Source: https://law.justia.com/cases/federal/appellate-courts/F2/590/68/224637/
Timestamp: 2019-05-25 07:24:30
Document Index: 130022004

Matched Legal Cases: ['§ 6511', '§ 6511', '§ 6401', '§ 6511', '§ 6511', '§ 6513', '§ 6511', '§ 6511', '§ 1215', '§ 6401', '§ 6401', '§ 6401', '§ 58']

Harry J. Binder, Appellant, v. United States of America, 590 F.2d 68 (3d Cir. 1978) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Third Circuit › 1978 › Harry J. Binder, Appellant, v. United States of America
Harry J. Binder, Appellant, v. United States of America, 590 F.2d 68 (3d Cir. 1978)
U.S. Court of Appeals for the Third Circuit - 590 F.2d 68 (3d Cir. 1978)
Argued Oct. 17, 1978. Decided Dec. 15, 1978
Taxpayer Binder appeals from the District Court's judgment dismissing, under Fed. R. Civ. P. 12(b) (6), his complaint on the ground that he has not stated a claim upon which relief can be granted.
The government contends that the only facts alleged in the complaint contradict plaintiff's claim that he or his employer made escrow payments, but, on the contrary, set forth a claim for the refund of tax payments which is defective because the claim was not made within the time limited by § 6511(b) (2) (A) of the Internal Revenue Code of 1954, 26 U.S.C. § 6511(b) (2) (A).
But the critical question is in what sense the complaint uses the terms "escrow payments" and "escrow deposits." It is not alleged, nor implied, nor suggested by plaintiff's counsel that plaintiff or his employer in making the payments to the IRS in any way indicated that the money was to be set aside by the IRS in a suspense account or otherwise until plaintiff's tax liability was determined, as in Rosenman et al. v. United States, 323 U.S. 658, 660, 65 S. Ct. 536, 89 L. Ed. 535 (1945). Nor does plaintiff allege that his or his employer's remittances were in any conventional sense payments in escrow, that is money "deposited with a third party to be held until the performance of a condition or the happening of a certain event." See Maris C. J. in Gulf Petroleum S. A. v. Collazo, 316 F.2d 257, 261 (1st Cir., 1963).
Nor is there any merit to plaintiff's contention that the nature of the payments made by plaintiff or his employer is affected by the facts that subjectively plaintiff expected to receive a refund if nothing were due, and that it turned out that for the years 1966 and 1971 plaintiff had no income tax liability. § 6401(c) of the Internal Revenue Code of 1954 provides that "An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was made." This rather ambiguous language has been interpreted, as we believe correctly, to mean that "the absence of tax liability for the year in respect of which payment was made does not affect the status of the remittances as payments of tax." Chemical Bank New York Trust Co. v. United States, 275 F. Supp. 26, 30 (S.D.N.Y., 1967), Aff'd per curiam 386 F.2d 995 (2nd Cir., 1967).
Hence, when plaintiff or his employer paid as estimated taxes more than was rightly due, even though nothing was due, he was making an "overpayment of taxes", for which the sole remedy was that which Congress provided in § 6511 of the Internal Revenue Code of 1954. As was said by the Supreme Court in a cognate situation involving refund of taxes not due, "Whatever the reason, the payment of more (taxes) than is rightfully due is what characterizes an overpayment (of taxes)." Jones v. Liberty Glass Co., 332 U.S. 524, 531, 68 S. Ct. 229, 233, 92 L. Ed. 142.
The complaint alleges plaintiff filed his administrative claim on August 8, 1975. Section 6511(b) (2) (A) of the Internal Revenue Code limits any recovery to ". . . the portion of the tax paid within the . . . (three years) immediately preceding the filing of the claim." Since Binder filed his refund claim on August 8, 1975, he could not recover any taxes paid prior to August 8, 1972. The term "paid" as used in § 6511 is governed by the following provision of § 6513(b) of the Internal Revenue Code, 26 U.S.C.:
Accordingly, the taxes to which the complaint refers were paid as of April 15, 1966 and April 15, 1972. They fall outside the recovery period specified in § 6511(b) (2) (A), and are barred.
Inasmuch as the claim stated in the complaint in the instant case is one for a refund of overpayments of taxes and cannot properly be construed as a statement of a claim to recover payments made in escrow, and inasmuch as plaintiff's claim is for the refund of taxes which were not paid within the period specified in § 6511(b) (2) (A) of the Internal Revenue Code of 1954, the complaint fails to state a cause of action.
Like so many other seemingly clear concepts, what amounts to a "payment" of taxes under the Internal Revenue Code has become confused by refinements, corrections, revisions, and explanations. While a rose is a rose is a rose, Rosenman v. United States, 323 U.S. 658, 65 S. Ct. 536, 89 L. Ed. 535 (1945), stands for the proposition that sending money to the I.R.S. is not necessarily a "payment," and whether a remittance constitutes a payment or a deposit in escrow must be decided in each case by a close examination of its facts.
"The receipt by the Government of moneys under such an arrangement carries no more significance than would the giving of a surety bond. Money in these accounts is held not as taxes duly collected are held but as a deposit made in the nature of a cash bond for the payment of taxes thereafter found to be due." Id. at 662, 65 S. Ct. at 538.
Rosenman was an estate tax case, but we have held that the same reasoning applies to funds transmitted in connection with possible income tax liability, Budd Co. v. United States, 252 F.2d 456, 459-60 (3d Cir. 1957), and it is not necessary that the money be deposited in a suspense account. Hill v. United States, 263 F.2d 885, 886 n. 3 (3d Cir. 1959). See also Rose v. United States, 256 F.2d 223, 226-27 (3d Cir. 1958), and Fortugno v. Commissioner, 353 F.2d 429, 433-35 (3d Cir. 1965), Cert. dismissed, 385 U.S. 954, 87 S. Ct. 337, 17 L. Ed. 2d 302 (1966).1
It is clear, therefore, that the taxpayer is not foreclosed from recovering his money simply because the statute of limitations applicable to a claim for refund of an overpayment has expired. Thus, it is important that the facts be analyzed, and since this is a dismissal under Fed. R. Civ. P. 12(b) (6), I take them from the complaint and view them in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). It is particularly in analyzing the facts that I part company with the majority.
"that the defendant and the Internal Revenue Service is (Sic) in error in finding the escrow deposits of money to be overpayments and tax payments. To the contrary they are not tax payments or overpayments as no taxes were ever due thereon, nor were any assessments made for the periods involved."
It would have been helpful in resolving the issues here if plaintiff had recited some of the facts underlying his statements that the remittances were "escrow deposits." However, Fed. R. Civ. P. 8 requires that a complaint need only consist of "a short and plain statement of the claim showing that the pleader is entitled to relief." The objective of the rule is "to avoid technicalities and to require that the pleading discharge the function of giving the opposing party fair notice of the nature and basis or grounds of the claim and a general indication of the type of litigation involved; the discovery process bears the burden of filling in the details." 5 C. Wright & A. Miller, Federal Practice and Procedure § 1215 (1969) (footnotes omitted). The complaint in this case meets that test as evidenced by the fact that neither the majority nor I have had the slightest difficulty in recognizing the issues tendered by the plaintiff. Indeed, the Commissioner's brief betrayed no uncertainty as to the plaintiff's position.
One final point deserves comment. In its order dismissing the case, the district court failed to rule upon the plaintiff's request to amend, which was included in his answer to the government's motion. Though I find the complaint adequate to withstand a 12(b) (6) motion, the district court should have granted the plaintiff leave to amend. Cf. Borelli v. City of Richmond, 532 F.2d 950, 951 (3d Cir. 1976) (per curiam). It may well be that an amendment could have alleged facts to bring the case more clearly within the ambit of Rosenman and Budd. I am left with the uncomfortable feeling that this case has been decided both here and in the district court on a lack of pleading skill rather than on the merits. The harried taxpayer seeking redress from the government has enough obstacles in his path without being subjected to an unduly narrow construction of pleading requirements. I dissent.
The majority does not dispute these general principles. However, it does place some reliance upon Chemical Bank of New York Trust Co. v. United States, 275 F. Supp. 26, 30 (S.D.N.Y.), Aff'd per curiam, 386 F.2d 995 (2d Cir. 1967), in holding that § 6401(c) of the 1954 Internal Revenue Code is applicable. I do not believe that § 6401(c) is relevant to the statute of limitations claim asserted here. The predecessor section to § 6401 was enacted by Congress in 1943 to resolve the problem of when interest is owed by the United States if an admitted overpayment occurs. See the discussion and extract from the Committee Reports in Fortugno v. Commissioner, supra at 433 n. 7. We have held that this provision is not controlling in a statute of limitations context, Budd Co. v. United States, supra at 460. To the same effect, See 10 J. Mertens, Supra at § 58.27. But cf. United States v. Miller, 315 F.2d 354, 357-58 (10th Cir.), Cert. denied, 375 U.S. 824, 84 S. Ct. 64, 11 L. Ed. 2d 57 (1963). Therefore, I cannot accept the majority's statement that "the absence of tax liability for the year in respect of which payment was made does not affect the status of the remittances as payments of tax" in the context of this case