Government Argues for Transfer of Overpayment Interest Claims

BANK OF AMERICA CORPORATION,
Plaintiff-Appellee
v.
UNITED STATES OF AMERICA,
Defendant-Appellant

IN THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

ON APPEAL FROM THE ORDER OF THE
UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF NORTH CAROLINA
No. 3:17-cv-546; JUDGE ROBERT J. CONRAD, JR.

BRIEF FOR THE APPELLANT

RICHARD E. ZUCKERMAN
Principal Deputy
Assistant Attorney General

ELLEN PAGE DELSOLE (202) 514-8128
NORAH E. BRINGER (202) 307-6224
Attorneys
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044

November 4, 2019

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TABLE OF CONTENTS

Table of contents

Table of authorities

Statement of related cases

Glossary

Jurisdictional statement

Statement of the issue

Statement of the case

Summary of argument

Argument

Conclusion

Statutory addendum

Addendum

Certificate of service

Certificate of compliance

TABLE OF AUTHORITIES

Cases:

Alexander Proudfoot Co. v. United States, 454 F.2d 1379 (Ct. Cl. 1972)

Amoco Production Co. v. United States, No. 87-C-8811, 1988 WL 9112 (N.D. Ill. Feb. 5, 1988)

Barnes v. United States, 133 Ct. Cl. 546 (1956)

Bhd. of R.R. Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519 (1947)

Citadel Indus., Inc. v. United States, 314 F. Supp. 245 (S.D.N.Y. 1970)

Coca-Cola Co. v. United States, 87 Fed. Cl. 253 (2009)

Estate of Culver v. United States, No. 1:19-cv-462, 2019 WL 4930224 (D. Colo. Oct. 7, 2019)

Davis v. Mich. Dep't of Treasury, 489 U.S. 803 (1989)

Draper v. United States, 10 A.F.T.R.2d 5446 (E.D. Wash. 1962)

E.W. Scripps Co. v. United States, 420 F.3d 589 (6th Cir. 2005)

EC Term of Years Trust v. United States, 550 U.S. 429 (2007)

Elec. Welfare Trust Fund v. United States, 907 F.3d 165 (4th Cir. 2018)

Energy East Corp. v. United States, 645 F.3d 1358 (Fed. Cir. 2011)

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)

Flora v. United States, 357 U.S. 63 (1958) (“Flora I”)

Flora v. United States, 362 U.S. 145 (1960) (“Flora II”)

Ford Motor Co. v. United States, 768 F.3d 580 (6th Cir. 2014)

Ford Motor Co. v. United States, 132 Fed. Cl. 104 (2017)

Ford Motor Co. v. United States, 908 F.3d 805 (Fed. Cir. 2018)

Gen. Elec. Co. & Subs. v. United States, 384 F.3d 1307 (Fed. Cir. 2004)

Gen. Instrument Corp. v. United States, 33 Fed. Cl. 4 (1995)

Gen. Motors Corp. v. United States, 389 F. Supp. 245 (E.D. Mich. 1975)

Gustafson v. Alloyd Co., Inc., 513 U.S. 561 (1995)

Horizon Coal Corp. v. United States, 43 F.3d 234 (6th Cir. 1994)

King v. St. Vincent's Hosp., 502 U.S. 215 (1991)

Lane v. Pena, 518 U.S. 187 (1996)

Mitchell v. United States, 930 F.2d 893 (Fed. Cir. 1991)

Paresky v. United States, 139 Fed. Cl. 196 (2018)

Paresky v. United States, No. 18-cv-23569, Doc. 104 (Order) (S.D. Fla. Oct. 21, 2019) (Appx1223-1228)

Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189 (1985)

Pfizer, Inc. v. United States, 939 F.3d 173 (2d Cir. 2019)

Phico Group, Inc. v. United States, 692 F. Supp. 437 (M.D. Pa. 1988)

Platt v. Union Pac. R.R. Co., 99 U.S. 48 (1878)

Roberts v. United States, 242 F.3d 1065 (Fed. Cir. 2001)

Sorenson v. Sec'y of Treasury, 475 U.S. 851 (1986)

Souders v. S.C. Pub. Serv. Auth., 497 F.3d 1303 (Fed. Cir. 2007)

South Corp. v. United States, 690 F.2d 1368 (Fed. Cir. 1982)

Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017)

Strategic Housing Fin. Corp. v. United States, 608 F.3d 1317 (Fed. Cir. 2010)

Sunoco, Inc. v. Commissioner, 663 F.3d 181 (3d Cir. 2011)

Texas E. Corp. v. United States, 18 Cl. Ct. 387 (1989), aff'd, 907 F.2d 138 (Fed. Cir. 1990)

Triangle Corp. v. United States, 592 F. Supp. 1316 (D. Conn. 1984)

Trs. of Bulkeley Sch. v. United States, 628 F. Supp. 802 (D. Conn. 1986)

TRW Inc. v. Andrews, 534 U.S. 19 (2001)

United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1 (2008)

United States v. Dalm, 494 U.S. 596 (1990)

United States v. Nordic Village, 503 U.S. 30 (1992)

United States v. Sherwood, 312 U.S. 584 (1941)

United States v. Williams, 514 U.S. 527 (1995)

United States v. Williams, 553 U.S. 285 (2008) 

Wachovia Bank, N.A. v. United States, 455 F.3d 1261 (11th Cir. 2006)

Wells Fargo & Co. v. United States, 827 F.3d 1026 (Fed. Cir. 2016) 

Wichita Center for Graduate Medical Education v. United States, No. 16-1054, 2016 WL 4000934 (D. Kan. July 26, 2016), 2016 WL 7971164 (D. Kan. Dec. 21, 2016), 2016 WL 7386454 (D. Kan. Dec. 21, 2016)

Wyodak Resources Development Corp. v. United States, 637 F.3d 1127 (10th Cir. 2011)

Statutes:

Internal Revenue Code (26 U.S.C.):

§ 6511

§ 6532

§ 6601(a)

§ 6601(e)

§ 6611

§ 6611(a)

§ 6621

§ 7422

28 U.S.C.:

§ 1292(d)(4)

§ 1346

§ 1491

§ 1631

§ 2107(b)

§ 2401

§ 2411

§ 2501

Act of July 13, 1866, 14 Stat. 98

Act of Mar. 3, 1887, 24 Stat. 505

Act of Mar. 3, 1911, 36 Stat. 1087

Act of Feb. 24, 1925, 43 Stat. 972

Act of July 30, 1954, 68 Stat. 589

Revenue Act of 1921, 42 Stat. 227

R.S. § 3226 (1878)

Miscellaneous:

Black's Law Dictionary (8th ed. 1999)

Fed. R. App. P. 4(a)(1)(B)

H.R. Rep. No. 67-486 (1921) (Conf. Rep.)

H.R. Rep. No. 83-659 (1953)

H.R. Rep. No. 83-2276 (1954) (Conf. Rep.)

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STATEMENT OF RELATED CASES

This matter has not previously been appealed to this or any other appellate court. Counsel for the Government are unaware of any pending case that will directly affect or be directly affected by this Court's decision in this appeal.

Bank of America is, however, pursuing other interest-netting claims in a separate suit that is pending in the Court of Federal Claims. Bank of America Corp. v. United States (Ct. Fed. Cl. No. 1:16-cv-1047). The Government also has filed a complaint against Bank of America to recover certain unrelated funds that have been erroneously refunded and paid with regard to Merrill Lynch & Co., of which Bank of America is the successor by merger. United States v. Bank of America Corp. (W.D.N.C. No. 3:18-cv-410).

GLOSSARY

Term	Definition
Appx	Appendix on appeal
CFC	Court of Federal Claims
HHS	Department of Health and Human Services
I.R.C. or “the Code”	Internal Revenue Code (26 U.S.C.)
IRS	Internal Revenue Service
Overpayment Interest Claims	Bank of America's claims for additional overpayment interest that were the subject of the Government's motion to transfer or dismiss and that are at issue in this appeal
Taxpayer	Bank of America Corporation
Third Amended Complaint or “Complaint”	Taxpayer's Third Amended Complaint filed in the District Court on August 15, 2018
TIN	Taxpayer Identification Number
§ 1346(a)(1)	28 U.S.C. § 1346(a)(1)

JURISDICTIONAL STATEMENT

Bank of America Corporation (“Taxpayer”) filed this lawsuit in federal district court seeking two types of interest from the United States: (1) additional interest on tax overpayments under 26 U.S.C. (“I.R.C.”) § 6611(a) (“overpayment interest”); and (2) refunds of interest that Taxpayer paid to the United States on its tax underpayments under I.R.C. § 6601(a) (“underpayment interest”). Taxpayer seeks a total of more than $163 million, and most of this relief stems from interest netting under I.R.C. § 6621(d).

There is no dispute that, under 28 U.S.C. § 1346(a)(1), the district courts have jurisdiction over tax refund claims, including claims seeking refunds of underpayment interest. At issue in this appeal is whether the district courts also have jurisdiction under § 1346(a)(1) over Taxpayer's standalone claims for overpayment interest that exceed $10,000 (the “Overpayment Interest Claims”). It is the Government's position, as explained herein, that they do not.¹

The Court of Federal Claims (“CFC”), however, may hear the Overpayment Interest Claims under 28 U.S.C. § 1491(a)(1). The Government, accordingly, moved to sever those claims and transfer them to the CFC, under 28 U.S.C. § 1631, or, in the alternative, to dismiss them for lack of subject matter jurisdiction. (Doc. 32.)² On July 1, 2019, the District Court, adopting the recommendation of the assigned magistrate judge (Appx1210-1214), held that, under 28 U.S.C. § 1346(a)(1), it had jurisdiction over the Overpayment Interest Claims. (Appx1-9.) The court, accordingly, denied the Government's motion to transfer or dismiss those claims. (Appx9.)

That order was immediately appealable to this Court under 28 U.S.C. § 1292(d)(4), which provides that this Court “ha[s] exclusive jurisdiction of an appeal from an interlocutory order of a district court of the United States . . . denying, in whole or in part, a motion to transfer an action to the United States Court of Federal Claims under [28 U.S.C. §] 1631.” 28 U.S.C. § 1292(d)(4)(A). See also Mitchell v. United States, 930 F.2d 893, 895 (Fed. Cir. 1991). On August 28, 2019, the Government timely filed its notice of appeal to this Court (Appx1215). 28 U.S.C. § 2107(b); Fed. R. App. P. 4(a)(1)(B). The District Court proceedings in this matter are stayed until this Court decides this appeal. 28 U.S.C. § 1292(d)(4)(B).

STATEMENT OF THE ISSUE

Whether the District Court erred in holding that it had jurisdiction over Taxpayer's standalone claims for overpayment interest under 28 U.S.C. § 1346(a)(1) and instead should have granted the Government's motion to transfer those claims to the CFC, which has jurisdiction under 28 U.S.C. § 1491.

STATEMENT OF THE CASE

A. Legal introduction

1. Interest and interest netting

When taxpayers overpay their taxes, the Government generally pays interest on those overpayments (“overpayment interest”). I.R.C. § 6611(a).³ Conversely, when taxpayers underpay their taxes, the Internal Revenue Code (“Code”) requires them to pay interest to the Government on those underpayments (“underpayment interest”).⁴ I.R.C. § 6601(a).

The Code treats underpayment interest — i.e., interest taxpayers owe to the Government — “as tax,” which “shall be assessed, collected, and paid in the same manner as taxes.” I.R.C. § 6601(e)(1). The Code, however, provides no similar treatment for overpayment interest. Overpayment interest “is simply a general debt of the government, which is not subject to the special rules associated with the adjustment and collection of obligations under the tax laws.” Gen. Elec. Co. & Subs. v. United States, 384 F.3d 1307, 1312 (Fed. Cir. 2004) (citing, e.g., Alexander Proudfoot Co. v. United States, 454 F.2d 1379, 1384 (Ct. Cl. 1972)⁵).

For most corporate taxpayers, the interest rate imposed on underpayments is higher than the rate the Government pays on overpayments. Compare I.R.C. § 6621(a)(1) with (a)(2). Due to the interest rate differential, a taxpayer who simultaneously has an underpayment and overpayment of the same amount of tax could have a net liability to the Government, due to interest alone. To address this imbalance, Congress enacted I.R.C. § 6621(d), which provides that “the net rate of interest . . . shall be zero” for periods in which interest is payable by taxpayers (on underpayments) and allowable by the Government (on overpayments) “on equivalent underpayments and overpayments by the same taxpayer.” See Ford Motor Co. v. United States, 908 F.3d 805, 806 (Fed. Cir. 2018) (discussing the framework for interest netting); Wells Fargo & Co. v. United States, 827 F.3d 1026, 1028 (Fed. Cir. 2016) (same).

“Put simply, this 'interest netting' provision cancels out any interest accrual on overlapping underpayments and overpayments.” Ford Motor, 908 F.3d at 806. A taxpayer seeking to benefit from interest netting may either (1) increase the lower interest rate on an overpayment to that for an underpayment, and then seek the resulting additional overpayment interest from the Government; or (2) reduce the higher interest rate on an underpayment to the lower rate for overpayments, and then seek a refund of the resulting underpayment interest. Id. In the instant suit, Taxpayer seeks both additional overpayment interest and refunds of underpayment interest, but only the claims for overpayment interest are at issue in this appeal.⁶ 

To benefit from interest netting, the underpayments and overpayments to be netted must have been made “by the same taxpayer.” I.R.C. § 6621(d). This Court has held that, in determining whether separate corporate entities are the “same taxpayer” for interest netting, “it is the identity of the corporation at the time of the payments that matters.” Wells Fargo, 827 F.3d at 1035 (emphasis in original and citing Energy East Corp. v. United States, 645 F.3d 1358 (Fed. Cir. 2011)). Accordingly, where one corporate entity made an overpayment and another made an underpayment, and the two entities merged after the payments were made, the payments are not eligible for interest netting because they were not made by the “same taxpayer.” Id. at 1034-35.

2. Statutes waiving sovereign immunity for tax-related claims

“The United States, as sovereign, is immune from suit save as it consents to be sued, and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.” United States v. Sherwood, 312 U.S. 584, 586 (1941) (citations omitted). Two statutory schemes define the terms on which tax-related claims can be brought in the district courts or the CFC: (1) the specific provisions governing tax refunds, which include 28 U.S.C. § 1346(a)(1), and (2) the Tucker Act, which provides a more general waiver for claims against the United States, see 28 U.S.C. §§ 1346(a)(2) and 1491(a)(1).

As relevant here, 28 U.S.C. § 1491(a)(1)), often cited as the “Tucker Act” or “Big Tucker Act,” provides that:

[t]he United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress . . .

Section 1346(a)(2) (28 U.S.C.), sometimes called the “Little Tucker Act,” grants jurisdiction to the district courts, concurrent with the CFC, over “[a]ny other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress. . . .” Each of the Overpayment Interest Claims exceeds $10,000, so the Little Tucker Act has no bearing on this appeal.⁷

Beyond the Tucker Act, Congress also has specifically provided that, when any court renders judgment for an overpayment of tax — i.e., awards a tax refund — that court also may award the accompanying overpayment interest. 28 U.S.C. § 2411. Taxpayer does not herein seek a refund of any tax overpayment, however, so § 2411 does not grant any relevant authority to the District Court here.

Section 1346(a)(1) provides that the district courts have concurrent jurisdiction with the CFC over the following:

Any civil action against the United States for the recovery of [1] any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or [2] any penalty claimed to have been collected without authority or [3] any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws[.]

Section 1346(a)(1) is part of an integrated statutory scheme, through which Congress has provided a limited waiver of sovereign immunity that permits taxpayers to bring suit in district courts for refunds of tax, as well as penalties and interest thereon. See 28 U.S.C. § 1346(a)(1); I.R.C. §§ 6511, 6532, 7422. To meet the terms of the waiver in § 1346(a)(1), a taxpayer must satisfy certain jurisdictional prerequisites. United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1, 4-5 (2008); United States v. Dalm, 494 U.S. 596, 601-02 (1990); Alexander Proudfoot, 454 F.2d at 1380-85. Such prerequisites include filing a timely administrative refund claim with the IRS and fully paying the tax liability at issue. I.R.C. §§ 6511(a), 7422(a); Clintwood Elkhorn, 553 U.S. at 4-5; Dalm, 494 U.S. at 601-02; Flora v. United States, 362 U.S. 145, 177 (1960) (“Flora II”); Flora v. United States, 357 U.S. 63, 75 (1958) (“Flora I”).

Section 7422(a) of the Code requires that a “claim for refund or credit” be “duly filed” before filing a suit seeking any of the relief described in § 7422(a) and § 1346(a)(1).⁸ I.R.C. § 7422(a). The central language of § 1346(a)(1) — describing the claims for which that provision waives sovereign immunity — is shared with § 7422(a) (emphasis added where wording is identical to 28 U.S.C. § 1346(a)(1)):

(a) No suit prior to filing claim for refund. — No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.

The deadline for filing the administrative refund claim that § 7422(a) requires is set by I.R.C. § 6511(a), and I.R.C. § 6532(a) establishes the timeline to file a refund suit.

Where a tax refund suit is filed in the CFC, these requirements also limit that court's general Tucker Act jurisdiction. Clintwood Elkhorn, 553 U.S. at 8-9. Outside of the tax refund context, however, the Tucker Act generally does not impose an administrative exhaustion requirement, and a six-year statute of limitations generally applies to Tucker Act claims. See 28 U.S.C. §§ 2401(a), 2501.

It is undisputed that, under these provisions, the CFC has jurisdiction over both (1) tax refund claims, including those seeking refunds of underpayment interest (provided that a taxpayer satisfies the relevant prerequisites to filing suit) and (2) claims for additional overpayment interest. Thus, Taxpayer could have sought relief for all of its interest-netting claims through a single suit in the CFC. Taxpayer chose, however, to split its interest-netting claims between this suit, filed in district court, and a separate suit currently pending in the CFC. See infra, at 15-16 n.11.

Taxpayer asserts, and the District Court agreed, that 28 U.S.C. § 1346(a)(1) grants jurisdiction to the District Court over Taxpayer's Overpayment Interest Claims. It is the Government's position that § 1346(a)(1) provides for district court jurisdiction only over tax refund claims, including claims for recovery of underpayment interest, which is statutorily defined, in I.R.C. § 6601(e), as a tax.⁹ This appeal concerns whether § 1346(a)(1) provides for district court jurisdiction over Taxpayer's Overpayment Interest Claims.

B. Factual background¹⁰

Taxpayer is the common parent and agent of an affiliated group of corporations that file consolidated corporate income tax returns (Forms 1120). (Appx11 ¶ 1.) Taxpayer's claims in this suit involve not only Bank of America but also six other corporate entities that Taxpayer acquired or with which it has merged. (See Appx10-13.) Although Taxpayer's proposed interest recomputations affect a number of tax years for these entities, Taxpayer seeks material relief in its favor for six tax years for Bank of America and eleven tax years for Merrill Lynch. (See Appx64-69; Appx1117.) The last such tax year for Merrill Lynch is 2007. (Id.) Taxpayer acquired Merrill Lynch in January 2009 and merged with Merrill Lynch in October 2013. (Appx13 ¶¶ 5-6.)

As relevant here, Taxpayer filed several administrative claims with the IRS for refunds of underpayment interest and for additional overpayment interest. The claims resulted from interest netting and other adjustments. Taxpayer filed the claims relevant to this appeal on June 26, 2015; January 3, 2017; February 7, 2017; and June 13, 2018. (Appx16-18 ¶¶ 27-29, 32.a; Appx26-39 (excerpts of June 26, 2015, claim); Appx40-48 (excerpts of January 3, 2017, claim); Appx49-53 (excerpt of February 7, 2017, claim); Appx1086-1087 (excerpts of June 13, 2018, claim).)

The IRS disallowed the claims filed on June 26, 2015, and January 3, 2017. (Appx17 ¶¶ 31-32; Appx54-56; Appx57-61.) In disallowing the former claim, the IRS explained that “[i]nterest rate netting only applies if the 'same taxpayer' makes both the underpayments and the overpayments in issue.” (Appx55 (quoting I.R.C. § 6621(d)).) The IRS recognized that “there ha[d] been a reorganization among the taxpayers,” i.e., among Taxpayer and the entities it had acquired or with which it had merged. (Appx55.) The IRS explained that, because “the 'overpayment' and 'underpayment' periods at issue were made by various corporations prior to the reorganization,” “the taxpayers were not the same when their respective underpayments and overpayments were made.” (Appx55.) Accordingly, those payments were not eligible for interest netting. (Appx55.) The IRS provided a similar explanation in its letter disallowing the January 3, 2017, claim. (See Appx60.) The IRS has not yet acted on Taxpayer's claims filed on February 7, 2017, or June 13, 2018. (Appx18 ¶ 33.)

C. District Court proceedings

On September 13, 2017, Taxpayer filed this lawsuit in the United States District Court for the Western District of North Carolina. (Doc. 1.) After initial proceedings not relevant to this appeal, taxpayer filed a Third Amended Complaint on August 15, 2018 (the “Complaint”). (Appx10-23.) Attached to the Complaint is a comprehensive set of computations that incorporates all of Taxpayer's claims at issue in this lawsuit.¹¹ (Appx18-19 ¶¶ 36, 36.a-b.; Appx1117 (see supra, at 6 n.6).)

The merits of Taxpayer's interest-netting claims are not at issue in the instant appeal, so we provide only a brief overview of those claims. Taxpayer seeks a total of more than $163 million, plus interest. (Appx18 ¶ 36; Appx69; Appx1117.) The lion's share of that sum, approximately $141 million, stems from interest netting, and includes both claims for refunds of underpayment interest and for additional overpayment interest. (Appx67-69; Appx1117.) In the Overpayment Interest Claims at issue in this appeal, Taxpayer seeks more than $10,000 in overpayment interest for each of nine of Merrill Lynch's tax years. Each of those tax years preceded Bank of America's 2009 acquisition of, and its 2013 merger with, Merrill Lynch. (Appx64-69; Appx1117.)

The Government moved to sever the Overpayment Interest Claims and transfer them to the CFC, under 28 U.S.C. § 1631, or alternatively, to dismiss them for lack of subject matter jurisdiction. (Docs. 32, 33.) The Government argued that the CFC has exclusive jurisdiction over monetary claims against the United States that seek over $10,000 and that do not otherwise qualify as tax refund claims, and that the Overpayment Interest Claims were not tax refund claims that could be brought in the District Court under 28 U.S.C. § 1346(a)(1).

The assigned magistrate judge issued a “Memorandum and Recommendation and Order,” in which he denied the Government's motion to transfer the Overpayment Interest Claims and recommended that the District Court deny the Government's alternative motion to dismiss those claims. (Appx1210-1214.) Regarding the jurisdictional issue, the magistrate judge wrote only that “[t]he weight of authority on this issue has upheld the District Courts' subject matter jurisdiction over overpayment interest claims pursuant to 28 U.S.C. § 1346(a)(1),” and that “[t]his Court is persuaded by the majority's rationale.” (Appx1212-1213 (citing cases).) At the time, the Sixth Circuit was the only federal appellate court to have addressed this issue, and the magistrate judge here relied on the Sixth Circuit's conclusion that § 1346(a)(1) grants jurisdiction to district courts over claims for overpayment interest. (Appx1212 (citing E.W. Scripps Co. v. United States, 420 F.3d 589 (6th Cir. 2005), and Ford Motor Co. v. United States, 768 F.3d 580 (6th Cir. 2014)).) He also cited six district court cases that he claimed supported his decision, although he acknowledged that Amoco Production Co. v. United States, No. 87-C-8811, 1988 WL 9112 (N.D. Ill. Feb. 5, 1988), had reached the opposite conclusion. (Appx1212-1213.) The Government objected to the order and recommendation. (Doc. 49.)

On July 1, 2019, the District Court adopted the recommendation and denied the Government's motion to transfer or dismiss. (Appx1-9.) The District Court observed that, at the time it entered the order, “most courts that ha[d] considered the issue — including the Sixth Circuit — ha[d] held that, under § 1346(a)(1), district courts have subject matter jurisdiction over overpayment claims” and that, at that time, “only one unreported district court opinion [had] conclude[d] otherwise.” (Appx3-4.).¹² The District Court explained that it was persuaded by the Sixth Circuit's rationale in Scripps, 420 F.3d at 597. (Appx4.) The District Court criticized what it viewed as the Government's “narrow reading” of §1346(a)(1), which, the court stated, “focuse[d] only on the literal, current state of the accounting ledger between the taxpayer and the United States.” (Appx5.) The Court wrote that, “[r]egardless of whether the government initially takes an excessive sum from the taxpayer or subsequently pays out an insufficient sum to the taxpayer, the end result is the same from the taxpayer's perspective: in either scenario, the taxpayer is due money from the United States.” (Appx5.)

The District Court also rejected our arguments regarding the language that § 1346(a)(1) shares with I.R.C. § 7422(a). (Appx5-8.) The District Court acknowledged that the Supreme Court has held that §7422(a) limits “'a taxpayer's right to bring a refund suit'” and “'is a jurisdictional condition precedent to maintenance of a refund suit in District Court.'” (Appx6 (quoting Dalm, 494 U.S. at 601, and Flora II, 362 U.S. at 148).) But the court found it “meaningful” that the statutory header for § 7422(a) — “No suit prior to filing claim for refund” — does not also appear in § 1346(a)(1). (Appx6.) The District Court held that § 7422(a) and § 1346(a)(1) “serve different functions and that § 7422(a) does not limit § 1346(a)(1).” (Appx8.)

Despite the identical language in § 1346(a)(1) and § 7422(a), the District Court declined to read those provisions in pari materia. (Appx7-8.) The court recognized that the Fourth Circuit had interpreted a different phrase shared between § 1346(a)(1) and § 7422(a) — “internal revenue tax” — in pari materia, but the District Court here declined to adopt that analysis for the similarly shared phrase “any sum alleged to have been excessive.” (Appx7-8 (discussing Elec. Welfare Trust Fund v. United States, 907 F.3d 165 (4th Cir. 2018)).)

The District Court held that § 1346(a)(1) granted it jurisdiction over the Overpayment Interest Claims, and the court, therefore, denied our motion to transfer those claims to the CFC. (Appx9.)

SUMMARY OF ARGUMENT

As the Second Circuit correctly held in Pfizer, Inc. v. United States, 939 F.3d 173, 178-79 (2d Cir. 2019), the grant of jurisdiction to the district courts in 28 U.S.C § 1346(a)(1) does not extend to the standalone claims for overpayment interest at issue here. Under §1346(a)(1)'s plain language, the district courts have jurisdiction only over suits seeking refunds of taxes or penalties previously paid — neither of which is involved here — and claims seeking the “recovery of . . . any sum alleged to have been excessive or in any manner wrongfully collected.” The District Court erred in holding that Taxpayer's Overpayment Interest Claims seek the “recovery of . . . any sum alleged to have been excessive.” 28 U.S.C. § 1346(a)(1).

As the Second Circuit explained in Pfizer, “[b]y its nature, overpayment interest is not a sum that, at some point in the past, was . . . excessive.” 939 F.3d at 178. Claims for overpayment interest do not fall within that statutory language, because they assert that interest paid by the Government has been insufficient and that new funds should be paid to the taxpayer. The noscitur a sociis canon of statutory interpretation further supports that reading, for the neighboring words in § 1346(a)(1) — which refer to the recovery of taxes or penalties that have been assessed or collected — reinforce that the provision is limited to claims for refund of amounts previously paid. Case law also supports that conclusion. Section 1346(a)(1) has long been described as authorizing only refund suits, and this Court and the CFC have long categorized standalone claims for overpayment interest as general debts of the Government (not tax refund claims) over which the CFC has jurisdiction under the Tucker Act.

Consideration of § 1346(a)(1)'s role within the overall statutory scheme bolsters the conclusion that § 1346(a)(1) does not confer jurisdiction for overpayment interest claims. The critical language in § 1346(a)(1), including the “any sum” phrase, also appears in I.R.C. § 7422(a). Section 7422(a) requires taxpayers to file an administrative refund claim before filing suit seeking, inter alia, “any sum alleged to have been excessive.” The Supreme Court has instructed that § 1346(a)(1) “must be read in conformity with” § 7422(a) and § 6511(a), which sets the deadline for an administrative refund claim. Dalm, 494 U.S. at 601-02. “[A]ny sum” under § 1346(a)(1), therefore, must be a “sum” for which a refund claim could have been filed under § 7422. Logically, however, Taxpayer could not have filed a refund claim for any of the Overpayment Interest Claims because Taxpayer thereby seeks new funds, not refunds. Similarly, the rule that the Supreme Court established in Flora, 362 U.S. at 177, which requires full payment of a tax liability before filing suit under § 1346(a)(1), cannot logically apply to the Overpayment Interest Claims.

Other Code provisions further support the conclusion that §1346(a)(1) does not address overpayment interest claims. In contrast to overpayment interest, the Code specifically provides that underpayment interest is treated as a tax, see I.R.C. § 6601(e), thus bringing claims to recover underpayment interest within § 1346(a)(1). Tellingly, the Internal Revenue Code includes no similar provision bringing overpayment interest within § 1346(a)(1)'s scope. Through 28 U.S.C. § 2411, Congress has allowed courts to award overpayment interest in a limited circumstance, specifically when rendering judgment for a tax overpayment (i.e., a tax refund). But, if § 1346(a)(1) waives sovereign immunity for all overpayment interest claims, as the District Court concluded, § 2411 essentially would be a nullity.

The legislative history also shows that, in enacting § 1346(a)(1) and its precursors, Congress intended to grant taxpayers seeking tax refunds broader access to relief in their home districts. Moreover, in 1954, when Congress most recently amended § 1346(a)(1), it confirmed that the provision applies only to claims for refunds of amounts assessed or collected. There is no evidence that Congress intended § 1346(a)(1) to apply beyond the tax refund context, as the language in that statute reflects.

At the least, because § 1346(a)(1) defines the scope of a waiver of sovereign immunity, it must be construed narrowly. It is well settled that a statute defining the terms of a waiver of sovereign immunity, as does § 1346(a)(1), should not be construed as conferring a broader grant of jurisdiction than is “unequivocally expressed” in the statute. Lane v. Pena, 518 U.S. 187, 192 (1996). Because § 1346(a)(1) does not use language that extends — let alone unequivocally extends — to overpayment interest, the District Court erred in giving the statute that breadth.

The Sixth Circuit's opinion in Scripps, 420 F.3d at 597, on which the District Court relied, should not be followed. The Scripps court rested its analysis on a paraphrase of the statutory language and thus fundamentally failed to consider or apply the language that Congress actually enacted in § 1346(a)(1). The Scripps court further ignored the overall statutory scheme and legislative history that supported the Government's reading, and, as the Pfizer court explained, the Sixth Circuit relied heavily on a misreading of Flora, 362 U.S. at 596-97.

This Court, therefore, should reject the reasoning of Scripps and hold, as did the Pfizer court, that the District Court lacked jurisdiction over Taxpayer's Overpayment Interest Claims. The Overpayment Interest Claims should be severed from the other claims in District Court and transferred to the CFC.

ARGUMENT

The District Court lacked jurisdiction over Taxpayer's Overpayment Interest Claims and should have transferred those claims to the CFC, which has jurisdiction under the Tucker Act

Standard of review

This Court reviews de novo whether, under 28 U.S.C. § 1346(a)(1), the District Court had jurisdiction over Taxpayer's Overpayment Interest Claims, and it also reviews de novo the District Court's decision not to transfer the Overpayment Interest Claims to the CFC. Souders v. S.C. Pub. Serv. Auth., 497 F.3d 1303, 1307 (Fed. Cir. 2007).

A. As the Second Circuit recently held, 28 U.S.C. § 1346(a)(1) does not grant jurisdiction to the district courts to hear standalone claims for overpayment interest

Only two other courts of appeals, the Second Circuit in Pfizer Inc. v. United States, 939 F.3d 173, 178-79 (2d Cir. 2019), and the Sixth Circuit in E.W. Scripps Co. v. United States, 420 F.3d 589, 597-98 (6th Cir. 2005), have addressed the question presented in this appeal: whether the district courts have jurisdiction under 28 U.S.C. § 1346(a)(1) over claims seeking only overpayment interest.¹³ The District Court here primarily relied on Scripps, 420 F.3d at 598. (Appx4 (“The Court finds the Sixth Circuit's rationale in Scripps persuasive.”).) After the District Court issued its ruling in this case, the Second Circuit held in Pfizer that § 1346(a)(1) does not provide for district court jurisdiction over overpayment interest claims. 939 F.3d at 179. As explained below, Pfizer correctly analyzed the statutory language to reach the correct conclusion, and Scripps rests on flawed reasoning. This Court, therefore, should join the Second Circuit in rejecting the Sixth Circuit's erroneous analysis. See Pfizer, 939 F.3d at 177-78.

1. Taxpayer's claims here do not fall within the plain text of 28 U.S.C. § 1346(a)(1)

The Pfizer court correctly focused on the plain language of 28 U.S.C. § 1346(a)(1) to determine that the statute does not confer jurisdiction on the district courts to hear standalone claims for overpayment interest. As the Supreme Court has instructed, the task of statutory interpretation “begin[s] and end[s] . . . with the text, giving each word its ordinary, contemporary, common meaning.” Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002, 1010 (2017) (internal quotation marks omitted). See also, e.g., Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194 (1985). Indeed, this Court has emphasized that principle when considering the “any sum” phrase of I.R.C. § 7422(a) that is identical to the language of § 1346(a)(1) at issue here. See Strategic Housing Fin. Corp. v. United States, 608 F.3d 1317, 1323 (Fed. Cir. 2010) (“When interpreting any statute, we look first to the statutory language.”).

The statute at issue, 28 U.S.C. § 1346(a)(1), provides that:

(a) The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:

(1) Any civil action against the United States for the recovery of [1] any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or [2] any penalty claimed to have been collected without authority or [3] any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws[.]

In Pfizer, 939 F.3d 173, the taxpayer sought to bring a suit in district court under § 1346(a)(1) to recover additional overpayment interest only, for a period in which Pfizer's tax refund checks had been lost. The Second Circuit held that § 1346(a)(1) did not confer jurisdiction on the district court to hear that suit. Focusing on the plain statutory language and engaging in the “word-by-word analysis” that this Court applied in Strategic Housing, 608 F.3d at 1326, the Second Circuit correctly held that the wording of § 1346(a)(1) does not grant jurisdiction to the district courts to hear standalone claims for additional overpayment interest.

Like the Overpayment Interest Claims here, the claims for additional overpayment interest in Pfizer sought new funds from the Government. As the Pfizer court explained, such funds are not taxes or penalties and have not been assessed or collected, so the first two categories of waiver in § 1346(a)(1) clearly do not apply. See Pfizer, 939 F.3d at 176-77. The Overpayment Interest Claims also do not seek “recovery of . . . any sum alleged to have been . . . in any manner wrongfully collected under the internal-revenue laws.” 28 U.S.C. § 1346(a)(1). Examining the text of § 1346(a)(1), the Pfizer court concluded that the “any sum” phrase, “just like 'tax' and 'penalty' [in §1346(a)(1)], refers to an amount previously paid to the IRS by the taxpayer” that exceeded the proper amount. Id. at 178-79.

Focusing on the phrase that also is at the center of this dispute, the court reasoned in Pfizer that “[t]he use of the present-perfect tense in the language of the statute” — i.e., “any sum alleged to have been . . .” — “indicates that the 'sum' must have been 'excessive' or 'wrongfully collected' at some point in the past (known or unknown) and that condition touches the present.” Id. at 179. The claims presented here and in Pfizer — that the taxpayer received insufficient interest, and is now entitled to recover more — do not fall within that plain language. “By its nature,” the Second Circuit explained, “overpayment interest is not a sum that, at some point in the past, was either excessive or wrongfully collected.” Id. Indeed, the court concluded, “[t]o find that overpayment interest qualifies as the type of 'sum' encompassed by § 1346(a)(1) strains the plain text of the statute beyond what it can bear.” Id. at 178.

The noscitur a sociis canon of statutory interpretation confirms that § 1346(a)(1) does not provide for recovery of new claims for additional overpayment interest.¹⁴ The “any sum” phrase in §1346(a)(1) “finds itself in fellowship with terms that plainly refer to amounts the taxpayer has previously paid to the government and which the taxpayer now seeks to recover.” Pfizer, 939 F.3d at 178-79. In Pfizer, the Second Circuit observed that the first two categories of waiver in § 1346(a)(1), regarding a tax or penalty that had previously been assessed or collected, “both address types of taxpayer claims that seek to recover funds that the taxpayer has already paid to the IRS.” Id. at 178. “As the more general term, 'any sum' is properly construed in harmony with these more specific terms.” Id. The court, accordingly, held that, “consistent with a 'tax' and a 'penalty,' the 'sum' category of § 1346(a)(1) encompasses only previously assessed amounts of money,” and not claims for additional overpayment interest. Id. at 179. A more expansive reading of the “any sum” phrase — even if that were reasonable under the plain text of the statute, which it is not — “would violate the canon of construction noscitur a sociis, or, a word is known by the company it keeps.” Id. at 178 (internal quotation marks omitted). For this additional reason, a claim for overpayment interest “does not fall within the meaning of 'any sum'” in § 1346(a)(1). Id. at 179.

Instead of engaging in a “word-by-word” analysis, as this Court held was appropriate in Strategic Housing, 608 F.2d at 1326 (interpreting identical language in I.R.C. § 7422(a)), and as the Pfizer court did in examining 28 U.S.C. § 1346(a)(1), 939 F.3d at 177-79, the District Court here deviated from the basic rule of construction that the statutory language governs. The District Court, instead, erroneously analyzed words that are not actually in the statute. Relying on the Sixth Circuit's opinion in Scripps, which the District Court followed and which similarly failed to analyze the words actually in the statute, the District Court here ignored the relevant language in § 1346(a)(1) — “recovery of . . . any sum alleged to have been excessive” — and instead based its decision on whether the Government “would retain an 'excessive sum.'” (Appx5 (quoting Scripps, 420 F.3d at 597).) “In the overpayment scenario,” the court wrote, “even though the United States does not take an 'excessive sum' from the taxpayer at first, the government would retain an 'excessive sum' by keeping the accumulated interest on funds it was never owed.” (Appx5 (quoting Scripps, 420 F.3d at 597).) The court found no difference, “from the taxpayer's perspective,” between an allegation that “the government initially [took] an excessive sum from the taxpayer” and an allegation that the Government “subsequently pa[id] out an insufficient sum to the taxpayer.” (Appx5.)

Congress did not, however, use the phrase “excessive sum” in §1346(a)(1), and that provision does not authorize the district courts to adjudicate every claim that the Government has retained an “excessive sum.” Section 1346(a)(1) instead describes claims seeking “recovery of . . . any sum alleged to have been excessive.” Taxpayer has not “alleged” that the additional overpayment interest it seeks has, at any time, “been excessive.” Taxpayer, instead, asserts that it has received insufficient overpayment interest. The Second Circuit's analysis in Pfizer, in stark contrast to that in Scripps and in the District Court's opinion here, is rooted in the language Congress chose to enact in § 1346(a)(1). The Pfizer opinion, which is grounded in the actual statutory language, is far more persuasive.

The Second Circuit's recent analysis does not stand alone. Over twenty years ago, in Amoco Production, on which the Government relied in the District Court here, the Northern District of Illinois engaged in a similar textual analysis and likewise held that the “any sum” phrase of § 1346(a)(1) does not encompass claims for overpayment interest because such claims do not “seek[ ] to recover an excessive sum that was previously paid.” Amoco Prod., No. 87-C-8811, 1988 WL 9112, at *5. After the Second Circuit issued Pfizer, two district courts have adopted the Pfizer analysis and rejected the Sixth Circuit's contrary holding in Scripps. Estate of Culver v. United States, No. 1:19-cv-462, 2019 WL 4930224, at *2 (D. Colo. Oct. 7, 2019); Paresky v. United States, Doc. 104 (Order), No. 18-cv-23569 (S.D. Fla. Oct. 21, 2019) (Appx1223-1228). We urge this Court to join the Second Circuit and these district courts in holding that the plain text of § 1346(a)(1) does not extend to claims that, like Taxpayer's Overpayment Interest Claims here, solely seek overpayment interest.

2. Courts consistently have characterized § 1346(a)(1) as governing refund claims and have held that claims for overpayment interest are properly brought under the Tucker Act

Guidance from the courts in other contexts also strongly supports the conclusion that 28 U.S.C. § 1346(a)(1) provides for district court jurisdiction over refund suits only, and that claims solely seeking overpayment interest must be pursued under the Tucker Act. Although the Supreme Court has not had occasion to address whether § 1346(a)(1) waives sovereign immunity for overpayment interest claims, the Court consistently has characterized § 1346(a)(1) as governing refund suits. In Flora, a pivotal tax case, the Court referred to the lawsuits described in the precursor to § 1346(a)(1) as “these refund suits.” Flora I, 357 U.S. at 71 n.15. See also Flora II, 362 U.S. at 151-52 (examining the impact that the precursor to § 1346(a)(1) had on jurisdiction over “tax refund suits”). The Court also has stated that § 1346(a)(1) “clearly allows one from whom taxes are erroneously or illegally collected to sue for a refund of those taxes.” United States v. Williams, 514 U.S. 527, 536 (1995). More recently, the Supreme Court characterized § 1346(a)(1) as applying to “a tax-refund action,” for which the taxpayer must have, inter alia, filed a timely “administrative refund claim” under I.R.C. §§ 6511(a) and 7422(a). EC Term of Years Trust v. United States, 550 U.S. 429, 431 & n.2 (2007).

This Court has more definitively stated that § 1346(a)(1) “refers only to a refund of taxes paid under the internal-revenue laws.” Roberts v. United States, 242 F.3d 1065, 1069 (Fed. Cir. 2001) (emphasis added). And the Fourth Circuit stated last year that “§ 1346(a)(1) applies only to taxes and other sums collected by the Internal Revenue Service under the Internal Revenue Code.” Elec. Welfare, 907 F.3d at 170 (emphasis added). None of these cases addressed the precise jurisdictional question at issue in this appeal, but they demonstrate that courts, including this Court, generally have understood § 1346(a)(1) to encompass claims for refund of amounts previously paid — not claims for recovery of additional amounts, such as the additional interest sought here.

In a similar vein, this Court and its predecessor have long looked to the Tucker Act as the ground for jurisdiction over claims seeking only additional overpayment interest. The Court of Claims held in 1956 that a suit for overpayment interest was “founded on [the] court's general jurisdiction,” i.e., on the Tucker Act. Barnes v. United States, 133 Ct. Cl. 546, 548 (1956), cert. denied, 351 U.S. 933 (1956). The CFC more recently held that, because an overpayment interest claim “is not a tax refund claim, but rather is a money claim based upon I.R.C. § 6611,” the CFC has jurisdiction over such a claim under the Tucker Act. Ford Motor Co. v. United States, 132 Fed. Cl. 104, 110 (2017), aff'd, 908 F.3d 805 (Fed. Cir. 2018). See also Paresky v. United States, 139 Fed. Cl. 196, 206 (2018) (citing Gen. Elec., 384 F.3d at 1312) (similar).¹⁵

The Court of Claims, this Court, and the CFC have repeatedly held, moreover, that overpayment interest claims are governed by the Tucker Act (28 U.S.C. §§ 1346(a)(2), 1491(a)(1)), and not by the statutory scheme for tax refunds that is anchored on § 1346(a)(1). For example, in Alexander Proudfoot, 454 F.2d at 1384, the Court of Claims stated that an overpayment interest claim is controlled by “the ordinary six-year limitations statute,” which applies to Tucker Act claims, and not by the specific rules governing tax refund claims. The court explained that the Government pays overpayment interest “not as a refund of interest previously paid on demand of the [IRS], but simply because the Government has had the use of money found to belong to the taxpayer.” Id. See also, e.g., Gen. Elec., 384 F.3d at 1312 (holding that the statute of limitations to seek overpayment interest is “the general six-year statute that applies to suits against the government, 28 U.S.C. § 2401,” and not the limitations period for tax refunds in I.R.C. § 6511); Barnes, 133 Ct. Cl. at 548 (holding that overpayment interest claim was “governed by [the] six-year statute of limitations”); Ford Motor, 132 Fed. Cl. at 110-11 (holding that a claim for overpayment interest was timely because it was brought “within six years after the claim first accrued”); Coca-Cola Co. v. United States, 87 Fed. Cl. 253, 255-56 (2009) (holding that overpayment interest claim was subject to “the Tucker Act's six-year statute of limitations, set forth at 28 U.S.C. § 2501”); Gen. Instrument Corp. v. United States, 33 Fed. Cl. 4, 6 (1995) (holding that overpayment interest claim was governed by the six-year statute of limitations in 28 U.S.C. §§ 2401, 2501). The Third Circuit also has stated, in dicta, that overpayment interest claims are governed by the Tucker Act. Sunoco, Inc. v. Commissioner, 663 F.3d 181, 190 (3d Cir. 2011).

For decades, this Court, its predecessor, and the CFC have held that overpayment interest claims are governed by the Tucker Act, and are not subject to the jurisdictional prerequisites to bring a suit under § 1346(a)(1). In accord with this longstanding view, this Court should hold that § 1346(a)(1) does not grant jurisdiction for a district court to hear Taxpayer's Overpayment Interest Claims here. Rather, the Tucker Act governs such claims for overpayment interest, and jurisdiction over such claims that exceed $10,000 lies only in the CFC.

B. Guides to statutory construction confirm that § 1346(a)(1) does not confer jurisdiction over the Overpayment Interest Claims

Because Taxpayer's Overpayment Interest Claims do not fall within the plain language of § 1346(a)(1), as explained above, it is not necessary for this Court to venture beyond the statutory text. But, if this Court should find it necessary to look further, multiple guides to statutory construction reinforce the conclusion that the District Court does not have jurisdiction under § 1346(a)(1) to hear Taxpayer's Overpayment Interest Claims.

1. The overall statutory scheme reinforces the conclusion that § 1346(a)(1) covers only refund claims

First, consideration of § 1346(a)(1) in the context of the overall statutory scheme confirms that the Government's reading is correct and that the District Court's reading does not fit within the “carefully articulated and quite complicated structure of tax laws,” of which § 1346(a)(1) is “a keystone.” Flora II, 362 U.S. at 157. The provision “is part of the broader scheme of tax administration,” and to interpret § 1346(a)(1), “one must understand how § 1346 intersects with other relevant statutes.” Elec. Welfare, 907 F.3d at 167. In Dalm, the Supreme Court held that, “[d]espite [the] spacious terms” of § 1346(a)(1), it “must be read in conformity with other statutory provisions which qualify a taxpayer's right to bring a refund suit upon compliance with certain conditions,” specifically the requirements in I.R.C. §§ 7422(a) and 6511(a) to file a timely administrative refund claim before filing a refund suit under § 1346(a)(1). 494 U.S. at 601-02 (emphasis added). See also Elec. Welfare, 907 F.3d at 167 (“Only after the[ ] twin hurdles of payment and administrative exhaustion are surmounted does § 1346 come into play. . . .”).

This Court has held that the administrative exhaustion requirements apply to “a party seeking to recover any internal-revenue tax, penalty, or sum,” i.e., to any of the claims described in § 7422(a) and § 1346(a)(1). Strategic Housing, 608 F.3d at 1324 (emphasis added). To bring a claim for a “sum” under § 1346(a)(1), as Taxpayer seeks to do with the Overpayment Interest Claims, one must, at least, comply with §§ 7422(a) and 6511(a). See id. The Eleventh Circuit also has examined the requisite interaction among § 1346(a)(1), § 6511(a), and § 7422(a). Wachovia Bank, N.A. v. United States, 455 F.3d 1261, 1268 (11th Cir. 2006). The court explained in Wachovia Bank that, in interpreting these provisions, it read “words or strings of them” — not “in isolation,” but rather “in context” — so that they “and their near and far kin make sense together, have them singing on the same note, as harmoniously as possible.” Id.

In substantial tension with this precedent, the District Court here declined to read § 1346(a)(1) and § 7422(a) in pari materia and also held “that § 7422(a) does not limit § 1346(a)(1).” (Appx8.) The Sixth Circuit reached the same erroneous conclusion in Scripps, 420 F.3d at 597-98, on which the District Court relied, and in Horizon Coal Corp. v. United States, 43 F.3d 234, 239-40 (6th Cir. 1994). Particularly given the identical language and the structural connections between these provisions, the District Court erred in declining to give uniform interpretation to the shared language, and in separating § 1346(a)(1) from the jurisdictional prerequisites in § 7422(a). Closer examination of § 1346(a)(1)'s history and its role in the “carefully articulated and quite complicated structure of tax laws” that Congress has enacted, Flora II, 362 U.S. at 157, reinforces the conclusion that § 1346(a)(1) does not waive the Government's sovereign immunity for claims seeking overpayment interest.

a. The identical language in § 1346(a)(1) and I.R.C. § 7422(a) must be uniformly interpreted, and the only way to reconcile those provisions is to limit them to refund claims

In the Revenue Act of 1921 (a tax statute), Congress first enacted the jurisdictional provision that now is codified in the Judicial Code, at 28 U.S.C. § 1346(a)(1). Revenue Act of 1921, § 1310(c), 42 Stat. 227, 311. The language at the center of this appeal — “any sum alleged to have been excessive” — has remained unaltered since 1921. Compare id. with 28 U.S.C. § 1346(a)(1).

In Flora, the Supreme Court held that a taxpayer filing suit under § 1346(a)(1) must first fully pay the tax liability at issue. Flora II, 362 U.S. at 177; Flora I, 357 U.S. at 75-76. To reach that conclusion, the Supreme Court closely analyzed the history of, and the relationship between, the provisions now codified at § 1346(a)(1) and § 7422(a). The Court concluded that “[t]he similarity of essential language” in the two provisions “leaves no doubt that the terms of the jurisdictional provision [now § 1346(a)(1)] were copied from the claim-for-refund statute [now § 7422],” which was enacted earlier. Flora I, 357 U.S. at 72. See Flora II, 362 U.S. at 152. Because of this connection, the “claim-for-refund statute [now § 7422(a)] provides the key to what Congress intended when it used that language in the jurisdictional provision [now § 1346(a)(1)].” Flora I, 357 U.S. at 65.

The Supreme Court's analytical approach in Flora parallels the general rule of statutory interpretation that “identical words used in different parts of the same act are intended to have the same meaning.” Sorenson v. Sec'y of Treasury, 475 U.S. 851, 860 (1986) (internal quotation marks omitted). Following its “duty to construe statutes, not isolated provisions,” the Court has “adopt[ed] the premise that [a] term should be construed, if possible, to give it a consistent meaning throughout [an] Act.” Gustafson, 513 U.S. at 568. That premise is particularly significant here, where the original language for § 1346(a)(1) was copied directly from the precursor to § 7422(a). If Congress had intended this identical language to have different meanings, “one would have expected Congress to have been explicit.” Gustafson, 513 U.S. at 573. But there is no evidence in the statutory text, much less explicit evidence, of such an intent.¹⁶

The identical language in § 1346(a)(1) and in § 7422(a), therefore, should be interpreted to “mean the same thing,” as the Tenth Circuit held in Wyodak Resources Development Corp. v. United States, 637 F.3d 1127, 1131 (10th Cir. 2011). In that case, the court addressed whether a coal reclamation fee paid under the Surface Mining Control and Reclamation Act of 1977 was an “internal-revenue tax” under §1346(a)(1), such that the plaintiff could invoke that provision to seek a refund of the fee. Id. at 1129. Recognizing the shared history and language between § 1346(a)(1) and § 7422(a), and “[a]bsent some very good reason” to conclude otherwise, that court “conclude[d] that the phrase 'internal-revenue tax' must mean the same thing” in both statutes. Id. at 1131. “[B]y providing a uniform interpretation” of the shared language, “those statutes seamlessly interlock in the manner intended by Congress.” Id. at 1135 (rejecting the contrary conclusion that the Sixth Circuit reached in Horizon Coal, 43 F.3d at 239-40, see infra, at 64-65).

The court reasoned in Wyodak that, because the administrative claim required under § 7422(a) could be filed only with the Secretary of the Treasury, the term “internal-revenue tax,” in both § 7422(a) and §1346(a)(1), solely encompassed taxes collected by the IRS. 637 F.3d at 1135-36. As the coal reclamation fees were not collected by the IRS, and as a claim for refund of those fees logically could not be filed with the Secretary of the Treasury, the court held that the coal reclamation fee was not an “internal-revenue tax” and could not be recovered in a district court under § 1346(a)(1). Id.

The Fourth Circuit engaged in a similar analysis in Electrical Welfare, where that court concluded that the “textual connection” between § 1346(a)(1) and § 7422(a) “compels the same construction” of the shared language. 907 F.3d at 168. The court held that, to bring a claim under § 1346(a)(1), the claim “must be one for which requesting a refund [under § 7422(a)] from the 'Secretary [of the Treasury]' is sensible.” Id. The plaintiff in Electrical Welfare sought to recover a payment made to the Department of Health and Human Services (“HHS”), which it asserted was an “internal-revenue tax” under § 1346(a)(1). Id. at 166-67. The court rejected that assertion because § 1346(a)(1) “uses the very same operative phrase” as § 7422(a), and a claim for refund of a payment made to HHS could not, logically, have been filed with the Secretary of the Treasury, as § 7422(a) requires. Id. at 168. The court, accordingly, concluded that the payment to HHS was not an “internal-revenue tax” under § 1346(a)(1) and that “§ 1346(a)(1) applies only to taxes and other sums collected by the Internal Revenue Service under the Internal Revenue Code.” Id. at 170.

As with the phrase “internal-revenue tax” at issue in Wyodak and Electrical Welfare, the phrase at issue here — “any sum alleged to have been excessive” — appears in both § 7422(a) and § 1346(a)(1). The “any sum” phrase — copied from one provision to the other — should be interpreted to mean the same thing in both provisions. When one reads § 1346(a)(1) “in conformity with” § 7422(a), as the Supreme Court instructed in Dalm, 494 U.S. at 601, it is apparent that the claims described in § 1346(a)(1) are limited to those for which a refund claim could have been filed under § 7422(a). Elec. Welfare, 907 F.3d at 168; Wyodak, 637 F.3d at 1135-36.

Applying that logical analysis here, Taxpayer's Overpayment Interest Claims cannot be for “any sum alleged to have been excessive” under § 1346(a)(1) because it would not have been sensible (or possible) for Taxpayer to file “a claim for refund or credit” for those claims under § 7422(a). Taxpayer is not, after all, seeking a refund of, or credit for, money it previously paid to the Government.¹⁷ Taxpayer's inability to comply with the jurisdictional prerequisite in § 7422(a) is further evidence that the Overpayment Interest Claims are not claims that can be brought in the District Court under 28 U.S.C § 1346(a)(1).

b. For the Overpayment Interest Claims, Taxpayer cannot meet the full-payment rule of Flora

Viewing § 1346(a)(1) as extending to the Overpayment Interest Claims also is at odds with the full-payment rule adopted in Flora. In Flora, the Supreme Court held that a taxpayer must fully pay an income tax underpayment before bringing suit under § 1346(a)(1). Flora II, 362 U.S. at 177; Flora I, 357 U.S. at 75. The taxpayer in Flora contended that the “any sum” phrase in § 1346(a)(1) allowed him to make a partial payment of a tax liability and then sue, under § 1346(a)(1), for a refund in district court. Flora II, 362 U.S. at 147-49; Flora I, 357 U.S. at 63-64. In rejecting that argument, the Court explained that the legislative history of § 1346(a)(1) “and related statutes,” which we discuss infra, at 54-58, left “no room for contention that their broad terms were intended to alter in any way” the longstanding full-payment rule. Flora I, 357 U.S. at 75. Two years after its opinion in Flora I, the Supreme Court reheard the case and again held that “§ 1346(a)(1), correctly construed, requires full payment of the assessment before an income tax refund suit can be maintained in a Federal District Court.” Flora II, 362 U.S. at 177.

Although the Supreme Court did not specifically state in its Flora opinions that § 1346(a)(1) waives sovereign immunity solely for refund suits, the Court also left no room for an argument that § 1346(a)(1) encompasses anything other than a refund suit. The Court did not distinguish between the “tax,” “penalty,” and “any sum” phrases in § 1346(a)(1). The Court held that relief sought under any of the three categories — specifically including the “any sum” category, which was at issue in Flora and on which the District Court here relied — is subject to the rule of “pay first and litigate later.” Flora I, 357 U.S. at 75 (internal quotation marks omitted).

With respect to the Overpayment Interest Claims, Taxpayer here did not, and could not, “pay first” before “litigat[ing] later” because Taxpayer seeks additional overpayment interest, rather than a refund of money it already paid to the Government. Citing Flora II, the Supreme Court explained in Williams that § 1346(a)(1) “is a postdeprivation remedy, available only if the taxpayer has paid the Government in full.” 514 U.S. at 538. Taxpayer here did not previously pay the sums it seeks through its Overpayment Interest Claims. It thus is not in a position to seek the “postdeprivation remedy” that § 1346(a)(1) affords.

As with the statutory provisions discussed above, Taxpayer's inability to comply with Flora strengthens the Government's position that § 1346(a)(1) does not waive sovereign immunity for overpayment interest claims.

c. The Code treats underpayment interest as “tax” but provides no similar treatment for overpayment interest

In statutory interpretation, courts aim to “fit, if possible, all parts into a harmonious whole.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (internal quotation marks omitted). Interpreting § 1346(a)(1) “with a view to [its] place in the overall statutory scheme” reinforces the Government's argument that § 1346(a)(1) does not encompass overpayment interest claims. Davis v. Mich. Dep't of Treasury, 489 U.S. 803, 809 (1989).

The Code “deals quite differently” with overpayment interest and underpayment interest. Alexander Proudfoot, 454 F.2d at 1384. See also Sunoco, 663 F.3d at 195-96. The Code treats underpayment interest “as tax” and provides that it “shall be paid upon notice and demand, and shall be assessed, collected, and paid in the same manner as taxes.” I.R.C. § 6601(e)(1). See also Alexander Proudfoot, 454 F.2d at 1382 (“The Code's design for [underpayment] interest is to assimilate it to the tax itself. . . .”). Accordingly, a refund claim for underpayment interest previously paid to the Government may be brought in district court under § 1346(a)(1) or in the CFC under the Tucker Act, 28 U.S.C. § 1491(a)(1). Either way, such a claim is subject to the “special sections of the Internal Revenue Code on tax refund claims and actions,” including the requirement, imposed through I.R.C. §§ 7422(a) and 6511, to file a timely administrative refund claim before filing suit. Alexander Proudfoot, 454 F.2d at 1380, 1385.

In contrast to the treatment of underpayment interest in §6601(e), the Code grants no similar consideration for overpayment interest. Sunoco, 663 F.3d at 190 (explaining that the court could “find no provisions in the [Code] which specifically address actions to recover . . . overpayment interest”). The Code thus reflects a “distinction between [underpayment] interest and overpayment interest.” Pfizer, 939 F.3d at 178. As the Second Circuit explained in Pfizer, “[underpayment] interest is treated as part of the underlying tax, while overpayment interest 'is simply a general debt of the government.'” Id. (quoting Gen. Elec., 384 F.3d at 1312). See also Alexander Proudfoot, 454 F.2d at 1384.

Congress allows claimants who seek payment on a “general debt of the government,” including overpayment interest, to sue the Government for such relief, but it is not by filing suit in a district court under § 1346(a)(1). Overpayment interest claims are governed by the Tucker Act, as discussed supra, at 36-38, and any such claims exceeding $10,000 may be brought solely in the CFC. Compare 28 U.S.C. § 1346(a)(2) with 28 U.S.C. § 1491(a)(1).

d. The Government's interpretation of § 1346(a)(1) avoids rendering 28 U.S.C. § 2411 essentially superfluous

Through 28 U.S.C. § 2411, Congress permits courts to award overpayment interest in a limited circumstance, specifically when a court renders judgment “for any overpayment in respect of any internal-revenue tax,” i.e., when a court enters judgment awarding a tax refund. If § 1346(a)(1) waived sovereign immunity for all claims to overpayment interest, as the District Court concluded here, there would have been no reason for Congress to enact § 2411. The “precision with which Congress has waived the Federal Government's sovereign immunity” in § 2411 “underscore[s]” the Government's position that Congress did not intend § 1346(a)(1) to waive sovereign immunity for all overpayment interest claims. Lane, 518 U.S. at 193.

The District Court's interpretation of § 1346(a)(1) would, moreover, render § 2411 essentially meaningless. That interpretation runs afoul of the Supreme Court's instruction, more than 140 years ago, that “the admitted rules of statutory construction declare that a legislature is presumed to have used no superfluous words.” Platt v. Union Pac. R.R. Co., 99 U.S. 48, 58 (1878). Instead, “some meaning, if possible, must be given to every word in a statute,” and if “a given construction would make a word redundant, it [is] reason for rejecting it.” Id. at 59. As the Court more recently explained, “[i]t is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (internal quotation marks omitted). Reading § 1346(a)(1) as not extending to standalone claims for additional overpayment interest not only is the best reading of the text, but it also allows § 2411 to continue to have “some meaning.” Platt, 99 U.S. at 59.

2. The legislative history supports limiting § 1346(a)(1) to refund claims

The legislative history of § 1346(a)(1) further supports the Government's view that the statute is limited to claims for refund and does not waive sovereign immunity for Taxpayer's Overpayment Interest Claims.¹⁸ In Flora I and Flora II, the Supreme Court explored the history of the provisions now codified at § 1346(a)(1) and § 7422(a). 357. U.S. at 65-75; 362 U.S. at 151-158. The original claim-for-refund statute (now § 7422(a)) was enacted in 1866 and applied only to the recovery of “any tax alleged to have been erroneously or illegally assessed or collected.” Act of July 13, 1866, ch. 184, § 19, 14 Stat. 98, 152. By the time of the Revenue Act of 1921, however, all three phrases (“penalty,” “tax,” and “any sum”) were in the claim-for-refund statute, see R.S. § 3226 (1878), and Congress copied that critical language to the jurisdictional statute now codified at § 1346(a)(1). Flora I, 357 U.S. at 72. See also Flora II, 362 U.S. at 152.

Congress first enacted that jurisdictional statute in 1921 to bridge a potential gap in district-court remedies for taxpayers seeking tax refunds. At that time, a taxpayer could sue the United States in district court for a tax refund only where the amount sought was $10,000 or less. Flora I, 357 U.S. at 70. See also Act of Mar. 3, 1887, ch. 359, § 2, 24 Stat. 505, 505 (jurisdictional limit of $1,000); Act of Mar. 3, 1911, ch. 231, § 20, 36 Stat. 1087, 1093 (increasing limit to $10,000). At the time, a taxpayer also could individually sue the relevant tax collector in district court for a refund of any amount,¹⁹ but if the collector was not available to be sued, a taxpayer seeking a refund exceeding $10,000 had no remedy in his or her home district and could only file suit against the United States in Washington, D.C., in the Court of Claims. Flora I, 357 U.S. at 70.

In 1921, Congress enacted the provision now codified at § 1346(a)(1) “merely to remove the jurisdictional amount limitation of the Tucker Act in the special situation where the collector could not be sued.” Flora I, 357 U.S. at 72. See also Flora II, 362 U.S. at 151-52; H.R. Rep. No. 67-486, at 57 (1921) (Conf. Rep.) (explaining that, where the tax collector had died, the precursor to § 1346(a)(1) granted the district courts jurisdiction “for the recovery of internal revenue taxes erroneously assessed or collected, even though the claim exceeds $10,000”). Accordingly, the 1921 precursor to § 1346(a)(1) applied to claims of more than $10,000 “if the collector of internal-revenue by whom such tax, penalty, or sum was collected [was] dead at the time” the suit was commenced. Revenue Act of 1921, § 1310(c), 42 Stat. 227, 311. The Court explained in Flora I that, other than this narrow purpose, the provision was not intended to “expand or even to restate the jurisdiction of the District Court in refund suits brought against the United States.” Flora I, 357 U.S. at 71-72. A 1925 amendment to the provision also allowed “such refund suits” to be brought when the collector was “'not in office.'” Flora I, 357 U.S. at 71 n.15 (quoting Act of Feb. 24, 1925, ch. 309, 43 Stat. 972).

There is no suggestion in the relevant legislative history, or in the Supreme Court's detailed review of that history in Flora I and Flora II, that when Congress enacted the precursor to § 1346(a)(1), Congress intended the provision to encompass anything other than “refund suits.” Flora I, 357 U.S. at 72. See also Flora II, 362 U.S. at 151-52 (examining the impact of § 1346(a)(1) on jurisdiction over “tax refund suits”).

In 1954, when Congress enacted “[t]he final step in the evolvement of 28 U.S.C. § 1346(a)(1),” Flora I, 357 U.S. at 74, it again made clear that the purpose of § 1346(a)(1) was to allow taxpayers a remedy in district court for tax refunds. That year, Congress removed the reference to claims exceeding $10,000, as well as the attendant requirement that the tax collector be dead or out of office. Act of July 30, 1954, ch. 648, § 1, 68 Stat. 589. Congress amended the statute so that taxpayers would have “a greater opportunity to sue the United States in the district court of their own residence to recover taxes which they feel have been wrongfully collected.” H.R. Rep. No. 83-659, at 1 (1953) (quoted in Flora I, 357 U.S. at 74). See also H.R. Rep. No. 83-2276, at 2 (1954) (Conf. Rep.) (similar). As the Conference Committee Report explained, whether a taxpayer sued the Government or the tax collector, “recovery [was] limited to the amount of taxes erroneously or illegally collected.” Id. at 3. See also Williams, 514 U.S. at 532 (observing that § 1346(a)(1) displaced the common-law remedy of bringing a tax refund action against the tax collector personally); Wyodak, 637 F.3d at 1133-34 (explaining that the 1954 amendment to § 1346(a)(1) allowed all taxpayers to seek a tax refund in the district where they lived).

The legislative history demonstrates that, in enacting § 1346, Congress “create[d] a narrow exception” to the general rule, under the Tucker Act, that claims against the Government exceeding $10,000 must be brought in the CFC. Elec. Welfare, 907 F.3d at 167. Under that “narrow exception,” taxpayers may “seek a [tax] refund in their home district rather than in Washington, D.C.” Id. “[T]he legislative history confirms,” however, “that the only substantive right granted by § 1346(a)(1) . . . is the right to sue for a refund of taxes collected by the IRS or the Bureau of Internal Revenue.” Wyodak, 637 F.3d at 1134 (punctuation and citation removed and emphasis added).

3. Section 1346(a)(1), which defines the terms of a waiver of sovereign immunity, should be construed narrowly

At all events, if the Court finds § 1346(a)(1)'s “any sum” phrase to be ambiguous, any ambiguity must be construed narrowly, in favor of sovereign immunity. The United States “is immune from suit save as it consents to be sued, and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.” United States v. Sherwood, 312 U.S. 584, 586-87 (1941). In conjunction with I.R.C. § 7422 and related statutes, § 1346(a)(1) “both waives sovereign immunity and grants subject-matter jurisdiction to the district courts.” Wyodak, 637 F.3d at 1130. And its careful delineation of categories of cases that it authorizes to be heard in the district courts defines the terms of the waiver. Accordingly, the language of § 1346(a)(1) must be “strictly construed, in terms of its scope, in favor of the sovereign.” Lane, 518 U.S. at 192. See United States v. Nordic Village, 503 U.S. 30, 34 (1992) (the Government's consent to be sued will not be “enlarged beyond what the [statutory] language requires” (punctuation omitted)).

Because the § 1346(a)(1) language does not at all encompass — much less, “unequivocally” encompass — claims for overpayment interest, that provision does not waive sovereign immunity for Taxpayer's Overpayment Interest Claims. See Lane, 518 U.S. at 192. See also Williams, 514 U.S. at 531 (interpreting the waiver of sovereign immunity in § 1346(a)(1)); Nordic Village, 503 U.S. at 37 (if a statute may “plausibl[y]” be read to preserve immunity, a claimed waiver of that immunity “is not 'unambiguous' and therefore should not be adopted”). The District Court fundamentally erred in failing to consider or apply the well-established principles governing construction of a waiver of sovereign immunity, which should have guided its analysis. (See Appx1-9; Appx1210-1214.)

C. The Sixth Circuit's decision in Scripps, on which the District Court relied, rested on flawed reasoning and should not be followed

In Scripps, the Sixth Circuit began with the premise that Congress “made quite clear” in I.R.C. § 6611(a), which allows overpayment interest, that taxpayers who pay too much in tax should be able to bring suit to recover overpayment interest. 420 F.3d at 592-93. Congress did, in fact, provide avenues for taxpayers to sue the Government for overpayment interest, but the Sixth Circuit erred in concluding that one of those avenues is § 1346(a)(1). Id. at 598. As we have explained, any court rendering judgment for a tax overpayment may award the accompanying overpayment interest, 28 U.S.C. § 2411, and a district court also has jurisdiction over a standalone overpayment interest claim of $10,000 or less, 28 U.S.C. § 1346(a)(2). The CFC has concurrent jurisdiction to award such relief and also has jurisdiction over claims for overpayment interest that exceed $10,000. See 28 U.S.C. § 1491(a)(1). Taxpayer here thus is not without a remedy with respect to its Overpayment Interest Claims, but as the Second Circuit held in Pfizer, that remedy exclusively lies in the CFC. 939 F.3d at 179.

The Sixth Circuit found support for its conclusion in Scripps from a statement in Flora II regarding the scope of the “any sum” phrase, see Scripps, 420 F.3d at 596-97, but the Sixth Circuit erred by taking that statement out of context and viewing it in isolation. In Flora II, the Supreme Court wrote that the “any sum” phrase “'may refer to amounts which are neither taxes nor penalties'” and that “'[o]ne obvious example of such a 'sum' is interest.'” Id. at 597 (quoting Flora II, 362 U.S. at 149). But, in concluding that “any sum” could include interest, the Supreme Court found it “significant that many old tax statutes described the amount which was to be assessed under certain circumstances as a 'sum' to be added to the tax, simply as a 'sum,' as a 'percentum,' or as 'costs.'” Flora II, 362 U.S. at 149-50. This passage demonstrates that the “interest” that the Supreme Court found could be construed as “any sum” under § 1346(a)(1) was interest that was “assessed” or “added to the tax,” i.e., interest that the taxpayer owed the Government (underpayment interest), and not additional overpayment interest that a taxpayer sought from the Government.

As the Second Circuit observed in criticizing Scripps, “the Supreme Court's decision in Flora is inapplicable” to the question at hand. Pfizer, 939 F.3d at 177. Instead, in Flora, the Supreme Court “plainly had additional tax assessments” — that is, underpayment interest — “in view when it mention[ed] 'interest' as a 'sum' under § 1346(a)(1).” Id. at 178. See also Alexander Proudfoot, 454 F.2d at 1384-85 (stating that “the 'any sum' language in § 7422 undoubtedly covers [underpayment] interest,” but the Code treats overpayment interest “quite differently”). The Sixth Circuit, therefore, erred in Scripps by relying on an isolated, out-of-context statement from Flora II to conclude that the “any sum” phrase in § 1346(a)(1) includes not only underpayment interest, which was at issue in Flora, but also overpayment interest, which was not.

The Sixth Circuit further erred by failing to analyze the actual language that Congress enacted in § 1346(a)(1). The court stated that “the 'excessive sum' phrase does encompass suits seeking recovery of statutory interest on overpayments.” Scripps, 420 F.3d at 597. If the Government does not pay the overpayment interest that § 6611 allows, the court wrote, “the Government has retained more money than it is due, i.e., an 'excessive sum.'” Id. The District Court here adopted this analysis. (Appx4-5.) As discussed supra, at 27-34, however, the phrase “excessive sum” does not appear in § 1346(a)(1), and the provision does not waive sovereign immunity for all claims that the Government has retained an excessive sum. Looking to the text in the statute, which should have been the focus of Scripps and the District Court's opinion here, the Overpayment Interest Claims cannot be construed to seek “any sum alleged to have been excessive,” 28 U.S.C. § 1346. Pfizer, 939 F.3d at 178. See supra, at 27-34.

Prior to Scripps, the Northern District of Illinois had held that it lacked jurisdiction, under § 1346(a)(1), over claims for overpayment interest. Amoco Prod., 1988 WL 9112, at *1. The Sixth Circuit criticized Amoco Production because the Northern District of Illinois, in the Sixth Circuit's view, “failed to recognize that, although § 1346(a)(1) and § 7422(a) use parallel language, the two provisions serve different functions and thus have their own independent meanings.” 420 F.3d at 597-98 (footnote omitted). The District Court here similarly held that the two statutory provisions “serve different functions and that § 7422(a) does not limit § 1346(a)(1).” (Appx8.) As explained supra, at 39-48, this approach is in substantial tension with the Supreme Court's instruction in Dalm, 494 U.S. at 601, that “§ 1346(a)(1) must be read in conformity” with §§ 6511(a) and 7422(a), as well as with a series of other cases in which courts have held that § 7422(a), together with §§ 6511 and 6532, limits the jurisdictional grant in § 1346(a)(1).

To separate § 1346(a)(1) from § 7422(a), the Sixth Circuit relied on its opinion in Horizon Coal, 43 F.3d at 239-40. Scripps, 420 F.3d at 598. In Horizon Coal, the court held that the mining reclamation fees imposed by the Surface Mining Control and Reclamation Act of 1977 constituted an “internal-revenue tax” under § 1346(a)(1) but nonetheless were not an “internal revenue tax” under § 7422(a). 43 F.3d at 239-40. Cf. Wyodak, 637 F.3d at 1131 (reaching the opposite conclusion). As a result, the Sixth Circuit concluded that a claim could be brought under § 1346(a)(1) without meeting the requirements imposed by § 7422(a). Horizon Coal, 43 F.3d at 240. In Wyodak, the Tenth Circuit correctly rejected the reasoning of Horizon Coal because the identical language in the two provisions “must mean the same thing.” 637 F.3d at 1131. The Sixth Circuit in Scripps and the District Court here erred by failing to recognize the strong connections between § 7422(a) and § 1346(a)(1) and also by declining to uniformly interpret the “any sum” phrase that appears in both provisions. For all these reasons, the Scripps opinion is grounded in faulty reasoning and should not be followed.

Although the District Court also pointed (Appx3-4 & n.1) to several district court opinions in support of its holding, those cases do not support its exercise of jurisdiction over the Overpayment Interest Claims. The Second Circuit's opinion in Pfizer reversed one of those opinions and abrogated two others. See supra, at 18-19 n.12. In other cases, district courts have adjudicated claims for overpayment interest without even addressing jurisdiction (see, e.g., Phico Group, Inc. v. United States, 692 F. Supp. 437 (M.D. Pa. 1988); Citadel Indus., Inc. v. United States, 314 F. Supp. 245 (S.D.N.Y. 1970)), or simply asserted, without analysis, that § 1346(a)(1) grants jurisdiction (e.g., Gen. Motors Corp. v. United States, 389 F. Supp. 245, 246 (E.D. Mich. 1975); Draper v. United States, 10 A.F.T.R.2d 5446 (E.D. Wash. 1962)). In Wichita Center for Graduate Medical Education v. United States, the District of Kansas relied on Scripps to hold that the “any sum” phrase of § 1346(a)(1) granted it jurisdiction over an overpayment interest claim but then held that § 7422(a) applies to such claims, a position rejected in Scripps, 420 F.3d at 598. Compare Wichita Center, No. 16-1054, 2016 WL 4000934, at *4 (D. Kan. July 26, 2016), reconsideration denied, 2016 WL 7971164 (D. Kan. Dec. 21, 2016), with 2016 WL 7386454, at *2 (D. Kan. Dec. 21, 2016). Thus, none of these cases provides well-reasoned authority for the District Court's exercise of jurisdiction over Taxpayer's Overpayment Interest Claims.

On the other hand, the District Court opinions supporting the Government's position offer well-reasoned analysis. As discussed above, the district court in Amoco Production, 1988 WL 9112, at *5, engaged in a thorough textual analysis, in which it concluded that § 1346(a)(1)'s plain language does not reach claims for overpayment interest. More recently, the District of Colorado rejected the Sixth Circuit's analysis in Scripps because it “relies on a strained reading of § 1346(a)(1) and an overbroad reading of a dictum in Flora to permit a taxpayer to recover a sum that it never paid to the government.” Culver, 2019 WL 4930224, at *2. The court in Culver instead adopted the reasoning in Pfizer, which “is rooted in the text of the statute and appropriate considerations regarding the broader context of tax law.” Id. The court, accordingly, transferred Culver to the CFC. Id. Employing a similar analysis, the Southern District of Florida also recently held that § 1346(a)(1) does not grant jurisdiction for overpayment interest claims. Paresky (Appx1223-1228), see supra, at 36 n.15.

As the Second Circuit concluded in Pfizer, and as the Culver and Paresky courts more recently held, overpayment interest claims do not seek the “recovery of . . . any sum alleged to have been excessive” under § 1346(a)(1). Section 1346(a)(1), accordingly, neither waives the Government's sovereign immunity for such claims nor grants district courts jurisdiction over them. Taxpayer's Overpayment Interest Claims, therefore, should be transferred to the CFC.

CONCLUSION

The order of the District Court denying the Government's motion to transfer the Overpayment Interest Claims to the CFC is incorrect and should be vacated. This Court should remand to the District Court with instructions to grant the motion and transfer the Overpayment Interest Claims to the CFC for further proceedings.

Respectfully submitted,

RICHARD E. ZUCKERMAN
Principal Deputy
Assistant Attorney General

ELLEN PAGE DELSOLE (202) 514-8128
NORAH E. BRINGER (202) 307-6224
Attorneys
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044

NOVEMBER 2019

STATUTORY ADDENDUM

I.R.C. § 7422. Civil actions for refund

(a) No suit prior to filing claim for refund. — No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.

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28 U.S.C § 1346. United States as defendant

(a) The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:

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