917 F.3d 1221
10th Cir.2019Background
- Wichita Center of Graduate Medical Education, a Kansas non-stock charitable organization, received a $5.4M FICA tax refund in 2010 and $4.7M in interest in 2012 after IRS determined students were not subject to FICA.
- IRS later concluded it paid interest at the higher non-corporate rate and demanded repayment of the $2.3M difference; the Center repaid and sued to recover that amount.
- Central legal question: whether a non-stock, not-for-profit entity incorporated under state law qualifies as a "corporation" for purposes of the overpayment interest rates in 26 U.S.C. § 6621(a)(1).
- Wichita Center argued § 6621 is ambiguous and non-profit, non-stock entities should get the higher overpayment interest rate applicable to individuals/others, citing prior regulations and interpretive canons.
- The district court and this panel held that the Internal Revenue Code’s general definition of "corporation" (26 U.S.C. § 7701(a)(3)) and ordinary legal usage include state-incorporated non-profit corporations, so § 6621 applies to them and they receive the lower corporate overpayment rate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a non‑stock, not‑for‑profit entity incorporated under state law is a "corporation" for § 6621(a)(1) | Wichita Center: statute ambiguous; non‑profit, non‑stock entities should get the higher non‑corporate overpayment rate; Kintner regs and canons support reading in an exception | Government: § 7701(a)(3) defines "corporation" broadly; ordinary meaning and Code context include non‑profit corporations; no ambiguity requiring deference to repealed regs | Court: Affirmed — state‑incorporated non‑profit corporations are "corporations" under § 6621 and receive the lower corporate overpayment interest rate. |
Key Cases Cited
- Robinson v. Shell Oil Co., 519 U.S. 337 (1997) (start statutory interpretation with plain meaning)
- Trustees of Dartmouth College v. Woodward, 17 U.S. 518 (1819) (historical definition of corporation includes private charities)
- United States v. Empey, 406 F.2d 157 (10th Cir. 1969) (use of § 7701 definitions and discussion of Kintner regs)
- K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988) (consider statute’s context and structure)
- Russello v. United States, 464 U.S. 16 (1983) (presumption that Congress’s inclusion or exclusion of language is purposeful)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (agency deference applies only when statute is ambiguous)
- Nat’l Credit Union Admin. v. First Nat’l Bank & Trust Co., 522 U.S. 479 (1998) (in pari materia canon and consistent meaning of similar language)
- Maimonides Medical Center v. United States, 809 F.3d 85 (2d Cir. 2015) (holding non‑profit hospitals are corporations for § 6621)
- United States v. Detroit Medical Center, 833 F.3d 671 (6th Cir. 2016) (same)
- Medical College of Wisconsin Affiliated Hospitals, Inc. v. United States, 854 F.3d 930 (7th Cir. 2017) (same)
- Littriello v. United States, 484 F.3d 372 (6th Cir. 2007) (discussing Kintner Regulations)