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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-10283
____________________
ALBERT G. HILL, III,
Petitioner-Appellant,
versus
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
____________________
Petition for Review of a Decision of the
U.S. Tax Court
Agency No. 794-18
____________________
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2 Opinion of the Court 22-10283
Before WILLIAM PRYOR, Chief Judge, and HULL and MARCUS,
Circuit Judges.
HULL, Circuit Judge:
This appeal concerns the Tax Court’s jurisdiction over a
taxpayer’s motion to redetermine interest owed to the taxpayer.
Albert Hill sent $10,263,750 to the United States Internal
Revenue Service (“IRS”) as a “deposit” toward his expected gift tax
liability. After an IRS audit examination and Hill’s tax deficiency
proceeding in the Tax Court, Hill and the IRS settled the deficiency
proceeding, stipulating that Hill owed a gift tax deficiency of
$6,790,000 for 2011. The IRS applied the $10,263,750 to that 2011
deficiency and issued Hill a check for the balance of $3,473,750.
Post-judgment, the parties did not dispute that the IRS owes
Hill interest on that $3,473,750. Rather, they disputed the interest
rate. The IRS used the interest rate for deposits, which is the
federal short-term rate. Hill wanted the interest rate for
overpayments, which is the federal short-term rate plus three
percentage points. In the Tax Court, Hill filed a petition to reopen
his case to redetermine interest.
The Tax Court has jurisdiction to redetermine interest due
a taxpayer if the court previously found a remittance was an
overpayment. So its jurisdiction turns on whether the Tax Court
found that Hill made an overpayment of tax.
After review, and with the benefit of oral argument, we
conclude there is no Tax Court finding that Hill made an
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22-10283 Opinion of the Court 3
overpayment of tax and thus the Tax Court did not have
jurisdiction over Hill’s post-judgment motion to redetermine
interest. Because the Tax Court lacked jurisdiction over Hill’s
motion, we affirm the Tax Court’s decision denying Hill’s motion
to redetermine interest for lack of jurisdiction.
I. BACKGROUND
A. The 2010 Settlement Agreement
More than a decade ago, Hill became involved in litigation
with his father and other family members in the U.S. District Court
for the Northern District of Texas. This litigation concerned the
distribution of assets derived from the Hunt Oil Company.
In May 2010, the parties executed a settlement agreement.
To effectuate the settlement, the district court’s order directed Hill
to assign an installment agreement between Hill and his father to
trusts for the benefit of Hill’s children. That agreement entitled
Hill to receive $30,675,000 from 2011 to 2015. In May 2011, Hill
executed documents necessary to complete this assignment to his
children’s trusts.
B. Hill’s Deposit
Anticipating that he would be liable for gift tax, Hill
arranged to make a deposit under Internal Revenue Code (“I.R.C.”)
§ 6603 toward his potential gift tax liability. Section 6603 allows a
taxpayer to “make a cash deposit with the Secretary which may be
used by the Secretary to pay any tax,” such as a gift tax, “which has
not been assessed at the time of the deposit.” I.R.C. § 6603(a).
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4 Opinion of the Court 22-10283
On February 23, 2012, the district court registry in Texas
issued a $10,263,750 check, in the care of Andrew Burnett, Hill’s
representative. The check was payable to the U.S. Treasury.
On February 28, 2012, one of Hill’s representatives delivered
the check to an IRS office, and Burnett followed up with a letter,
stating that Hill “intend[ed] for this deposit to satisfy the
requirements of Section 6603(a) of the Internal Revenue Code.”
Burnett identified the disputable tax as “the potential tax imposed
under subtitle B of the Internal Revenue Code,” which covers
estate and gift taxes, for tax year 2011.
On August 19, 2013, an IRS letter notified Hill that (1) it had
credited $10,263,750 to his account for tax year 2011, but (2) it had
not received his 2011 gift tax return. The IRS letter also informed
Hill that, when he submitted his gift tax return, the IRS would
“apply the credit to the tax [he] owe[d] and refund any
overpayment.”
On August 23, 2013, Hill responded that: (1) his
representative had hand delivered to the IRS “a $10,263,750 deposit
of tax,” (2) the $10,263,750 credit “should be applied to 2012 rather
than 2011,” and (3) his potential gift tax was still “undetermined.”
The IRS transferred the $10,263,750 deposit to Hill’s 2012 account.
C. Hill’s Gift Tax Return for Tax Year 2012
On March 26, 2014, Hill filed a 2012 gift tax return, reporting
that he owed no gift tax. Hill asserted that no completed gift had
yet occurred because “matters [related to the 2010 settlement
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22-10283 Opinion of the Court 5
agreement] were still being litigated and appealed.” Hill also
reported that he had prepaid the amount of $10,263,750, and he
requested that that the IRS “refund” that “payment” of
$10,263,750.
D. Hill Requests Return of the Deposit
Over the next several years, Hill made multiple requests for
the return of the $10,263,750 deposit. On June 11, 2014, Hill made
a formal request to the IRS for the “immediate return of his deposit
as authorized by
26 U.S.C. § 6603(c).” Section 6603(c) provides
that, “[e]xcept in a case where the Secretary determines that
collection of tax is in jeopardy, the Secretary shall return to the
taxpayer any amount of the deposit (to the extent not used for a
payment of tax) which the taxpayer requests in writing.” I.R.C.
§ 6603(c).
On July 22, 2014, Hill made another request to the IRS for
“the return of his deposit in the amount of $10,263,750.”
On August 22, 2014, the IRS requested that Hill explain:
(1) whether the check was “accompanied by a writing which
identified it as a deposit as directed in Rev. Proc. 2005-18,” and
(2) “the facts which caused [him] to suppose that gift tax of such
magnitude might be owed for 2011 and/or 2012” so that the IRS
could determine whether to examine his gift tax returns.
Importantly, the IRS asked Hill if he agreed that the funds should
be returned “to the District Court from which the payment
originally came,” rather than to Hill himself.
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6 Opinion of the Court 22-10283
On February 4, 2015, Hill replied, confirming that the
$10,263,750 check was a § 6603 “deposit” toward his potential gift
tax liability for 2011 and then redirected to 2012. Hill also
submitted the writing identifying the check as a “deposit” and
requested the IRS “immediately return to Mr. Hill his $10,263,750
deposit.”
E. IRS Examination of 2012 Gift Tax Return
On July 30, 2015, the IRS notified Hill that his 2012 gift tax
return was selected for examination. From August 2015 to August
2016, the IRS corresponded with Hill and received documents from
Hill.
On October 20, 2016, the IRS sent Hill a letter, recounting
how the IRS’s attorney had advised Hill’s representative that the
IRS’s final determination of Hill’s gift tax liability could differ from
Hill’s reported gift tax of $0 for tax year 2012. The IRS letter also
advised it could release the funds but requested that Hill “confirm
that [he] would like to move forward with [his] request for return
of funds.” The IRS observed that the parties to the 2010 settlement
agreement had stipulated that “any refund of tax payments would
be returned to the District Court’s account holding the other funds
involved in the litigation.” Because “the District Court’s account
authorized the payment originally,” the IRS asked if “the District
Court should also send in a request for the return of funds in order
to authorize the release [of the funds].” The record does not
indicate that Hill ever responded to this question.
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On December 14, 2016, the IRS completed its examination
of Hill’s gift tax return for 2012. The IRS advised Hill of its three
alternative determinations: (1) the gift was completed in 2010
when Hill settled the litigation, and the district court entered its
final judgment; (2) the gift was completed in 2011 when Hill
executed the assignment of the installment agreement to his
children’s trusts; or (3) the gift was completed in 2015 when the
funds were transferred into the trusts for Hill’s children.
The IRS observed that, in his 2012 gift tax return, Hill
“attribut[ed] the Section 6603 deposit to this gift tax year only.” As
there was no gift tax liability for 2012, the IRS advised Hill to
“request in writing that the funds be applied to a different tax year
in accordance with Revenue Procedure 2005-18” to avoid liability
in the relevant tax year. Otherwise, the § 6603 deposit would be
returned to the district court.
F. Hill’s Protest
On February 13, 2017, Hill filed a protest, disputing the IRS’s
determination of his gift tax liability. This time, Hill requested that
the IRS apply “his previous deposit of $10,263,750, made according
to IRC § 6603, . . . to the disputed gift tax liability for 2010, 2011,
and 2015.” The IRS then transferred Hill’s deposit designated for
2012 to his account for 2010.
Hill’s protest disputing his gift tax liability was not
successful. On October 18, 2017, the IRS issued a notice of
deficiency, which assessed: (1) a gift tax deficiency of $10,386,250
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8 Opinion of the Court 22-10283
for tax year 2010; (2) a statutory penalty of $2,336,906 under I.R.C.
§ 6651(a)(1) for failing to file a required gift tax return for tax year
2010; and (3) a statutory penalty of $595,131 under I.R.C.
§ 6651(a)(2) for failing to pay that tax.
G. Hill’s Deficiency Proceeding in the Tax Court
On January 16, 2018, Hill filed a petition in the Tax Court to
redetermine the deficiency for tax year 2010. Hill’s petition
asserted that: (1) the IRS erred in determining his 2010 assignment
to his children’s trusts was a taxable gift, (2) he had “deposited
$10,263,750 with the IRS while the legal effect of the [assignment]
was being analyzed by [his] professional advisors,” and (3) the IRS
“misclassifie[d] th[is] deposit as a payment.”
Prior to trial, the parties settled the deficiency proceeding.
On May 31, 2019, the parties filed a joint stipulation that provided:
(1) Hill made a taxable gift of $24,400,000 in 2011; (2) no gift tax
was due for 2010 and 2015; and (3) “[t]he deficiency in this case will
be computed without reference to an advance payment of
$10,263,750 that was made on February 28, 2012.” (Emphasis
added).
On June 26, 2019, the IRS sent a letter estimating the interest
due to Hill. The IRS stated that its calculation was “only an
estimate” and estimated that the interest was $1,069,230.12, using
the interest rate for overpayments. The interest rate (1) for
deposits is the federal short-term rate, and (2) for overpayments is
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22-10283 Opinion of the Court 9
the federal short-term rate plus three percentage points. See I.R.C.
§§ 6603(d)(4), 6621(a)(1).
H. Judge Gustafson’s Stipulated Decision
On July 19, 2019, Tax Court Judge David Gustafson entered
a stipulated decision. The first page of that final decision contained
the parties’ stipulations that Judge Gustafson adopted as the order
and decision of the Tax Court as follows:
Pursuant to the agreement of the parties in this
case, it is
ORDERED AND DECIDED: That there is a
deficiency in gift tax due from petitioner for the
calendar year 2011 in the amount of $6,790,000.00;
That there are no deficiencies in gift tax due
from, nor overpayments due to, petitioner for the
calendar years 2010 and 2015;
That there is no addition to tax due from
petitioner for the taxable year 2010, under the
provisions of I.R.C. § 6651(a)(1); and
That there is no addition to tax due from
petitioner for the taxable year 2010, under the
provisions of I.R.C. § 6651(a)(2).
Judge Gustafson’s electronic signature appeared at the end of this
first page. By agreement of the parties, Judge Gustafson thus
ordered and decided that a $6,790,000 deficiency existed for 2011,
but no deficiency existed for 2010 and 2015.
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A second page was part of the document. That second page
was signed by the parties’ representatives, but not Judge Gustafson.
It contained these stipulations by the parties:
It is hereby stipulated that the Court may enter
the foregoing decision in this case.
It is further stipulated that interest will accrue
and be assessed as provided by law on the deficiency
due from petitioner.
It is further stipulated that, effective upon the
entry of this decision by the Court, petitioner waives
the restrictions contained in I.R.C. § 6213(a)
prohibiting assessment and collection of the
deficiency (plus statutory interest) until the decision
of the Tax Court becomes final.
It is further stipulated that there is a
prepayment credit in the amount of $10,263,750.00
which payment was made on February 28, 2012 and
was credited to petitioner’s tax year 2010 gift tax
liability. It is stipulated that the prepayment credit in
the amount of $10,263,750.00 will be reversed for
petitioner’s tax year 2010 and applied to petitioner’s
tax year 2011 gift tax liability. It is further stipulated
that the deficiency for the taxable year 2011 is
computed without considering the prepayment
credit of $10,263,750.00.
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It is further stipulated that interest will be
credited or paid as provided by law on any
overpayment in tax due to petitioner.
(Emphases added). The parties refer to these stipulations as
“below-the-line stipulations” because they appear below Judge
Gustafson’s signature.
On October 17, 2019—ninety days after entry on the docket
after no appeal was taken—the stipulated decision became final.
See I.R.C. §§ 7481(a)(1), 7483. 1
In January 2020, the IRS issued a check to Hill in the amount
of $3,473,750, which was the difference between Hill’s $10,263,750
deposit and the $6,790,000 deficiency for tax year 2011. It did not
include interest.
I. Hill’s Motion to Redetermine Interest
In August 2020, Hill filed a motion to redetermine interest
in the Tax Court. Hill’s motion alleged that: (1) his $10,263,750
remittance was designated as a § 6603 deposit, (2) the $3,473,750
that the IRS returned to Hill was “the exact difference between the
amount [Hill] deposited and the deficiency [the Tax] Court
1 Generally, § 6213(a) does not allow the IRS to collect a deficiency until the
Tax Court’s decision becomes final. I.R.C. § 6213(a). Hill’s waiver of the
restrictions in § 6213(a) allowed the $10,263,750 deposit to be applied instanter
to the 2011 gift tax liability before the stipulated decision became final.
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12 Opinion of the Court 22-10283
determined,” and (3) he was owed interest of $1,267,322.80, using
the interest rate for overpayments.
In response to Hill’s motion, the IRS submitted that the Tax
Court lacked jurisdiction to redetermine the interest owed to Hill.
It pointed out that: (1) I.R.C. § 7481(c)(2)(B) gives the Tax Court
jurisdiction over a motion to redetermine interest when the Tax
Court “finds under section 6521(b) that the taxpayer has made an
overpayment,” but (2) Judge Gustafson’s stipulated decision did
not find that Hill made an overpayment of tax. The IRS asserted
that, even if the Tax Court had jurisdiction over Hill’s motion, Hill
was owed only $218,121.22 in interest, using the interest rate for
deposits.
With its response, the IRS submitted an “Activity
Summary,” which listed (1) $6,790,000 as an “Advance Payment of
Determined Deficiency”; (2) $3,473,750 as a “Refund of
Overpayment”; and (3) $218,121.22 as “Overpayment Interest.”
That interest, however, is calculated at the deposit rate of the
federal short-term rate, not the overpayment rate of the federal
short-term rate plus three percentage points. See I.R.C.
§§ 6603(d)(4), 6621(a)(1).
In a reply brief, Hill argued for the first time that his
$10,263,750 remittance should be deemed a payment of tax, rather
than a deposit. Hill contended that: (1) the stipulated decision
determined that he made an overpayment of tax in 2011; (2) the
IRS treated his $10,263,750 remittance as an “advance payment”;
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22-10283 Opinion of the Court 13
and (3) his remittance lost its character as a deposit when the IRS
refused to return it upon his requests.
J. Reassignment of Hill’s Motion to Redetermine Interest
In July 2021, after briefing was completed, the Tax Court
Chief Judge reassigned Hill’s case from Judge Gustafson to Judge
Albert Lauber for disposition of Hill’s motion. In the Tax Court,
Hill did not challenge this reassignment order.
K. Denial of Hill’s Motion to Redetermine Interest
On October 25, 2021, the Tax Court denied Hill’s motion to
redetermine interest for lack of statutory jurisdiction. Hill v.
Comm’r,
122 T.C.M. (CCH) 252 (T.C. 2021). Although jurisdiction
existed over motions to redetermine interest on overpayments, the
Tax Court concluded that it had no jurisdiction to redetermine
Hill’s interest because Judge Gustafson’s stipulated decision (1) had
found only that Hill had a gift tax deficiency of $6,790,000 in 2011
and (2) had not found that Hill made an “overpayment.”
Further, the below-the-line stipulations (1) evidenced only
an agreement between the parties, not findings by the Tax Court,
(2) did not refer to any “overpayment,” and (3) actually stated that
the deficiency for tax year 2011 would be computed “without
considering the prepayment credit of $10,263,750.”
The Tax Court also concluded that the stipulated decision
could not have found that Hill made an overpayment in 2011
because he (1) had called the $10,263,750 check a “deposit,” and
(2) had not made a payment of tax for any relevant year when the
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Court’s 2019 decision was entered. The Tax Court observed that:
(1) Hill “initially designated the $10,263,750 check as a ‘deposit’” in
February 2012; (2) Hill “consistently referred to it as a ‘deposit’” in
his correspondence with the IRS and his filings with the Tax Court;
and (3) Hill likely characterized the remittance as a deposit for his
own benefit so that “[h]e could demand the immediate return of
his deposit at any time.”
The Tax Court also reasoned that the IRS had not converted
Hill’s deposit into a payment of taxes because (1) there was no
authority that the IRS could overrule Hill’s designation of his
remittance as a deposit or any evidence that the IRS had done so,
(2) the IRS never refused to return the remittance, and (3) Hill did
not allege that he provided the information that the IRS requested
to effectuate the return of the remittance to the district court. The
Tax Court observed that, while the parties used the terms “advance
payment” or “payment” when referring to the $10,263,750
remittance, “the word ‘payment,’ when appearing in these
contexts, was not being used in a technical sense” and “such
statements cannot override [Hill’s] unambiguous designation of
the remittance as a ‘deposit.’”
Because the $10,263,750 was a deposit and Judge Gustafson
had not found an overpayment, the Tax Court denied Hill’s
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22-10283 Opinion of the Court 15
motion to redetermine interest for lack of jurisdiction. Hill timely
appealed. 2
II. GENERAL PRINCIPLES
“The Tax Court is a court of limited jurisdiction and lacks
general equitable powers.” Comm’r v. McCoy,
484 U.S. 3, 7,
108
S. Ct. 217, 219 (1987); see also I.R.C. § 7442 (“The Tax
Court . . . shall have such jurisdiction as is conferred on [it] by this
title . . . .”). We thus examine the relevant statutes granting the
Tax Court jurisdiction.
A. Jurisdiction over a Petition to Redetermine a Deficiency
I.R.C. § 6213(a) grants the Tax Court jurisdiction to
redetermine a deficiency assessed by the IRS. I.R.C. § 6213(a). In
general, a deficiency is the amount by which a tax imposed under
the Code exceeds the amount reported by the taxpayer on his tax
returns. See id. § 6211(a).
When the IRS determines that a taxpayer owes a deficiency,
the IRS is authorized to send notice to the taxpayer, specifying the
deficiency amount and demanding payment. Id. §§ 6303(a),
2In this appeal, Hill contends for the first time that the Tax Court erred in
assigning his motion to redetermine interest to Judge Lauber after the
underlying deficiency action was assigned to Judge Gustafson. Hill forfeited
this issue by not raising it in the Tax Court. Stubbs v. Comm’r,
797 F.2d 936,
938 (11th Cir. 1986) (concluding that an issue not presented to the Tax Court
“although briefed by the parties, is not properly before this [C]ourt”). In any
event, Hill’s contention lacks merit.
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6212(a). Within a specific time period, “the taxpayer may file a
petition with the Tax Court for a redetermination of the
deficiency.”
Id. § 6213(a).
Hill started this case with his petition to redetermine the
deficiency assessed by the IRS. When that deficiency proceeding
was settled, the Tax Court entered the stipulated decision, which
later became final.
The issue here is whether the Tax Court had jurisdiction to
reopen Hill’s case (post-judgment) to redetermine interest. As
explained below, not all taxpayers can go back to the Tax Court to
redetermine interest.
B. Jurisdiction over a Post-Judgment Motion to Redetermine
Interest
The Tax Court may reopen a final decision for the purpose
of redetermining interest in limited circumstances. See I.R.C.
§ 7481(c)(1). Section 7481(c)(1) provides that:
[I]f, within 1 year after the date the decision of the Tax
Court becomes final . . . , the taxpayer files a motion
in the Tax Court for a redetermination of the amount
of interest involved, then the Tax Court may reopen
the case solely to determine whether the taxpayer has
made an overpayment of such interest or the
Secretary has made an underpayment of such interest
and the amount thereof.
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Id. (emphasis added). 3
There are two categories of deficiency cases that may be
reopened (post-judgment) to redetermine interest. First, under
§ 7481(c)(2)(A), the Tax Court may reopen the case when the IRS
has assessed a deficiency “which includes interest . . . , and . . . the
taxpayer has paid the entire amount of the deficiency plus interest
claimed by the Secretary.” Id. § 7481(c)(2)(A). Hill does not argue
that the Tax Court had jurisdiction over his motion under
§ 7481(c)(2)(A).
Second, the Tax Court may reopen a deficiency case
(post-judgment) when it “finds under section 6512(b) that the
taxpayer has made an overpayment.” Id. § 7481(c)(2)(B) (emphasis
added). Section 6512(b) provides, in relevant part, that:
[I]f the Tax Court finds that there is no deficiency and
further finds that the taxpayer has made an
overpayment . . . of gift tax . . . in respect of which the
Secretary determined the deficiency, or finds that
there is a deficiency but that the taxpayer has made
an overpayment of such tax, the Tax Court shall have
jurisdiction to determine the amount of such
overpayment, and such amount shall, when the
decision of the Tax Court has become final, be
credited or refunded to the taxpayer.
3 The parties agree that Hill’s motion to redetermine interest was timely filed.
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Id. § 6512(b)(1) (emphases added).
The Code references overpayment, but it “does not contain
a general definition of ‘overpayment.’” Gen. Elec. Co. &
Subsidiaries v. United States,
384 F.3d 1307, 1312 (Fed. Cir. 2004).
In interpreting the term “overpayment” in other tax provisions, the
Supreme Court has “read the word ‘overpayment’ in its usual
sense, as meaning any payment in excess of that which is properly
due.” Jones v. Liberty Glass Co.,
332 U.S. 524, 531,
68 S. Ct. 229,
233 (1947). The Supreme Court has explained that “[t]he
commonsense interpretation is that a tax is overpaid when a
taxpayer pays more than is owed, for whatever reason or no reason
at all.” United States v. Dalm,
494 U.S. 596, 609 n.6,
110 S. Ct. 1361,
1368 n.6 (1990) (“The word encompasses ‘erroneously,’ ‘illegally,’
or ‘wrongfully’ collected taxes . . . .” (citation omitted)).
Similarly, our Court has observed that “[a]n overpayment
occurs whenever a taxpayer has paid an amount over and above
his true tax liability.” Glaze v. United States,
641 F.2d 339, 343 (5th
Cir. Unit B Apr. 1981) (quotation marks and citation omitted); see
also Wachovia Bank, N.A. v. United States,
455 F.3d 1261, 1263
(11th Cir. 2006) (“[A]ny payment is an overpayment when no
payment was due.”).
C. Payments and Deposits
As further background, it helps to understand why
taxpayers, like Hill, will expressly designate a remittance as a
“deposit,” as opposed to a payment. Whether the taxpayer makes
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a deposit or a payment can affect whether the taxpayer can
challenge the amount of a deficiency.
Generally, when a taxpayer makes an undesignated
remittance, the IRS treats that remittance as a payment and applies
it “against any outstanding liability for taxes, penalties[,] or
interest.” See Rev. Proc. 2005-18 § 4.01(2), 2005-
13 I.R.B. 798, 799. 4
“If an undesignated remittance is made in the full amount of a
proposed liability,” it “will be treated as a payment of tax, a notice
of deficiency will not be mailed[,] and the taxpayer will not have
the right to petition the Tax Court for a redetermination of the
deficiency.”
Id. § 4.03, 2005-13 I.R.B. at 800.
By contrast, a taxpayer who makes a “deposit” can challenge
an alleged deficiency in the Tax Court without accruing
underpayment interest on the disputed tax, up to the amount of
the deposit. See I.R.C. §§ 6601(a), 6603(a)–(b), 6213(a). The
Supreme Court has recognized that “the taxpayer will often desire
treatment of the remittance as a deposit—even if this means
forfeiting the right to interest on an overpayment—in order to
preserve jurisdiction in the Tax Court, which depends on the
existence of a deficiency,” which “would be wiped out” if the
4 Throughout their briefs, both parties cited and relied upon Revenue
Procedure 2005–18. No party raised a deference issue under Chevron, U.S.A.,
Inc. v. National Resources Defense Council, Inc.,
467 U.S. 837,
104 S. Ct. 2778
(1984), and thus we do not address Chevron.
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20 Opinion of the Court 22-10283
remittance were treated as a payment. Baral v. United States,
528
U.S. 431, 439 n.2,
120 S. Ct. 1006, 1011 n.2 (2000).
Deposits are returnable on demand. If the taxpayer requests
the return of his deposit in writing before the deposit is used to pay
a tax, the IRS must return it to the taxpayer unless the IRS
determines that the collection of tax is in jeopardy. I.R.C. § 6603(c).
But once the deposit is applied to pay a tax, the taxpayer may
submit “a claim for credit or refund as an overpayment.” Rev. Proc.
2005-18 § 6.01, 2005-13 I.R.B. at 800 (“A deposit made pursuant to
section 6603 is not subject to a claim for credit or refund as an
overpayment until the deposit is applied by the [IRS] as payment
of an assessed tax of the taxpayer.”).
With this background, we turn to Hill’s arguments.
III. DISCUSSION
The parties agree that the Tax Court had jurisdiction to
reopen Hill’s case if the Tax Court “finds that there is a deficiency
but that the taxpayer has made an overpayment of such tax.” I.R.C.
§ 6512(b)(1). Hill contends the Tax Court’s stipulated decision
made the required finding of an overpayment. 5 We review Hill’s
arguments in that regard.
5This Court reviews de novo the Tax Court’s legal conclusions, including
questions of subject-matter jurisdiction and statutory interpretation.
Greenberg v. Comm’r,
10 F.4th 1136, 1155 (11th Cir. 2021).
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A. Tax Court’s Stipulated Decision
Hill emphasizes that the Tax Court expressly found: (1) that
he owed a $6,790,000 deficiency for tax year 2011; and (2) there
were no deficiencies or overpayments for tax years 2010 or 2015.
Hill argues that “the only tenable conclusion” from the two
stipulated findings is that he made an overpayment of tax for 2011.
We do not agree.
It is obvious that the Tax Court did not make an express
finding that Hill had made an overpayment of tax for 2011. And,
contrary to Hill’s argument, the Tax Court did not implicitly, or in
substance, find that he made an overpayment of tax. Indeed, the
Tax Court’s findings on the first page are also consistent with a
determination that Hill made a $10,263,750 deposit that had not yet
been applied to the deficiency for tax year 2011.
At most, the Tax Court was silent on whether Hill made an
overpayment for tax year 2011. The Tax Court’s silence cannot be,
and is not, a finding of an overpayment for § 6512(b)(1)
jurisdictional purposes.
B. Below-the-Line Stipulations
We now turn to the below-the-line stipulations on the
second page. Hill argues that the below-the-line stipulations
(1) also constituted findings by the Tax Court and (2) stated that he
made an overpayment of tax.
For several reasons, we conclude these below-the-line
stipulations reflect an agreement between the parties and were not
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22 Opinion of the Court 22-10283
judicial findings by the Tax Court. Furthermore, these stipulations
do not even state that Hill made an overpayment.
For starters, the below-the-line stipulations were separate
and distinct from the Tax Court’s findings on the first page of the
stipulated decision. These stipulations were memorialized below
Judge Gustafson’s signature on a page signed only by the parties’
representatives. Under the Tax Court Rules, a stipulation for trial
is treated as a “conclusive admission by the parties to the
stipulation.” Tax Ct. R. 91(e); accord G.I.C. Corp. v. United States,
121 F.3d 1447, 1450 (11th Cir. 1997) (“[P]arties are bound by their
stipulations and a pretrial stipulation frames the issues for trial.”).
There is no reason to treat stipulations for settlement differently.
While the below-the-line stipulations may be binding against the
IRS, these stipulations were not findings by the Tax Court.
Second, we reject Hill’s argument that the first sentence in
the below-the-line stipulations—“[i]t is hereby stipulated that the
Court may enter the foregoing decision in this case”—was a finding
of fact necessary for the Tax Court to enter judgment. (Emphasis
added). To the contrary, this stipulation indicates that only the
foregoing stipulations on the first page of the stipulated decision
constitute the decision of the Tax Court.
Third, Hill misreads how far the below-the-line stipulations
go. Nothing in them constitutes a stipulation, even by the parties,
that the $3,473,750 was an overpayment of tax. We explain why.
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22-10283 Opinion of the Court 23
Hill relies on two below-the-line stipulations that reference
“prepayment credit” and “payment” as follows: (1) “there is a
prepayment credit in the amount of $10,263,750.00 which payment
was made on February 28, 2012 and was credited to petitioner’s tax
year 2010 gift tax liability”; and (2) “the prepayment credit in the
amount of $10,263,750.00 will be reversed for petitioner’s tax year
2010 and applied to petitioner’s tax year 2011 gift tax liability.” 6
(Emphases added).
These two stipulations do not identify or treat Hill’s original
$10,263,750 remittance as a payment toward his 2011 gift tax
liability. Read properly, the stipulations state that the $10,263,750
initially was credited to Hill’s 2010 gift tax liability and now will be
applied as a payment toward his 2011 gift tax liability.
In fact, the very next below-the-line stipulation states that
“the deficiency for the taxable year 2011 is computed without
considering the prepayment credit of $10,263,750.00.” (Emphasis
added). Had the parties agreed to treat the $10,263,750 as a
payment of tax for 2011, it would not have been disregarded in the
deficiency computation of $6,790,000.
6 Hill also directs our attention to this below-the-line stipulation: “It is further
stipulated that interest will be credited or paid as provided by law on any
overpayment in tax due to petitioner.” (Emphasis added). However, this is a
general stipulation that tracks the Internal Revenue Manual’s (“I.R.M.”)
recommended form language about interest accrual. See I.R.M. § 35.8.2.5(3)
(Aug. 11, 2004). It does not in any way identify the $3,473,750 excess
remittance as an overpayment.
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24 Opinion of the Court 22-10283
Fourth, we reject Hill’s claim that the Tax Court required a
finding of an exact amount of overpayment in order to satisfy the
jurisdictional requirement of § 7481(c)(2)(B). This claim is belied
by the record. The Tax Court determined that it lacked jurisdiction
because Judge Gustafson’s stipulated decision “did not find that
[Hill] had made an overpayment,” not because the stipulated
decision failed to identify the exact amount of an overpayment.
In sum, because Judge Gustafson’s stipulated decision did
not find that Hill made an overpayment of tax, the Tax Court did
not err in denying Hill’s motion to redetermine interest for lack of
jurisdiction.
IV. HILL’S OTHER ARGUMENTS
A. Intent of the Parties
Hill also argues that, to the extent the stipulated decision
was ambiguous, we may consider extrinsic evidence of the parties’
communications, such as: (1) the IRS’s “estimate of the
overpayment interest,” calculated using the overpayment interest
rate, and (2) the “Activity Summary” that characterized the
$3,473,750 excess remittance as a “Refund of Overpayment.” Hill
argues that this evidence removes any doubt that the parties
intended to treat the $3,473,750 excess remittance as an
overpayment.
We disagree. The intent of the parties has no bearing on the
ultimate issue in this case—whether the Tax Court found that Hill
made an overpayment of tax.
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Moreover, the evidence of the parties’ intent is decidedly
mixed. Hill argues that his remittance became a payment on
August 23, 2013, when he requested that the remittance “be
applied to 2012 rather than 2011.” Yet Hill’s August 23, 2013 letter
referred to the remittance as a “deposit” and noted that the
potential gift tax for 2012 was still “undetermined.” Hill again
referred to the $10,263,750 remittance as a “deposit” in later
communications with the IRS and even in his motion to
redetermine interest. Tellingly, Hill only began to refer to the
remittance as an overpayment in his reply brief in those interest
proceedings after the IRS pointed out that the Tax Court lacked
jurisdiction to redetermine interest with respect to a deposit.
B. Advance Payment
Next, Hill emphasizes that, before the settlement, the IRS
sent him an estimate of the interest he was owed and classified his
remittance as an “Advance Payment of Determined Deficiency.”
The parties’ joint stipulations, before the settlement, also referred
to the remittance as an “advance payment.”
As the IRS points out, the I.R.M. states that, when the IRS
processes a § 6603 deposit, this deposit should be classified as an
“Advance Payment of Determined Deficiency.” See I.R.M.
§ 20.2.4.8.2.1(1) (Mar. 5, 2015). Thus, the term “advance payment”
could refer to a deposit, which is submitted to the IRS and then can
be applied to pay a tax. See I.R.C. § 6603(a). In any event, the
parties’ use of the term “advance payment” before the stipulated
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26 Opinion of the Court 22-10283
decision was entered does not show that Judge Gustafson found
that Hill made an overpayment in the stipulated decision.
C. Return of Deposit
Hill also argues that the $10,263,750 remittance lost its
character as a deposit because the IRS did not return it on demand.
We agree with the Tax Court that the IRS did not convert Hill’s
remittance into a payment of taxes for 2011.
As the Tax Court indicated, the IRS never refused to return
his deposit. Hill did request, in writing, the return of his deposit at
least four times. However, early on in August 2014, the IRS
pointed out the $10,263,750 check was issued by the district court
and asked if those funds should be sent to the district court, rather
than Hill himself. Later, Hill did not provide information that the
IRS requested to effectuate the return of his deposit. On October
20, 2016, the IRS sent Hill a letter, requesting that Hill “confirm
that [he] would like to move forward with [his] request for return
of funds” and asking if “the District Court should also send in a
request for the return of funds in order to authorize the release [of
the funds].” Hill does not allege that he ever responded to this
question.
Additionally, Hill has cited no authority stating that a
designated deposit becomes a payment merely because the IRS
does not return it on demand. Cf. Dillon Tr. Co. v. United States,
162 Fed. Cl. 708, 720 (2022) (“[Section] 6603(c) does not enumerate
the number of days or months in which the IRS
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22-10283 Opinion of the Court 27
must return the deposits, nor does it use time-sensitive phrases
such as ‘immediately’ or ‘within a reasonable time.’”). Nothing in
§ 6603 imposes the on-demand time constraint Hill suggests. See
I.R.C. § 6603(c).
D. Post-Decision Issuance of $3,473,750 Check
Hill also asserts that “[t]he ultimate test of whether the Tax
Court had found an overpayment under section 6512(b) would
inhere in the consequences that flowed from the entry of its
decision document.” Hill contends that, because he received a
check for $3,473,750 on January 6, 2020, after his original
$10,263,750 remittance was applied to the $6,790,000 deficiency,
the Tax Court must have found an overpayment under
§ 6512(b)(1).
Hill’s argument again ignores that the Tax Court must
“find[]”an overpayment before the court can exercise jurisdiction
over a motion to redetermine interest. I.R.C. § 7481(c)(2)(B).
Here, the Tax Court’s findings, not the parties’ subsequent
conduct, control whether the Tax Court had jurisdiction over Hill’s
motion to redetermine interest. How the $10,263,750 was applied
after the Tax Court’s stipulated decision was entered has no
bearing on whether the Tax Court found that Hill made an
overpayment.
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28 Opinion of the Court 22-10283
V. CONCLUSION
Because the Tax Court did not have jurisdiction to rule on
Hill’s motion to redetermine interest, we affirm the Tax Court’s
dismissal of Hill’s motion for lack of jurisdiction.
AFFIRMED.
