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IN THE UNITED STATES COURT OF FEDERAL CLAIMS
THE COCA-COLA COMPANY & SUBSIDIARIES, Plaintiffs, v. THE UNITED STATES, Defendant.
) ) ) ) ) No. 03-1155 T ) The Honorable Lawrence J. Block ) ) ) )
DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT
Defendant, the United States, pursuant to Rule 56(h)(1) of the Rules of the United States Court of Federal Claims, respectfully provides these proposed findings of uncontroverted fact. 1. Taxpayer timely (pursuant to an extension) filed its return with respect to calendar
1981 on or about September 13, 1982. Joint Stipulation of Facts (hereafter "Stip.") ¶ 7; Declaration of Connie Stegen McDonald (hereafter "McDonald Declaration"), attached hereto as Exhibit A, ¶ 5. 1/ 2. The return reported a tax liability of $89,332,282, not all of which had been paid
when due, on March 15, 1982. McDonald Declaration ¶ 6.
The exhibit is a facsimile. The original document, signed by the declarant, has been retained by counsel for the Government. -1-
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3.
After adjustments reducing the tax liability by $119,636, and payment of
underpayment interest of $145,946.68 in September, 1983, and $70,085.60 in April, 1984, the account balance for the plaintiff's 1981 income tax year became zero. McDonald Declaration ¶ 7. 4. In November 1984, taxpayer filed a Form 1139, "Corporation Application for a
Tentative Refund," seeking a refund of 1981 income tax of $7,606,600, based on carrybacks from 1983. McDonald Declaration ¶ 8. 5. This refund was paid within 45 days of the date of the claim, without interest.
McDonald Declaration ¶ 9. 6. In January 1985, taxpayer filed yet another Form 1139, seeking a carryback refund
of 1981 income tax of $1,114,752, based on carrybacks from 1984. McDonald Declaration ¶ 10. 7. This refund was paid within 45 days of the claim, without interest. McDonald
Declaration ¶ 11. 8. On September 16, 1985, plaintiff filed a third Form 1139, this time seeking a
refund of $18,682,973, generated by additional carrybacks to 1981 from 1984. Stip. ¶ 8; McDonald Declaration ¶ 12. 9. This refund was paid on September 27, 1985, within 45 days of the filing of the
claim, without interest. Stip. ¶ 8; McDonald Declaration ¶ 13. 10. Coca-Cola's 1981 taxes had been under audit since June of 1983. McDonald
Declaration ¶ 14.
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11.
In October of 1987, the Internal Revenue Service assessed a tax deficiency in the
amount of $8,191,826, along with deficiency interest in the amount of $7,802,895 (for a total of $15,994,721). Stip. ¶ 9; McDonald Declaration ¶ 15. 12. The deficiency consisted of general adjustment increasing plaintiff's taxes by
$8,967,196, and allowance of an additional carryback to 1981 from 1982, decreasing plaintiff's 1981 tax in the amount of $775,370. McDonald Declaration ¶ 16. 13. This tax deficiency and the deficiency interest was satisfied by plaintiff with a
payment of $15,994,721 on October 27, 1987. Stip. ¶ 9; McDonald Declaration ¶ 17. 14. In January of 1990, the Commissioner commenced an audit of plaintiff's 1981 tax
liability, which reviewed, among other things, the amount and correctness of the carrybacks from 1984 to 1981. McDonald Declaration ¶ 18. 15. The examination resulted in a net tax assessment of $9,772,827, which was
comprised of three parts: there was a reduction in the amount of the carryback allowed to 1981 from 1984, resulting in a tax increase of $12,448,079; there was a general adjustment reducing plaintiff's tax liability by $952,336; there was an increase in the amount of the carryback allowed from 1983 to 1981, resulting in a tax decrease of $1,722,916. Finally, Stip. ¶ 11; McDonald Declaration ¶ 19. 16. This net tax deficiency, along with deficiency interest of $3,780,718, was assessed
on January 23, 1991. Stip. ¶ 11; McDonald Declaration ¶ 20. 17. The deficiency assessed in January 1991 was satisfied by transferring into the
account an overpayment credit from 1980 in the amount of $986,054.19, another overpayment credit from 1980 in the amount of $712,094.04 (which had been paid on October 27, 1987), and -3-
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an overpayment credit from 1984 in the amount of $11,855,397.47 (which had been paid on March 15, 1990). Stip. ¶ 11. These last two amounts ($712,094.04, originally paid with respect
to 1980, and $11,855,397.47, originally paid with respect to 1984) would later be transferred out of the account (and applied to plaintiff's tax liability for 1982) when the Service's deficiency assessment was almost entirely reversed, as set out below. McDonald Declaration ¶ 21. 18. On May 30, 1991, the Commissioner issued a Notice of Deficiency with respect to
plaintiff's taxes for 1981, 1983 and 1984. McDonald Declaration ¶ 22. 19. The Notice proposed various substantive adjustments to plaintiff's taxes for 1983
and 1984, and affected the year in issue, 1981, only insofar as those adjustments to 1984 reduced carrybacks which plaintiff had claimed (and had been allowed) from 1984 to 1981. McDonald Declaration ¶ 23. 20. As a result of the reduced carryback, the Notice proposed a deficiency in tax with
respect to 1981 in the amount of $6,234,894. McDonald Declaration ¶ 24. 21. Taxpayer filed a petition for a redetermination with the United States Tax Court.
McDonald Declaration ¶ 25. 22. The resolution of the dispute over taxpayer's 1981 income tax was embodied in a
stipulated decision of the Tax Court, dated January 2, 1997, which determined that there was an overpayment of tax with respect to 1981 in the amount of $12,352,648, which had been paid on October 27, 1987 and March 15, 1990 (the dates of the payments of the amounts that had been credited to plaintiff's 1981 account as credits from 1980 and 1984, referred to above, used to satisfy the deficiency). Stip. ¶ 13; Stip. Ex. 3; McDonald Declaration ¶ 26.
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23.
The overpayment resulted entirely from reversal of virtually all of the carryback
recapture. McDonald Declaration ¶ 27. 24. Taxpayer originally claimed (and was allowed a refund) of $18,682,973 as the
result of carrybacks from 1984 to 1981. Stip. ¶ 8; McDonald Declaration ¶ 28. 25. The Service later disallowed $12,448,079 of that amount. Stip. ¶ 11; McDonald
Declaration ¶ 29. 26. The stipulated Tax Court decision reflected the agreement of taxpayer and the
Commissioner that the correct amount of the carryback was $18,587,542 (instead of $18,682,973, a difference of $95,431) and that the Commissioner's reversal (recapture) of $12,448,079 of that carryback was in error to the extent of $12,352,648, resulting in an overpayment in that amount. Stip. ¶ 14; McDonald Declaration ¶ 30. 27. This adjustment also resulted in the abatement of previously assessed deficiency
interest in the amount of $5,531,965.47, for a total overpayment of $17,884,613.47. Stip. ¶ 14; McDonald Declaration ¶ 31. 28. The overpayment was applied as a credit against plaintiff's 1982 corporate income
tax liability on or about May 25, 1997. Stip. ¶ 16; McDonald Declaration ¶ 32.
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Respectfully submitted,
s/ W. C. Rapp W. C. RAPP Attorney of Record United States Department of Justice Tax Division Court of Federal Claims Section Post Office Box 26 Ben Franklin Post Office Washington, D.C. 20044 Voice: (202) 307-0503 Fax: (202) 514-9440 Email: [email protected] EILEEN J. O'CONNOR Assistant Attorney General DAVID GUSTAFSON Chief, Court of Federal Claims Section
September 15, 2006
s/ David Gustafson Of Counsel
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