October 10, 2011
In our report on the oral argument in Sunoco, which took place back in January, we remarked that the Third Circuit panel seemed skeptical of the Tax Court’s decision, even if the panel had not yet mastered the complexities of the case. It took more than eight months, but the Third Circuit has now issued a comprehensive opinion reversing the Tax Court and holding that it lacked jurisdiction to consider Sunoco’s claims for additional overpayment interest. The court’s opinion tracks the government’s position fairly closely, and it accepts the government’s view that Estate of Baumgardner v. Commissioner, 85 T.C. 445 (1995), is correctly decided but applies only to claims for deficiency (i.e., underpayment) interest. That case cannot help Sunoco with its efforts to receive additional overpayment interest, which it could have obtained only by bringing suit in the Court of Federal Claims.
The Third Circuit explains that the Code gives the Tax Court jurisdiction over claims for overpayment interest only “in two very narrow circumstances,” under sections 6512(b)(2) and 7481(c), and neither of those sections come into play in Sunoco’s situation. The court summarized its view of the critical defect in Sunoco’s position as follows: “The overpayment interest at issue here is not attributable to any decision of the Tax Court . . . . Rather, the interest at issue here arises from overpayments that were refunded or credited before this case began. We can find no statutory authorization for the Tax Court to determine this kind of claim.”
If Sunoco decides to seek further review, a petition for rehearing would be due on November 21, and a petition for certiorari would be due on January 5, 2012.