SUPREME COURT OF THE UNITED STATES

No. 94–1785

COMMISSIONER OF INTERNAL REVENUE, PETITIONER v. ROBERT F. LUNDY

on writ of certiorari to the united states court of appeals for the fourth circuit

[January 17, 1996]

Justice Thomas, with whom Justice Stevens joins, dissenting.

Under the Internal Revenue Service's longstanding interpretation of 26 U. S. C. §§6511(a) and (b), Lundy would have collected a refund if he had filed suit in district court. The majority assumes, and I am prepared to hold, that that interpretation of §6511 is correct. Section 6512(b)(3)(B) incorporates the look-back periods of §6511 for proceedings to recover a refund in Tax Court. Section 6512(b)(3)(B) also contains some language that permits a taxpayer in certain circumstances to collect a refund although he has not actually filed an administrative claim (or has not filed one in what would be a timely fashion under §6511(a))). Because in my opinion nothing in §6512(b)(3)(B) suggests that Congress intended to shorten the look-back period in a proceeding in Tax Court, I would hold that Lundy is entitled to his refund.

Since 1976, the Service has taken the position that if a taxpayer files a delinquent return containing an

accurate claim for a refund within three years after the date on which the tax is deemed to have been over-withheld from his pay, then he can obtain a refund of that tax. See Rev. Rul. 76–511, 1976–2 Cum. Bull. 428 (construing 26 U. S. C. §6511(a)). This is because "[a] return shall be a claim for refund if it contains a statement setting forth the amount determined as an overpayment and advising that such amount shall be refunded to the taxpayer," ibid., and because a claim filed simultaneously with a return is filed "within three years from the time the return was filed" under 26 U. S. C. §6511(a). The net effect of the interpretation of §§6511(a) and (b) adopted in Revenue Ruling 76–511 is that "if (i) a return is filed more than two but less than three years after it is due and (ii) a refund claim is filed contemporaneously or subsequently, `the refund would [be] allowable since the overpayment would have been made within the 3-year period immediately preceding the filing of the claim.'" Brief for Petitioner 29, n. 11 (quoting Rev. Rul. 76–511, 1976–2 Cum. Bull., at 429). The majority assumes that this interpretation of §6511 is correct. See ante, at 16–17. Under this reading of §6511, Lundy would have received a 3-year look-back period and a refund if he had filed a suit in a district court or the Court of Federal Claims, rather than filing a petition in the Tax Court.

The harder step is determining whether the Service's interpretation of §6511 itself is correct. Arguably, §6511(a) is ambiguous as to what point in time is relevant in determining whether "no return was filed." The Ninth Circuit has held in Miller v. United States, 38 F. 3d 473, 475 (1994), that "[t]he point at which one must determine whether a return has or has not been filed [for purposes of §6511(a)] must be two years after payment" of the taxes.

Congress' intent on this issue is difficult to discern. There is reason to think that Congress simply did not consider how being delinquent in filing a return would affect a taxpayer's right to recover a refund—in any forum. It appears that Congress chose the 3-year limitation period in §6511(a) to correspond with the amount of time the Government has to make an assessment. See S. Rep. No. 1983, 85th Cong., 2d Sess., 98–99 (1958). As construed by the Service in Revenue Ruling 76–511, subsection (a) of §6511 does create a limitation period for any taxpayer that will correspond with the period for assessment: the taxpayer has three years from the time he files his return to file a claim, and the Government usually has three years from the time the taxpayer files a return, for assessment. However, in cases where the taxpayer does not timely file his return, subsection (b) takes back the symmetry that subsection (a) bestows. In those cases, the taxpayer may only recover a refund of tax that was paid within the three years prior to his claim, yet the 3-year statute of limitation on assessments is triggered by the filing of the return. These facts suggest that in enacting §6511, Congress quite likely was simply not thinking about the effects on delinquent filers. Or, to put it another way, Congress may have had no intent regarding whether §§6511(a) and (b) would permit a taxpayer to take advantage of a 3-year look-back period where the taxpayer's return is not filed on time, and where the 3-year period thus cannot correlate with the Government's assessment period.

Nevertheless, in light of the language of §6511(a), the absence of any reason to think that Congress affirmatively intended to prevent taxpayers who file their returns more than two years late (but less than three years late) from collecting refunds, and the Service's 20-year interpretation of §6511 in its Revenue Ruling, I would interpret §6511 in conformity with the Revenue Ruling.

Section 6512(b), rather than §6511, directly governs the amount of a tax refund that may be awarded in the Tax Court. The most striking aspect of §6512(b)(3)(B), however, is that it incorporates the look-back provisions of §6511—it directs the Tax Court to determine what portion of tax was paid "within the period which would be applicable under section 6511(b)(2)." To my mind, then, the question is whether the additional language in §6512(b)(3)(B) (that directing the Tax Court to pretend that "on the date of the mailing of the notice of deficiency a claim had been filed"), the statute's legislative history, or other related statutory provisions indicate that Congress meant to prevent a taxpayer from receiving his refund from the Tax Court, even though the other courts could have ordered the refund.

Section 6512(b)(3)(B) does not merely incorporate §6511, of course. Instead, §6512(b)(3)(B) provides that the Tax Court is to determine what portion of tax was paid "within the period which would be applicable under section 6511(b)(2) . . . , if on the date of the mailing of the notice of deficiency a claim had been filed." 26 U. S. C. §6512(b)(3)(B) (emphasis added). The question is whether the addition of this language somehow prevents a taxpayer in Lundy's situation from collecting a refund in Tax Court. In asserting that §6512(b)(3)(B) does not permit recovery here, the Commissioner must tacitly rely upon one of two theories of interpreting that provision—that adopted by the Tax Court or that adopted by the majority.

Under the Tax Court's interpretation in this case, "section 6512(b)(3)(B) directs us to focus on the situation as it would have been on a specified date—the date of the mailing of the notice of deficiency." 65 TCM 3011, 3014, RIA TC memo ¶93, 278 (1993). According to the Tax Court, §6512(b)(3)(B) "requires us to `take a snapshot' of the situation" on the date the notice of deficiency was mailed. Ibid. Hence, the applicable look-back period is the period that would have been applicable under §6511(b)(2), if on the date of the mailing of the notice of deficiency a claim had been filed and if a determination as to the appropriate look-back period had also been made at that time—that is, without the benefit of the information that a real claim was ultimately filed less than three years after the tax was paid. The majority's interpretation of §6512(b)(3)(B) is only slightly different—in a way that does not help Lundy. Under that interpretation, "the `claim' contemplated in that section [is to be] treated as the only mechanism for determining whether a taxpayer can recover a refund." Ante, at 6–7 (emphasis added).

Section 6512(b)(3)(B), does not, however, require the Tax Court to limit its consideration to events that occurred on or before the notice of deficiency was mailed. Indeed, if anything, the variance in tenses ("would be applicable . . . if a claim had been filed") suggests that the Tax Court should determine the proper look-back period in the same way that courts normally determine the applicability of statutes of limita tion—with whatever information it has at the time that it rules.

Nor does the language of §6512(b)(3)(B) make clear any intent that the deemed claim of §6512(b)(3)(B) be treated as the only mechanism for determining whether a taxpayer can recover a refund. The statute incorporates the look-back periods of §6511 and then explicitly tells the Tax Court that, in applying §6511, it should pretend that an event happened "whether or not" it actually did happen; it does not tell the Tax Court to ignore events that did happen. If Congress had meant to say what the majority thinks it said, it could have added the words "no other claim is to be given effect." Or it might have directed the Tax Court to determine if the tax was paid "within the period which would be applicable under 6511(b)(2) with respect to a claim filed on the date the notice of deficiency was mailed." Cf. infra, at 7–8 (26 U. S. C. §6512(b)(3)(C) uses the phrase "period which would be applicable under section 6511(b)(2) . . . in respect of [a] claim" when denoting the period applicable to a particular claim).

The Commissioner notes that §6512(b)(3)(C) provides for the situation in which "a refund claim had actually been filed `before the date of the mailing of the notice of deficiency'" and argues that §6512(b) does not provide any "additional" jurisdiction in the Tax Court for refund claims made "after" the notice of deficiency is issued. Reply Brief for Petitioner 3–4 (emphasis in original). But Lundy does not argue for "additional" jurisdiction; he asks only that §6512(b)(3)(B), which appears to incorporate the look-back periods applicable in district court, not be construed as cutting off in the Tax Court a right to obtain a refund that he would have had in district court.

The government is perhaps making an expressio unius argument based upon the existence of §6512(b)(3)(C). It is true that my interpretation of §6512(b)(3)(B)—which permits a taxpayer to rely upon real claims as well as well as the deemed claim—might render §6512(b)(3)(C) unnecessary. But it appears that §6512(b)(3)(C) was not added to carve out an exception to some supposed implicit requirement in §6512(b)(3)(B) that the only recognizable claim in the Tax Court be the hypothetical one. Rather, it was meant to clarify that a certain application of §6512(b)(3)(B) was permissible. The Senate Report that accompanied the 1962 amendment to §6512(b), which added what is now §6512(b)(3)(C) explained:

"Since the 1954 enactment, . . . the Internal Revenue Service has in practice interpreted the law [i.e., §6512(b)(3)(B)] as permitting the refund of amounts where valid claims have been timely filed, as well as where these claims could have been filed on the date of the mailing of the notice of deficiency.

"Your committee believes it is desirable to amend the language of present law (sec. 6512(b)([3])) to make it clear that the statute conforms with the interpretation of this section followed by the Service since the enactment of the 1954 Code." S. Rep. No. 2273, 87th Cong., 2d Sess., 15 (1962).

Rather than demonstrating that §6512(b)(3)(B) was meant to prohibit recognition of "real" claims, this Report, and the Service's pre-1962 interpretation of §6512(b)(3)(B) described therein, suggest the opposite: that subsection (b)(3)(B) did and does recognize "real" claims that would be recognized under §6511.

Congress likely failed to state specifically in §6512(b) whether a subsequently filed claim should be considered in Tax Court because it simply did not consider how that statute would be applied to the taxpayer who failed to file a timely return—just as it likely did not consider how §6511 itself would be applied to the delinquent filer. Although Congress' intent, if any, as to how these statutes should apply where a late return is filed is obscure, its intent on two more general issues is more discernable.

First, Congress meant as a general matter to incorporate the look-back periods of §6511(b)(2) into §6512(b)(3)(B). If Congress had intended the Commissioner's construction of §6512(b)(3)(B), there would have been no reason to refer to §6511; instead, it could have stated the look-back periods much more simply and clearly, e.g., by specifying that a 3-year look-back period should apply if the taxpayer filed a return before the notice of deficiency was mailed, and that otherwise a 2-year look-back period should apply. Although, as noted below, Congress clearly intended to augment the taxpayer's ability to recover a refund in Tax Court proceedings in certain circumstances, there is no evidence of any intent to prevent the taxpayer from recovering in Tax Court a refund that he could have obtained in a suit in district court.

Second, by adding the "if" clause in §6512(b)(3)(B), Congress clearly did mean to favor a taxpayer who is notified that he owes the Government money, is effectively forced to go to court to contest the deficiency, and is required to put together his records and possibly litigate against the Government, only to discover during that litigation that it is he who has provided a loan to the Government. The deemed claim of §6512(b)(3)(B) is intended to protect the filer of a timely return who receives a notice of deficiency in the mail too late to gather his wits, review his papers more carefully, and file an accurate claim for a refund (or an accurate assertion of a right to a refund in a Tax Court petition) prior to the expiration of the 3-year period. When Congress amended 26 U. S. C. §322(d), the predecessor of §6512(b), in 1942, the House Report explained:

"In order to give the taxpayer the privilege to claim an overpayment before the [Tax Court] by such amendments to his petitions as may be allowed under the rules of the [Tax Court], without the period of limitations running against the refund of such overpayment after the notice of deficiency is mailed, [§322(d) is amended] to provide that the period of limitations which determines the portion of the tax which may be credited or refunded is measured from the date the notice of deficiency is mailed, rather than from the date the petition is filed." H. R. Rep. No. 2333, 77th Cong., 2d Sess., 121 (1942).

Because §6512(b)(3)(B) incorporates the look-back periods of §6511(b) and because it appears that the variance in the Tax Court statute was meant to be more protective of the taxpayer litigating in the Tax Court in certain circumstances, I would hold that Lundy may recover his refund.

Lundy argues that he was no more negligent for failing to file his return within three years than he was for failing to file it within two years, and that it would be irrational for Congress to forfeit Lundy's refund simply because the Service "beat him to the punch" in sending him a deficiency notice. I disagree. Allowing a delinquent taxpayer a shorter period of time within which to file his claim would not be irrational, nor would giving a taxpayer an incentive to submit his return before the Service calculates his tax obligation, locates him, and sends him a deficiency notice. Thus, for example, Congress might well have provided that if the notice of deficiency is sent prior to the taxpayer's filing his return, the taxpayer will have only a 2-year look-back period in any forum.

What would not make much sense to me, however, would be deliberately to adopt this scheme only in Tax Court proceedings—i.e., to punish only the taxpayer whose cash reserves make it impossible for him to provide the Government a still larger loan in any amount it demands while the taxpayer pursues relief in the district court or Court of Federal Claims, the taxpayer who is too unsophisticated to realize that a suit in district court could preserve his right to a refund, and the taxpayer whose expected refund is too small in relation to attorney's fees and other costs to justify a suit in district court. Obviously Congress could constitutionally have adopted such a strange scheme, but I will not simply presume that it has done so. Indeed, the Commissioner does not suggest any reason why Congress would have intended to do this; rather, it merely notes that there are many (generally unrelated) differences between Tax Court and district court proceedings and insists that the plain language of §6511 and §6512(b)(3)(B) mandates this result.

As noted previously, the harder step for me is the antecedent one of determining that §6511 itself permits a refund in these circumstances, because it does not appear to me that either §6511 or §6512(b) was written with delinquent filers in mind. Once that hurdle is cleared, however, it makes no sense to bar the tax payer's recovery in the Tax Court alone, when the language of §6512(b)(3)(B) does not mandate this result and when there is no reason to think that Congress intended it.