Richards v. C.I.R.

• Decision Date: 05 October 1994
• Docket Number: No. 93-9016,93-9016
• Citation: 37 F.3d 587
• Parties: -6552, 94-2 USTC P 50,542 Jane M. RICHARDS, f/k/a Jane M. Morgan, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 587

37 F.3d 587

74 A.F.T.R.2d 94-6552, 94-2 USTC P 50,542

Jane M. RICHARDS, f/k/a Jane M. Morgan, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

No. 93-9016.

United States Court of Appeals Tenth Circuit.

Oct. 5, 1994.

Rehearing Denied Dec. 15, 1994.

David M. Kirsch, San Jose, CA, for petitioner-appellant.

Regina S. Moriarty (Michael L. Paup, Acting Asst. Atty. Gen., and Richard Farber with her on the brief), Tax Div., Dept. of Justice, Washington, DC, for respondent-appellee.

Before BALDOCK, McWILLIAMS and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

Ms. Richards appeals the judgment of the United States Tax Court denying her claim for a refund of taxes withheld in 1987. The narrow issue presented in this case requires us to interpret two specific sections of the Internal Revenue Code ("the Code"), 26 U.S.C. Secs. 6511 and 6512(b)(3)(B), to determine whether Ms. Richards' refund claim was timely. We have jurisdiction to review a final decision of the tax court under 26 U.S.C. Sec. 7482(a)(1) and we affirm.

BACKGROUND ¹

Ms. Richards, an accountant, did not initially file a tax return for the 1987 calendar year. Federal income taxes and Social Security taxes were withheld for that tax year, however, and under applicable law, those taxes were deemed paid on April 15, 1988. See 26 U.S.C.A. Sec. 6513(b)(1). Because Ms. Richards had not filed her return, the Internal Revenue Service ("Service") was uncertain whether she was deficient in her 1987 tax payments. On October 22, 1990, the Service mailed her a notice of deficiency. In response to this notice, Ms. Richards eventually filed a tax return on January 23, 1991, for the 1987 year, correctly showing she had in fact overpaid her taxes and claiming a refund.

The Service refused Ms. Richards' refund claim and she thereafter sought relief in tax court. The issue before the tax court was whether Ms. Richards' refund claim was timely. The tax court, relying on the weight of past tax court decisions, concluded Ms. Richards' claim was untimely and therefore she was not entitled to a refund under the applicable statutes. It is this ruling of law by the tax court that forms the basis for Ms. Richards' appeal.

DISCUSSION

We review tax court rulings "in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury." 26 U.S.C.A. Sec. 7482(a)(1); accord, Houston Oil and Minerals Corp. v. Commissioner, 922 F.2d 283, 285 (5th Cir.1991). Thus, the tax court's interpretation of the statutes in question is subject to de novo review. See NCAA v. Commissioner, 914 F.2d 1417, 1420 (10th Cir.1990).

I.

Our inquiry focuses on the statutory limitations periods for taxpayer refund claims and the respective triggering events in both federal district court and tax court. ² In order to understand the issue presented in this appeal, an overview of the relatively tedious statutes at issue is appropriate since the starting point for our analysis is the statutory language. ³ See Central Trust Co. v. Official Creditors' Comm. of Geiger Enters., 454 U.S. 354, 359-60, 102 S.Ct. 695, 697-98, 70 L.Ed.2d 542 (1982) (per curiam ) (quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917)).

A.

The Code imposes general limitations on both the period for filing a refund claim (the "filing period") and on the period for calculating the amount of refund (the "refund period"). 26 U.S.C.A. Sec. 6511(a)-(b). The analysis is further compounded because, as we discuss below, these limitations periods have different triggering events depending on whether the claim is filed in federal district court or tax court. ⁴ Subsection 6511(a) defines the filing period as follows Claim for ... refund of an overpayment of any tax ... shall be filed by the taxpayer within 3 years from the time the return was filed ... or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.

26 U.S.C.A. Sec. 6511(a).

In general, a court reviewing a refund claim must first examine whether a taxpayer has satisfied the statutory filing period pursuant to Sec. 6511(a). If a taxpayer has satisfied the filing period, then one refund period applies; if the filing period has not been satisfied, then a different, and shorter, refund period applies. See 26 U.S.C.A. Sec. 6511(b)(2)(A)-(B).

The refund period in Sec. 6511(b) restricts the taxpayer's ability to recover overpaid taxes to either the two-year or three-year period immediately preceding the filing of the refund claim. Which period applies is dependent upon the filing period the taxpayer has satisfied. "If the claim was filed by the taxpayer during the 3-year period prescribed in subsection (a), the amount of.... refund shall not exceed the portion of the tax paid within the [three] years immediately preceding the filing of the claim." 26 U.S.C.A. Sec. 6511(b)(2)(A). Alternatively, "[i]f the claim was not filed within such 3-year period, the amount of the ... refund shall not exceed the portion of the tax paid during the 2 years immediately preceding the filing of the claim." 26 U.S.C.A. Sec. 6511(b)(2)(B).

Under Sec. 6511(a), the benchmark date for measuring the triggering events of the relevant periods in federal district court is the date on which the taxpayer actually filed a return. Under Sec. 6512(b)(3)(B), ⁵ however, if the suit is filed in tax court, the Commissioner does not rely on the date the return was actually filed by the taxpayer but instead, focuses on the date the Service mailed the taxpayer a notice of deficiency.

B.

Applying these principles to the case before us, Ms. Richards is deemed to have filed her refund claim on October 22, 1990, the date the Service mailed her a notice of deficiency. See 26 U.S.C.A. Sec. 6512(b)(3)(B). The issue then becomes one of determining the appropriate refund period. Section 6512(b)(3)(B) cross-references Sec. 6511(b)(2) to determine the refund period. Section 6511(b)(2)(A) provides a three-year refund period, while Sec. 6511(b)(2)(B) provides only a two-year refund period. The longer refund period in Sec. 6511(b)(2)(A) applies only if the claim for refund was filed "during the 3-year period prescribed in [Sec. 6511](a)." If it was not, then the taxpayer is limited to the two-year refund period in Sec. 6511(b)(2)(B).

It is undisputed that in tax court, Ms. Richards' claim was deemed filed on the date she received her notice of deficiency, October 22, 1990, although her return was filed on January 23, 1991. As a result, her claim was not filed "within 3 years from the time the return was filed." 26 U.S.C.A. Sec. 6511(a) (emphasis added). The ordinary understanding of the words "from the time" implies that the taxpayer must file the return prior to filing the claim in order to benefit from the three-year refund period. Ms. Richards' return, however, was filed on January 23, 1991, after the date her claim was deemed filed in tax court. Therefore, she cannot avail herself of the three-year refund period under Sec. 6511(b)(2)(A), and she is necessarily limited to the two-year refund period under Sec. 6511(b)(2)(B).

Under the two-year refund period, Ms. Richards may only obtain a refund for tax payments she made on or after October 22, 1988. By operation of Sec. 6513(b)(1), Ms. Richards' 1987 taxes were deemed paid on April 15, 1988, which is outside the two-year refund period. As a result, the tax court correctly held that Sec. 6512(b)(3)(B) prohibits her from recovering any overpaid taxes, a result that accords with the ruling of at least ⁶ one other circuit court. See Galuska Galuska involved facts almost identical to those presented in this case. Mr. Galuska, the taxpayer, sought a refund for overpaid taxes for 1986. He did not file a return for 1986, however, until September 19, 1991, which was approximately one-and-one-half years after the April 12, 1990 date when the Service mailed him a notice of deficiency. He sought a refund in tax court, and while that court agreed Mr. Galuska had overpaid his 1986 taxes, it concluded his claim was untimely by virtue of the two-year refund period. Id. at 195-96. The sole issue on appeal involved whether the tax court correctly applied Sec. 6512(b)(3)(B).

v. Commissioner, 5 F.3d 195, 196 & n. 2 (7th Cir.1993) (citing tax court decisions).

The Seventh Circuit concluded that Mr. Galuska had not filed a claim within three years of the time he filed his return, and therefore, the two-year refund period under Sec. 6511(b)(2)(B) applied. Id. at 196. Because Mr. Galuska had paid the taxes for which he sought a refund before the two-year refund period from the date the notice of deficiency was mailed, "Section 6512(b)(3)(B) preclude[d] any refund of his overpayment." Id. We agree with our sister circuit's holding and analysis of this issue and the result it dictates in our case.

II.

We would be remiss, however, if we did not address one additional argument advanced by Ms. Richards. She contends, as did Mr. Galuska, that if she had sought a refund in federal district court, her claim would have been timely and she would be entitled to a refund. She asserts that in federal district court, her return, which was filed on January 23, 1991, would constitute a claim for refund. ⁷ She further asserts that her 1987 taxes, which were deemed filed on April 15, 1988, would be refundable because under the three-year refund period applicable to her claim, she could seek a refund of taxes paid on or after January 23, 1988. Thus, her argument goes, it would be inequitable to find the refund claim viable in federal district court but not in tax court.

Mr. Galuska unsuccessfully advanced the same argument before the Seventh Circuit. The court analyzed the relevant statutory provisions and stated if the refund had been sought in federal district court, then Mr In view of Section 6512(b)(3), a taxpayer who asks the Tax Court for a refund of an...