Unpublished Disposition, 852 F.2d 1289 (9th Cir. 1986)

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US Court of Appeals for the Ninth Circuit - 852 F.2d 1289 (9th Cir. 1986)

Maurice GROSSMAN, Plaintiff-Appellant,v.UNITED STATES of America, United States VeteransAdministration, United States Civil ServiceCommission, Defendants-Appellees.

No. 87-2440.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 10, 1988.Decided July 20, 1988.

Before POOLE, WIGGINS and BRUNETTI, Circuit Judges.


Grossman appeals from summary judgment in favor of the United States in his action for an $11,397.67 tax refund. He claims the district court abused its discretion in denying him equitable relief from tax treatment which he admits was proper under the controlling provisions of the Internal Revenue Code. We affirm.


Grossman alleges that upon resigning after 15 years as a medical officer in the Veterans' Administration, he was told by another employee that early retirement forfeited his rights to a civil service annuity. He left the agency and did not apply for an annuity. Seventeen years later he learned that this information was incorrect and that he had been entitled to receive an annuity since attaining age 62. He then applied for and received retroactive benefits totalling $36,021.83, which the Civil Service Commission paid in a single lump sum in 1981. This amount did not include interest to compensate for delayed payment.

Grossman reported the taxable portion of the payment as income on his 1981 federal income tax return, but he later sought a refund claiming that he should be allowed to re-compute his tax liability as though the annuity had been received as it came due each year from 1969 through 1980. He would have the IRS offset the deficiencies resulting from increasing his taxable income during those years against the overpayment in 1981, then refund the remainder of the overpayment along with interest and penalties which he paid. The district court found that Grossman was not entitled to such treatment and granted the government's cross-motion for summary judgment.


We review the denial of equitable relief for abuse of discretion. In re Wolverton, 491 F.2d 361, 365 (9th Cir.), cert. denied, 417 U.S. 947 (1974).


Grossman concedes that the Civil Service Commission was not obligated to notify him when he became eligible to receive an annuity; that the annuity did not become payable until he applied for it; that the accrued annuity was promptly paid once he applied; and that he was not entitled to interest to compensate for delayed receipt. He also acknowledges that under the controlling provisions of the Internal Revenue Code and Treasury Regulations he is not entitled to a refund for the 1981 tax year. What he claims is that he should be allowed the requested tax treatment on the basis of "something akin to equitable recoupment" as that doctrine was condoned in the unpublished Fourth Circuit decision Doner v. Commissioner, No. 84-2259 (4th Cir. Feb. 21, 1986).

We are not inclined to follow that decision here because we are unable to discern a principled basis for treating different arms of the government as single entity for the purpose of requiring one to compensate for the alleged shortcomings of the other. While the Navy's statutory authorization to correct military records and pay claims incident thereto, 10 U.S.C. § 1552, arguably served as the basis for such treatment in Doner, there is no similar authorization here. Furthermore, Grossman does not claim that either the Civil Service Commission or the IRS made a mistake which should be corrected, or that either engaged in wrongful conduct. Nor has he asserted estoppel against the government on the basis of the incorrect advice allegedly given by an unidentified Veterans' Administration employee in 1953, for which he never sought confirmation. We see no basis on which to require the government to alleviate the hardship resulting from Grossman's own delay in applying for his annuity, or on which the district court should have exercised its equitable discretion to achieve the same result.

Grossman is not entitled to equitable recoupment as that doctrine has developed in this circuit because the annuity payment was not subjected to two taxes based on inconsistent legal theories. See Kolom v. United States, 791 F.2d 762, 767 (9th Cir. 1986). Grossman merely seeks tax treatment more favorable than that to which he is entitled. The district court did not abuse its discretion in denying equitable relief.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3