U.S. v. Williams

• Decision Date: 25 April 1995
• Docket Number: 931170,94395
• Citation: 115 S.Ct. 1611,514 U.S. 527,131 L.Ed.2d 608
• Parties: UNITED STATES, Petitioner, v. Lori Rabin WILLIAMS
• Court: U.S. Supreme Court

514 U.S. 527

115 S.Ct. 1611

131 L.Ed.2d 608

UNITED STATES, Petitioner,

v Lori Rabin WILLIAMS.

No. 94-395.

Supreme Court of the United States

Argued Feb. 22, 1995.

Decided April 25, 1995.

Syllabus ^*

The Government assessed a tax against Jerrold Rabin and placed a lien on all of his property, including his interest in the home he jointly owned with respondent Lori Williams, his then-wife. Before the Government recorded its lien, Rabin transferred his interest in the home to Williams, as part of a division of assets in contemplation of divorce. Although Williams was not personally liable for the tax, she paid it under protest to remove the lien and sued for a refund under 28 U.S.C. § 1346(a)(1), which waives the Government's sovereign immunity from suit in "[a]ny civil action . . . for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected." The Government responded that it was irrelevant whether the Government had a right to Williams' money because she lacked standing to seek a refund under § 1346(a)(1). According to the Government, that provision authorizes refund actions only by the assessed party, i.e., Rabin. The District Court accepted this jurisdictional argument, but the Court of Appeals reversed.

Held: Section 1346(a)(1) authorizes a refund suit by a party who, though not assessed a tax, paid the tax under protest to remove a federal tax lien from her property. Pp. __.

(a) Williams' plea falls squarely within § 1346(a)(1)'s broad and unequivocal language authorizing suit for "any . . . tax . . . erroneously . . . collected." Pp. __.

(b) The Government's strained reliance on the interaction of three other provisions to narrow § 1346(a)(1)'s waiver of sovereign immunity is rejected. The Government argues: Under 26 U.S.C. § 7422, a party may not bring a refund action without first exhausting administrative remedies; under 26 U.S.C. § 6511, only a "taxpayer" may exhaust; under 26 U.S.C. § 7701(a)(14), Williams is not a taxpayer. The Government's argument fails at two statutory junctures. First, the word "taxpayer" in § 6511(a)—the provision governing administrative claims—cannot bear the weight the Government puts on it. This provision's plain terms provide only a deadline for filing for administrative relief, not a limit on who may file. Further, the Government's claim that Williams is not at this point a "taxpayer" is unpersuasive. In placing a lien on her home and then accepting the tax payment she made under protest, the Government surely subjected Williams to a tax, even though she was not the assessed party. Colorado Nat. Bank of Denver v. Bedford, 310 U.S. 41, 52, 60 S.Ct. 800, 805, 84 L.Ed. 1067, distinguished. Pp. __.

(c) The Government's strained reading of § 1346(a)(1) would leave people in Williams' position without a remedy. This consequence reinforces the conclusion that Congress did not intend refund actions under § 1346(a)(1) to be unavailable to persons situated as Lori Williams is. Though the Government points to the levy, quiet-title, and separate-fund remedies authorized by 26 U.S.C. § 7426, 28 U.S.C. § 2410(a)(1), and 26 U.S.C. § 6325(b)(3), respectively, none of those realistically would be available to Williams or others in her situation. Moreover, because those remedies offer pre-deprivation relief, they do not become superfluous if some third party suits are authorized by § 1346(a)(1), a post-deprivation remedy available only if the taxpayer has paid the Government in full. Pp. __.

(d) The principle on which the Government relies, that parties generally may not challenge the tax liabilities of others, is not unyielding. See, e.g., Stahmann v. Vidal, 305 U.S. 61, 59 S.Ct. 41, 83 L.Ed. 41. The burden on that principle is mitigated here because Williams' main challenge is to the existence of a lien against her property, rather than to the underlying assessment on her husband. Moreover, the Government's forecast that allowing her to sue will lead to rampant abuse by parties volunteering to pay others' taxes seems implausible. In any event, the disposition herein does not address the circumstances, if any, under which a party who volunteers to pay a tax assessed against someone else may seek a refund under § 1346(a). Pp. __.

24 F.3d 1143 (CA 9 1994), affirmed.

GINSBURG, J., delivered the opinion of the Court, in which STEVENS, O'CONNOR, SCALIA, SOUTER, and BREYER, JJ., joined. SCALIA, J., filed a concurring opinion. REHNQUIST, C.J., filed a dissenting opinion, in which KENNEDY and THOMAS, JJ., joined.

Kent L. Jones, Washington, DC, for petitioner.

Philip Garrett Panitz, Camarillo, CA, for respondent.

Justice GINSBURG delivered the opinion of the Court.

This case presents the question whether respondent Lori Williams, who paid a tax under protest to remove a lien on her property, has standing to bring a refund action under 28 U.S.C. § 1346(a)(1), even though the tax she paid was assessed against a third party. We hold that respondent has standing to sue for a refund. Respondent's suit falls within the broad language of § 1346(a)(1), which gives federal courts jurisdiction to hear "[a]ny civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected," and only a strained reading of other relevant provisions would bar her suit. She had no realistic alternative to payment of a tax she did not owe,¹ and we do not believe Congress intended to leave parties in respondent's position without a remedy.

I

Before this litigation commenced, respondent Lori Williams and her then-husband Jerrold Rabin jointly owned their home. As part owner of a restaurant, Rabin personally incurred certain tax liabilities, which he failed to satisfy. In June 1987 and March 1988, the Government assessed Rabin close to $15,000 for these liabilities, and thereby placed a lien in the assessed amount on all his property, including his interest in the house. See 26 U.S.C. § 6321 ("If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount . . . shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person."). The Government has not alleged that Williams is personally liable for these or any subsequent assessments.

Meanwhile, Rabin and Williams divided their marital property in contemplation of divorce. Williams did not have notice of the lien when Rabin deeded his interest in the house to her on October 25, 1988, for the Government did not file its tax lien until November 10, 1988. As consideration for the house, Williams assumed three liabilities for Rabin (none of them tax liabilities) totaling almost $650,000. App. 7-8 (Statement of Uncontroverted Facts presented by Attorneys for United States). In the ensuing months, the Government made further assessments on Rabin in excess of $26,000, but did not file notice of them until June 22, 1989.

Williams entered a contract on May 9, 1989, to sell the house, and agreed to a closing date of July 3. App. 8. One week before the closing, the Government gave actual notice to Williams and the purchaser of over $41,000 in tax liens which, it claimed, were valid against the property or proceeds of the sale. The purchaser threatened to sue Williams if the sale did not go through on schedule. Believing she had no realistic alternative none having been suggested by the Government—Williams, under protest, authorized disbursement of $41,937 from the sale proceeds directly to the Internal Revenue Service so that she could convey clear title.

After the Government denied Williams' claim for an administrative refund, she filed suit in the United States District Court for the Central District of California, claiming she had taken the property free of the Government's lien under 26 U.S.C. § 6323(a) (absent proper notice, tax lien not valid against purchaser). To enforce her rights, she invoked 28 U.S.C. § 1346(a)(1), which waives the Government's sovereign immunity from suit by authorizing federal courts to adjudicate "[a]ny civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected." In a trial on stipulated facts, the Government maintained that it was irrelevant whether the Government had a right to Williams' money; her plea could not be entertained, the Government insisted, because she lacked standing to seek a refund under § 1346(a)(1).² According to the Government, that provision authorizes actions only by the assessed party, i.e., Rabin. The District Court accepted this jurisdictional argument, relying on precedent set in the Fifth and Seventh Circuits.³

The United States Court of Appeals for the Ninth Circuit reversed, 24 F.3d 1143, 1145 (1994), guided by Fourth Circuit precedent.⁴ To resolve this conflict among the Courts of Appeals, we granted certiorari, 513 U.S. ---- (1994), and now affirm.

II

The question before us is whether the waiver of sovereign immunity in § 1346(a)(1) authorizes a refund suit by a party who, though not assessed a tax, paid the tax under protest to remove a federal tax lien from her property. In resolving this question, we may not enlarge the waiver beyond the purview of the statutory language. Department of Energy v. Ohio, 503 U.S. 607, 614-616, 112 S.Ct. 1627, 1632-1634, 118 L.Ed.2d 255 (1992). Our task is to discern the "unequivocally expressed" intent of Congress, construing ambiguities in favor of immunity. United States v. Nordic Village, Inc., 503 U.S. 30, 33, 112 S.Ct. 1011, 1014, 117 L.Ed.2d 181 (1992) (internal quotation marks omitted).

To fathom the congressional instruction, we turn first to the language of § 1346(a). This provision does not say that only the person assessed may sue. Instead, the statute uses broad language:

"The district courts shall have original jurisdiction,...