OCTOBER TERM, 1999
Syllabus
BARAL
v. UNITED STATES
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
DISTRICT OF COLUMBIA CIRCUIT
No. 98-1667. Argued January 18, 2000-Decided February 22,
2000
Two remittances were made to the Internal Revenue Service toward
petitioner BaraI's income tax liability for the 1988 tax year: a
withholding of $4,104 from BaraI's wages throughout 1988 by his
employer, and an estimated income tax of $1,100 remitted in January
1989 by Baral. BaraI's income tax return for 1988 was due on April
15, 1989. Though he received an extension until August 15, he
missed this deadline and did not file the return until June 1,
1993. On the return, he claimed a $1,175 overpayment and asked the
Service to apply this excess as a credit toward his outstanding tax
obligations for the 1989 tax year. The Service denied the requested
credit, concluding that the claim exceeded the ceiling imposed by
26 U. S. C. § 6511(b)(2)(A), which states that "the amount of the
credit or refund shall not exceed the portion of the tax paid
within the period, immediately preceding the filing of the claim,
equal to 3 years plus the period of any extension of time for
filing the return." Since Baral filed his return on June 1, 1993,
and received a 4-month extension from the initial due date, the
relevant look-back period under § 6511(b)(2)(A) extended from June
1, 1993, back to February 1, 1990 (i.
e., three years plus
four months). According to the Service, Baral had paid no portion
of the overpaid tax during that period, and so faced a ceiling of
zero on any allowable refund or credit. Baral commenced this suit
for refund in the Federal District Court, which granted the Service
summary judgment. The Court of Appeals affirmed, concluding that
both remittances were "paid" on April 15, 1989.
Held: Remittances of estimated income tax and withholding
tax are "paid" on the due date of a calendar year taxpayer's income
tax return. Sections 6513(b)(1) and (2) unequivocally provide that
the two remittances were "paid" on April 15, 1989, for purposes of
§ 6511(b)(2)(A), so that they precede the look-back period, which
began on February 1, 1990. Subsection (1) resolves when the
remittance of BaraI's employer's withholding tax was "paid," and
subsection (2) determines when his remittance of estimated income
tax was "paid." Because neither these remittances nor any others
were "paid" within the look-back period, the ceiling on BaraI's
requested $1,175 credit is zero, and the Service was correct to
deny that credit. Contrary to BaraI's claim, the withholding tax
and estimated tax are not taxes in their own right (separate
from
432
the income tax), that are converted into income tax only on the
income tax return. Rather, they are methods for collecting income
taxes. And the Tax Code directly contradicts Baral's notion that
income tax is "paid" under § 6511(b)(2)(A) only when the income tax
is assessed. See § 6151(a). His position also finds no support in
Rosenman v.
United States, 323 U. S. 658, and would
work to the detriment of timely taxpayers, who would be denied
interest for the time between filing a return claiming a refund or
credit and the Service's assessment. Pp. 434-439.
172 F.3d
918, affirmed.
THOMAS, J., delivered the opinion for a unanimous Court.
Walter J. Rockler argued the cause for
petitioner. With him on the briefs were
Julius Greisman and
Thomas Klein.
Kent L. Jones argued the cause for the United States.
With him on the brief were Solicitor General Waxman, Assistant
Attorney General Argrett, Deputy Solicitor General Wallace, Gilbert
S. Rothenberg, and Charles Bricken.
JUSTICE THOMAS delivered the opinion of the Court. Internal
Revenue Code § 6511(b)(2)(A) imposes a ceiling on the amount of
credit or refund to which a taxpayer is entitled as compensation
for an overpayment of tax: "[T]he amount of the credit or refund
shall not exceed the portion of the tax paid within the period,
immediately preceding the filing of the claim, equal to 3 years
plus the period of any extension of time for filing the return." 26
U. S. C. § 6511(b)(2)(A). We are called upon in this case to decide
when two types of remittance are "paid" for purposes of this
section: a remittance by a taxpayer of estimated income tax, and a
remittance by a taxpayer's employer of withholding tax. The plain
language of a nearby Code section, § 6513(b), provides the answer:
These remittances are "paid" on the due date of the taxpayer's
income tax return.
I
The relevant facts are not disputed. Two remittances were made
to the Internal Revenue Service toward peti-
433
tioner David H. Baral's income tax liability for the 1988 tax
year. The first, a withholding of $4,104 from Baral's wages
throughout 1988, was a garden-variety collection of income tax by
the employer, see § 3402. The second, an estimated income tax of
$1,100 remitted in January 1989, was sent by Baral himself out of
concern that his employer's withholding might be inadequate to meet
his tax obligation for the year, see § 6654. In the ordinary
course, Baral's income tax return for 1988 was due to be filed on
April 15, 1989. Though he applied for and received an extension of
time until August 15, Baral missed this deadline; he did not file
the return until nearly four years later, on June 1, 1993. The
Service, on July 19, 1993, assessed the tax liability reported on
this belated return.
On the return, Baral claimed that he (and his employer on his
behalf) had remitted $1,175 more with respect to the 1988 taxable
year than he actually owed. Baral requested that the Service apply
this excess as a credit toward his outstanding tax obligations for
the 1989 taxable year. The Service denied the requested credit. It
did not dispute that Baral had timely filed the request under the
relevant filing deadline-"within 3 years from the time the return
was filed or 2 years from the time the tax was paid, whichever of
such periods expires the later." § 6511(a); see § 6511(b)(1). But
the Service concluded that the claim exceeded the ceiling imposed
by § 6511(b)(2)(A). That provision states that "the amount of the
credit or refund shall not exceed the portion of the tax paid
within the period, immediately preceding the filing of the claim,
equal to 3 years plus the period of any extension of time for
filing the return."
Ibid.; see generally
Commissioner
v.
Lundy, 516
U. S. 235, 240 (1996) (explaining that § 6511 contains two
separate timeliness provisions: (1) § 6511(b)(1)'s filing deadline
and (2) § 6511(b)(2)'s ceilings, which are defined by reference to
that provision's "look-back period[s]"). Since Baral had filed his
return on June 1, 1993, and had earlier received a 4-month
extension from the initial
434
due date, the relevant look-back period under § 6511(b)(2)(A)
extended from June 1, 1993, back to February 1, 1990 (i.
e.,
three years plus four months). According to the Service, Baral had
paid no portion of the overpaid tax during that period, and so
faced a ceiling of zero on any allowable refund or credit.
Baral then commenced the instant suit for refund in Federal
District Court. That court sustained the Service's position and
granted summary judgment in its favor. The Court of Appeals
affirmed. App. to Pet. for Cert. A-l, judgt. order reported at
172 F.3d
918 (CADC 1999). The Court of Appeals looked to §
6513(b)(1), which states that amounts of tax withheld from wages
"shall ... be deemed to have been paid by [the taxpayer] on the
15th day of the fourth month following the close of his taxable
year," and to § 6513(b)(2), which makes similar provision for
amounts submitted as estimated income tax, and concluded that,
under these subsections, both of the remittances at issue were
"paid" on April 15, 1989. Accord,
e. g.,
Dantzler v.
United States, 183 F. 3d
1247,1250-1251 (CA111999) (estimated income tax);
Ertman v.
United States, 165 F.3d
204, 207
(CA2 1999) (same);
Ehle v.
United
States, 720 F.2d
1096, 1096-1097
(CA9 1983) (withholding from wages). In
view of apparent tension between this approach and a decision of
the Court of Appeals for the Fifth Circuit,
Ford v.
United States, 618 F.2d
357, 360-361, and n. 4 (1980) (suggesting that a remittance
respecting any sort of tax is "paid" under § 6511 only when the
Service assesses the tax liability), we granted certiorari, 527 U.
S. 1067 (1999).
II
The parties renew before us the contentions advanced below. The
Government submits that §§ 6513(b)(1) and (2) unequivocally provide
that the two remittances at issue were "paid" on April 15, 1989,
for purposes of § 6511(b)(2)(A), so that they precede the look-back
period, which, as noted, commenced on February 1, 1990. Baral, on
the other hand, urges that a tax cannot be "paid" within the
meaning of
435
§ 6511(b)(2)(A) until the tax liability is assessed (i.
e., the value of the liability is definitively fixed).
According to Baral, the requisite assessment might be made either
when the taxpayer files his return (here June 1, 1993) or when the
Service, under § 6201, formally assesses the liability (here July
19, 1993), though he seems to prefer the latter date. See Brief for
Petitioner 9 ("Payment of the income tax ... occurred at the
earliest on June 1, 1993, when the amount of that tax first became
known, and more precisely on July 19, 1993, when the income tax was
assessed").
We agree with the Government that §§ 6513(b)(1) and (2) settle
the matter. We set out these provisions in full:
"(b) Prepaid income tax
"For purposes of section 6511 or 6512-
"(1) Any tax actually deducted and withheld at the source during
any calendar year under chapter 24 shall, in respect of the
recipient of the income, be deemed to have been paid by him on the
15th day of the fourth month following the close of his taxable
year with respect to which such tax is allowable as a credit under
section 31.
"(2) Any amount paid as estimated income tax for any taxable
year shall be deemed to have been paid on the last day prescribed
for filing the return under section 6012 for such taxable year
(determined without regard to any extension of time for filing such
return)."
Subsection (1) resolves when the remittance of withholding tax
by Baral's employer was "paid": Since Baral is a calendar year
taxpayer, the $4,104 withheld from his wages during the 1988
calendar year was "paid" on April 15, 1989. Subsection (2)
determines when Baral's remittance of estimated income tax was
"paid": Since the referenced § 6012 together with § 6072(a)
requires that a calendar year taxpayer like Baral file his income
tax return on the April 15th following the close of the calendar
year, the $1,100 remitted as an estimated income tax in respect of
Baral's 1988 tax liability was
436
likewise "paid" on April 15, 1989. And both of these statutorily
defined payment dates apply "[f]or purposes of section 6511," the
provision directly at issue in this case. This means that, under §
6511(b)(2)(A), both remittances at issue (the withholding and the
estimated income tax) fall before, and hence outside, the look-back
period, which commenced on February 1, 1990. Because neither these
remittances nor any others were "paid" within the look-back period
(February 1, 1990, to June 1, 1993), the ceiling on Baral's
requested credit of $1,175 is zero, and the Service was correct to
deny the requested credit.
Baral disputes this reading of § 6513(b). He claims that §§
6513(b)(1) and (2) establish a "deemed paid" date for payment of
estimated tax and
withholding tax, but in no sense
prescribe when the
income tax is "paid," which is the
crucial inquiry under § 6511(b)(2)(A). According to Baral,
withholding tax and estimated tax are taxes in their own right
(separate from the income tax), and are converted into income tax
only on the income tax return. (On this view, payment of the
income tax occurred no earlier than June 1, 1993, when Baral
filed the return.) This reading is evident, he says, from the
significance that the Treasury Regulations place on the filing of
the return, see 26 CFR § 301.6315-1 (1999) ("The aggregate amount
of the payments of estimated tax should be entered upon the income
tax return for such taxable year as payments to be applied against
the tax shown on such return"); § 301.6402-3(a)(1) (providing that
"in the case of an overpayment of income taxes, a claim for credit
or refund of such overpayment shall be made on the appropriate
income tax return"), and from the fact that the Code's provisions
regarding withholding and estimated tax are found in different
subtitles (C and F, respectively) from the provisions governing
income tax (A).
We disagree. Withholding and estimated tax remittances are not
taxes in their own right, but methods for collecting the income
tax. Thus, § 31(a)(1) of the Code provides that
437
amounts withheld from wages "shall be allowed to the recipient
of the income as a credit against the [income] tax," and § 6315
states that "[p]ayment of the estimated income tax, or any
installment thereof, shall be considered payment on account of the
income taxes imposed by subtitle A for the taxable year."
Similarly, one of the regulations cited by Baral explains that a
remittance of estimated income tax "shall be considered payment
on account of the income tax for the taxable year for which
the estimate is made." 26 CFR § 301.6315-1 (1999) (emphasis added).
Baral's reading fails, moreover, to give any meaning to 26 U. S. C.
§ 6513. That section exists "[f]or purposes of section 6511," and §
6511 concerns credits and refunds, which result only when the
aggregate of remittances (such as withholding tax and estimated
income tax)
exceed the tax liability, see § 6401. Thus, the
concepts of credit or refund have no meaning as applied to Baral's
notion of withholding taxes and estimated taxes as freestanding
taxes. Not surprisingly, the caption to § 6513(b) describes
withholding and estimated income tax remittances as "[p]repaid
income tax."
Taking a more metaphysical tack, Baral contends that income tax
is "paid" under § 6511(b)(2)(A) only when the income tax is
assessed-here, June 1 or July 19, 1993, see
supra, at
434-435-because the concept of payment makes sense only when the
liability is "defined, known, and fixed by assessment," Brief for
Petitioner 9. But the Code directly contradicts the notion that
payment may not occur before assessment. See § 6151(a) ("[T]he
person required to make [a return of tax] shall,
without
assessment or notice and demand from the Secretary,
pay
such tax ... at the time and place fixed for filing the return"
(emphasis added)); § 6213(b)(4) ("Any amount
paid as a tax
or in respect of a tax
may be assessed upon the receipt of such
payment" (emphasis added)). Nor does Baral's argument find
support in our decision in
Rosenman v.
United States,
323 U. S. 658
(1945), where we applied § 6511's predecessor to a remittance of
esti-
438
mated estate tax. To be sure, a part of our opinion seems to
endorse petitioner's view that payment only occurs at
assessment:
"It is [the] erroneous assessment that gave rise to a claim for
refund. Not until then was there such a claim as could start the
time running for presenting the claim. In any responsible sense
payment was then made by the application of the balance credited to
the petitioners in the suspense account .... " Id., at
661.
But the remittance in
Rosenman, unlike the ones here, was
not governed by a "deemed paid" provision akin to § 6513, and we
therefore had no occasion to consider the implications of such a
provision for determining when a tax is "paid" under the
predecessor to § 6511. See
ibid. (noting that "no extraneous
relevant aids to construction have been called to our attention").
Moreover, if the quoted passage had represented our holding, we
would have broadly rejected the Government's argument that payment
occurred when the remittance of estimated estate tax was made,
instead of rejecting the argument, as we did, only because it was
not in accord with the "tenor" of the "business transaction,"
id., at 663.1
We observe, finally, that Baral's position-to the extent he
submits that payment occurs only at the Service's assessment-would
work to the detriment of taxpayers who timely file their returns
and claim a refund or credit as compensa-
1 Central to our analysis in this regard was a concern that the
Service should not be able to treat the same remittance as a
payment for statute of limitations purposes-disadvantaging
the taxpayer by decreasing the time in which a refund claim could
be filed-and as a
deposit for purposes of accrual of
interest on overpayments-disadvantaging the taxpayer by starting
the accrual of interest only at assessment.
Rosenman, 323 U.
S., at 662-663. Indeed, we suggested that an amendment to the Code
disapproving of the Service's treatment of remittances as deposits
for interest purposes might change the analysis.
Id., at 663
(citing Current Tax Payment Act of 1943, § 4(d), 57 Stat. 140)
(presently codified at 26 U. S. C. § 6401(c)).
439
tion for an overpayment. The Service will not always assess the
taxpayer's liability immediately upon receiving the return; the
Service generally has three years in which to do so, see 26 U. S.
C. § 6501(a) (1994 ed., Supp. III). The Code does allow for payment
of interest to the taxpayer on overpayments once the return has
been filed and the tax paid, 26 U. S. C. § 6611 (1994 ed. and Supp.
III), but under Baral's view no interest could accrue during the
time between the filing of the return and the Service's assessment.
Fortunately for the timely taxpayer, the Code definitively rejects
Baral's position in this setting. Section 6611(d) of 26 U. S. C.
explains that the date of payment is determined according to the
provisions of § 6513, which, as noted,
supra, at 435436,
plainly set a deemed date of payment for remittances of withholding
and estimated income tax on the April 15 following the relevant
taxable year.2
***
For the foregoing reasons, we affirm the judgment below.
It is so ordered.
2 We need not address the proper treatment under § 6511 of
remittances that, unlike withholding and estimated income tax, are
not governed by a "deemed paid" provision akin to § 6513(b). Such
remittances might include remittances of estimated estate tax, as
in
Rosenman, or remittances of any sort of tax by a taxpayer
under audit in order to stop the running of interest and penalties,
see,
e. g., Moran v.
United States,
63 F.3d
663 (CA7 1995). In the latter situation, 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, 26 U. S. C. § 6213 (1994 ed. and
Supp. III), a deficiency that would be wiped out by treatment of
the remittance as a payment. We note that the Service has
promulgated procedures to govern classification of a remittance as
a deposit or payment in this context. See Rev. Proc. 84-58, 1984-2
Cum. Bull. 501.
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