Baral v. United States

PETITIONER: Baral
RESPONDENT: United States
LOCATION: Denton County District Court

DOCKET NO.: 98-1667
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 528 US 431 (2000)
ARGUED: Jan 18, 2000
DECIDED: Feb 22, 2000

ADVOCATES:
Kent L. Jones - Department of Justice, argued the cause for the respondent
Walter J. Rockler - Argued the cause for the petitioner

Facts of the case

David H. Baral made two remittances to the Internal Revenue Service towards his 1988 income tax, which was due on April 15, 1989. The first was a standard withholding from Baral's wages throughout 1988 by his employer. The second was an estimated income tax remitted in January 1989 by Baral himself. Baral received an extension until August 15, but did not file the return until June 1, 1993. On the return, Baral claimed a $1,175 overpayment and asked the IRS to apply this excess as a credit toward his outstanding tax obligations for the 1989 tax year. The IRS denied the requested credit citing 26 U. S. C. Section 6511, which states that "the amount of the credit or refund shall not exceed the portion of the tax paid within the period immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return." According to the IRS, Baral had paid no portion of the overpaid tax between February 1, 1990 and June 1, 1993, and therefore he faced a ceiling of zero on any allowable refund or credit. Baral commenced suit for a refund in the Federal District Court, which granted the IRS summary judgment. In affirming, the Court of Appeals concluded that both remittances were paid on April 15, 1989.

Question

Are remittances of withholding tax and estimated income tax paid on the due date of the taxpayer's income tax return?

Media for Baral v. United States

Audio Transcription for Oral Argument - January 18, 2000 in Baral v. United States

Audio Transcription for Opinion Announcement - February 22, 2000 in Baral v. United States

William H. Rehnquist:

The opinion of the Court in No. 98-1667, Baral against the United States will be announced by Justice Thomas.

Clarence Thomas:

This case comes to us on a writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.

Petitioner Baral is a taxpayer.

In 1988, petitioner’s employer withheld a portion of petitioner’s wages and remitted it to the Internal Revenue Service toward petitioner’s tax liability for the tax year 1988.

Petitioner remitted an additional amount to the IRS as estimated income tax.

Although, petitioner obtained an extension of time for filing his tax return until August 15, 1989, he missed his deadline and did not file the return until June 1, 1993.

On this return, he claimed that the two remittances exceeded his tax liability for the 1988 tax year and requested a credit toward his 1989 tax liability.

The IRS denied the requested credit concluding that petitioner’s claim exceeded the ceiling imposed by Internal Revenue Code Section 6511(b) which limits the amount of credit or refund of overpaid tax to the portion of the overpaid tax that was paid within the period immediately preceding the filing of the claim equal to three years plus any extension of time.

Here that period began on February 1, 1990 and ended on June 1, 1993.

The IRS determined that the two remittances have been paid on April 15, 1989, that is before and outside the period described by Section 6511(b).

Petitioner then brought suit in Federal District Court which ruled in favor of the IRS.

The Court of Appeals affirmed explaining that Code Section 6513 plainly establishes that remittances of a holding tax and estimated income tax are deemed paid for the purpose of Section 6511 on the due date of the taxpayer’s return for the relevant year.

Here that due date was April 15, 1989.

In an opinion filed with the Clerk, we affirm the judgment of the Court of Appeals as that court observe Section 6513 plainly indicates that the remittances at issue here are considered paid on April 15, 1989 so that they fall outside the period described by Section 6511.

Because neither these nor any other remittances towards the overpaid tax was paid within the relevant period, the ceiling on petitioner’s credit or refund is zero and the IRS was correct to deny the requested credit.

We reject petitioner’s contention that Section 6513 indicates only when remittances of withholding tax or estimated income tax are deemed paid and that Section 6513 says nothing about when income tax was paid.

This contention rests on the mistaken premise that the withholding tax and the estimated income tax are taxes in their own right, separate from the income tax; they are instead methods for collecting the income tax.

The opinion of the court is unanimous.