Cir

MEMORANDUM

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 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…