Justices Uphold IRS Refusal to Waive Deadline for Refunds


Saying that it is more important for the tax laws to be efficient than fair, the U.S. Supreme Court on Tuesday rejected a refund request from a retired Los Angeles schoolteacher whose senile father mistakenly sent a $7,000 check to the Internal Revenue Service.

The tax agency kept the money after it arrived in 1984, even though the 93-year-old man did not owe any taxes. When his daughter discovered the mistake after his death in 1989, the IRS said it was too late to issue a refund because she filed the claim after the legal deadline to do so.

Upholding the government’s refusal, the high court ruled unanimously that the strict time deadlines set in the tax law cannot be waived by the courts, even in sympathetic cases.

By setting these firm deadlines, “Congress decided to pay the price of occasional unfairness in individual cases in order to maintain a more workable tax enforcement system,” Justice Stephen G. Breyer wrote for the court.


He noted that the tax agency processes more than 200 million returns a year and issues more than 90 million refunds.

It “could create serious administrative problems” if the IRS were forced “to respond to, and perhaps litigate, large numbers of late claims,” he said in his opinion in the case (United States vs. Brockamp, 95-1125).

In 1988, Stanley McGill of Granada Hills died at age 98. In his last years, he had lived with his daughter, Marian Brockamp, who handled his financial affairs.

But he had continued to write some checks without her knowledge. She found the $7,000 check he had sent to the IRS and inquired about a refund since no taxes were owed. When tax officials rebuffed her request, she filed suit.


“It made me mad. I didn’t think it was fair,” she said in a recent interview.

The Encino tax lawyer who took the refund case all the way to the Supreme Court said he was disappointed but not surprised by the outcome. During the oral argument in December, the justices made it clear they were concerned about requiring the IRS to reopen, at least potentially, thousands of old cases.

In a companion case that was argued at the same time, a Hawaii man who was alcoholic was seeking a $30,000 refund for money he wrongly paid in 1984.

“The Justice Department succeeded in making them fear an onslaught of spurious tax refund claims, and I suppose I was not able to overcome that fear,” said attorney Robert F. Klueger.

But the case was not a total loss. It prompted President Clinton to order the Treasury Department to study a change in the law. And two weeks ago, the government proposed waiving the deadlines in the future for taxpayers who overpay because they suffer a “medically determined mental or physical disability.”

That change, included in the president’s budget, must be approved by Congress. But it will only apply to overpayments beginning next year.

Current tax law says that a “claim for refund . . . shall be filed by the taxpayer within three years from the time the return was filed . . . or if no return was filed . . . within two years from the time the tax was paid.”

To the surprise of tax officials, the U.S. 9th Circuit Court of Appeals ruled that Brockamp deserved a refund if her lawyer could prove that her father was mentally incompetent when he overpaid.


“It would be unconscionable to allow the government to retain the money that it concedes it was not owed,” said Judge Charles Wiggins for the appeals court. His opinion said the deadlines for refunds could be waived in sympathetic cases.

The Justice Department appealed that ruling, leading to Tuesday’s reversal.


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The Supreme Court eased the way for lawsuits by ex-employees. A15