Wm. TERRELL HODGES, Senior District Judge
This is an action by Everett Davenport and his wife, Hildegarde Davenport, ("the Plaintiffs") against the United States of America for the refund of money seized by the Internal Revenue Service (IRS) to pay the Plaintiffs' 1989 tax liability. Cross motions for summary judgment have been filed (Doc. 13 15). The Plaintiffs raise three arguments in support of their claim for refund: (1) because Mrs. Davenport's 1983 tax liability was extinguished by operation of the collections statute of limitations, funds obtained through subsequent forced sale of Mrs. Davenport's property interests should not have been applied to the 1983 tax liability, but should have instead reduced the 1989 liability; (2) the IRS lien did not attach to the money seized; and (3) if the lien did attach, the IRS nevertheless took too much. Because the Plaintiffs did not raise these arguments during their administrative claim for refund, summary judgment in favor of the United States is due to be granted.
Background and Facts
The Plaintiffs filed a joint return in April of 1984 reporting tax liability of roughly $22,000.00 for the 1983 taxable year. The return was accompanied by a check for the amount due. This check was dishonored by the bank, and the Plaintiffs sent a second check to the IRS in July of 1984, which was honored. The IRS apparently had not recorded that the initial check bounced, so when the second check arrived, the IRS, believing that the Plaintiffs had overpaid their 1983 liability, erroneously issued a refund check. By the time the IRS realized its mistake, the Plaintiffs had spent the refund. Consequently, the Plaintiffs' 1983 tax liability became delinquent.
On March 5, 1990, the IRS recorded a tax lien in Jefferson County, Kentucky for the 1983 taxes as well as for tax liability for the years 1985 and 1988. On April 30, 1990, the IRS seized a parcel of real property owned in Mr. Davenport's name. The property was then sold at public auction on June 6, 1990. The IRS applied the proceeds of the sale to the 1983 tax liability in partial satisfaction. The IRS refiled its lien for the 1983 taxes on September 5, 1990. On November 30, 1990, Mr. Davenport redeemed the property from the purchaser.
The Plaintiffs subsequently moved to Florida and presently reside in this district.
Doc. 16, exh. C.
Doc. 16, exh. D.
Doc. 13, exh. A.
Doc. 16, exh. F.
Doc. 16, exh. D.
On January 14, 1991, the IRS recorded another tax lien in Jefferson County for the Plaintiffs' unpaid tax liability for the year 1989. In May of 1992, the IRS levied on the property a second time, and the property was redeemed by the mortgage holder on June 16, 1992. The Plaintiffs claim that the proceeds of the redemption were applied to the 1983 taxes. However, IRS records show that there were no credits or payments applied to the 1983 liability other than the proceeds of the 1990 sale.
Doc. 16, exh. O.
Doc. 16, exh. G H.
Doc. 13, exh. A.
The mortgage holder who redeemed the property in 1992 subsequently conveyed the property back to the Plaintiffs as tenants by the entireties. When the Plaintiffs sold the real property in October of 1999, the closing attorney, noticing that there was a federal tax lien on the property, contacted the IRS and was advised that the lien was for unpaid 1989 taxes in the amount of $31,811.50. The attorney then withheld this sum from the sale proceeds and forwarded it to the IRS.
Doc. 16, unlabeled exh. K.
On June 12, 2001, the Plaintiffs filed an administrative claim for refund of the 1999 sales proceeds. The Plaintiffs' administrative claim was predicated on grounds not now argued before this Court. The claim was denied, and this action ensued.
Doc. 13, exh. C.
Discussion
Section 7422(a) of the Internal Revenue Code requires that the taxpayer must first file an administrative claim for refund with the Secretary of the Treasury prior to bringing an action against the United States for a tax refund. The regulations accompanying § 7422(a) state that "[t]he claim must set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof." The Eleventh Circuit follows the "variance rule" whereby subsequent litigation of the Government's denial of the taxpayer's refund claim is limited to the grounds "fairly contained" within the administrative refund claim. "Federal courts have no jurisdiction to entertain taxpayer allegations that impermissibly vary or augment the grounds originally specified by the taxpayer in the administrative refund claim." The purpose of the variance rule is to allow for resolution of the taxpayer's claim at the administrative level and to prevent surprise during subsequent litigation. The government should not have to "hazard a guess" as to the actual nature of the taxpayer's claim for refund.
26 U.S.C. § 7422(a).
Treas. Reg. § 301.6402-2(b)(1).
Charter Co. v. United States, 971 F.2d 1576, 1579 (11th Cir. 1992).
Id.
Id.; Campbell Sons Oil Co. v. United States, No. CV-94-U-2461-NE, 1995 WL 691829, at * 2 (N.D. Ala. Sept. 8, 1995) ("the plaintiff must do more than allude to a possible theory of recovery in the refund claim").
In this case, none of the arguments now raised in support of the Plaintiffs' refund action can be said to be "fairly contained" within the administrative claim. In the administrative claim, Mr. Davenport argued that the funds seized in the 1999 sale to pay the 1989 taxes should be refunded because he believed that the proceeds of the earlier 1992 sale (and other seizures) were impermissibly applied to the 1983 taxes and should have instead satisfied the 1989 liability prior to the 1999 sale. He claimed that the 1992 proceeds and other seizures were impermissibly applied to the 1983 taxes because his personal liability for the 1983 taxes had been discharged in bankruptcy.
Doc. 13, exh. C.
Mr. Davenport also argued that the IRS had improperly applied several tax refunds and money in a seized bank account to the 1983 liability.
Before this Court, however, the Plaintiffs make different arguments. First, they argue that the collections statute of limitations with respect to Mrs. Davenport's liability for the 1983 taxes had run prior to any levies or seizures of the couple's property. This means, they say, that the IRS could not have applied any proceeds derived from the sale or seizure of Mrs. Davenport's interest or share of the couple's assets to the 1983 liability and should have instead applied all collections attributable to her property to the 1989 liability. Secondly, the Plaintiffs argue that the IRS lien could not have attached to the property when it was reacquired in 1993 because the lien related only to Mr. Davenport and the property was held by the couple at that time as tenants by the entireties. Finally, the Plaintiffs argue that even if the tax lien properly attached to Mr. Davenport's interest in the property at the time of the 1999 sale, the value of his interest, which they claim was the only interest subject to the lien, may be actuarially measured at less than the $31,811.50 seized.
26 U.S.C. § 6502(a). At the relevant time, the collections statute of limitations was six years from the date of assessment. The record clearly shows that the statute of limitations with respect to Mrs. Davenport had not run by the date of the June 1990 sale. The uncontroverted IRS records show that the assessment date for the 1983 liability was August 5, 1984. Doc. 13, exh. A. Moreover, the IRS records show that no other collections were applied to the 1983 liability. Id.
The parties do not dispute that the collections statute of limitations did not run as to Mr. Davenport because his bankruptcy filing in 1986 tolled the running of the limitations period so that the collection period had not expired by the time the Omnibus Budget Reconciliation Act of 1990, P.L. 101-508, 104 Stat. 1388 (Nov. 5, 1990) was passed, which changed the applicable limitations period to ten years from the date of assessment.
In support of this position, the Plaintiffs cite the former Fifth Circuit case United States v. American National Bank of Jacksonville, 255 F.2d 504 (5th Cir. 1958), which held that a federal tax lien for taxes owed only by a husband could not attach to property held by the husband with his wife as tenants by the entireties. The Plaintiffs claim that the IRS regarded the 1989 tax liability as being owed only by Mr. Davenport, and, as proof, refer to the IRS tax liens which list only Mr. Davenport's tax identification number. Doc. 16, exh. O. However, the Government points out, correctly, that the 1989 tax liability was owed jointly and severally by the Plaintiffs and that the lien documents list both Mr. and Mrs. Davenport as taxpayers.
But see, footnote 20.
It is clear that not one of these arguments was raised in the administrative claim for refund. Therefore, this Court lacks jurisdiction to consider the merits of the instant suit. Accordingly, summary judgment is due to be granted in favor of the United States and against the Plaintiffs.
Conclusion
Accordingly, upon due consideration, it is adjudged that:
(1) the Plaintiffs' motion for summary judgment (Doc. 15) is DENIED;
(2) the United States' motion for summary judgment (Doc. 13) is GRANTED; and
(3) the Clerk is directed to enter judgment accordingly, terminate any pending motions, and close the file.
IT IS SO ORDERED.
DONE and ORDERED.