Opinion ID: 780311
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Heading: Statute of Limitations for Bringing Suit Against the United States

Text: 11 Sovereign immunity protects the United States from being sued unless Congress has expressly waived the government's immunity. United States v. Shaw, 309 U.S. 495, 500-01, 60 S.Ct. 659, 84 L.Ed. 888 (1940); United States v. Kearns, 177 F.3d 706, 709 (8th Cir.1999). A district court lacks jurisdiction to hear a case against the United States unless its sovereign immunity has been waived, and the court's jurisdiction is limited by the scope of the waiver. Kearns, 177 F.3d at 709. [A] waiver of the government's sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign. Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996). Once consent has been expressly provided and its scope defined, however, the waiver of immunity is liberally construed within the parameters of the consent. Shaw, 309 U.S. at 501, 60 S.Ct. 659. 12 Congress has expressly waived sovereign immunity for suits against the United States by taxpayers seeking to recover tax refunds. Congress limited that waiver by requiring a taxpayer to file an administrative claim with the Secretary of Treasury before bringing a lawsuit. See 26 U.S.C. § 7422(a) (1994), I.R.C. § 7422(a). Congress further limited the waiver of sovereign immunity by requiring the taxpayer to bring suit within 2 years from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance of the part of the claim to which the suit or proceeding relates. I.R.C. § 6532(a)(1). Although [n]o officer by his action can confer jurisdiction[,] Shaw, 309 U.S. at 501, 60 S.Ct. 659, Congress expressly allows the Secretary to extend the time for filing suit for a refund, and correspondingly to extend the waiver of immunity, as provided in a written agreement with the taxpayer. I.R.C. § 6532(a)(2). Form 907, Agreement to Extend Time to Bring Suit, is generally used to satisfy the extension provision of § 6532(a)(2). 13 The United States argues that the district court lacked jurisdiction over the refund claim based on the original 1989 Form 1040 because the suit against the United States, as it related to that refund claim, was not filed within the requisite two years of the disallowance notice, dated April 28, 1995, and the IRS did not enter a Form 907 Agreement related to the original 1989 claim. 3 The parties agree that the Kaffenbergers did not file this suit within the requisite two-year period. Thus, the suit was timely only if the IRS agreed to extend the time for bringing suit as provided in I.R.C. § 6532(a)(2). 14 The IRS entered into two Form 907 Agreements with the Kaffenbergers, which extended the waiver of sovereign immunity to the agreed upon date of December 31, 1998, the date this suit was filed. Both forms were signed on October 14, 1997, by the Kaffenbergers' representative, and on October 17, 1997, by an IRS agent. (Appellant's App. at 8; Dist. Ct. Docket Entry 25, Exh. 5.) Both referenced October 24, 1995, as the date that the notice of disallowance of the claim was mailed. They differed only in that the first Form 907 Agreement covered the tax period ending December 31, 1989, and the second Form 907 Agreement covered the tax period ending December 31, 1990. The district court's jurisdiction hinges on whether either of these Form 907 Agreements extended the time for bringing suit related to the original 1989 return. 15 The government argues that the first Form 907 Agreement did not apply to the original 1989 refund claim for two reasons: (1) because the Form 907 Agreement referred only to the claim for which the notice of disallowance was sent on October 24, 1995, which was the 1989 Form 1040X amended return as opposed to the original Form 1040 return, and (2) because, even if the Form 907 Agreement applied to the original 1989 refund claim, it was ineffective to extend the statutory period because the parties entered into the Form 907 Agreement after the limitations period had run for the original 1989 claim. 16 We reject the first argument because the government conceded prior to trial in its motion to dismiss or for summary judgment that the Form 907 Agreement did in fact apply to both the original and amended 1989 refund claims. ( See Appellant's Br. at 38 n. 4; United States' Br. Responding to Aug. 31, 2000 Order, Dist. Ct. Docket Entry 34, at 1-2, 3.) The scope of a waiver of the government's sovereign immunity must be strictly construed in favor of the government. Lane, 518 U.S. at 192, 116 S.Ct. 2092. So construing Congress's waiver of sovereign immunity, the Kaffenbergers' suit must have been brought within the time frame agreed to by the IRS and the Kaffenbergers. Having strictly construed the scope of the waiver, however, we must liberally construe the waiver within those parameters. Shaw, 309 U.S. at 501, 60 S.Ct. 659. In its submissions to the district court, the government agreed that the Form 907 extended the time for bringing suit on the original 1989 refund claim, even though the Form 907 referred to the date that the 1989 1040X was disallowed. We cannot allow the IRS to renege on that agreement if we are to liberally construe the waiver within the parameters provided by Congress. Further, holding the government to its concession does not allow it to confer jurisdiction upon the court, as the government suggests. See Krein v. Norris, 250 F.3d 1184, 1187 (8th Cir.2001) (noting that court must determine jurisdiction, even if parties concede the issue); Overhauser v. United States, 45 F.3d 1085, 1088 (7th Cir.1995) ([G]overnment officers have no general power to waive statutes of limitations in tax cases.). Rather, it holds the IRS to the agreement that it made, an agreement that Congress authorized it to enter pursuant to I.R.C. § 6532(a)(2). See United States v. Aetna Cas. & Surety Co., 338 U.S. 366, 383, 70 S.Ct. 207, 94 L.Ed. 171 (1949) (The exemption of the sovereign from suit involves hardship enough, where consent has been withheld. We are not to add to its rigor by refinement of construction, where consent has been announced.) (internal quotations omitted). 17 The government argues alternatively that it lost the authority to extend the two-year statute of limitations once the limitations period expired, so that even if the Form 907 Agreement included the original 1989 claim, it was incapable of extending the period for bringing suit related to that claim. The government relies on a revenue ruling and the general proposition that an officer lacks the power to waive the United States' sovereign immunity. We respectfully disagree with the government and the revenue ruling upon which it relies. 18 The power to waive the United States' sovereign immunity rests solely with Congress. As such, it is our duty to determine the scope of the waiver created by Congress in light of Congress's intent. See United States v. Brockamp, 519 U.S. 347, 352, 117 S.Ct. 849, 136 L.Ed.2d 818 (1997). Congress provided a mechanism that allows the IRS and the taxpayer to extend the period for bringing suit to recover a refund beyond the normal two-year statutory period. I.R.C. § 6532(a)(2) (The 2-year period prescribed in paragraph (1) shall be extended for such period as may be agreed upon in writing between the taxpayer and the Secretary.). The government argues that the agreement must be entered before the two-year statutory period lapses, and any later agreement is invalid to confer jurisdiction upon the district court. The parties have not cited, nor have we located in our own research, any cases that have addressed whether an extension agreement pursuant to § 6532(a)(2) is effective if entered after the two-year period for bringing suit has ended. Although the government's position is facially appealing, other related statutory provisions lead us to a different conclusion. 19 Congress enacted § 6532(a)(2) as part of the Tax Reform Act of 1954 on August 16, 1954, see ch. 736, 68A Stat. 816, the same time that it enacted § 6501, see ch. 736, 68A Stat. 803. Section 6501 includes a statute of limitations period within which the IRS must assess a tax, barring the IRS from assessing taxes beyond three years from the date that a return is filed. See I.R.C. § 6501(a). Similar to § 6532, that section contains a provision allowing the taxpayer and the IRS to agree to extend the assessment period beyond the three-year statute of limitations, but contrary to § 6532, § 6501 expressly requires the agreement to be made before the expiration of the time prescribed in this section for the assessment of any tax imposed by this title. § 6501(c)(4). Congress did not include similar limiting language in § 6532(a)(2). Comparing the two statutes, enacted together as part of the Tax Reform Act of 1954 and codified within a few pages of each other in the Statutes at Large, we are compelled to conclude that Congress did not intend to prevent taxpayers and the IRS from agreeing, after the two-year statute of limitations has passed, to extend the time in which a taxpayer may bring suit for a refund. See Dep't of Housing and Urban Dev. v. Rucker, 535 U.S. 125, 122 S.Ct. 1230, 1234, 152 L.Ed.2d 258 (2002) (comparing two sections of the Anti-Drug Abuse Act of 1988 and holding that [t]he forfeiture provision shows that Congress knew exactly how to provide an `innocent owner' defense. It did not provide one in § 1437d(1)(6).); Duncan v. Walker, 533 U.S. 167, 173, 121 S.Ct. 2120, 150 L.Ed.2d 251 (2001) (It is well settled that `[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.' (quoting Bates v. United States, 522 U.S. 23, 29-30, 118 S.Ct. 285, 139 L.Ed.2d 215 (1997), in turn quoting Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983))) (alteration in original); Hohn v. United States, 524 U.S. 236, 249-50, 118 S.Ct. 1969, 141 L.Ed.2d 242 (1998) (applying Russello rule); Sharp v. United States, 14 F.3d 583, 589 (Fed.Cir.1993) (applying Russello rule to Internal Revenue Code § 163, and holding that where Congress provided express limitations in § 172 but not in § 163, Congress did not intend the limitations to apply to § 163). 20 The IRS issued a revenue ruling in 1971 which found that a district director lacked authority to enter an agreement to extend the two-year statute of limitations for bringing suit after the period had expired. See Rev. Rul. 71-57, 1971-1 C.B. 405. The IRS relied on its interpretation of extended to mean[] the continuation of an existing period of time with no intervening lapse. Id. We respectfully disagree with the IRS's revenue ruling. In § 6501, the statute limiting the IRS's time frame for assessing taxes to three years from the date the return is filed, Congress allows the IRS and taxpayer to further extend [the assessment period] by subsequent agreements in writing made before the expiration of the period previously agreed upon. I.R.C. § 6501(c)(4). If Congress had intended extend to carry the definition given it by the IRS, there would have been no need for Congress to include the phrase before the expiration of the period previously agreed upon in the provision allowing the IRS and taxpayer to enter subsequent extensions under § 6501. We decline to adopt the IRS's definition of extension where to do so renders the above quoted portion of § 6501 insignificant, if not wholly superfluous. Duncan, 121 S.Ct. at 2125. We hold that the IRS acted within its statutory authority in entering into the Form 907 Agreement to extend the time to bring suit on the original 1989 refund claim, even though the statutory time period for bringing suit had lapsed prior to the date of the Form 907 Agreement. Consequently, the district court properly exercised jurisdiction over the original 1989 refund claim.