Opinion
Civil No. 3:02cv482 (PCD).
March 17, 2003.
RULING ON PLAINTIFFS' AND DEFENDANT'S CROSS-MOTIONS FOR SUMMARY JUDGMENT
Plaintiffs and Defendant cross-move for summary judgment.
I. Background
The relevant facts are as follows. Plaintiffs filed their joint federal income tax returns for the 1993, 1994, and 1995 tax years on February 10, 2000. On these returns, Plaintiffs claimed Earned Income Credits equal to $415, $203, and $765, for 1993, 1994, and 1995, respectively. Plaintiffs requested a refund of these amounts on their filed tax returns. The Internal Revenue Service ("IRS") disallowed Plaintiffs' claim for refund of the earned income credits and notified them by letters sent by certified mail. Plaintiffs brought suit for refund under 26 U.S.C. § 7422. Upon preparing motions for this summary judgment, the parties have agreed that the earned income credits for the years 1993 and 1994 should be as follows: $317 (1993); $233 (1994).
The facts are taken from the parties Local Rule 9(c) statements, and are undisputed unless otherwise stated.
The parties agree that there are no genuine issues of material fact in dispute. Instead, they dispute whether the earned income credits for which Plaintiffs seek a refund were "paid" within three years of the date the claims for refund were filed.
II. Discussion
A. Standard of Review
A party moving for summary judgment must establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. FED. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "A party opposing a properly brought motion for summary judgment bears the burden of going beyond the pleadings, and 'designating specific facts showing that there is a genuine issue for trial.'" Amnesty Am. v. Town of W. Hartford, 288 F.3d 467, 470 (2d Cir. 2002) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). In determining whether a genuine issue has been raised, all ambiguities are resolved and all reasonable inferences are drawn against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980). Summary judgment is proper when reasonable minds could not differ as to the import of evidence. Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991). "Conclusory allegations will not suffice to create a genuine issue." Delaware H.R. Co. v. Conrail, 902 F.2d 174, 178 (2d Cir. 1990). Determinations as to the weight to accord evidence or credibility assessments of witnesses are improper on a motion for summary judgment as such are within the sole province of the jury. Hayes v. N.Y. City Dep't of Corr., 84 F.3d 614, 619 (2d Cir. 1996). "[W]hen both parties move for summary judgment, asserting the absence of any genuine issues of material fact, a court need not enter judgment for either party. . . . Rather, each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration." Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001).
B. Discussion
Plaintiffs argue that the earned income credits for which they seek refunds were paid on the date the returns were filed. Pl. Mem. in Support of Summ. J., p. 9 (Nov. 26, 2002). Plaintiffs contend that they had overpayments of taxes equal to their claimed earned income credits in 1993, 1994, and 1995, and that these overpayments were claimed as refunds of taxes when they filed their joint individual income tax returns for these years on February 10, 2000. Id. at 8. Plaintiffs claim that they filed their refund claims within the statutory period for filing such claims under 26 U.S.C. § 6511 (a). Id.
In their Local Rule 9(c)(1) statement, Plaintiffs allege that they signed their income tax returns on February 10, 2000, and that the IRS processing center received the returns on February 18, 2000. Plaintiffs' Local Rule 9(c)(1) Statement, ¶¶ 21, 22, 40, 41, 56, 57 (Nov. 26, 2002). In their memoranda submitted for purposes of the pending summary judgment, Plaintiffs state at one point that they filed their federal income tax returns on February 10, 2000, and later state that they claimed their earned income credit overpayments on February 14, 2000. Pl. Mem. in Support of Summ. J., p. 1, 8 (Nov. 26, 2002). Defendant, who does not explicitly contest the dates in Plaintiffs' Local Rule 9(c)(1) statement, refers to the filing date as February 17, 2000, and as February 17, 2001. Def Mem. in Opposition to Pl. Mot. for Summ. J. and in Support of Def. Mot. for Summ. J., p. 4, 10 (filed Jan. 28, 2003). For purposes of consistency, the Court credits the date as February 10, 2000, and notes that whether the date was February 10, 2000, February 14, 2000, or February 17, 2000, is not material to this ruling. The Court concludes that Defendant's reference to February 17, 2001 is a typographical error.
Defendant argues the earned income credits for which they seek refunds were paid on the date the returns were due. See Def. Mem. in Opposition to Pl. Mot. for Summ. J. and in Support of Def Mot. for Summ. J., p. 9-10 (filed Jan. 28, 2003). Defendant agrees with Plaintiffs that their claims for refund were timely filed, but argues that Plantiffs are entitled only to a refund of any monies paid with respect to the returns within the three-year look back period immediately preceding the filing of the claims for refund. Id. at 4.
Section 651(a) of the Internal Revenue Code sets forth that a claim for refund must be filed within three years of the date the return was filed. 26 U.S.C. § 6511 (a). Here, both parties agree that Plaintiffs filed their claim for refund within three years of the date the return was filed.
This section provides that a "claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer 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 th later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid." 26 U.S.C. § 6511(a).
Section 6513 considers the time which a return is deemed filed, and provides that "[a]ny tax actually deducted and withheld at the source during any calendar year . . . shall, in respect of the recipient of the income, be deemed to have been paid by him on the 15th day of the fourth month following the close of his taxable year." 26 U.S.C. § 6513(b)(1). The statute further provides that "[a]ny amount paid as estimated income tax . . . shall be deemed to have been paid on the last day prescribed for filing the return." 26 U.S.C. § 6513(b)(2).
Plaintiffs argue that § 6513(b) does not, by its terms, apply to earned income credits. They note that while § 6513(b) explicitly mentions estimated income tax, see 26 U.S.C. § 6513(b)(2), and tax withheld, see 26 U.S.C. § 6513(b)(3), it does not explicitly mention earned income credits. However, it has been recognized that the earned income credit "is quite similar to excess withholding taxes." Sorenson v. Secretary of Treasury, 752 F.2d 1433, 1443 n. 1, aff'd, 475 U.S. 851 (1986).
Furthermore, various courts considering the issue have concluded that 26 U.S.C. § 6513(b) applies to earned income credits. See e.g. Harriman v. IRS, 233 F. Supp.2d 451 (E.D.N.Y. 2002); Little v. C.I.R., T.C. Memo. 1995-1, 1995 WL 1504 (Tax Ct. 1995); Smith v. IRS, No. Civ. 00-1176-JE, 2000 WL 300488 (Or. Feb. 8, 2000); Ellis v. United States, 1982 U.S. Ct. Cl. LEXIS 43, at *2, 229 Ct. Cl. 814, 815 (1982). In Harriman, the court found that § 6513(b) applies to the earned income credit, therefore any claim made more than three years after the date the credit was deemed paid would be barred. Harriman, 233 F. Supp. at 459. In Little, the court considered the statutory scheme and concluded that
the overpayment resulting from the earned income credit . . . is deemed paid by the taxpayer on the 15th day of the fourth month following the close of the taxpayer's taxable year. . . . Petitioner's earned income credit necessarily was based on her 'earned income,' which could be determined when her tax return was due to be filed, the 15th day of the fourth month following the close of her taxable year. The overpayment resulting from her earned income credit, therefore, as well as the taxes withheld on her wages, is deemed to have been paid on April 15, 1991.Little, 1995 WL 1504. In Smith, which considered whether an untimely filed return can be deemed a timely claim for refund, the court stated that "[e]arned income credits are deemed to have been paid by the taxpayer on the last day prescribed for the filing of a return." Smith, 2000 WL 300488, at *2 (citing 26 U.S.C. § 6513(b)). In Ellis, the court stated that "[s]ection 6513(b) provides that . . . earned income credit shall be deemed to have been paid on the last day prescribed for filing the return." Ellis, 1982 U.S. Ct. Cl. LEXIS 43, at *2.
Plaintiffs argue that these cases do not set forth any rationale for their decision. Defendant responds that these cases comport with Congress' intent to provide "the Government with strong statutory protection against stale demands." United States v. Brockamp, 519 U.S. 347, 353 (1997) (internal citation and quotation omitted). The tax itself is a payment that can be reduced by the earned income credit, subject to the three year limitation. Plaintiffs' entitlement is linked to the amount deemed paid as the tax, and nothing in the statutory framework provides that the earned income credit operates outside of the deemed paid provision.
Although Plaintiffs characterize the refundable earned income credit as a remittance made by the government to the taxpayer, courts have characterized the earned income credit as a sort of overpayment. "An individual can receive the amount by which his entitlement to an earned income credit exceeds his tax liability only because § 6401(1) of the Code defines that amount as an 'overpayment'. . . . The refundability of the earned-income credit is thus inseparable from its classification as an overpayment of tax." Sorenson v. Secretary of Treasury, 475 U.S. 851, 859 (1986). The refund of any excess earned credit income "is payable as if it were a refund of tax paid." Sorenson, 475 U.S. at 863. "Taxpayers have an affirmative duty to file income tax returns. . . . Taxes are considered paid as of the due date of the return . . ., not when the return is actually filed." Ertman v. United States, 972 F. Supp. 706, 707 (Conn. 1997), aff'd, 165 F.3d 204 (2d Cir. 1999). Plaintiffs argue that an individual is eligible for an earned income credit only when she actually files the tax return, because the individual must submit various documentation to establish that she qualifies for the earned income credit. Plaintiffs contend that "[t]hese facts cannot be known to the IRS unless and until the taxpayer files an income tax return and Schedule EIC." Pl. Opposition to Def. Cross-Motion for Summ. J., p. 6 (January 14, 2003). Plaintiffs further argue that the refundable earned income credit "takes place only after they have demonstrated their eligibility by filing an income tax return." Id. at 7. However, as stated above, "[t]axes are considered paid as of the due date of the return . . ., not when the return is actually filed." Ertman, 972 F. Supp. at 707. Just as individuals have an "affirmative duty" to timely file income tax returns, they have an affirmative duty to timely submit relevant documentation to support their income tax returns. Accordingly, the amount of any overpayment resulting from the earned income credit exists on the due date of the tax return.
Therefore, as Defendant notes, Plaintiffs' returns were due, and the earned income credits were deemed paid, on April 15, 1994 for the 1993 year, on April 15, 1995 for the 1994 year, and on April 15, 1996 for the 1995 year. The claims for refund were not filed until February 10, 2000, meaning that Plaintiffs would only be entitled to a refund of payments made on or after February 10, 1997. Because Plaintiffs' claims for refund were filed more than three years after the date their earned income credits were deemed paid, these claims are untimely.
III. Conclusion
Plaintiffs' motion for summary judgment (Doc. No. 17) is denied. Defendant's motion for summary judgment (Doc. No. 22) is granted. The clerk shall close the file.
SO ORDERED.