Ford's Tax Issue Isn't Ready for High Court
WASHINGTON - The government's changing position on jurisdiction fouled Ford's ongoing appeal over interest it is owed on overpaid taxes, the U.S. Supreme Court ruled Monday.
The justices handed down the two-page opinion, summarily granting Ford a writ of certiorari and vacating the underlying judgment from the 6th Circuit.
Ford's case concerns its voluntary payment of $875 million to the Internal Revenue Service when it learned that it had underpaid on its taxes from 1983 to 1989.
The deposits totaling $875 million stopped the clock on interest Ford would otherwise accrue once the IRS completed its audits and determined how much money was owed exactly.
Ford later requested that the IRS treat the deposits as advance payments of the additional tax it owed.
When the IRS determined that Ford had overpaid its taxes for the relevant years, Ford became entitled to return of the overpayment plus interest.
Section 6611(a) of the U.S. Code that says interest begins to run "from the date of overpayment."
The automotive giant filed suit because the IRS defined that date as the one on which Ford asked the IRS to treat its deposits as advance payments.
Ford meanwhile argued that the correct date was when it first remitted the deposits to the agency, entitling it to an extra $445 million.
Accepting the government's construction of Section 6611(a), a federal judge awarded it judgment on the pleadings.
The 6th Circuit affirmed last year, concluding that Section 6611 is a waiver of sovereign immunity that must be construed strictly in favor of the government.
In its petition to the Supreme Court for relief, Ford said the law does not merit strict construction because it is Section 1346 of 28 U.S.C. that waives the government's immunity from this suit.
The government countered for the first time in its reply brief that Section 1346(a)(1) does not apply at all to this suit.
It said that the only basis for jurisdiction, and "the only general waiver of sovereign immunity that encompasses [Ford's] claim," is the Tucker Act, codified at Section 1491(a) of 28 U.S.C.
The Supreme Court noted Monday that the government's construction would mean that "jurisdiction over this case was proper only in the United States Court of Federal Claims."
As such, the 6th Circuit should be the first court to consider the government's new contention about jurisdiction, according to the opinion.
"Depending on that court's answer, it may also consider what impact, if any, the jurisdictional determination has on the merits issues, especially whether or not §6611 is a waiver of sovereign immunity that should be construed strictly," the unsigned order states.