Flora v. United States

Flora v. United States, 357 U.S. 63, affirmed on rehearing, 362 U.S. 145, was a case in which the Supreme Court of the United States held that a taxpayer generally must pay the full amount of an income tax deficiency assessed by the Commissioner of Internal Revenue before he may challenge its correctness by a suit in a federal district court for refund under 28 U.S.C. § 1346. The Supreme Court agreed with the Commissioner of Internal Revenue, stating that the full payment rule requires the entire amount of an asserted deficiency to be paid before a refund suit may be maintained.

Importance

If the taxpayer chooses to pay less than the deficiency asserted, the taxpayer's only remedies are a deficiency proceeding in the Tax Court or, in a bankruptcy case, a determination under section 505 of the US Bankruptcy Code. That rule can be a problem for a taxpayer who lets the 90-day period expire and then cannot fully pay because of insufficient assets.