UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT UNITED STATES OF AMERICA, No. 21-17083

Plaintiff-Appellant, D.C. No. 3:20-cv-08072- v. JAT JEFFREY S. PAGE, ORDER AND AMENDED Defendant-Appellee. OPINION

Appeal from the United States District Court for the District of Arizona James A. Teilborg, District Judge, Presiding

Argued and Submitted September 11, 2023 Phoenix, Arizona

Filed June 26, 2024 Amended September 12, 2024

Before: Ronald M. Gould, Andrew D. Hurwitz, and Roopali H. Desai, Circuit Judges.

Order; Opinion by Judge Desai 2 USA V. PAGE

SUMMARY*

Tax

The panel reversed the district court’s dismissal, as time- barred, of a complaint brought by the United States to recover an erroneous tax refund, and remanded. Due to a clerical error, the Internal Revenue Service (“IRS”) mailed taxpayer a tax refund check in excess of what it should have been. Taxpayer eventually returned only a portion of the refund. The government sued under 26 U.S.C. § 7405 to recover the outstanding balance. After taxpayer did not answer or appear, the government moved for default under Fed. R. Civ. P. 55(a). After the clerk entered default, the government moved for a default judgment under Rule 55(b). The district court denied the motion, and dismissed the complaint as untimely because the two-year limitations period began to run when taxpayer received the refund check. As a matter of first impression in this circuit, the panel held that the two-year limitations period to sue to recover an erroneous refund starts on the date the erroneous refund check clears the Federal Reserve and payment to the taxpayer is authorized by the Treasury. Because taxpayer’s refund check cleared less than two years before the government sued, the panel held that the complaint was timely, and that the district court erred by dismissing it.

* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. USA V. PAGE 3

The panel also addressed other district court errors that independently warranted reversal. By sua sponte raising the statute of limitations defense and ordering the government to show cause why the complaint should not be dismissed, the district court improperly shifted the burden to the government to prove at the pleading stage that its claim against a party—who had not yet answered or appeared— was timely. The district court compounded this error by construing taxpayer’s interrogatory responses, submitted during limited discovery, against the government and dismissing the complaint. The panel explained that, rather than finding that the government’s claim was not time- barred on the face of the complaint, the district court looked beyond the face of the complaint and shifted the burden to the government to prove its claim was timely.

COUNSEL Isaac B. Rosenberg (argued), Bruce R. Ellisen, and Nathaniel S. Pollock, Attorneys, Tax Division/ Appellate Section; David A. Hubbert, Deputy Assistant Attorney General; Gary M. Restaino, Of Counsel, United States Attorney; United States Department of Justice, Washington, D.C.; for Plaintiff-Appellant. Jacob T. Spencer (argued), Gibson Dunn & Crutcher LLP, Washington, D.C.; Nicholas B. Venable, Ben Gibson, and J. Jacob Marsh, Gibson Dunn & Crutcher LLP, Denver, Colorado; for Defendant-Appellee. 4 USA V. PAGE

ORDER

Foot