Wiltgen v. US

Decision Date28 August 1992
Docket NumberCiv. No. C91-4040.
Citation813 F. Supp. 1387
PartiesEdward P. WILTGEN, duly appointed conservator and guardian of the taxpayer Helen A. Wiltgen, Plaintiff, v. UNITED STATES of America, Defendant.
CourtU.S. District Court — Northern District of Iowa

Edward P. Wiltgen, pro se.

Charles W. Larson, U.S. Atty., Carolyn D. Jones, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, DC, for defendant.


DONALD E. O'BRIEN, Chief Judge.

The underlying action was instituted by the plaintiff to recover funds remitted to the Internal Revenue Service ("IRS"). The defendant has moved to dismiss plaintiff's action on the grounds that (1) the statute of limitations has expired and (2) the plaintiff failed to comply with the requirements necessary to waive the sovereign immunity of the United States. The Court, having considered the materials on file, the arguments of those concerned, and being fully advised, denies the defendant's motion.


A defendant must surmount a major obstacle in order to persuade this court to dismiss the plaintiff's claim at so early a stage in the litigation. "A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."1 Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). Thus, it is only in the "unusual case" where the complaint on its face reveals some insuperable bar to relief that a dismissal under Rule 12(b)(6) is warranted. Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir.1982). The issue is not whether plaintiffs will ultimately prevail, but rather whether they are entitled to offer evidence in support of their claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); United States v. Aceto Agricultural Chemical Corp., 872 F.2d 1373, 1376 (8th Cir.1989).


Helen A. Wiltgen ("taxpayer") submitted four checks to the IRS as set forth below:

                      Date of check      Amount
                    April 23, 1981     $  826.00
                    December 21, 1981     749.88
                    January 15, 1982    1,145.00
                    June 14, 1983         500.00
                    Total              $3,220.88

These amounts were later "credited" to the taxpayer's federal income tax liabilities for 1980, 1981, 1982, and 1983. The records of the IRS indicate that no assessments were made for the 1980 and 1982 tax year, while assessments were made for 1981 and 1983 tax years on February 23, 1987. At the time the above checks were mailed, taxpayer did not direct how the payments were to be applied nor were the checks accompanied by federal income tax returns.

Edward P. Wiltgen ("conservator") was appointed conservator and guardian of taxpayer Helen A. Wiltgen by the District Court for the State of Iowa on March 21, 1986. On December 22, 1986, the conservator filed federal income tax returns on behalf of the taxpayer for 1981, 1982, and 1983, requesting refunds as set forth below:

                    Taxable year  Amount requested
                        1981         $2,378.28
                        1982            500.00
                        1983            241.00
                       Total         $3,119.28

On December 21, 1987, the IRS refunded the $500.00 applied to the 1982 tax year. The plaintiff's complaint requests a refund of $2,803.77, as well as generally requests the return of any other money that is not owed to the IRS for 1981, 1982, and 1983.3 According to the records of the United States, the only amounts at issue are the $2,378.28 for the 1981 tax year and the $241.00 for the 1983 tax year, since the $500.00 for 1982 was previously refunded. The conservator contends he is entitled to a refund since Helen A. Wiltgen suffered from schizophrenia at the time she wrote the checks to the IRS.4

1. Statute of limitations.

It is often expressed that tax laws are technical and, for the most part, are to be interpreted accordingly. Or, as another court phrased it, "taxation is a game which must be played strictly in accordance with the rules." Ewing v. United States, 914 F.2d 499, 501 (4th Cir.1990). One of the best-known rules in the Internal Revenue Code is the statute of limitations concerning income tax refunds. However, there are several technical provisions of the Code that should be examined before turning to the statute of limitations discussion.

26 U.S.C. § 7422(a), provides in part:

No suit or proceeding shall be maintained in any court for the recovery of an internal revenue tax alleged to have been erroneously or illegally assessed or collected without authority, or of any penalty claimed to have been collected without authority, 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.

A closely related provision, 26 U.S.C. § 6402(a), provides in part:

In the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall, subject to subsections (c) and (d), refund any balance to such person.

The defendant asserts that this action is in essence a claim for refund. Plaintiff contends that he is not requesting a refund per se, but, rather a return of all money that is not owed to the IRS plus interest and court costs.5 The court interprets this action as a claim for the return or refund of an overpayment to the IRS. The term "overpayment" is general in scope encompassing amounts erroneously, illegally, or wrongfully collected by the IRS. Furthermore, the above sections conditions a District Court's authority to hear a suit attempting to recover funds that have been wrongfully collected, assessed, or retained upon the filing of a "claim for refund" of an overpayment. To create a distinction between a refund action and a suit for funds wrongfully retained is a fiction with little significance; See United States v. Dalm, 494 U.S. 596, 609, 110 S.Ct. 1361, 1368-69, 108 L.Ed.2d 548 (1990), there is no reason to overanalyze the term overpayment as it is used in § 7422(a). While the remittances may have been something other than "payments" at the time of their receipt, they were transformed into overpayments on the date the return was filed whereby the taxpayer elected to treat the remitted funds as overpayments to be returned promptly.

Defendant concedes that the initial jurisdictional requirement imposed by § 7422(a) has been met by the plaintiff in this case. A properly executed income tax return shall, at the election of the taxpayer, be a claim for refund within the meaning of §§ 6402 and 6511 for the amount of the overpayment disclosed by such return. Treas.Regs. §§ 301.6402-3(b)(4) and (5). The defendant contends that the refunds cannot be made to the plaintiff as he is beyond the refund limitations period. This argument leads to § 6511.

Section 6511 contains two statutory limitations on the refund procedure: (1) § 6511(a) and (2) § 6511(b)(2)(A). Section 6511(a) provides in part:

Claims for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer 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. ...

This first limitation requires that a claim for refund must be filed within three (3) years of the date that the original return is filed.6 As mentioned previously, the IRS does not dispute that plaintiff's claims for refunds were timely filed pursuant to this provision. This is entirely correct since the original returns, filed on December 22, 1986 also served as the plaintiff's claims for refunds.

Defendant, satisfied that plaintiff has met the requirements imposed by both §§ 7422 and 6511(a), asserts that the plaintiff fails comply with the requirements of § 6511(b)(2)(A). Section 6511(b)(2)(A) provides in part:

If the claim was filed by the taxpayer during the 3-year period prescribed in subsection (a), the amount of the credit or refund shall not exceed 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.

. . . . .

This second limitation provides that a claim for refund cannot be honored if the tax was paid three (3) or more years before the claim for refund was filed.7 This is the crux of defendant's motion to dismiss.

Defendant asserts that there is no dispute that the amounts sent to the IRS were "paid" prior to December 22, 1983, and the claim for refund is barred by the statute of limitations thereby making the dismissal of the complaint appropriate. It is true that there is no dispute concerning when the remittances were sent and received by the IRS, however, the court is unpersuaded by the assertion that the plaintiff's claim is barred by the provisions of § 6511(b)(2)(A).

In order to properly apply the above provision, the Court must determine (1) when was the claim for refund deemed filed and (2) when were the 1981, 1982, and 1983 taxes deemed paid? Having already disposed of the former question, December 22, 1986, the court now addresses the latter issue of when were the taxes deemed paid.

Ordinarily, the date on which the taxpayer remits funds in payment of a tax liability is the date of payment. Thus, in the usual case, where a taxpayer files a tax return and remits the amount shown due, the statute of limitations commences to run on that...

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