The opinion of the court was delivered by: MISHLER
Memorandum of Decision and Order
This is an action for the refund of taxes paid brought pursuant to 26 U.S.C. § 7422. Jurisdiction is alleged to exist under 28 U.S.C. § 1346(a)(1). Defendant has moved for judgment on the pleadings under Rule 12(c) F.R. Civ. P. The essence of defendant's claim is that the court does not have subject matter jurisdiction of the instant controversy in that plaintiff has not filed a timely claim for refund according to the provisions of 26 U.S.C. § 7422(a). As matters outside the pleadings have been presented to the court, and have not been excluded, the motion shall be treated as a motion for summary judgment under Rule 56 F.R. Civ. P., as provided for in the text of Rule 12(c) F.R. Civ. P. For the purposes of its motion, defendant has admitted all the factual allegations in the complaint.
The facts are as follows: Plaintiff [taxpayer] and her deceased husband always used the calendar year as their fiscal year. Taxpayer brings this action in her own right and as administratrix of her husband's estate. On or about March 15, 1956 and 1957, the deceased filed joint returns for himself and his wife, paying in full the taxes as computed thereon for the prior calendar year. Benjamin Mondshein, taxpayer's husband, died on December 5, 1957. On or about March 15, 1958, taxpayer, for herself and as administratrix, filed a return for the calendar year 1957. The taxes due as computed on that return were paid.
On February 6, 1963, the Internal Revenue Service notified taxpayer that a deficiency had been found in her payments for the year 1957 and that an assessment in the amount of $11,193.73 was being made. Plaintiff taxpayer alleges, and defendant admits for the purposes of the motion, that this assessment was the result of a change in method of accounting dictated by the Service. Taxpayer paid the assessment in full on March 1, 1963. On February 2, 1965, plaintiff filed a claim for a refund in the amount of $10,547.67. This claim was allowed and taxpayer, on October 22, 1965, was refunded $10,616.95, representing the entire claim plus interest. Taxpayer filed a further claim for refund for the years 1955, 1956 and 1957 on September 22, 1966. An amended claim based on the same underlying claim was filed on June 26, 1967, requesting the refund of $14,285.36 plus interest. On or about November 2, 1967, taxpayer was notified by the Internal Revenue Service that the claim of September 22, 1966, as amended, was rejected. This decision was appealed by taxpayer to the Appellate Division of the Internal Revenue Service, which affirmed the rejection, so notifying taxpayer on August 1, 1968. Taxpayer thereafter applied for reargument and reconsideration, both of which applications were rejected on August 13, 1968 and October 14, 1968, respectively. This suit followed.
Defendant asserts that the applicable statute of limitations for claims such as that pressed by taxpayer is contained in 26 U.S.C. § 6511(a).
That sub-section states that claims for refund shall be filed within three years from the time a return is filed or two years from the payment of the tax, whichever is later, or two years from the payment of the tax if no return is filed. No return was filed for the assessment paid by taxpayer on March 1, 1963. Section 6511(b)(1) states that if a claim is not filed within the above time periods no refund or credit shall be granted.
Defendant then points to sub-section (a) of 26 U.S.C. § 7422, which lays down the rule that no suit shall be maintained for the recovery of taxes unless a claim has been "duly filed."
No return having been filed in the instant case, and the assessment having been paid on March 1, 1963, defendant asserts that taxpayer had until March 1, 1965 to file a claim. A claim was indeed filed on February 2, 1965, well within the limitations period of 26 U.S.C. § 6511(a). This claim was allowed in full on October 22, 1965.
The controversy centers about the claim filed on September 22, 1966. Defendant asserts that that claim was not timely filed, and that such a defect deprives this court of subject matter jurisdiction because of the effect of 26 U.S.C. § 7422(a). That subsection does not refer to jurisdiction in haec verba, but the non-fulfillment of its requirements has been held to be a jurisdictional defect. Algonac Mfg. Co. v. United States, 192 Ct. Cl. 649, 428 F.2d 1241, 1249 (1970). Section 7422(a) does not contain any mention of timeliness, but only states that a claim must have been "duly filed." This term has been held to include timeliness: "To have been 'duly filed', a refund claim must have been filed within the applicable period of limitations; a tardy claim cannot ground jurisdiction of a suit for refund of taxes." per Pollack, J., in Schneider v. United States, 300 F. Supp. 136, 137 (S.D.N.Y. 1969) citing Benenson v. United States, 257 F. Supp. 101 (S.D.N.Y. 1967), aff'd 385 F.2d 26 (2d Cir. 1967). See also J. C. Pitman & Sons, Inc. v. United States, 161 Ct. Cl. 701, 317 F.2d 366, 368 (1963); Prentis v. United States, 273 F. Supp. 460, 477 (S.D.N.Y. 1967).
It is thus evident that were taxpayer's claim of September 22, 1966 to be a new and ordinary refund claim for taxes paid without a return before September 22, 1964, or with a return filed before September 22, 1963, this court would have no jurisdiction over the suit, a claim for refund not having been duly filed.
Taxpayer makes three arguments in support of the timeliness of her claim for refund made on September 22, 1966. First, she argues that the claim of September 22, 1966 must be considered an amendment of the claim of February 2, 1965 and is thus not subject to the limitations period contained in 26 U.S.C. § 6511(a). Second, she states that as the Commissioner changed her method of accounting, she becomes eligible for the adjustment provisions contained in 26 U.S.C. § 481, and that these adjustment provisions incorporate by reference the special mitigation provisions contained in 26 U.S.C. § 1314(b), thus extending the time in which a claim must be filed. Third, she states that she is eligible for the benefits provided by the mitigation provisions taken as a whole, 26 U.S.C. §§ 1311-15.
The claim for refund filed on September 22, 1966 cannot be considered an amendment of the prior claim made on February 2, 1965, which claim was allowed in full on October 22, 1965. As stated by the Court in New York Trust Co. v. United States, 87 F.2d 889, 891 (2d Cir. 1937), cert. denied 301 U.S. 704, 57 S. Ct. 937, 81 L. Ed. 1359 (1937):
Allowance of a specific claim and payment of the full sum claimed must be deemed final action thereon, leaving nothing pending for subsequent amendment. No reason is apparent to differentiate between allowance and rejection in this respect, and concededly it is too late to amend after rejection of a claim.
Cf. United States v. Memphis Cotton Oil Co., 288 U.S. 62, 72, 53 S. Ct. 278, 282, 77 L. Ed. 619 (1933); Edwards v. Malley, 109 F.2d 640, 645-46 (1st Cir. 1940); Solomon v. United States, 57 F.2d 150, 151 (2d Cir. 1932).
The rule that acceptance of a claim in full bars any subsequent amendment has also been applied to more recent cases arising under the 1954 revision of the Internal Revenue Code. Union Pacific R. Co. v. United States, 182 Ct. Cl. 103, 389 F.2d 437 (1968); United States v. Wells Fargo Bank, 393 F.2d 272 (9th Cir. 1968). Cf. Clement v. United States, 405 F.2d 703 (1st Cir. 1969). In the light of all the above cases, taxpayer's first contention must fail.
Conceding that the action taken by the Commissioner in 1963 relating to certain inclusions and exclusions in taxpayer's income for 1957 amounted to a total change of accounting method and that the adjustment provisions of 26 U.S.C. § 481 do apply, this court holds that the extension of the period of limitations contained in 26 U.S.C. § 1314(b) is not incorporated into § 481. Plaintiff relies upon a reference in 26 U.S.C. § 481(b)(3)(B) which cites 26 U.S.C. § 1314(a).
It is self-evident that the mention there made of 26 U.S.C. § 1314 refers only to the method of computation which is indeed set out in sub-section (a) of § 1314. No reference is made to sub-section (b) of § 1314 which is the sub-section which actually extends the time to file claims. The conclusion that taxpayers eligible for the adjustment provisions of § 481 are not automatically granted an extension of the period of limitations is further reinforced by the language of 26 U.S.C. § 1314 itself. Sub-section (b) of § ...