Trustees of Bulkeley School v. United States, Civ. No. H 84-980 (JAC).
| Decision Date | 18 February 1986 |
| Docket Number | Civ. No. H 84-980 (JAC). |
| Citation | 628 F. Supp. 802 |
| Parties | TRUSTEES OF the BULKELEY SCHOOL v. UNITED STATES of America. |
| Court | U.S. District Court — District of Connecticut |
S. Joel Suisman, New London, Conn., for plaintiff.
Joanne Rutkowski, Washington, D.C., W. Philip Jones, Hartford, Conn., for defendant.
RULING ON MOTION TO DISMISS
This matter is before the court on the government's motion to dismiss both counts of the complaint, pursuant to Rule 12(b)(1), Fed.R.Civ.P., on the ground that the court lacks subject-matter jurisdiction over a claim for $54,328.59 in interest on overpaid federal taxes.1
The government counters that 28 U.S.C. § 1346(a)(1) does not grant the federal district courts jurisdiction over claims for interest on tax overpayments. Instead, the government contends that federal district courts may exercise jurisdiction over such claims only pursuant to 28 U.S.C. § 1346(a)(2), which permits federal district courts to consider "any other ... claim against the United States not exceeding $10,000 in amount." Accordingly, the government argues, any claim for more than $10,000 in interest on overpaid federal taxes can be heard only by the United States Claims Court.
The government has offered no authority for its position either in the legislative history of Section 1346(a)(1) or in the case law interpreting that provision. New Mexico v. Regan, 745 F.2d 1318 (10th Cir.1984), the principal case relied upon by the government, was not an action for interest on a tax overpayment in which jurisdiction was alleged under Section 1346(a)(1). Moreover, as the government properly concedes, the court in Triangle Corporation v. United States, 592 F.Supp. 1316, modified, 597 F.Supp. 507 (D.Conn.1984) (Dorsey, J.), held that 28 U.S.C. § 1346(a)(1) vests the federal district courts with jurisdiction over suits to recover interest on federal tax refunds. See also Draper v. United States, 62-2 U.S.T.C. ¶ 9697 (E.D.Wash.1962) (same).
It is clear that the plaintiff is seeking to recover an "internal-revenue tax alleged to have been erroneously or illegally assessed or collected" as is permitted by Section 1346(a)(1). The Congress, by requiring the government to pay interest on tax overpayments, see 26 U.S.C. § 6611, implicitly recognized that refunds of taxes overpaid in previous years must be appropriately adjusted to reflect the time value of money. See generally M. Graetz, Federal Income Taxation 989 (1985) ( why "a dollar today is worth more than a dollar tomorrow"). A taxpayer has not received a full refund of "erroneously ... collected" taxes until he has recovered not only the nominal amount of the collection but also an amount of interest that will compensate him for the loss of the use of his money between the time that he paid the tax and the time that he received the refund.2
Finally, a contrary result would effectively deprive the federal district courts of jurisdiction over all tax refund suits in which the taxpayer may recover interest in excess of $10,000. It is unlikely that the Congress would have enacted sub silentio so significant a restriction on the tax jurisdiction of the federal district courts.
Accordingly, the motion to dismiss count one of the plaintiff's complaint is hereby denied.
The government has also moved to dismiss the second count of the complaint pursuant to Rule 12(b)(1) on the ground that the government has consented to be sued with respect to allegedly wrongful tax...
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...Of course, we are not bound by these decades-old holdings, but, more to the point, we do not find their reasoning persuasive. In Trustees of Bulkeley School , the District of Connecticut held that "a taxpayer has not received a full refund ... until he has recovered not only the nominal amo......
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