EC Term of Years Trust v. United States

Background

The dispute involves EC Term of Years Trust, a trust that deposited funds in a bank account after the IRS asserted tax liabilities against the trust’s creators. The IRS issued a levy on the account and the bank delivered a check for over $3 million to the U.S. Treasury. Nearly a year later the trust sued under the statute that allows third parties to challenge wrongful levies, but the complaint was filed after the nine-month filing deadline and the District Court dismissed the case. The trust then pursued an administrative refund claim and later filed a refund lawsuit in federal court, arguing it could seek recovery under the more general tax-refund statute.

Reasoning

The core question was whether a third party that missed the nine-month deadline for a wrongful-levy suit may instead bring the same claim as a tax-refund action. The Court explained that Congress created a specific, time-limited remedy for wrongful levies and that allowing third parties to use the broader refund statute would undermine that limit. The Court distinguished an earlier case that involved a lien and no alternative remedy, saying that here a timely wrongful-levy claim was available but not filed. Because the wrongful-levy statute applies to both pre- and post-deprivation claims on its face, the more general refund route is not available to evade the nine-month deadline.

Real world impact

The ruling leaves third parties whose property is seized by the IRS limited to the specific wrongful-levy remedy and its short filing period. Parties who miss that nine-month window cannot revive the same claim later as a refund suit. The decision resolves a circuit split and reinforces quick resolution of levy disputes to protect tax collection efforts.