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Birger Engineering, Inc. v. United States

United States District Court, D. Massachusetts

August 20, 2018




         On December 5, 2012, Birger Engineering, Inc. (Birger) sent the Internal Revenue Service (IRS) a check for $25, 252.74 to settle a 2009 tax assessment. After determining that the assessment had been mistakenly imposed, Birger filed a Form 941-X on November 26, 2014, seeking a refund. In May of 2015, the IRS notified Birger that it had approved the claim and that Birger would be repaid in full, with interest. Seven months later, in January of 2016, having not received the refund, Birger contacted the IRS and was told that the payment had been placed on hold. At the direction of the IRS, Birger prepared and filed a Form 843 regarding the erroneous 2009 assessment. Separately, Birger filed a Form 941-X seeking a $14, 860.95 refund for an allegedly incorrect 2011 IRS assessment, which Birger had paid in February of 2014. Once again, the IRS directed Birger to file a Form 843, and Birger complied. The IRS subsequently denied the 2009 claim as untimely, and has declined to issue a decision regarding Birger's 2011 claim. Birger filed this Complaint against the United States in the federal district court. Before the court is the government's motion to dismiss.


         The First Refund Claim

         On August 1, 2011, the IRS “made a tax assessment on Birger in the amount of $25, 322.95.” Compl. ¶ 5. Thereafter, several credit adjustments reduced this initial tax assessment to zero. Id. ¶¶ 6-7. However, the IRS subsequently reassessed Birger for the same amount. Id. ¶¶ 8-9. Under the “threat of property seizure, ” Birger paid the second assessment t0 the IRS by a check dated December 5, 2012. Pl.'s Opp'n, Dkt. #21 at 2; Compl. ¶ 11.

         On November 26, 2014, Birger filed a Form 941-X (Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund) to claim a refund of the second assessment, stating that it “made an extra payment due to a repetitive IRS assessment that had previously been credited in full, ” and that the “IRS erroneously made duplicate assessments for the quarters 9/30/2009 and 12/31/2009.” Id. ¶ 13.

         On May 4, 2015, the IRS notified Birger in writing that it had approved the November of 2014 claim and that it would pay Birger a full refund, including interest and penalty decreases, for a total of $29, 784.22. Id. ¶ 15. Birger never received the refund, and on January 13, 2016, “counsel for Birger contacted the IRS to inquire about the status of Birger's refund check.” Id. ¶ 17. An IRS employee told counsel that the refund had been placed on hold “pending a review by the statute of limitations section.” Id. The employee also directed Birger to prepare a Form 843 (Claim for Refund and Request for Abatement), which Birger completed and filed on January 21, 2016. Id. ¶ 19.

         On February 17, 2016, the IRS informed Birger by letter that the refund claim “was disallowed because it was filed more than two years after the payment of the tax.” Id. ¶ 20. Birger's subsequent appeal was denied on December 5, 2017. Id. ¶ 22.

         The Second Refund Claim

         An internal accounting error gave rise to Birger's second refund claim. Id. ¶ 30. In 2011, Birger's payroll company inadvertently attributed $11, 992.96 in tax payments to the company's fourth quarter (Q4), when the “amount should have been credited to” its third quarter (Q3). Id. ¶¶ 29-31. Accordingly, although “too much had been paid in Q4 and too little was paid in Q3, ” “Birger's withholding and trust taxes due for 2011 had been paid in full by the end of Q4 2011.” Id. ¶ 32.

         On November 11, 2013, the IRS assessed Birger for the shortfall in 2011 Q3, not taking into account that Birger had paid its 2011 tax liability in full in the final quarter of the year. Id. ¶ 33. Birger, because of an accounting oversight, did not recognize that the November 2013 assessment was redundant and paid the amount on February 12, 2014. Id. ¶¶ 34-36. On January 21, 2016, having realized the mistake, Birger filed a Form 941-X seeking a refund of the February of 2014 payment. Id. ¶ 27. After an IRS employee informed the company that a Form 843 was the proper avenue for relief, Birger immediately prepared and filed the Form. Pl.'s Opp'n at 7. To date, the IRS has not made a decision on Birger's claim. Compl. ¶ 37.

         On February 7, 2018, Birger filed this Complaint in the federal district court, seeking a full refund for both payments, statutory interest, and attorneys' fees. Compl. at 8-9. The government subsequently moved to dismiss, asserting that Birger lacks standing to bring this action by operation of the statute of limitations. See Fed. R. Civ. P. 12(b)(1).


         Standing is a prerequisite to a court's Article III authority to adjudicate a case. See Baena v. KPMG LLP, 453 F.3d 1, 4 (1st Cir. 2006). “[A]t the pleading stage, the plaintiff bears the burden of establishing sufficient factual matter to plausibly demonstrate [its] standing to bring the action.” Hochendoner v. Genzyme Corp., 823 F.3d 724, 731 (1st Cir. 2016). “While the court generally may not consider materials outside the pleadings on a Rule ...

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