## Facts

- Two Ohio corporations, Portsmouth Ambulance, Inc. (Portsmouth) and Urgent Care Transport, Inc. (Urgent Care), incurred unpaid federal employment and corporate income taxes for certain years, leading the IRS to file and record federal tax liens against Urgent Care.
- Investors (including Kenneth Boggs) acquired 86% of Portsmouth’s stock via a 2006 agreement that also included an option to acquire Urgent Care; Portsmouth later exercised the option, making Urgent Care its wholly owned subsidiary, and the ownership change was reported to the IRS.
- Urgent Care’s tax debts remained largely unpaid; an IRS-ordered sale of Urgent Care’s assets did not satisfy the liabilities.
- The new ownership also failed to pay certain federal employment taxes in 2008, resulting in additional liens.
- The IRS filed a notice of federal tax lien against Portsmouth as Urgent Care’s alleged alter ego, treating Portsmouth’s property as available to satisfy Urgent Care’s liabilities.
- A creditor bank foreclosed and sold company assets, ending Portsmouth’s operations; the IRS applied sale proceeds to both Urgent Care’s liabilities ($333,769.24) and Portsmouth’s liabilities ($302,818.16).
- Portsmouth objected to the allocation (denying alter-ego status), submitted administrative refund claims, and then sued seeking (1) a refund based on alleged misallocation and (2) damages for wrongful collection.

## Issues

1. Whether a third-party property owner may sue for a refund under the general refund provisions (26 U.S.C. § 7422; 28 U.S.C. § 1346(a)(1)) when the claim is that proceeds from its property were used to satisfy another taxpayer’s lien.
2. Whether 26 U.S.C. §§ 6325(b)(4) and 7426(a)(4) supply the exclusive remedy (and limited sovereign-immunity waiver) for recovery of amounts applied to another taxpayer’s lien.
3. Whether a damages claim for unauthorized collection under 26 U.S.C. § 7433 is barred for failure to file within two years and for failure to exhaust administrative remedies.

## Decision

- The Sixth Circuit affirmed dismissal of the complaint.
- The court held that §§ 6325(b)(4) and 7426(a)(4) provide the exclusive procedure for a third-party owner to contest and recover amounts paid to discharge a lien securing another party’s tax debt; plaintiffs could not proceed under general refund statutes.
- The court held the § 7433 damages claim was untimely and also failed for lack of required administrative exhaustion.
- Because the United States’ waiver of sovereign immunity was not satisfied, the federal courts lacked authority to hear the claims as pleaded.

## Legal Principles

- Suits against the United States require an unequivocal waiver of sovereign immunity, and any waiver is strictly construed.
- Where Congress creates a specific, carefully drawn remedial scheme for a defined problem, that scheme is exclusive and displaces reliance on more general refund provisions for the same injury.
- For third-party owners whose property is encumbered by a federal tax lien securing another’s liability, §§ 6325(b)(4) and 7426(a)(4) set a deposit/bond-and-sue mechanism that supplies the cause of action and limits jurisdiction.
- A § 7433 claim must be filed within two years of accrual and is conditioned on exhaustion of IRS administrative remedies; noncompliance defeats the statutory waiver.

## Conclusion

The Sixth Circuit held that a property owner seeking to recover proceeds applied to satisfy another taxpayer’s federal tax lien must use the exclusive lien-discharge and wrongful-lien framework in 26 U.S.C. §§ 6325(b)(4) and 7426(a)(4), and that a § 7433 wrongful-collection claim fails absent timely filing and administrative exhaustion.


Portsmouth Ambulance, Inc. v. United States, 756 F.3d 494 (6th Cir. 2014)