The Code Trumps Tucker


The U.S. Supreme Court recently held that an unconstitutionally assessed excise tax could not be recovered under the Tucker Act—the general provision for non-tort claims against the United States—for tax years outside the normal three-year period for filing refund claims. Thus the court overturned a decision by the Court of Appeals for the Federal Circuit that had permitted the recovery of taxes and interest under the Tucker Act for three earlier years. It also underscored the primacy of IRC § 7422(a), which requires taxpayers to file a claim for refund with the IRS to recover any erroneously or illegally collected or assessed tax. Section 6511(a) requires the claim to be filed within three years from the date the return was filed or two years from when the tax was paid, whichever is later.


In 1978, Congress enacted an excise tax on coal mined in the United States (IRC § 4121), specifying it was not included in a general exemption for exports. In 1998, in Ranger Fuel Corp. v. U.S. (83 AFTR2d 99- 375), the District Court for Eastern Virginia declared the tax levied on exported coal violated the Export Clause of the Constitution (Art. I, § 9, cl. 5: “No Tax or Duty shall be laid on Articles exported from any State”). Refund claims by coal companies ensued. In 2000, in Cyprus Amax Coal Co. v. U.S. (85 AFTR2d 2000-1151), the Federal Circuit held that a claim for a refund and interest could be pursued within the six-year scheme of the Tucker Act, even though the normal statutory administrative process had not been followed.


Clintwood Elkhorn Mining, along with other coal companies, received a refund for 1997 through 1999 through normal administrative procedures and filed the Tucker Act claim with the Court of Federal Claims covering 1994 to 1996. The court allowed the refund but denied interest on it. Clintwood and two other companies appealed to the Federal Circuit on the issue of interest, while the government cross-appealed and sought to overturn Cyprus Amax . The Federal Circuit upheld the earlier case and Clintwood’s refund, plus awarded the requested interest, saying the lower court’s denial of the latter had reflected a “convoluted” and outdated reading of the authorization of interest on court-ordered tax refunds of 28 USC § 2411. The government appealed to the Supreme Court.


The high court sided with the government, denying a refund and, consequently, interest. Writing for a unanimous court, Chief Justice John Roberts noted that IRC § 7422 provides that no claim for the refund of any amount of any Internal Revenue tax or any penalty that was collected in error in any manner will be upheld in any court if a taxpayer does not file a claim for a refund with the IRS. When Congress uses five “anys” in one sentence, that provision should be applied broadly, Roberts wrote. The court also found the time limits of section 6511 to be unambiguous and that such statutory requirements are necessary to ensure that suits are brought promptly to assist the government in monitoring revenue.


This case makes it clear that taxpayers must follow the administrative requirements of sections 7422 and 6511 when seeking a refund of tax—for any reason.


U.S. v. Clintwood Elkhorn Mining Co ., 101 AFTR2d 2008-1612


Prepared by Charles J. Reichert , CPA, professor of accounting, University of Wisconsin–Superior.





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