Opinion
Case No. 00-75043
March 26, 2002
OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
Plaintiff Goldcorp, Inc. commenced this action in this Court on November 16, 2000, claiming that it is owed a refund of taxes paid in 1988 by virtue of its allegedly timely assertion of a "protective claim" though the filing of a Form 1120X Amended U.S. Corporation Income Tax Return in 1995. Plaintiff seeks a refund of $62,244 in allegedly overpaid 1988 taxes as a result of its carryback of a 1991 net operating loss to the earlier 1988 tax year. The Internal Revenue Service ("IRS"), while allegedly not expressly denying Plaintiff's claim, has declined to pay the refund sought by Plaintiff.
By motion filed on June 26, 2001, Defendant United States of America now seeks summary judgment in its favor. In support of its motion, the Government argues that, under Internal Revenue Code ("IRC") § 7502 and controlling Sixth Circuit authority, the evidentiary record is insufficient as a matter of law to enable Plaintiff to satisfy its burden of demonstrating the timely filing of its claim for a refund. Plaintiff responded to this motion on July 17, 2001, and Defendant filed a reply in further support of its motion on July 31, 2001.
Having reviewed the parties' submissions and the record as a whole, the Court finds that oral argument is not necessary, and that it is appropriate to decide the Government's motion "on the briefs." See Local Rule 7.1(e)(2), U.S. District Court, Eastern District of Michigan. For the reasons set forth below, the Court finds that Defendant is entitled to summary judgment.
II. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Goldcorp, Inc. is a wholesale jeweler. This case concerns the federal income taxes paid by Plaintiff for tax year 1988. Plaintiff filed its initial return for this tax year in September of 1989, stating that it owed taxes in the amount of $248,121.
In 1991, Plaintiff became the subject of an investigation by the IRS and other agencies. Pursuant to this investigation, Plaintiff's business records were seized by the IRS on November 6, 1991, and its inventory of goods was seized in June of 1992. During this time, Plaintiff sought and received an extension until September 15, 1992 to file its 1991 tax return. Plaintiff failed to meet this deadline, however, eventually filing the return on February 10, 1997. Plaintiff's 1991 return, as filed in 1997, reflected a net operating loss of $183,070.
As the basis for the relief sought in this action, Plaintiff contends that it timely filed a protective claim for a refund of taxes overpaid for the 1988 tax year. Specifically, Plaintiff asserts that, at some point prior to September 15, 1995, it filed a Form 1120X, Amended U.S. Corporation Income Tax Return, reflecting a carryback to 1988 of the net operating loss it sustained in 1991. Plaintiff further alleges that it perfected this protective claim by filing a subsequent Form 1120X, received by the IRS on December 1, 1997, in which Plaintiff specifically identified the amount of its net operating loss in 1991 ($183,070) and the amount of the refund due on its 1988 taxes ($62,244), in light of the carryback of the 1991 loss to the 1988 tax year. (See Complaint, Ex. 4; Defendant's Motion, Ex. E.)
As the Government points out, although Plaintiff attached a copy of this protective claim as Exhibit 2 to its complaint, this copy is neither signed nor dated. The Government further states, without contradiction, that Plaintiff has never produced a signed and dated version of this document. Finally, the Government observes that this protective claim does not seek the refund of a specified amount, presumably because, at the time it allegedly was prepared in 1995, Plaintiff had not yet completed its underlying tax return for 1991, and had not yet determined the exact extent of its operating loss for that tax year. Rather, this protective claim states generally that Plaintiff sought "to keep open the statute of limitations relating to a potential net operating loss carryback from the taxpayer's 1991 tax year." (Complaint, Ex. 2, Protective Claim at 2.)
Plaintiff has admitted that it did not send its initial protective claim by registered or certified mail. In place of such evidence of mailing, Plaintiff has submitted affidavits from its president, Walid Khalife, and its accountant and tax return preparer at the time, Fred Calderone, stating that this initial Form 1120X was, in fact, signed and placed in the ordinary U.S. mail at some point prior to September 15, 1995. (See Plaintiff's Response, Exs. A, B.) The Government has responded with a certification that, upon thoroughly searching the IRS records, it has been unable to locate a Form 1120X or other form of claim for refund for Plaintiff's tax year 1988 that was filed on or before September 15, 1995. (See Defendant's Motion, Ex. D.) Rather, the Government acknowledges receipt only of the Form 1120X submitted by Plaintiff in late 1997.
To date, Plaintiff has not received the refund sought in its protective claim. Accordingly, Plaintiff brought this action on November 16, 2000, challenging the IRS's failure to remit this refund. On June 26, 2001, the Government filed the present motion for summary judgment, arguing that Plaintiff has failed as a matter of law to produce evidence of a timely claim for a refund.
III. ANALYSIS
A. The Standards Governing Defendant's Motion
Through its present motion, Defendant seeks summary judgment in its favor on Plaintiff's claim that it timely filed a protective claim for a refund for tax year 1988. Under the relevant Federal Rule, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). There is no question that the issue presented in Defendant's motion is amenable to resolution as a matter of law, as this motion rests solely on a determination whether the evidence of timely filing offered by Plaintiff in this case is satisfactory under the governing law. Accordingly, the Court turns to this question.
B. Plaintiff Has Failed to Produce Legally Cognizable Proof of the Timely Filing of Its Claim for a Refund.
The Internal Revenue Code expressly provides that no suit may be brought to recover overpaid taxes "until a claim for credit has been duly filed" with the IRS in accordance with the governing law and regulations. 26 U.S.C. § 7422(a). Thus, as a jurisdictional prerequisite to the pursuit of this action, Plaintiff bears the burden of showing that it "duly filed" a claim for the refund it now seeks. See Miller v. United States, 784 F.2d 728, 729 (6th Cir. 1986). The Government contends that Plaintiff cannot meet this burden under the present record. The Court agrees.
Normally, a taxpayer must file a claim for a refund "within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later." 26 U.S.C. § 6511(a). However, where the claim for a refund relates to a net operating loss carryback from a subsequent year, the taxpayer must file such a claim within three years after "the time prescribed by law for filing the return (including extensions thereof) for the taxable year of the net operating loss . . . which results in such carryback." 26 U.S.C. § 6511(d)(2)(A). In the present suit, the parties agree that Plaintiff's tax return for 1991, the year of its net operating loss, was due on or before September 15, 1992. It follows, and the parties again agree, that any claim for a refund arising from the carryback of this 1991 net operating loss must have been filed within three years after Plaintiff's 1991 return was due, or on or before September 15, 1995. The principal question before this Court, then, is whether Plaintiff met this filing deadline.
Section 7502 of the Internal Revenue Code provides the applicable standards for determining whether a document is timely filed with the IRS. The Sixth Circuit has explained the genesis of this statutory provision:
Prior to 1954, all documents mailed by a taxpayer to the Internal Revenue Service were considered to have been "filed" with the agency at the time of actual receipt. Federal courts routinely applied the common law presumption that properly mailed documents would actually be received in due course by the addressee, but unless same-day delivery was in fact the norm, receipt by the addressee was not deemed to have occurred on the same day as the mailing. The presumption seems to have been that the addressee would receive the material after a normal interval — two or three days, e.g., under current Postal Service norms.
Congress altered the actual-receipt rule with the enactment of 26 U.S.C. § 7502 in 1954. In § 7502(a) Congress said that a document mailed to the IRS on or before a filing deadline and delivered by the Postal Service after the deadline would be "deemed" to have been received on the date of the postmark if the postmark itself was not after the deadline. And for purposes of § 7502, Congress went on to say in § 7502(c)(1)(A), a showing that the document had been sent by registered mail would constitute prima facie evidence of delivery to the IRS. The date of registration — again "[f]or purposes of this section" — would be deemed the postmark date. § 7502(c)(1)(B).Carroll v. Commissioner of Internal Revenue, 71 F.3d 1228, 1230-31 (6th Cir. 1995) (citations omitted); see also Miller, 784 F.2d at 730 ("Section 7502 was enacted as a remedial provision to alleviate inequities arising from differences in mail delivery from one part of the country to another.")
Thus, the statute rewards the use of certified or registered mail, presumptively deeming the date of such a mailing as the date of filing.See 26 U.S.C. § 7502(c)(1). Alternatively, even where ordinary mail is used, the date of the postmark still is deemed the date of filing, so long as this date precedes the deadline and the IRS actually receives this mailing, albeit after the deadline. See 26 U.S.C. § 7502(a)(1);see also Surowka v. United States, 909 F.2d 148, 149 (6th Cir. 1990).
In the present case, neither of these statutory avenues of establishing timely filing is available to Plaintiff. Its initial protective claim was not sent by certified or registered mail, and the IRS has been unable to confirm that it ever received this document. As observed in Carroll, § 7502 does not directly address such a situation. In particular, the statute is "silent as to what the result [sh]ould be" in cases where, as here and in Carroll, a taxpayer offers some evidence of mailing a document to the IRS prior to a filing deadline, but the IRS cannot verify receipt and, "because of the use of regular mail, rather than registered or certified mail," the taxpayer is unable to produce "direct proof that the document had been postmarked on or before the filing deadline and had actually been delivered to the IRS." Carroll, 71 F.3d at 1231.
Indeed, the facts before the Court in Carroll were particularly compelling. The plaintiffs had not merely produced some evidence that the document in question had been placed in the ordinary mail before the applicable filing deadline. Rather, the Tax Court had "found as a fact, following an evidentiary hearing, that the signed form had been mailed to the IRS" via regular mail nearly two months before this deadline. 71 F.3d at 1230. The Tax Court also heard evidence that the IRS occasionally loses tax forms, and the Sixth Circuit further noted an in-house IRS study indicating that "the IRS loses about two million tax documents from its files each year." 71 F.3d at 1230 n. 1. Nevertheless, in Carroll, as here, the IRS was unable to locate the form in question or confirm that it had ever been received. The question before the Court, then, was whether § 7502 effectively repealed the prior common-law presumption of delivery within a reasonable time "in all cases other than those where registered or certified mail was used." 71 F.3d at 1231.
Upon surveying the governing Sixth Circuit precedents, Carroll found that the answer was clear: namely, that "[i]n this circuit, a taxpayer who sends a document to the IRS by regular mail, as opposed to registered or certified mail, does so at his peril." 71 F.3d at 1229. In particular, in Miller, supra, the Sixth Circuit had squarely addressed, and rejected, a taxpayer's argument that § 7502 was intended only as a "safe harbor," while not barring reliance on additional, judicially crafted presumptions such as the one that had governed prior to the statute's enactment. See Miller 784 F.2d at 730. The Court held otherwise, finding that "the exceptions embodied in [the statute] [a]re exclusive and complete," and concluding that "the only exceptions to the physical delivery rule available to taxpayers are the two set out in section 7502." 784 F.2d at 731. The Sixth Circuit adhered to this rule inSurowka, supra, affirming a District Court's determination that circumstantial proof of filing a tax form via regular mail did not provide an alternative to the two statutory exceptions set forth in § 7502. Surowka, 909 F.2d at 149-51; see also BMC Bankcorp, Inc. v. United States, 59 F.3d 170, 1995 WL 363387, at *2 (6th Cir. June 15, 1995) (following the rule set forth in Miller and Surowka).
Carroll expressly acknowledges that other Circuits have adopted a different rule, finding that the common-law presumption of delivery is still available absent an express statement to the contrary in § 7502. See Carroll, 71 F.3d at 1231-32 (citing Estate of Wood v. Commissioner of Internal Revenue, 909 F.2d 1155, 1158-61 (8th Cir. 1990), and Anderson v. United States, 966 F.2d 487, 491 (9th Cir. 1992)). Yet, despite these contrary rulings, the Court in Carroll found that this Circuit had never retreated from the rule of Miller andSurowka. "Unless the Supreme Court should decide otherwise, therefore,Miller and Surowka will remain good law in the Sixth Circuit." Carroll, 71 F.3d at 1232. Accordingly, because the plaintiffs could not satisfy either of the avenues of proof set forth in § 7502, the Court found that they had not timely filed the tax form in question.
As in Carroll, the outcome here also is clear. Plaintiff cannot appeal to the general rule of physical delivery, because there is absolutely no evidence of such delivery. Rather, Plaintiff offers only circumstantial evidence, in the form of affidavits, that it sent its initial protective claim by regular mail at some point before the deadline of September 15, 1995. But, again, the IRS records fail to indicate that this document was ever received. It follows that neither of the exceptions set forth in § 7502 is applicable here. Subsection (a) is unavailing in the absence of evidence that the IRS received this protective claim at some point after the filing deadline. Subsection (c) is inapplicable because Plaintiff did not send its claim via registered or certified mail. Under the governing Sixth Circuit precedents, then, Plaintiff's protective claim was not timely filed prior to the deadline of September 15, 1995.
Nor can Plaintiff prevail on its argument — alluded to in its complaint, (see Complaint at ¶ 13), but notably absent from its response to Defendant's motion — that the IRS should be charged with "constructive knowledge" of Plaintiff's operating loss for the 1991 tax year, in light of the agency's seizure of the company's business records in November of 1991, and its retention of those records until at least 1995. As explained earlier, this Court's jurisdiction must rest upon a "duly filed" claim for a refund, and not merely on knowledge by the IRS, whether constructive, actual, or otherwise, that a taxpayer is entitled to a refund. As a matter of law, no such claim was duly filed in this case before the acknowledged deadline of September 15, 1995. Plaintiff has identified no authority, and the Court is not aware of any, that would overcome this jurisdictional defect.
C. Plaintiff's Discovery-Related Objections Are Without Merit.
Plaintiff's principal argument in opposition to the Government's motion for summary judgment is that this motion improperly rests upon the certification of Amber Bishop, an employee at the IRS's Cincinnati office, stating that the IRS has no record of a protective claim filed by Plaintiff on or before September 15, 1995. Plaintiff challenges this certification because Ms. Bishop does not appear on the trial witness list filed by the Government, and because the Government did not provide this certification or otherwise disclose Ms. Bishop's identity during the course of discovery. Plaintiff submits that this conduct violates the Court's March 26, 2001 Scheduling Order, and also deprived it of the opportunity to conduct full and complete discovery as to the matters addressed in the certification.
This argument is wholly lacking in merit, for a variety of reasons. Initially, the Court notes that its Scheduling Order expressly provides a sanction for a party's failure to identify a witness on its witness list: namely, such a witness may not be called at trial. Accordingly, if the Government's present motion were not granted, Ms. Bishop arguably could not be called as a witness at trial. Nothing in the Scheduling Order, or in the Federal Rules of Civil Procedure generally, establishes any requirement that the affidavits submitted in support of a motion for summary judgment under Fed.R.Civ.P. 56 must come from witnesses who will testify at trial.
Even this point is debatable, as indicated below.
The only conceivable concern raised by such reliance on the affidavit of a non-trial witness is the requirement under Rule 56 that affidavits in support of a motion for summary judgment must "set forth such facts as would be admissible in evidence." Fed.R.Civ.P. 56(e). Thus, if the Government did not intend to call Ms. Bishop as a witness at trial, it had to identify some other means through which the facts set forth in her affidavit could have been admitted into evidence. Yet, the Government took the necessary steps to accomplish this, stating in its preliminary witness list that it would call "[o]ne or more employees of the IRS Service Center, Cincinnati, Ohio." The purpose of calling such a witness, presumably, would have been to introduce evidence as to the content of the IRS's tax records with respect to Plaintiff. Indeed, Ms. Bishop herself seemingly matches the description set forth in the Government's witness list, so that it is far from clear, as a threshold matter, that the Government would have been precluded from calling her at trial.
At any rate, even if Ms. Bishop's affidavit were altogether stricken from the record, it appears that the Government still would be entitled to summary judgment in its favor. After all, this affidavit has been provided merely to prove a negative: namely, that there is no evidence that the IRS ever received the protective claim allegedly sent by Plaintiff on or before September 15, 1995. Presumably, then, the Government could have simply asserted this proposition in its brief, and left it to Plaintiff to introduce evidence calling this issue into question. Cf. Fed.R.Civ.P. 56(b) (stating that a defendant may move for summary judgment in its favor "with or without supporting affidavits). The Court declines to penalize the Government for taking the additional step of offering affirmative evidence in support of its position that evidence is lacking as to a key issue in this case.
This leaves only Plaintiff's contention that it was prejudiced by the Government's failure to either identify Ms. Bishop or produce her affidavit during the course of discovery. In response, the Government points out that the facts set forth in this affidavit were provided to Plaintiff during the course of discovery, in the form of a "Certification of Lack of Record" signed by another IRS employee, Ralph Suchyta. This certification, like the one provided by Ms. Bishop, stated that no records could be located of a claim for a 1988 tax year refund filed by Plaintiff on or before September 15, 1995. (See Defendant's Reply Br., Ex. B.) Thus, Plaintiff was amply apprised during discovery of both the Government's position and the underlying state of the IRS records.
Similarly, the Government's responses to Plaintiff's first set of interrogatories, attached as Exhibit E to Plaintiff's response to the Government's motion, set forth the Government's position that the IRS had no record of any claim by Plaintiff for a refund for tax year 1988 other than the claim received by the IRS on December 1, 1997. (See Plaintiff's Response, Ex. E at 5-6.)
Plaintiff made no effort to depose Mr. Suchyta, nor did it seek under Fed.R.Civ.P. 30(b)(6) to take the deposition of an IRS designee regarding the agency's records of Plaintiff's tax filings. Moreover, as the Government points out, if Plaintiff truly were surprised by the statements set forth in Ms. Bishop's affidavit, it could have requested that the Court allow additional discovery under Fed.R.Civ.P. 56(f). Tellingly, Plaintiff did not do so. At any rate, the Court cannot possibly conceive of any useful purpose that might have been served by additional discovery, where Plaintiff has suggested no basis for doubting that Mr. Suchyta and Ms. Bishop have accurately characterized the state of the IRS records pertaining to this case. Accordingly, the Court finds nothing unlawful or inappropriate in the Government's submission of Ms. Bishop's affidavit in support of its motion for summary judgment.
IV. CONCLUSION
For the reasons set forth above,
NOW, THEREFORE, IT IS HEREBY ORDERED that Defendant's June 26, 2001 Motion for Summary Judgment is GRANTED.
JUDGMENT OF DISMISSAL
The Court having this day entered an Opinion and Order granting Defendant's motion for summary judgment,
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that this case be, and hereby is, DISMISSED in its entirety with prejudice.