OCTOBER TERM, 1994
Syllabus
UNITED STATES
v. WILLIAMS
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
No. 94-395. Argued February 22, 1995-Decided April 25, 1995
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. 531-541.
(a) Williams' plea falls squarely within § 1346(a)(1)'s broad
and unequivocal language authorizing suit for "any ... tax ...
erroneously ... collected." pp. 531-532.
(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,
528
Syllabus
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, distinguished. Pp. 532-536.
(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 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)(12), 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 postdeprivation remedy available only if the taxpayer
has paid the Government in full. pp. 536-538.
(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. 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. 538-540.
24 F.3d
1143, 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,
post, p. 541. REHNQUIST, C.
J., filed a dissenting opinion, in which KENNEDY and THOMAS, JJ.,
joined,
post, p. 541.
Kent L. Jones argued the cause for the United States.
With him on the briefs were Solicitor General Days, Assistant
Attorney General Argrett, Deputy Solicitor General Wallace, William
S. Estabrook, and Kevin M. Brown.
Philip Garrett Panitz argued the cause for
respondent.
With him on the brief was
Gregory Ross Gose.
529
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,l 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.
1 Seeking summary disposition in the District Court, the
Government did not contend otherwise or question the District
Court's understanding that "the plaintiff here is left without a
remedy." App.22.
530
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.
Id., at 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 Govern-
531
ment 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. 959 (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
(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 (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:
2 The dissent, perhaps finding unappealing the Government's
defense of unjustified taking, tenders factual inferences,
post, at 545-546, both unfavorable to Williams and beyond
the parties' stipulation of uncontroverted facts. The sole issue in
this case, however, is whether one in Williams' situation has
standing to sue for a refund, and to that issue the strength of
Williams' case on the merits is not relevant.
3 See Snodgrass v. United States,
834 F.2d
537, 540 (CA5 1987); Busse
4 See
Martin v.
United States, 895 F.2d
992 (1990).
532
"The district courts shall have original jurisdiction,
concurrent with the United States Court of Federal Claims, of:
"(1) Any civil action against the United States for the
recovery of any internal-revenue tax alleged to have been
erroneously or illegally assessed or collected, or
any penalty claimed to have been collected without authority
or any sum alleged to have been excessive or in any manner
wrongfully collected under the internalrevenue laws." 28 U.
S. C. § 1346(a) (1988 ed. and Supp. V) (emphasis added).
Williams' plea to recover a tax "erroneously ... collected"
falls squarely within this language.
The broad language of § 1346(a)(1) mirrors the broad common-law
remedy the statute displaced: actions of assumpsit for money had
and received, once brought against the tax collector personally
rather than against the United States. See Ferguson, Jurisdictional
Problems in Federal Tax Controversies, 48 Iowa L. Rev. 312, 327
(1963). Assumpsit afforded a remedy to those who, like Williams,
had paid money they did not owe-typically as a result of fraud,
duress, or mistake. See H. Ballantine, Shipman on CommonLaw
Pleading 163-164 (3d ed. 1923). Assumpsit refund actions were
unavailable to volunteers, a limit that would not have barred
Williams because she paid under protest. See
Philadelphia v.
Collector, 5 Wall. 720, 731-732 (1867) ("Where the party
voluntarily pays the money, he is without remedy; but if he pays it
by compulsion of law, or under protest, or with notice that he
intends to bring suit to test the validity of the claim, he may
recover it back .... ").
III
Acknowledging the evident breadth of § 1346(a)(1), the
Government relies on the interaction of three other provisions to
narrow the waiver of sovereign immunity. The Government argues:
Under 26 U. S. C. § 7422, a party may
533
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.
It is undisputed that § 7422 requires administrative
exhaustion.5 If Williams is eligible to exhaust, she did so by
filing an administrative claim. But to show that Williams is not
eligible to exhaust, the Government relies first on 26 U. s. C. §
6511(a), which provides in part:
"(a) Period of limitation on filing claim
"Claim for credit or refund of an overpayment of any tax imposed
by this title in respect of which tax the taxpayer is required to
file a return shall be filed by the taxpayer within 3 years
from the time the return was filed or 2 years from the time the tax
was paid, whichever of such periods expires the later, or if no
return was filed by the taxpayer, within 2 years from the time the
tax was paid." (Emphasis added.)
From the statute's use of the term "taxpayer," rather than
"person who paid the tax," the Government concludes that only a
"taxpayer" may file for administrative relief under § 7422, and
thereafter pursue a refund action under 28 U. s. C. § 1346(a)(1).6
Then, to show that Williams is not
5 Section 7422(a) provides in relevant part:
"No suit or proceeding shall be maintained in any court for the
recovery of any internal revenue tax alleged to have been
erroneously or illegally assessed or collected, or of any penalty
claimed to have been collected without authority, or of any sum
alleged to have been excessive or in any manner wrongfully
collected, until a claim for refund or credit has been duly filed
with the Secretary, according to the provisions of law in that
regard, and the regulations of the Secretary established in
pursuance thereof."
6 Title 26 U. S. C. § 6532(a)(1), governing the time to file a
refund suit in court, reads in part:
"No suit or proceeding under section 7422(a) for the recovery of
any internal revenue tax, penalty, or other sum, shall be begun
before the expira-
534
a "taxpayer," the Government relies on 26 U. S. C. § 7701
(a)(14), which defines "taxpayer" as "any person subject to any
internal revenue tax." According to the Government, a party who
pays a tax is not "subject to" it unless she is the one
assessed.
The Government's argument fails at both 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,7 not a limit on who may file. To read
the term "taxpayer" as implicitly limiting administrative relief to
the party assessed is inconsistent with other provisions of the
refund scheme, which expressly contemplate refunds to parties other
than the one assessed. Thus, in authorizing the Secretary to award
a credit or refund "[i]n the case of any overpayment," 26 U. S. C.
§ 6402(a) describes the recipient not as the "taxpayer," but as
"the person who made the overpayment." Similarly, in providing for
credits and refunds for sales taxes and taxes on tobacco and
alcohol, 26 U. S. C. § 6416(a) and 26 U. S. C. § 6419(a) describe
the recipient as "the person who paid the tax."
tion of 6 months from the date of filing the claim required
under such section unless the Secretary renders a decision thereon
within that time, nor after the expiration of 2 years from the date
of mailing by certified mail or registered mail by the Secretary to
the taxpayer of a notice of the disallowance of the part of the
claim to which the suit or proceeding relates."
7 As a statute of limitations, § 6511 (a) does narrow the waiver
of sovereign immunity in § 1346(a)(1) by barring the tardy. See
United States v.
Dalm, 494 U. S. 596, 602 (1990)
("Read together, the import of these sections [§§ 1346(a)(1),
7422(a), 6511(a)] is clear: unless a claim for refund of a tax has
been filed within the time limits imposed by § 6511(a), a suit for
refund, regardless of whether the tax is alleged to have been
'erroneously,' 'illegally,' or 'wrongfully collected,' §§
1346(a)(1), 7422(a), may not be maintained in any court.").
535
Further, even if, as the Government contends, only "taxpayers"
could seek administrative relief under § 6511, the Government's
claim that Williams is not at this point a "taxpayer" is
unpersuasive. Section 7701(a)(14), defining "taxpayer," informs us
that "[w]hen used in [the Internal Revenue Code], where not
otherwise distinctly expressed or manifestly incompatible with the
intent thereof, ... [t]he term 'taxpayer' means any person subject
to any internal revenue tax." 8 That definition does not exclude
Williams. The Government reads the definition as if it said "any
person who is assessed any internal revenue tax," but these are not
Congress' words. The general phrase "subject to" is broader than
the specific phrase "assessed" and, in the tax collection context
before us, we think it is broad enough to include Williams. In
placing a lien on her home and then accepting her tax payment under
protest, the Government surely subjected Williams to a tax, even
though she was not the assessed party.
In support of its reading of "taxpayer," the Government cites
our observation in
Colorado Nat. Bank of Denver v.
Bedford, 310 U.
S. 41, 52 (1940), that "[t]he taxpayer is the person ultimately
liable for the tax itself." The Government takes this language out
of context. We were not interpreting the term "taxpayer" in the
Internal Revenue Code, but deciding whether a state tax scheme was
consistent with federallaw. In particular, we were determining
whether Colorado had imposed its service tax on a bank's customers
(which was consistent with federal law) or on the bank itself
(which was not). Though the bank collected and paid the tax, its
incidence fell on the customers. Favoring substance over form, we
said: "The person liable for the tax [the bank], primarily, cannot
always be said to be the real taxpayer.
8The Treasury's regulation, 26 CFR §301.7701-16 (1994), adds
nothing to the statute; in particular, the regulation does not
ascribe any special or limiting meaning to the statute's "subject
to" terminology.
536
The taxpayer is the person ultimately liable for the tax
itself."
Ibid. As a result, we determined that the tax had
been imposed on the customers rather than the bank. If
Colorado
Nat. Bank is relevant at all, it shows our preference for
commonsense inquiries over formalism-a preference that works
against the Government's technical argument in this case.
IV
As we have just developed, 28 U. S. C. § 1346(a)(1) clearly
allows one from whom taxes are erroneously or illegally collected
to sue for a refund of those taxes. And 26 U. S. C. § 6402(a), with
similar clarity, authorizes the Secretary to pay out a refund to
"the person who made the overpayment." The Government's strained
reading of § 1346(a)(1), we note, would leave people in Williams'
position without a remedy. See
supra, at 529, n. 1. This
consequence reinforces our 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 three
other remedies, none was realistically open to Williams. Nor would
any of the vaunted remedies be available to others in her
situation. See,
e. g., Martin v.
United States,
895 F.2d
992 (CA4 1990);
Barris v.
United States, 851 F.
Supp. 696 (WD Pa. 1994);
Brodey v.
United States, 788
F. Supp. 44 (Mass. 1991) (all ordering refunds of amounts
erroneously collected to the people who paid those amounts).
If the Government has not levied on property-as it has not
levied on Williams' home-the owner cannot challenge such a levy
under 26 U. S. C. § 7426. Nor would an action under 28 U. S. C. §
2410(a)(1) to quiet title afford meaningful relief to someone in
Williams' position. The first lien on her property, for nearly
$15,000, was filed just six months before the closing; and liens in
larger sum-over $26,000, out of $41,937-were filed only 11 days
before the closing. (Williams did not receive actual notice of
any of the liens until barely a week before the closing.)
She simply did not have
537
time to bring a quiet title action. She urgently sought to sell
the property, but a sale would have been difficult before a final
judgment in such litigation, which could have been protracted. In
contrast, a refund suit would allow her to sell the property and
simultaneously payoff the lien, leaving her free to litigate with
the Government without tying up her real property, whose worth far
exceeded the value of the Government's liens.
Nor may Williams and persons similarly situated rely on §
6325(b)(3) for such an arrangement. This provision permits the
Government to discharge a lien on property if the owner sets aside
a fund that becomes subject to a new lien; the parties then can
litigate the propriety of the new lien after the property is sold.
However, § 6325(b)(3) and its implementing regulation render this
remedy doubtful indeed, for it is available only at the
Government's discretion. See § 6325(b)(3) ("[T]he Secretary
may issue a certificate of discharge [of a federal tax lien]
of any part of the property subject to the lien if such part of the
property is sold and,
pursuant to an agreement with the
Secretary, the proceeds of such sale are to be held, as a fund
subject to the liens and claims of the United States, in the same
manner and with the same priority as such liens and claims had with
respect to the discharged property.") (emphasis added); 26 CFR §
301.63251(b)(3) (1994) ("A district director [of the Internal
Revenue Service] may,
in his discretion, issue a certificate
of discharge of any part of the property subject to a [tax lien] if
such part of the property is sold and,
pursuant to a written
agreement with the district director, the proceeds of the sale
are held, as a fund subject to the liens and claims of the United
States, in the same manner and with the same priority as the lien
or claim had with respect to the discharged property.") (emphasis
added).
So far as the record shows, the Government did not afford
Williams an opportunity to substitute a fund pursuant to
538
§ 6325(b)(3).9 This omission is not surprising, for on the
Government's theory of who may sue under § 1346(a)(1), the
Government had scant incentive to agree to such an arrangement with
people caught in Williams' bind. Under § 6325(b)(3), the Government
does not receive cash, but another lien (albeit one on a fund). In
contrast, if the Government resists a § 6325(b)(3) agreement, it is
likely to get cash immediately: property owners eager to remove a
tax lien will have to pay, as did Williams. If they may not sue
under § 1346(a)(1), their payment is nonrefundable. An agreement
pursuant to § 6325(b)(3) thus dependent on the district director's
grace cannot sensibly be described as available to Williams.
We do not agree with the Government that, if § 1346(a)(1)
authorizes some third-party suits, the levy, quiet title, and
separate-fund remedies become superfluous. Section 1346(a)(1) is a
postdeprivation remedy, available only if the taxpayer has paid the
Government in full.
Flora v.
United States, 362 U. S. 145 (1960). The
other remedies offer predeprivation relief. The levy provision in
26 U. S. c. § 7426(a)(1) is available "without regard to whether
such property has been surrendered to or sold by the Secretary."
Likewise, 28 U. S. C. § 2410 allows a property owner to have a lien
discharged without ever paying the tax. Under 26 U. S. C. §
6325(b)(3), the lien on the property is removed in exchange for a
new lien, rather than a cash payment.
V
Finally, the Government urges that allowing Williams to sue will
violate the principle that parties may not challenge
9 The dissent asserts, regarding § 6325(b)(3), that Williams
cannot complain in court without exhausting her administrative
remedy.
Post, at 547-548. But § 6325(b)(3) presents no
question of administrative exhaustion as a prelude to judicial
review, for that "remedy" lies entirely within the Government's
discretion.
539
the tax liabilities of others. According to the Government,
undermining this principle will lead to widespread abuse: In
particular, parties will volunteer to pay the tax liabilities of
others, only to seek a refund once the Government has ceased
collecting from the real taxpayer.
Although parties generally may not challenge the tax liabilities
of others, this rule is not unyielding. A taxpayer's fiduciary may
litigate the taxpayer's liability, even though the fiduciary is not
herself liable. See 26 CFR § 301.6903l(a) (1994) (the fiduciary
must "assume the powers, rights, duties, and privileges of the
taxpayer with respect to the taxes imposed by the Code");
ibid. ("The amount of the tax or liability is ordinarily not
collectible from the personal estate of the fiduciary but is
collectible from the estate of the taxpayer .... "); 15 J. Mertens,
Law of Federal Income Taxation § 58.08 (1994) (refund claims for
decedents filed by executor, administrator, or other fiduciary of
estate). Similarly, certain transferees may litigate the tax
liabilities of the transferor; if the transfer qualifies as a
fraudulent conveyance under state law, the Code treats the
transferee as the taxpayer, see 26 U. S. C. § 6901(a)(1)(A); 5 J.
Rabkin & M. Johnson, Federal Income, Gift and Estate Taxation §
73.10, pp. 73-82 to 73-87 (1992), so the transferee may contest the
transferor's liability either in tax court, see 14 Mertens,
supra, § 53.50, or in a refund suit under § 1346(a)(1). See
id., § 53.55. Furthermore, the Court has allowed a refund
action by parties who were not assessed, albeit under a different
statute. See
Stahmann v.
Vidal, 305 U. S. 61 (1938)
(cotton producers could bring a refund action for a federal cotton
ginning tax if they had paid the tax, even though the tax was
assessed against ginners rather than producers).
The burden on the principle that a party may not challenge the
tax liability of another is mitigated, moreover, because Williams'
main challenge is to the existence of a lien against
her
property, rather than to the underlying assessment on
540
her husband. That is, her primary claim is not that
her
husband never owed the tax lO_a matter that, had she not paid
these taxes herself under the duress of a lien, would not normally
be her concern. Rather, she asserts that the Government has
attached a lien on the wrong property, because the house belongs to
her rather than to him-a scenario which leaves her "subject to" the
tax in a meaningful and immediate way.
We do not find disarming the Government's forecast that allowing
Williams to sue will lead to rampant abuse. The Government's
posited scenario seems implausible; it is not clear what incentive
a volunteer has to pay someone else's taxes as a way to help that
person evade them. Nor does the Government report that such schemes
are commonplace among the millions of taxpayers in the Fourth and
Ninth Circuits, Circuits that permit persons in Williams' position
to bring refund suits. Furthermore, our holding does not authorize
the host of third-party challenges the Government fears. Williams
paid under protest, solely to gain release of the Government's lien
on her property-a lien she attacked as erroneously maintained. We
do not decide 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).
10 On motion for summary judgment in District Court, Williams
did challenge her husband's liability as well. See Plaintiff's
Notice of Motion and Cross-Motion for Summary Judgment 13. However,
counsel retreated from this claim at oral argument. Tr. of Oral
Arg. 36 ("We're not arguing that she's going to go into court and
litigate the liability of her exhusband.");
id., at 37
("[W]e're not saying that she wa[nts] [to] go into court and
litigate his tax liability. That's his problem, not hers.").
Moreover, to affirm the Ninth Circuit's judgment, we can rely
solely on Williams' standing to challenge the lien, regardless of
whether she has standing to challenge the underlying assessment on
her husband. Accordingly, we need not resolve whether Williams is
still asserting her challenge to the underlying assessment, let
alone whether she has standing to do so.
541
***
The judgment of the United States Court of Appeals for the Ninth
Circuit is
Affirmed.
JUSTICE SCALIA, concurring.
I join the opinion of the Court, except insofar as it holds that
Williams is a "taxpayer" within the meaning of 26 U. S. C. §§
6511(a) and 7701(a)(14), see
ante, at 534-536. That seems to
me unnecessary to the decision, since § 6511(a), an administrative
exhaustion provision, has too remote a bearing upon § 1346(a)(1),
the jurisdictional provision at issue, to create by implication the
significant limitation upon jurisdiction that the Government
asserts.
I acknowledge the rule requiring clear statement of waivers of
sovereign immunity, see
post, at 544 (dissenting opinion),
and I agree that the rule applies even to determination of the
scope of explicit waivers. See,
e. g., United States v.
Nordic Village, Inc., 503 U. S. 30, 34 (1992).
The rule does not, however, require explicit waivers to be given a
meaning that is implausible-which would in my view be the result of
restricting the unequivocal language of § 1346(a)(1) by reference
to § 6511(a). "'The exemption of the sovereign from suit involves
hardship enough where consent has been withheld. We are not to add
to its rigor by refinement of construction where consent has been
announced.'"
United States v.
Aetna Casualty &
Surety Co., 338 U. S. 366, 383 (1949)
(quoting
Anderson v.
Hayes Constr. Co., 243 N. Y.
140, 147, 153 N. E. 28, 29-30 (1926) (Cardozo, J.)).
CHIEF JUSTICE REHNQUIST, with whom JUSTICE KENNEDY and JUSTICE
THOMAS join, dissenting.
The Court, in an unusual departure from the bedrock principle
that waivers of sovereign immunity must be "unequivocally
expressed," holds that respondent may sue for a refund of a tax
which was not assessed against her. In so doing, it
542
outlines in some detail what it conceives to be the equities of
respondent's situation-a factor not usually of great significance
in construing the Internal Revenue Code. I believe that the Court's
picture of the equities is misleadingly inaccurate, and that its
effort to stretch the law to avoid these perceived inequities is
quite contrary to established doctrine.
The legal question at hand is whether the Government has waived
its sovereign immunity in 28 U. S. C. § 1346(a)(1) to authorize
respondent, who conceded that she "is not the taxpayer," App. 16,
to file a refund suit. In answering that question, it must be
remembered that § 1346(a)(1) is "a jurisdictional provision which
is a keystone in a carefully articulated and quite complicated
structure of tax laws."
Flora v.
United States,
362 U. S. 145,
157 (1960). Section "1346(a)(1) must be read in conformity with
other statutory provisions [26 U. S. C. §§ 7422(a) and 6511(a)]
which qualify a taxpayer's right to bring a refund suit."
United
States
Section 1346(a)(1) provides:
"The district courts shall have original jurisdiction,
concurrent with the United States Court of Federal Claims, of:
"(1) Any civil action against the United States for the recovery
of any internal-revenue tax alleged to have been erroneously or
illegally assessed or collected, or any penalty claimed to have
been collected without authority or any sum alleged to have been
excessive or in any manner wrongfully collected under the
internalrevenue laws." 28 U. S. C. § 1346(a)(1) (1988 ed. and Supp
V).
The jurisdiction conferred by § 1346(a)(1) is limited by 26 U.
S. C. § 7422(a). Like § 1346(a)(1), § 7422(a) contains no language
limiting a refund suit to the "taxpayer," but its "express language
... conditions a district court's authority
543
to hear a refund suit."
Dalm, supra, at 609, n. 6. It
requires that "a claim for refund or credit [first be] filed with
the Secretary, according to the provisions of law in that regard."
26 U. S. C. § 7422(a). There are two "provisions of law" dealing
with such claims. Title 26 U. S. C. § 6511(a) provides in part that
a
"[c]laim for credit or refund of an overpayment of any tax
imposed by this title in respect of which tax the taxpayer
is required to file a return shall be filed by the taxpayer
within 3 years from the time the return was filed or 2 years from
the time the tax was paid." (Emphasis added.)
Title 26 U. S. C. § 6532(a), which imposes a period of
limitations on suits for refunds in court and is entitled "Suits by
taxpayers for refund," states that
"[n]o suit or proceeding under section 7422(a) ... shall be
begun before the expiration of 6 months from the date of filing the
claim required under such section ... , nor after the expiration of
2 years from the date of mailing by certified mail or registered
mail by the Secretary to the taxpayer of a notice of the
disallowance" (emphasis added).
Both §§ 6511(a) and 6532(a) clearly are limited to the
"taxpayer," and the term "taxpayer" is in turn defined in §
7701(a)(14) to mean "any person subject to any internal revenue
tax." Reading these provisions as a whole, the conclusion is
inescapable that only a "taxpayer" (§ 7701(a)(14)) who has filed a
timely claim for refund (under § 6511(a)) and a timely suit for
refund (under § 6532(a)) is authorized to maintain a suit for
refund in any court (§ 7422(a)) for an "erroneously or illegally
assessed or collected" tax (28 U. S. C. § 1346(a)(1)).
The Court describes 26 U. S. C. § 6511(a) as providing "only a
deadline for filing for administrative relief, not a limit on who
may file."
Ante, at 534. But the "plain terms" of
544
§ 6511(a),
ibid., do impose such a limit-a refund claim
may be filed only "by the taxpayer." The Court discounts the notion
that the term "taxpayer" limits administrative relief to the party
assessed by concluding that such a construction "is inconsistent
with other provisions of the refund scheme."
Ibid. The
"other provisions" cited by the Court, however, are in no way
inconsistent with the above construction of § 6511(a): the fact
that the Secretary is authorized to refund any overpayment to "the
person who made the overpayment," § 6402(a), or to "the person who
paid the tax," §§ 6416(a), 6419(a), does not mean that such a
person may bring suit if she disagrees with the Secretary's
calculation of the amount of the overpayment. And even if such an
inconsistency did exist, an "inconsistency" is not enough to carry
the day when dealing with a waiver of sovereign immunity;
"inconsistency" simply means ambiguity, and because a waiver of
sovereign immunity must be "'unequivocally expressed,'" any
ambiguity is construed in favor of immunity.
United States
v.
Nordic Village, Inc., 503 U. S. 30, 33
(1992).
The Court proceeds to argue that, even if only "taxpayers" could
seek administrative relief under § 6511, respondent qualifies as a
"taxpayer."
Ante, at 535. That term is defined in the Code
as "any person subject to any internal revenue tax." § 7701(a)(14).
The Court says this phrase is "broad enough to include
[respondent]" because the Government "place[d] a lien on her home
and then accept[ed] her tax payment."
Ante, at 535. This is
remarkably imprecise reasoning.
Respondent was subjected to a tax
lien, but this does not
mean she was "subject to any internal revenue tax" in the normal
sense of that phrase as used in the Code. The tax was assessed
against Rabin, not respondent, and respondent has equivocated as to
whether she is simply challenging the lien or also challenging
Rabin's underlying tax assessment. The underlying tax, and the lien
to enforce liability for that tax, are obviously two different
things. One may have a tax
545
assessed against him, and if he pays it in a timely manner he
will never be subject to a lien. Conversely, one against whom the
tax was not assessed may nonetheless be subject to a lien to
enforce collection of that tax. The Court says it will decide here
only the challenge to the lien, thereby leaving the tax totally
unchallenged in this proceeding.
Ante, at 539-540, and n.
10. This is quite contrary to the language quoted above, which
allows only the person "subject to any internal revenue
tax"
to file the claim for refund which is the necessary prerequisite
for bringing a refund suit under § 1346(a)(1).
The Court believes its position is reinforced by its conclusion
that respondent is left without a remedy if she cannot bring a
refund suit under § 1346(a)(1). Equities ordinarily do not assume
such a dominant role when dealing with questions of sovereign
immunity, but if they are to play that role, the equities ought to
be those which can be confirmed on the record before us.
The undisputed facts of record which evoke the Court's sympathy
are these. Rabin and respondent owned the property in question as
joint tenants. In June 1987, and in March 1988, the Government made
federal employment tax assessments totaling nearly $15,000 against
Rabin. A federal tax lien securing the taxes and interest owed by
Rabin arose "at the time the assessment [was] made," 26 U. s. C. §
6322, and reached "all property and rights to property, whether
real or personal, belonging to" Rabin at that time. § 6321. In
October 1988, Rabin and respondent entered into a "transfer
agreement," whereby Rabin agreed to convey his interest in the
property to respondent and to indemnify her for the payment of any
liens on the property. Rabin transferred his interest in the
property to respondent by executing a quitclaim deed. The deed,
recorded nearly three months before any divorce proceedings had
commenced, described respondent as "'an unmarried woman.'" App. 14.
This misrepresentation-stating that respondent was "'an
546
unmarried woman'" at the time of the transfer-raises the
question whether the property was conveyed to respondent "in
contemplation of divorce," as the Court says,
ante, at 530,
or whether it was done in an attempt to shield Rabin's assets from
the tax lien. In November 1988, the Government recorded notice of
the federal tax lien. Respondent commenced divorce proceedings
against Rabin in January 1989, and in May 1989, while the divorce
petition was pending, respondent entered into an agreement to sell
the property. In June 1989, the Government filed notice of
additional tax liens, including a lien in respondent's name as
nominee, agent, alter ego, and holder of a beneficial interest in
the property for Rabin. The closing date for the sale of the
property was July 3, 1989.
Respondent thus faced a situation not uncommon to those who seek
to transfer a clear title to real property: Her property was
subject to federal tax liens. But despite the Court's suggestion to
the contrary, respondent clearly had available to her at least two
remedies. She could have brought an action to "quiet title" under
28 U. S. C. § 2410(a)(1), or she could have sought from the
Secretary a "certificate of discharge" of the property under 26 U.
S. C. § 6325(b)(3).
The Court, relying on respondent's bald assertion that she had
no notice of the liens until the week before the closing, concludes
that a quiet title action under § 2410(a) would not have afforded
respondent meaningful relief because only "a refund suit would
allow her to sell the property and simultaneously payoff the lien,
leaving her free to litigate with the Government without tying up
her real property."
Ante, at 537. This simply begs the
question. Obviously, a quiet title action brought at the time
respondent agreed to sell the property could not have proceeded to
judgment before the closing date, but that is true of lawsuits to
quiet title against all sorts of other liens that may prevent the
conveyance of clear title. The existence of outstanding liens on
property
547
is a fact of life, and heretofore lienors-Ieast of all the
United States-have not been required to afford the legal equivalent
of "same day service" to finally adjudicate title before the
closing date.
Respondent was not left only with the remedy of a quiet title
action; she could have sought from the Secretary a "certificate of
discharge" of the property under 26 U. S. C. § 6325(b)(3) by
agreeing to hold the proceeds of the sale of the property "as a
fund subject to the liens and claims of the United States," with
the propriety of the liens to be litigated in a subsequent action
under § 7426(a)(3). The Court finds this remedy inadequate because
it was a "doubtful" remedy upon which respondent could not "rely,"
since the certificate of discharge could issue only in the exercise
of the Secretary's discretion.
Ante, at 537. That the
Secretary must exercise discretion does not make § 6325(b)(3) a
"doubtful" remedy. Congress appropriately granted the Secretary
discretion to determine, on a case-by-case basis, whether the
proceeds from the sale of property will be sufficient to protect
the Government's tax lien. And because the worth of respondent's
property "far exceeded the value of the Government's liens,"
ibid., the Secretary most likely would have issued a
certificate of discharge in this case. But respondent never sought
to invoke this remedy, and the cases are legion holding that a
person may not claim an administrative remedy was inadequate if she
never sought to invoke it. See,
e. g., McGee v.
United
States, 402 U. S.
479, 483 (1971) (a Selective Service registrant may not
complain in court if the registrant "has failed to pursue normal
administrative remedies and thus has sidestepped a corrective
process which might have cured or rendered moot the very defect
later complained of");
Geo. F. Alger Co. v.
Peck, 74
S. Ct. 605, 606607, 98 L. Ed. 1148, 1150 (1954) (Reed, J., in
chambers) (a company may not complain in court when it failed to
take advantage of an available administrative remedy, even though
that remedy may "cause inconvenience and ex-
548
pense"); cf.
McCarthy v.
Madigan, 503 U. S. 140, 145 (1992)
(exhaustion of administrative remedies "appl[ies] with particular
force when the action under review involves exercise of the
agency's discretionary power or when the agency proceedings in
question allow the agency to apply its special expertise") (citing
McKart v.
United States, 395 U. S. 185, 194
(1969)).
To make a bad matter worse, the Court faults the Government for
not "afford[ing respondent] an opportunity" to pursue this remedy.
Ante, at 537. This makes one wonder whether we are entering
an era where internal revenue agents must give warnings to
delinquent taxpayers and lienees analogous to the warnings required
in criminal cases by our decision in
Miranda v.
Arizona, 384
U. S. 436 (1966). Certainly the Court has never so held before,
and one may hope that it would not so hold in the future. Indeed,
since respondent concedes in her brief that the Government was not
required to tell her about the discretionary relief available,
Brief for Respondent 20, it is surprising to see the Court suggest
to the contrary.
If this case involved the interpretation of a statute designed
to confer new benefits or rights upon a class of individuals,
today's decision would be more understandable, since such a statute
would be "entitled to a liberal construction to accomplish its
beneficent purposes."
Cosmopolitan Shipping Co. v.
McAllister, 337 U. S. 783 (1949)
(construing the Jones Act); see also
Atchison, T. & S.
F. R. Co. v.
Buell, 480 U. S. 557, 562 (1987)
(stating that the Federal Employers' Liability Act is a "broad
remedial statute" which must be given a "'liberal construction' ").
But it would surely come as news to the millions of taxpayers in
this country that the Internal Revenue Code has a "beneficent
purpose" as far as they are concerned. I t does not, and the Court
is mistaken to decide this case in a way that can only be justified
if it does.
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