DISTRICT COURT REFUSES TO DISMISS SUIT FOR REFUND CLAIMED ON NOL CARRYBACK.

ORDER

The Court has before it Defendant's Motion to dismiss claim for 1980, filed September 7, 1991. Plaintiff filed its resistance on November 19, 1991.

I. STATEMENT OF FACTS

The matter in dispute surrounds Plaintiff's claim for a refund with respect to tax year 1980. The refund claimed arose when Plaintiff, on January 21, 1986, filed a Form 1139 with respect to the 1985 tax year indicating a net operating loss. On January 12, 1987, Plaintiff amended its return for 1980 on form 1120X, claiming a refund with respect to 1980 in the amount of $11,545.00, based upon a carryback of the 1985 operating loss from 1985 to 1979, and in turn, the resultant carryforward of certain investment tax credits from 1979 to 1980.

Defendant asserts that the Court lacks jurisdiction over this action for failure to file a timely claim for refund for the 1980 tax year. Plaintiff contends that the filing was timely.

II. APPLICABLE LAW AND DISCUSSION

A defendant must surmount a major obstacle in order to persuade this court to dismiss the plaintiff's claim at so early a stage in the litigation. "A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Thus, it is only in the "unusual case" where the complaint on its face reveals some insuperable bar to relief that a dismissal under Rule 12(b)(6) is warranted. Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir. 1982). The issue is not whether plaintiffs will ultimately prevail, but rather whether they are entitled to offer evidence in support of their claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); United States v. Aceto Agricultural Chemical Corp., 872 F.2d 1373, 1376 (8th Cir. 1989).

The essence of the Defendant's motion is the application of the proper statute of limitation period for the filing of the Plaintiff's claim for refund. Defendant argues that 26 U.S.C. section 6511(a) controls the statutory limitation for the filing in this matter. Plaintiff counters that the appropriate limitation period is set forth in 26 U.S.C. section 6511(d)(2)(A) which is a special period of limitation with respect to net operating loss or capital loss carrybacks.

In Longiotti v. United States, 819 F.2d 65 (4th Cir.) cert denied 484 U.S. 985 (1987), the court stated: "Normally, the statute of limitations for filing a tax refund claim is 'three years from the time the return was filed or two years from the time the tax was paid, whichever of such periods expires the later.'" (citing 26 U.S.C. section 6511(a)) Id. at 66. "Since the existence of net operating losses might not become known until after the section 6511(a) period had expired, Congress enacted a special limitations provision to govern such losses." Id. (citing Mar Monte Corp. v. United States, 503 F.2d 254, 256 (9th Cir. 1974). "If the refund is attributable to net operating loss carrybacks, 'in lieu of the 3-year period of limitations prescribed in subsection (a), the [limitations] period shall be that period which ends with the expiration of the 15th day of the 40th month' following the end of the taxable year of the net operating loss which results in the carryback." Id. (citing 26 U.S.C. section 6511(d)(2)(A)). See also Nelson v. United States, 757 F.2d 1537 (5th cir. 1985); Rev. Rul. 65-281, 1965-2 C.B. 44.

In the present case, the section 6511(a) statutory limitation had expired when the net operating loss become known in 1986. The net operating loss was then carried back to the 1979 tax year which, in turn, created an investment tax credit for 1980 taxes and, therefore, entitlement to a refund in 1980. Under section 6511(d)(2)(A), Plaintiff had until March 15, 1989, to file for the 1979 as well as the 1980 refund. Plaintiff filed for the refund on January 12, 1987, well within the allowable statutory limit.

The exhibits submitted with Plaintiff's resistance are not dated or signed, but the court finds that the factual documentation coupled with the case law and special statutory provisions for net operating loss carrybacks provides sufficient evidence to permit the Plaintiff's claims to go forward at this time. It does not appear beyond doubt that the Plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

III. CONCLUSION

Defendant's Motion to dismiss is DENIED.

It is so ordered.

Dated this day 31st of December, 1991.

                                   Ronald E. Longstaff