Dickow v. U.S.

• Decision Date: 18 August 2010
• Docket Number: Civil Action No. 09-10786-DPW
• Citation: 740 F.Supp.2d 231,106 A.F.T.R.2d 2010
• Parties: D. Charles DICKOW, as Executor of the Estate of Margaret W. Dickow, Plaintiff, v. UNITED STATES of America and Internal Revenue Service, Defendants.
• Court: U.S. District Court — District of Massachusetts

740 F.Supp.2d 231

106 A.F.T.R.2d 2010

D. Charles DICKOW, as Executor of the Estate of Margaret W. Dickow, Plaintiff,

v.UNITED STATES of America and Internal Revenue Service, Defendants.

Civil Action No. 09-10786-DPW.

United States District Court, D. Massachusetts.

Aug. 18, 2010.

Andrea L. Martin, Dennis J. Kelly, Burns & Levinson LLP, Boston, MA, for Plaintiff.

Austin L. Furman, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, District Judge.

Plaintiff D. Charles Dickow, as the Executor of the Estate of Margaret W. Dickow, seeks to recover federal estate tax he claims has been erroneously assessed and collected by the Internal Revenue Service ("IRS") for the tax year ending on January 15, 2003. The IRS and the Executor have moved respectively for summary judgment and partial summary judgment over the issue of the timeliness of the Executor's refund request. For the reasons stated below, I will grant the IRS summary judgment.

I. BACKGROUND

A. The Facts

Margaret W. Dickow died on January 15, 2003. Pursuant to 26 U.S.C. § 6075(a), the IRS Form 706 (United States Estate Tax Return) was due on October 15, 2003, i.e., nine months after Mrs. Dickow's death.

On October 10, 2003, the Executor filed an IRS Form 4768 (Application for Extension of Time to File a Return and/or Pay U.S. Estate Taxes), enclosing a check in the amount of $945,000 for the payment of the estimated tax. The Executor received an automatic six-month extension of time, i.e., until April 15, 2004, to file the estate tax return.

On March 23, 2004, the Executor filed a second IRS Form 4768 requesting for an extension of an additional six-month period, i.e., until October 15, 2004, to file and pay the estate tax return. In an attachment to the form, the Executor noted that he sought a second extension to file the estate tax return because "despite due diligence on his part, he has not received an appraisal of a real estate asset which constitutes a large portion of the Estate." As a result, the Executor concluded that he could not accurately compute the estate tax due. The IRS contends that the Executor's second request was invalid on the ground that the form was altered and incomplete. As basis for this contention, the IRS relies on the fact that the words "REQUEST FOR SECOND EXTENSION" were typed at the top of the form and that the Executor failed to check any box of the form indicating that he was requesting an extension of time under a recognized grounds for doing so.

On April 7, 2004, the IRS denied the Executor's second request for extension of time to file the estate tax return on the ground that a previous extension had already been granted until April 15, 2004 and that "[b]y law extension of time to file may be granted for no longer than six months." The extension of time to pay was nonetheless approved and the Executor was given until October 15, 2004 to pay the estate tax. It is disputed whether the IRS actually informed ¹ the Executor that it had denied his second request for extension of time to file the estate tax return. The Executor therefore contends that he relied on the IRS' silence to conclude that his second request had been granted, thereby justifying his failure to file the estate tax return on April 15, 2004.

Thereafter, on August 16 and October 11, 2004, the IRS sent two delinquency notices to the Executor or his agents, informing him that the estate tax return was overdue. The Executor denies having received such notices. Meanwhile, on September 30, 2004, the Executor mailed an IRS Form 706 (United States Estate Tax Return), in which he requested a refund in the amount of $337,139.81 of the $945,000.00 previously paid to the IRS. This amount was refunded to the Executor by the IRS on November 1, 2004.

Almost three years later, on September 10, 2007, the Executor mailed an amended IRS Form 706, in which he claimed a refund of $574,953.29 (i.e., the $337,139.81 previously refunded and an additional $237,813.48 that is the subject of the present litigation). In response, the IRS sent a letter to the Executor on October 15, 2007, denying the request for refund in the amount $239,768.48 (i.e., $237,813.48 plus$1,955.00 paid in connection with a 1998 gift tax).

B. Procedural History

On May 14, 2009, the Executor filed a complaint in this Court, seeking to recover for federal estate tax in the amount of $237,813.48. The IRS filed a motion to dismiss for lack of subject matter jurisdiction on July 14, 2009 on the ground that the relief sought by the Executor was barred as untimely under 26 U.S.C. § 6511(b)(2)(A).

While IRS' motion was still pending, the Executor filed a First Amended Complaint on August 21, 2009, alleging a claim for tax refund pursuant to 26 U.S.C. § 6511(a) & (b)(2)(A) (Count I) and equitable estoppel (Count II). The IRS subsequently filed a second motion to dismiss, claiming, as it did in the first motion, that the Executor's claim for relief was untimely. I denied IRS' second motion to dismiss on September 24, 2009. Thereafter, IRS filed its Answer to the Executor's First Amended Complaint.

II. STANDARD OF REVIEW

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The vocabulary of summary judgment is well-settled. "A material fact is one that would affect the outcome of the suit, while a genuine issue is one for which the evidence would permit a reasonable jury to return a verdict for the nonmoving party." Zimmerman v. Puccio, 613 F.3d 60, 70 (1st Cir.2010).

In ruling on a motion for summary judgment, a court must "make all reasonable factual inferences in the light most favorable to the non-movant." Shell Co. (P.R.) Ltd. v. Los Frailes Serv. Station, 605 F.3d 10, 24 (1st Cir.2010). Where, as here, the parties have filed cross-motions for summary judgment and partial summary judgment, the court "must view each motion, separately, through this prism." Estate of Hevia v. Portrio Corp., 602 F.3d 34, 40 (1st Cir.2010). This means that the "court may enter summary judgment only if the record, read in this manner, reveals that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Id.

III. DISCUSSION

The IRS argues that judgment as a matter of law should be granted on two grounds: (A) the Executor is jurisdictionally barred from the relief he seeks because his claim is untimely under 26 U.S.C. § 6511(a) & (b)(2)(A) and (B) the Executor's claim for equitable estoppel cannot provide this Court with jurisdiction over this action; and, even if it could, such a claim would be insufficient as a matter of law. I will address these two questions in turn.

A. Timeliness as a Jurisdictional Requisite

1. Legal Considerations

28 U.S.C. § 1346(a)(1) gives federal district courts jurisdiction over suits against the United States "for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected." 28 U.S.C. § 1346(a)(1). This provision is only of a jurisdictional nature. See United States v. Testan, 424 U.S. 392, 398, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976). It does not waive sovereign immunity to permit a suit against the government; rather, a separate waiver is required. The waiver of sovereign immunitythat allows tax refund suits reads as follows:

No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, ..., or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.

26 U.S.C. § 7422(a) (emphasis added). The requirements applicable to "duly filed" refund claims are contained in 26 U.S.C. § 6511 and the regulations enacted thereunder.

Accordingly, a taxpayer seeking a refund of overpaid taxes must file a refund claim in a timely fashion with the IRS under 26 U.S.C. § 6511. This section contains two separate provisions for determining the timeliness of a claim for refund. First, § 6511(a) provides a "filing deadline" which requires the taxpayer to file a refund claim "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). Second, § 6511(b)(1)(A) establishes a "look-back period" applicable where the claim is filed within "the 3-year period prescribed in subsection (a)." 26 U.S.C. § 6511(b)(2)(A). The look-back period requires that the amount of the refund be limited 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." Id.

The provisions at issue in this case—26 U.S.C. §§ 6511(a) and 6511(b)(2)(A)—are all jurisdictional in nature, and a tax refund suit that fails to satisfy these provisions must be dismissed for lack of subject-matter jurisdiction. See Comm'r v. Lundy, 516 U.S. 235, 240, 116 S.Ct. 647, 133 L.Ed.2d 611 (1996) (noting that "the provisions governing refund suits in United States District Court ... make timely filing of a refund claim a jurisdictional prerequisite to bringing suit"); see also Zeier v. U.S. I.R.S., 80 F.3d 1360, 1364 (9th Cir.1996) ("Following the Supreme Court in Lundy, we hold that § 6511(b)(2)(A) is jurisdictional."); Porter v. United States, 919 F.Supp. 927, 934 (E.D.Va.1996) ("§ 6511(b)(2)(A) establishes a jurisdictional requirement for refund claims in district courts."); Oropallo v. United...