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Requirements of Equitable Recoupment
In a recent case, the Supreme Court reaffirmed that a party
litigating a tax claim in a timely proceeding may, in that
proceeding, seek recoupment of a related, and inconsistent, but
now time-barred tax claim relating to the same transaction. See
United States v. Dalm, supra at 608 (interpreting Bull v. United
States, 295 U.S. 247 (1935), and Stone v. White, 301 U.S. 532
(1937)).
A claim of equitable recoupment requires: (1) That the
refund or deficiency for which recoupment is sought by way of
offset be barred by time; (2) that the time-barred offset arise
out of the same transaction, item, or taxable event as the
overpayment or deficiency before the Court; (3) that the
transaction, item, or taxable event have been inconsistently
subjected to two taxes; and (4) that if the subject transaction,
item, or taxable event involves two or more taxpayers, there be
sufficient identity of interest between the taxpayers subject to
the two taxes so that the taxpayers should be treated as one.
See United States v. Dalm, supra at 604-605 & n.5; Coohey v.
United States, 172 F.3d 1060 (8th Cir. 1999); Parker v. United
States, 110 F.3d 678, 682-683 (9th Cir. 1997).
Each of these requirements is met in the instant case.
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