Johnson v. United States

The Internal Revenue Service (IRS) assessed tax deficiencies against William and Linda Johnson (plaintiffs) for 1981 through 1983. The Johnsons claimed tax overpayments for 1988 through 1990, which the IRS applied to the Johnsons’ 1981 and 1982 assessments. In December 1993, the IRS issued deficiency notices to the Johnsons for 1981 through 1983, which the Johnsons challenged in February 1994 in the United States Tax Court. The Johnsons’ Tax Court petition alleged, among other things, that the IRS’s December 2, 1993, collection notice to them was improper. After engaging in extensive discovery and litigation before the Tax Court, on July 12, 1994, the Tax Court granted the parties’ request for an order stating that the Johnsons neither owed any tax for 1981 through 1983 nor overpaid their taxes for those years. On July 11, 1996, the Johnsons sued the United States (defendant), alleging that the IRS engaged in unauthorized tax-collection actions in violation of Internal Revenue Code (code) § 7433. Specifically, the Johnsons cited IRS actions regarding the assessment and determination of tax that the Johnsons purportedly owed and certain IRS notice and demand actions. All the IRS’s alleged § 7433 violations, including the IRS’s purportedly wrongful December 1993 and January 1994 collection notices, occurred before March 21, 1994. The United States moved for summary judgment, arguing that § 7433’s two-year statute of limitations expired no later than March 21, 1996. The Johnsons responded that their § 7433 claim did not accrue—and thus the limitations period did not commence—until the Tax Court’s July 12, 1994, order because all the essential elements of their claim did not exist until then.