### I N THE UNI TED STATES COURT OF APPEALS FOR THE FI F TH CI RCUI T

No. 12-20803

EL PASO CGP COMPANY, L.L.C.; EL PASO, L.L.C., Plaintiffs - Appellants
v. UNITED STATES OF AMERICA, also known as United States Attorney’s Office, Defendant - Appellee

Appeal from the United States District Court for the Southern District of Texas

Before JOLLY, JONES, and BARKSDALE, Circuit Judges. E. GRADY JOLLY, Circuit Judge: The plaintiff and taxpayer, El Paso CGP (“El Paso”), appeals the district court’s grant of summary judgment to the defendant, the Internal Revenue Service (“IRS”) denying El Paso’s tax r e fund claim. El Paso contends that the IRS, in settling a tax dispute with El Paso involving a refund and s e t-off, failed to adhere t o the a ssessment and collection procedures provided b y the Internal Revenue Code (the “Code”) when setting o ff El Paso’s d e f i c i e n c y against its refund. This failure, in El Paso’s view, bars the IRS f rom collecting unpaid taxes from E l Paso. In response, the IRS argues that under the variance doctrine, the district court lacked jurisdiction over the refund suit or, alternatively, that the U n i t e d S t at e s C o u rto f A p p e a ls

F i ft h C i rc u i t 

### FI L E D March 18, 2014 Ly le W . Cay ce C lerk Case: 12-20803 Document: 00512564653 Page: 1 Date Filed: 03/18/2014No. 12-20803

IRS complied with the procedures relevant to the transaction. W e hold that the district court h ad jurisdiction over the claim, and that the IRS acted within its authority by setting off deficiencies against refunds that were owed to El Paso. Accordingly, we AFFIRM the judgment of the district court. I. This appeal is centered on El P aso’s 1986 corporate tax retur n . I n that return, El Paso claimed various investment tax credits. B e cause the amount of credits available to El Paso in 1986 exceeded the allowable limit f or the year, El Paso carried some of those credits forward to the 1987-1990 tax years, lowering El Paso’s tax l iability in those later y ears. The IRS later initiated an audit of El Paso’s 1986 return and disallowed some of the tax credits c laimed in that return. The disallowan c e of these credits for 1986 increased El Paso’s tax liability for that year. In April 2000, El Paso made an advance payment of approximately $51 million t o the I RS to cover the 1986-1990 tax deficiencies r esulting from the audit. In Marc h 2002 – as a result o f the audit and subsequent discussions between El Paso and the IRS – the parties executed a Form 870-AD (“Offer to Waive Restrictions on Assessment a n d C o ll e c ti o n o f T ax Deficiency and to Accept Overassessment”). I n this form, El Paso agreed to the assessment and collection of an income tax deficiency f or its 1986 t ax y ear a s a result of the i nvestment tax credit disallowance, but reserv e d t h e r ight to later f ile a claim for a refund for the 1986 tax year. In December 2002, El Paso exercised this right and filed a refund claim of $18,047,020 for the 1986 tax year (the “Refund Claim”). Under IRS policy, El Paso was allowed to replace the disallowed i n v e s tment tax c redits with other investm e n t tax c redits that had originally been carried forward to later tax years. This rearrangement of tax c redits resulted in an overpayment b y El Paso of approximately $18 million f or the 1986 taxable year. It also creat e d

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deficiencies in the 1987-1990 tax years as E l Paso now h ad fewer tax c redits to apply t o these years. Following El Paso’s Refund Claim, the parties entered into discussions to determine the amount of E l Paso’s overpayment for 1 986, as well

as the precise a mounts of the defi c i e n c i e s that had resulted in subsequent tax years. In 2005, El Paso and the IRS r e ached a tentative a g r e e m e n t on the amounts each party wa s d u e , or owed, for each y ear. They then executed another Form 870-AD and a Form 866-c (“Agreement as to Final D etermination of Tax Liability”). These two f orms, e xecuted in July 2 0 0 5 , c onstitute the “Closing Agreement” between the parties. Thu s , th e C l o s i n g Agreement set out the final determination of the amount El Paso overpaid for 1 9 8 6 a s w e ll as the amount of the liabilities that El Paso owed for the 1987-1990 tax years. In September 2005, the IRS m ade a partial payment of the 1986 refund amount to El Paso. The IRS, however, withheld the balance of the refund amount and informed El Paso that the additional money would be used to satisfy the d eficiencies for the years 1987-1990 laid out in the Closing Agreement. El Paso received an additional a mount from the I RS in November 2005 after the parties agreed that the IRS had used an i mproper start date in calculating the interest due El Paso. A year after the Closing Agreement was executed, in August 2006, El Paso sent a precisely timed memorandum to the IRS claiming that the deficiencies for 1987-1990 must be refunded to El Paso because the IRS had failed p roperly to

assess those deficiencies before the just-expired one-year s tatute of limitations. El Paso argued th at because the default statutory period of limitations h ad run, the IRS had to follow the mitigation rules ( allowing for the reopening of a closed tax year through an assessment within one year of a closing agreement) in order to collect deficiencies from those years. E l Paso took the position that, because the IRS had failed to follow these mitigati o n procedures, the IRS must refund the m o n ey the I RS had retained to offset El Paso’s liabilities, as provi ded and

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agreed to i n the Closing Agreement. The IRS treated this memorandum as an informal refund claim and denied it. I I. El Paso filed this r efund suit in the U.S. D istrict Cour t for the Southern District o f Texas in December 2010. In m oving for summary j udgment, the IRS made two arguments to the district court. First, the IRS argued that the district court lacked jurisdiction over El Paso’s claim. Second, the I RS argued that if the district c ourt had jurisdiction, the IRS was entitled to offset the deficiencies from 1987-1990 against El Paso’s 1986 overpayment. The district court referred the c a s e t o a magistrate judge and, after hearing oral arguments, the magistrate judge i ssued a recommendation that the dist r i c t c o u r t grant the IRS’s motion for summary j udgment. The magistrate judge concluded that the district court did not have jurisdiction over the claim for two reasons. First, the magistrate judge n oted that I.R.C. § 7 422(a) requires that a taxpayer first file a timely claim for refund with the IRS in order to establish district court jurisdiction over the r efund s uit. The magistrate judge

r e c o m m e nded r ejecting El Paso’s argument that the 2002 Refund Claim supported jurisdiction, noting that the R e f u n d C laim h ad been disposed with finality by the IRS in the 2005 Closing Agreement. 1 As an alternative jurisdictional ground f or dismissal of the refund suit, the magistrate judge suggested that the district court lacked jurisdiction because El Paso’s suit contravened the v a r i a n c e doctrine. T o assert a court’s j urisdiction

over a claim f

or refund, the variance doctrine requires that the grounds for recovery advanced in federal court must be the same a s advanced before the IRS. The magistrate judge concluded that the grounds for recovery presented in federal court arose from th e IRS’s s et-off, an act th at occurred three years after

1 El Pas o exp res sly d is avow ed the 2006 m em orand um as a bas is for juris d iction. 4 Case: 12-20803 Document: 00512564653 Page: 4 Date Filed: 03/18/2014No. 12-20803

the filing o f El Paso’s Refund Cla i m before the IRS. Thus, El Paso’s Refund Claim could not have rested on the same grounds for recovery as the federal suit because those grounds for recovery had not occurred at the time of the Refund Claim. In addition to recommending that the dist rict court hold that it lacked jurisdiction, the magistrate judge addressed the merits of El Paso’s claim. The magistrate judge again recommended that the district court s ide with the IRS. The magistrate judge concluded that Supreme Court precedent allowed the IRS to u se tax deficiencies to offset refund a mounts which were owed to the t axpayer. Additionally, the magistrate judge recommended that the Closing Agreement be treated a s a “package d e a l

. ” That is, El P aso should not be allowed to get the bene f i t s of the deal (the refund) without also shouldering the burdens (the liabilities) it imposed. El Paso objected to the recommendations of the magistrate judge, but the district court nonetheless adopted them and entered judgment for the IRS. El Paso then brought this appeal. III. This case presents a question of whether the IRS complied w it h t h e procedure established b y the Code. El Paso readily admits that it o wes the IRS money. E l Paso, however, argues that the Co d e a n d i t s accompanying regulations lay out the steps that the IRS must take in order to be able to collect that money. Before determining whether the IRS adequately followed these steps, we must first address the jurisdictional challenges that the IRS raises. Subject-matter jurisdiction presents a question of law that this court reviews de novo. See Wagner v. United S tates , 545 F.3d 298, 300 (5th C ir. 2008). Suits f o r tax r efunds are governed by I.R.C. § 7 422(a), which requires that a claim for r efund comply with “the regulation s o f the Secretary established in
pursuance thereof.” The relevant regulation requires that a claim for refund “set

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forth in detail each ground upon which a credit o r refund is claimed and facts sufficient to apprise the Commissioner of the exact basis the r e o f

. . . .” Treas. Reg. § 301.6402-2(b)(1). This regulation codifies the variance doctrine. Under this doctrine, “a taxpayer is barr e d f r om raising in a refund suit grounds for
recovery which had not previously been s et forth in its claim for a refund.” Mallette Bros. Const. Co., I nc. v. United S tates , 695 F.2d 1 45, 155 (5th Cir. 1983). “The alleged e rror must be clearly and specifically set forth in the r efund claim. A generalized p lea of e rror wil l n o t s u f f i c e .” Id

. “All grounds upon which a taxpayer relies must be stated in the original claim for refund.

. . . Anything not raised at that time c annot be raised later in a s uit for refund.” Alabama ByProducts Corp. v. Patterson , 258 F.2d 892, 900 (5th Cir. 1958). Ap p lyi n g thi s a d mittedly explicit and unyielding language , th e I R S a s s e rt s that this court h as no jurisdiction to litigate this 2 002 Refund Claim because El Paso now raises on appeal grounds that w ere not raised before the IRS. I n short, this s uit is barred by the variance doctr i n e . The IRS points out that El Paso’s Refund Claim, b ecause i t was filed in 2002, c o uld not possibly h ave raised the argument it n ow adv a n c e s because El Paso’s argument r aises IRS conduct occurring three years later – that is, the IRS’s 2005 offset. Although the variance doctrine h a s been expressed i n uncompromising terms, courts have not always been so dogmatic i n applying it

. Sensibly, courts have e xplicitly c arved o u t an exception in cases where the Government’s unilateral action itself creates the s ubstantial v ariance. See, e.g., Shore v. United S tates , 26 C l. Ct. 826, 8 28-29 (19 92) (rejecting a variance doctrine argument where the G overnment c rea t e d t he substantial v ariance from the initial claim); Brown v . U nited States , 427 F.2d 5 7, 62 (9th C i r . 1970) (holding that taxpayers “cannot be foreclosed from responding” t o new issues created by the Government after the filing of the initial refund claim).

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The IRS correctly points out that these cases involve situations in which the Government r aises new defenses or c ounterclaims for the first t ime after the claim is in litigation. In allow i n g t he taxpayer flexibility to respond, courts recognize that the G o vernment cannot use the variance doctrine to straightjack e t the taxpayer when the Government unexpectedly changes its litigation strategy. We see no reason why the r ationale unde r l y i n g t h is exception to the variance d octrine doe s not a pply here. El Paso filed a refund claim based on the i nformation it had in 2 002. The IRS t ook actions i n 2005 in which El Paso was refunded some of i t s o v e r payment, but n ot all because deficiencies in other years were offset against that amount due El Paso. El Paso has now brought this s uit to obtain the entire a mount that it claimed in its 2002 Refund Claim. A s in t h e c ases cited above, the variance doctrine does not bar this action when the only v ar i a n c e i n El Paso’s claim arises from alleged IRS failures to follow proper procedures o f which El Paso was unaware when those failures occurred. F or these r e asons, w e a re unwilling to apply the variance doctrine to deprive the taxpayer from ass e r t ing federal court jurisdiction o ver this suit for refund. 2 IV. So, we have jurisdiction over this refund suit, w h ich brings us to the merits of El Paso’s claim. We review a d i s t r ict court’s grant of summary judgment de novo. Kornman & Associates, Inc. v. United States , 527 F.3d 443,

2 The IRS als o argues that this court does not have juris d iction over this cas e bas ed on I. R. C. § 7422( a) , w hich requires that a taxp ayer f ile a tim ely ref

und claim p rior to f

iling suit f or the ref

und

. The IRS argues that E l Pas o has not com plied w ith this section becaus e the only ref und claim that coulds up p ort juris d iction, the 2002 Ref und Claim , w as extinguis hed
w ith finality by the Clos ing Agreem ent. In our view , this cas e can p rop erly be characterized as s eek ing to enf

orce the term s of the Clos ing Agreem ent. El Pas o’s central claim is that the IRS d id not com p ly w ith the ap p li c a b l e p r o v i sions of the C od e w hen enf orcing the Clos ing Agr e e m e n t

. B e caus e even the IRS ad mits that we have juris d iction over a s uit to enf orce a Clos ing Agreem ent, w e need not d eterm ine w hether the Ref und Claim qua ref

und claim w as extinguis hed by the Clos ing Agreem ent. 7 Case: 12-20803 Document: 00512564653 Page: 7 Date Filed: 03/18/2014No. 12-20803

4 5 0 (5th Cir. 2 008). El Paso’s argument on the merits i s straightforward: The I R S is required to assess a tax within the applicable period o f l imitations; th e IRS failed to do this; and by failing to do so, the IRS has no authority to collect

or offset the tax deficiencies. El Paso is therefore entitled to a full refund that includes the deficiencies that were set off; or reduced to numbers, E l Paso is due $28,894,529 with statutory interest. This is the a rgument that the I RS defends against. A. The IRS begins its response by arguing that t h e C o d e p r ovides express authority for this set-off. The language of the Closing Agreement makes clear that the parties were agreeing on the amount of liabilities, and the Code allows the I RS to set off liabilities against overpayments. See I .R.C. § 6402(a) (“In the

case of any overpayment, the Secretary, within the a pplicable period of limitations, may credit the amount of such overpayment

. . . against any liability.

. . .”). Because an assessment is not required to create a tax liability, the IRS asserts th at the o ffset of the tax liability against the refund that was due El Paso was proper w i t h o u t a n assessment. The IRS’s argument, h owever, ignores the restriction on th is power to offset liab i l i t i es for tax periods outside the statutory period of limitations. The tax years f o r w h i c h the deficiencies arose (1987-1990) were closed tax years. The Code, however, does provide a particular m ethod for the IRS to reopen closed tax years – the m itigation provisions. As they apply here, these mitigation provisions allow the IRS to reopen closed tax years following a closing

a g r e ement between the parties b y assessing deficiencies or refundi n g overpayments within one year of the closing agreement

. Se e I

. R.C. §§ 1311-1314. If the IRS complied with the mitigation p rovisions, which w ould have reopened the statute of limitations f or the barred y ears, then § 6402(a) could provide the

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IRS the statutory authority for th e set-off. We n ow turn to the question of whether the IRS complied with the mitigation provisions. 3 B. The IRS c ontends that it complied w i t h the mitigation provisions, citing I

. R

. C. § 1314(b), which provides that an adjustment (the reopening o f a c l o s e d ta x y e a r) can be made by “assessing and collecting, or refunding or crediting,” the amount of the adjustment within one year of the Closing Agreement. While agreeing that § 1314(b) provides the method by which the IRS could reopen the closed tax years, E l P aso rebuts the IRS a rgument, contending t h a t the IRS failed t o properly do so in this case. W e a re now at the c rux of the disagreement between the parties. Section 1 3 1 4 (b ) allows the I RS to perform an adjustment by either “assessing and collecting” o r “refunding o r cred i ting” the amount of the adjustment. The parties agree that “assessin g a n d c ollecting” applies to collecting deficiencies

– that i s, the I RS must “assess and collect” deficiencies

– and the “refunding or crediting” a pplies to overpayments – that i s, the IRS must “refund or credit” overpayments. T h e d i s p u te is which of these two avenues

– “assessing and collecting” or “refunding or crediting”

– p r o v i des the proper method for the IRS to deal with El Paso’s claim.

3 The IRS argued , bef ore both this court and the d is trict court, that the m itigation p rovis ions d o not ap p ly here and ins tead contend s that this ap p eal s hould be d ecid ed on the ground s that the s et- of f w as w ithin the IRS’s authority in the light of the C los ing Agreem ent betw een the p arties

. In the alternative, the I R S m aintains that, if the m itigation p rovis ions d o ap ply, it has com p liedw ith thos e p rovis ions

. El Pas o con t e n d s that the m itigation p rovis ions ap p ly, the IRS failed to com p ly w ith them , and El Pas o is theref ore entitled to the ref

und

. We need not res olve this dis p ute f or the f ollow ing reas on: Whether the m itigation p rovis ions ap p ly or not, the I RS prevails becaus e it com p lied with the mitigation p rovis ions , and El Pas o s up p lies no alternative ground s on w hich it s hould p revail notw iths tand ing this com p liance. We theref ore ad dres s El Pas o’s argum ents as s um ing w ithout d ecid ing the m itigation p rovis ions ap p ly to this s ituation. 9 Case: 12-20803 Document: 00512564653 Page: 9 Date Filed: 03/18/2014No. 12-20803

The IRS argues that it c an look at the entire period covered by the Closing Agreement (1986-1990), determine whether for that entire period there was a net deficiency o r a net overpayment, and then comply w ith the m itigation provisions by either assessing and collecting (if the total is a net deficiency), or refunding or crediting (if there is a net over p a y m e n t)

. Because there is a net overpayment h e r e , the IRS contends, as discussed i n n ote 3, that it c omplied with § 1314(b) by refunding that amount to El P aso within one year of the Closing Agreement. In c o n t r a s t , El Paso contends that the IRS is required t o look at each individual tax y e ar a nd, in i n d i v i dual years where there was a deficiency, (i.e. 1987-1990) “ assess and collect” the taxes for each year indiv i d u a l ly ; similarly, El Paso argues that the “refund or credit” language is only relevant for individual tax years in which there is an overpayment. Because the IRS failed to assess and collect the deficiencies for the 1987-1990 taxable y e ars within one year of th e C l o s i n g Agreement, El Paso contends that the IRS has no claim to those amou n t s . T he question is whether the I RS, when acting on the

o v e r p a yments and deficiencies agreed to in a closing a greement, must act on each taxable year individually or may compl y w i t h § 1314(b) b y treating the Closing Agreement as a “ p a c k a ge d eal.” S aid another way, the issue is: what does § 1314(b) require the IRS to do here. 1

. A statute’s meaning b egins with its plain langu a ge. See Carder v. Continental Airlines, Inc

. , 636 F.3d 172 , 1 75 (5th Cir. 2011). The relevant portion of § 1314(b) states: The adjustment authorized in section 1311(a) shall be made by assessing and collecting, o r refunding or c r e d i t ing, the amount thereof in the same m anner as if it were a d e ficiency determined by the S ecretary with respect to the taxpayer as to whom the error was made or an overpayment claimed by such taxpayer, as the c ase may

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be, for the taxable year or years with respect to which a n amount is ascertained under subsection (a). . . . (Emphasis added.) In our view, this language allows a n a d j u s t m e nt c overing multiple tax years. We reach this conclusion acknowledging that the amount of the adjustment must be determined for each individual taxable year. See I.R.C. § 1314(a) (“In computing the amount o f an adjustment u n der this pa r t t h e r e shall first b e ascertained the t ax previously determined for the taxable year with respect to which the error was made.”) (emphasis added). In our view, the language of § 1314(b ) a l l o ws the IRS t o make one total a djustment, c overing multiple tax years; but the o ne adjustment amount first must be determined on the basis of e ach tax year separately. This is precisely what o ccurred here. The Closing Agreement lays out the a djustment a mounts for each i ndividual tax year, and the IRS implemented the adjustment for all th e years by refunding to El Paso the amount of the net overpayment. 4 2

. That the plain language of § 1314(b) calls for deficiencies to be “assess[ed] and c ollect[ed]” further supports t h e IRS’s position b y tying together an assessment a nd collection. This con n ection suggests that the assessment is meant to occur in cases where collection activiti e s might be required. If the Closing Agreement contains a net overpayment

– a s it does h ere – the IRS will not have to collect the deficienci e s for the individual years because the IRS already holds the taxpayer’s money to cover the deficiency. This connection between an assessment and the I RS’s collection p owers is

a p p arent throughout the Code, including i n the regulations related to closin g agreements. See Treas. Reg. § 301.7121-1 ( d) (2) (“Any tax or deficiency in tax

4 H ere, the net overp aym ent f rom the Clos i n g A gr e e m e nt w as treated as a s ingle am ount. As El Pas o had no other outs tand ing taxes d ue, there w as no occas ion f or the IRS to “cred it” any am ount of the overp aym ent. Thus , the IRS ref und ed to El Pas o the f ull am ount d eterm ined by the Clos ing Agreem ent. 11 Case: 12-20803 Document: 00512564653 Page: 11 Date Filed: 03/18/2014No. 12-20803

determined pursuant to a c losing agreement shall b e assessed and collected, and any overpayment determined pursuant thereto shall be credited or refunded.

. . .”). Thi s c o n n e ction has also been recognized by courts. See Philadelphia & Reading Corp. v. United States , 944 F .2d 1063, 1064 n.1 (3d Cir. 1991) (“[I]t is the assessment, and only the assessment, that sets in motion the collection powers o f the IRS.

. . . ”). From these authorities, i t i s c l e a r that a primary function of an assessment is to lay the n ecessary groundwork for the IRS to exercise its collection authority. That is not t o say, dogmatically, that an assessment i s only required when the IRS uses it s formal c ollection powers. It does, however, f

u l ly support the I RS’s argument that an assessment is

unnec e ssary when the IRS, as here, already holds adequate money from the taxpayer to cover the deficiencies. 3

. El Paso argues a gainst this reading of the st a t ute, contending that it violates the established norm that tax years must be treated as insular units. This insulation p revents the IRS from commingling o ver p ayments and deficiencies across tax years to arriv e a t a net amount due to the taxpayer or

o w e d t o t h e IRS. See id. at 1066 (“Under the relevant tax laws, however, t h e IRS is not empowered to arrive at a net deficiency or overpayment a nd send the taxpayer a bill or r efund for the n et amount. I nstead, th e IRS must separately

assess e ach year’s d eficiency and separately refund e ach year’s overpayment.”). We have already recognized the general rule that each i n dividual tax year must be treated indi v i dually. When the Government f inds deficiencies in one tax year and overpayments in another, it may not, on its own i n i t i a t i v e a nd without proper assessment, send the t ax payer a single bill for the net deficiency. In holding that the IRS acted permissibly in this case, w e are not c asting doubt

on this principle, or on the opinion o f the Third Circuit in Philadelphia & Reading

. To be sure, however, this case fits within an exceptio n t o t h e broad

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principle that t h e Third Circuit recognized: “[T]he taxpayer and the IRS can reach an a greement t h a t permits the I RS to pay out or recover only the net overpayment or deficiency.” Id

. Here, the Closing Agreement permitted the IRS to pay out only the net overpayment. The Closing Agreement did not require the IRS to refund the entire overpayment to E l Paso, then require the IRS to engage in a s eparate effort to collect the deficiencies through f o r m a l collection procedures. E l Paso acknowledges this point. It o n l y a rgues that the IRS did not take the n ecessary steps, i.e. assessing year-by-yea r t he tax deficiencies, prior to refunding to E l Paso its overpayment, an overpayment which h ad been reduced by the set-off d eficiencies. 5 This agreement fits th is c a se into the exception recognized by the Third Circuit. V. Our holding is not a broad one. W e s imply hold that where t h e IRS and

a t axpayer e nter i nto a closing agreement, which se t s out the liabilities and

ov e rp ay m e nts of the taxpayer, the IRS c an comply w ith the mitigatio n p r ovi s i o n s of the Code b y “ a s sessing and c ollecting” any net deficiency f rom the years covered by t h e c l o s i n g agreement, or by “refunding or crediting” any net overpayment for those years. This case involves “refunding” an overpayment. Moreover, the Government refunded El Paso’s n et o verpayment within one year of the execution of the Closing Agreement. The “refunding” thus occurred within the applicable s tatutory period of limitations a s per the mitigation provisions. 6

5 The tim e line of the events of this cas e mak es evid ent that El Pas o is only arguing the p roced ural p oint and not the IRS’s general authority und er the Clos ing Agreem ent to net out the p aym ents

. The I RS m ad e the partial ref und to El Pas o in Sep tem ber and N ovem ber 2005; El Pas o d id not rais e a challenge to the s et- of f until Augus t 2 0 0 6

. H a d E l P as o not been exp ecting the s et- of

f, it is obvious to us that up on receiving s everal m illion d ollars les s than e x p e c t ed , El Pas o w ould hard ly have w aited s o long to rais e the is s ue. As exp lained at or a l argum ent, El P as o only rais ed a challenge to the s et- of f up on f ind ing out that an as s es s m ent of the d ef

iciencies had not tak en p lace.

6 Becaus e we hold that the IRS com p lied w ith the m itigation p rovis ions , we neednot reach the IRS’s other argum ents in s up p ort of its actions

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For the f oregoing reasons, we hold that we have jurisdiction over El Paso’s refund claim and t hat the IRS acted within its authority in applying El Paso’s deficiencies to offset its overpayment. Accordingly, the judgment of the district court is AFFIRMED.

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