EC Term of Years Trust v. United States
Issues
Whether 26 U.S.C. § 7426, which is designed specifically for wrongful levy actions and has a shorter statute of limitations, is the exclusive remedy for an individual seeking a refund after a wrongful levy assessed by the IRS.
Elmer and Dorothy Cullers created the EC Term of Years Trust (“the Trust”) to reduce the impact of federal taxes on their estate. When the IRS claimed the Cullers had transferred property to the Trust to avoid paying taxes, the Trust opened a bank account to pay the back-taxes. The IRS levied on the account. Afterwards , the Trust sought to recover the funds under 26 U.S.C. § 7426 (wrongful levy statute) and 28 U.S.C. § 1346 (tax refund statute). At issue in this case is whether 26 U.S.C. § 7426, with its shorter statute of limitations, is the exclusive remedy for wrongful levy actions by third parties, or whether third parties may alternatively seek relief under the more general tax refund provisions of 28 U.S.C. § 1346, which has a longer statute of limitations. The Court’s decision in this case will determine whether wrongful levy claimants will have this longer statutory period during which to bring suit against the U.S. The Court’s decision will also implicitly give weight to particular methods of statutory interpretation and ways of determining congressional intent.
Questions as Framed for the Court by the Parties
May a person who is not the assessed taxpayer utilize 28 U.S.C. § 1346 to seek a refund when its funds were seized through a wrongful levy and it had an opportunity to utilize the wrongful levy procedure under 26 U.S.C. § 7426?
Elmer and Dorothy Cullers created the EC Term of Years Trust (“the Trust”), the Petitioner, in 1991 to reduce the impact of federal taxes on their estate. Brief for Petitioner at 3.