Appeal from the United States District Court for the Northern District of California Samuel Conti, Senior District Judge, Presiding D.C. No. 3:10-cv-00098-SC
The opinion of the court was delivered by: N.R. Smith, Circuit Judge:
Argued and Submitted May 14, 2012-San Francisco, California
Before: Stephen Reinhardt, Richard R. Clifton, and N. Randy Smith, Circuit Judges.
Opinion by Judge N.R. Smith
A taxpayer's claim for credit of an overpayment is limited to the amount of the overpayment made within of the applicable look-back period in § 6511(b)(2)(A) of the Internal Revenue Code (the "I.R.C." or the "Code").*fn1 Any claim for refund based on an amount claimed as a credit but paid outside of the § 6511(b)(2)(A) look-back period is time barred and uncollectible. Therefore, we affirm the district court, because Jose Reynoso's claim for credit of his $117,527 overpayment of his 1999 taxes was time-barred under § 6511(b)(2)(A).
Jose Reynoso was charged with and pleaded guilty to three misdemeanor counts for not filing tax returns for 1999, 2000, and 2001. Although Reynoso did not file returns for these years, he made tax payments during these years. As payments toward his 1999 estimated tax liability, on April 21, 1999 Reynoso paid $25,000 and on April 15, 2000 Reynoso paid $220,000. On April 15, 2001, Reynoso paid $200,000 toward his 2000 tax liability. On April 15, 2002, he paid $200,000 toward his 2001 tax liability.
As a result of the criminal proceedings, and notwithstanding Reynoso's previous tax payments, the IRS designated $585,329 of Reynoso's funds it was holding as a cash bond to offset Reynoso's anticipated tax liability for 1999, 2000, and 2001. On December 13, 2005, the IRS applied $75,852, $278,338, and $51,913 of the cash bond toward Reynoso's 1999, 2000, and 2001 tax liability, respectively. The IRS transferred the remaining $179,227 of the cash bond to an excess collection account.
In 2007 and 2008, Reynoso filed his tax returns for 1999, 2000, and 2001.*fn2 His tax liabilities for each year were: $127,473 for 1999; $238,328 for 2000; and $231,042 for 2001. Based on his tax liabilities, 1999 was the only year that his initial payments (not counting the application of the cash bond) exceeded his tax liability. Reynoso's 1999 tax payments made in April 1999 and April 2000 (totaling $245,000) exceeded his 1999 tax liability of $127,473 by $117,527. This is significant because § 6511(b)(2)(A)'s look-back period does not allow overpayment amounts to be credited or refunded if the overpayments were made more than three years (plus any time granted for extensions) prior to the date the tax return is filed. Reynoso claimed a credit for the 1999 overpayment in his 1999 tax return filed on December 5, 2007.
Sometime between February 6, 2009 and April 6, 2009, the IRS applied the $117,527 1999 overpayment to Reynoso's 2000 tax year, as requested in Reynoso's tax return. An IRS agent later said that the IRS mistakenly applied the overpayment to the 2000 tax account. The IRS agent did not think the IRS was permitted to move the money based on the Code.
On April 23, 2009, Reynoso sent a letter to the IRS requesting a refund for the overpayments caused by the application of the cash bond to the 1999, 2000, and 2001 tax years and for the unapplied cash bond amount. Reynoso also claimed a refund for the $117,527 amount that was credited to his 2000 taxes as an overpayment of his 2000 taxes. Therefore, Reynoso sought a total refund of $612,197, which included the $117,527 overpayment.
On January 8, 2010, Reynoso filed suit to recover the asserted overpayments totaling $612,197, including the $117,527 overpayment. Reynoso filed a motion for summary judgment, and the Government also moved for summary judgment asserting that Reynoso's requested refund should be reduced by $117,527. The Government admitted that Reynoso was entitled to a refund amount requested except for the $117,527 overpayment. The IRS argued that the $117,527 overpayment in 1999, which was credited to ...