No. 96-1574

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

 TERESA MARIE PANTANI AND EDMUND L.  PANTANI,
 PETITIONERS

v.

MARGARET MILNER RICHARDSON,
COMMISSIONER OF THE IRS, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

WALTER DELLINGER
Acting Solicitor General

LORETTA C. ARGRETT
 Assistant Attorney General

GILBERT S. ARGRETT
BRIDGET M. ROWAN
Attorneys

Department of Justice 
Washington, D.C. 20530-0001
(202) 514-2217

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QUESTION PRESENTED

    Whether a remittance made by petitioners in con-
nection with a request for an extension of time to file
their income tax return was a payment of tax that
commenced the running of the statute of limitations
for a subsequent refund claim seeking recovery of
that payment.

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TABLE OF CONTENTS

Opinions below . . . . 1
Jurisdiction . . . . 1
Statutory provisions involved . . . . 2
Statement . . . . 4
Argument . . . . 7
Conclusion . . . . 9

TABLE OF AUTHORITIES

Cases:

Ameel v. United States, 426 F.2d 1270 (6th Cir.
1970) . . . . 7
Cohen v. United States, 995 F.2d 205 (Fed. Cir.
1993) . . . . 7
Ewing v. United States, 914 F.2d 499 (4th Cir.
1990), cert. denied, 500 U. S. 905(1991) . . . . 7 
Ford v. United States, 618 F.2d 357 (5th Cir.
1980) . . . . 9
Fortugno v. Commissioner, 353 F.2d 429 (3d Cir.
1965), cert. dismissed, 385 U.S. 954 (1966) . . . . 7
Gabelman v. Commissioner, 86 F.3d 609 (6th Cir.
1996) . . . . 6
Harden v. United States, 76 A.F.T.R.2d (P-H)
95-7980 (5th Cir. Nov. 30, 1995) . . . . 9
Moran v. United States, 63 F.3d 663 (7th Cir.
1995) . . . . 7
The Monrosa v. Carbon Black Export, Inc., 359
U.S. 180 (1959) . . . . 8
Thomas v. Mercantile National Bank, 204 F.2d
943 (5th Cir. 1953) . . . . 9
Weigand v. United States, 760 F.2d 1072 (l0th Cir.
1985) . . . . 6
Zeier v. IRS, 80 F.3d 1360 (9th Cir. 1996) . . . . 7

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IV

Statutes and rule:           Page

Internal Revenue Code (26 U.S.C.):
6151(a) . . . . 2
6511(b) . . . . 2
6511(b)(l) . . . . 2
6511 (b)(2) . . . .  2, 7
6511(b)(2)(A) . . . . 2,4, 5
6511(b)(2)(B) . . . . 3
6511(b)(2)(C) . . . . 3
6513(b)(2) . . . . 3, 6
Fed. R. Civ. P.11 . . . . 5

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In the Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-1574

TERESA MARIE PANTANI AND EDMUND L. PANTANI,
PETITIONERS

v.

MARGARET MILNER RICHARDSON,
COMMISSIONER OF' THE IRS, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINIONS BELOW

    The opinion of the court of appeals (Pet. App. Al-
A5) is unpublished, but the decision is noted at 104
F.3d 352 (Table). The opinion of the district court
(Pet. App. B6-B10) is reported at 902 F. Supp. 24.

JURISDICTION

    The judgment of the court of appeals was entered on
October 31, 1996. The petition for a writ of certiorari
was filed on January 29, 1997. The jurisdiction of the
Court is invoked under 28 U.S.C. 1254(1).

(1)

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2

STATUTORY PROVISIONS INVOLVED        

    1. Section 6151(a) of the Internal Revenue Code, 26
U.S.C. 6151(a), provides:               
  
  General rule. -Except as otherwise provided in
  this subchapter, when a return of tax is required
  under this title or regulations, the person
  required to make such return shall, without
  assessment or notice and demand from the Secre-
  tary, pay such tax to the internal revenue officer
  with whom the return is filed, and shall pay such
  tax at the time and place fixed for filing the return
  (determined without regard to any extension of
  time for filing the return).

    2. Section 6511(b) of the Internal Revenue Code, 26
U.S.C. 6511(b), provides, in relevant part:

Limitations on allowance of credits and refunds
       
(1) Filing of claim within prescribed period

    No credit or refund shall be allowed or made     
after the expiration of the period of limitation
prescribed in subsection (a) for the filing of a
claim for credit or refund, unless a claim for
credit or refund is filed by the taxpayer within
such period.

(2) Limit on amount of credit or refund

(A) Limit where claim filed within 3-year
period                    

    If the claim was filed by the taxpayer
during the 3-year period prescribed in sub-
section (a), the amount of the credit or refund
shall not exceed the portion of the tax paid     

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   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. If the tax was required to be paid by
   means of a stamp, the amount of the credit or
   refund shall not exceed the portion of the tax
   paid within the 3 years immediately
   preceding the filing of the claim.

     (B) Limit where claim not filed within 3-year
 period

  If the claim was not filed within such 3-
  year period, the amount of the credit or
  refund shall not exceed the portion of the tax
  paid during the 2 years immediately pre-
  ceding the filing of the claim.

    (C) Limit if no claim filed
  
      If no claim was filed, the credit or refund
  shall not exceed the amount which would be
  allowable under subparagraph (A) or (B), as
  the case may be, if claim was filed on the date
  the credit or refund is allowed.
       *****
    3. Section 6513(b) of the Internal Revenue Code, 26
U.S.C. 6513(b), provides in relevant part:
Prepaid income tax For purposes of section 6511
or 6512-
       *****
      (2) Any amount paid as estimated income
  tax for any taxable year shall be deemed to have

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been paid on the last day prescribed for filing ,
the return under section 6012 for such taxable
year (determined without regard to any exten-
sion of time for filing such return).         

* * * * *
STATEMENT

    1. On April 15,1987, petitioners remitted the sum
of $86,000 to the Internal Revenue Service.  This
amount represented their estimated liability for in-
come taxes for 1986.  The remittance accompanied pe-
 titioners' application for a four-month extension of
time for the filing of their 1986 tax return (Pet. App.
A3). Although the requested four-month extension
was granted, petitioners did not actually file their
1986 tax return until more than five years later, in
August 1992 (id. at B7-B8). The return that they
ultimately filed for 1986 showed a tax liability of
$54,476 and claimed an overpayment of $33,571.
    Petitioners sought to have the amount of the
overpayment claimed on their belated 1986 tax return
credited against their tax liability for 1987.  The
Service denied that request because the 1986 taxes
had been paid more than three years before the refund
claim was made and recovery was therefore barred by
the express terms of 26 U.S.C. 6511(b)(2)(A).
    2. Petitioners then commenced this tax refund
suit in federal district court. They asserted that
their refired claim was not untimely because the
$86,000 remittance that they made in April 1987-in
connection with their request for a four-month exten-
sion of time to file their 1986 return-was a "deposit"
rather than a "payment" (Pet. App. B9; see also id. at
A3).  Based on the theory that the 1987 payment was

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only a "deposit," petitioners claimed that the statute
of limitations on refund claims in 26 U.S.C.
6511(b)(2)(A) did not bar recovery in this case.
The United States moved for summary judgment,
and petitioners failed to make any timely response.
The district court granted summary judgment for the
government "absent objection" by petitioners (Pet.
App. B7).  The court thereafter refused petitioners'
request for reconsideration.  The court noted that pe-
titioners had offered no valid reason for not respond-
ing to the summary judgment motion and that their
"failure to interpose any opposition was not excused"
(ibid.).
    The district court also awarded sanctions against
petitioners because of the "false facts" that they had
asserted in the complaint (Pet. App. B7).  Petitioners
had alleged in the complaint that their refund claim
was timely because their return had been filed in
August 1987, within the period of the four-month
extension of time obtained in April 1987.  The district
court explained, however, that the tax return forms
that petitioners claimed to have filed in August 1987
did not even exist at that time and that it was
therefore clear that the return offered by petitioners
had been "backdated" by them (id. at B8).  The dis-
trict court awarded sanctions against petitioners
under Rule 11 of the Federal Rules of Civil Procedure
for their dishonest use of a fraudulent exhibit that
improperly purported to show a timely filing (id. at
B7-B8).
    3. The court of appeals affirmed (Pet. App. A1-A5).
The court first stated that it was not clear whether
petitioners sought to challenge the Rule 11 sanctions
entered by the district court but that, " [i]f they do, we
do not hesitate to find no abuse of discretion in the

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district court's award" (id. at A2). The court also
affirmed the judgment in favor of the United States
on the merits of the refund claim. 1.
    The court stated that the contention that the re-
mittance of $86,000 made by petititoners was a "de-
posit" rather than a "payment" was "meritless" (Pet.
App. A3).  The court noted that 26 U.S.C. 6513(b)(2)
expressly provides that any remittance submitted "as
estimated income tax" is to be "deemed to have been
paid on the last day prescribed for filing the return
* * * (determined without regard to any extension of
time * * * )."  The court agreed with the several
other appellate courts that have held that a remit-
tance submitted "as estimated income tax" is there-
fore a "payment" of tax, not a "deposit," as a matter of
law. Pet. App. A3, citing, e.g., Gabelman v. Commis-
sioner, 86 F.3d 609, 611-613 (6th Cir. 1996); Weigand
v. United States, 760 F.2d 1072, 1073-1074 (l0th Cir.
1985).
    The court further ruled that, even if the question
whether the remittance was a "payment" or a "de-
posit" should be determined as a question of fact,
rather than as one of law, petitioner's admissions
during discovery required the conclusion that the
remittance was intended as a "payment." Because-
both as a matter of fact and as a matter of law-the
remittance was a "payment" and not a "deposit," the
court held that its recovery is barred by the statute of

___________________(footnotes)
                  
1 The government did not urge the court of appeals to
affirm the award of summary judgment on the ground that
petitioners had waived their right to oppose the summary
judgment motion.  The court of appeals therefore addressed
the merits of the underlying tax issue and affirmed on that
basis (Pet. App.

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7

limitations contained in 26 U.S.C. 6511(b)(2) (Pet.
App. A5).

ARGUMENT

    The court of appeals correctly concluded that the
remittance of estimated taxes submitted by petition-
ers in April 1987 was a "payment" of taxes and that
their belated request for a refund was untimely.
Although various circuits have applied different tests
for determining whether a "payment" or "deposit"
has been made, and although that issue may in a
future case merit this Court's review, the present
case does not provide an appropriate vehicle for re-
solving these disparate analyses.
    1. The courts of appeals have not applied a uniform
analysis in determining whether a remittance of an
estimated tax liability is a "payment" of tax or a
"deposit." Some circuits have concluded, as the court
did in this case, that a remittance of an estimated tax
is a "payment" of tax as a matter of law, See Pet. App.
A3 (citing cases).  Other circuits have concluded that,
in determining whether a remittance is a deposit or a
payment, the appropriate inquiry in every case should
focus on the facts and circumstances under which the
remittance was made. See, e.g., Zeier v. IRS, 80 F.3d
1360 (9th Cir. 1996); Moran v. United States, 63 F.3d
663, 667-668 (7th Cir. 1995); Ewing v. United States,
914 F.2d 499,502-503 (4th Cir. 1990), cert. denied, 500
U.S. 905 (1991); Ameel  v. United States, 426 F.2d 1270,
1273 (6th Cir. 1970); Fortugno v. Commissioner, 353
F.2d 429 (3d Cir. 1965), cert. dismissed, 385 U.S. 954
(1966); Cohen v. United States, 995 F.2d 205 (Fed. Cir.
1993).  That inquiry typically seeks to determine the
taxpayer's "intent" in making the remittance.

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8

    The difference in the methods of analysis applied by
these circuits is not, however, material to the disposi-
tion of the present case.  In the courts below, petition-
ers asserted that, viewing the facts in their entirety,
their 1987 remittance of estimated taxes for 1986
should be treated as a "deposit" rather than as a
"payment." As the court of appeals observed, how-
ever, even if this issue were treated as a question of
fact-rather than as one of law-the remittance made
in this case "constituted a payment" based upon "Mr.
Pantani's own admission during a deposition" (Pet.
App. A4).  The court noted that Mr. Pantani acknowl-
edged that his intent in submitting the remittance
was "[t]o send in a payment" that would " be applied
toward [his] 1986 income tax liability" (ibid.).  As the
court noted, " [w]hat Mr. Pantani describes is a pay-
ment of estimated tax, not a deposit" (id. at A5).  That
factual conclusion is amply supported by the record
(id. at A4-A5), and any dispute about its correctness
does not present a question warranting this Court's
review.
    Whether the status of the remittance of estimated
taxes as a "payment" or as a "deposit" is to be deter-
mined as a matter of. law or as a matter of fact under
the standards discussed above, the same concision
would be reached in this case.  The present case
therefore does not provide an appropriate vehicle for
resolving the different methods of analyses applied by
these circuits on this issue.  See The Monrosa v.
Carbon Black Export, Inc., 359 U.S. 180,184 (1959).
    2. The Fifth Circuit has applied a different test in
determining whether a remittance is a "payment" or
a "deposit." Under the standard applied in that cir-
cuit, any remittance made before the underlying tax
liability is assessed is treated as a "deposit," rather

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9

than as a "payment," as a matter of law. See, e.g.,
Harden v. United States, 76 A.F.T.R. 2d (P-H) 95-
7980 (5th Cir. Nov. 30, 1995 (No. 95-40046)); Ford v.
United States, 618 F.2d 357 (5th Cir. 1980); Thomas v.
Mercantile National Bank, 204 F.2d 943 (5th Cir.
1953).
    In neither of the courts below, however, did peti-
tioners cite or rely upon the Fifth Circuit precedent
or the rule applied in that circuit.  In particular, peti-
tioners did not claim that their remittance was a
"deposit" as a matter of law because it was made
before the tax was assessed.   Instead, petitioners
argued only that their remittance was a "deposit" as a
matter of fact because their intent was not to make a
payment (Pet. App. A3-A4).  The argument that peti-
tioners now seek to raise in their petition by citing
Harden for the first time (Pet. 3) was not raised or
addressed below.  This case thus does not present a
suitable occasion for review of the singular rule
adopted and applied in the Fifth Circuit.

CONCLUSION

    The petition for a writ of certiorari should be
denied.

Respectfully submitted.

MAY 1997

WALTER DELLINGER
Acting Solicitor General

LORETTA C. ARGRETT
Assistant Attorney General

GILBERT S. ROTHENBERG
BRIDGET M. ROWAN
Attorneys