*

Honorable John R. Gibson, Senior U.S. Circuit Judge for the

Eighth Circuit, sitting by designation. 

United States Court of Appeals,

Eleventh Circuit.

No. 94-6606.

MUTUAL ASSURANCE, INC., Plaintiff-Appellee,

v.

UNITED STATES of America, Defendant-Appellant.

July 3, 1995.

Appeal from the United States District Court for the Northern

District of Alabama. (No. CV 93-H-952-S), James Hughes Hancock,

Judge.

Before HATCHETT and EDMONDSON, Circuit Judges, and GIBSON*

, Senior

Circuit Judge.

HATCHETT, Circuit Judge:

In this tax refund case, we affirm the district court's ruling

that the appellee's, Mutual Assurance, Inc., amendment to a timely

filed administrative claim for refund could serve as the

jurisdictional basis for maintaining this action.

FACTS

Mutual Assurance, Inc. (Mutual Assurance), the appellee, an

Alabama corporation whose principal place of business is located in

Birmingham, Alabama, is a property and casualty insurance company

specializing in medical malpractice insurance. The Internal

Revenue Code allows Mutual Assurance to determine its taxable

income through deductions, including its "losses incurred,"

including unpaid loss reserves, from its gross revenues. In 1986,

Congress enacted section 846 of the Internal Revenue Code, 26

U.S.C. § 846, which required insurance companies such as Mutual
Assurance to discount to present value their unpaid loss reserves

attributable to current as well as prior tax years.

In response to problems that arose in the industry, the

Internal Revenue Service (IRS) subsequently promulgated Revenue

Procedure 91-21 that provided certain insurers the opportunity to

elect to use a special schedule of discount factors (the Composite

Schedule P factors) to determine their unpaid loss reserves. In

the case of Mutual Assurance, the election led to a larger loss

reserve, a larger deduction, and a lower tax liability. The relief

set forth in Revenue Procedure 91-21 was available for all years

for which the statute of limitations on filing refund claims were

still open.

Mutual Assurance reports its income taxes on the basis of a

calendar year, and the earliest open year was 1987. Mutual

Assurance filed its 1987 tax return on September 10, 1988. Section

6511(a) of the Internal Revenue Code (26 U.S.C.) requires a

taxpayer to file an administrative claim for refund with the IRS

within three years from the time the taxpayer files the return or

two years from the time the tax is paid, whichever period expires

later. Therefore, Mutual Assurance had until September 10, 1991,

to file a claim for a refund of its 1987 taxes. On April 5, 1991,

Mutual Assurance filed claims for refund for its 1987, 1988, and

1989 tax years using Revenue Procedure 91-21 as the basis for the

refunds claimed. The amount claimed for 1987 was $495,728. On May

14, 1991, the IRS allowed Mutual Assurance's claim for the 1987 tax

year and refunded to the company $495,728. On September 19, 1991,

nine days after the expiration of the three-year period for seeking
refunds for tax year 1987, the IRS conducted a field examination of

Mutual Assurance's claims and discovered a miscalculation of the

company's unpaid loss reserves for the 1987, 1988, and 1989 tax

years. This miscalculation caused Mutual Assurance to understate

the amount of its overpayment in the original claim for a refund

for tax year 1987 by $489,601. As a result, in addition to the

money already refunded, Mutual Assurance overpaid $489,601.

On September 26, 1991, Mutual Assurance filed an informal

claim for refund for each of the three years. The IRS allowed the

claims for refund for 1988 and 1989, including the additional

amounts claimed in the informal claim of September 26, 1991. The

IRS disallowed Mutual Assurance's claim for the additional $489,601

as a result of the 1987 overpayment. On April 23, 1993, Mutual

Assurance filed a formal claim for refund for tax year 1987

requesting a refund of $489,601. In letters dated April 29, 1993,

and May 6, 1993, the IRS notified Mutual Assurance that it was

disallowing both the company's informal and formal claim for an

additional refund for tax year 1987 due to Mutual Assurance's

failure to timely file an administrative refund claim pursuant to

I.R.C. § 6511(a). Mutual Assurance instituted this action on May

12, 1993.

PROCEDURAL HISTORY

On July 16, 1993, the government filed a motion to dismiss the

complaint for lack of subject matter jurisdiction. The government

relied on I.R.C. § 7422 that bars an action for recovery of federal

taxes unless a claim for refund has been duly filed. The

government then invoked I.R.C. § 6511's three-year period for
filing a refund claim and argued that because the only claim filed

within the three-year period the IRS allowed, no timely claim could

serve as the basis for this action for refund. For that reason,

the government argued, the district court lacked jurisdiction over

this lawsuit.

In an order dated October 4, 1993, the district court denied

the government's motion. The court ruled that Mutual Assurance's

original refund claim for tax year 1987, filed on April 5, 1991,

provided a sufficient jurisdictional basis for the refund lawsuit

for the $489,601. In rejecting the assertion that Mutual

Assurance's right to a refund of taxes is limited to the amount in

its claim for refund, the court concluded that once a taxpayer

files a claim for refund, the IRS is required to compute the

correct tax. The court therefore concluded that Mutual Assurance's

April 5, 1991 claim for refund was a sufficient basis to allow it

to recover the entire amount of its overpayment. Alternatively,

the district court found that Mutual Assurance's informal claim for

refund of September 26, 1991, should be viewed as an amendment of,

and should relate back to, its timely April 5, 1991 claim even

though Mutual Assurance's earlier claim had already been allowed in

full. The court reasoned that Mutual Assurance's amendment

altering the amount of recovery was based on the same grounds as

the original claim.

Because the government's sole defense to the relief sought by

Mutual Assurance was stated in its motion to dismiss, the parties

stipulated to the entry of final judgment in Mutual Assurance's

favor. Pursuant to that stipulation, the district court entered
judgment on May 11, 1994. The government appeals.

CONTENTIONS

The government contends that once it allowed Mutual

Assurance's April 5, 1991 request for a $495,728 refund for tax

year 1987, that claim was rendered moot; and nothing more was

pending before the IRS with respect to tax year 1987. Therefore,

at the time the statute of limitations expired on September 10,

1991, an administrative refund claim that could serve as the

jurisdictional basis for a refund suit did not exist. The

government also argues that the district court's alternative

holding is contrary to a long line of cases holding that once a

refund claim has been satisfied, it can no longer be amended.

Mutual Assurance argues that the district court's judgment

should be affirmed because its April 5, 1991 refund claim provided

the IRS with sufficient notice to grant relief in the correct

amount. Mutual Assurance also argues, alternatively, that it was

entitled to amend the original claim to state the correct amount.

ISSUE

The sole issue raised on this appeal is whether Mutual

Assurance's April 5, 1993 timely filed refund claim for the 1987

tax year may be amended after the expiration of the statute of

limitations because the amount the government refunded was less

than the full amount of the overpayment.

DISCUSSION

 The subject matter jurisdiction of the district court is a

question of law subject to de novo review. United States v. Perez,

956 F.2d 1098 (11th Cir.1992). Under well-settled principles of
 1

Section 7422 provides, in relevant part:

(a) .... No suit or proceeding shall be maintained in

any court for the recovery of any internal revenue tax

alleged to have been erroneously or illegally assessed

or 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.

I.R.C. § 7422(a). 

sovereign immunity, the United States is immune from suit unless it

consents to be sued. United States v. Dalm, 494 U.S. 596, 608, 110

S.Ct. 1361, 1368, 108 L.Ed.2d 548 (1990). Moreover, "[t]he terms

of [the United States's] consent to be sued in any court define

that court's jurisdiction to entertain the suit." United States v.

Sherwood, 312 U.S. 584, 586-87, 61 S.Ct. 767, 769, 85 L.Ed. 1058

(1941). A statute of limitations requiring that a suit against the

government be brought within a certain period of time is one of

those terms. Dalm, 494 U.S. at 608, 110 S.Ct. at 1368.

 The United States has waived its sovereign immunity in order

to allow taxpayers to file actions seeking tax refunds: "The

district courts shall have original jurisdiction ... of [a]ny civil

action against the United States for the recovery of any

internal-revenue tax alleged to have been erroneously or illegally

assessed or collected...." 28 U.S.C. § 1346(a)(1). Section 7422

of the Internal Revenue Code (26 U.S.C.) provides, however, that a

suit for a refund of federal taxes may be maintained only if an

administrative claim for refund has been "duly filed."1

 Courts

have consistently held that a taxpayer's filing of an

administrative refund claim with the IRS in accordance with the

relevant provisions of the Internal Revenue Code is a
jurisdictional prerequisite to the maintenance of a tax refund

suit. E.g., Dalm, 494 U.S. at 602, 110 S.Ct. at 1365; Charter Co.

v. United States, 971 F.2d 1576, 1579 (11th Cir.1992). Section

6511(a) of the Internal Revenue Code (26 U.S.C.) requires a

taxpayer to file an administrative claim for refund with the IRS

"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." I.R.C. § 6511(a). A taxpayer who

fails to file an administrative claim for refund within the period

set forth in I.R.C. § 6511(a) is barred from filing a refund suit

in the district courts. Dalm, 494 U.S. at 609-10, 110 S.Ct. at

1368-69; Vintilla v. United States, 931 F.2d 1444, 1446, reh'g

denied, 942 F.2d 798 (11th Cir.1991).

 The government argues that once it satisfied Mutual

Assurance's timely filed, April 5, 1991 refund claim for tax year

1987 and paid the amount requested, Mutual Assurance no longer had

an administrative refund claim for tax year 1987 pending before the

IRS. Therefore, when Mutual Assurance filed an amended claim for

refund on September 26, 1991, beyond the three-year period for

filing refund claims for tax year 1987, no refund claim existed

that could be amended. The government finds support for this

proposition in a line of cases holding that an accepted claim is no

longer in existence and is, therefore, not a basis for filing an

amended claim. E.g., Edwards v. Malley, 109 F.2d 640, 645 (1st

Cir.1940); New York Trust Co. v. United States, 87 F.2d 889, 891

(2d Cir.), cert. denied, 301 U.S. 704, 57 S.Ct. 937, 81 L.Ed. 1359
(1937). We disagree.

In Bemis Brothers Bag Co. v. United States, 289 U.S. 28, 53

S.Ct. 454, 77 L.Ed. 1011 (1933), the taxpayer's timely filed claim

for refund raised three grounds for relief and set forth facts and

arguments in support of each basis for the claim. The IRS denied

the claim after rejecting only one of the three grounds the

taxpayer presented. After the statute of limitations for filing

refund claims had expired, the taxpayer filed an amended claim that

asserted no new theories for relief, but merely requested that the

IRS consider in the alternative the grounds for relief stated in

its timely filed claim. The IRS reconsidered the taxpayer's claim,

agreed that an overpayment had occurred, but refused to allow the

claim on the ground that the statute of limitations had run. The

Supreme Court, however, held that the taxpayer could amend its

prior claim for refund.

 In allowing the amendment, the Court reasoned that the

taxpayer had not set forth a new theory of recovery; rather, the

taxpayer was merely "asking the Commissioner take action upon

discoveries already in the making or perhaps already made." Bemis

Brothers, 289 U.S. at 35, 53 S.Ct. at 457. Bemis Brothers compels

us to reject the government's argument that once it paid Mutual

Assurance the requested amount of the refund, the claim ceased to

exist. In Bemis Brothers, the Court expressly rejected the prayer

for relief test as a basis for determining the limits of

permissible amendments: "the suitor shall have the relief

appropriate to the facts that he has pleaded, whether he has prayed

for it or not." Bemis Brothers, 289 U.S. at 34, 53 S.Ct. at 456.
 2

During oral argument, the government conceded that Mutual

Assurance's April 5, 1991 claim for refund provided it with a

sufficient basis for accurately computing the exact amount of the

1987 overpayment. 

This case is similar to Bemis Brothers in that Mutual Assurance's

April 5, 1991 refund claim for tax year 1987 contained a defective

prayer for relief: it requested an overpayment refund in the

amount of $495,728 when the actual overpayment for that year was

$985,329. In addition, the amendment asserted the same ground for

relief as the original claim, the Composite Schedule P factors.

Therefore, "the claim as amended does not differ in matter of

substance from the claim as first presented." Bemis Brothers, 289

U.S. at 33, 53 S.Ct. at 456. Moreover, Internal Revenue Service

Revenue Ruling 81-87, provides that "in order to ascertain whether

there has been an overpayment of tax, adjustments that decrease the

tax must be considered as well as adjustments that increase the

tax." Rev.Rul. 81-87, 1981-1 C.B. 580. Rev.Rul. 81-87, therefore,

required the IRS to correctly compute the amount of Mutual

Assurance's 1987 overpayment. In Bemis Brothers, the Court noted

that where the basis of the taxpayer's claim for refund allows the

IRS to "learn[ ] ... that the assessment is erroneous in a

determinable amount. Justice will then require that it be changed

to that extent." We must allow the amendment because Mutual

Assurance's original claim for refund for tax year 1987 was based

on recomputing its unpaid loss reserves using the Composite

Schedule P factors. If the IRS had properly applied these discount

factors it would have arrived at the correct amount of Mutual

Assurance's overpayment.2
 3

Decisions of the United States Court of Appeals for the

Fifth Circuit handed down prior to the close of business on

September 30, 1981, are binding precedent on the Eleventh

Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th

Cir.1981) (en banc ). 

The government relies on a decision of the United States Court

of Claims in Union Pacific Railroad Co. v. United States, 389 F.2d

437 (1968), in which the court stated "[t]he disposition of a

taxpayer's refund claim by allowance of the amount requested in

full ... precludes an amendment asserting an additional amount

after the expiration of the statutory period for refund." 389 F.2d

at 447. We respectfully submit that this aspect of the decision in

Union Pacific Railroad Co. cannot be reconciled with the teachings

of Bemis Brothers. In any event, Union Pacific Railroad Co. is not

binding precedent in this circuit.

The government also cites Tobin v. Tomlinson, 310 F.2d 648

(5th Cir.1962), cert. denied, 375 U.S. 929, 84 S.Ct. 327, 11

L.Ed.2d 262 (1963), as support for its position. 3

 In Tobin,

however, the issue was whether a taxpayer's letter could be

considered an informal claim for a tax refund that could be

perfected through the filing of a formal refund claim outside the

statutory limitations period. Tobin, 310 F.2d at 650. The court

concluded that the letter did not comply with applicable

regulations; therefore, it could not serve as the basis for an

otherwise untimely amendment. Tobin, 310 F.2d at 651. Tobin,

therefore, is inapposite. Lastly, other circuits have held that

"[w]here the facts upon which the amendment is based would have

been ascertained by the commissioner in determining the merits of

the original claim, the amendment is proper." United States v.
Ideal Basic Industries, Inc., 404 F.2d 122, 124 (10th Cir.1968)

(quoting Pink v. United States, 105 F.2d 183, 187 (2d Cir.1939)),

cert. denied, 395 U.S. 936, 89 S.Ct. 1997, 23 L.Ed.2d 451 (1969).

CONCLUSION

Accordingly, the judgment of the district court is affirmed.

AFFIRMED.