Case 1:05-cv-01028-MBH
Document 20
Filed 06/30/2006
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IN THE UNITED STATES COURT OF FEDERAL CLAIMS __________ No.05-1028 T (Judge Marian Blank Horn) ESTATE OF RANKIN M. SMITH, SR., SUNTRUST BANK, TAYLOR W. SMITH, and RANKIN M. SMITH, JR., Co-Executors, Plaintiffs v. THE UNITED STATES, Defendant
DEFENDANT'S STATUS REPORT
Pursuant to the Court's order of June 9, 2006, the United States reports as follows: The parties disagree as to whether there is a jurisdictional issue in this action. Defendant believes there is a jurisdictional issue because the assessed estate tax was not fully paid by plaintiff at the time the Complaint was filed. As support for this position, defendant relies upon the Certificate of Assessments and Payments ("transcript of account") for plaintiff which was prepared by the Internal Revenue Service. The plaintiff's transcript of account reflects an unpaid assessed estate tax liability of $4,276,648.61, which was outstanding on September 23, 2005, when plaintiff filed the Complaint in this action. Defendant's position, based upon Flora v. United States, 362 U.S. 145 (1960), is that this Court lacks jurisdiction over this action because
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Case 1:05-cv-01028-MBH
Document 20
Filed 06/30/2006
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all assessed estate taxes were not paid prior to filing suit. It is defendant's position that plaintiff owes an additional $4,276,648.61 in estate tax. The following is defendant's understanding of plaintiff's position: Plaintiff disagrees that there is a jurisdictional issue in this action. Plaintiff contends that the estate tax deficiency assessed on June 20, 2002, is defective and that the transcript of account is erroneous. Plaintiff contends that it incurred deductible administrative expenses and was entitled to a credit before suit was filed which would eliminate any outstanding tax liability. The administrative expenses claimed and the credit claimed were included in a claim for refund which was disallowed by the IRS. Plaintiff contends that it is entitled to reduce its estate tax liability by the amount of the disallowed administrative expense deductions and the disallowed credit. This, plaintiff contends, satisfied the full payment requirement of Flora at the time the Complaint was filed and no further tax is owed. Plaintiff's contentions supporting its position that there is no jurisdictional defect are based on its arguments on the substantive issues (raised in the refund claim that was disallowed), over which the Court has no jurisdiction. In other words, plaintiff contends that the IRS's disallowance of the claimed deductions and credit was erroneous- - a substantive issue which this Court may address only if it first determines that it has jurisdiction.
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Case 1:05-cv-01028-MBH
Document 20
Filed 06/30/2006
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Respectfully submitted,
s/Jennifer Dover Spriggs JENNIFER DOVER SPRIGGS Attorney of Record U.S. Department of Justice Tax Division Court of Federal Claims Section Post Office Box 26 Ben Franklin Post Office Washington, D.C. 20044 (202) 307-0840
EILEEN J. O'CONNOR Assistant Attorney General DAVID GUSTAFSON Chief, Court of Federal Claims Section STEVEN I. FRAHM Assistant Chief s/Steven I. Frahm Of Counsel
June 30, 2006
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