26 U.S.C. §6511: Limitations on credit or refund
26 U.S.C. §6405: Reports of refunds or credits
Background on Refunds
As you may be aware, the Internal Revenue Code at 26 U.S.C. §6401 ( c ) at Exhibit ________ asserts:
( c ) Rule where no tax liability.
An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid.
Now, it is very important to note the fact that the exact same words that appear in the Internal Revenue Code at 26 U.S.C. §6401 ( c ) cited immediately above, also appear verbatim in the corresponding Treasury Regulation 26 CFR §301.6401 – 1 ( b ) at Exhibit ______. To wit:
§301.6401 -1 Amounts treated as overpayments.
( a ) The term “overpayment” includes:
An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid.
Notice that in both 26 U.S.C. §6401 ( c ) and 26 CFR §301.6401 – 1 ( b ), a double negative is used. With respect to the Rules of English grammar and what it means when a double negative is used in a sentence, according to “The American Heritage Book of English Usage. A Practical and Authoritative Guide to Contemporary English, circa 1996”, it asserts that when a double negative is used in a sentence, it creates an affirmative. In other words, the use of a double negative in a sentence creates a positive. For additional credible evidence proving that two negatives when used in a sentence create a positive, please refer to the United States Government owned internet web site whose url address is http://www.plainlanguage.gov/howto/guidelines/bigdoc/writeNo2Negs.cfm
In light of this fact, what 26 U.S.C. §6401 ( c ) and 26 CFR §301.6401 – 1 ( b ) at Exhibits ___ and ___ really means is:
‘an amount paid as tax shall be considered to constitute an overpayment solely by reason of the fact that there was no tax liability in respect to which such amount was paid.’
So in other words, since I had no income tax liability for calendar year 2007, the $________ that has thus far been withheld from my remuneration, constitutes an overpayment by me and over withholding by __________ Inc..
District of Columbia v. Brady, 288 F.2d 108, 111 (D.C. Cir. 1960)
It is settled that to establish the right to his remedy at law, assumpsit for money had and received, a taxpayer has only to pay the tax involuntarily. Neither the denial of a claim for refund nor even the filing of such a claim is a prerequisite to his suit.
[District of Columbia v. Brady, 288 F.2d 108, 111 (D.C. Cir. 1960)]
FOOTNOTES:State Tonnage Tax Cases, 1870, 12 Wall. 204, 79 U.S. 204, 209, 20 L.Ed. 370, 376; Maryland Virginia Milk Products Ass'n v. Hazen, supra note 4; and see Keigwin, Cases in Common Law Pleading 219-221 (2d ed. 1934). By statute both federal and state taxing authorities have frequently annexed such conditions precedent to the common-law right of assumpsit for recovery of taxes. 27 Am.Jur. Income Taxes § 240; Annotation, 34 A.L.R. 979.
California Civil Code, Section 2224
California Civil Code
Section 2224“One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.”
26 U.S.C. §7422: Civil Actions for refund
TITLE 26 > Subtitle F > CHAPTER 76 > Subchapter B > § 7422
§ 7422. Civil actions for refund
(a) No suit prior to filing claim for refund No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.
(b) Protest or duress Such suit or proceeding may be maintained whether or not such tax, penalty, or sum has been paid under protest or duress.
(c) Suits against collection officer a bar
A suit against any officer or employee of the United States (or former officer or employee) or his personal representative for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected shall be treated as if the United States had been a party to such suit in applying the doctrine of res judicata in all suits in respect of any internal revenue tax, and in all proceedings in the Tax Court and on review of decisions of the Tax Court.
(d) Credit treated as payment The credit of an overpayment of any tax in satisfaction of any tax liability shall, for the purpose of any suit for refund of such tax liability so satisfied, be deemed to be a payment in respect of such tax liability at the time such credit is allowed.
Flora v. United States, 362 U.S. 145; 80 S.Ct. 630, 647 (1960)
The foregoing study of the legislative history of 28 U.S.C. 1346 (a) (1) and related statutes leaves no room for contention that their broad terms were intended to alter in any way the Cheatham principle of "pay first and litigate later." 24 For many years that principle has been reinforced by the rule that no suit can be maintained for the purpose of restraining the assessment or collection of any tax. 25 More recently, Congress took care to except from the operation of the Federal Declaratory Judgments Act any controversies "with respect to Federal taxes." 26 To ameliorate the hardship produced by these requirements Congress created a special court where tax questions could be adjudicated in advance of any payment. But there is no indication of any intent to create the hybrid remedy for which petitioner contends.
It is suggested that a part-payment remedy is necessary for the benefit of a taxpayer too poor to pay the full amount of the tax. Such an individual is free to litigate in the Tax Court without any advance payment. Where the time to petition that court has expired, or where for some other reason a suit in the District Court seems more desirable, the requirement of full payment may in some instances work a hardship. But since any hardship would grow out of an opinion whose effect Congress in successive [357 U.S. 63, 76] statutory revisions has made no attempt to alter, if any amelioration is required it is now a matter for Congress, not this Court.
[Flora v. United States, 362 U.S. 145; 80 S.Ct. 630, 647 (1960)]
Laing v. U.S., 423 U.S. 161, 96 S.Ct. 473 (U.S.Ky. 1976)
At this point, Flora v. United States, 357 U.S. 63, 78 S.Ct. 1079, 2 L.Ed.2d 1165 (1958), on rehearing, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960), deserves comment. In that case the Court held that a federal district court does not have jurisdiction of an action for refund of a part payment made by a taxpayer on an assessment. It ruled that the taxpayer must pay the full amount of the assessment before he may challenge its validity in the court action. Payment of the entire deficiency thus was made a prerequisite to the refund suit. The ruling, however, was tied directly to the jurisdiction of the Tax Court where litigation prior to payment of the tax was the usual order of the day. 362 U.S., at 158-163, 80 S.Ct., at 637-640. The holding thus kept clear and distinct the line between Tax Court jurisdiction and district court jurisdiction. The Court said specifically:
“A word should also be said about the argument that requiring taxpayers to pay the full assessments before bringing suits will subject some of them to great hardship. This contention seems to ignore entirely the right of the taxpayer to appeal the deficiency to the Tax Court without paying a cent.” Id., at 175, 80 S.Ct., at 646.
This passage demonstrates that the full-payment rule applies only where a deficiency has been noticed, that is, *209 only where the taxpayer has access to the Tax Court for redetermination prior to payment. This is the thrust of the ruling in Flora, which was concerned with the possibility, otherwise, of splitting actions between, and overlapping jurisdiction of, the Tax Court and the district court. Id., at 163, 165-167, 176, 80 S.Ct., at 640, 641-642, 646. Where, as here, in these terminated period situations, there is no deficiency and no consequent right of access to the Tax Court, there is and can be no requirement of full payment in order to institute a refund suit. The taxpayer may sue for his refund even if he is unable to pay the full amount demanded upon the termination of his taxable period. Irving v. Gray, 479 F.2d, at 24-25, n. 6; Lewis v. Sandler, 498 F.2d 395, 400 (CA4 1974).
I recognize that on occasion the refund procedure may cause some hardship for the terminated taxpayer whose entire assets may be seized and who may be required to wait as long as six months before filing his refund suit. Indeed, this hardship was one of the reasons for establishing the Board of Tax Appeals as a prepayment forum in the first place. See H.R.Rep. No. 179, 68th Cong., 1st Sess., 7 (1924); S.Rep. No. 398, 68th Cong., 1st Sess., 8 (1924).FN14 It is obvious, of course, that when one taxpayer dishonestly *210 evades his share of the tax burden, **498 that share is shifted to all those who comply with the law. This balance of “hardship” doubtless was in the minds of those who formulated the statutory structure.
[Laing v. U.S., 423 U.S. 161, 96 S.Ct. 473 (U.S.Ky. 1976)]
De Lima v. Bidwell, 182 U.S. 1, 125-26 (1901)
"In the Dooley cases and in the Armstrong case, suits have been brought against the Government of the United States. In the Armstrong case the suit was brought in the Court of Claims; in the Dooley cases under the concurrent jurisdiction act, in the United States Circuit Court. Now, if these cases are revenue cases, the suits do not lie. Suits cannot be brought against the United States either in the Court of Claims or in the Circuit Court to recover back revenue collected by officers of the United States. That jurisdiction has not been given to those courts, nor such a privilege accorded to those who pay money into the Treasury of the United States. And the reason is obvious. If such suits lie, there is no statute of limitations, and the Government could never know the amount of claims outstanding against it resulting from the collection of revenue through its agents. The Government has, therefore, provided exclusive methods of determining whether revenue was rightfully collected or not. When those methods are pursued, the officers of the Government are able to tell right along what claims exist against it, and Congress can provide for them. On the other hand, if these cases are not revenue cases, then they sound in tort, and neither court, as I understand, takes jurisdiction of cases of that sort. And so for these reasons, which are supported, as we think, by the authorities, we claim that the courts below had no jurisdiction of any of these cases.”
[De Lima v. Bidwell, 182 U.S. 1, 125-26 (1901)]
Wilkes Barre Lace Mfg Co v. Mundy, 18 F. Supp. 65, 67-68 (M.D. Pa. 1937)
At common law, a collector of internal revenue was liable to the taxpayer for the amount of taxes illegally collected and paid under protest. Elliott v. Swartwout, 10 Pet. 137, 9 L.Ed. 373. As there was no law at that time compelling a collector to pay taxes paid to him under protest into the Treasury, it was held that the collector was liable to the taxpayer even though he had turned the taxes over to the Treasury. Later, Congress passed an act making it the duty of the collector to turn over to the Treasury all amounts received as taxes whether paid under protest or not. Act of 1839 (chapter 82, 5 Stat. 339, 348). In the case of Cary v. Curtis, 3 How. 236, 11 L.Ed. 576, it was held that this statute relieved the collector from liability where money collected by him was paid into the Treasury in compliance with this act, even though it had been paid under protest. In that case it was pointed out that an action for the refund of taxes illegally collected is an action for money had and received based upon a promise implied in law from the fact that the collector is under a duty to return it. The court held, however, that no promise will be implied which is contrary to duty or contrary to law. Shortly after the decision in Cary v. Curtis, supra, Congress passed the Act of February 26, 1845 (chapter 22, 5 Stat. 727), which provided that nothing in section 2 of the Act of March 3, 1839, should be construed to deny or impair the right of any person or persons 'who have paid or shall hereafter pay ' duties under protest 'to maintain any action at law against such collector * * * and to have a right to a trial by jury' to determine the legality and validity of such payment, but such action could be maintained and recovery could be had only if protest 'setting forth distinctly and specifically the grounds of objection to the payment thereof' was made in writing at or before the payment of the duties. This act restored the right to sue collectors, but from the date of enactment of the Act of March 3, 1839, removing the basis for an action in assumpsit until the enactment of the Act of February 26, 1845, restoring the right to sue collectors, or for a period of approximately six years, no right of action existed against collectors of internal revenue for the recovery of amounts illegally collected as taxes and paid into the Treasury pursuant to law. The only remedy which taxpayers had was by appeal to the Secretary of the Treasury. Curtis' Administratrix v. Fiedler, 2 Black, 461, 479, 17 L.Ed. 273; Barney, Collector, v. Watson, 92 U.S. 449, 452, 23 L.Ed. 730; De Lima v. Bidwell, 182 U.S. 1, 178, 21 S.Ct. 743, 45 L.Ed. 1041.
Since the enactment of the Act of 1839, collectors of internal revenue have uniformly been required to remit all collections to the Treasury, but, due to the Act of February 26, 1845, and subsequent legislation, action against the collector has been allowed. Where, however, judgment is rendered against the collector in such action, and it appears that the money was collected in the performance of official duty or under direction of the Secretary of the Treasury or other proper officer, on probable cause, as certified by the court, and paid into the Treasury, no execution may issue against him, but the judgment is to be paid out of the Treasury. R.S. § 989, 28 U.S.C.A. § 842. The exact nature of such suits against a collector was finally settled by the Supreme Court in Moore Ice Cream Company v. Rose, 289 U.S. 373, 53 S.Ct. 620, 77 L.Ed. 1265. The court said, at page 382 of 289 U.S. at page 623 of 53 S.Ct., 77 L.Ed. 1265, 'A suit against a collector who has collected a tax in the fulfillment of a ministerial duty is to-day an anomalous relic of bygone modes of thought. He is not suable as a trespasser, nor is he to pay out of his own purse. He is made a defendant because the statute has said for many years that such a remedy shall exist, though he has been guilty of no wrong, and though another is to pay. Philadelphia v. The Collector, supra, page 731, of 5 Wall., 18 L.Ed. 614. There may have been utility in such procedural devices in days when the government was not suable as freely as now. * * * They have little utility to-day, at all events where the complaint against the officer shows upon its face that in the process of collecting he was acting in the line of duty, and that in the line of duty he has turned the money over. In such circumstances, his presence as a defendant is merely a remedial expedient for bringing the government into court.'
By the provisions of title 7 of the Revenue Act of 1936 (7 U.S.C.A. §§ 623 note, 644-659), the collector's liability is abolished only in those case where the collector acted 'in performance of his official duties, ' or 'under the direction of the Secretary (of the Treasury) or other proper officer of the Government. ' Thus, the collector's liability is abolished only in those cases in which he is entitled to exoneration and in which the Supreme Court has said that the action against the collector is 'merely a remedial expedient for bringing the government into court. ' In the present case, that which was collected by the defendant as taxes was collected by him in the performance of his official duties. The money was turned over to the Treasury of the United States, and the collector is entitled to a certificate of probable cause. The plaintiff has alleged these facts in its statement of claim.
Section 910 (7 U.S.C.A. § 652) does not abolish a common-law right of action against the collector. No commonlaw right of action against the collector exists where he has acted in performance of his official duties or under the direction of the Secretary of the Treasury or other proper officer of the government. Cary v. Curtis, supra; Curtis' Administratrix v. Fiedler, supra. Suits under such circumstances are essentially suits against the United States authorized by Congress and subject to the power of Congress to withdraw its authorization at any time. The Collector v. Hubbard, supra. Where a remedy conferred by statute is prohibited by a subsequent statute, or the law conferring it is repealed, jurisdiction ceases and causes pending at the time of prohibition or repeal fall. Baltimore & P. Railroad Co. v. Grant, 98 U.S. 398, 25 L.Ed. 231.
I conclude that title 7 of the Revenue Act of 1936 is not unconstitutional in so far as it forbids the maintenance of this suit. It does not operate to extinguish any vested right of the plaintiff.
[Wilkes Barre Lace Mfg Co v. Mundy, 18 F. Supp. 65, 67-68 (M.D. Pa. 1937)]
Bull v. United
States, 295 U.S 247, 261, 55 S.Ct. 695, 700, 79 L.Ed. 1421,
through Mr. Justice Roberts:
The United States, we have held, cannot, as against the claim of an innocent party, hold his money which has gone into its treasury by means of the fraud of its agent. While here the money was taken through mistake without element of fraud, the unjust retention is immoral and amounts in law to a fraud of the taxpayer's rights. What was said in the State Bank Case applies with equal force to this situation. ‘An action will lie whenever the defendant has received money which is the property of the plaintiff, and which the defendant is obligated by natural justice and equity to refund. The form of the indebtedness or the mode in which it was incurred is immaterial.
[Bull v. United States, 295 U.S 247, 261, 55 S.Ct. 695, 700, 79 L.Ed. 1421]
Gordon v. U. S., 227 Ct.Cl.
328, 649 F.2d 837 (Ct.Cl., 1981)
When the Government has illegally received money which is the property of an innocent citizen and when this money has gone into the Treasury of the United States, there arises an implied contract on the part of the Government to make restitution to the rightful owner under the Tucker Act and this court has jurisdiction to entertain the suit.
90 Ct.Cl. at 613, 31 F.Supp. at 769.
It does not follow, however, that there is a contract implied in fact where, as now, a nontaxpayer may recover property improperly levied upon through timely suit in the district court. In this situation it seems unlikely that the government also has agreed to make restitution to the nontaxpayer under an implied contract, which may be sued upon in this court. An important reason for the Kirkendall decision, although not explicitly set forth in the opinion, would appear to be that unless there were such a contract implied in fact, there might be no method by which the nontaxpayer effectively could recover the property the government improperly had taken from him through a levy. With the enactment of section 110(a), however, that situation no longer exists. Cf. Fletcher v. United *847 States, Ct.Cl. No. 572-79T, order entered December 31, 1980.
In view of our disposition of this case, there is no occasion here to reach this issue, which neither party has addressed. I discuss it only because it seems important to point out that, if and when the court faces the issue, it may conclude that Kirkendall no longer is viable.[Gordon v. U. S., 227 Ct.Cl. 328, 649 F.2d 837 (Ct.Cl., 1981)]
Sinking Fund Cases, 99 U.S. 700 (1878)
"In Calder v. Bull, which was here in 1798, Mr. Justice Chase said, that there were acts which the Federal and State legislatures could not do without exceeding their authority, and among them he mentioned a law which punished a citizen for an innocent act; a law that destroyed or impaired the lawful private [labor] contracts [and labor compensation, e.g. earnings from employment through compelled W-4 withholding] of citizens; a law that made a man judge in his own case; and a law that took the property from A [the worker]. and gave it to B [the government or another citizen, such as through social welfare programs]. 'It is against all reason and justice,' he added, 'for a people to intrust a legislature with such powers, and therefore it cannot be presumed that they have done it. They may command what is right and prohibit what is wrong; but they cannot change innocence into guilt, or punish innocence as a crime, or violate the right of an antecedent lawful private [employment] contract [by compelling W-4 withholding, for instance], or the right of private property. To maintain that a Federal or State legislature possesses such powers [of THEFT!] if they had not been expressly restrained, would, in my opinion, be a political heresy altogether inadmissible in all free 306Hrepublican governments.' 3 Dall. 388."
[HSinking Fund Cases, 99 U.S. 700 (1878)]