Tax refund

“ While no new assessment can be made, after the bar of the statute has fallen, the taxpayer, nevertheless, is not entitled to a refund unless he has overpaid his tax. The action to recover on a claim for refund is in the nature of an action for money had and received and it is incumbent upon the claimant to show that the United States has money which belongs to him.'
We agree with the conclusion reached by the courts below. ”

“ Since there is no provision 'otherwise' for income tax refund claims involving the latter type of errors, the conclusion is reached that the four-year limitation period of § 3313 remains applicable. We cannot agree. ”

“ That view rests on two untenable premises-one that the question whether the burden of the tax has thus been borne by the taxpayer is solely for administrative solution, and the other that a judgment for a refund may be given subject to the condition that it is to become obligatory and be given effect only if and when the claimant proves to the Commissioner that he alone has borne the burden of the tax. Our reasons for rejecting the first premise already have been shown. ”

“ We cannot assent to the view that a court may give a judgment awarding the taxpayer a refund without inquiring whether he has borne the burden of the tax or has reimbursed himself by collecting it from the purchaser. ”

“ If the application is either denied or not acted on by the Commissioner, the taxpayer is accorded a fixed period within which to bring suit for a refund against the United States or the Collector who received the tax, and, if in the suit he establishes that the tax was erroneous or invalid, that it was paid by him, and that his claim has been duly and seasonably presented and prosecuted, he is entitled to judgment for a refund of the amount paid with interest. ”

“ The petitioner owed the Reconstruction Finance Corporation $5963.51, balance on a note for borrowed money. The General Accounting Office directed the Treasury not to pay the tax refund to the petitioner, but to issue a check for the refund payable to the R.F.C. 'to partially liquidate' petitioner's indebtedness to that governmental agency. As authorized by 28 U.S.C. § 250 (1) , 28 U.S.C.A. § 250 (1) , the petitioner then brought suit against the Government for the tax refund in the Court of Claims. ”

“ There is need once again to decide whether a claim for the refund of a tax has been presented by the taxpayer in such a form as to be subject to amendment after a claim wholly new would be barred by limitation. ”

“ It provides that, if the taxpayer has on or before June 15, 1925, filed a waiver of his right to have the tax due for the taxable year 1919 determined and assessed within five years after the return was filed, then refund relating to such tax shall be made if claim therefor is filed on or before April 1, 1926. The section is a part of a tax law giving to taxpayers opportunity to secure refund of overpayments that had become barred. Manifestly it is to be construed liberally in favor of the taxpayers to give the relief it was intended to provide. ”

“ Many inequities are inherent in the income tax. We multiply them needlessly by nice distinctions which have no place in the practical administration of the law. If the refund were allowed, the integrity of the taxable year would not be violated. The tax would be paid when due; but the government would not be permitted to maintain the unconscionable position that it can keep the tax after it is shown that payment was made on money which was not income to the taxpayer. ”

“ In case of overstatement and overpayment, the taxpayer may obtain refund calculated according to the method on which the return was made. Change from one method to the other, as petitioner seeks, would require recomputation and readjustment of tax liability for subsequent years and impose burdensome uncertainties upon the administration of the revenue laws. ”

“ There the taxpayer's claim for refund asserted that, owing to abnormal conditions affecting invested capital and income, there could be no fair computation of the tax by the appraisal of the cash value of its property under section 326 of the Revenue Act of 1918, 40 Stat. 1092, and it should, therefore, have the benefit of a special assessment under sections 327 and 328, 40 Stat. ”

“ The similar treatment accorded by the statutes to credit against an overdue tax, and to payment of it; the prohibition of credit of an overpayment of one year against a barred deficiency for another; and the requirement that payment of a barred deficiency shall be refunded, are controlling evidences of the congressional purpose by the enactment of sections 607 and 609 to require refund to the taxpayer of an overpayment, even though he has failed to pay taxes for other periods, whenever their collection is barred by limitation. ”

“ It said:
'A taxpayer entitled to a carry-back of a net operating loss or an unused excess profits credit (see sec. 204 of the bill) will not be able to determine the deduction on account of such carry-back until the close of the future taxable year in which he sustains the net operating loss or has the unused excess profits credit. He must therefore file his return and pay his tax without regard to such deduction, and must file a claim for refund at the close of the succeeding taxable year when he is able to determine the amount of such carry-back. ”

“ Furthermore, the very mechanics of the 1942 amendment require that determination of rights to refund under it be based on consideration of something other than the tax meaning of the 1936 Act or other tax terminology. The right to recovery in every case depends ultimately upon whether federal law or federal regulatory bodies, or state law or state regulatory bodies, prohibit payments of dividends. ”

“ Plainly, in such circumstances the certificate of overassessment without more does not import a promise by the Commissioner to refund the amount there certified instead of applying it as a credit upon the tax of an earlier year. At most the promise to be implied is one to refund the excess after there has been a computation of the taxes unpaid for other years and an ascertainment of the balance. ”

“ So far as petitioner's contention may be taken to be that it is entitled to recover by reason of the invalidity of the tax, although in fact its burden has been 'passed on' to another, the contention cannot be sustained. While the taxpayer was undoubtedly hurt when he paid the tax, if he has obtained relief through the shifting of its burden, he is no longer in a position tl claim an actual injury and the refusal of a refund in such a case cannot be regarded as a denial of constitutional right. ”

“ Nevertheless, one of the arguments which has been most strenuously urged is that the plain language of the statute precludes, or at the very least strongly militates against, a decision that full payment of the income tax assessment is a jurisdictional condition precedent to maintenance of a refund suit in a District Court. ”

“ This amendment was designed to grant corporations a refund on account of payments of undistributed profits taxes for tax years in which they had an accumulated deficit, and where, for that reason, state law, federal law, or public regulatory orders of either prohibited distribution of dividends. ”

“ That upon the allowance of a claim for the refund of or redi t for internal revenue taxes paid, interest shall be allowed and paid upon the total amount of such refund or credit at the rate of one-half of 1 per centum per month to the date of such allowance, as follows: (1) if such amount was paid under a specific protest setting forth in detail the basis of and reasons for such protest, from the time when such tax was paid. * * *'
The petitioner, a domestic corporation, on March 28, 1918, filed its income and excess profits tax return for the year 1917. ”

“ But if we should approve a doctrine of recoupment of the breadth here applied we would seriously undermine the statute of limitations in tax matters. In many, if not most, cases of asserted deficiency the items which occasion it relate to past years closed by statute, at least as closely as does the item involved here. Cf. Hall v. United States, 95 Ct.Cl. 539, 43 F.Supp. 130. The same is true of items which form the basis of refund claims. Every assessment of deficiency and each claim for refund would invite a search of the taxpayer's entire tax history for items to recoup. ”

“ There is room for the inference that had it not been for this delay, the tax would have been collected before the statute ran. The tax was collected later and the statute, by its terms, is applicable.
It is further insisted on behalf of the petitioners that sections 607 and 611 relate solely to administrative action and not to judicial proceedings. In support of this argument, an elaborate analysis of the revenue acts is presented in order to establish the meaning of the statutory words 'credit and refund' and 'overpayment' and the aptness of their reference to administrative proceedings. ”

“ The court held that under these unique circumstances the distributor lacked standing to seek a refund, explaining that " [o] ne who does not himself bear the financial burden of a wrongfully extracted tax suffers no loss or injury, and accordingly, would not have standing to demand a refund." Ibid. The court in Szabo did not mention, let alone rely on, a state-law immunity bar to the refund action.↑ We reject respondents' intimation that the cost of any refund considered by the State might justify a decision to withhold it. ”

“ Montana National Bank thus held that one forced to pay a discriminatorily high tax in violation of federal law is entitled, in addition to prospective relief, to a refund of the excess tax paid-at least unless the disparity is removed in some other manner. ”

“ Collectors not having sufficient sums in their hands to refund, &c., the money to be paid out of the treasury.Sec. 6. And be it further enacted, That in case a collector shall not have in his hands a sufficient sum out of which to refund the sums authorized to be refunded by this act, or to defray the expenses incident to the collection of the outstanding duties and direct tax, such repayments and expenses shall be made and defrayed out of any money in the treasury not otherwise appropriated. ”

“ Civil Penalty.—If a claim for refund or credit with respect to income tax (other than a claim for a refund or credit relating to the earned income credit under section 32) is made for an excessive amount, unless it is shown that the claim for such excessive amount has a reasonable basis, the person making such claim shall be liable for a penalty in an amount equal to 20 percent of the excessive amount. ”

“ This involves a redetermination of the entire tax liability.' No matter though the claim for refund be specific and limited, the Commissioner is at liberty to audit the return afresh and to strike a new balance as the facts may then appear. Commonly, though, it seems, not always, a general audit will be necessary or will be at least a wise precaution, whether the claim is broad or narrow, if the government is to have the benefit of any compensating adjustments. ”

“ Under section 6330 (c) (2) (B) , if a taxpayer received a notice of deficiency for a year in question and does not file a petition for redetermination of the deficiency with the Tax Court, in a collection hearing a taxpayer may not contest the existence or amount of his or her underlying tax liabilities. Nestor v. Commissioner, 118 T.C. 162, 165-166 (2002) . Rather, to contest the underlying tax liabilities in such a situation, the taxpayer would be required to pay the taxes assessed by respondent and to pursue a refund claim and a refund suit in Federal District Court. ”

“ In general.—Each individual who was an eligible individual for such individual's first taxable year beginning in 2000 shall be treated as having made a payment against the tax imposed by chapter 1 for such first taxable year in an amount equal to the advance refund amount for such taxable year. `` (2) Advance refund amount.—For purposes of paragraph (1) , the advance refund amount is the amount that would have been allowed as a credit under this section for such first taxable year if this section (other than subsection (d) and this subsection) had applied to such taxable year. ”

“ On the 5th of October, 1872, the Commissioner of Internal Revenue wrote the parties that the claim to have the tax refunded had not been submitted to the department, and forwarded them a blank to be filled up and transmitted to the department, and they would then pass upon the case upon its merits. ”

“ Timing of payments.—In the case of any overpayment attributable to this subsection, the Secretary shall, subject to the provisions of this title, refund or credit such overpayment as rapidly as possible and, to the extent practicable, before October 1, 2001. ”

“ Refund of Automobile Accessories Tax.
' (a) No refund shall be made of any amount paid by or collected from any manufacturer, producer, or importer in respect of the tax imposed by subdivision (3) of section 600 of the Revenue Act of 1924, or subdivision (3) of section 900 of the Revenue Act of 1921 or of the Revenue Act of 1918, unless either-
' (1) Pursuant to a judgment of a court in an action duly begun prior to April 30, 1928 ”

“ Modification of collection due process procedures for employment tax liabilities. Sec. 8244. Permanent extension of IRS user fees. Sec. 8245. Increase in penalty for bad checks and money orders. Sec. 8246. Understatement of taxpayer liability by return preparers. Sec. 8247. Penalty for filing erroneous refund claims. Sec. 8248. Time for payment of corporate estimated taxes. PART 1 — SMALL BUSINESS TAX RELIEF PROVISIONS ”