Dantzler v. U.S. IRS, 98-8514

• Decision Date: 10 August 1999
• Docket Number: No. 98-8514,98-8514
• Citation: 183 F.3d 1247
• Parties: (11th Cir. 1999) LAURENCE KEITT DANTZLER, BROOKS WHITTLE DANTZLER, Plaintiffs-Appellees, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellant
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1247

183 F.3d 1247 (11th Cir. 1999)

LAURENCE KEITT DANTZLER, BROOKS WHITTLE DANTZLER, Plaintiffs-Appellees, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellant.

No. 98-8514

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

August 10, 1999

Appeal from the United States District Court for the Middle District of Georgia D. C. Docket No. 5:96-CV-94-1

Before EDMONDSON and CARNES, Circuit Judges, and WATSON^*, Senior Judge.

EDMONDSON, Circuit Judge:

As legal authority, the binding aspect of an earlier case is found in the actual disposition of the case given its particular essential facts. The power of precedent chiefly is to assure that like cases have like results. Cases that are not essentially alike can rightly have different results. These principles come into play as we decide the government's appeal from the district court's judgment awarding Taxpayers refunds of their federal income taxes. Because Taxpayers' claims for refunds were not timely, we reverse.

Background

Each April of 1986, 1987 and 1988, taxpayers Laurence and Brooks Dantzler, who are husband and wife, submitted to the federal Internal Revenue Service ("IRS") a Form 4868 application for a four-month extension of time for filing their annual federal income tax return. Each year, the Dantzlers enclosed a remittance. These amounts were sent to the IRS: $5,220.00 in 1986; $3,234.64 in 1987; $4,577.89 in 1988. Each time, the IRS granted the Dantzlers' request for a four-month extension.

The Dantzlers did not file the returns within the respective four-month extension periods, nor did they request additional extensions. Instead, the Dantzlers submitted their tax returns for the years 1985, 1986 and 1987 in December 1992. The returns showed that the Dantzlers' liability was less than the remittances the Dantzlers had made in connection with the corresponding extension requests, and each return accordingly sought a refund. In November 1993, the Dantzlers requested that the IRS return the excess amounts to them. The IRS later notified the Dantzlers that it had disallowed their refund claims because the claims were barred by the statute of limitations.

The Dantzlers brought this action seeking a refund for the years 1985, 1986, and 1987.¹ The government and the Dantzlers filed cross-motions for summary judgment. The district court denied the government's motion and granted the Dantzlers' motion. The government appeals.

Discussion

This case presents the issue of whether the remittances submitted by the Dantzlers with their 4868 forms, requesting extensions of time for the filing of their 1985, 1986 and 1987 tax returns, constitute payments for purposes of the statute of limitations on a claim for refund. We conclude that the remittances were payments. The Dantzlers' refund claims are therefore time-barred.

The Internal Revenue Code contains two jurisdictional time bars for tax refund claims. Section 6511(a) provides that a refund claim must be filed "within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid." 26 U.S.C. 6511(a). Even if a claim was filed within the three-year window of section 6511(a), however, section 6511(b)(2)(A) limits the amount of a credit or refund to "the portion of the tax paid within the period immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return." 6511(b)(2)(A).²

So, for the Dantzlers to recover, their claims must have been filed, at the latest, within three years and four months from the time the tax was paid. If the remittances submitted with their Form 4868 applications for extensions were payments, their claims are time-barred because the claims at issue in this appeal were made more than three years and four months after each respective remittance was made. But, if the remittances were deposits and if the taxes were not paid until the Dantzlers filed their returns in 1992, the Dantzlers' claims are not barred: the payments would have occurred simultaneously with the refund claims.

The Dantzlers argue that their remittances were no payments. They say that binding precedent of our circuit establishes a per se rule that there can be no payment of a tax until there has been an assessment of a tax. Because an assessment had not been made when the Dantzlers filed their returns in this case³ (at which time they also filed their claim for a refund), the Dantzlers contend that their claims were timely.

The distinction between deposits and payments was initially recognized in Rosenman v. United States, 323 U.S. 658 (1945). In Rosenman, the Supreme Court concluded that a refund claim for a remittance of anticipated (but disputed) estate taxes was not time-barred by the predecessor to section 6511: the Court concluded that the pertinent remittance was a "deposit" rather than a "payment." Id. at 663, 65 S.Ct. 536. The estate executors in Rosenman had submitted a remittance of an anticipated estate tax, with a letter stating that payment was "made under protest and duress, and solely for the purpose of avoiding penalties and interest[.]" Id. at 660, 65 S.Ct. 536. The IRS had then placed the amount in a suspense account⁴ to the credit of the estate. Id.

Based on its evaluation of the specific facts before it -- the timing of the remittances and the disputed IRS assessment, which came years later than the remittance; the taxpayers' intent in making the remittance; and how the IRS treated the remittance upon receipt -- the Court, in Rosenman, ruled that the remittance was a deposit; so the statute of limitations did not apply. The taxpayers were accordingly entitled to a refund. Id. at 661-63, 65 S.Ct. 536.

In Thomas v. Mercantile National Bank, 204 F.2d 943 (5th Cir. 1953), the court seemed to interpret Rosenman as establishing, in effect, a per se rule that a remittance will not be construed as a payment until an assessment of the tax owed has been made. Id. at 944. Thomas involved a remittance for a proposed estate tax deficiency. The taxpayers responded with a check for the exact amount, but the assessment was not entered until some time after the government received the money. The facts of the case were such that the refund claim was timely only if the tax was deemed "paid" on the date of the assessment rather than at the time the check was received. The court concluded that the check was not a payment until the pertinent tax had been assessed; therefore, the refund claim was timely. Id.

In Ford v. United States, 618 F.2d 357 (5th Cir. 1980), the court applied Thomas in a case where the taxpayers sought a refund of their federal income taxes. The taxpayers in that case remitted funds in response to a statutory notice of deficiency. After an assessment by the IRS, it was determined they had overpaid. But, the taxpayers did not file a refund claim until the limitations period -- if measured from the time when they remitted funds in response to the notice of deficiency -- had expired. The Ford court said the case was controlled by Thomas, id. at 361, and while disagreeing with the result, see id. at 359-61 (criticizing Thomas and inviting en banc consideration "of a rule we believe not justified by Supreme Court precedent, the practice of other courts, or the realities of our tax system"), the Ford court concluded that the tax was not deemed paid until the date of assessment of deficiency, id. at 361.

In the instant case, the district court believed that Thomas and Ford required it to accept the Dantzlers' position that their remittances were deposits. So, the district court determined that the provisions of section 6511 did not preclude Plaintiffs from obtaining their refunds.

The district court was correct, of course, that it must follow the law of our circuit. We must do so too. Each panel of this court is bound by an earlier decision of this court which decided an indistinguishable case, unless and until that decision is overruled by the court en banc or by the Supreme Court. See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc). The law-of-the-circuit rule, however, will not determine the outcome here, because the Thomas and Ford cases are distinguishable, given the facts of the present case.

The district court erred in concluding that it was bound to follow Thomas and Ford in this case. The courts in Thomas and Ford were not presented with and did not decide the question presented in this case: whether taxpayers' remittances submitted with a Form 4868 request for an extension of time for the filing of income tax returns constitute payments of tax for purposes of the statute of limitations for refund claims. We do face that particular question; and we conclude that the remittances in this case were not deposits, but were payments.

An automatic extension pursuant to Form 4868 does not relieve the taxpayer of the obligation to pay the taxes on the statutory due date: The regulations for Form 4868 extensions provide, "[n]otwithstanding the application of 1.6081-1(a), any automatic extension of time . . . shall not operate to extend the time for payment of any tax due on such return." 26 C.F.R. 1.6081-4(b). Form 4868 itself states, in bold print, "[t]his is not an extension of time for payment of tax." Most important, section 6513, "Time return deemed filed and tax considered paid," provides that "[a]ny amount paid as estimated income tax for any taxable year shall be deemed to have been paid on the last day prescribed for filing the return . . . for such taxable year (determined without regard to any extension of time for filing such return)." 26 U.S.C. 6513(b)(2).⁵

Section 6513(b)(2) applies to remittances made in conjunction with a request for extension of time because such remittances are estimates of tax. Form...