Opinion ID: 781361
Heading Depth: 3
Heading Rank: 2

Heading: Sufficiency of administrative claim regarding misapplication of payments

Text: 16 The district court held that it lacked subject-matter jurisdiction over the misapplication claim. It ruled that Synergy had failed to exhaust its administrative remedies by failing to give the IRS adequate notice of the nature of the claim. We disagree with this portion of the district court's ruling. 17 A refund suit may not be maintained in court until a claim has been filed with the IRS in accordance with Treasury regulations. 26 U.S.C. § 7422(a). The regulations require that the refund claim set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof. 26 C.F.R. § 301.6402-2(b)(1). This requirement is intended to prevent surprise and to give the IRS adequate notice of the claim so that it can be investigated and resolved. Boyd v. United States, 762 F.2d 1369, 1371 (9th Cir.1985). 18 In our view, the language in Synergy's administrative claim was sufficient to put the IRS on notice that Synergy was alleging that its tax payments had been misapplied. In its administrative claim, Synergy stated, in a stand-alone paragraph, that the IRS arbitrarily applied deposits, regardless of timeliness, to the earliest tax liability rather than the current payroll liability. (Emphasis in original.) A reasonable IRS employee reading this document would know that the taxpayer was griping, at least in part, about the way the payments had been applied. It was there, in black and white, in its own paragraph, for anyone to read. It does not matter that it was in the middle of the page, or that it wasn't flagged with a Roman numeral. 19 The adequacy of Synergy's claim stands in sharp contrast to the claim in Boyd v. United States. Mr. Boyd, a professional poker player, filed an administrative claim seeking allowance of a business expense deduction for losses incurred playing poker. In district court, however, he also sought to establish the deductibility of not just his poker losses, but also of his tipping expenses and expenses incurred in contributing to the house take-off. Boyd, 762 F.2d at 1371. The district court held that Boyd's administrative claim did not sufficiently apprise the IRS that he would be claiming the right to deduct tips and house take-offs, and therefore, those issues could not be raised for the first time in a district court lawsuit. We agreed. Boyd's claim directed the IRS' attention only to the losses incurred while playing poker and made no mention of tipping expenses and house take-offs. Id. 20 Synergy's claim does not suffer from that sort of infirmity. It specifically mentions the supposed misapplication of payments to the oldest liability instead of to the current amounts due. 21 Therefore, as to the administrative claims relating to quarterly periods ending on or after September 30, 1993 in which the language relating to the misapplication of payments appears, we reverse the district court's dismissal of Synergy's misapplication claims for lack of subject-matter jurisdiction. We remand the case for further proceedings consistent with this opinion. 22 No costs allowed. 23 AFFIRMED IN PART; REVERSED AND REMANDED IN PART.