Tax Legal Services · Primary-source case analysis

Dalm: Equitable Recoupment Cannot Create Jurisdiction for an Untimely Refund Suit

By Aneeta Mishra and Timothy Chan

Published September 13, 2026

United States v. Dalm distinguishes a defensive equitable-recoupment claim in a timely tax case from an independent refund suit that does not satisfy Congress’s filing deadlines.

The same payments generated gift and income tax disputes

Dalm received payments connected to an estate, paid gift tax on one transfer, and later settled income-tax deficiencies after the IRS treated the payments as compensation. She then sought a refund of the earlier gift tax.

The administrative claim was late

Sections 6511 and 7422 condition a tax-refund suit on a timely administrative claim. Dalm filed after the statutory period, so the district court lacked jurisdiction over the refund action.

Equitable recoupment is defensive

The doctrine can permit an otherwise barred tax item to offset a timely claim arising from the same transaction. It does not independently waive sovereign immunity or authorize a standalone refund suit when no timely action is otherwise before the court.

The refund judgment was reversed

The Supreme Court reinstated dismissal. The result made timing decisive even though inconsistent tax treatment may have occurred; the taxpayer needed to preserve the gift-tax issue in the timely income-tax proceeding or file a timely refund claim.

Key takeaways

• Calendar the section 6511 claim period independently of other tax disputes.
• File the administrative refund claim before suing.
• Raise same-transaction recoupment in a timely proceeding.
• Do not treat an equitable doctrine as a substitute for jurisdiction.