Case: 14-31164 Document: 00513202496 Page: 1 Date Filed: 09/22/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 14-31164 FILED
September 21, 2015
Lyle W. Cayce
KATHRYN ROTHKAMM, Clerk
Plaintiff - Appellant
v.
UNITED STATES OF AMERICA; INTERNAL REVENUE SERVICE,
Defendants - Appellees
Appeal from the United States District Court
for the Middle District of Louisiana
Before JOLLY, HIGGINBOTHAM, and DAVIS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Plaintiff-Appellant Kathryn Rothkamm and her husband filed separate
tax returns. Rothkamm’s husband incurred a tax liability, and the IRS levied
her account at a bank, which she asserts was her separate property. She
initially sought a Taxpayer Assistance Order (“TAO”) through the Taxpayer
Advocate Service but obtained no relief. She then filed an administrative claim
and, when that was denied, filed this suit for wrongful levy. The IRS filed a
motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) on the ground
that the suit was untimely under the applicable nine-month statute of
limitations and had not been tolled by her TAO application. The district court
concluded that Rothkamm was not a “taxpayer” for purposes of the TAO
Case: 14-31164 Document: 00513202496 Page: 2 Date Filed: 09/22/2015
No. 14-31164
statute, 26 U.S.C. § 7811, and that, even if she was, § 7811(d) would not toll
the running of the statute of limitations in this case. Accordingly, the district
court dismissed for lack of subject matter jurisdiction. Rothkamm appealed,
arguing both that she is a “taxpayer” under section 7811 and that the nine-
month statute of limitations was tolled by her TAO application. For the reasons
set forth below, we agree on both grounds and therefore reverse and remand.
I. BACKGROUND
Plaintiff-Appellant Kathryn Rothkamm and Defendants-Appellees
United States of American and the Internal Revenue Service (collectively the
“Government” or “IRS”) agree on the relevant facts, as the district court set out
below:
Rothkamm is the owner of a certificate of deposit
maintained in an account at IberiaBank, located at
7325 Highland Road, Baton Rouge, Louisiana. On
March 6, 2012 the Internal Revenue Service (“IRS”)
issued to IberiaBank a Notice of Levy for Rothkamm’s
account to satisfy certain tax liabilities of Kathryn’s
husband, Chester J. Rothkamm, Jr. Thereafter, on
April 18, 2012, IberiaBank remitted to the IRS the full
contents of Rothkamm’s account, consisting of
$73,360.41.
Less than two weeks later, on April 30, 2012,
Rothkamm attempted to challenge the IRS’s levy by
filing an application for assistance with the Taxpayer
Advocate Service (“TAS”). On October 11, 2012, having
determined that it “was unable to provide any
assistance to [Rothkamm],” the TAS “closed”
Rothkamm’s case.
Still seeking relief, on May 15, 2013 Rothkamm filed
with the IRS an administrative claim for wrongful levy
pursuant to 26 U.S.C. § 6343(b). The IRS denied
Rothkamm’s claim on July 1, 2013. Finally, on
September 6, 2013, Rothkamm sued the IRS for
wrongful levy in this Court, pursuant to 26 U.S.C.
2
Case: 14-31164 Document: 00513202496 Page: 3 Date Filed: 09/22/2015
No. 14-31164
§ 7426. On November 8, 2013, the Government filed
the motion to dismiss that is the subject of this Order. 1
Rothkamm filed this suit for wrongful levy under 26 U.S.C. § 7426(a)(1),
which provides:
(1) Wrongful levy.--If a levy has been made on
property or property has been sold pursuant to a levy,
any person (other than the person against whom is
assessed the tax out of which such levy arose) who
claims an interest in or lien on such property and that
such property was wrongfully levied upon may bring a
civil action against the United States in a district court
of the United States. Such action may be brought
without regard to whether such property has been
surrendered to or sold by the Secretary. 2
Section 7426(i) provides that the nine-month statute of limitations in 26 U.S.C.
§ 6532(c) applies; this period may be tolled by filing an administrative claim
for return of the wrongfully levied property under 26 U.S.C. § 6343(b). 3
As the district court explained, the IRS levied Rothkamm’s account on
April 18, 2012. Thus, the general statute of limitations would have expired on
January 18, 2013, absent any tolling. Rothkamm’s administrative wrongful
levy claim, which she filed on May 15, 2013, would toll the running of the
statute of limitations if filed within the statute of limitations. Thus, the core
question is whether, as Rothkamm contends, the statute of limitations was
tolled while her application for a TAO was pending before the TAS. If so, her
administrative claim under § 6343(b) would also have been timely, and the
statute of limitations for filing suit would have been suspended until January
1 Rothkamm v. United States, No. 3:13-CV-00589-BAJ, 2014 WL 4986884, at *1 (M.D.
La. Sept. 15, 2014) (footnote and record citations omitted).
2 26 U.S.C. § 7426(a)(1).
3 26 U.S.C. § 6532(c)(1) (generally concerning “suits by persons other than taxpayers”).
3
Case: 14-31164 Document: 00513202496 Page: 4 Date Filed: 09/22/2015
No. 14-31164
1, 2014, months after this suit was filed on September 6, 2013.” 4 The district
court summarized the key question and the parties’ arguments as follows:
To the extent that it is not already clear, the parties
concede that the dispositive issue is whether
Rothkamm’s April 30, 2012 application for assistance
to the TAS tolled the 9-month period of limitations for
filing her wrongful levy suit. Rothkamm insists that
her application to the TAS stopped the clock on her
wrongful levy claim because she “is able to use the
suspension of the statute of limitations provided by [26
U.S.C. §] 7811(d).” The Government disagrees,
arguing: (1) 26 U.S.C. affords relief to “taxpayer[s]”
and, as it relates to this case, Rothkamm “is not a
taxpayer under any definition because she was not
subject to a tax”; and (2), even if Rothkamm is a
taxpayer within the meaning of section 7811, she is not
entitled to tolling pursuant to section 7811(d) because
“the suspensions of the statute of limitations periods
[described there] are for IRS actions, not taxpayer
[actions][.]” 5
The district court therefore concluded that Rothkamm was not a
“taxpayer” for purposes of the TAO statute, 26 U.S.C. § 7811, and even if she
was, the statute could not toll the running of the statute of limitations. 6 Thus,
the district court concluded that it had no subject matter jurisdiction to hear
Rothkamm’s claim against the IRS, granted the IRS’s motion to dismiss, and
dismissed Rothkamm’s suit with prejudice. Rothkamm appealed.
II. Standard of Review
We review the district court’s dismissal for lack of subject matter
jurisdiction under Rule 12(b)(1) de novo. 7 The central question is whether
4 Rothkamm, 2014 WL 4986884, at *2 (record citations omitted).
5 Id. (record citations omitted).
6 Id. at *3.
7 Davis v. United States, 597 F.3d 646, 649 (5th Cir. 2009) (citing St. Tammany Parish
ex rel. Davis v. Fed. Emergency Mgmt. Agency, 556 F.3d 307, 315 (5th Cir. 2009)).
4
Case: 14-31164 Document: 00513202496 Page: 5 Date Filed: 09/22/2015
No. 14-31164
Congress intended to waive sovereign immunity under these particular
circumstances. The Supreme Court has “said on many occasions that a waiver
of sovereign immunity must be ‘unequivocally expressed’ in statutory text.” 8
Legislative history cannot supply a waiver that is not
clearly evident from the language of the statute. Any
ambiguities in the statutory language are to be
construed in favor of immunity . . . so that the
Government’s consent to be sued is never enlarged
beyond what a fair reading of the text requires.
Ambiguity exists if there is a plausible interpretation
of the statute that would not authorize money
damages against the Government. 9
Nevertheless,
Although this canon of interpretation requires an
unmistakable statutory expression of congressional
intent to waive the Government’s immunity, Congress
need not state its intent in any particular way. We
have never required that Congress use magic words.
To the contrary, we have observed that the sovereign
immunity canon “is a tool for interpreting the law” and
that it does not “displac[e] the other traditional tools
of statutory construction.” Richlin Security Service Co.
v. Chertoff, 553 U.S. 571, 589, 128 S. Ct. 2007, 170 L.
Ed. 2d 960 (2008). What we thus require is that the
scope of Congress’ waiver be clearly discernable from
the statutory text in light of traditional interpretive
tools. If it is not, then we take the interpretation most
favorable to the Government. 10
In this case, we conclude the district court erred in determining the
definition of “taxpayer” under § 7811 by failing to supply the Internal Revenue
Code’s generally applicable definition set out in § 7701; and the court further
8 F.A.A. v. Cooper, 132 S. Ct. 1441, 1448, 182 L. Ed. 2d 497 (2012) (citing cases).
9 Id. (citations omitted).
10 Id.
5
Case: 14-31164 Document: 00513202496 Page: 6 Date Filed: 09/22/2015
No. 14-31164
erred in its interpretation of § 7811(d)’s tolling provision by failing to follow the
plain language of the statute and associated regulations.
III. Analysis
A. Applicable Law
Resolution of this appeal turns on the TAO statute, 26 U.S.C. § 7811,
which generally provides:
(a) Authority to issue.--
(1) In general.--Upon application filed by a
taxpayer with the Office of the Taxpayer
Advocate (in such form, manner, and at such
time as the Secretary shall by regulations
prescribe), the National Taxpayer Advocate may
issue a Taxpayer Assistance Order if--
(A) the National Taxpayer Advocate
determines the taxpayer is suffering or
about to suffer a significant hardship [as
defined in § 7811(a)(2)] as a result of the
manner in which the internal revenue
laws are being administered by the
Secretary; or
(B) the taxpayer meets such other
requirements as are set forth in
regulations prescribed by the Secretary. 11
Among other things, the statute provides for tolling of statutes of limitations
during the pendency of an application for a TAO under certain circumstances;
those provisions are discussed below.
The IRS has issued regulations for section 7811, found in 26 C.F.R. §
301.7811-1. Our interpretation is guided by the Supreme Court’s two-step test
11 26 U.S.C. § 7811(a).
6
Case: 14-31164 Document: 00513202496 Page: 7 Date Filed: 09/22/2015
No. 14-31164
set out in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837
(1984):
When a court reviews an agency’s construction of the
statute which it administers, it is confronted with two
questions. First, always, is the question whether
Congress has directly spoken to the precise question
at issue. If the intent of Congress is clear, that is the
end of the matter; for the court, as well as the agency,
must give effect to the unambiguously expressed
intent of Congress. If, however, the court determines
Congress has not directly addressed the precise
question at issue, the court does not simply impose its
own construction on the statute, as would be necessary
in the absence of an administrative interpretation.
Rather, if the statute is silent or ambiguous with
respect to the specific issue, the question for the court
is whether the agency’s answer is based on a
permissible construction of the statute. 12
In this case, not only is the language of the Internal Revenue Code clear and
unambiguous and thus controlling, but the associated regulations are in accord
with the statute.
B. Rothkamm Is a “Taxpayer” under Section 7811.
The district court concluded that Rothkamm cannot be a “taxpayer”
under section 7811, reasoning as follows:
The Court is persuaded by the Government’s position
and determines that Rothkamm’s application for
assistance to the TAS did not toll the 9–month period
of limitations for filing her wrongful levy suit. First,
the Court observes that the function of the TAS is to
“assist taxpayers in resolving problems with the
Internal Revenue Service.” 26 U.S.C. § 7803(c)(2)(A)(i)
(emphasis added); see Hyler v. C.I.R., 84 T.C.M. (CCH)
717 (T.C. 2002), aff’d 104 F. App’x 13 (9th Cir. 2004).
Despite her protests to the contrary, it is far from clear
12 467 U.S. at 842-43 (footnotes omitted).
7
Case: 14-31164 Document: 00513202496 Page: 8 Date Filed: 09/22/2015
No. 14-31164
whether Rothkamm—a wrongful levy claimant—is a
“taxpayer” within the meaning of the relevant
statutes. See 26 U.S.C. §§ 7803(c), 7811; compare
United States v. Williams, 514 U.S. 527, 535–36 (1995)
(holding that a party who, though not assessed a tax,
paid a tax under protest to remove a federal tax lien
from her property was a “taxpayer” entitled to bring
administrative tax refund claim), with EC Term of
Years Trust v. United States, 550 U.S. 429, 435 n. 4
(2007) (“It has been commonly understood that
Williams did not extend § 1346(a)(1) to parties in the
[wrongful levy claimant’s] position.”); see also Wagner
v. United States, 545 F.3d 298, 303 (5th Cir. 2008). 13
The district court erred by assuming, without saying so, that the term
“taxpayer” is either undefined in the TAO statute, § 7811, or that it is defined
narrowly to mean only the person against whom a tax is assessed. In fact, the
Internal Revenue Code supplies a default definition of “taxpayer” for all of Title
26 which is broad enough to include Rothkamm in these circumstances. Section
7701 of the Internal Revenue Code, 26 U.S.C. § 7701, provides, in relevant part:
(a) When used in this title, where not otherwise
distinctly expressed or manifestly incompatible with
the intent thereof-- . . .
(14) Taxpayer.--The term “taxpayer” means
any person subject to any internal revenue tax. 14
Although the district court cited Williams, it failed to apply it properly.
In Williams, the question was whether the plaintiff, Lori Williams, “who paid
a tax under protest to remove a lien on her property, ha[d] 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.” 15 Section 1346(a)(1) authorized “[a]ny civil
13 Rothkamm, 2014 WL 4986884, at *3.
14 26 U.S.C. § 7701(a)(14).
15 514 U.S. at 529.
8
Case: 14-31164 Document: 00513202496 Page: 9 Date Filed: 09/22/2015
No. 14-31164
action against the United States for the recovery of any internal-revenue tax
alleged to have been erroneously or illegally assessed or collected.” The
Government argued that “[u]nder 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.” 16
The Government argued that because “taxpayer” was not defined in
§ 6511 to mean “person who paid the tax,” the definition of “taxpayer” must be
supplied by the Internal Revenue Code’s general definition set out in
§ 7701(a)(14), which the Government asserted narrowly meant only the person
against whom a tax was assessed. 17 The Supreme Court disagreed, explaining
that § 7701(a)(14)’s definition of “taxpayer,” which is generally applicable to
the entire Internal Revenue Code, is broad enough to include a person who
pays a tax assessed against another:
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.” 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. 18
16 Id. at 532-33.
17 Id. at 533-34.
18 Id. at 535 (footnotes omitted).
9
Case: 14-31164 Document: 00513202496 Page: 10 Date Filed: 09/22/2015
No. 14-31164
In rejecting the Government’s argument concerning one of its prior cases
which did not concern the Internal Revenue Code, the Court noted that, if that
case “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.” 19 Because the Court concluded that § 7701(a)(14)’s
definition of “taxpayer” encompassed Williams, it held that Williams was a
“taxpayer” for purposes of § 6511 and therefore was entitled to exhaust her
administrative remedies, a prerequisite to suit under § 1346(a)(1), which did
not itself use the word “taxpayer.” The Court ultimately concluded that
§ 1346(a)(1) authorized Williams to sue the government to obtain a refund of
the wrongfully collected taxes, reasoning that her claim fell under the broad
terms of § 1346(a)(1) and did not give rise to relief under any other more
specific statute. 20
Following Williams, Congress did not revise § 7701(a)(14), so the
Supreme Court’s interpretation stands. Thus, under § 7701(a)(14), the word
“taxpayer” means not only the person against whom a tax is assessed (here,
Rothkamm’s husband) but also the person who actually pays the tax (here,
Rothkamm herself). Pursuant to § 7701(a), that definition applies throughout
Title 26 “where not otherwise distinctly expressed or manifestly incompatible
with the intent thereof.”
The district court in its order and the IRS in its brief on appeal cited EC
Term of Years Trust v. United States, 550 U.S. 429 (2007), apparently for the
proposition that the definition of “taxpayer” is somehow limited to the person
against whom the tax is assessed in the wrongful levy context. 21 That is not
19 Id.
20 Id. at 536-38.
21 See Rothkamm, 2014 WL 4986884, at *3. The only other case cited by the district
court, Hyler v. C.I.R., 84 T.C.M. (CCH) 717 (T.C. 2002), aff’d, 104 F. App’x 13 (9th Cir. 2004),
concerned the finer points of procedure under § 7811 by a person against whom a tax was
10
Case: 14-31164 Document: 00513202496 Page: 11 Date Filed: 09/22/2015
No. 14-31164
what that case says, however. In EC Term of Years Trust, the plaintiff, a trust,
sued to recover property which it claimed had been wrongfully levied by the
Government. The question was not whether a person in the trust’s position
could be a “taxpayer” under § 7701(a)(14). Indeed, the Williams court had
already held that “subject to” in § 7701(a)(14) means someone who has actually
paid a tax assessed against another, so the trust would meet that definition.
Rather, EC Term of Years Trust concerned the proper remedy (and thus
statute of limitations) for a third-party payer (i.e., not the assessed taxpayer)
who had paid the tax because of a wrongful levy. 22 The trust had filed suit
under § 1346(a)(1), the same general statute the third-party “taxpayer” had
used in Williams to obtain a refund of the wrongfully paid tax. The
Government argued that the claim was required to be brought under a more
specific statute enacted after Williams, 26 U.S.C. § 7426(a)(1) (the same
statute under which Rothkamm sued in this case), which provided at the time:
“If a levy has been made on property . . . any person (other than the person
against whom is assessed the tax out of which such levy arose) who claims an
interest in . . . such property and that such property was wrongfully levied
upon may bring a civil action against the United States in a district court.” 23
If the trust could bring suit under § 1346(a)(1), its suit would be timely, but it
would be time-barred under § 7426(a)(1)’s stricter nine-month statute of
limitations.
The Supreme Court noted that the difference was that the plaintiff in
Williams had no means of obtaining relief other than suing under the general
statute, § 1346; whereas Congress had later enacted specific relief for parties
levied and who was subjected to an IRS lien. It said nothing about the definition of “taxpayer”
under § 7811 and did not involve someone who paid a tax assessed against another person.
Thus, it is not relevant to this case.
22 550 U.S. at 430.
23 550 U.S. at 431.
11
Case: 14-31164 Document: 00513202496 Page: 12 Date Filed: 09/22/2015
No. 14-31164
in the same position as the trust, § 7426, which carried a much shorter nine-
month statute of limitations. More fully:
The Trust argues that in United States v. Williams,
514 U.S. 527, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995),
we construed the general jurisdictional grant of
§ 1346(a)(1) expansively enough to cover third parties’
wrongful levy claims. So, according to the Trust,
treating § 7426(a)(1) as the exclusive avenue for these
claims would amount to a disfavored holding that
§ 7426(a)(1) implicitly repealed the pre-existing
jurisdictional grant of § 1346(a)(1). See Radzanower v.
Touche Ross & Co., 426 U.S. 148, 96 S. Ct. 1989, 48
L.Ed.2d 540 (1976); Morton v. Mancari, 417 U.S. 535,
94 S. Ct. 2474, 41 L.Ed.2d 290 (1974).
But the Trust reads Williams too broadly. Although we
decided that § 1346(a)(1) authorizes a tax-refund claim
by a third party whose property was subjected to an
allegedly wrongful tax lien, we so held on the specific
understanding that no other remedy, not even a timely
claim under § 7426(a)(1), was open to the plaintiff in
that case. See Williams, supra, at 536–538, 115 S. Ct.
1611. Here, on the contrary, the Trust challenges a
levy, not a lien, and could have made a timely claim
under § 7426(a)(1) for the relief it now seeks under
§ 1346(a)(1). 24
The Court further explained that by enacting § 7426(a)(1), Congress had
impliedly repealed § 1346(a)(1) with respect to taxpayers in the trust’s
position. 25
Nothing in EC Term of Years Trust concerned the definition of “taxpayer”
found in § 7701(a)(14). The Court did not cite the statute or discuss its
definition because it was not necessary for resolution of the case. Section
7426(a)(1) is not written in terms of “taxpayer” versus “non-taxpayer” but
24 Id. at 434-35.
25 Id. at 435-36.
12
Case: 14-31164 Document: 00513202496 Page: 13 Date Filed: 09/22/2015
No. 14-31164
applies to “any person (other than the person against whom is assessed the tax
out of which such levy arose)” whose property was wrongfully levied to pay a
tax. Such a person is unquestionably “subject to” the tax and therefore is a
“taxpayer” under § 7701(a)(14), but that definition has nothing to do with the
issue presented in EC Term of Years Trust: whether such a person may still
file suit under § 1346(a)(1) or must file suit under the more specific statute,
§ 7426(a)(1).
All of which is to say that Williams defined “taxpayer” broadly under
§ 7701(a)(14) to include not only the assessed taxpayer but also a person who
actually pays the tax, and EC Term of Years Trust did nothing to alter that
definition. It simply held that a third-party (relative to the assessed taxpayer)
whose property is wrongfully levied must bring suit under § 7426(a)(1) rather
than § 1346(a)(1) because § 7426(a)(1) specifically covers that situation. In this
case, Rothkamm brought suit under § 7426(a)(1) and has always conceded that
the nine-month statute of limitations applies to her case.
The question here is whether Rothkamm is a “taxpayer” under the TAO
statute, § 7811, such that she could even apply for a TAO in the first place and
potentially toll the running of the statute of limitations under § 7811(d), as
discussed in the next part. Because, under Williams, she is a “taxpayer” under
the default definition set out under § 7701(a)(14), we must determine whether
the TAO statute, § 7811, and the statute creating the Office of the Taxpayer
Advocate, § 7803, “distinctly express” a definition of “taxpayer” that is different
from or somehow “manifestly incompatible” with the default definition set out
in § 7701(a)(14).
In establishing the Office of the Taxpayer Advocate in § 7803(c),
Congress set out the Office’s general functions as follows:
(A) In general.--It shall be the function of the Office
of the Taxpayer Advocate to—
13
Case: 14-31164 Document: 00513202496 Page: 14 Date Filed: 09/22/2015
No. 14-31164
(i) assist taxpayers in resolving problems with
the Internal Revenue Service;
(ii) identify areas in which taxpayers have
problems in dealings with the Internal Revenue
Service;
(iii) to the extent possible, propose changes in
the administrative practices of the Internal
Revenue Service to mitigate problems identified
under clause (ii); and
(iv) identify potential legislative changes which
may be appropriate to mitigate such problems. 26
The other provisions are similarly broad. It is significant that nowhere
in § 7803 did Congress “specifically express” a definition of “taxpayer” more
limited than the one set out in § 7701(a)(14), and nothing in the statute
suggests that § 7701(a)(14)’s broad definition of “taxpayer” is “manifestly
incompatible” with the functions of the Office of the Taxpayer Advocate. If the
purpose of the office is to assist taxpayers in resolving their problems with the
IRS, it is difficult to say that a taxpayer who actually pays a tax assessed
against someone else should be treated worse than the person against whom it
is assessed, absent any statutory language saying so. Indeed, § 7803 has been
amended a few times since Williams was decided in 1995, and Congress has
not redefined “taxpayer” more narrowly.
Similarly, the statute governing TAOs, § 7811, neither “specifically
expresses” a more limited definition of “taxpayer” nor is “manifestly
incompatible” with § 7701(a)(14)’s broad definition. Most notably, § 7811(a)(1)
provides:
(a) Authority to issue.--
26 26 U.S.C. § 7803(c)(2)(A).
14
Case: 14-31164 Document: 00513202496 Page: 15 Date Filed: 09/22/2015
No. 14-31164
(1) In general.--Upon application filed by a
taxpayer with the Office of the Taxpayer
Advocate (in such form, manner, and at such
time as the Secretary shall by regulations
prescribe), the National Taxpayer Advocate may
issue a Taxpayer Assistance Order if--
(A) the National Taxpayer Advocate
determines the taxpayer is suffering or
about to suffer a significant hardship as a
result of the manner in which the internal
revenue laws are being administered by
the Secretary; or
(B) the taxpayer meets such other
requirements as are set forth in
regulations prescribed by the Secretary. 27
Again, nothing in the statute suggests a definition of “taxpayer” other
than the default definition supplied by § 7701(a)(14). Because the statute is
clear, we must conclude that the § 7701(a)(14) definition of “taxpayer” applies.
The associated regulations also do not “specifically express” a more narrow
definition of “taxpayer.” 28 Indeed, at least four of the ten example situations
set out in the regulations, all concerning wrongful levies, are written without
specifying whether the TAO applicant is an assessed taxpayer or a third-party
taxpayer who pays the tax assessed to another. 29 In short, neither the statutes
(§§ 7803 and 7811) nor the regulations are “manifestly incompatible” with
§ 7701(a)(14)’s broad definition of “taxpayer.” Thus, the district court erred in
holding that Rothkamm is not a “taxpayer” under § 7811.
27 25 U.S.C. § 7811(a)(1).
28 See 26 C.F.R. § 301.7811-1.
29 See 26 C.F.R. § 301.7811-1(a), Ex. 1 (IRS levies A’s bank account; does not specify
whether A is assessed taxpayer or third-party taxpayer); § 301.7811-1(e), Exs. 1, 2 and 3 (do
not specify whether person subject to levy is an assessed taxpayer or a third-party taxpayer
paying a tax assessed against another).
15
Case: 14-31164 Document: 00513202496 Page: 16 Date Filed: 09/22/2015
No. 14-31164
We now turn to the question of whether § 7811(d) tolled the running of
the statute of limitations when Rothkamm filed her TAO application.
C. Section 7811 Provides for Tolling under These Circumstances.
Although the district court concluded that Rothkamm was not a
“taxpayer” under § 7811 and therefore could not avail herself of the TAO
scheme in the first place, it ruled, in the alternative, that the statute would not
allow tolling under these circumstances even if she were a “taxpayer”:
But even if the Court assumes for sake of argument
that Rothkamm is a taxpayer within the meaning of
26 U.S.C. § 7811, she still cannot prevail because a
plain reading of section 7811(d) shows that the time
periods tolled relate to actions available to the IRS, not
actions available to the taxpayer. See 26 U.S.C. §
7811(c), (d). This conclusion is reinforced by the
relevant administrative regulations, which state
unequivocally: “A taxpayer’s right to administrative or
judicial review will not be . . . expanded in any way as
a result of the taxpayer’s seeking assistance from
TAS.” 26 C.F.R. § 301.7811–1 (emphasis added); see
Demes v. United States, 52 Fed. Cl. 365, 373 (Fed. Cl.
2002) (“I.R.C. § 7811(a) . . . . does not go to the tolling
of the statute of limitations in court, but rather confers
the IRS with discretion to effect tolling upon a
taxpayer’s request. Plaintiffs therefore cannot sue in a
court for a refund under this provision, nor can the
court use it as a basis to toll the statute of limitations
in plaintiffs’ case:” (emphasis added)); cf. Qureshi v.
United States, 200 F. App’x 973, 975 (Fed. Cir. 2006)
(unpublished but persuasive) (“[I.R.C. § 7811(a)]
merely confers the IRS with discretion to provide a
taxpayer with relief under certain circumstances.”). 30
We conclude the district court erred because the plain language of the statute
(and the associated regulations) provides for tolling in this situation.
30 Rothkamm, 2014 WL 4986884, at *3.
16
Case: 14-31164 Document: 00513202496 Page: 17 Date Filed: 09/22/2015
No. 14-31164
1. The Plain Language of Section 7811 Provides for Tolling Here.
Section 7811(a) provides that the “National Taxpayer Advocate may
issue a Taxpayer Assistance Order” under appropriate circumstances. Section
7811(b) provides:
(b) Terms of a Taxpayer Assistance Order.--The
terms of a Taxpayer Assistance Order may require the
Secretary within a specified time period--
(1) to release property of the taxpayer levied
upon, or
(2) to cease any action, take any action as
permitted by law, or refrain from taking any
action, with respect to the taxpayer under--
(A) chapter 64 (relating to collection),
(B) subchapter B of chapter 70 (relating to
bankruptcy and receiverships),
(C) chapter 78 (relating to discovery of
liability and enforcement of title), or
(D) any other provision of law which is
specifically described by the National
Taxpayer Advocate in such order. 31
Section 7811(d) provides:
(d) Suspension of running of period of
limitation.--The running of any period of limitation
with respect to any action described in subsection (b)
shall be suspended for--
(1) the period beginning on the date of the
taxpayer’s application under subsection (a) and
ending on the date of the National Taxpayer
31 26 U.S.C. § 7811(b).
17
Case: 14-31164 Document: 00513202496 Page: 18 Date Filed: 09/22/2015
No. 14-31164
Advocate’s decision with respect to such
application, and
(2) any period specified by the National
Taxpayer Advocate in a Taxpayer Assistance
Order issued pursuant to such application. 32
By its plain terms, § 7811(d)(1) applies to toll the running of any statute
of limitations for any action described in § 7811(b) from the time the taxpayer
files an application for the optional TAO until a decision is reached. Section
7811(d)(1) does not require that a TAO actually be issued or that any relief be
granted. It simply provides that any statute of limitation for an action
described in subsection (b) is tolled from the time an application is filed until
the National Taxpayer Advocate reaches a decision.
It is plain from the language of the statute that because subsection (d)
applies to all of subsection (b), it benefits both the IRS and the taxpayer,
essentially pausing the running of the statutes of limitations applicable to both
parties so that neither one is prejudiced by the TAO process. For instance,
subsection (d), through subsection (b)(2)(A), tolls the statute of limitations for
collection actions by the IRS, meaning the IRS does not lose any time to pursue
collections when a taxpayer pursues a TAO. Likewise, subsection (d), through
subsection (b)(1), tolls the statute of limitations for actions “to release property
of the taxpayer levied upon.” By definition, such an action is one by the
taxpayer, and any tolling on such an action necessarily benefits the taxpayer.
(It is also, of course, precisely the action at issue in this case.) Thus, the
taxpayer may pursue a TAO without fear that the process—which Congress
expressly designed to assist taxpayers—will prejudice her administrative or
judicial rights in the event she does not obtain TAO relief. Subsection (d)’s
plain language means that neither the IRS nor the taxpayer is any worse off
32 26 U.S.C. § 7811(d) (emphasis added).
18
Case: 14-31164 Document: 00513202496 Page: 19 Date Filed: 09/22/2015
No. 14-31164
when a taxpayer decides to pursue TAO relief because all relevant statutes of
limitations are tolled. Under the plain terms of the statute, this tolling occurs
automatically until the National Taxpayer Advocate reaches a decision on the
TAO application, without regard to any discretion on the part of the IRS.
Several cases and secondary authorities, tracking the language of
§ 7811(d) confirm that the statute of limitations is tolled during the pendency
of an application for a TAO, with no reference to any exception or any discretion
on the part of the IRS to allow or disallow the tolling. See United States v.
Carinos Ambulance Serv., Inc., 654 F. Supp. 2d 52, 59-60 (D.P.R. 2009) (noting
that the statute of limitations under 26 U.S.C. § 6502 is tolled from “the date
the taxpayer submits Form 911 (Application for Taxpayer Assistance Order)
until the date when the National Taxpayer Advocate decides with regards to
the submitted application, (26 U.S.C. § 7811(d)(1))”); In re Turner, 182 B.R.
317, 329 (Bankr. N.D. Ala. 1995), adhered to on reconsideration, 195 B.R. 476
(Bankr. N.D. Ala. 1996) (noting that the statutes of limitation under 26 U.S.C.
§§ 6501(c)(4) and 6502(a) “are suspended when the taxpayer files an
application for a Taxpayer Assistance Order, and do not resume until the IRS’s
Taxpayer Ombudsman makes a decision on the taxpayer’s application.” (citing
§ 7811(d))); In re Gore, 182 B.R. 293, 304 (Bankr. N.D. Ala. 1995) (same); 20A
Federal Procedure, Lawyers Edition § 48:1497 (“The running of any period of
limitation with respect to any action for the issuance of a taxpayer assistance
order will be suspended for: (1) the period beginning on the date of the
taxpayer’s application for taxpayer assistance and ending on the date of the
National Taxpayer Advocate’s decision with respect to such application . . . .”);
34 Am. Jur. 2d Federal Taxation ¶ 70627 (“The running of any limitations
period . . . with respect to any action related to TAO . . . is suspended for (a)
the period beginning on the date of the taxpayer’s application for the TAO and
19
Case: 14-31164 Document: 00513202496 Page: 20 Date Filed: 09/22/2015
No. 14-31164
ending on the date of the National Taxpayer Advocate’s decision on the
application . . . .” (footnote omitted)).
Here, Rothkamm filed an application for a TAO for return of property
subject to a wrongful levy, which is one of the proper subjects of a TAO under
§ 7811(b). Under the plain terms of § 7811(d)(1), “[t]he running of any period
of limitation with respect” to that wrongful levy action was tolled from the time
she filed her application until the time a decision was made on it. The nine-
month statute of limitations for an action under § 7426(a) certainly qualifies
as “any period of limitation” for a wrongful levy action, so it was tolled until a
decision was made on her TAO application. Because her claim was tolled while
she pursued the TAO, her later administrative wrongful levy claim under
§ 6343(b) was timely and, in turn, tolled her claim so that this suit was timely.
2. There Is No Controlling Support for the District Court’s
Conclusion.
In agreeing with the IRS’s argument that “a plain reading of section
7811(d) shows that the time periods tolled relate to actions available to the
IRS, not actions available to the taxpayer,” the district court did not discuss
the language of § 7811(d) itself, and the sources it cited cannot change the fact
that the plain language of the statute provides for automatic tolling from the
time the TAO application is filed until a decision is reached. In addition to
citing § 7811(d), the district court cited § 7811(c), which provides:
(c) Authority to modify or rescind.--Any Taxpayer
Assistance Order issued by the National Taxpayer
Advocate under this section may be modified or
rescinded--
(1) only by the National Taxpayer Advocate, the
Commissioner of Internal Revenue, or the
Deputy Commissioner of Internal Revenue, and
20
Case: 14-31164 Document: 00513202496 Page: 21 Date Filed: 09/22/2015
No. 14-31164
(2) only if a written explanation of the reasons
for the modification or rescission is provided to
the National Taxpayer Advocate. 33
Section 7811(c) has nothing to do with tolling. Indeed, § 7811(c) only applies
once a TAO has actually been issued, whereas § 7811(d) applies to toll the
statute of limitations up to the point a decision is reached, either to issue a
TAO or deny relief. Thus, the provision is irrelevant here.
The district court also quoted the following sentence from 26 C.F.R.
§ 301.7811-1(b): “A taxpayer’s right to administrative or judicial review will
not be diminished or expanded in any way as a result of the taxpayer’s seeking
assistance from TAS.” There are two problems with the district court’s reliance
on that sentence. First, under Chevron, if the language of the statute, §
7811(d), clearly provides for tolling (i.e., a waiver of sovereign immunity), then
that ends the inquiry. The regulation cannot alter what Congress has clearly
set out in the statute. Second, the sentence in the regulation the district court
quotes comes from a subsection generally discussing TAOs and says nothing
specifically about tolling:
(b) Generally. A TAO is an order by the NTA to the
IRS. The IRS will comply with a TAO unless it is
appealed and then modified or rescinded by the NTA,
the Commissioner, or the Deputy Commissioner. If a
TAO is modified or rescinded by the Commissioner or
the Deputy Commissioner, a written explanation of
the reasons for the modification or rescission must be
provided to the NTA. The NTA may not make a
substantive determination of any tax liability. A TAO
is also not intended to be a substitute for an
established administrative or judicial review
procedure, but rather is intended to supplement
existing procedures if a taxpayer is about to suffer or
is suffering a significant hardship. A request for a TAO
33 26 U.S.C. § 7811(c).
21
Case: 14-31164 Document: 00513202496 Page: 22 Date Filed: 09/22/2015
No. 14-31164
shall be made on a Form 911, “Request for Taxpayer
Advocate Service Assistance (And Application for
Taxpayer Assistance Order)” (or other specified form)
or in a written statement that provides sufficient
information for the Taxpayer Advocate Service (TAS)
to determine the nature of the harm or the need for
assistance. A taxpayer’s right to administrative or
judicial review will not be diminished or expanded in
any way as a result of the taxpayer’s seeking
assistance from TAS. 34
It is clear from the context that the concluding sentence does not concern
tolling. However, 26 U.S.C. § 301.7811-1(e), part of the same regulation, does
address tolling and tracks the provisions of § 7811(d). Both the relevant
language of section 301.7811-1(e) and the associated examples show that the
running of the statute of limitations is tolled until a decision on the TAO
application is reached. Importantly, this specific subsection on tolling says
nothing about tolling being subject to the IRS’s discretion. Rather, the
regulation notes that the Ombudsman (i.e., the representative of the Office of
the Taxpayer Advocate, not the IRS) has the authority to lengthen—but not
shorten—the period of tolling beyond the decision date:
(e) Suspension of statutes of limitations--(1) In
general. The running of the applicable period of
limitations for any action which is the subject of a
taxpayer assistance order shall be suspended for the
period beginning on the date the Ombudsman receives
an application for a taxpayer assistance order in the
form, manner, and time specified in paragraph (b) of
this section and ending on the date on which the
Ombudsman makes a determination with respect to
the application, and for any additional period specified
by the Ombudsman in an order issued pursuant to a
taxpayer’s application. For the purpose of computing
34 26 C.F.R. § 301.7811-1(b).
22
Case: 14-31164 Document: 00513202496 Page: 23 Date Filed: 09/22/2015
No. 14-31164
the period suspended, all calendar days except the
date of receipt of the application shall be included.
(2) Date of decision. The “date on which the
Ombudsman makes a decision with respect to
the application” is the date on which the
taxpayer’s request for a taxpayer assistance
order is denied, or agreement is reached with the
involved function of the Service, or a taxpayer
assistance order is issued (except that when the
taxpayer assistance order is reviewed by an
official who may modify or rescind the taxpayer
assistance order as provided in paragraph (d) of
this section, the decision date is the date on
which such review is completed).
(3) Periods suspended. The periods of
limitations which are suspended under section
7811(d) are those which apply to the taxable
periods to which the application for a taxpayer
assistance order relate or the taxable periods
specifically indicated in the terms of a taxpayer
assistance order.
Example 1. On August 31, 1989, the Internal
Revenue Service levies on funds in the taxpayer’s
checking account. On September 1, 1989 (at which
time 7 months remain before the period of limitations
on collection after assessment will expire on April 1,
1990) the Ombudsman receives the taxpayer’s written
application for a taxpayer assistance order.
Subsequently, on September 6, 1989, the Ombudsman
determines that the levy has caused a significant
hardship and the Internal Revenue Service function
which served the levy agrees to release the levy. The
levy is released. As a result of the application and the
decision by the Ombudsman and the involved function
of the Service resolving the hardship, the statute of
limitations on collection after assessment is suspended
from the date the Ombudsman received the
application, September 1, 1989, until the date on
which the decision was made to release the levy,
23
Case: 14-31164 Document: 00513202496 Page: 24 Date Filed: 09/22/2015
No. 14-31164
September 6, 1989. Therefore, the statute of
limitations on collection after assessment will not
expire until after April 6, 1990, which is 7 months plus
5 days after the date on which the application for a
taxpayer assistance order was received by the
Ombudsman.
Example 2. The facts are the same as in example 1
except that the Internal Revenue Service function
which served the levy does not agree to release the
levy, and the Ombudsman, having made a
determination that the levy is causing a significant
hardship, issues a taxpayer assistance order on
September 6, 1989, in which the levy is ordered to be
released and specifies that the statute of limitations
on collection after assessment is suspended for an
additional 15 days. The period of limitations on
collection after assessment will therefore not expire
until after April 21, 1990, which is 7 months and 20
days (5 days plus 15 days) after the application for the
taxpayer assistance order was received by the
Ombudsman.
Example 3. The facts are the same as in example 2
except that the Ombudsman does not specifically
suspend the statute of limitations on collection after
assessment for an additional number of days in the
taxpayer assistance order, but rather the function
seeks modification or rescission of the taxpayer
assistance order and the appropriate official charged
with that responsibility completes his consideration of
the assistance order on September 8, 1989. The period
of limitations on collection after assessment will
therefore not expire until after April 8, 1990, which is
7 months and 7 days after the application for the
taxpayer assistance order was received by the
Ombudsman. 35
35 26 C.F.R. § 301.7811-1(e)(1)-(3).
24
Case: 14-31164 Document: 00513202496 Page: 25 Date Filed: 09/22/2015
No. 14-31164
Thus, the regulations associated with § 7811(d) do not make the tolling
subject to the IRS’s discretion. The only discretion granted under 26 C.F.R.
§ 301.7811-1(e) is granted to the Ombudsman in the Office of the Taxpayer
Advocate, and even then only to toll the statute of limitations beyond the
decision date. This precludes the argument that the IRS itself has the
discretion to grant or deny tolling.
The caselaw cited by the district court in support of its conclusion is not
binding and is, at any rate, deeply flawed. Most notably, the district court
relied on Demes v. United States, 52 Fed. Cl. 365, 373 (Fed. Cl. 2002), which
indeed concluded that the IRS has discretion to effect tolling on the taxpayer’s
behalf. The problem is that the Demes court cited no relevant support for that
conclusion. The only authorities it cited—26 U.S.C. § 7811(a), 26 C.F.R.
§ 301.7811-1(c)(3), and Inman v. Comm’r, 871 F. Supp. 1275 (E.D. Ca. 1994)—
say nothing about tolling. 36 Remarkably, the Demes court did not address
either § 7811(d) or 26 C.F.R. § 301.7811-1(e), which actually establish the
tolling rules. 37 Because Demes provided no viable support for its conclusion, it
is not even persuasive authority, nor is any case that relies on Demes. 38
In sum, the district court failed to construe the plain language of
§ 7811(d) (or even the associated regulation on tolling, 26 C.F.R. § 301.7811-
1(e)), and there is no viable support for its conclusion that the statutes and
regulations somehow give the IRS discretion to determine whether or not a
TAO applicant’s claim is tolled. Congress did not provide the IRS with that
discretion under § 7811(d), and the only discretion granted in the regulations
36 52 Fed. Cl. at 373.
37 Id.
38 The district court also relied on Qureshi v. United States, 200 F. App’x 973, 975 (Fed.
Cir. 2006), which itself cited Demes. Qureshi did not concern the IRS’s supposed discretion to
toll the running of the statute of limitations but its “discretion to provide a taxpayer with
relief under certain circumstances.” Thus, it is inapposite to the question presented here.
25
Case: 14-31164 Document: 00513202496 Page: 26 Date Filed: 09/22/2015
No. 14-31164
is the discretion granted to the Ombudsman to lengthen the period of tolling
beyond the date of the decision on the TAO application.
3. The IRS Has Presented No Viable Alternative Interpretation.
On appeal, the IRS raises two primary arguments, neither of which has
merit. First, the IRS argues that Congress has directly addressed the question
at issue (i.e., whether § 7811(d) tolls the running of the nine-month statute of
limitations in § 7426(a)) because neither statute references the other statute,
and therefore they cannot affect each other. The IRS does not explain how
Congress may “directly address” something by remaining silent on it, but in
any event § 7811(d) is not silent. As pointed out above, § 7811(d) tolls “[t]he
running of any period of limitation with respect to any action described in”
§ 7811(b), including wrongful levy actions.
Next, the IRS argues that § 7811(d) cannot toll this wrongful levy action
because “the tolling provisions of § 7811(d) do not mention wrongful levy
actions under § 7426, and the none [sic] of the four categories of ‘actions’ subject
to tolling under § 7811(b)(2) apply to this case.” Again, § 7811(d) provides: “The
running of any period of limitation with respect to any action described in
subsection (b) shall be suspended . . . .” Subsection (b) provides:
(b) Terms of a Taxpayer Assistance Order.--The
terms of a Taxpayer Assistance Order may require the
Secretary within a specified time period--
(1) to release property of the taxpayer levied
upon, or
(2) to cease any action, take any action as
permitted by law, or refrain from taking any
action, with respect to the taxpayer under
[certain other laws].
The IRS seems to argue that § 7811(d)’s use of the phrase “action
described in subsection (b)” means that only the parts of subsection (b) that
26
Case: 14-31164 Document: 00513202496 Page: 27 Date Filed: 09/22/2015
No. 14-31164
specifically use the word “action” may be tolled. Under the IRS’s reading, that
would include only subsection (b)(2), which specifically uses the word “action.”
That reading would conveniently exclude subsection (b)(1), which specifically
concerns the wrongful levy action at issue here, simply because the word
“action” is not used in subsection (b)(1). The IRS’s argument ignores the fact
that subsection (d) refers to all of subsection (b), not just subsection (b)(2), and
strains credulity beyond the breaking point.
In short, the IRS has failed to offer a reasonable alternative construction
of the plain language of § 7811(d), which provides for tolling under the
circumstances presented herein.
IV. Conclusion
For the reasons set out above, we first conclude that Rothkamm, as the
person who paid a tax assessed against another person, is a “taxpayer” under
the Internal Revenue Code’s default definition, and nothing in the TAO
statute, § 7811, redefines or is manifestly incompatible with that definition.
Next, we conclude that her TAO application tolled the running of the statute
of limitations under the plain language of § 7811(d). Accordingly, we
REVERSE and REMAND for further proceedings consistent with this
proceeding.
27
Case: 14-31164 Document: 00513202496 Page: 28 Date Filed: 09/22/2015
No. 14-31164
PATRICK E. HIGGINBOTHAM, Circuit Judge, dissenting:
Kathryn Rothkamm claims that the IRS wrongfully levied a certificate
of deposit issued solely in her name to satisfy tax liabilities of her husband.
The Internal Revenue Code provides two different avenues to challenge a
wrongful levy: (1) an administrative appeal; or (2) a lawsuit in federal court.
By either avenue, the aggrieved party must act within nine months of the levy. 1
Rothkamm did not do so. I dissent from the majority’s newly minted tolling
rule. While this creativity is driven by a desire to achieve fairness, it suffers
the vice common to such endeavors – it does the opposite by disrupting a
carefully structured regime for the resolution of disputes between the IRS and
property owners.
I.
The IRS has “broad authority” to levy a taxpayer’s property to satisfy
unpaid tax liabilities. 2 Nevertheless, “[a] levy is wrongful if imposed upon
property in which the taxpayer had no interest.” 3 A third party such as
Rothkamm seeking to challenge a wrongful levy has two options: (1) she may
file an administrative request for the return of the property with the IRS 4 or
(2) she may file a civil suit against the United States in federal district court. 5
These options are not mutually exclusive; if the third party’s administrative
request is denied, she may then file a civil suit – although an administrative
request is not a prerequisite to filing suit in federal court. The period of
1 26 U.S.C. § 6532(c); see United Sand & Gravel Contractors, Inc. v. United States, 624
F.2d 733, 735-36 (5th Cir. 1980).
2 Oxford Capital Corp. v. United States, 211 F.3d 280, 282-83 (5th Cir. 2000) (per
curiam) (citations omitted).
3 Id.
4 See 26 C.F.R. § 301.6343-2(b).
5 See 26 U.S.C. § 7426(a)(1). The Supreme Court has held that a general tax-refund
claim is not available. See EC Term of Years Trust v. United States, 550 U.S. 429, 433-36
(2007).
28
Case: 14-31164 Document: 00513202496 Page: 29 Date Filed: 09/22/2015
No. 14-31164
limitation for filing a civil suit can be found at 26 U.S.C. § 6532(c). This
provision provides:
(1) General rule.--Except as provided by paragraph
(2), no suit or proceeding . . . shall be begun after the
expiration of 9 months from the date of the levy or
agreement giving rise to such action.
(2) Period when claim is filed.--If a request is made
for the return of property . . . , the 9-month period
prescribed in paragraph (1) shall be extended for a
period of 12 months from the date of filing of such
request or for a period of 6 months from the date of
mailing by registered or certified mail by the Secretary
to the person making such request of a notice of
disallowance of the part of the request to which the
action relates, whichever is shorter.
Rothkamm filed an administrative request and, on its rejection, a civil suit.
To recap the timeline of events:
• March 6, 2012: The IRS issues a Notice of Levy to a bank of its levy upon
a bank account that Rothkamm says was her property.
• April 18, 2012: The bank remits the contents of the account to the IRS.
• April 30, 2012: Rothkamm files an application for assistance with the
Taxpayer Advocate Service (“TAS”).
• October 11, 2012: TAS closes Rothkamm’s case, advising that it is
unable to provide assistance.
• May 15, 2013: Rothkamm files an administrative request with the IRS.
• July 1, 2013: The IRS denies Rothkamm’s administrative request.
• September 6, 2013: Rothkamm sues the IRS in federal court. 6
The key question in this case is whether Rothkamm’s administrative request
was timely. Under § 6532(c)(2), Rothkamm’s civil action would be timely if
filed within six months of the denial of a timely filed administrative request.
6 See Rothkamm v. United States, No. 3:13-cv-00589-BAJ-RLB, 2014 WL 4986884, at
*1 (M.D. La. Sept. 15, 2014).
29
Case: 14-31164 Document: 00513202496 Page: 30 Date Filed: 09/22/2015
No. 14-31164
But § 6532(c)(2) does not apply if an administrative request is untimely – and
an administrative request is untimely if filed more than nine months after the
levy. 7 Rothkamm’s administrative request was filed fourteen months after the
levy. Relying on the terms of the statutory scheme as this court has read it,
the Government thus argues that her civil action is barred by § 6532(c)(1)
because it was filed more than nine months after the levy. Rothkamm counters
that 26 U.S.C. § 7811(d) tolled the period of limitation for filing an
administrative request while her application for TAS assistance was pending.
If this roughly five-and-a-half-month period is not counted, Rothkamm’s
administrative request was filed within nine months of the levy and triggered
§ 6532(c)(2), which, in turn, means that her civil suit was timely.
II.
A.
The majority agrees with Rothkamm, bedding its holding in the
perceived “plain” language of 26 U.S.C. § 7811. Two different subdivisions of
§ 7811 are relevant to this case: subdivision (b) and subdivision (d). These
subdivisions provide:
(b) Terms of a Taxpayer Assistance Order.--The
terms of a Taxpayer Assistance Order may require the
Secretary within a specified time period--
(1) to release property of the taxpayer levied
upon, or
(2) to cease any action, take any action as
permitted by law, or refrain from taking any action,
with respect to the taxpayer under [chapters relating
to collection, bankruptcy and receiverships, or
discovery of liability and enforcement of title].
....
7 See United Sand & Gravel Contractors, 624 F.2d at 735-36.
30
Case: 14-31164 Document: 00513202496 Page: 31 Date Filed: 09/22/2015
No. 14-31164
(d) Suspension of running of period of
limitation.--The running of any period of limitation
with respect to any action described in subsection (b)
shall be suspended for--
(1) the period beginning on the date of the
taxpayer’s application under subsection (a) and ending
on the date of the National Taxpayer Advocate’s
decision with respect to such application, and
(2) any period specified by the National
Taxpayer Advocate in a Taxpayer Assistance Order
issued pursuant to such application.
In short, the majority holds that subsection (d) suspends the period of
limitation for “any action described in subsection (b)” and subsection (b)(1)
describes a wrongful levy action. That is, the period of limitation for filing an
administrative request was tolled during the pendency of Rothkamm’s
application for a Taxpayer Assistance Order (“TAO”), and she can rely on
§ 6532(c)(2).
Appealing in its simplicity, this plain language argument does not
survive closer scrutiny for it steps past critical language. Subsection (d)
provides that an application for a TAO suspends the running of the period of
limitation for “action[s] described in subsection (b).” 8 We should not assume
that Congress’s use of the word “action” was accidental. To the contrary, “[a]
normal rule of statutory interpretation is that when Congress uses the same
word in different parts of a statute, it intended each to carry the same
meaning.” 9 In this case, this rule dictates that “action” has the same meaning
in subsection (b) that it does in subsection (d). That is, subdivision (d) suspends
the period of limitation only for the suits and proceedings in subdivision (b)
that Congress described using the word “action.” Since Congress did not use
826 U.S.C. § 7811(d) (emphasis added).
9Little v. Shell Exploration & Prod. Co., 690 F.3d 282, 286 (5th Cir. 2012) (citing Dep’t
of Revenue v. ACF Indus., Inc., 510 U.S. 332, 341-42 (1994)).
31
Case: 14-31164 Document: 00513202496 Page: 32 Date Filed: 09/22/2015
No. 14-31164
the word “action” in subsection (b)(1), § 7811(d) did not toll the period of
limitation for Rothkamm’s wrongful levy claim – and her suit is untimely. The
majority counters that this reading of § 7811 ignores that subsection (d) refers
to all “action[s]” in subsection (b), not just those in subsection (b)(2). But this
argument fails on its own terms; I contend only that subsection (b)(1) does not
describe an “action,” not that subsection (d) does not apply to, or embrace,
subsection (b)(1). If Congress had intended to suspend the period of limitation
for all suits or proceedings described in subsection (b), it could have used either
of those words – but it chose not to do so.
If the language of § 7811 is not clear enough, the larger context and
purpose of subdivision (d) eliminate any residual doubt that this is the proper
interpretation. 10 Although it may seem inequitable that subsection (d) only
suspends the period of limitations for actions brought by the IRS, this was a
sensible choice given that TAS – the agency that issues TAOs – lacks the power
to direct taxpayers to do anything. As a result, nothing prevents a taxpayer
from pursuing other remedies while seeking a TAO. In fact, a TAO “is intended
to supplement existing procedures if a taxpayer is about to suffer or is suffering
a significant hardship,” not “to be a substitute for an established
administrative or judicial review procedure.” 11 TAS can, however, issue a TAO
that bars the IRS from pursuing certain actions against a taxpayer. 12
Subdivision (d) responds to the reality that a taxpayer can use a TAO to tie the
10 Though the majority limits its analysis to the language of § 7811, “[t]his Court looks
at the ‘language of the statute as well as the design, object and policy in determining the
plain meaning of a statute.’” United States ex rel. Babalola v. Sharma, 746 F.3d 157, 161
(5th Cir. 2014) (quoting Hightower v. Tex. Hosp. Ass’n, 65 F.3d 443, 448 (5th Cir. 1995)); see
also King v. St. Vincent’s Hosp., 502 U.S. 215, 221 (1991) (“[A] statute is to be read as a whole,
since the meaning of statutory language, plain or not, depends on context.” (citation
omitted)).
11 26 C.F.R. § 301.7811-1(b).
12 26 U.S.C. § 7811(b).
32
Case: 14-31164 Document: 00513202496 Page: 33 Date Filed: 09/22/2015
No. 14-31164
enforcement arms of the IRS with a symmetry achieving result – limitation
does not run against the Government while the TAO blocks access to
enforcement.
The legislative history of § 7811 supports this view of subdivision (d). In
the Conference Report adopting § 7811, the conferees provided only one
example of the type of statute of limitation that would be suspended by
subdivision (d): “the statute of limitation under sec. 6501 relating to the
assessment or collection of tax.” 13 The limited case law interpreting § 7811 has
similarly implied that subdivision (d) suspends the statute of limitations only
for actions brought by the IRS. Indeed, the three cases cited by the majority
all group § 7811(d) along with “legal provisions scattered within the IRC [that]
provide for the suspension of the ten (10) year collection process.” 14 Other cases
are in accord. 15 The majority also acknowledges that the only case somewhat
on point – Demes v. United States – concludes that a plaintiff cannot use § 7811
13 2 H.R. Rep. No. 100-1104, at 215 (1988) (Conf. Rep.); see I.R.S. Litigation Bulletin
360 (Sept. 1990), 1990 WL 1086174 (“The legislative history identifies the limitations period
in section 6501 (assessment and collection of tax) as a statute subject to the suspension. Thus,
we believe that only those statutes of limitation that would continue to run to the detriment
of the Service when an application for a TAO is filed, are subject to the suspension.”).
14 United States v. Carinos Ambulance Serv., Inc., 654 F. Supp. 2d 52, 59 (D.P.R. 2009);
see also In re Turner, 182 B.R. 317, 329 (Bankr. N.D. Ala. 1995) (“All suspension provisions
[including § 7811(d)] are designed and intended to avoid prejudice to the IRS’s ability to
collect during periods of time in which collection or assessment is prohibited by law [or
otherwise impeded].”), adhered to on reconsideration, 195 B.R. 476 (Bankr. N.D. Ala. 1996);
In re Gore, 182 B.R. 293, 304 (Bankr. N.D. Ala. 1995) (same).
15 See, e.g., White v. Comm’r, 899 F. Supp. 767, 773 (D. Mass. 1995) (“An application
merely suspends the running of the period of limitations on collection.”); United States v.
Johnson, No. 2:12-CV-00097, 2013 WL 1403973, at *1 (S.D. Tex. Apr. 5, 2013) (“[The period
of limitation on assessment] is also suspended during the time that a taxpayer applies for
and obtains a decision on a Taxpayer Assistance Order.”); Next Generation Wireless, Ltd. v.
United States, No. 06-CV-838, 2008 WL 4115516 (S.D. Ohio Aug. 28, 2008) (considering only
whether the application for a TAO extended the period of limitation for filing a wrongful levy
claim under § 6532(c)(2) – and ignoring § 7811(d)); Scheafnocker v. Comm’r, 642 F.3d 428,
441 (3d Cir. 2011) (per curiam) (Nygaard, J., concurring) (same), vacated on other grounds,
No. 08-2655, 2012 WL 1854183 (3d Cir. Apr. 24, 2012).
33
Case: 14-31164 Document: 00513202496 Page: 34 Date Filed: 09/22/2015
No. 14-31164
to toll the statute of limitations. 16 There is no reason to reach a different result
here. 17
B.
Any suggestion that this analysis turns subdivision (d) into a trap for the
unwary is misplaced. IRS Form 911 – which a taxpayer must complete to apply
for TAS assistance – contains the following bolded note: “The signing of this
request allows the IRS by law to suspend any applicable statutory periods of
limitation relating to the assessment or collection of taxes. However, it does
not suspend any applicable periods for you to perform acts related to
assessment or collection, such as petitioning the Tax Court for redetermination
of a deficiency or requesting a Collection Due Process hearing.” 18 Rothkamm
provides no explanation for why she ignored this warning. There is also no
reason to suspect that the TAS review process is designed to lull taxpayers into
forfeiting their remedies against the IRS. The statutory function of TAS is to
“assist taxpayers in resolving problems with the Internal Revenue Service.” 19
On its website, TAS bills itself as “your voice at the IRS,” and informs visitors
that “TAS is here to protect your rights as a taxpayer, and help you with tax
problems you can’t resolve on your own.” 20 And twice a year, TAS submits
reports to Congress full of scathing criticism of the IRS and suggestions for
16 52 Fed. Cl. 365, 373 (Fed. Cl. 2002).
17 The majority also cites two treatises as support for its position. Yet neither does
anything more than beg the question by paraphrasing the language of § 7811(d).
18 I.R.S. Form 911 (Feb. 2015), http://www.irs.gov/pub/irs-pdf/f911.pdf (emphasis
added).
19 26 U.S.C. § 7803(c)(2)(A)(i).
20 See Taxpayer Advoc. Serv.: Your Voice at the IRS,
http://www.taxpayeradvocate.irs.gov (last visited Sept. 15, 2015).
34
Case: 14-31164 Document: 00513202496 Page: 35 Date Filed: 09/22/2015
No. 14-31164
how the IRS could improve. 21 This is an agency that seeks to help taxpayers
and apprise them of their rights, not trick them. 22
Rothkamm also overstates the practical hardship of simultaneously
pursuing other remedies while seeking a TAO. Before taking the step of filing
suit in federal court, a taxpayer like Rothkamm may submit an administrative
request to the IRS for the return of any wrongfully levied property. 23 This is
not an onerous process; the taxpayer must submit a written request with the
same information that she likely has already provided to TAS: (1) her name
and address; (2) a description of the levied property; (3) a description of her
basis for claiming an interest in the levied property; (4) the name and address
of the person against whom the tax was assessed; (5) the IRS office that issued
the levy; and (6) the date of levy. 24 The compilation of this basic information –
which again, has likely already been compiled for TAS – is not the type of
“hardship” that Congress created TAS to assuage. 25 Moreover, Rothkamm did
not even have to assume this minimal burden in this case. After TAS closed
21 See Reports to Congress, Taxpayer Advoc. Serv.: Your Voice at the IRS,
http://www.taxpayeradvocate.irs.gov/reports (last visited Sept. 15, 2015); see also 26 U.S.C.
§ 7803(c)(2)(A)(ii)-(iv) (requiring TAS to “identify areas in which taxpayers have problems in
dealings with the Internal Revenue Service” and “propose changes to the administrative
practices of the Internal Revenue Service” and “identify potential legislative changes” to
mitigate these problems).
22 Notably, Rothkamm has not argued that TAS did not inform her about the period
of limitation for filing a wrongful levy action. Cf., e.g., Scheafnocker v. Comm’r, 642 F.3d 428,
441 (3d Cir. 2011) (per curiam) (Nygaard, J., concurring) (“[I]n the Taxpayer Advocate’s
denial of Scheafnocker’s original request for assistance, there was notice of her right to appeal
to the District Court, along with a recitation of the statutes dictating the time-frame in which
this appeal must be filed.”), vacated on other grounds, No. 08-2655, 2012 WL 1854183 (3d
Cir. Apr. 24, 2012); Austin & Laurato, P.A. v. United States, No. 8:12-cv-1648-T-17-AEP, 2012
WL 5907066, at *2 (M.D. Fla. Nov. 26, 2012) (“[T]he Taxpayer Advocate Service denied
Plaintiffs’ requested assistance and directed them to file a lawsuit.”), aff’d, 539 F. App’x 957
(11th Cir. 2013).
23 26 U.S.C. § 6532(c)(2).
24 I.R.S. Publication 4528 (Nov. 2007), http://www.irs.gov/pub/irs-pdf/p4528.pdf; see
also 26 C.F.R. § 301.6343-2(b).
25 26 U.S.C. § 7811(a)(2).
35
Case: 14-31164 Document: 00513202496 Page: 36 Date Filed: 09/22/2015
No. 14-31164
her application for assistance in October 2012, Rothkamm still had two months
to file an administrative request with the IRS before the period of limitation
expired. 26 She has never explained why she waited until May 2013 to seek
relief.
C.
The majority’s efforts to save Rothkamm from her unexplained oversight
may ultimately have a serious impact on the IRS’s ability to collect on unpaid
tax liabilities. As the Supreme Court has recognized, “[t]he demand for greater
haste when a third party contests a levy is no accident.” 27 To the contrary, 26
U.S.C. § 7426(a)(1) has a short statute of limitations for an “obvious” reason:
once “someone else successfully claims property already credited against the
taxpayer’s tax liability, the United States must look to other assets of the
taxpayer to satisfy the taxpayer’s liability.” 28 If these collateral disputes are
not resolved swiftly, it is unlikely that there will be any other assets to levy. 29
In EC Term of Years Trust, the Supreme Court relied on this reasoning in
holding that taxpayers may not use the general tax-refund statute – which has
a four-year statute of limitation – to challenge a wrongful levy. 30 The Court
concluded that a holding to the contrary would have fatally undermined “the
levy statute’s 9-month limitations period thought essential to the
Government’s tax collection.” 31 Yet the majority’s interpretation of § 7811
See Rothkamm v. United States, No. 3:13-cv-00589-BAJ-RLB, 2014 WL 4986884, at
26
*1 (M.D. La. Sept. 15, 2014).
27 EC Term of Years Trust v. United States, 550 U.S. 429, 431-32 (2007).
28 United Sand & Gravel Contractors, Inc. v. United States, 624 F.2d 733, 739 (5th Cir.
1980).
29 See id.; see also Becton Dickinson & Co. v. Wolckenhauer, 215 F.3d 340, 351 (3d Cir.
2000) (“Were we to hold that section 6532(c) can be equitably tolled, we would delay the final
disposition of competing claims in cases like this one and would jeopardize, perhaps even
destroy, the IRS’s ability to impose a levy on other assets owned by a delinquent taxpayer.”).
30 550 U.S. at 433-36.
31 Id. at 434.
36
Case: 14-31164 Document: 00513202496 Page: 37 Date Filed: 09/22/2015
No. 14-31164
ignores these concerns – and effectively extends the “9-month limitations
period thought essential to the Government’s tax collection.”
The majority’s interpretation may also hurt more taxpayers than it
helps. “The tax code is an intricate web and demands clear rules so that it may
be administered with as little uncertainty as possible.” 32 The majority’s
holding, however, replaces the clarity of 26 U.S.C. § 6532(c) with a new tolling
rule that stops and starts the nine-month period of limitation at indefinite
dates. This new system may prove confusing to taxpayers looking to calculate
deadlines ahead of time. Taxpayers who wait several months to file a request
for TAS assistance, for instance, may have no warning until TAS actually
denies their claim that they need to move quickly to preserve their rights.
There is also little indication that the current system is not working. If a
taxpayer wants to challenge an IRS levy on the merits without the full expense
and effort of a federal suit, she can avail herself of what the Supreme Court
has called “an effective and inexpensive” remedy – an administrative request
for the return of the property. 33 The TAS review process may be inexpensive
and most effective in correcting clerical errors, such as misdescriptions of
property. It is not an avenue for resolution of legal issues. Indeed, by law, TAS
cannot “make a substantive determination of any tax liability.” It thus lacks
the ability to help taxpayers like Rothkamm who raise complex legal
questions. 34 Perhaps this is why no court has found such a tolling as has been
32 Sidell v. Comm’r, 225 F.3d 103, 111 (1st Cir. 2000).
33 United States v. Nat’l Bank of Commerce, 472 U.S. 713, 728 (1988); see also
Raymond v. United States, 983 F.2d 63, 66 (6th Cir. 1993) (agreeing that “the reason for
extending the limitations period in cases where an administrative claim is filed is to give the
Secretary ample opportunity to consider such a request on the merits before the matter comes
before the courts”); cf. Baddour, Inc. v. United States, 802 F.2d 801, 808 (5th Cir. 1986)
(concluding that the two available avenues for challenging a wrongful levy make it
unnecessary “[t]o open up an entirely new avenue of relief”).
34 26 C.F.R. § 301.7811-1(b).
37
Case: 14-31164 Document: 00513202496 Page: 38 Date Filed: 09/22/2015
No. 14-31164
created here and there are only one or two reported cases in which a taxpayer
has tried to invoke § 7811(d) as a basis for tolling – even though TAOs have
been available since 1989. 35 Our court should be wary of disrupting Congress’s
comprehensive and functional scheme for resolving wrongful levy claims to
save one taxpayer.
III.
But even if my construction of § 7811(d) is wrong, that does not change
the outcome in this case. “A statute of limitations requiring that a suit against
the Government be brought within a certain period of time” – like § 7811(d) –
represents a waiver of sovereign immunity. 36 “When waiving the
Government’s sovereign immunity, Congress must speak unequivocally.” 37
This means that “[a]ny ambiguities in the statutory language are to be
construed in favor of immunity, so that the Government’s consent to be sued is
never enlarged beyond what a fair reading of the text requires. Ambiguity
exists if there is a plausible interpretation of the statute that would not
authorize money damages against the Government.” 38 Our court has held that
the plaintiff bears the burden of showing that no such plausible interpretation
exists. 39
Rothkamm cannot meet this burden. At the very least, there is a
“plausible interpretation” of § 7811(d) “that would not authorize money
damages against the Government.” The majority points to the Supreme
35 Technical and Miscellaneous Revenue Act of 1988, Pub. L. No. 100-647, tit. VI,
§ 6230(d), 102 Stat. 3342, 3733-34.
36 United States v. Dalm, 494 U.S. 596, 608 (1990); see also Block v. North Dakota, 461
U.S. 273, 287 (1983) (“When waiver legislation contains a statute of limitations, the
limitations provision constitutes a condition on the waiver of sovereign immunity.”).
37 F.A.A. v. Cooper, 132 S. Ct. 1441, 1453 (2012).
38 Id. at 1448 (citations omitted); see also Freeman v. United States, 556 F.3d 326, 334-
35 (5th Cir. 2009).
39 See Freeman, 556 F.3d at 334; St. Tammany Parish ex rel. Davis v. Fed. Emergency
Mgmt. Agency, 556 F.3d 307, 315 (5th Cir. 2009).
38
Case: 14-31164 Document: 00513202496 Page: 39 Date Filed: 09/22/2015
No. 14-31164
Court’s statement in Cooper that it has never required Congress to “state its
intent in any particular way” or “use magic words” to waive sovereign
immunity. 40 But this statement only iterates the unremarkable proposition
that Congress need not use the language “this statute waives the Government’s
sovereign immunity” to effectuate a waiver. This acknowledgment did not
dilute the insistence upon “an unmistakable statutory expression of
congressional intent to waive the Government’s immunity” 41 – indeed the
Supreme Court upheld the immunity of the Government in Cooper on the basis
of this very rule. 42
Any ambiguity in § 7811(d) also creates another problem for Rothkamm.
Under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., we
defer to an agency’s “permissible construction” of an ambiguous statute. 43 That
is, if an agency issues a regulation interpreting an ambiguous provision of a
statute, we defer to the agency’s regulation as long as it represents a
“permissible construction.” “An agency’s interpretation is permissible if it is
reasonable. The question of reasonableness is not whether the agency’s
interpretation is the only possible interpretation or whether it is the most
reasonable, merely whether it is reasonable vel non.” 44
As noted by the majority, the IRS has issued a regulation that addresses
the interpretation of § 7811(d). 45 This regulation states that “[a] taxpayer’s
right to administrative or judicial review will not be diminished or expanded
40 Cooper, 132 S. Ct. at 1448.
41 Id.
42 See id. at 1453.
43 467 U.S. 837, 843 (1984).
44 ConocoPhillips Co. v. U.S. E.P.A., 612 F.3d 822, 831 (5th Cir. 2010).
45 The Supreme Court has rejected the argument that tax regulations are entitled to
less deference than other types of regulations. See Mayo Found. for Med. Educ. & Research
v. United States, 562 U.S. 44, 55-57 (2011).
39
Case: 14-31164 Document: 00513202496 Page: 40 Date Filed: 09/22/2015
No. 14-31164
in any way as a result of the taxpayer’s seeking assistance from TAS.” 46
Though this provision does not use the word “tolling,” I disagree with the
majority that it does not concern the issue before our court. By its terms, this
provision prevents taxpayers from expanding their right to administrative or
judicial review – such as by extending the period of limitation – through
seeking TAS assistance. And contrary to the majority’s suggestion, this correct
statement of the law is not contradicted by the examples provided in the
subdivision directly addressing tolling. Though the majority reproduces these
examples as support for its position, it fails to appreciate that all three concern
the tolling of the IRS’s period of limitation on collection – and not one applies
subdivision (d) to a taxpayer’s period of limitation. 47 Even assuming § 7811(d)
were ambiguous, we ought defer to the IRS’s reasonable construction of this
provision. 48 I would do so.
IV.
For the reasons above, I respectfully dissent.
46 26 C.F.R. § 301.7811-1(b).
47 Id. § 301.7811-1(e)(3); see I.R.S. Program Manager Tech. Adv. Mem. 2007-429, at 4
(Mar. 9, 2001) (opining that the majority’s expansive “interpretation [of § 7811(d)] would be
inconsistent with the statutory language and inconsistent with the examples provided in the
regulation”).
48 The IRS has also adopted this construction of § 7811(d) in various publications that
are entitled to Skidmore deference. See I.R.S. Manual 13.1.14.3 (Oct. 31, 2004) (“A signed
Form 911 or written statement will suspend the running of limitations periods for assessment
or collection of tax under IRC §6501 and §6502. A Form 911 or written statement will not
however, suspend the period of limitations for filing refund claims.”); I.R.S. Litigation
Bulletin 360, supra; I.R.S. Form 911, supra; I.R.S. Program Manager Tech. Adv. Mem. 2007-
429, supra.
40