                                   UNITED STATES DISTRICT COURT
                                   FOR THE DISTRICT OF COLUMBIA


 STARR INTERNATIONAL
 COMPANY, INC.,

                      Plaintiff,

                 v.                                    Case No. 14-cv-01593 (CRC)

 UNITED STATES OF AMERICA,

                      Defendant.

 UNITED STATES OF AMERICA,

                      Counterclaim-Plaintiff,

                 v.

 STARR INTERNATIONAL
 COMPANY, INC.,

                      Counterclaim-Defendant.

                                      MEMORANDUM OPINION

        In 2013, the IRS erroneously issued a $21 million refund to Starr International Company,

Inc. for the 2008 tax year. Under the applicable statute of limitations, the Government had two

years to file suit to reclaim that refund, but it failed to do so. Instead, four years after issuing the

refund, the Government filed a counterclaim in this case, which Starr originally brought to

recover taxes withheld for the 2007 tax year. The IRS contends that it is entitled to an extended

limitations period because it was induced to issue the refund by Starr’s misrepresentations of

material fact. Because the Court finds that Starr made no such misrepresentations in its refund

claim, it will apply the two-year statute of limitations and grant Starr’s motion for summary

judgment on the Government’s counterclaim.
 I.    Background

       A. Legal Background

       Starr International Company, Inc. (“Starr”) is a privately held Swiss-based company. As

with all foreign companies, Starr owes U.S. federal income taxes on dividend income attributable

to stock held in U.S. corporations. Counterclaim ¶ 13. These taxes are typically withheld at a

rate of 30 percent and remitted directly to the IRS. 26 U.S.C. § 1442. A tax treaty between the

United States and Switzerland, however, entitles certain Swiss-resident corporations to a

significant reduction in the tax rate applied to U.S.-source dividends—from 30 percent to either 5

or 15 percent. See Convention Between the United States of America and the Swiss

Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income art.

10(2), Oct. 2, 1996, S. Treaty Doc. No. 105–8, https://www.irs.gov/pub/irs-trty/swiss.pdf

[hereinafter “Treaty”].

       A Swiss corporation automatically benefits from the Treaty if it meets one of a dozen or

so enumerated criteria—for example, if it does significant business in Switzerland. See id. art.

XXII. If a corporation does not qualify for an automatic reduction, it may nevertheless be

granted benefits on a discretionary basis by “the competent authority of the State in which the

income arises . . . after consultation with the competent authority of the other Contracting State.”

Id. art. XXII(6). In the case of a Swiss corporation like Starr, this means that the Office of the

United States Competent Authority (“USCA”) will review its request for discretionary benefits

and, after mandatory consultation with the Swiss competent authority, make a final

determination. An analysis of the Treaty issued by the U.S. Treasury Department—the so-called

“Technical Explanation”—instructs the USCA, when reviewing requests for discretionary

benefits, to consider whether the corporation acted with a “principal purpose” of obtaining treaty



                                                  2
benefits. See Dep’t of the Treasury, Technical Explanation of the Convention Between the

United States of America and the Swiss Confederation for the Avoidance of Double Taxation

with Respect to Taxes on Income 72, http://www.irs.gov/pub/irs-trty/swistech.pdf; see also Starr

Int’l Co. v. United States, 2017 WL 3491802, at *8 (D.D.C. Aug. 14, 2017).

       A taxpayer claiming a refund based on treaty benefits seeks those funds using a Form

1120-F—the general income tax return for foreign corporations. Treas. Reg. § 301.6402-3(a)(1).

All Form 1120-Fs must be filed with the IRS Service Center in Ogden, Utah. See Starr’s Mot.

Summ. J. on Counterclaim Ex. 11, at 4 (ECF No. 80) (2008 Instructions to Form 1120-F). If the

IRS denies or fails to act on the refund claim then—and only then—may the taxpayer bring suit

seeking a refund in federal court. See 26 U.S.C. § 7422(a). In other words, filing a refund claim

with the IRS is a jurisdictional prerequisite to seeking a refund in federal court.

       Sometimes the IRS grants a refund claim but does so erroneously. When this happens,

the Government generally has two years to realize its error and initiate a lawsuit to recover the

refund. 26 U.S.C. § 6532(b). The statute of limitations is extended to five years, however, “if it

appears that any part of the refund was induced by fraud or misrepresentation of a material fact.”

Id. The Government bears the burden of proving a misrepresentation of material fact in order for

the five-year statute of limitations to apply. See Lane v. United States, 286 F.3d 723, 730 (4th

Cir. 2002).

       B. Factual Background

       In December 2007, Starr filed a request with the USCA seeking discretionary benefits—

specifically, a reduced rate of withholding paid on dividends it received from AIG stock—under

the U.S.-Swiss Treaty. Counterclaim ¶ 16. While that request was pending, Starr filed a refund

claim with the Ogden Service Center for the 2007 tax year, seeking a refund in the amount it



                                                  3
would be entitled to receive if it were eligible for the treaty benefits. Starr indicated on the front

page of its Form 1120-F that the refund request was a “Protective Refund Claim” and informed

the USCA that it was filing this claim. Counterclaim ¶ 20. The USCA representative who was

reviewing Starr’s treaty benefits eligibility request, David Kosterlitz, contacted the Ogden

Service Center and instructed it not to issue a refund. Counterclaim ¶ 21.

       In October 2010, the USCA issued a final determination letter denying Starr its requested

treaty benefits for the 2007 tax year. Counterclaim ¶ 22. Starr then filed a refund request with

the IRS for $21 million for the 2008 tax year and an amended claim for the 2007 tax year. On

the first page of its 2008 Form 1120-F, next to the line indicating the amount to which Starr

claimed it was owed, Starr wrote “See Statement 1,” referring to an attached 5-page statement

with several attachments. Starr’s Mot. Summ. J. on Counterclaim Ex. 1, at 12. In the first

paragraph of this statement, Starr disclosed that it had not been granted benefits by the USCA.

Id. at 19. The statement went on to detail Starr’s legal arguments about why it believed the

USCA’s determination was incorrect. Id. at 19–23. Starr also attached about 90 pages of

correspondence between Starr and the USCA, including the determination letter that set forth the

USCA’s basis for deciding that Starr did not qualify for the benefits. Id. at 41–130.

       In 2011, the IRS granted Starr’s 2008 refund request and issued a refund for

$21,151,745.75. Counterclaim ¶ 29. It did not act on Starr’s 2007 amended claim.

       In 2014, Starr filed suit in this Court seeking a refund of taxes paid for the 2007 tax year

on the basis that the USCA erroneously denied its request for treaty benefits. See 26 U.S.C. §

7422; 28 U.S.C. § 1346(a)(1) (providing cause of action against United States for recovery of

taxes “erroneously or illegally assessed”). The Court held that Starr’s refund claim was not

subject to judicial review because, in order to grant Starr its requested refund, the Court would



                                                  4
need to “dictate the outcome” of the Treaty’s mandatory consultation with the Swiss competent

authority and would thereby “impinge upon the Executive’s prerogative to engage in that

[consultation] process.” Starr Int’l Co. v. United States, 2016 WL 410989, at *2 (D.D.C. Feb. 2,

2016). The Court nonetheless permitted Starr to amend its complaint with a claim that the

USCA’s determination was arbitrary and capricious under the Administrative Procedure Act

(“APA”). Id. The Court ultimately ruled that the USCA’s determination did not violate the

APA, and Starr has appealed that ruling. Starr Int’l Co. v. United States, 2017 WL 3491802, at

*17 (D.D.C. Aug. 14, 2017).

       Meanwhile, in 2015, the Government amended its answer to Starr’s complaint before this

Court by adding a counterclaim seeking to recover the 2008 refund as erroneously issued. Citing

IRS regulations, the Government contended that the USCA’s denial of benefits was not

administratively reviewable by the Ogden Service Center, see Rev. Proc. 2006-54 § 12.04, 2006-

2 C.B. 1035, and so the Ogden Service Center did not have jurisdiction to issue the refund in the

first place. As the Government recognizes, because it brought suit to recover the erroneous

refund almost four years after it was issued, its counterclaim would be untimely under the default

two-year statute of limitations set forth in 26 U.S.C. § 6532(b). Thus, for the Government’s

counterclaim to succeed, it must prove that Starr induced the IRS to issue the refund “by fraud or

misrepresentation of a material fact”—only then does § 6532(b)’s extended five-year limitations

period apply. Id. The parties have accordingly filed cross-motions for summary judgment on

the issue of whether the Government’s claim is timely.

 II.   Standard of Review

       Summary judgment is appropriately granted when “the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a matter of



                                                5
law.” Fed. R. Civ. P. 56(a). A factual dispute is “material” if the resolution “might affect the

outcome of the suit under the governing law” and “genuine” if “the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 248 (1986). When deciding a motion for summary judgment, the Court must

“examine the facts in the record and all reasonable inferences derived therefrom in a light most

favorable to the nonmoving party.” Robinson v. Pezzat, 818 F.3d 1, 8 (D.C. Cir. 2016) (citation

omitted).

 III. Analysis

        The sole issue presented in these cross-motions is whether the Government’s

counterclaim seeking return of the $21 million refund for the 2008 tax year is timely, given that

it was filed four years after the refund was issued. The Government contends that the

counterclaim is subject to § 6532(b)’s extended five-year limitations period, rather than the

default two-year period, because Starr made three misrepresentations of material fact that

induced the refund: (1) it indicated on line 9 of the Form 1120-F that it was entitled to a $21

million refund; (2) it failed to notify Mr. Kosterlitz at the USCA that it was filing the refund

request; and (3) it failed to notify the Ogden Service Center that it lacked jurisdiction to issue a

refund. The Court finds that none of these acts or omissions were material misrepresentations

for purposes of the statute of limitations.

       Before turning to each of these alleged misrepresentations, however, it is important to

first explain the Government’s underlying theory of why they qualify as misrepresentations.

Crucial to this theory is an IRS regulation—Revenue Procedure 2006-54—which sets out

procedures for requesting treaty benefits from the USCA, and specifically section 12.04 of that

regulation, which makes clear that denials of discretionary treaty benefits are final and not



                                                  6
subject to administrative review. In the Government’s view, section 12.04 does more than

foreclose a formal administrative appeal of the USCA’s determinations: it also prevents a

taxpayer from filing a refund claim that does not “take that directive into account.” Hr’g Tr. at

25. More particularly, while the Government concedes (for reasons explained below) that Starr

acted properly in filing a refund claim in the first place, it urges that section 12.04 required Starr

to construct its claim in a way that would ensure it would not be granted. Otherwise, Starr would

be effectively seeking administrative review of the USCA’s determination in violation of the

regulation. Thus, according to the Government, Starr should have taken three particular

precautions to ensure that the refund would not be granted, and its failure to take them amounted

to misrepresentations of material fact.

       This theory has a core deficiency that spells trouble for the Government’s case: A refund

claim cannot be naturally understood as an attempt to obtain administrative review of a

regulatory decision related to the claimed amount. Rather, refund claims are non-adversarial

mechanisms for taxpayers to seek money the IRS has withheld. And, as the Government

concedes, filing a refund claim is an absolute, jurisdictional prerequisite to seeking judicial

review of an IRS refund determination. 26 U.S.C. § 7422(a); see also Bartley v. United States,

123 F.3d 466, 468 (7th Cir. 1997). Specifically, while taxpayers generally have the right to sue

the government in federal court for a refund of taxes “erroneously or illegally assessed or

collected,” see 26 U.S.C. § 7422; 28 U.S.C. § 1346, the taxpayer must submit an administrative

refund claim to the IRS before filing such an action. If a taxpayer instead proceeds directly to

federal court, the court will lack subject matter jurisdiction and must dismiss the action. See

Cohen v. United States, 650 F.3d 717, 731 (D.C. Cir. 2011). Thus, the mere act of filing a




                                                  7
refund claim is not a “misrepresentation” in the sense that it improperly seeks administrative

review of the USCA’s determination.

        As a result of this (proper) concession, the Government is forced to walk a more

precarious line: the taxpayer may file a refund claim, yet must construct the claim in such a way

so as to avoid having the refund issue—otherwise, there has been a material misrepresentation of

fact in the return. That position is circular (a refund claim impermissibly seeks review of the

USCA’s determination whenever the refund issues) and it is unfair to taxpayers (what if, despite

the taxpayer’s best efforts to ensure the refund is not paid, the refund nevertheless issues?). It

cannot be that section 12.04 imposes a generalized duty on taxpayers to file refund claims that

will not result in refunds.

        The case would be different if the taxpayer made some particular misrepresentation

beyond successfully filing a refund claim—for example, by disregarding an express instruction

on Form 1120-F, by ignoring a disclosure requirement created by statute or regulation, or

perhaps by failing to disclose information it understood was necessary for the IRS to reach an

informed decision. Specifically, if Starr had not submitted a statement accompanying its Form

1120-F explaining the USCA’s denial of discretionary benefits—or its statement had omitted key

information—this case would be more like Lane v. United States, 286 F.3d 723 (4th Cir. 2002).

There, the Fourth Circuit found a material misrepresentation where a taxpayer in his refund

claim characterized payments as “compensation” rather than “gifts,” yet omitted the “critical fact

that [taxpayer] thought of the payments as gifts and so characterized them on his [prior] gift tax

returns.” Id. at 732. This omission, the court held, was at least grossly negligent, and thus it

triggered § 6532(b)’s extended limitations period. Id. at 732–33. The Government alleges no




                                                  8
similar failure here, as Starr attached a fulsome statement that repeatedly highlighted the

USCA’s denial.1

       With that context, the Court will now turn to the three specific misrepresentations that the

Government contends Starr made beyond merely filing a refund claim.2

       A. First Alleged Misrepresentation: Starr Should Have Requested $0 on Its Refund or
          Left Line 9 Blank

       The Government argues that Starr’s “representation on line 9 of its return that it was due

a refund of over $21 million was a misrepresentation of material fact.” Gov’t’s Cross-Mot.

Summ. J. & Opp’n 33 (ECF No. 95). In the Government’s view, even if Starr had to file the

request to preserve its ability to seek judicial review of the USCA’s treaty benefits

determination, it should have either requested $0 or left line 9 of the form blank. According to

the Government, taking “this precaution would have allowed [Starr] to litigate the merits of the

USCA denial determination in court” without inducing the Ogden Service Center to actually

issue the refund. Id. at 36. While it is true that requesting $0 or leaving line 9 blank may have in

fact prevented the Ogden Service Center from issuing the refund, Starr’s decision to note the




       1
          The Government’s theory might also be more compelling if there were evidence that
Starr knew that the Ogden Service Center would not review the attached statement in evaluating
its claim. But there is no such evidence in the record, and in its absence the Court is not willing
to assume that Starr was somehow trying to game the system. Quite the contrary, the
instructions accompanying Form 1120-F require the taxpayer to submit a statement along the
lines of what Starr provided. See Starr’s Mot. Summ. J. on Counterclaim Ex. 11, at 3 (ECF No.
80) (requiring corporation to attach a “statement that describes the basis for the claim for refund”
and “[a]ny additional documentation to support the claim”).
       2
         Also coloring the disputes regarding these three alleged misrepresentations is a broader
debate about what sort of mental state must accompany an action or omission for it to be a
“misrepresentation.” While the resolution of this question may be important in certain cases, it is
not here. The Court finds that—as a matter of undisputed fact—none of Starr’s actions or
omissions were misrepresentations at all, let alone negligent, grossly negligent, or reckless ones.

                                                 9
amount it believed it was owed on line 9 of its 1120-F was not a misrepresentation of material

fact.

        First, Starr was required to report the full amount it believed it was owed according to the

IRS’s own regulations and instructions. Treasury Regulations require that refund claims

“contain[] a statement setting forth the amount determined as an overpayment.” Treas. Reg. §

301.6402-3(a)(5). Starr also followed the plain instructions on Form 1120-F, which ask the

taxpayer to “enter amount overpaid” in line 9 of the form. Starr’s Mot. Summ. J. on

Counterclaim Ex. 1, at 12. Accepting the Government’s argument would imply that taxpayers—

many of whom are less sophisticated as Starr—should ignore this plain instruction, lest they be

accused of making a misrepresentation. See Br. of Leslie Book et al. as Amicus Curiae Supp.

Counterclaim-Def. (ECF No. 106).

        The surrounding law and the Government’s litigation strategy in other cases also

illustrate why it would have been imprudent for Starr to ask for a refund of $0 or leave line 9

blank. The Government has argued in other cases that a taxpayer cannot ask for more than they

initially requested in the refund request if they are later successful in challenging the IRS’s

determination. This argument is drawn from the “variance doctrine,” which is based on a

Treasury Regulation that prohibits judicial consideration of any basis for a refund that was not

raised at the time the refund was requested. Treas. Reg. § 301.6402-2(b)(1) (“No refund or

credit will be allowed after the expiration of the statutory period of limitation applicable to the

filing of a claim therefor except upon one or more of the grounds set forth in a claim filed before

the expiration of such period.”); see Cencast Servs., L.P. v. United States, 729 F.3d 1352, 1367

(Fed. Cir. 2013) (holding that “new claims or theories raised subsequent to the initial refund

claim are not permitted where they substantially vary from the theories initially raised in the



                                                 10
original claim for refund”); Smith v. United States, 2006 WL 1984646, at *5 (W.D. Pa. July 13,

2013) (Government arguing that a court may not award a greater amount than sought in the claim

for refund). The Government has also challenged taxpayers’ ability to obtain refunds where they

did not list the amount to be refunded. See, e.g., Wagner v. United States, 2003 WL 691029, at

*5 (M.D. Fl. Jan. 21, 2003) (holding taxpayer’s refund claim invalid because it failed to list an

amount to be refunded).3 Based on the Government’s previous litigation strategy, it would have

been irresponsible for Starr to request $0 or leave line 9 blank—either action may have

precluded it from later seeking $21 million if this Court (or an appeals court) had ruled in its

favor on the treaty benefits issue.

       The Government argues that to counter this effect, Starr could have included attachments

explaining why it put $0 on line 9. Gov’t’s Reply Supp. Mot. Summ. J. on Counterclaim 13

(ECF No. 102). At least in theory, this would have prevented a court from applying the variance

doctrine to preclude Starr from receiving a refund to which it was entitled. But regardless of

whether it had included an explanation, Starr would have ended up in one of the following

positions had it written $0 on line 9: (1) the IRS would “grant” the $0 request, in which case

Starr has no further right to seek the $21 million it believes it is owed; or (2) the IRS would deny

the refund claim, in which case it could at least argue (as it has in the past) that Starr cannot seek




       3
         The Government has also taken the position that a taxpayer cannot ask for a higher
refund than the initial request after the time for filing a refund claim has expired. For instance, in
Keneipp v. United States, 184 F.2d 263 (D.C. Cir. 1950), the Government sought to invalidate a
taxpayer’s second refund claim filed outside the limitations period, which added to an original
refund claim filed within the limitations period. Id. at 267. Though the D.C. Circuit rejected this
position, it is another example of the Government challenging a taxpayer’s ability to recover
more than it claimed in its initial, timely refund request.

                                                  11
more than it initially requested. Either way, Starr would have risked not being able to receive its

$21 million refund had a court agreed that it was entitled to treaty benefits.

       In the end, the amount of money Starr requested on line 9 reflects Starr’s colorable legal

position on what it is owed—a position that Starr supported with a thorough statement explaining

the basis for its claim. While it is possible to imagine situations where the dollar amount

requested on line 9 would be a material misrepresentation (e.g., a taxpayer subjectively believed

she was owed $1,000 but instead requested $150,000), here it is not. Starr simply stated the

amount it would be owed if it ultimately obtained treaty benefits through this litigation. And

Starr’s position was (and continues to be) that it is entitled to those benefits. The IRS is of

course free to disagree and decline to issue the refund, but Starr’s legal position that it was

entitled to that refund despite the USCA’s decision was not a misrepresentation of a fact. Under

the Government’s theory, a taxpayer would be misrepresenting a material fact every time she

asked for a refund the Government believed she was not entitled to. And if that were so, there

would be no need for an extended limitations period for misrepresentations of material fact

because every erroneously issued refund would be the product of a misrepresentation. That

cannot be right.

       B. Second Alleged Misrepresentation: Starr Should Have Informed the USCA that
          It Was Filing the 2008 Refund Request

       The Government next argues that Starr misrepresented a material fact by not informing

the USCA (specifically, Mr. Kosterlitz, the USCA analyst handling Starr’s treaty benefits

request) that it had filed its 2008 refund claim with the Ogden Service Center. The Government

has good reason to believe that informing Mr. Kosterlitz would have prevented the Ogden

Service Center from issuing the refund because it was Mr. Kosterlitz who called the Ogden

Service Center in 2010 and prevented it from issuing the 2007 refund. Starr’s Mot. Summ. J. on


                                                 12
Counterclaim Ex. 3. However, Starr was under no legal obligation to inform the USCA that it

had filed the 2008 refund claim, and its failure to do so was not a misrepresentation of material

fact.

        The Government urges that section 4.08 of Revenue Procedure 2006-54 imposes such a

duty. That provision states:

        [1] The taxpayer must keep the U.S. competent authority informed of all material
        changes in the information or documentation previously submitted as part of, or in
        connection with, the request for competent authority assistance. [2] The taxpayer also
        must provide any updated information or new documentation that becomes known or is
        created after the request is filed and which is relevant to the resolution of the issues under
        consideration. (Emphasis added.)

Specifically, the Government argues that filing the refund claim constituted a “material change”

in the information Starr had previously sent the USCA within the meaning of the first sentence of

section 4.08. It also argues that the refund claim was “updated information” within the meaning

of the second sentence of the regulation. The Court disagrees on both counts.

        For one, the second sentence of section 4.08 does not require taxpayers to keep the

USCA apprised of information after the USCA has adjudicated a request for treaty benefits, as

the text explicitly refers to information relevant to “issues under consideration.” When Starr

filed its refund claim for 2008, the USCA had already issued its final decision, so no issues

related to the USCA’s benefits determination remained “under consideration.” Thus, the second

sentence of 2006-54 did not compel Starr to inform the USCA about its filing.

        The Government argues that, nevertheless, Starr should have updated the USCA based on

the first sentence of section 4.08. In its view, the 2008 refund claim was a material change “in

connection with” a request for competent authority assistance because it effectively challenged

the USCA’s denial of benefits. This argument also fails. The regulation is clearly aimed at

requiring the disclosure of changes that are relevant specifically to the USCA’s decisionmaking


                                                 13
process, not to the IRS generally. And there is no suggestion that the existence of Starr’s refund

claim would in any way have affected the USCA’s treaty benefits determination—which, as just

explained, was completed by the time Starr filed its 2008 refund request. Rather, to the extent

that informing the USCA would have had any effect, it would be because it would have spurred

one official, Mr. Kosterlitz, to halt the payment of a refund from the Ogden Service Center. This

is not the sort of disclosure that section 4.08 compels.4

       Moreover, while the plain text of the first sentence of section 4.08 is less clear than the

second sentence with respect to the timing of required disclosures, the regulation as a whole is

more naturally read to require a taxpayer to keep the USCA apprised of material changes while it

makes its determination, and not after. Forcing the taxpayer to keep the competent authority

apprised of changes indefinitely—even after it has made its decision—would impose a

significant burden on the taxpayer and defy common sense. The regulation therefore did not

impose a duty on Starr to disclose to the USCA that it had filed its refund claim with the IRS.

       C. Third Alleged Misrepresentation: Starr Should Have Informed the Ogden
          Service Center That It Did Not Have Jurisdiction to Overturn the USCA’s
          Determination and Issue the Refund

       The Government’s third alleged misrepresentation is that Starr did not affirmatively

inform the Ogden Service Center that it lacked jurisdiction to issue the refund. But no statute,

regulation, or IRS instruction requires taxpayers to inform the IRS of its own jurisdictional

boundaries. And absent a duty to take this step, failing to do so is not a misrepresentation. See,




       4
         Indeed, the Revenue Procedures themselves list the kind of “information” the USCA
requires from the taxpayer. That list includes items that would help the USCA make its
determination, such as a description of the issues and any prior discussions the taxpayer may
have had with the IRS Appeals Office. See Rev. Proc. 2006-54 § 4.05.


                                                 14
e.g., In re Time Warner Inc. Sec. Litig., 9 F.3d 259, 267 (2d Cir. 1993) (“[A]n omission is

actionable under the securities laws only when the corporation is subject to a duty to disclose the

omitted facts.”); Weisblatt v. Minn. Mut. Life Ins. Co., 4 F. Supp. 2d 371, 380 (E.D. Pa. 1998)

(“[A]n omission or nondisclosure is only actionable under the [tort] of negligent

misrepresentation if there is a duty to speak”).

          Absent any concrete duty to inform the IRS of its jurisdictional limits, it would be

extraordinary for the Court to invent one of its own accord. And the situation here is not so

extraordinary that it warrants invention: As Starr’s counsel noted in the hearing, there are

numerous other contexts in which the IRS processes refund claims for which it lacks authority to

actually issue a refund. For example, the IRS National Office issues “Technical Advice Memos”

setting forth legal conclusions that reflect the IRS’s final position on particular tax issues. Like

the USCA’s determination here, the conclusions in these memos are not administratively

reviewable by other entities within the IRS. Treas. Reg. § 301.6110-2(f); Tax Analysts v. IRS,

117 F.3d 607, 616 (D.C. Cir. 1997). Yet when a taxpayer who has received an unfavorable

Technical Advice Memo files a refund claim in order to preserve her right to appeal the adverse

legal conclusion in federal court, she is under no obligation to call the IRS and tell them they do

not have the authority to overturn the IRS National Office’s decision. Taxpayers are not

obligated to predict how the IRS’s internal procedures could potentially lead it to issue an

erroneous refund, and then take affirmative steps to inform the IRS of its own jurisdictional

limits.

          Finally, the Government does not explain how Starr should have informed the Ogden

Service Center that it did not have jurisdiction to issue the refund. If it had included this

information in the refund claim itself, it may not have made a difference: the Government



                                                   15
acknowledges that its review of Form 1120-F “consists mainly of verifying certain line items”

rather than reading the return. Gov’t’s Cross-Mot. Summ. J. & Opp’n 19. In other words,

because IRS employees were trained to only look at a very specific part of the refund claim, it is

far from clear that Starr’s failure to inform the Ogden Service Center that it did not have

jurisdiction to issue the refund “induced” it to erroneously issue the refund. The only other

alternative would have been for Starr to try to contact the Ogden Service Center some other way,

such as via telephone or email, and hope the information got to the right person. It would be

unreasonable to impose a duty on taxpayers to take matters into their own hands and find a way

to tell the Ogden Service Center about its own regulatory limitations in order to avoid

misrepresenting a material fact.

 IV. Conclusion

       Starr properly completed and filed its 2008 Form 1120-F, accurately indicating the

amount it believed it was due while repeatedly alerting the IRS to the fact that the USCA had

denied it treaty benefits. The Ogden Service Center’s erroneous payment of the refund claim

does not mean that Starr misrepresented a material fact. True, Starr could have gone above and

beyond its legal obligations by contacting someone who would have personally ensured that the

refund would not be issued, or by risking its ability to later file a refund suit by claiming a $0

refund, or by declining to file the refund at all. But its failure to take such precautionary

measures was not a misrepresentation for purposes of § 6532(b).5 The Court will therefore apply




       5
          Having concluded that Starr did not make any misrepresentations within the meaning of
the statute, it need not resolve Starr’s alternative argument that any alleged misrepresentations
were immaterial to the IRS’s decision to award a refund.

                                                 16
the standard two-year statute of limitations to the Government’s counterclaim, rendering it

untimely.

       Accordingly, the Court will grant Starr’s motion for summary judgment on the

Government’s counterclaim (ECF No. 80) and will deny the Government’s cross-motion (ECF

No. 95). A separate Order will accompany this Memorandum Opinion.




                                                            CHRISTOPHER R. COOPER
                                                            United States District Judge

Date: January 31, 2018




                                               17
