United States District Court, E.D. New York
September 9, 2014
For Maimonides Medical Center, Plaintiff: Thomas D. Sykes, PRO HAC VICE, Gould & Ratner LLP, Chicago, IL.
For United States of America, Defendant: Stephen Tancill Lyons, LEAD ATTORNEY, U.S. Department of Justice, Washington, DC.
MEMORANDUM & ORDER
ERIC N. VITALIANO, United States District Judge.
On July 14, 2009, plaintiff Maimonides Medical Center (" MMC" ) commenced this action against defendant the United States of America to recover overpayments of Federal Insurance Contribution Act (" FICA" ) taxes. On September 8, 2010, the parties advised the Court that the action had settled, and on September 10, 2010 the case was discontinued, except as to the right to reopen if the settlement was not consummated. On October 1, 2013, the Court granted plaintiff's unopposed motion to reopen the case, and it was restored to the calendar of active cases. The parties, moreover, still agree that plaintiff is entitled to a refund for its overpayments of FICA taxes. They also still agree on the amount of that refund. The sole issue in dispute is the rate of interest that should be applied, pursuant to 26 U.S.C. § 6621(a)(1). The government argues that plaintiff should receive the rate applicable to corporations receiving refunds in excess of $10,000. MMC rejoins that it is entitled to the higher rate of interest paid to non-corporate taxpayers. The parties now cross-move for summary judgment, pursuant to Federal Rule of Civil Procedure 56. For the reasons stated below, defendant's motion is granted in its entirety, and plaintiff's cross-motion is denied.
MMC is organized and operated as a domestic not-for-profit corporation under New York law. Joint Stipulation, Dkt. No. 29 (" Stip." ), ¶ 1. It is exempt from federal income tax, pursuant to § 501, as a " [corporation . . . organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes . . . ." See Stip. ¶ 2; § § 501(a), (c)(3). However, plaintiff pays other kinds of federal tax. In particular, as an employer, MMC is required to pay federal employment tax under FICA.
Standard for Summary Judgment
Pursuant to Rule 56, a federal district court must grant summary judgment upon motion and finding, based on the pleadings, depositions, interrogatory answers, admissions, affidavits, and all other admissible evidence, including stipulations of fact, that " there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The initial burden is on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Feingold v. New York, 366 F.3d 138, 148 (2d Cir. 2004). In determining whether the moving party has met this burden, a court must construe all evidence in a light most favorable to the nonmoving party, resolving all ambiguities and inferences in its favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Gibbs-Alfano v. Burton, 281 F.3d 12, 18 (2d Cir. 2002). However, " the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is
that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48 (emphasis in original); Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83, 90 (2d Cir. 2002). Material facts are those which, given the substantive law, might affect the suit's outcome. Anderson, 477 U.S. at 248.
If the moving party makes a prima facie showing that there are no genuine issues of material fact, the nonmoving party must go beyond the pleadings and put forth " specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); Davis v. New York, 316 F.3d 93, 100 (2d Cir. 2002). In so doing, the nonmoving party may not rely on conclusory allegations or speculation. Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 200 (2d Cir. 2004) (citing D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998)); Fed.R.Civ.P. 56(e) (" Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." ). Thus, to defeat a motion for summary judgment, the nonmoving party " must do more than simply show that there is some metaphysical doubt as to the material facts." Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005) (quoting Matsushita, 475 U.S. at 586). Nonetheless, the nonmoving party need not make a compelling showing; it need merely show that reasonable minds could differ as to the import of the proffered evidence. R.B. Ventures. Ltd. v. Shane, 112 F.3d 54, 59 (2d Cir. 1997).
The dispute between MMC and the government centers on statutory construction: the meaning of the term " corporation" in § 6621(a)(1). More specifically, the parties disagree about whether the term includes not-for-profit organizations, like plaintiff, which are incorporated in that form under state law and are exempt from federal income tax.
Section 6621(a)(1) sets the interest rate that is applied to overpayments of federal taxes:
(a) General Rule.-
(1) Overpayment rate.--The overpayment rate established under this section shall be the sum of--
(A) the Federal short-term rate . .., plus
(B) 3 percentage points (2 percentage points in the case of ...