Foreign citizen denied refund of erroneously withheld taxes.

• Author: Beavers, James A.

The Federal Circuit upheld the IRS's denial of a request for refund of erroneously withheld taxes because the taxpayer filed his claim for a refund well after the end of the three-year lookback period in Sec. 6511(b)(2)(A).

Background

Mario Boeri is a citizen of Italy who has never lived or worked in the United States. He was employed outside the United States by Verizon Corp. and its predecessor, GTE, for 36 years. In November 2003, he chose to participate in Verizon's Management Voluntary Separation Plan and was awarded a gross separation payment of $247,177 in 2004. Over two distributions in March and August 2004, Verizon withheld a total of $70,559, including U.S. income tax, Social Security tax, and Medicare tax, even though Boeri had no apparent U.S. tax liability because he never lived or worked in the United States.

Boeri was aware of the erroneous withholding from sometime in 2004. In March 2009, after consulting with a CPA, he filed a nonresident alien income tax return for the 2004 tax year, seeking a refund from the IRS of all the taxes withheld by Verizon. The IRS denied his request for a refund on the grounds that, under Sec. 6511(b)(2)(A), Boeri should have requested it within three years of April 15, 2005 (the date that the IRS deemed the taxes were paid under Sec. 6513(b)(1)). The IRS Appeals Office denied his administrative appeal of this determination in July 2011.

Boeri then appealed the determination to the Claims Court, stating that the three-year period did not apply because he was not seeking a refund of a tax overpayment, but correction of an erroneous withholding. He argued that under his circumstances, the request for a refund was not within the scope of the three-year lookback provision of Sec. 6511(b)(2)(A).

The Claims Court held that Boeri could not recover the withheld funds because his request was not made within the three-year period of Sec. 6511(b)(2)(A). The Claims Court then dismissed his suit for failure to state a claim upon which relief could be granted. The court stated that "Sections 6513(b)(1) and (c)(2) specify when advance payments of income tax and social security and Medicare taxes are deemed paid," and that "[U]nder these provisions, the advanced payments paid by Verizon in 2004 for which [Boeri] seeks a refund are deemed paid on April 15, 2005." Because Boeri did not seek a refund within three years of the "deemed paid" date calculated pursuant to Sec. 6513(b)(1), the court held that Sec...