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Wichita Center for Graduate Medical Education v. United States

United States District Court, D. Kansas

December 7, 2017

Wichita Center for Graduate Medical Education, ET AL., Plaintiff,
v.
United States of America, Defendant.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE.

         Resolving a long-standing disagreement with taxpayers, the IRS in 2010 agreed that medical students were not subject to FICA taxes. Following this determination, the IRS refunded prior FICA tax payments, including some $5.4 million in overpaid employer-portion FICA taxes to plaintiff Wichita Center for Graduate Medical Education (WCGME), from tax periods from 1997 to 2005.

         The IRS and WCGME dispute the appropriate interest which plaintiff should receive for the overpayment. The IRS originally remitted $4.7 in interest to WCGME, but later determined that it had paid WCGME interest at an overly generous rate, and demanded repayment of $2.3 million in interest. WCGME repaid this amount, and filed the present action seeking its recovery.

         WCGME and the IRS have essentially stipulated to all relevant facts, and both parties have moved for summary judgment. For the reasons provided herein, the court grants summary judgment in favor of the United States.

         Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must examine all evidence in a light most favorable to the opposing party. McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir. 1988). The party moving for summary judgment must demonstrate its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir. 1985). The moving party need not disprove plaintiff's claim; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir. 1987).

         In resisting a motion for summary judgment, the opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Once the moving party has carried its burden under Rule 56(c), the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. “In the language of the Rule, the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis in Matsushita). One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477 U.S. 317 (1986).

         A taxpayer is entitled to interest on overpayments at the rate established by 26 U.S.C. § 6621. See 26 U.S.C. § 6611(a). Section 6621 sets forth the procedures for the determination of interest rates, with subsection (a) defining the different appropriate interest rates to be paid by the government (in the case of an overpayment), or for the taxpayer (in the case of underpayment).

(1) Overpayment rate.--The overpayment rate established under this section shall be the sum of-
(A) the Federal short-term rate determined under subsection (b), plus
(B) 3 percentage points (2 percentage points in the case of a corporation).
To the extent that an overpayment of tax by a corporation for any taxable period (as defined in subsection (c)(3), applied by substituting “overpayment” for “underpayment”) exceeds $10, 000, subparagraph (B) shall be applied by substituting “0.5 percentage point” for “2 percentage points”.
(2) Underpayment rate.--The underpayment rate established under this section shall be the sum of-
(A) the Federal short-term rate determined under subsection ...

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