Portsmouth Ambulance, Inc. v. United States

Urgent Care Transport, Inc. (UC) failed to pay certain taxes to the Internal Revenue Service (IRS). In 2003 and 2007, the IRS recorded tax liens against UC. In October 2006, Kenneth Boggs (plaintiff) purchased a majority stake in Portsmouth Ambulance, Inc. (Portsmouth) (plaintiff), which acquired UC and made it a wholly owned subsidiary. After learning about UC’s ownership change, the IRS ordered the sale of UC’s assets, which left UC with a significant tax liability. In 2008 and 2009, the IRS recorded tax liens against Portsmouth. Also in 2009, the IRS recorded a tax lien against Portsmouth as UC’s alter ego and imposed a civil penalty against Boggs, which Boggs paid. Portsmouth’s assets were sold in June for $1 million; the IRS received approximately $334,000 to pay UC’s liability (and immediately released the UC lien) and approximately $303,000 to partially pay Portsmouth’s liability. Portsmouth asked the IRS to refund the money used for UC, arguing that the money should have been used to pay Portsmouth’s liability. Boggs also asked the IRS to refund his civil-penalty payment, arguing that Portsmouth’s assets should have paid it. Portsmouth and Boggs sued the United States (defendant), seeking the refunds. The district court dismissed the claims on subject-matter-jurisdiction grounds, ruling that 28 U.S.C. §§ 6325(b)(4) and 7426(a)(4), with which Portsmouth and Boggs did not comply, provided the exclusive means to challenge a lien placed on a plaintiff’s property due to another party’s tax liability. Portsmouth and Boggs appealed, arguing that (1) §§ 6325(b)(4) and 7426(a)(4) applied only in cases involving third-party tax liability, but the IRS treated Portsmouth and UC as alter egos; (2) the IRS released its UC lien instead of issuing a certificate of discharge (certificate), which prevented compliance with §§ 6325(b)(4) and 7426(a)(4); and (3) they could not request a certificate because the IRS immediately released the UC lien.