Danoff v. U.S.
| Decision Date | 07 April 2004 |
| Docket Number | No. SA CV03-945-JVS(ANX).,SA CV03-945-JVS(ANX). |
| Citation | 324 F.Supp.2d 1086 |
| Court | U.S. District Court — Central District of California |
| Parties | Edward R. DANOFF, Plaintiff, v. UNITED STATES of America, Defendant. |
Richard G Stack, AUSA — Office of US Attorney, Tax Division, Los Angeles, CA, for U.S.
STATEMENT OF UNCONTROVERTED FACTS AND CONCLUSIONS OF LAW
The Motion to Dismiss Complaint, or Alternatively, for Summary Judgment filed by defendant, the United States of America, came on for hearing before the Court, the Honorable James V. Selna, United States District Judge, presiding, at the date, time, and place shown above. Based upon the papers filed in support of and in opposition to the Motion, the arguments made by the parties at the hearing on such Motion, and all matters properly part of the record, the Court makes the following Statement of Uncontroverted Facts and Conclusions of Law:
1. On June 5, 2003, plaintiff Edward R. Danoff ("plaintiff" or "Danoff") commenced this action by filing a "Complaint Against the United States of America for Refund of Monies Deposited With the Internal Revenue Service" ("Complaint"). In the Complaint, plaintiff seeks to recover from the defendant, the United States of America ("defendant" or "United States"), the sum of $22,382.00, plus interest and costs allowed by law.
2. On June 25, 2003, plaintiff served the summons and Complaint on the United States Attorney's Office, by mail.
3. Plaintiff alleges that he deposited funds of $22,382.00 with the Internal Revenue Service ("IRS" or "Service") on or about April 15, 1996 for his future, potential personal income taxes. (Complaint, ¶ 4).
4. Plaintiff contends that when he filed his 1997 income tax return with the IRS on or about April 11, 2001, he requested that the $22,382.00 remain on deposit for his future, potential personal income taxes. (Complaint, ¶ 5).
5. Plaintiff alleges that, on or about May 14, 2001, the IRS mailed a letter to him, stating that the Service "either made changes to your [my] return or payments claimed on the return did not match our [IRS] records." That letter further advised plaintiff that, after the IRS had made changes to his return, no overpayment remained. (Complaint, ¶ 6).
6. Plaintiff alleges that after he received the May 14, 2001 letter, he immediately contacted the IRS to determine the disposition of his deposited funds. According to plaintiff, on May 19, 2001, an IRS employee named Ms. Aldrich (badge no. 6206351) informed him that: (1) the IRS still had his $22,382.00 on deposit as a credit against his tax account(s); (2) the IRS never should have sent the May 14, 2001 letter to plaintiff; (3) plaintiff had four years to file his return claiming entitlement to a refund or credit; and (4) since plaintiff had filed his return by April 15 2001, his money still was available to be credited by the IRS. (Complaint, ¶¶ 7-9).
7. Although it is not specifically alleged in the Complaint, plaintiff further contends that he spoke with a different IRS employee in May of 2000, who initially informed him that there was no time limit for him to recover the $22,382.00 if he had "deposited" the funds with the IRS. Later during that conversation, the IRS employee allegedly informed plaintiff that he had four years from the due date of his return in order to file a claim for refund or credit of the $22,382.00.
8. On June 25, 2001, the IRS mailed a letter to plaintiff, notifying him that the IRS could not refund or credit the deposited funds of $22,382.00, since such funds were paid more than 3 years before plaintiff filed a claim, and that plaintiff had 2 years in which to file a lawsuit with the District Court seeking recovery of the $22,382.00. (Complaint, ¶¶ 10 and 13).
9. On August 21, 2003, the United States filed its Answer to the Complaint. In its Answer, defendant denied that plaintiff was entitled to recover any sum whatsoever by way of his Complaint, and it asserted numerous "additional" (or affirmative) defenses.
10. Defendant's primary defense is that plaintiff's Complaint and action is barred by the statute of limitations because plaintiff did not make any payments to the IRS during the 3-year period "immediately preceding the filing of" his refund claim for the year 1996 on April 11, 2001, as required by 26 U.S.C. § 6511(b)(2)(A). (Answer, Additional Defense No. 3).
11. Defendant also disputes certain allegations that plaintiff has made in the Complaint, namely, the dates on which he filed certain income tax returns and that the disputed funds of $22,382.00 constitute a "deposit" rather than a "payment" of tax.
12. On or about December 13, 1995, plaintiff filed his 1994 Federal income tax return with the IRS. (Exhibits A and B1, Form 4340, Certificate of Assessments, Payments, and Other Specified Matters regarding Federal income tax return, Form 1040, of plaintiff Edward R. Danoff for period ending December 31, 1994, certified on August 28, 2003; and Retention Register dated July 29, 2003 pertaining to plaintiff's 1994 Federal income tax return, entry "Received-Date: 12311995").2
13. On his 1994 return, plaintiff reported total tax in the amount of $10,374.00, which the IRS assessed on January 8, 1996. (Exhibit A, entry "Return Filed and Tax Assessed"). Plaintiff also reported on his 1994 return credits for a "Subsequent Payment" in the amount of $5,000.00 and an "Overpaid Credit From Prior Tax Period" in the amount of $27,756.00. (Exhibit A). As a result, plaintiff reported a tax overpayment in the amount of $22,382.00 on his 1994 return, which plaintiff timely elected to have the IRS apply toward his estimated income taxes for 1995. (Exhibit A, entry "Overpayment Credit Elect Transferred to Next Tax Period").
14. Thus, that overpayment was deemed transferred to plaintiff's 1995 tax account as of April 15, 1996. See 26 U.S.C. §§ 6513(b)(2) and (d).
15. On August 21, 1997, plaintiff filed his 1995 Federal income tax return with the IRS. (Exhibit C, U.S. Individual Income Tax Return, Form 1040, of Edward R. Danoff for period ended December 31, 1995).
16. On his 1995 return, plaintiff reported total tax liability of $0.00 and an overpayment in the amount of $22,382.00 (arising from an overpayment credit election transfer that plaintiff had made on his 1994 return). Plaintiff timely elected to have the IRS apply the overpayment shown on his 1995 return toward his estimated income taxes for 1996.
17. Thus, such overpayment was deemed transferred to plaintiff's 1996 tax account as of April 15, 1997. See 26 U.S.C. §§ 6513(b)(2) and (d).
18. On April 11, 2001, plaintiff belatedly filed his 1996 Federal income tax return with the IRS. (Exhibit D, U.S. Individual Income Tax Return, Form 1040, of Edward R. Danoff for period ended December 31, 1996).
19. On or about April 15, 1997, plaintiff obtained an extension of time to file his 1996 return to August 15, 1997. (Exhibit E, literal transcript of account regarding plaintiff's 1996 return, entry dated April 15, 1997, entitled "Extension of Time to File, Ext. Date 08-15-1997").
20. On his 1996 return, plaintiff reported total tax liability of $0.00 and an overpayment in the amount of $22,382.00 (arising from an overpayment credit election transfer that plaintiff had made on his 1995 return). Plaintiff attempted to make an election on his 1996 return to have the IRS apply that overpayment toward his estimated income taxes for 1997.
21. Plaintiff did not file his 1997 return with the IRS until April 15, 2002. (Exhibit F, U.S. Individual Income Tax Return, Form 1040, of Edward R. Danoff for period ended December 31, 1997).
22. By certified letter dated June 25, 2001, the IRS Service Center in Fresno, California ("Fresno Service Center") notified plaintiff of the disallowance of his claim for refund or credit for tax year 1996 in the amount of $22,382.00, received on April 11, 2001. (Exhibit G, certified letter dated June 25, 2001 from Fresno Service Center to plaintiff).3
23. By nearly identical letters to the Fresno Service Center dated April 26, 2002 and June 19, 2002, plaintiff responded to the Service's notice of disallowance letter dated June 25, 2001. (Exhibits H and I).4 In those letters, plaintiff attempted to explain why he did not file his refund claim for 1996 until April 11, 2001.
24. In the Motion, defendant sought to obtain the following two determinations, which would be dispositive of this case:
a. That plaintiff is not entitled to the refund or credit of any portion of his claimed 1996 income tax overpayment in the amount of $22,382.00 because such tax was "deemed paid" on April 15, 1997 (see 26 U.S.C. §§ 6513(b)(2)), before the 3-year "lookback" period prescribed by 26 U.S.C. § 6511(b)(2)(A),5 which limits the amount of a recoverable refund or credit.
b. That, as a matter of law, plaintiff is not entitled to relief from the operation of 26 U.S.C. § 6511(b)(2)(A) based upon the doctrine of equitable estoppel.
25. Any conclusion of law deemed more appropriately to be a finding of fact is incorporated herein as a finding of fact.
1. As a sovereign, the United States is immune from suit without its consent. The terms of the United States' consent to be sued, when granted, circumscribe the court's jurisdiction. United States v. Dalm, 494 U.S. 596, 608, 110 S.Ct. 1361, 1368, 108 L.Ed.2d 548 (1990).
2. The applicable statute of limitations is a term by which the United States has consented to be sued. Nesovic v. United States, 71 F.3d 776, 777 (9th Cir.1995). Because a statute of limitations constitutes a condition on the Government's waiver of immunity, United States v. Mottaz, 476 U.S. 834, 841, 106 S.Ct. 2224, 2229, 90 L.Ed.2d 841 (1986), it should be "construed strictly...
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