Supreme Court Action: Jurisdiction Under The Tucker Act, Sort Of

The Supreme Court issued a single Per Curiam opinion this morning.  It deals with federal jurisdiction in the context of tax payments, refunds, and when interest starts to accrue, though the opinion does not resolve the tax issues.  The case is Ford Motor Company v. United States (13-113).

The IRS informed Ford that it had underpaid its taxes for the years 1983 through 1989.  Ford gave the Government several payments totaling $875 million that stopped the accrual of interest that Ford would otherwise owe pending the result of the audits.  Ford told the Government to treat the deposits as advance payments that Ford would otherwise owe.  As it turns out, Ford had overpaid its taxes which entitled the company to a return of the overpayment with interest from the date of overpayment under 26 U.S.C. §6611.  The Code section, however, does not define the date of overpayment.  The Government claimed the starting date of the accrual began with the date Ford asked that the overpayments be used as credits.  Ford claimed, however, that the date of accrual should be when the deposits were made.  The difference in interpretations was about $445 million.

Ford sued the Government in Federal District Court using 28 U.S.C. §1346(a)(1) as the basis for jurisdiction.  That section authorizes civil actions against the United States to recovery taxes erroneously or illegally assessed or collected.  The Government and the District Court did not contest the jurisdictional authority.  The District Court held for the Government’s interpretation and the Sixth Circuit affirmed.

Ford sought certiorari on the issue.  The Government countered for the first time on appeal that 28 U.S.C. §1346(a)(1) does not apply to the suit.  It contended that the Tucker Act applies to the suit meaning that the only court with jurisdiction over the case is the United States Court of Federal Claims.  The Supreme Court sent the case back to the Sixth Circuit to determine which statute waives sovereign immunity and to determine which court has proper jurisdiction.  Bloomberg has a short report on the case.


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