Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

UNITED STATES v. FRANCES L. DALM

SUPREME COURT OF THE UNITED STATES No. 88-1951 110 S. Ct. 1361, 494 U.S. 596, 108 L. Ed. 2d 548, 58 U.S.L.W. 4355, 1990.SCT.41527 <http://www.versuslaw.com> decided: March 20, 1990. UNITED STATES, PETITIONERv.FRANCES L. DALM ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT. Christine Desan-Husson argued the cause pro hac vice for the United States. On the briefs were Solicitor General Starr, Assistant Attorney General Peterson, Deputy Solicitor General Wallace, Alan I. Horowitz, Gilbert S. Rothenberg, and Charles Bricken. Robert B. Pierce argued the cause for respondent. With him on the brief was Paul T. Mengel. Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C.j., and White, Blackmun, O'connor, and Scalia, JJ., joined. Stevens, J., filed a dissenting opinion, in which Brennan and Marshall, JJ., joined, post, p. 612. Author: Kennedy


ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT.

Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C.j., and White, Blackmun, O'connor, and Scalia, JJ., joined. Stevens, J., filed a dissenting opinion, in which Brennan and Marshall, JJ., joined, post, p. 612.

Author: Kennedy

 JUSTICE KENNEDY delivered the opinion of the Court.

Single transactions, it is well known, may be susceptible to different, and inconsistent, theories of taxation. In the case before us, the taxpayer treated moneys derived from her deceased employer's estate as a gift and paid gift tax on the transfer. Some years later, the Government contended that the money the taxpayer had received from the transaction was income. The taxpayer disagreed, and the Government's assertion of an income tax deficiency was the subject of proceedings in the United States Tax Court. The question presented is whether, the statute of limitations long since having run, the doctrine of equitable recoupment supports a separate suit for refund of the earlier paid gift tax after the taxpayer settled the Tax Court deficiency proceeding and agreed to pay income tax on the transaction. We hold that it does not.

I

The taxpayer, Frances Dalm, is the respondent here. Dalm was appointed administratrix of the estate of Harold Schrier in May 1975, at the request of Schrier's surviving brother, Clarence. It appears Dalm had been the decedent's loyal secretary for many years and that Clarence wanted her to take charge of the affairs of the estate and receive some of the moneys that otherwise would belong to him. Dalm received fees from the estate, approved by the probate court, of $30,000 in 1976 and $7,000 in 1977. She also received from Clarence two payments, $180,000 in 1976 and $133,813 in 1977. Clarence and his wife filed a gift tax return in December 1976 reporting the $180,000 payment as a gift to Dalm, and in that same month Dalm paid the gift tax of $18,675. The Internal Revenue Service (IRS) later assessed an additional $1,587 in penalties and interest with respect to the transfer. The Schriers paid the penalties and interest in 1977, and were reimbursed by Dalm. But no gift tax return was filed with respect to the 1977 payment of $133,813.

After auditing Dalm's 1976 and 1977 income tax returns, the IRS determined that the payments from Clarence represented additional fees for Dalm's services as administratrix of the estate and should have been reported as income. The IRS asserted deficiencies in her income tax of $91,471 in 1976, and $70,639 in 1977, along with additions to the taxes under § 6653(a) of the Internal Revenue Code of 1954 (IRC), 26 U.S.C. § 6653(a) (1982 ed.).*fn1

Dalm petitioned the Tax Court for a redetermination of the asserted deficiencies, as was her right under § 6213(a). In her petition, she argued that the 1976 and 1977 payments from Clarence were gifts to carry out the wish of the decedent that she share in the estate. After two days of trial, Dalm and the IRS settled the case, with the parties agreeing to a stipulated decision that respondent owed income tax deficiencies of $10,416 for 1976 and $70,639 for 1977. No claim for a credit or recoupment of the gift tax paid by Dalm was raised in the Tax Court proceedings, although there is some dispute whether the gift tax was one of the factors considered in arriving at the terms of the settlement. See n. 2, infra.

Immediately after agreeing to the settlement, Dalm filed an administrative claim for refund of the $20,262 in gift tax, interest, and penalties paid with respect to the $180,000 transfer in 1976. The claim was filed in November 1984, even though the IRC required Dalm to file any claim for a refund of the gift tax by December 1979. See § 6511(a). When the IRS failed to act upon her claim within six months, Dalm filed suit in the United States District Court for the Western District of Michigan, seeking what in her complaint she denominated a refund of "overpaid gift tax." Her complaint alleged that the District Court had jurisdiction under 28 U.S.C. § 1346(a)(1) (1982 ed.).

The Government moved to dismiss the suit for lack of jurisdiction and for summary judgment, arguing that the suit was untimely under the applicable statute of limitations. The District Court granted the Government's motions, rejecting Dalm's contention that her suit was timely under the doctrine of equitable recoupment as set forth in our opinion in Bull v. United States, 295 U.S. 247 (1935), a case we shall discuss. The court held that equitable recoupment did not authorize it to exercise jurisdiction over "an independent lawsuit, such as this suit, . . . maintained for a refund for a year in which the statute of limitations has expired." App. to Pet. for Cert. 19a.

On appeal, the Court of Appeals for the Sixth Circuit reversed. 867 F.2d 305 (1989). The court found Dalm's claim satisfied all of the requirements for equitable recoupment expressed in our cases. It rejected the District Court's characterization of Dalm's action as an independent lawsuit barred by the statute of limitations, reasoning that she could maintain an otherwise barred action for refund of gift tax because the Government had made a timely claim of a deficiency in her income tax based upon an inconsistent legal theory. Id., at 311-312 (citing Kolom v. United States, 791 F.2d 762 (CA9 1986)).*fn2 Because the approach taken by the Sixth and Ninth Circuits is in conflict with that adopted by Seventh Circuit, see O'Brien v. United States, 766 F.2d 1038 (1985), we granted certiorari, 493 U.S. 807 (1989), and now reverse.

II

The ultimate question in the case is whether the District Court had jurisdiction over Dalm's suit seeking a refund of the gift tax, interest, and penalties paid on the 1976 transfer. We hold that it did not.

A

In her complaint, Dalm invoked 28 U.S.C. § 1346(a)(1) (1982 ed.), under which a district court has jurisdiction over a "civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws." Despite its spacious terms, § 1346(a)(1) must be read in conformity with other statutory provisions which qualify a taxpayer's right to bring a refund suit upon compliance with certain conditions. The first is § 7422(a), which, tracking the language of § 1346(a)(1), limits a taxpayer's right to bring a refund suit by providing that

"[n]o suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof."

Second, § 6511(a) provides that if a taxpayer is required to file a return with respect to a tax, such as the gift tax, the taxpayer must file any claim for refund within three years from the time the return was filed or two years from the time the tax was paid, whichever period expires later. Read together, the import of these sections is clear: unless a claim for refund of a tax has been filed within the time limits imposed by § 6511(a), a suit for refund, regardless of whether the tax is alleged to have been "erroneously," "illegally," or "wrongfully collected," §§ 1346(a)(1), 7422(a), may not be maintained in any court. See United States v. Kales, 314 U.S. 186, 193 (1941).

There is no doubt that Dalm failed to comply with these statutory requirements. The Schriers filed their gift tax return and Dalm paid the gift tax on the 1976 transfer in December 1976. She paid the penalties and interest on that tax in March 1977. Dalm did not file her claim for refund of the gift tax until November 1984, long after the limitations period expired. Under the plain language of §§ ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.