The opinion of the court was delivered by: TELESCA
Plaintiff, Kathleen Beauchamp, brings this action pursuant to Internal Revenue Code § 6672 and § 1346 seeking a refund for taxes, penalties, and interest which she paid on March 31, 1995 to the Internal Revenue Service ("IRS") to satisfy the tax liabilities of her estranged husband, Claude Beauchamp. The IRS seized her property pursuant to a tax levy and, in order to secure the immediate return of her personal property, she paid $ 48,325.35 to the IRS insisting, however, that she only owed $ 1,858.03 and the balance was her husband's responsibility.
Plaintiff filed this action on August 27, 1997. The Government applied for an extension of time to interpose its answer which was extended to November 28, 1997. The defendant failed to answer or move and instead on December 1, 1997 filed a motion to stay the case pending the resolution of a contemplated criminal action against the estranged husband, Claude Beauchamp. In a Decision dated January 16, 1998, this Court denied the Government's motion for a stay and directed the Government to formalize its motion to dismiss and deferred determination of the plaintiff's motion for default and summary judgment.
The Government now argues that this Court lacks subject matter jurisdiction of this case because plaintiff's exclusive remedy was a wrongful levy action for which the statute of limitations had expired.
I hold that the plaintiff has standing to bring this action for a refund under 26 U.S.C § 1346(a)(1) pursuant to the Supreme Court's decision in United States v. Williams, 514 U.S. 527, 115 S. Ct. 1611, 131 L. Ed. 2d 608 (1995). The Government's motion to dismiss is denied.
The income tax liabilities at issue involve the Beauchamps' joint personal income tax liabilities for 1990, Claude Beauchamp's personal income tax liabilities for the years 1991-1992, and a trust fund recovery penalty (under 28 U.S.C. § 6672) assessed against Claude and Kathleen Beauchamp for employment tax liabilities of Chessman Security Systems, Inc. ("Chessman").
Kathleen Beauchamp insists that she is not responsible for any of these taxes because (1) she never signed a joint return with her husband Claude for the 1990 tax year and, therefore, is an "innocent spouse"; (2) she has no liability for her estranged husband's personal tax liabilities for the 1991-1992 tax years; and (3) she was not an owner of Chessman, nor was she a "responsible person" (i.e. did not write checks, had no control of bills, etc.) and, thus, is not liable for the employment tax liability assessed.
Kathleen and Claude entered into a Separation Agreement in December of 1989 and essentially have been living separate and apart since that time. However, in February of 1995, they were living together at 350 Westminster Road, Rochester, New York. Kathleen Beauchamp alleges that on February 2, 1995, while she was home alone, agents from the IRS Criminal Investigation Division entered the apartment to search for records of Claude Beauchamp and Chessman. She claims that the agents had guns and were extremely harassing to her. She also alleges that additional agents from the IRS Collection Office arrived and seized all of the personal property in the apartment (including furniture, paintings, jewelry, china, houseware items, etc.) without regard to whether the items belonged to her or Claude Beauchamp.
Ms. Beauchamp insists that the majority of the items seized by the IRS belonged to her pursuant to the 1989 Separation Agreement in which she relinquished all of her ownership interest in Chessman in exchange for the majority of the marital personal property. The IRS would not accept that explanation, seized the property pursuant to the tax levy and told her that the only way she could receive the immediate return of the property would be to pay the IRS $ 48,325.35 in satisfaction of the tax lien.
Plaintiff then borrowed the money necessary from a personal friend to pay the IRS $ 48,325.35 in order to obtain the return of her personal property. She insists that she only owes the IRS $ 1,858.03 but the Government disagrees and claims that she owes approximately $ 24,000 of the total amount of the levy. The plaintiff also explains that on January 8, 1997 she filed the proper administrative claims for a refund of the money paid to the IRS but has yet to receive a response. Plaintiff then filed this action on August 27, 1997.
Pending before the Court are the Government's motion to dismiss portions of the complaint for lack of subject matter jurisdiction and plaintiff's cross motions for default judgment and for summary ...