United States v. Dalm

Frances Dalm (plaintiff) was paid by both an estate and its beneficiary for her work as administrator, reported the payments as gifts, and paid gift tax on them. The IRS later decided the payments were income rather than gifts and audited her; Dalm settled the resulting income-tax dispute in tax court, then promptly sought a refund of the gift tax she had already paid — but by then the statute of limitations on that refund claim had run. When the IRS did not act, Dalm sued for a refund in federal district court; the district court dismissed for lack of jurisdiction, but the Sixth Circuit reversed, holding jurisdiction existed under equitable recoupment. The Supreme Court granted certiorari.