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March 23, 1977

DuPont Glore Forgan Incorporated, et al., Plaintiffs
American Telephone and Telegraph Company, et al., Defendants and Third-Party Plaintiffs v. United States of America, Third-Party Defendant.

The opinion of the court was delivered by: WEINFELD


WEINFELD, District Judge: Plaintiffs commenced this class action to recover communications excise taxes which they allege were overcollected by defendants, acting as statutory collecting agents for the government. The plaintiffs are users of "Centrex" systems, *fn1" a form of telephone service used primarily by businesses and other large organizations, which permits communication between different telephones within one office as well as outside communications. The defendants are the American Telephone and Telegraph Co. ("AT&T") and twenty-three affiliated operating companies. The defendants have served a third-party complaint seeking recovery from the United States in the event plaintiffs prevail in their action.

Section 4251 of the Internal Revenue Code of 1954 *fn2" ("the Code") imposes an excise tax on telephone and other communications services and facilities. *fn3" The tax is imposed on the person who pays for the service or facility ("taxpayer") but the company providing the service or facility ("collecting agent") is obligated to collect the tax from the taxpayer and remit it to the government. *fn4" Pursuant to the Excise Tax Reduction Act of 1965, *fn5" however, no such tax is imposed upon "private communication service" such as intra-office communication by means of Centrex systems, provided that "a separate charge is made for such service." *fn6"

 The complaint contains eight counts. *fn7" In substance, Counts I, III and V allege that the defendants' failure to make separate charges for intra-office communication service provided by Centrex systems between 1966 and 1972 violated federal statutory and common law fiduciary duties. Counts VII and VIII allege violations of the federal antitrust laws. Counts II, IV and VI allege that the entries on defendants' books for Centrex service satisfied the "separate charge" requirement, as interpreted in a ruling of the Internal Revenue Service, *fn8" and that therefore plaintiffs were not required to pay the excise tax upon the intra-office communications service provided by Centrex.

 The defendants now move for summary judgment only on Counts II, IV and VI upon the ground that these counts assert claims for refund of taxes, which can be maintained only against the United States; alternatively, they seek partial summary judgment on these counts as to those members of the plaintiff class who have not filed administrative claims for refunds. The United States supports the defendants' motion and in addition has moved for summary judgment on the third-party complaint.

 I. Defendants' Motion for Summary Judgment

 Counts II, IV and VI of the complaint allege that "[since] the separation of the charges existed on the books of the defendants," the excise tax was not due upon the intra-office communication service, but that nonetheless

 defendants collected, or caused to have been collected, a greater amount in excise taxes from plaintiffs and members of the class than they were entitled to collect, or cause to be collected, under the law, and plaintiffs and members of the class were required to pay and did pay to the [defendants] excise taxes which were not in fact due. *fn9"

 The language of the complaint is thus cast solely in terms of a refund of overcollected taxes. Significantly, there is no allegation of breach of statutory or common law duty, or of violations of the antitrust laws, as alleged in the other counts. So, too, there is no dispute that all sums collected from plaintiffs by defendants were timely paid over by them to the United States as required by law. Thus, it is apparent that the issue to be addressed in these counts is essentially the same as would be presented in a tax refund suit: whether or not separate charges were made, which would determine the extent of plaintiffs' liability for the communications tax. However, the plaintiffs have chosen not to seek a return of the allegedly overcollected tax in a refund suit against the government, but rather have sued the defendants, who collected the tax from them and remitted it to the government. In support of their motion for summary judgment, defendants contend in essence that the tax refund provisions of the Code were intended by Congress to prohibit any suit against collecting agents such as themselves, and that plaintiffs therefore cannot maintain this suit against defendants but must sue the government.

 The question is close and not entirely free from doubt, but the Court is persuaded that an overall view of the tax collection and refund provisions of the Code, and of the mandated role of non-governmental collecting agents such as defendants, shows that aggrieved taxpayers such as plaintiffs must bring their suit against the government. A brief examination of the refund procedures established by the Code is necessary to an understanding of the issues involved. The Code provides that a taxpayer seeking a refund of taxes *fn10" must first make an administrative claim for refund within three years from the time his return was filed (or two years from the date the tax was paid, whichever is later) or, if no return was filed, within two years from the time the tax was paid. *fn11" He cannot bring suit until either the refund claim has been acted upon or six months have elapsed since it was filed. *fn12" In no event can suit be brought more than two years after the claim has been disallowed. *fn13" Refund suits can be brought only in accordance with these procedures, *fn14" which serve two functions. First, they afford the Internal Revenue Service an opportunity to investigate tax claims and resolve them without the time and expense of litigation. *fn15" Second, they protect the Treasury by providing strict limitations periods for tax refund suits. *fn16"

 Section 7422 of the Code, *fn17" upon which defendants rely, is persuasive evidence that an action against the government in accordance with these provisions of the Code was intended to be the exclusive remedy for a tax refund. Section 7422 reads, in relevant part:

 (a) No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary or his delegate, according to the provisions of law in that regard, and the regulations of the Secretary or his delegate established in pursuance thereof.

 . . .

 (f)(1) A suit or proceeding referred to in subsection (a) may be maintained only against the United States and not against any officer or employee of the United States (or former officer ...

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