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LEGAL INFORMATION INSTITUTE -- CORNELL LAW SCHOOL
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The following information has just arrived via the LII's
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MEADWESTVACO CORP. v. ILLINOIS DEPT. OFREVENUE (06-1413 Syllabus)
http://www.law.cornell.edu/supct/html/06-1413.ZS.html
UNITED STATES v. CLINTWOOD ELKHORN MINING CO. (07-308 Syllabus)
http://www.law.cornell.edu/supct/html/07-308.ZS.html
(L041408B Orders)
http://www.law.cornell.edu/supct/html/041408.ZR.html
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UNITED STATES v. CLINTWOOD ELKHORN MINING CO. (No. 07-308)
Web-accessible at:
http://www.law.cornell.edu/supct/html/07-308.ZS.html
Argued: March 24, 2008 -- Decided: April 15, 2008
Opinion author: Roberts
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The Internal Revenue Code requires a taxpayer seeking a
refund of taxes unlawfully assessed to file an administrative
claim with the Internal Revenue Service (IRS) before filing
suit against the Government, see 26 U. S. C. sec.7422(a).
Such claim must be filed within three years of the filing
of a tax return or two years of the tax's payment, whichever
is later, see sec.6511(a). In contrast, the Tucker Act
allows claims to be brought against the Government within
six years of the challenged conduct. Respondent coal companies
paid taxes on coal exports under a portion of the Code
later invalidated under the Export Clause of the Constitution.
They filed timely administrative claims and recovered refunds
of their 1997-1999 taxes, but sought a refund of their
1994-1996 taxes in the Court of Federal Claims without
complying with the Code's refund procedures. Nevertheless,
the court allowed them to proceed directly under the Export
Clause and the Tucker Act. Affirming in relevant part,
the Federal Circuit ruled that the companies could pursue
their Export Clause claim despite their failure to file
timely administrative refund claims.
Held: The plain language of 26 U. S. C. sec.sec.7422(a)
and 6511 requires a taxpayer seeking a refund for a tax
assessed in violation of the Export Clause, just as for
any other unlawfully assessed tax, to file a timely administrative
refund claim before bringing suit against the Government.
Pp. 4-12.
(a) Because the companies did not file a refund claim with
the IRS for the 1994-1996 taxes, they may, under sec.7422(a),
bring "[n]o suit" in "any court" to recover "any internal
revenue tax" or "any sum" alleged to have been wrongfully
collected "in any manner." Moreover, sec.6511's time limits
for filing administrative refund claims--set forth in an
"unusually emphatic form," United States v. Brockamp, 519
U. S. 347 --apply to "any tax imposed by [Title 26]," sec.6511(a)
(emphasis added). Contrary to the companies' claim that
these statutes are ambiguous, the provisions clearly state
that taxpayers must comply with the Code's refund scheme
before bringing suit, including the filing of a timely
administrative claim. Indeed, this question was all but
decided in United States v. A. S. Kreider Co., 313 U. S.
443 , where the Court held that the limitations period
in the Revenue Act then in effect, not the Tucker Act's
longer period, applied to tax refund actions. As was the
case there, the current Code's refund scheme would have
"no meaning whatever," id., at 448, if taxpayers failing
to comply with it were nonetheless allowed to bring suit
subject only to the Tucker Act's longer time bar. Pp. 4-6.
(b) The companies nonetheless assert that their claims
are exempt from the Code provisions' broad sweep because
the claims derive from the Export Clause. The principles
that a "constitutional claim can become time-barred just
as any other claim can," Block v. North Dakota ex rel.
Board of Univ. and School Lands, 461 U. S. 273 , and that
Congress has the authority to require administrative exhaustion
before allowing a suit against the Government, even for
a constitutional violation, see, e.g., Ruckelshaus v. Monsanto
Co., 467 U. S. 986 , are fully applicable to unconstitutional
taxation claims. The companies' attempt to distinguish
Export Clause claims on the ground that the Clause is not
simply a limitation on taxing authority but a prohibition
carving particular economic activity out of Congress's
power is without substance and totally manipulable. There
is no basis for treating taxes collected in violation of
that Clause differently from taxes challenged on other
grounds. Because the companies acknowledge that their claims
are subject to the Tucker Act's time bar, the question
is not whether their refund claim can be limited, but rather
which limitation applies. Their argument that, despite
explicit and expansive statutory language, the Code's refund
scheme does not apply to their case as a matter of statutory
interpretation is unavailing. They claim that Congress
could not have intended it to apply a "constitutionally
dubious" refund scheme to taxes assessed in violation of
the Export Clause, but the statutory language emphatically
covers the facts of this case. In any event, there is no
constitutional problem. Congress's detailed scheme is designed
"to advise the appropriate officials of the demands or
claims intended to be asserted, so as to insure an orderly
administration of the revenue," United States v. Felt &
Tarrant Mfg. Co., 283 U. S. 269 , to provide that refund
claims are made promptly, and to allow the IRS to avoid
unnecessary litigation by correcting conceded errors. Even
when a tax's constitutionality is challenged, taxing authorities
have an "exceedingly strong interest in financial stability,"
McKesson Corp. v. Division of Alcoholic Beverages and Tobacco,
Fla. Dept. of Business Regulation, 496 U. S. 18 , that
they may pursue through provisions of the sort at issue.
There is no reason why invoking the Export Clause would
deprive Congress of the power to protect this interest.
The companies' claim that the Code procedures are excessively
burdensome is belied by their own invocation of those procedures
for taxes paid within the Code's limitations period, which
resulted in full refunds with interest. Pp. 6-10.
(c) The companies' fallback argument--that even if the
refund scheme applies to Export Clause cases generally,
it does not apply when taxes are unconstitutional on their
face--is rejected. Enochs v. Williams Packing & Nav. Co.,
370 U. S. 1 , distinguished. Pp. 10-12.
473 F. 3d 1373, reversed.
Roberts, C. J., delivered the opinion for a unanimous Court.
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===============================================================
UNITED STATES v. CLINTWOOD ELKHORN MINING CO. (No. 07-308)
Web-accessible at:
http://www.law.cornell.edu/supct/html/07-308.ZS.html
.. . .
(c) The companies' fallback argument--that even if the
refund scheme applies to Export Clause cases generally,
it does not apply when taxes are unconstitutional on their
face--is rejected. Enochs v. Williams Packing & Nav. Co.,
370 U. S. 1 , distinguished. Pp. 10-12.
So what should someone in their position do? What happens if someone
pays the Unconstitutional tax, then files for a refund in a timely
manner? The IRS will, of course, deny the refund; but later, when the
tax is found to be Unconstitutional, the filing will have preserved
the taxpayer's rights.
Would filing for a refund in such a circumstance be deemed abusive or
frivolous, and subject to penalties?
Seth
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