Delaune v. United States

1998 WL 34183459 (5th Cir.)

United States Court of Appeals, Fifth Circuit.

Sammie Barman DELAUNE, Estate; Denise Loveless, Co-Executors and Transferees of the Estate of Sammie Barman Delaune; Mae Acy Amedee, Co-Executors and Transferees of the Estate of Sammie Barman Delaune; William R. Smith, Jr., Transferees of the Estate of Sammie Barman Delaune; Phyllis Robira Zapp, Transferees of the Estate of Sammie Barman Delaune; Bertha Thomas, Transferees of the Estate of Sammie Barman Delaune; Jane Lee Van Reenen, Transferees of the Estate of Sammie Barman Delaune; Joyce B. Metcalf, Transferees of the Estate of Sammie Barman Delaune; Peggy Ann Geiler, Transferees of the Estate of Sammie Barman Delaune; Samuel Buckmaster, Jr., Transferees of the Estate of Sammie Barman Delaune Plaintiffs-Appellants,

UNITED STATES OF AMERICA, Defendant-Appellee.

No. 97-30385.

January 7, 1998.

ON APPEAL FROM THE MIDDLE DISTRICT OF LOUISIANA CASE NUMBER 94-CV-416 THE HONORABLE JOHN v. PARKER

Appellant's Reply Brief

Joseph A. Prokop, Jr., Louisiana Bar Roll No. 20461, 830 Main Street, Suite C, Baton Rouge, LA 70802, (504) 387-2277, Attorneys for Plaintiffs-Appellants

James E. Boren, Louisiana Bar Roll No. 3252, 830 Main Street, Suite A, Baton Rouge, LA 70802, (504) 387-5786

*i Note:Table of Contents page numbers missing in original document.

TABLE OF CONTENTS

Table of Citations ... i

Statement of Issues ... 1

Summary of Argument ... 1

Argument ... 2

I. Did Sammie Delaune accept benefits from the disclaimed property prior to her death? ... 2

II. Did Jack's heirs have a valid claim against Sammie's estate pursuant to I.R.C. § 2053? ... 9

III. Is the estate the proper party to exert a claim for the refund of the entire amount of additional estate taxes paid? ... 11

Conclusion ... 15

Certificates of Service

Certificate of Compliance with Local Rule 32.2.7(c)

TABLE OF CITATIONS

Federal Statutes:

I.R.C. § 2001(a) ... 11

I.R.C. § 2002 ... 11

I.R.C. § 2053 ... 1, 9, 11, 15

I.R.C. § 2518 ... 1, 2, 4, 9, 15

I.R.C. § 2518(b) ... 5

I.R.C. § 2518(b)(4) ... 4

I.R.C. § 6402(a) ... 14

I.R.C. § 6416(a) ... 14

I.R.C. § 6419(a) ... 14

I.R.C. § 6511(a) ... 13, 14

I.R.C. § 7422(a) ... 12

I.R.C. § 7701(a)(14) ... 13

28 U.S.C. § 1346(a) ... 12

Federal Regulations:

Treas. Reg. § 20.2043-1(a) ... 10

Treas. Reg. § 25.2518-2(c)(5)(Ex. 5 & 10) ... 4

Treas. Reg. § 25.2518-2(d)(1) ... 6, 8

A.O.D. CC-1990-06 (Feb. 7, 1990) ... 4

Congressional Reports:

H.R. CONF. REP. No. 14844, 94th Cong., 2d Sess. 67 (1976) ... 2

H.R. CONF. REP. No. 215, 97th Cong., 1st Sess. 255 (1981) ... 4

H.R. REP. No. 201, 97th Cong., 1st Sess. 190-91 (1981) ... 3

Joint Committee Explanation of the Tax Reform Act of 1976, 94th Cong., 2d Sess. 590-91 (1976) ... 2

JOINT COMMITTEE SUMMARY, 94TH CONG., 2D SESS. 91 (1976) ... 2

S. REP. No. 1236, 94th Cong., 2d Sess. 623-24 (1976) ... 2

S. REP. No. 144, 97th Cong., 1st Sess. 142 (1981) ... 3-4

*ii Federal Cases:

Atkins v. Commissioner, 30 F.2d 761 (5th Cir. 1929) ... 10

Boryan v. U.S., 690 F. Supp. 459 (E.D. Va. 1988), aff'd 884 F.2d 767 (4th Cir. 1989) ... 13

Commissioner v. Bosch, 387 U.S. 456, 87 S. Ct. 1776, 18 L. Ed. 2d 886 (1967) ... 5

Cook Oil Co., Inc. v. U.S., 919 F. Supp. 1556, 1560 (M.D. Ala. 1996) ... 14

Estate of Bennett v. Commissioner, 100 T.C. 42 (1993) ... 4

Estate of Dancy v. Commissioner, 872 F.2d 84 (4th Cir. 1989) ... 4

Estate of Goree, 68 T.C.M. (CCH) 123 (1994) ... 5-6

Estate of Monroe v. Commissioner, 124 F.3d 699 (5th Cir. 1997) ... 7-8, 9

U.S. v. Williams, 514 U.S. at ___, 115 S. Ct. 1611, 131 L. Ed. 2d 608 (1995) ... 12, 13-14, 15

State Statutes:

LA. CIV CODE ANN. art. 1017 ... 9

LA. CIV CODE ANN. art. 1761 ... 10

LA. CIV CODE ANN. art. 1762(3) ... 10

State Cases:

Breaux v. Breaux, 51 So.2d 73 (1951) ... 10

Estate of Wiltz, 406 N.Y.S.2d 671 (N.Y Sur. Ct. 1978) ... 4

Succession of Dunham, 428 So. 2d 876 (La. App. 1st Cir. 1983) ... 6, 8-9

Succession of Gumbel, 56 So.2d 418 (La. 1951) ... 10

Succession of Harrison, 444 So.2d 1191 (La. 1984) ... 10

Miscellaneous Authority:

5 B. BITTKER & L. LOKKEN, FEDERAL TAXATION OF INCOME, ESTATES AND GIFTS, ¶ 121.7.6 (2d ed. 1984) ... 4

S. Litvanoff, Louisiana Civil Law Treatise, Law of Obligations § 2.5 ... 10

*1 STATEMENT OF ISSUES

I. Did Sammie Delaune accept benefits from the disclaimed property prior to her death?

II. Did Jack's heirs have a valid claim against Sammie's estate pursuant to I.R.C. § 2053?

III. Is the estate the proper party to exert a claim for refund of the entire amount of additional estate taxes paid?

SUMMARY OF ARGUMENT

The Defendant erred when it increased Sammie's gross estate by the value of the disclaimed portion of Jack's estate because the disclaimer [FN1] meets all the requirements of I.R.C. § 2518. In the alternative, the Defendant erred when it refused to allow Sammie's estate to deduct the value of the claim against her estate by Jack's relatives, as provided in I.R.C. § 2053. Furthermore, the additional estate tax and interest that was erroneously and illegally assessed should be refunded to the estate because it is the taxpayer, incurred the liability and is a party to this action.

FN1. Generally, the term "disclaimer is used when discussing federal law and the term "renunciation" is used when discussing Louisiana law. These terms are used synonymously in this Brief.

*2 ARGUMENT

I. SAMMIE DELAUNE DID NOT ACCEPT BENEFITS FROM THE DISCLAIMED PROPERTY PRIOR TO HER DEATH.

The Plaintiffs still contend that state law determines only who receives the disclaimed property and that it is incorrect to require that a disclaimer also be valid under state law.

In 1976, Congress enacted I.R.C. § 2518. The reason for this legislation was to "achieve uniform treatment" of disclaimers so the government and the taxpayers did not have to contend with the various nuances within the Tax Code and among the several states laws. H.R. CONF. REP. NO. 14844, 94th Cong., 2d Sess. 67 (1976) states:

The bill provides definitive rules relating to disclaimers for purposes of estate, gift and generation-skipping transfer taxes. If the requirements of the provision are satisfied, a refusal to accept property is to be given effect for Federal estate and gift tax purposes even if applicable local law does not technically characterize the refusal as a "disclaimer" or if the person refusing the property was considered to have been the owner of the legal title to the property before refusing acceptance of the property ....

See JOINT COMMITTE EXPLANATION OF THE TAX REFORM ACT OF 1976, 94TH CONG., 2D SESS. 590-91 (1976); JOINT COMMITTEE SUMMARY 94TH CONG., 2D SESS. 91 (1976); S. REP. NO. 1236, 94th Cong., 2d Sess. 623-24 (1976).

In 1981, Congress made technical changes to I.R.C. § 2518 because the *3 intended uniform treatment of disclaimers had not been achieved. This amendment makes it clear that local law only determines the transferee of the disclaimed property. Furthermore, a refusal to accept property that is not effective under local law is still valid if the property is actually transferred to the person who would receive the property under local law. H.R. rep. No. 201, 97th Cong., 1st Sess. 190-91 (1981) states:

Thus, contrary to the original Congressional intent, present law does not provide uniform treatment of disclaimers under the Federal estate and gift tax law. In order to provide uniform treatment among States, the committee believes that where an individual timely transfers the property to the person who would have received the property had the transferor made an effective disclaimer under local law, the transfer will be treated as an effective disclaimer for Federal estate and gift tax purposes

Local law will be applicable to determine the identity of the transferee, but the transfer need not satisfy any requirements of the local disclaimer statute. In addition, the individual's direction of the transfer to the individual who would have taken under local law pursuant to an effective disclaimer will not be construed as an acceptance of the property.

S. rep. No. 144, 97th Cong., 1st Sess. 142 (1981) states:

Under the committee bill, for purposes of estate and gift tax, a refusal to accept any property interest that is not effective to pass title under local law will be construed to pass property without any direction on the part of the disclaimant if the refusal otherwise satisfies the Federal requirements and the disclaimant timely transfers the property interest to the person who would have received the *4 property had the refusal been an effective disclaimer under local law. Although the State disclaimer rules will be used to determine the transferee, the refusal need not be a valid disclaimer under local law.

See H.R. CONF. rep. No. 215, 97th Cong., 1st Sess. 255 (1981); Treas. Reg. § 25.2518-2(c)(5)(Ex. 5 & 10).

The Defendant asserts that a disclaimer under I.R.C. § 2518 must also be effective under state law. It is precisely this argument that persuaded Congress to change the law in 1981 to eliminate the need for a disclaimer to be valid under state law. It is clear from the committee reports that the Internal Revenue Code governs the procedure for disclaimers. It is also clear that state law determines only the transferee and ownership of the disclaimed property. It is respectfully suggested that cases to the contrary are simply wrong. [FN2]

FN2. See Estate of Bennett v. Commissioner, 100 T.C. 42, 66-76 (1993) ( "Although IRC 2518 does not explicitly require disclaimers to be effective under state law, this requirement is implicit in IRC 2518(b)(4) which provides that the disclaimed interest must pass without any direction by the disclaimant to a person other than the disclaimant (unless the disclaimant is the decedent's surviving spouse)." (quoting 5 B. bittker & L. lokken, federal taxation of income, estates and gifts, ¶ 121.7.6, 121-63 (2d ed. 1984))); Estate of Dancy v. Commissioner, 872 F.2d 84, 86-87 (4th Cir. 1989) (Court must look to whether the disclaimer was valid under state law; disclaimer was valid since, inter alia, accepted by the state Department of Revenue.); A.O.D. CC-1990-06 (Feb. 7, 1990)

(The Service announced that it would follow Dancy). But see, Estate of Wiltz, 406 N.Y.S.2d 671, 673 (N.Y Sur. Ct. 1978) (Where widow's disclaimer appeared to comply in all respects with the Internal Revenue Code, but did not comply with state law, the disclaimer would be treated as being in substantial compliance with the state statute; the Internal Revenue Code supersedes local disclaimer law.).

*5 Many of the issues raised by the Defendant in this case were argued in Estate of Robert W. Goree, Jr., 68 T.C.M. (CCH) 123 (1994). In Goree, the conservator of the minor heirs made a partial disclaimer on their behalf that caused the disclaimed property to pass to the decedent's spouse by operation of Alabama law. A guardian ad litem was appointed to represent the minors, a hearing was held in state court and the court approved the disclaimer.

Claiming that the state court rubber stamped the judgment and relying on Commissioner v. Estate of Bosch, 387 U.S. 456, 87 S. Ct. 1776, 18 L. Ed. 2d 886 (1967), the Government argued that the Tax Court should conduct a de novo review of the state court decision. The Tax Court rejected this argument and ruled that they should use the Alabama appellate review standard of "plainly and palpably erroneous." See Goree at 128. The Tax Court held that there was a valid disclaimer under I.R.C. § 2518(b) since the state court decision was not plainly and palpably erroneous.

The Government relies on a strained interpretation of Bosch for the proposition that when interpreting state law, it can disregard decisions of lower state courts interpreting the law. However, the Government cannot ignore its Treasury Regulations, Revenue Rulings and Private Letter Rulings. See authority Cited in Appellant's Original Brief at pp. 12-18. Furthermore, *6Bosch, 387 U.S. at 465, 87 S. Ct. at 1783, 18 L. Ed. 2d at 894, requires that the Government give "proper regard" to relevant rulings of other courts of the state. It is suggested that "proper regard" does not mean total disregard.

The Government also contends in its appellate brief that Bill Delaune had a Power of Attorney from Sammie Delaune to manage her financial affairs. However, there is no documentary evidence to support this contention.

Finally, the Government also contends that a letter written by one of the attorneys for Sammie's co-executors, Alton Bayard, states that Sammie accepted the benefits of Jack's estate. However, Mr. Bayard testified at trial that his letter was being taken out of context and that he had no knowledge of whether Sammie accepted the income from Jack's estate. (Tr. 130-134, 137-139).

Acceptance of a gift or legacy requires "an affirmative act which is consistent with ownership of the interest in property." See Treas. Reg. § 25.2518-2(d)(1). Louisiana Jurisprudence is clear that when an estate is under administration, the succession representative also administers and possesses the surviving spouse's portion of the community property. See Succession of Dunham, 428 So. 2d 876 (La. App. 1st Cir. 1983). [FN3] Sammie could not accept Jack's *7 succession or any of its benefits and did not have possession of the community property because Jack's estate was under administration. The community property was in the possession of Jack's estate and bills were being paid by Jack's executor, as required by law. All Sammie knew was that Bill was taking care of things. Sammie accepted neither the interest in the refused property nor any of its benefits.

FN3. Sammie was in a nursing home in Baton Rouge during the relevant time period. Bill Delaune was Jack's executor and was managing the affairs of Jack's succession.

The Government contends that income from Jack and Sammie's community property was used to pay Sammie's bills and that this is an "acceptance of benefits" that invalidates any disclaimer. The Plaintiffs deny these allegations.

Recently, in Estate of Monroe v. Commissioner, 124 F.3d 699 (5th Cir. 1997), this Court discussed the meaning of "acceptance" in the regulations under I.R.C. § 2518(b). [FN4] In Monroe at 709, this Court stated:

FN4. [A] primary purpose of the law authorizing disclaimers is to facilitate post-mortem estate planning and to increase family wealth on the "expectation" that there will thus remain more wealth to pass on to disclaimants in the future. Consequently, if the Tax Court's subjective interpretation of "unqualified" disclaimer is accepted, it undermines the very purpose for which the provision was enacted. It also ensures litigation in virtually every disclaimer situation, because it can be assumed that heirs and legatees rarely execute disclaimers for tax purposes without having had some "expectations" or "inducements" based on conversations with advisors on the prospective benefits of such a course of action.

Monroe at 709. The volume of litigation is further increased when combined with: (1) the Government's apparent view that Bosch allows them to totally disregard all lower state court interpretations of state law; and (2) the view that disclaimers must also conform to state law, contrary to express congressional intent.

*8 The regulations set forth two situations in which a disclaimer expresses a mere qualified refusal to accept an interest in property: when the disclaimant accepts, expressly or impliedly, the interest or any of its benefits; and when the disclaimant receives "consideration in return for executing the disclaimer. Treas. Reg. § 25.2518-2(d)(1). Consistent with our interpretation, a disclaimant cannot purport to disclaim, while taking actual advantage of the property "or any of its benefits." Further, the disclaimant cannot accept "benefits" from the property by receiving consideration in exchange for the disclaimer. The juxtaposition in the regulation between the "implied" acceptance of the interest or any of its benefits and the "consideration" that must be received in exchange for a disclaimer is not accidental. One may impliedly accept the benefits of property, for instance as pledging it as security for a loan, and therefore act inconsistently when making an alleged disclaimer. On the other hand, only by receiving "consideration" in the classic sense does one receive "property" or any of its benefits in exchange for executing the disclaimer. We thus agree with the estate that to have accepted the benefits of a disclaimed interest, the disclaimant must have received actual consideration in return for renouncing his legacy.

As stated previously, the entire community was being administered by Jack's executor, Bill Delaune. Sammie lacked the authority to accept (alienate) the community property or its income while Jack's estate was under administration. See Succession of Dunham. Only Jack's executor had the authority to alienate succession property. Therefore, Sammie could not impliedly accept the interest in community property from Jack. Possibly, Sammie could have executed an instrument expressly accepting the interest from Jack. However, there is no evidence of such an instrument. [FN5]

FN5. The Dunham decision creates a conundrum if a renunciation is treated as an alienation. La. CIV. CODE ann. art. 1017 authorizes express renunciations. However, if a renunciation is an alienation, Dunham and its progeny do not allow an heir or legatee to alienate property in an administered succession. This is a reason why, as a practical matter, estate attorneys use judicial renunciations to get approval of the renunciation from the court that is administering the succession. This is also an example of how it may be impossible to have a disclaimer that is valid under both state and federal law.

*9 As in Monroe at 709, for Sammie "to have accepted the benefits of a disclaimed interest, [she] must have received actual consideration in return for renouncing his legacy." Any consideration that arguably existed was not in return for renouncing the legacy. This consideration, if any, is no different from that in Monroe, where the disclaimants received gifts roughly equal to the disclaimed interest within days of their disclaimer.

In summary, state law applies only to determine who receives the disclaimed interest. Sammie did not accept the property or its benefits. Therefore, there was a qualified disclaimer pursuant to I.R.C. § 2518.

II. JACK'S HEIRS HAD A VALID CLAIM AGAINST SAMMIE'S ESTATE PURSUANT TO I.R.C. § 2053.

The Government simply misconstrues this argument and mis-understands the concept of a natural obligation.

Jack and Sammie had an oral agreement that upon the death of the survivor of them, their property would be divided among their heirs. This agreement was either an oral bilateral contract or oral reciprocal wills, all of which are invalid *10 under Louisiana law because of form. Although the oral disposition lacked the necessary form, Sammie had a moral duty to perform the agreement. This moral duty created a natural obligation under Louisiana law. See LA. CIV. CODE ANN. art. 1762(3). See also, Breaux v. Breaux, 51 So.2d 73 (1951); Succession of Gumbel, 56 So.2d 418 (La. 1951); Succession of Harrison, 444 So.2d 1191 (La. 1984); Atkins v. Commissioner, 30 F.2d 761 (5th Cir. 1929); S. LITVANOFF, LOUISIANA CIVIL LAW TREATISE, LAW OF OBLIGATIONS § 2.5.

This natural obligation ripened into an onerous contract when Sammie instructed the attorneys to draft the documents necessary to perform the natural obligation. Jack's relatives could legally enforce the natural obligation once it became an onerous contract. See Appellant's Original Brief at pp. 24-28.

As a matter of law, a natural obligation is adequate consideration for an onerous contract. See LA. CIV. CODE ANN. art. 1761 (Comments a, c & d); Treas. Reg. § 20.2043-1(a). The consideration was capable of valuation in money or money's worth because the object of the onerous contract was Jack's estate. Jack's estate was valued for estate tax purposes.

The Government suggests that there is something sinister in the fact that the parties agreed to settle the claims by Jack's heirs rather than litigate the matter. All of the witnesses testified that there was a genuine and bona fide dispute *11 between Jack's heirs and Sammie's heirs. After weighing the costs, risks and other factors, the parties arrived at a negotiated settlement of the dispute. The Government accepted the settlement as reported on Jack's return, but denied the settlement as reported on Sammie's return. Contrary to the Government's assertions, there is nothing in the law that penalizes parties for settling lawsuits rather than litigating them.

In summary, the claim by Jack's relatives was valid under Louisiana law because the natural obligation ripened into an enforceable onerous contract when Sammie began to perform or promised to perform the natural obligation. This claim meets all of the requirements of I.R.C. § 2053and should have been allowed as a deduction from Sammie's taxable estate.

III. THE ESTATE IS THE PROPER PARTY TO EXERT A CLAIM FOR REFUND OF THE ENTIRE AMOUNT OF ADDITIONAL ESTATE TAXES PAID.

I.R.C. § 2001(a) states that "[a] tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States." I.R.C. § 2002 states that "[t]he tax imposed by this chapter shall be paid by the executor."

The Estate of Sammie Barman Delaune created the estate tax liability and the co-executors of the estate were required to ensure that all estate taxes were *12 paid. The co-executors fulfilled this requirement.

When the Government assessed additional estate taxes, the estate and the other Plaintiffs initiated this action pursuant to the Federal Tort Claims Act, which waives the Government's sovereign immunity from suit and confers original jurisdiction on the district courts of the United States.

The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:

(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws; ...

28 U.S.C. § 1346(a). [FN6] In their Complaint, the Plaintiffs specifically alleged that the taxes were erroneously and illegally assessed.

FN6. See U.S. v. Williams, 514 U.S. at ___, 115 S. Ct. 1611, 131 L. Ed.

2d 608 (1995) ("This provision does not say that only the person assessed may sue.").

Following the federal Administrative Procedures Act, Congress required that administrative remedies be exhausted before a party can bring a refund action in district court. See I.R.C. § 7422(a). Congress also imposed a statute of limitations on the filing of Claims for Refund.

Claim for credit or refund of an overpayment of any tax imposed by this title in respect of which tax the taxpayer is required to file a return shall be filed by the taxpayer within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires *13 the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid ....

I.R.C. § 6511(a) (emphasis added) [FN7] This statute authorizes a timely Claim for Refund of an overpayment where "the taxpayer is required to file a return." Furthermore, the Claim for Refund "shall be filed by the taxpayer." Id. (emphasis added).

FN7. The parties stipulated that the Plaintiffs filed a timely Claim for Refund.

A "taxpayer" is "any person subject to any internal revenue tax." I.R.C. § 7701(a)(14) (emphasis added). The Government argues that only persons "assessed" a tax have standing to file a refund suit. [FN8] Recently, the Supreme Court rejected this argument, stating that "[t]he general phrase 'subject to' is broader than the specific phrase 'assessed' ...." Williams, 514 U.S. at ___, 115 S. Ct. at 1617, 131 L. Ed. 2d at 617. [FN9]

FN8. In Boryan v. U.S., 690 F. Supp. 459 (E.D. Va. 1988), aff'd 884 F.2d 767 (4th Cir. 1989), the decedent's estate and an inter vivos trust created by the decedent paid the estate taxes. The estate and trust terminated and the trust beneficiaries filed a Claim for Refund of estate taxes. The Defendant asserted that the estate, not the trust beneficiaries that actually paid the tax, was the only party with standing to seek the refund. Ironically, in the instant case the Defendant is asserting that the estate beneficiaries that actually paid the tax, not the estate, is the only party with standing to seek the refund.

FN9. To read the term "taxpayer" as implicitly limiting administrative relief to the party assessed is inconsistent with other provisions of the refund scheme, which expressly contemplate refunds to parties other than the one assessed. Thus, in authorizing the Secretary to award a credit or refund "[i]n the case of an overpayment," 26 U.S.C. § 6402(a) describes the recipient not as the "taxpayer," but as the "person who made the overpayment." Similarly, in providing for credits or refunds for sales taxes and taxes on tobacco and alcohol, 26 U.S.C. § 6416(a) and 26 U.S.C. 6419(a) describe the recipient as "the person who paid the tax." Williams, 514 U.S. at ___, 115 S. Ct. at 1617, 131 L. Ed. 2d at 616. Applying the Defendant's argument that only "assessed" persons have standing to seek a refund, to the limitation in I.R.C. § 6511(a) of claims for refund to overpayments where "the taxpayer is required to file a return," means that transferees assessed with estate tax can never seek a refund of overpayments. The estate is required to file the U.S. Estate Tax Return, There is no transferee return to file or legal authority for such a return. See also, Cook Oil Co., Inc. v. U.S., 919 F. Supp. 1556, 1560 (M.D. Ala. 1996).

*14 The estate is the taxpayer because it is "subject to" the estate tax. See I.R.C. §§ 2001(a) & 2002. It created the tax liability and was initially sought to pay the deficiency. Only when the Government discovered that the estate had been distributed did it assess the various transferees. This does not change the fact that the estate is the taxpayer and allegedly owed additional taxes. [FN10] In fact, Defendant's Exhibit 22, an internal I.R.S. document, lists the Estate of Sammie *15 Barman Delaune as the "taxpayer."

FN10. The Supreme Court distinguished I.R.C. § 6402(a), which describes "recipients" of overpayment refunds, from the statutes granting "taxpayers" relief from overpayments. See Williams, 514 U.S. at ___, 115 S. Ct. at 1617, 131 L. Ed. 2d at 616. The Defendant's reliance on I.R.C. § 6402(a) is misguided since, when taken in context, it simply authorizes the Internal Revenue Service to offset any overpayment with any liability and refund the balance to the payor. The I.R.C. provision about where refunds are mailed does not determine the jurisdiction of this Court. This Court has jurisdiction over the estate's claim pursuant to the Tort Claims Act. See Williams, 514 U.S. at ___, 115 S. Ct. at 1611, 131 L. Ed. 2d at 608.

The estate is the proper party to exert the claim for the full refund and reclaim all overpayments. Furthermore, a portion of the additional estate taxes assessed was paid by Sammie's estate. [FN11] See Exhibits X & Y.

FN11. The remainder of the additional assessment was paid by the transferees because the estate's property had been distributed to them.

Ironically, the transferees faced potential gift tax liability if they gave a portion of the funds back to the estate so it could pay the additional estate tax assessment.

If the Government erroneously and illegally assessed the tax, it was wrong in assessing the entire tax and the entire amount should be refunded to the estate because the estate incurred the liability and is a party to this action. The Government's claims to the contrary have no substantial basis in fact or in the law. See Williams, 514 U.S. at ___, 115 S. Ct. at 1611, 131 L. Ed. 2d at 608.

CONCLUSION

Sammie's executors sought and obtained a judicial renunciation that meets all of the requirements of I.R.C. § 2518. Therefore, the Government erred when it did not allow the disclaimer and assessed additional taxes against the transferees of the Sammie's estate.

The claim by Jack's relatives was valid claim against Sammie's estate and should have been allowed as a deduction from Sammie's taxable estate because it meets all of the requirements of I.R.C. § 2053.

*16 The additional estate tax and interest that was erroneously and illegally assessed should be refunded to the estate because it is the taxpayer, incurred the liability and is a party to this action.