JOEL A. PISANO, District Judge.
This is an action seeking the recovery of income taxes, penalties and interest collected from plaintiff Beth Kops McGinley ("Plaintiff") for the 2000 tax year. Plaintiff seeks the return of $102, 969.68 plus interest. Presently before the Court is a motion by defendant United States of America (the "government") to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1). For the reasons below, the government's motion is granted.
On August 6, 2001, Plaintiff and her then husband, Kevin Kops ("Kops"), filed a joint income tax return for the 2000 tax year with the Internal Revenue Service ("IRS"). Compl. at ¶ 6. The amount due, exclusive of penalty and interest, was $76, 744. Id. at ¶ 7. Subsequently, Plaintiff and Kops divorced, and on July 2, 2004, the Superior Court of New Jersey entered a judgment against Kops requiring him to pay Plaintiff child support. Id. at ¶ 8. This judgment was filed and attached as a lien against Kops's half-interest in the former marital home (the "Residence"), where Plaintiff resided with the couple's children. Id. at ¶ 9. Shortly thereafter, on August 25, 2004, the IRS filed a tax lien against Plaintiff and Kops in the amount of $91, 404.56 which attached to the Residence. Id.
In the divorce, Plaintiff was awarded the previously jointly-owned Residence and title to it was deeded solely to Plaintiff in 2005. Id. at ¶ 10. As such, the property was no longer held jointly by Kops.
In March of 2006, the IRS determined that Plaintiff was an "innocent" spouse and granted relief to Plaintiff under Section 6015 of the Internal Revenue Code for the entire tax liability for the 2000 tax year. Id. at ¶ 11. Thus, the IRS effectively determined that Plaintiff had no responsibility for that year's tax liability. Accordingly, in July of that same year, the IRS released the previously filed tax lien as to Plaintiff, but did not release its lien with respect to Kops. Id. .
Plaintiff's counsel worked on her behalf seeking relief from the tax lien as to Kops against the Residence, as the Residence was now solely owned by Plaintiff. The IRS advised counsel to file a request for a certificate of nonattachment, which he did on October 29, 2008. Eagan Decl. ¶ 11. The IRS denied the request. Id. The IRS also advised counsel to file a request for a certificate of discharge, which was done on June 22, 2009. Id. at ¶ 12. This request was also denied. Id. According to counsel, each of these requests were prepared after he engaged in "long conversations with multiple IRS agents" with whom counsel dealt with on the matter as to proper IRS procedure. Id. at ¶ 13. According to his declaration, Plaintiff's counsel was receiving "conflicting advice" from the IRS as to how to proceed from a procedural perspective. Id. at ¶ 14. Counsel was engaged in "protracted negotiations" with the IRS in order to find suitable relief for Plaintiff, but such negotiations allegedly lagged allegedly "due to the IRS's confusion and conflicting advice on how to move forward." Id. at ¶¶ 14-15.
In June of 2010, Plaintiff entered into a contract to sell the residence. Id. at ¶ 18. With respect to the sale, the IRS took the position that Kops still had an interest in the property because "the August 24, 2004 tax lien was filed before the property was transferred solely to plaintiff in June 2005." Compl. ¶ 12. Plaintiff's counsel contacted the IRS in an attempt to come to a settlement on the amount owed so that amount could be escrowed at the closing. Eagan Decl. ¶ 19. Initially, the IRS agreed to permit the escrow of an amount of just over $162, 000 so that Plaintiff could sell the residence and continue to dispute the amount owed. Id. at 20. The parties continued to negotiate and eventually the IRS agreed that it would release the lien in exchange for a payment of about $103, 000. Id. at ¶ 24. The IRS changed its position with respect to escrowing the funds, and advised Plaintiff on the eve of closing that it would require payment, not escrow, of that amount in exchange for a discharge of the lien. Id. at ¶ 23.
In August 2010, Plaintiff sold the Residence. Consequently, on or about September 2, 2010, Plaintiff paid the IRS $102, 929.68, an amount which Plaintiff states she believed to be full payment of all tax, penalty and interest owed with respect to the 2000 tax year. Compl. at ¶¶ 12-13. On November 10, 2011, the IRS issued a certificate of discharge with respect to the entire tax lien. Eagan Decl. ¶ 24.
On January 31, 2011, Plaintiff appealed the certificate of discharge with the IRS Appeals Office. Id. at ¶ 25. In early February 2011, Plaintiff was advised by an appeals officer that he could not provide any relief because the tax was paid as part of the sale of real estate, but this officer suggested that Plaintiff file a claim for refund pursuant to Form 843. Id. at ¶¶ 26-27. Consequently, on August 2, 2011, Plaintiff filed a claim for a refund with the IRS, asserting, among other things, that no monies should have been collected by the IRS with respect to the lien because the July 2, 2004 child support judgment had priority over the August 25, 2004 federal tax lien. The amount of child support owing by 2010 had become $553, 000. Compl. at ¶ 16.
While her claim for refund was pending, Plaintiff, believing that her claim was covered by the two-year statute of limitations under Section 6511(b) of the Tax Code, filed the instant lawsuit on August 30, 2012 as a protective measure. Eagan Decl. ¶ 28. Plaintiff's counsel continued his discussions with the IRS and, on or about October 4, 2012, reached an agreement with a member of the IRS Taxpayer Advocate's Office, who agreed that the full amount of the payment would be refunded because the tax lien did not have priority over the child support judgment lien. Id. at ¶ 29. The IRS advised Plaintiff's counsel that New Jersey's probation department would have to send a letter to the IRS requesting the payment of the funds to the department directly. Accordingly, on November 26, 2012, Superior Court of New Jersey, Family Part, Somerset County entered an order requiring the IRS to pay the funds into court pending a formal application by Plaintiff for release of those funds. Id. at ¶ 30. The IRS has refused to pay the funds. This suit followed.
The government alleges that the Court lacks subject matter jurisdiction over this case because the United States has not waived sovereign immunity. As explained below, the government contends that the Court lacks jurisdiction if Plaintiff's claim is considered a refund claim under § 1346(a)(1) because plaintiff is not the "taxpayer" and the prerequisite of the tax being fully paid has not been met. The government further contends that Plaintiff's claim is out of time if the claim is considered one under § 7426(a)(4) (providing certain remedies for third parties) because that statute required her to file her action within 120 days of the issuance of the certificate of discharge by the IRS.
Plaintiff responds that her claim is permitted under § 1346(a)(1) pursuant to the doctrine set forth in United States v. Williams, 514 U.S. 527, 532-533, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995). Plaintiff also argues that the government should be equitably estopped from raising its various procedural defenses to ...