An

Abstract

Longstanding judicial precedent and the official position of the I.R.S. agree that federal tax refund suits are limited only by the Internal Revenue Code’s two-year statute of limitations, which is triggered only when the I.R.S. mails the claimant a notice of disallowance. 26 U.S.C. § 6532(a)(1). This article contends that tax refund litigation is also governed by the six-year limitation on “[e]very civil action commenced against the United States,” which is triggered upon the accrual of a claim. 28 U.S.C. § 2401(a). The prevailing view that the general statute of limitations does not apply to tax refund litigation is based on Detroit Trust Co. v. United States, 131 Ct. Cl. 223 (1955). Under Detroit Trust, a taxpayer may indefinitely sit on her right to sue the Government unless the I.R.S. issues a formal disallowance that triggers § 6532(a)(1). The contrary view advanced here, that the six-year bar imposes an “outside limit” on the tax-specific statute of limitations, was recently stated in dicta by a unanimous Supreme Court in United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1 (2008). The persuasiveness of Detroit Trust was further eroded when a district court held that the case was “wrongly decided” and dismissed as untimely a refund suit filed more than six years after the claim accrued, even though the I.R.S. had never disallowed the underlying claim. Wagenet v. United States, No. 08-00142 AG (ANx), 2009 U.S. Dist. LEXIS 115547 (C.D. Cal. Sep. 14, 2009). Applying the six-year bar as a backstop to tax refund suits would enforce its plain meaning, would accord with multiple canons of statutory construction, would promote timely resolution of tax refund claims, and would bring tax refund litigation into line with the rest of federal claims jurisprudence, thereby eliminating one manifestation of the tax exceptionalism that the Supreme Court recently criticized in Mayo Foundation for Medical Education & Research v. United States, No. 09-837, slip op. at 9 (U.S. Jan. 11, 2011).