Estate of Harrah v. United States

The Estate of William F. Harrah (Estate) seeks to recover an alleged overpayment of income taxes in the taxable years of 1983 and 1984. The William F. Harrah Marital Trust (Trust) 1 also seeks to recover a related over *1449 payment for the 1984 taxable year. The difficulty each confronts is that the reopening of the relevant years is barred by the statute of limitations. See 26 U.S.C. § 6511 (a).

To remove this bar the Estate relied upon the mitigation provisions of the Internal Revenue Code, 26 U.S.C. §§ 1311-1314 , and the doctrine of equitable recoupment. The district court held that the mitigation provisions did not apply to these claims, but that equitable recoupment did. Accordingly, it recomputed the income taxes owed for the years in question and found overpayments by the Estate and Trust with respect to the relevant taxable years.

The Estate and Trust concede that the district court’s judgment with respect to the inapplicability of the mitigation provisions of the Code set forth in 26 U.S.C. §§ 1311-1314 is correct. We reverse the district court’s application of the doctrine of equitable re-coupment and hold that the claims of the Estate and Trust with respect to the…