  United States Court of Appeals
      for the Federal Circuit
              __________________________

  MANOR CARE, INC. (FORMERLY KNOWN AS HCR
           MANOR CARE, INC.),
 HCR MANOR CARE, INC., AND MANOR CARE OF
             AMERICA, INC.,
            Plaintiffs-Appellants,
                           v.
                  UNITED STATES,
                  Defendant-Appellee.
              __________________________

                      2010-5038
              __________________________

    Appeal from the United States Court of Federal
Claims in case no. 07-CV-776, Judge Lawrence M. Baskir.
               __________________________

               Decided: January 21, 2011
              ___________________________

    GREGORY C. GARRE, Latham & Watkins LLP, of Wash-
ington, DC, argued for plaintiffs-appellants. With him on
the brief were GERALD A. KAFKA, RITA A. CAVANAGH, PAUL
B. HYNES, JR. and DEREK D. SMITH.

    RICHARD FARBER, Attorney, Appellate Section, Tax
Division, United States Department of Justice, of Wash-
ington, DC, for defendant-appellee. With him on the brief
MANOR CARE   v. US                                      2


were JOHN A. DICICCO, Acting Assistant Attorney Gen-
eral, and BETHANY B. HAUSER, Attorney.

    DAVID W. BUNNING, Greenberg Traurig LLP, of New
York, New York, for Amicus Curiae. With him on the
brief were MARK E. SOLOMONS and LAURA METCOFF
KLAUS, of Washington, DC.
              __________________________

   Before RADER, Chief Judge, DYK and PROST, Circuit
                        Judges.
DYK, Circuit Judge.
    Manor Care, Inc., HCR Manor Care, Inc., and Manor
Care of America, Inc. (collectively “Manor Care” or “tax-
payers”) are operators of nursing homes. They brought
suit in the United States Court of Federal Claims
(“Claims Court”) under the Tucker Act, 28 U.S.C. §
1491(a)(1), claiming an income tax refund. Taxpayers
allege that the Commissioner of the Internal Revenue
Service (“IRS”) improperly refused tax credits under the
“work opportunity” (“WOTC”) and “welfare-to-work”
(“WtW”) tax credit programs, which were designed to
encourage the hiring of employees from certain disadvan-
taged groups. I.R.C. §§ 51, 51A (1998). The Claims Court
granted summary judgment in favor of the government.
Manor Care, Inc. v. United States, 89 Fed. Cl. 618 (2009).
We hold that taxpayers failed to meet the certification
requirements necessary for tax credit eligibility. Accord-
ingly, we affirm.
                      BACKGROUND
  In 1996 and 1997, Congress enacted the WOTC and
WtW tax credit to provide employers an incentive to hire
3                                         MANOR CARE   v. US


individuals from certain disadvantaged groups. 1        See
I.R.C. §§ 51(d), 51A(c).
    As amended, the WOTC provides a tax credit to the
employer equal to a percentage of first-year wages paid to
“members of a targeted group.” I.R.C. § 51(d)(1); see
Small Business Job Protection Act of 1996, Pub. L. No.
104-188, § 1201, 110 Stat. 1755, 1768–1772. Section
51(d)(1) identifies eight targeted groups for whom em-
ployers can claim tax credits: qualified Title IV-A recipi-
ents (temporary assistance to needy families), qualified
veterans, qualified ex-felons, high-risk youth, vocational
rehabilitation referrals, qualified summer youth employ-
ees, qualified food stamp recipients, and qualified SSI
recipients. § 51(d)(1). Subsections 51(d)(2)–(9) detail the
substantive requirements for each targeted group. For
example, to be a “qualified veteran,” the individual must
be a veteran “certified by the designated local agency as
being a member of a family receiving food stamp assis-
tance . . . for at least a 3-month period ending during the
12-month period ending on the hiring date.” § 51(d)(3)(A).
To be “certified by the designated local agency,” an em-
ployer must provide proof that an employee satisfies the
substantive requirements of a targeted group.
    The WtW credit provides a tax credit equal to a per-
centage of first and second-year wages paid to “individu-
als who are long-term family assistance recipients.”
I.R.C. § 51A(b)(1); see Taxpayer Relief Act of 1997, Pub. L.
No. 105-34, § 801, 111 Stat. 788, 869–871. A “long-term
family assistance recipient” is “any individual who is
certified by the designated local agency . . . as being a

    1   References to the Internal Revenue Code (“Code”)
provisions are to those in effect during 1998–2001, the
taxable years at issue. Since that time, § 51 has been
renumbered, and § 51A has been repealed and subsumed
under § 51.
MANOR CARE   v. US                                         4


member of a family receiving assistance under a IV-A
program [(temporary assistance for needy families)]” for a
specified minimum period of time. § 51A(c)(1)(A). “Long-
term family assistance recipients” are essentially a ninth
targeted group.
    For both types of tax credit, there are “[s]pecial rules
for certification” set forth in § 51(d)(12). These rules
require that “[a]n individual shall not be treated as a
member of a targeted group unless”: (1) the employer
receives a certification on or before the day the new hire
begins work, § 51(d)(12)(A)(i); or (2) the employer com-
pletes a “pre-screening notice” on or before the day the
new hire begins work and submits that notice to the
designated local agency as part of a written request for
certification within twenty-one days after the new hire
begins work, § 51(d)(12)(A)(ii).
    From 1998 through 2001, Manor Care pre-screened
and hired individuals who had indicated under penalty of
perjury that they were members of certain targeted
groups. Manor Care submitted the pre-screening notices
to the designated local agencies as part of a request for
certification, as required by § 51(d)(12)(A)(ii). Although
the agencies granted many of these requests, approxi-
mately 3,000 were denied. Manor Care claims the agen-
cies did not provide adequate explanations for the denials
as required by § 51(d)(12)(C), which states that an agency
“shall provide . . . a written explanation of the reasons for
denial.” However, there is no indication that Manor Care
sought review of any of these denials before the desig-
nated local agencies.
    On their initial tax returns, taxpayers did not claim
credits with respect to the 3,000 employees denied certifi-
cation, but, in 2005, they filed amended tax returns
seeking a refund, with statutory interest, for an alleged
5                                            MANOR CARE   v. US


overpayment of approximately $3.4 million attributable to
the credits. When the IRS denied the refund claims,
taxpayers filed suit in the Claims Court on November 5,
2007, for Manor Care, Inc.’s 1999, 2000, and 2001 tax
years; for HCR Manor Care’s short tax year ending Sep-
tember 25, 1998; and for Manor Care of America’s tax
year ending May 31, 1998.
    During summary judgment proceedings, taxpayers
primarily contended that the tax credits should have been
permitted despite the certification denials because, under
the “[s]pecial rules for certification” in § 51(d)(12), submit-
ting the requests for certification alone was sufficient to
earn the tax credits. In the alternative, Manor Care
argued that, even if certification were required by statute,
the government’s delay in clarifying certain eligibility
requirements caused errors in the certifications and
entitled the taxpayers to the tax credits on equitable
grounds.
    The parties filed cross motions for summary judg-
ment. In October 2009, the Claims Court granted sum-
mary judgment for the government and dismissed the
complaint. The court held that §§ 51 and 51A expressly
require certification for statutory membership in a tar-
geted group, and that simply submitting requests for
certification is not enough. Manor Care, 89 Fed. Cl. at
622–24. The court determined that the “[s]pecial rules for
certification” in § 51(d)(12) were enacted to ensure that
employers could not claim credits retroactively for indi-
viduals who were already employed, since doing so would
have no effect on incentivizing the hiring of new employ-
ees from the targeted groups. Id. at 625–26. Finally, the
court rejected taxpayers’ alternative argument, finding
that the government’s delay in clarifying the eligibility
requirements did not entitle the taxpayers to a refund on
“equitable” grounds. Id. at 627–28. Taxpayers timely
MANOR CARE   v. US                                         6


appealed, and we have jurisdiction under 28 U.S.C.
§ 1295(a)(3). We review grants of summary judgment de
novo. Cal. Fed. Bank, FSB v. United States, 245 F.3d
1342, 1346 (Fed. Cir. 2001).
                        DISCUSSION
                              I
    Manor Care argues that by virtue of the “[s]pecial
rules for certification” in § 51(d)(12), the credits in ques-
tion are earned when a sufficient request for certification
is submitted—regardless of whether the request is actu-
ally granted. Such a reading is inconsistent with the
unambiguous language of the statute.
    We are, of course, obligated to construe the statutory
requirements of the Code by looking to the plain meaning
of the literal text. See USA Choice Internet Servs., LLC v.
United States, 522 F.3d 1332, 1336–37 (Fed. Cir. 2008).
Here, the definition of every targeted group requires that
the individual be “certified by the designated local
agency.” For example, a “qualified ex-felon” must be
“certified by the designated local agency” as (i) having
been convicted of a felony, (ii) having been released from
prison within one year of being hired, and (iii) being a
member of a low-income family. § 51(d)(4). A “long-term
family assistance recipient” is “any individual who is
certified by the designated local agency” as being a mem-
ber of a family that received certain benefits for a certain
period of time. § 51A(c)(1). In total, the words “certified
by the designated local agency” appear eleven times in §§
51(d) and 51A(c). Thus, it is clear that Congress intended
certification to be an integral—and not an optional—part
of the statutory scheme. Where certification is denied,
there is no entitlement to a tax credit.
7                                            MANOR CARE   v. US


    Manor Care, however, argues that the “[s]pecial rules
for certification” contained in § 51(d)(12) authorize em-
ployers to claim the tax credits without receiving certifica-
tion. This section provides:
    (12) Special rules for certifications.
        (A) In general.—An individual shall not be
        treated as a member of a targeted group
        unless—
            (i) on or before the day on which such in-
            dividual begins work for the employer, the
            employer has received a certification from
            a designated local agency that such indi-
            vidual is a member of a targeted group, or
            (ii) (I) on or before the day the individual
                 is offered employment with the em-
                 ployer, a pre-screening notice is com-
                 pleted by the employer with respect to
                 such individual, and
                (II) not later than the 21st day after the
                individual begins work for the em-
                ployer, the employer submits such no-
                tice, signed by the employer and the
                individual under penalties of perjury,
                to the designated local agency as part
                of a written request for such a certifica-
                tion from such agency.
§ 51(d)(12)(A) (emphases added). Manor Care construes
these rules as permitting an employer to claim a tax
credit upon either “receiv[ing]” or “request[ing]” certifica-
tion, regardless of whether the designated local agency
actually grants the request.
    However, there is no basis for this construction in the
statutory certification section. Section 51(d)(12)(A) does
MANOR CARE   v. US                                        8


not provide that “an individual shall be treated as a
member of a targeted group if” the employer timely “re-
ceive[s]” or “request[s]” certification. Rather, it provides
that an “individual shall not be treated as a member of a
targeted group unless” the employer follows the relevant
procedures. § 51(d)(12)(A) (emphases added). Section
51(d)(12)(A) thus makes clear that the requirements of
that provision are necessary but not sufficient conditions
for claiming the tax credits. Unless at least one of the two
certification procedures is followed, an employee may not
be treated as a member of a targeted group. See, e.g.,
I.N.S. v. Doherty, 502 U.S. 314, 322–23 (1992) (finding
that a regulation couched in negative “shall not . . .
unless” terms does not specify positive conditions under
which ruling should be granted). Thus, instead of expand-
ing the definitions of the targeted groups, § 51(d)(12)
actually imposes procedural limits as to the membership
requirements.
    The obvious policy goal of § 51(d)(12) is to ensure that
the credits are available only when the employer either
received or sought certification before hiring the em-
ployee. See, e.g., Honeywell, Inc. v. United States, 973
F.2d 638, 640 (8th Cir. 1992) (denying credits based on
retroactive certifications). Allowing employers to retroac-
tively claim tax credits for individuals who are already
employed would thwart the statute’s purpose because it
would not incentivize new hires from the targeted groups,
as was made clear in the legislative history:
   [T]he Congress was concerned about the extent to
   which the credit was being claimed for employees
   with retroactive certifications, i.e., for employees
   hired before the employer knew such individuals
   were members of target groups. Clearly, in these
   cases, the credit was not serving as an incentive
   for the hiring of target group members. Accord-
9                                         MANOR CARE   v. US


    ingly, the Act requires that certification that an
    individual is a member of a target group must be
    made or requested before the individual begins
    work.
Staff of J. Comm. on Taxation, 97th Cong., General Ex-
planation of the Economic Recovery Tax Act of 1981, at
171 (Comm. Print 1981). 2
    Thus, § 51(d)(12) was not intended, as Manor Care
suggests, to bypass the need for formal certification.
Rather, to ensure that tax credits are granted only where
they create an incentive to hire new employees, §
51(d)(12) required employers to either receive certification
before an employee begins work or request the certifica-
tion within three weeks of their start date. Thus, there is
no merit to the argument that a tax credit is available
based merely on a request for certification. 3


    2    The original 1981 version of 51(d)(12) did not have
the specific time limits of the current version, but the
policy behind the provision remains unchanged in the
current version. The original version provided that “[a]n
individual shall not be treated as a member of a targeted
group unless, before the day . . . such individual begins
work,” the employer “has received a certification from a
designated local agency that such individual is a member
of a targeted group,” or “has requested in writing such
certification from the designated local agency.” Pub. L.
No. 97-34, § 261(c)(1)(A), 95 Stat. 172 (1981) (emphasis
added).
    3    We note that employers are given notice that the
pre-screening in and of itself is insufficient. IRS Form
8850, which contains the pre-screening notice and certifi-
cation request, includes clear instructions that
“[s]ubmitting [a pre-screening notice] is but one step” in
qualifying for the WOTC and WtW tax credits. J.A. 259
(last rev. Sept. 1997). The designated local agency still
“must certify [that] the job applicant is a member of a
MANOR CARE   v. US                                        10


                             II
    Taxpayers argue, apparently for the first time on ap-
peal, that the statutes compel tax credits for any certifica-
tions improperly denied, and a genuine issue of material
fact exists as to the extent to which certifications were
wrongfully denied to these taxpayers by the state agen-
cies.
     Even if taxpayers had properly raised this argument,
it is without merit. Nothing in the statute permits a
taxpayer to challenge the denial of a state certification in
a federal tax proceeding. Under the statute, and in
accordance with general administrative law principles,
the proper mechanism for challenging an improper certifi-
cation is an administrative appeal to the state agency, not
a collateral challenge in a tax refund proceeding. At the
time the certifications were denied, it appears that proce-
dures were already in place to review the denials. The
record contains three example certification denials ac-
companied by letters from the local agencies, each stating
the reasons for the denials along with information about
submitting additional documentation for reconsideration.
Thus, taxpayers could have challenged the denials before
the appropriate state agencies. Subsections 51(d)(12)(B)
and (C) of the Code make clear that denials of certifica-
tions must be challenged before the state agencies by
requiring that state agencies denying certification provide
a written explanation of the reasons for such a denial.
    Because the statute made the availability of the tax
credits dependent upon state action, an erroneous state
action had to be corrected within the state system in order


targeted group or is a long-term family assistance recipi-
ent.” Id.
11                                        MANOR CARE   v. US


to secure a tax credit. 4 Certification errors by state
authorities cannot be corrected in federal tax proceedings.
                            III
    Finally, Manor Care argues that the IRS’s failure to
provide the agencies timely advice regarding the eligibil-
ity requirements for certain targeted groups should
excuse its failure to secure certification. Thus, even if
certification were statutorily required, taxpayers argue
that equitable principles should bar the government from
relying on the certification requirements in denying the
tax credits.
    The background of this dispute is as follows. During
the period in which the 3,000 requests for certification
were denied, the statute required that an employee be “a
member of a family” receiving government assistance for
the following four targeted groups: qualified IV-A recipi-
ents, § 51(d)(2)(A), qualified veterans, § 51(d)(3)(A),
qualified food stamp recipients, § 51(d)(8)(A)(ii), and
“long-term family assistance recipients,” § 51A(c)(1)(A).
However, there was confusion as to what it meant to be a
“member of a family” receiving government assistance. In
particular, a question arose whether a new employee
would qualify if he was a member of a family that had
received the requisite benefit for the requisite period, but
had not been a member of that family for the entire
requisite period. For example, a child who was listed on a

     4  See, e.g., United States v. L. A. Tucker Truck
Lines, Inc., 344 U.S. 33, 37 (1952) (“[O]rderly procedure
and good administration require that objections to the
proceedings of an administrative agency be made while it
has opportunity for correction in order to raise issues
reviewable by the courts. . . . [C]ourts should not topple
over administrative decisions unless the administrative
body not only has erred but has erred against objection
made at the time appropriate under its practice.”).
MANOR CARE   v. US                                     12


welfare grant at some point during the qualifying period,
may not have had coverage the entire period because he
moved out of the welfare household. Manor Care con-
tends that the agencies were applying a stricter standard
than intended by the statutes by excluding family mem-
bers who were not listed on the welfare grant for the
entire qualifying period.
    In 2002 and 2003, three Congressmen involved in
drafting the statutes urged the IRS to provide guidance
on the family membership issue. In response, the IRS
clarified the eligibility requirements in Revenue Ruling
2003-112, 2003-2 C.B. 1007 (Nov. 10, 2003) (“Revenue
Ruling”), concluding that an employer was entitled to a
tax credit for hiring an individual “if the individual is
included on the grant (and thus receives [government]
assistance) for some portion of the specified period.” The
Revenue Ruling acknowledged that some of the certifica-
tion requests were almost certainly denied improperly
under a stricter standard applied by some state agencies.
     However, it was not until March 2005 that the De-
partment of Labor finally issued a training and employ-
ment guidance letter (“TEGL”) directing the state
agencies to apply the Revenue Ruling to all certification
requests filed on or after the date of the Revenue Ruling.
This TEGL stated that a future TEGL would address
concerns about requests denied before the Revenue Rul-
ing.
    In July 2006, the IRS published a study addressing
the impact of the delay in announcing the proper guide-
lines on certifications before the Revenue Ruling. See
Announcement 2006-49, 2006-2 C.B. 89 (July 17, 2006).
The study found that “less than one percent” of the deni-
als resulted from state agencies “taking a position incon-
sistent with the [Revenue Ruling].”            J.A. 315.
13                                        MANOR CARE   v. US


Consequently, the IRS concluded that “no . . . administra-
tive resolution is necessary or appropriate, and no credit
will be allowed . . . without proper certification by a
designated local agency.” Id. An employer who believed
an employee was improperly denied certification prior to
the Revenue Ruling could “request that the . . . agency
reconsider that denial.” Id.
    Taxpayers have introduced no evidence that any of
the 3,000 allegedly improper denials was the result of
inadequate IRS findings. Taxpayers essentially argue
that it is unfair that some of their certification requests
might have been improperly denied because the govern-
ment did not issue a Revenue Ruling (which it was under
no obligation to issue) in a timely manner. In support of
an equitable remedy, Manor Care relies on two, non-
binding district court opinions, Perdue Farms, Inc. v.
United States, No. CIV. A. Y-97-3571, 1999 WL 550389
(D. Md. June 14, 1999), and H.E. Butt Grocery Co. v.
United States, 108 F. Supp. 2d 709 (W.D. Tex. 2000), to
argue that it is entitled to a tax credit where government
inaction unfairly caused certain tax credit programs to be
improperly administered.
    In Perdue Farms, the local agencies failed to process
over 2,000 certification requests because the tax credit
program had temporarily expired. Perdue Farms, 1999
WL 550389, at *1. The government did not dispute that
the certifications would have been granted had the re-
quests been reviewed. In granting summary judgment to
Perdue Farms, the court concluded that it would have
been inequitable to allow the government to rely on the
absence of certification to deny the tax credits that were
clearly deserved. Id. at *2–3.
   In H.E. Butt, almost 2,000 certification requests were
never processed because the local agencies ran out of
MANOR CARE   v. US                                          14


funding. 108 F. Supp. 2d at 715. Because the circum-
stances made it impossible for plaintiffs to comply with
the certification requirement, the court fashioned an
equitable remedy to allow the taxpayer to proceed to trial,
where it could present evidence as to how many, if any, of
its employees would have qualified for certification had
their requests been reviewed. Id.
    We think these cases, which do not cite any pertinent
case authority, were incorrectly decided. The general rule
is that estoppel will not lie against the government be-
cause of actions by government agents. Office of Pers.
Mgmt. v. Richmond, 496 U.S. 414, 426–27 (1990). As a
general matter, tax law requires strict adherence to the
Code as written. The failure of the tax authorities to give
clear guidance as to the meaning of a Code provision does
not justify a departure from the strict requirements of the
statute or lead to an “equitable” exception. The fact is
that the Code is extraordinarily complex, and many
provisions are not written with pristine clarity. In other
words, they require interpretation. The failure of the IRS
to provide clear guidance as to their meaning cannot
excuse compliance with the Code requirements. The fact
that the guidance here was directed to state agencies in
no way suggests a different result.
    As the Supreme Court noted in Lewyt Corp. v. C.I.R.,
349 U.S. 237, 240 (1955), “general equitable considera-
tions do not control the measure of deductions or tax
benefits . . . where the benefit claimed . . . is fairly within
the statutory language and the construction sought is in
harmony with the statute as an organic whole.” So, too,
our court has reached a similar result. For example, in
Marsh & McLennan Co. v. United States, 302 F.3d 1369,
1381 (Fed. Cir. 2002), we held that a taxpayer could not
recover additional interest on “credit elect overpayments”
of federal income tax based on equitable considerations.
15                                        MANOR CARE   v. US


The relevant Treasury Regulation stated that such credit
elect overpayments did not bear interest under I.R.C. §
6611(a) for the dates asserted by the taxpayer. See 26
C.F.R. § 301.6611-1(h)(2)(vii) (2001). The taxpayer in
Marsh & McLennan nonetheless argued that if it had
sought a refund instead of making a credit elect overpay-
ment, it would have had use of those funds. In ruling for
the government, we refused to override the language of
the statute as interpreted by the Treasury to “achieve
what might be perceived to be better tax policy,” noting
that the “tax code is complex” and “we must be careful to
enforce the statute as written and interpreted.” Id. at
1381 (citations omitted).
     If Congress had intended to excuse certification where
the IRS had failed to provide clear guidance to the state
agencies, it would have said so in the Code or authorized
regulatory rules. Absent statutory or regulatory author-
ity, we decline to rewrite the plain language of § 51(d)(12)
in order to accommodate supposed equitable principles.
                       AFFIRMED
