Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 00-cv-02066) District Judge: Honorable Garrett E. Brown, Jr.
Before: Barry, Ambro and Cowen, Circuit Judges
The opinion of the court was delivered by: Ambro, Circuit Judge
Argued September 24, 2002
Roger Pransky appeals the District Court's determination that he failed to initiate in a timely manner this adversary proceeding against the Internal Revenue Service, as required to invoke the Bankruptcy Court's jurisdiction pursuant to 26 U.S.C. S 6532(a)(1). Section 6532 sets a two-year statute of limitations to file suit in court when the IRS disallows a taxpayer's request for a tax refund. Because Pransky did not bring suit within S 6532's two-year window of opportunity following the IRS's disallowance of his refund requests for tax years 1984 and 1985, the District Court correctly held that the Bankruptcy Court did not have jurisdiction over Pransky's adversary proceeding as it pertains to those tax years. We therefore affirm the decision of the District Court in this regard and remand to permit the Bankruptcy Court to rule on the IRS's proof of claim, over which the Bankruptcy Court can properly exercise jurisdiction.
For tax years 1984 through 1987, Pransky did not file tax returns by the applicable due dates because he was under a criminal investigation at that time and feared that by providing certain information on the tax returns he might waive his Fifth Amendment right not to incriminate himself. His counsel advised him instead to remit money to the IRS in an amount that would exceed any tax liability he might have. Following this advice, Pransky remitted sums of money for each of the taxable years in question, 1984 through 1987, with letters directing that the money was to be applied to any income tax liability that he might have for those years.
In 1991 Pransky finally filed tax returns for tax years 1984, 1985, and 1986, and in 1992 he filed his 1987 return. He elected on his 1984 through 1986 tax returns to apply overpayments from those years as credits to the taxes he owed for each succeeding year. The IRS interpreted the elections to credit the overpayments as requests for refunds, and there is no dispute over this characterization. We will refer to the requests for credits made on Pransky's 1984 and 1985 tax return forms as the "first requests." *fn1
In 1992 the IRS disallowed the first requests as untimely under 26 U.S.C. S 6511(b)(2)(A), which, generally speaking, permits refunds of tax payments only if they were paid within the three-year period preceding the request. Pransky had remitted in 1986 and 1987 the money expected to cover his 1984 and 1985 taxes, respectively. These remittances were therefore made more than three years before 1991, when Pransky filed the pertinent returns.
The IRS did not send a notice of disallowance of Pransky's request to carry forward any overpayment from his 1986 taxes. As a result of the disallowances for the 1984 and 1985 tax years, however, Pransky had deficiencies in his 1986 and 1987 taxes. In 1992, after Pransky received the disallowance notices for the 1984 and 1985 requested refunds, he again asked the IRS to credit the 1984 and 1985 overpayments to the 1986 and 1987 tax deficiencies ("second requests"). Pransky had made the first requests only by filling in a line on his tax forms that indicated that he elected to credit to subsequent years the amount of money he claimed in overpayments. The second requests included factual background and legal argument in support of the requested credits, contending whyS 6511 did not preclude them.
The IRS did not send notices of disallowance for the second requests. Instead, it applied $294,613 in overpayments from Pransky's 1991 through 1996 taxes to pay his 1986 and 1987 tax deficiencies as calculated without the 1984 and 1985 credits. Nonetheless, according to the IRS's calculations Pransky still owed money on his 1987 taxes.
In January 1997, Pransky filed a Chapter 11 bankruptcy petition. The next month, the IRS brought a proof of claim for Pransky's 1987 ...