United States v. Williams

Background

Lori Williams, a homeowner, bought and later agreed to sell a house that her then-husband had once owned jointly. The IRS assessed taxes against her husband and filed liens after he deeded his interest to her. One week before closing, the IRS gave notice of liens. To keep the sale, Williams paid $41,937 from the sale proceeds under protest to clear title, then filed an administrative refund claim and sued the United States when it was denied.

Reasoning

The Court considered whether the federal waiver that allows refund suits for erroneously collected internal-revenue taxes lets someone who was not assessed sue after paying under protest. It looked at §1346(a)(1)'s broad language, historical remedies, and interaction with other tax rules. The Court concluded §1346(a)(1) covers Williams and that other statutes and remedies (quiet title, discretionary discharge of liens) did not bar her suit because she had no realistic alternative. The Ninth Circuit's judgment was affirmed.

Real world impact

This ruling permits people who, under the pressure of last-minute federal tax liens, pay another's assessed tax to clear their property to bring a federal refund suit. It is a post-payment remedy — usable after paying under protest — and does not decide all situations, such as voluntary payments or challenges to the original assessment.

Dissents or concurrances

Justice Scalia agreed except he would not decide whether Williams qualifies as a "taxpayer" under other tax provisions. Chief Justice Rehnquist dissented, warning the decision stretches waivers of government immunity and arguing administrative or prepayment remedies were available.