Ford (Again) Loses Bid for $445M Tax Refund

[DaveofDurham]

Ouch!

 

From http://www.nationallawjournal.com

 

A federal appeals court on Wednesday rebuffed Ford Motor Co.’s bid for $445 million in interest it claimed it was due after overpaying its corporate income tax.

On remand from the U.S. Supreme Court, a three-judge panel from the U.S. Court of Appeals for the Sixth Circuit found that Ford, represented by Latham & Watkins partner Gregory Garre, is not entitled to the refund and that the court has jurisdiction to hear the case.

The long-running dispute began when the IRS in an audit made a preliminary determination that Ford underpaid its taxes from 1983 until 1989 by about $2 billion. In the 1990s, Ford remitted a series of payments to the IRS totaling $875 million. The deposits stopped the accrual of interest that Ford would otherwise owe once the amount of its underpayment was finally determined.

Except it turned out that Ford didn’t owe anything—it actually overpaid its income tax. The IRS refunded Ford’s money, but the question before the court was how much interest the company was owed.

Ford initially designated the payments “deposits in the nature of a cash bond,” which the IRS says is “is not a payment of tax,” and “if returned to the taxpayer, does not bear interest.” Later, Ford asked the IRS to treat its remittances as advance tax payments, which do bear interest in the event of an overpayment.

The government said Ford only gets interest after the money was reclassified as an advance tax payment, while Ford argued it was entitled to interest from the first day it sent in the money.

“Both parties offer imaginative and convoluted theories to support their arguments, but the interpretative dispute we must resolve is ultimately a simple one,” wrote Judge Julia Smith Gibbons, who was joined by Judge Alice Batchelder. Judge John Rogers wrote a separate concurring opinion.

The two forms of tax payment have tradeoffs—a company can demand its cash bond back at any time, while an advance payment can be returned only through the IRS’ formal refund process. “Ford is a sophisticated taxpayer, and its designation of the remittances was not accidental,” Gibbons wrote.

 

In 2012, the Sixth Circuit backed the government and ruled Ford was not entitled to the interest.

However, in December 2013, the Supreme Court in an unsigned order overturned the decision, questioning whether the district court had jurisdiction to hear the case.

Ford argued that the case was properly brought in district court, which has jurisdiction over cases “for the recovery of any … sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws.”

In opposition to Ford’s certiorari petition, the government for the first time argued that the district court didn’t have jurisdiction because Ford was not trying to recover money—it wanted interest that the IRS refuses to pay. As a result, the government said the case belonged in the U.S. Court of Federal Claims.

“The Sixth Circuit should have the first opportunity to consider the government’s new contention with respect to jurisdiction in this case,” the high court held.

The appellate panel dispensed with the question quickly, ruling that a 2005 Sixth Circuit decision, E.W. Scripps Co. v. United States, confers jurisdiction. “We decline the government’s invitation” to review that decision, Gibbs wrote, which “undeniably affirms the district court’s jurisdiction to decide this case.”

Ford counsel Garre referred a request for comment to the company. “We are disappointed in the result and are considering our options for next steps,” Ford spokeswoman Whitney Eichinger said in an email. 

Read more: http://www.nationallawjournal.com/id=1202672019224/Ford-Again-Loses-Bid-for-445M-Tax-Refund#ixzz3EwMz0BxE

 

 

 

[ScubaDadMiami]

Something doesn't seem right about that, to me.

[MomsHugs]

Ford didn't need a government bailout like GM & overpaid taxes to boot, the refund of which the government refuses to pay interest. Hummmm... makes me wonder if GM underpaid taxes & had to pay interest on taxes owed. Also makes me wonder if Congressional oversight committee needs another investigation of the IRS. Fishy doesn't even begin to describe this kettle of fish!