                                                                              FILED
                           NOT FOR PUBLICATION                                SEP 17 2014

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                           FOR THE NINTH CIRCUIT


HAIM REVAH and LUCINDA REVAH,                    No. 11-70211

              Petitioners - Appellants,          Tax Ct. No. 23331-08L

  v.
                                                 MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,

              Respondent - Appellee.


                           Appeal from a Decision of the
                             United States Tax Court

                       Argued and Submitted April 9, 2014
                              Pasadena, California

Before: THOMAS, M. SMITH, and CHRISTEN, Circuit Judges.

       Haim and Lucinda Revah appeal from the decision of the tax court

concluding that equitable recoupment does not apply to offset their income tax

liabilities, and upholding the determination of the Internal Revenue Office of

Appeals to proceed with the collection of such liabilities. Because the parties are



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
familiar with the facts and procedural history of this case, we repeat only those

facts necessary to resolve the issues raised on appeal. We reverse and remand.

      A party seeking equitable recoupment must demonstrate that: (1) the “same

transaction, item, or taxable event” is subject to two taxes; (2) the taxes are

“inconsistent in that the Tax Code authorizes only a single tax”; (3) the tax sought

to be recouped is time barred; (4) there is an “identity of interest between the

parties paying the duplicative tax”; and (5) “the court in which the recoupment

claim is brought must independently have jurisdiction to adjudicate the claim.”

Estate of Branson v. Comm’r, 264 F.3d 904, 909–10 (9th Cir. 2001) (internal

quotations omitted).

      The tax court concluded that the Revahs could not demonstrate that the

Internal Revenue Service applied two inconsistent taxes. The tax court reasoned

that the Revahs’ inability to use net operating losses to reduce tax liabilities was

the result of their failure to make their refund claims within the proper time period,

rather than the result of inconsistent theories of taxation.

      The tax court’s conclusion that the Revahs are not entitled to equitable

recoupment due to their failure to timely file is erroneous. In United States v.

Bowcut, we rejected the government’s argument that recoupment should not be

permitted because the situation from which relief was sought was created by the


                                           2
taxpayer’s untimely refund claim. 287 F.2d 654, 657 (9th Cir. 1961); see also

Branson, 264 F.3d at 918 (citing Bowcut to reject government’s argument that

petitioner was not entitled to equitable recoupment because she did not diligently

pursue her refund claim). Rather, both Bowcut and Branson concluded that

equitable recoupment was available even though the claims at issue were not

timely filed. Branson, 264 F.3d at 918; Bowcut, 287 F.2d at 657.

      Therefore, even though the Revahs failed to timely file their refund claims,

their untimeliness is not a ground upon which the tax court may deny equitable

recoupment. See Branson, 264 F.3d at 918; Bowcut, 287 F.2d at 657. The tax

court thus erroneously concluded that the Revahs’ failure to timely assert their

refund claims precluded them from satisfying the equitable recoupment

requirement that the taxes be inconsistent. Accordingly, we reverse and remand

for further proceedings consistent with this memorandum disposition.

      REVERSED AND REMANDED.




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