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Lua v. United States

United States Court of Appeals, Federal Circuit

December 15, 2016

ARMANDO SANDOVAL LUA, YADIRA SANDOVAL, Plaintiffs-Appellants
v.
UNITED STATES, Defendant-Appellee

         Appeal from the United States Court of Federal Claims in No. 1:13-cv-00095-CFL, Judge Charles F. Lettow.

          Sean H. Colon, Sean H. Colon, Inc., Woodland, CA, argued for plaintiffs-appellants.

          Regina S. Moriarty, Tax Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Richard Farber, Caroline D. Ciraolo.

          Before Prost, Chief Judge, Wallach and Chen, Circuit Judges.

          Wallach, Circuit Judge.

         Armando Sandoval Lua and Yadira Sandoval (together, "the Sandovals") appeal from the decision of the U.S. Court of Federal Claims ("Claims Court") granting summary judgment in favor of the United States ("Government") as to certain tax refunds claimed by the Sandovals. See Sandoval Lua v. United States, 123 Fed.Cl. 269, 277 (2015). We affirm.

         Background

         In 2006, the U.S. Internal Revenue Service ("IRS") opened an audit of the Sandovals' tax return for the 2004 fiscal year. Appellee's Suppl. App. ("SA") 3. The IRS later expanded this audit to include the 2003 and 2005 fiscal years.[1] SA 44. The Sandovals met with an IRS agent several times and went over the proposed adjustments to the Sandovals' taxable income and, thus, outstanding tax liability owed, for the 2003 and 2004 fiscal years. SA 44-47. During this process, the Sandovals signed two key documents; in Form 4549, they waived their right to a notice of deficiency for the years 2003 and 2004, and in Form 872, they consented to extend the statute of limitations period for the 2003 fiscal year through December 31, 2008. SA 34, 36-37. The Sandovals hired representation and obtained audit reconsideration. SA 42, 46.

         On reconsideration, the IRS assessed deficiencies for the 2003 and 2004 fiscal years in the amounts of $60, 274 and $87, 566, respectively. SA 3, 9. IRS agents thereafter continued to meet and confer with the Sandovals' representative in the following months to prepare amended returns for 2003 and 2004. SA 46-47.

         The Sandovals filed amended tax returns in June 2008 for the amounts owed that they considered to be "substantially correct, " and requested abatements that roughly totaled the outstanding amounts assessed but not paid. SA 58, 59-77 (2003 amended tax return), 78-95 (2004 amended tax return); see also SA 156 at 58:6-7 (deposition of Ms. Sandoval in which she states that they sent checks to the IRS that were "an estimate of―only of the money that we owed"). The returns included two checks and an accompanying letter from their representative stating that the checks were to be applied to the Sandovals' income tax liability for 2003 and 2004, and that "any overpayment" should be contributed to other years' outstanding amounts due. SA 58. The IRS granted a substantial portion of the requested abatements, such that these checks and overpayment credits satisfied the Sandovals' tax deficiencies in full from 2003 and 2004.[2]SA 4, 10.

         In 2010, the Sandovals filed a second set of amended returns for 2003 and 2004 seeking a full refund of funds remitted plus amounts applied as overpayments from other tax years, totaling approximately $101, 000. Appellants' Suppl. App. 27-69. The IRS denied the claims for refund and denied appeal in 2012. SA 140-49, 151-52.

         The Sandovals filed suit in the Claims Court seeking the same relief. The Sandovals contended that they were entitled to the remitted funds on any of the following grounds: (1) they withdrew consent to assessment without notice of deficiency and never received subsequent notice; (2) the 2008 funds were applied after the three year statute of limitations for assessment had expired; or (3) the 2008 funds were given as refundable deposits rather than as tax payments. The Claims Court granted summary judgment in favor of the Government and denied a cross-motion for summary judgment, finding that as a matter of law the Sandovals were not entitled to the claimed refunds. Sandoval Lua, 123 Fed.Cl. at 277.

         The Sandovals subsequently filed this appeal. This court has jurisdiction pursuant to ...


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