The opinion of the court was delivered by: RAMBO
Sylvia H. Rambo, United States District Judge.
Before the court are the parties' cross motions for summary judgment. The motions have been fully briefed and are ripe for disposition.
The parties have stipulated as to the following facts in this case:
1. Phico Group, Inc. is a corporation organized under the laws of the Commonwealth of Pennsylvania. It is the successor in interest to the Pennsylvania Hospital Insurance Company and has its principal place of business in Mechanicsburg, Pennsylvania. Pennsylvania Hospital Insurance Company was organized under the laws of the Commonwealth of Pennsylvania in January, 1976 and commenced operations in March, 1976. The term "plaintiff" will be used interchangeably herein to refer to Phico Group, Inc. or to Pennsylvania Hospital Insurance Company.
2. Plaintiff files its federal income tax return on the basis of a calendar year.
4. During 1983 plaintiff made estimated, federal income tax payments for that year totalling $ 1,100,000.
5. On or about February 9, 1984 plaintiff, pursuant to section 6425 of the Internal Revenue Code, filed with the Internal Revenue Service a "Corporation Application for Quick Refund of Overpayment of Estimated Tax" on IRS Form 4466, the form prescribed therefor. The application requested a refund of $ 1,539,235, which consisted of:
a. The $ 1,100,000 estimated taxes paid in 1983, plus
b. The amount of tax overpaid on its 1982 return which was credited to 1983, $ 449,235 less $ 10,000, the amount of tax which it computed to be due and payable for the year 1983.
6. The Internal Revenue Service Center in Philadelphia, Pennsylvania notified plaintiff by letter dated February 29, 1984 that its application for a quick refund was rejected because "amounts due on other accounts exceed the overpayment."
7. On March 12, 1984 the same Internal Revenue Service Center sent plaintiff a demand for payment of federal income taxes in the amount of $ 5,470,863.63 for the year 1977.
8. Plaintiff, in fact, had no federal income tax liability outstanding for 1977 or any other year on February 29, 1984, when its application was denied, or on March 12, 1984, when the foregoing demand was made.
9. On or about June 1, 1984 plaintiff filed with the Internal Revenue Service a claim for refund of the $ 1,100,000 in estimated tax paid during 1983 with interest thereon.
10. On July 6, 1984 the Internal Revenue Service refunded $ 1,100,000 in estimated, federal income tax ...