COMMISSIONER OF INTERNAL REVENUE, PETITIONER V. ALFONZO L. DOWELL AND VIVIAN T. DOWELL No. 82-1873 In the Supreme Court of the United States October Term, 1982 The Solicitor General, on behalf of the Commissioner of Internal Revenue, petitions for a writ of certiorari to review the judgments of the United States Court of Appeals for the Tenth Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Tenth Circuit TABLE OF CONTENTS Opinions below Jurisdiction Statutes involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F OPINIONS BELOW The first opinion of the Tax Court (App. A, infra, 1a-5a) is reported at 68 T.C. 646. The first opinion of the court of appeals (App. B, infra, 6a-11a) is reported at 614 F.2d 1263. The Tax Court's opinion on remand (App. C, infra, 12a-20a) is not officially reported. The opinion of the court of appeals on the second appeal (App. D, infra, 21a-32a) is not reported. JURISDICTION The judgments of the court of appeals (App. E, infra, 33a-34a) were entered February 11, 1980, and January 19, 1983. By order dated April 8, 1983, Justice White extended the time for filing a petition for a writ of certiorari to and including May 19, 1983. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTES INVOLVED The pertinent parts of Sections 6501 and 6653 of the Internal Revenue Code of 1954 (26 U.S.C.) are set forth in App. F, infra, 35a-36a. QUESTION PRESENTED Section 6501(a) of the Internal Revenue Code of 1954 (26 U.S.C.) provides that "the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed * * *." Section 6501(c)(1) sets forth an exception for false or fraudulent returns, providing that in such cases, "the tax may be assessed * * * at any time." The question presented is whether the statutory exception prescribing that no period of limitations is applicable to fraudulent returns requires that where a fraudulent return is filed in the first instance, the subsequent filing of an amended nonfraudulent return does not commence the running of the three-year statute of limitations. STATEMENT For each of the years 1963 through 1966, respondents filed a false and fraudulent joint federal income tax return. After the Commissioner of the Internal Revenue began an investigation of their tax liability, respondents filed nonfraudulent amended returns for 1965 and 1966 on September 13, 1968, and nonfraudulent amended returns for 1963 and 1964 on November 25, 1968. In 1970, respondents were convicted of willfully attempting to evade or defeat federal income taxes for the years 1963 through 1966 in violation of Section 7201 of the 1954 Code. United States v. Alfonzo L. Dowell and Vivian T. Dowell, Crim. No. 70-85 (W.D. Okla. May 17, 1970), aff'd, 446 F.2d 145, 146-147 (10th Cir.), cert. denied, 404 U.S. 984 (1971) (App. A, infra, 3a). On December 11, 1974, the Commissioner issued a notice of deficiency to respondents, determining deficiencies in tax and additions to tax under Section 6653(b) for each of the years in question. In these proceedings brought in the Tax Court, respondents stipulated that their criminal convictions estopped them from denying that they had filed false and fraudulent original income tax returns for 1963 through 1966. They contended, however, that assessment of the deficiencies and penalties was nevertheless barred by the statute of limitations prescribed in Section 6501(a) of the 1954 Code because the deficiency notice was not issued within three years after the filing of the amended returns. The Tax Court rejected that contention, ruling that the exception provided by Section 6501(c)(1), allowing taxes to be assessed "at any time" where a fraudulent return is filed, continued to apply, despite respondents' subsequent filing of amended nonfraudulent returns (App. A, infra, 4a-5a). The court of appeals reversed (App. B, infra, 6a-11a). In so ruling, the court upheld respondents' contention that the filing of nonfraudulent amended returns started the running of the ordinary three-year limitations period under Section 6501(a). The court remanded the case to the Tax Court for further proceedings in accordance with its opinion (App. B, infra, 11a). On remand, respondents claimed that they were also entitled to recover $8,310.32 of the amount they had remitted in 1968 with their amended returns. That amount had been placed in a suspense account by the Commissioner and was not formally assessed until 1977. /1/ The Tax Court ruled that "payment" occurred in 1968 when respondents remitted the funds with their amended returns and that it therefore lacked jurisdiction under Section 6512(b)(2) to determine the existence of refundable overpayments with respect to payments made in 1968 (App. C, infra, 12a-20a). On respondents' second appeal, the court of appeals affirmed (App. D, infra, 21a-32a). It agreed that the $8,310.32 remittance was a "payment" in 1968 and held that the respondents were barred from recovering any overpayments because they failed to file a claim for refund within three years from the time the payment was made (App. D, infra, 30a-32a). REASONS FOR GRANTING THE PETITION The question presented to the court of appeals on the first appeal in this case -- whether the filing of nonfraudulent amended returns following the filing of fraudulent original returns starts the running of the three-year statute of limitations under Section 6501(a) of the Internal Revenue Code of 1954 -- will be resolved by the Court next term in Badaracco v. Commissioner and Deleet Merchandising Corp. v. United States, 693 F.2d 298 (3d Cir. 1982), cert. granted, Nos. 82-1453 and 82-1509 (May 16, 1983). As we pointed out in our brief responding to the petitions for writs of certiorari in Badaracco and Deleet Merchandising, there is a square conflict of decisions on this issue between the Third and Fifth Circuits, on the one hand, and the Second and Tenth Circuits, on the other. The Third Circuit in Badaracco and Deleet Merchandising and the Fifth Circuit in Nesmith v. Commissioner, 699 F.2d 712 (1983), have upheld the Commissioner's interpretation of Section 6501(a) that was rejected by the court of appeals below and thereafter by the Second Circuit in Britton v. United States, 697 F.2d 288 (1982), aff'g mem., 532 F. Supp. 275 (D. Vt. 1981). /2/ For the reasons more fully set forth in our brief in response to the certiorari petitions in Badaracco and Deleet Merchandising, we submit that where false or fraudulent returns are filed in the first instance, the filing of nonfraudulent amended returns does not commence the running of the three-year limitations period under Section 6501(a). Rather, in such circumstances, the exception for the case of a false or fraudulent return continues to apply, providing an unlimited assessment period under Section 6501(c)(1) so that taxes can be assessed "at any time." Moreover, we believe the Court should resolve the conflict and establish a uniform national rule with respect to the interpretation of the statute of limitations provisions. Accordingly, the Court should hold this case until its disposition of Badaracco and Deleet Merchandising. /3/ CONCLUSION The Court should hold the petition and dispose of this case in accordance with its dispositions in Badaracco and Deleet Merchandising, Nos. 82-1453 and 82-1509. /4/ Respectfully submitted. REX E. LEE Solicitor General MAY 1983 /1/ An additional $2,111.33 remitted with the amended returns was applied, in the first instance, against assessed liabilities for 1965 (App. D, infra, 22a). /2/ In Klemp v. Commissioner, 77 T.C. 201 (1981), appeal pending, No. 81-7744 (9th Cir.), the Tax Court reversed its position on this issue and followed the court of appeals' decision in this case. /3/ Because there was no conflict at the time of the court of appeals' original decision remanding the case for further proceedings, the Commissioner did not then seek certiorari. Nor did he file a notice of appeal with respect to that portion of the Tax Court's decision on remand determining, in accordance with the Tenth Circuit's mandate, that there were no deficiencies for the years in question. Such a course would have been futile in light of the court of appeals' decision on the statute of limitations question. Under this Court's decisions, these circumstances do not limit this Court's power to review the court of appeals' original holding at this time. The Court can now "consider all of the substantial federal questions determined in the earlier stages of the litigation * * *." Reece v. Georgia, 350 U.S. 85, 87 (1955). See also Mercer v. Theriot, 377 U.S. 152, 153-154 (1964); Urie v. Thompson, 337 U.S. 163, 172-173 (1949); Hamilton-Brown Shoe Co. v. Wolf Brothers & Co., 240 U.S. 251, 257-258 (1916); Panama R.R. v. Napier Shipping Co., 166 U.S. 280, 284 (1897). /4/ We are serving a copy of this petition upon counsel for the petitioners in Badaracco and Deleet Merchandising. We are also furnishing a copy of our brief acquiescing to the grant of the petitions in Badaracco and Deleet Merchandising to counsel for the respondents in the instant case. Appendix Omitted