United States v. Wurts

Background

This case involved the United States and a taxpayer who had received an erroneous tax refund. The tax official signed a schedule approving the refund on March 15, 1932, and a refund check was mailed April 30, 1932. The Government sued to recover the payment on April 26, 1934—more than two years after the approval but less than two years after the payment. Lower courts held the suit barred because they treated the approval date as the start of the two-year period.

Reasoning

The core question was whether the two-year limit to sue runs from the date a refund is approved or from the date the money is actually paid. The Court explained that the Government’s long-established right to recover mistaken payments exists without a statute, and that §610 of the 1928 Act only limits that right. The Court relied on the ordinary meaning of “refund,” on committee reports, and on the fact that an official’s approval does not finally fix a taxpayer’s right to money. The Court also said a later 1932 statute did not change §610’s running date. Reading the words in their common sense, the Court concluded the limitation begins when the payment is made because the Government has no enforceable right to recover until money has actually been paid.

Real world impact

The Court reversed the lower courts. Going forward, the Government has two years from the date an erroneous refund is actually paid to bring a recovery suit, not from the approval date. That means tax officials and payees should count the deadline from payment, and taxpayers cannot defeat recovery simply by pointing to an earlier approval date.