The Federal Court of Claims recently denied a U.S. executor’s claim for a federal tax refund when the IRS had previously issued a refund check to a non-U.S. ancillary executor. At issue was the estate of a deceased U.S. citizen who died domiciled in France. Unrelated individuals, the Plaintiffs, administered her estate in the U.S. The decedent”s son served as an ancillary executor in France.

The U.S. executor initially paid from the estate about $17.5 million in federal estate taxes and requested an extension of time to file along with the payment of the tax. Subsequent to this, the son filed an estate tax return claiming a $10 million refund, which the IRS paid to him. The son’s agent negotiated the check.

The U.S. executor subsequently filed for a $5 million refund, which was denied on the basis that the refund had already been paid. The U.S. executor filed suit, claiming that the check was forged or fraudulently negotiated and the IRS breached an implied in fact contract between it and the U.S. executor. The Court of Claims disagreed. Because the check was issued to the son and duly negotiated, no forgery or fraud was present. Moreover, the court held that the U.S. executor failed to establish a basis for an implied in fact contract.