Opinion ID: 696133
Heading Depth: 2
Heading Rank: 1

Heading: Refund Claim

Text: 8 As a general rule a taxpayer cannot recover a refund if he does not show that an overpayment was made. Here the taxpayer does not claim an overpayment, only a procedural irregularity in the notice he received. In Lewis v. Reynolds, 284 U.S. 281, 283 (1932), the Court held: 9 An overpayment must appear before refund is authorized. Although the statute of limitations may have barred the assessment and collection of any additional sum, it does not obliterate the right of the United States to retain payments already received when they do not exceed that amount which might have been properly assessed and demanded. 10 Following this precedent, the Ninth Circuit held in Van Antwerp v. United States, 92 F.2d 871, 873 (9th Cir. 1937), an inadequate notice case, that: 11 [T]he taxpayer must show, in an action for refund of taxes illegally collected, that he does not owe the tax. We hold this to be true regardless of the legality of the Commissioner's action in collecting the alleged deficiency without sending the deficiency notice .... 12 However, an exception to this general rule was recognized in Martinez v. United States, 669 F. 2d 568 (9th Cir. 1981). There, cash and property of the plaintiff was seized under the now-repealed Marijuana Tax Act. In Martinez, the plaintiff received no notice whatsoever of the government's intent to levy on the property before it was seized. In such circumstances we held that the action could be viewed as more closely resembling a tort action for conversion than a refund action. The court explained: 13 Whether a jeopardy finding is made or not, the taxpayer must be given notice and an opportunity to fail or refuse to pay the tax. The conclusion is inescapable from reading [the language of Sec. 6331(a)] that a taxpayer in a jeopardy situation must be given some opportunity, however short, to fail or refuse to pay the tax. In Bremson v. United States ... the levy was made minutes after the taxpayer had responded to notice and demand for payment by stating that he would have to consult with his attorney. Nonetheless, he had notice and his statement was construed as refusal to pay. Here, Martinez had neither notice nor an opportunity to fail or refuse to pay.... [G]overnment counsel conceded that Martinez had not received notice before the levy. Martinez's affidavit also stated that he had received none. The government has never alleged that Martinez was given the necessary opportunity to refuse or fail to pay the tax. 14 Id. at 569 (citations omitted). 15 In the first appeal, we concluded that a proper notice of sale had not been given under 26 U.S.C. Sec. 6335(b), because the government did not make a reasonable attempt to locate Powelson personally before serving him with the notice by mail. We held that the single attempt to serve him personally on March 23, 1988 was insufficient. We were then faced with reconciling Van Antwerp and Martinez. We concluded that the two were not inconsistent, and that a refund action can be sustained under the latter case if the claim is sufficiently analogous to a tort action for wrongful conversion. 979 F.2d at 145. We held that a remand was appropriate to allow the district court to resolve this issue in the first instance. 16 The district court did as we asked, and concluded that this case was not closely analogous to a wrongful conversion case. The court correctly reasoned that in our case Powelson had received notice of the tax liability and the government's intention to levy on the property numerous times before the sale. There is no dispute that he received actual notice of the intended sale and was at the closing. We agree with the district court that Martinez is distinguishable on its facts and that the refund claim therefore fails.