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Birger Engineering, Inc. v. United States

United States District Court, D. Massachusetts

August 2, 2019

BIRGER ENGINEERING, INC.
v.
UNITED STATES OF AMERICA

          MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

          RICHARD G. STEARNS UNITED STATES DISTRICT JUDGE

         Birger Engineering, Inc., brought this lawsuit against the United States of America, seeking a refund under 26 U.S.C. § 7422 for two tax overpayments it believes it made to the Internal Revenue Service (IRS). Specifically, Birger alleges that it overpaid its federal taxes for the fourth quarter of 2009 and for the fourth quarter of 2011 in the amount of $25, 252.74 (Count I) and $14, 860.95 (Count II), respectively. Both parties now move for summary judgment. Although the government concedes that Birger is entitled to a refund of $29, 784.22, plus interest under 26 U.S.C. § 6611, for overpaying its taxes in 2009, Birger contends that it is also entitled to a similar refund of its 2011 tax payments. The court heard oral argument on the cross-motions on August 1, 2019. For the reasons to be explained, the government's motion for summary judgment will be allowed, while Birger's motion will be denied.

         BACKGROUND

         The material facts are as follows. On December 29, 2009, Birger paid the IRS $25, 322.96 - what it believed to be its tax liability for the fourth quarter of 2009. Since the deposit exceeded the IRS's then-assessment for that quarter, the IRS credited the entire amount towards future tax periods.[1]Then, on August 1, 2011, the IRS revised its assessment and charged Birger $25, 322.95 (the amount Birger had originally calculated) for the fourth quarter of 2009, which Birger satisfied through credits from other tax periods.[2] On April 10, 2012, Birger submitted a Form 941-X (Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund) stating that the $25, 322.94 tax bill it had previously reported for the fourth quarter of 2009 should, in fact, have been attributed to the third quarter. The IRS processed the form and, on May 28, 2012, assessed Birger $25, 322.94 for the third quarter of 2009. On December 6, 2012, Birger paid the IRS $25, 252.74 to satisfy this third quarter assessment.

         On December 2, 2014, Birger filed another Form 941-X, requesting a refund to address the “erroneously made duplicative assessments.” Gov't Stmt of Facts (GSOF) (Dkt # 33-1) ¶ 22. On May 4, 2015, the IRS agreed that Birger had overpaid $29, 784.22 for the fourth quarter of 2009. On January 21, 2016, Birger submitted a Form 843 (Claim for Refund and Request for Abatement) requesting a corresponding refund. On February 17, 2016, the IRS denied the refund because Birger had “filed [its] claim more than 2 years after [it] paid the tax or balance due.” Id. ¶ 26. Birger appealed the decision, and the IRS Appeals Office affirmed the denial on December 5, 2017.

         In a reprise of 2009, in 2011, Birger paid the IRS $15, 749.95, the amount it had determined to be its tax liability for the fourth quarter of 2011. But because the deposit exceeded the IRS's then-assessment for that quarter by $11, 992.96, the IRS credited that amount toward past tax periods, namely the third and fourth quarters of 2009.[3] Then, on September 20, 2013, the IRS revised its assessment for the fourth quarter of 2011 and charged Birger $14, 860.95: $11, 992.96 in tax liability plus interest and penalties. On February 13, 2014, Birger paid the IRS $14, 860.95. On January 21, 2016, Birger submitted another Form 843 reporting that it had already paid the IRS $11, 992.96, but that it had inadvertently attributed the deposit to the fourth quarter instead of the third quarter.[4]

         On February 7, 2018, Birger initiated this lawsuit. On August 20, 2018, the court denied the government's motion to dismiss the Complaint on statute of limitation grounds. Dkt # 22.

         DISCUSSION

         Summary judgment is appropriate when, based upon the pleadings, affidavits, and depositions, “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is material if it has the potential of determining the outcome of the litigation.” Maymí v. P.R. Ports Auth., 515 F.3d 20, 25 (1st Cir. 2008). “An issue is ‘genuine' when a rational factfinder could resolve it [in] either direction.” Boudreau v. Lussier, 901 F.3d 65, 71 (1st Cir. 2018) (citation omitted).

         “In a refund action under section 7422(a), the taxpayer must bear the burden of proving that the challenged IRS tax assessment was erroneous.” Webb v. I.R.S. of U.S., 15 F.3d 203, 205 (1st Cir. 1994). “To properly challenge a tax assessment by obtaining a refund, the taxpayer must first pay the tax assessed against [it] and exhaust [its] administrative remedies.” Wojcicki v. I.R.S., 2012 WL 1118626, at *1 (D. Mass. Mar. 7, 2012). Having concluded that Birger exhausted its administrative remedies, see Dkt # 22, the court now turns to the issue of whether Birger is entitled to a refund for its alleged overpayments in 2009 (Count I) and 2011 (Count II).

         As to Count I, the government concedes that “[t]here is no dispute that Birger Engineering ultimately overpaid its employment taxes for 2009” by $29, 784.22.[5] Gov't Mem. (Dkt # 34) at 3. While Birger agrees with the amount owed, it contests “the government's calculations” of the sum. Pl.'s Mem. (Dkt # 38) at 8. The government contends that while the $25, 322.96 Birger paid on December 29, 2009 for the fourth quarter of 2009 was duplicative of its December 6, 2012 payment of $25, 252.74 for the third quarter of 2009, the latter, unlike the former, was not an overpayment because it resolved taxes actually owed. In other words, Birger overpaid its taxes for the fourth quarter of 2009, not the third quarter.

         Birger, for its part, argues that the December 6, 2012 payment of $25, 252.74 forms the basis for the refund. It alleges that the government “has created an ad hoc explanation” that is inconsistent with its May 4, 2015 notice.[6] Pl.'s Mem. at 9 (italics in original). However, that is not the case. The notice identifies the fourth quarter of 2009 (December 31, 2009) as the tax period for the overpayment. Moran Aff., Ex. 2. And as counsel for the government stated at the hearing on August 1, 2019, Birger's overpayment stemmed from credits from other tax periods, and not from Birger's 2012 payment. The court, therefore, agrees with the government that Birger is entitled to a refund of $29, 784.22, plus interest pursuant to 26 U.S.C. § 6611, and no more.[7]

         As to Count II, the parties do not agree on the amount owed. Birger contends that it is entitled to a refund of $14, 860.85 plus interest for overpaying its 2011 taxes. The government, however, argues that although Birger “in a sense effectively paid $11, 992.96 on two occasions for the same period, no overpayment of this amount occurred in light of ...


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