Revah v. Commissioner ( 2014 )

FILED
NOT FOR PUBLICATION SEP 17 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
YAAKOV J. REVAH, No. 11-70229
Petitioner - Appellant, Tax Ct. No. 24076-08L
v.
MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
Appeal from a Decision of the
United States Tax Court
Submitted April 9, 2014**
Pasadena, California
Before: THOMAS, M. SMITH, and CHRISTEN, Circuit Judges.
Yaakov Revah appeals from the decision of the tax court concluding that
equitable recoupment does not apply to offset his income tax liabilities, and
upholding the determination of the Internal Revenue Office of Appeals to proceed
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
with the collection of such liabilities. Because the parties are familiar with the
facts and procedural history of this case, we repeat only those facts necessary to
resolve the issues raised on appeal. We reverse and remand.
A party seeking equitable recoupment must demonstrate that: (1) the “same
transaction, item, or taxable event” is subject to two taxes; (2) the taxes are
“inconsistent in that the Tax Code authorizes only a single tax”; (3) the tax sought
to be recouped is time barred; (4) there is an “identity of interest between the
parties paying the duplicative tax”; and (5) “the court in which the recoupment
claim is brought must independently have jurisdiction to adjudicate the claim.”
Estate of Branson v. Comm’r, 264 F.3d 904, 909–10 (9th Cir. 2001) (internal
quotations omitted).
The tax court concluded that Revah could not demonstrate that the Internal
Revenue Service applied two inconsistent taxes. The tax court reasoned that
Revah’s inability to use net operating losses to reduce tax liabilities was the result
of his failure to make his refund claims within the proper time period, rather than
the result of inconsistent theories of taxation.
The tax court’s conclusion that Revah is not entitled to equitable recoupment
due to his failure to timely file is erroneous. In United States v. Bowcut, we
rejected the government’s argument that recoupment should not be permitted
because the situation from which relief was sought was created by the taxpayer’s
untimely refund claim. 287 F.2d 654, 657 (9th Cir. 1961); see also Branson, 264
F.3d at 918 (citing Bowcut to reject government’s argument that petitioner was not
entitled to equitable recoupment because she did not diligently pursue her refund
claim). Rather, both Bowcut and Branson concluded that equitable recoupment
was available even though the claims at issue were not timely filed. Branson, 264
F.3d at 918; Bowcut, 287 F.2d at 657.
Therefore, even though Revah failed to timely file his refund claims, his
untimeliness is not a ground upon which the tax court may deny equitable
recoupment. See Branson, 264 F.3d at 918; Bowcut, 287 F.2d at 657. The tax
court thus erroneously concluded that Revah’s failure to timely assert his refund
claims precluded him from satisfying the equitable recoupment requirement that
the taxes be inconsistent. Accordingly, we reverse and remand for further
proceedings consistent with this memorandum disposition.
REVERSED AND REMANDED.