Free Stipulation - District Court of Federal Claims - federal

Case 1:95-cv-00758-NBF

Document 311

Filed 10/06/2006

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________ No. 95-758 T (Judge Firestone) NATIONAL WESTMINSTER BANK, PLC, Plaintiff v. THE UNITED STATES, Defendant ____________ JOINT SUBMISSION REGARDING THE CLEARING ACCOUNT INTEREST INCOME ISSUE AND OVERPAYMENT COMPUTATION ____________ Plaintiff and defendant submit this stipulation to advise the Court of their resolution of the clearing account interest income issue and computation of the amount of plaintiff s overpayments of taxes and interest as a result of this Court s rulings.1 I. CLEARING ACCOUNT INTEREST INCOME

In its ruling of December 16, 2005, this Court denied, in part, plaintiff s motion for summary judgment because it found there were disputed issues of fact concerning whether plaintiff s U.S. branches charged and paid arm s-length interest on certain clearing accounts of affiliates. After its ruling, the Court allowed additional, limited discovery concerning plaintiff s

The parties orally advised the Court of the resolution of the clearing account issue during the status hearing held on April 19, 2006.

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clearing accounts, and, as a result, defendant s expert reduced the proposed adjustment from $10,553,557 to $278,000. For purposes of entering judgment and without admitting the merits of this revised adjustment, plaintiff has accepted the adjustment, prorated over the seven years at issue. This resolves the only issue on which this Court did not grant summary judgment. II. COMPUTATION OF PLAINTIFF S OVERPAYMENTS

Partial summary judgments were granted in plaintiff s favor in opinions and orders dated July 27, 1999, November 14, 2003, and December 16, 2005. Defendant opposed the motions for summary judgment, and is reserving its right to appeal the Court s rulings. In light of the Court s rulings, the parties have agreed to a computation of the overpayments of income taxes and interest that plaintiff made in 1995 for the taxable years 1981 through 1987. These calculations take into account the adjustments to which the parties have agreed as well as the Court s summary judgment rulings in this case. Plaintiff s overpayments (including deficiency interest paid) are as follows: Total Interest Overpayment $28,419,289 $40,490,744 12,871,412 19,778,369 11,288,943 17,325,050 14,734,667 24,522,420 7,663,923 14,130,453 9,932,684 18,407,436 15,613,281 31,592,780 ___________ Total $166,247,252

Year 1981 1982 1983 1984 1985 1986 1987

Tax $12,071,455 6,906,957 6,036,107 9,787,753 6,466,530 8,474,752 15,979,499

These overpayments will be refunded to plaintiff with interest as allowed by law. A proposed final judgment setting forth these refunds is attached as Exhibit A. Dated: October 6, 2006

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Respectfully submitted, s/ Cory A. Johnson CORY A. JOHNSON Attorney of Record U.S. Department of Justice Tax Division Court of Federal Claims Section P.O. Box 26 Ben Franklin Station Washington D.C. 20044 202-307-3046 EILEEN J. O CONNOR Assistant Attorney General DAVID GUSTAFSON Chief, Court of Federal Claims Section STEVEN I. FRAHM Assistant Chief, Court of Federal Claims Section s/ Steven I. Frahm Of Counsel Attorneys for Defendant

s/ D. Scott Wise D. SCOTT WISE Attorney of Record Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 212-450-4000 Attorney for Plaintiff

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EXHIBIT A

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________ No. 95-758 T (Judge Firestone) NATIONAL WESTMINSTER BANK, PLC, Plaintiff v. THE UNITED STATES, Defendant ____________ (PROPOSED) FINAL JUDGMENT ____________

This Court granted partial summary judgments in favor of plaintiff in opinions and orders dated July 27, 1999, November 14, 2003, and December 16, 2005. The parties having now agreed to an adjustment to plaintiff s income to resolve the issue on which this Court did not grant summary judgment (i.e., the interest income of plaintiff s U.S. branches from certain clearing accounts), and the parties having submitted to the Court an agreed computation of plaintiff s overpayments of taxes and interest based on the Court s summary judgment rulings, this Court now enters final judgment.1

1 The parties agreement on the computation of tax and overpayments is without prejudice to defendant s right to appeal this Court s rulings or to the parties rights to propose different computations to reflect the resolution of the Court s rulings on appeal.

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The Court hereby determines that plaintiff has overpaid tax and deficiency interest in the following amounts. Accordingly, subject to 26 U.S.C. § 6402, the amounts to be refunded to plaintiff with interest as provided by law are as follows: Total Overpayment $40,490,744 19,778,369 17,325,050 24,522,420 14,130,453 18,407,436 31,592,780 ___________ $166,247,252

Year 1981 1982 1983 1984 1985 1986 1987

Tax $12,071,455 6,906,957 6,036,107 9,787,753 6,466,530 8,474,752 15,979,499

Interest $28,419,289 12,871,412 11,288,943 14,734,667 7,663,923 9,932,684 15,613,281 Total

IT IS SO ORDERED

____________________________ Nancy B. Firestone Judge Dated: ______________________