Court Opinion

ID: 9465399
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:45:06.419478+00
Date Added: 2024-06-11T17:39:09.472236
License: Public Domain

WEIS, Circuit Judge,
dissenting.
The issue in this case is not complicated, although its ultimate resolution, dependent as it is upon slogging through the morass of the Internal Revenue Code, assuredly is. Plaintiff says he deposited $78,625.78 with the Internal Revenue Service to meet his obligations, if any, and to avoid penalties and interest in the event he owed income taxes for 1966 and 1971. Since it has now been determined that no taxes were due, plaintiff wants the deposit returned. The Service contended, and the district court agreed, that the “deposit” was actually a “payment of taxes,” and because the statutory period for refund of an “overpayment” has expired, plaintiff cannot get his money back even though he is otherwise entitled to it.
Like so many other seemingly clear concepts, what amounts to a “payment” of taxes under the Internal Revenue Code has *72become 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 starting point for determining whether a remittance is a tax payment is an analysis of Rosenman v. United States, supra. There, the Court held that sending funds to the I.R.S. under protest as protection from assessment of penalties and interest was merely a “deposit” and not a “payment” of taxes that commenced the running of the statute of limitations. Upon receipt of the money, the Commissioner placed the funds in a “suspense” account. Commenting upon these facts, the Court said:
“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.
In Rosenman’s view, a concrete event, such as a prior assessment of liability by the I.R.S., would be necessary to transform a mere deposit of funds into a payment of taxes.
One authoritative commentary in the field with due deference to Rosenman has summarized the factors to be considered in determining whether there has been a payment:
“This much is clear: (1) a remittance is not per se ‘payment’ of the tax; (2) a remittance that does not satisfy an asserted tax liability should not be treated as the ‘payment’ of a tax; and (3) an essential factor in ‘payment’ before assessment is the satisfaction or discharge of what the taxpayer deems a liability.” 10 J. Mertens, Law of Federal Income Taxation § 58.27 (rev. ed. 1976) (footnote omitted). See also 5 J. Rabkin & M. Johnson, Federal Income Gift and Estate Taxation § 76.03(3) (1978).
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, *73236, 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.
The pleading is far from artful. It is inconsistent at times, and as the majority points out, alternately characterizes the remittances as “escrow payments” or a “deposit,” and as “payment of estimated taxes.” Nevertheless, in paragraph 5(b) the complaint reads: “escrow deposits were solely for the purpose of avoiding penalties and interest . . . .” Furthermore, in paragraph 7(a), plaintiff alleges:
“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.”
While these allegations are conclusory to a great extent, there can be no question that the plaintiff is pressing his cause under the Rosenman theory.
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.), affd 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.