The rebate debate continues, but this time the debate hits the road in YRC Regional Transport, Inc. and Subsidiaries, f.k.a. USF Corporation and Subsidiaries, 2014 T. C. Memo. 112, filed 6/10/14.

In its USF days, YRC had an NOL, for which it requested a refund in its YRC days as a carryforward. IRS sent two refund checks for the same refund.

When IRS discovered its mistake, it hit YRC with an increased deficiency. IRS had issued a SNOD for a much lower amount, which sparked the petition here, then amended their answer to try to recoup the overpayment, even though the Section 7405 SOL had run. IRS claimed it had recalculated YRC’s deficiency; YRC claimed that IRS was trying to recoup its own error too late, and moved for summary judgment.

Judge Kerrigan gives YRC summary judgment. The erroneous IRS payment is not a rebate; a rebate arises from an IRS recalculation of tax owed, when a taxpayer pays too much. A nonrebate is an IRS error, plain and simple. And this is one.

Judge Kerrigan: “Refunds issued by the Commissioner by accident are nonrebate refunds, while rebate refunds are issued because of the taxpayer’s tax liability.” 2014 T. C. Memo. 112, at p. 7.

Tax Court has jurisdiction to consider deficiencies, as defined by Section 6211(a), that is, the difference between tax actually imposed, and tax paid, tax previously assessed or collected without assessment, plus rebates. Here, no rebate, so the only deficiency for which IRS can go after YRC is what was underpaid by YRC.

As for the erroneous double payment, as Tax Court has no jurisdiction, IRS must, in the immortal words of the Bard, “seek him i’ th’ other place yourself.” Hamlet, Act IV, Sc. 3.