El Paso CGP Co., et al. v. United States

El Paso appealed the district court's grant of summary judgment to the IRS, denying El Paso's tax refund claim. El Paso contended that the IRS, in settling a tax dispute with El Paso involving a refund and set-off, failed to adhere to the assessment and collection procedures provided by the Internal Revenue Code when setting off El Paso's deficiency against its refunds. El Paso contended that this failure barred the IRS from collecting unpaid taxes from El Paso. The court concluded that it had jurisdiction over the suit where it was unwilling to apply the variance doctrine to deprive the taxpayer from asserting federal court jurisdiction over the suit for refund. On the merits, the court held that, where the IRS and a taxpayer enter into a closing agreement, which sets out the liabilities and overpayments of the taxpayer, the IRS could comply with the mitigation provisions of the Code by "assessing and collecting" any net deficiency from the years covered by the closing agreement, or by "refunding or crediting" any net overpayment for those years. This case involved "refunding" an overpayment and the Government refunded El Paso's net overpayment within one year of the execution of the Closing Agreement. The "refunding" thus occurred within the applicable statutory period of limitations as per the mitigation provisions. The IRS acted within its authority in applying El Paso's deficiencies to offset its overpayment. Accordingly, the court affirmed the judgment of the district court. View "El Paso CGP Co., et al. v. United States" on Justia Law