The opinion of the court was delivered by: McDADE, District Judge.
On November 12, 1990, the IRS made an assessment of $9,438
against Plaintiffs, Raymond E. O'Bryant and Dorothy J.
O'Bryant, ["Plaintiffs"], for federal income taxes due in
1989.*fn1 Because Plaintiffs have not paid their total 1989
income tax liability, Defendant, the
United States of America, has filed a Federal Tax Lien which
continues to encumber their real property, and title to that
property cannot be quieted until the 1989 assessment is
Before the Court are Cross-Motions for Summary Judgment on
Count II of the United States' Counterclaim. In Count II, the
United States seeks to reduce the 1989 assessment to judgment.
Conversely, Plaintiffs seek an order by the Court directing
the IRS to either apply certain overpayments made by
Plaintiffs to offset their liability for the 1989 assessment
or to issue a refund for the amounts overpaid.
The Court has jurisdiction over the United States'
Counterclaim pursuant to 28 U.S.C. § 1346(c) and 26 U.S.C. § 7402(a).
The United States contends, however, that the Court
does not have jurisdiction under the Code either to order the
IRS to apply the overpayments made by Plaintiffs to their 1989
assessment or to maintain Plaintiffs' suit for a refund.
After review of the Code, the case law, and the pleadings,
the Court finds that it has jurisdiction over only one of
Plaintiffs' claims, namely, that Plaintiffs' November 19, 1991
payment should be refunded. For the reasons which follow, the
Court finds that although Plaintiffs are entitled to a refund
of their November 19, 1991 payment, the 1989 assessment should
be reduced to judgment. Thus, the United States' Motion for
Summary Judgment is granted in part and denied in part, and
Plaintiffs' Motion for Summary Judgment is granted in part and
denied in part.*fn2
On August 13, 1993, this Court granted summary judgment in
favor of Plaintiffs, holding that Plaintiffs satisfied their
1984 tax liability by payment in 1987. The Court also granted
Plaintiffs' Motion to Dismiss Count I of the United States'
Counterclaim, but denied their Motion to Dismiss Count II,
which alleged that Plaintiffs remained liable for a 1989 tax
assessment. The Court then ordered Plaintiffs to answer Count
II. The facts relevant to the Court's August 13, 1993 decision
are also relevant here and are as follows.
On October 18, 1985, Plaintiffs filed their income tax
return for 1984. On November 25, 1985, the IRS made an
assessment totalling $22,593.20 for taxes owed by Plaintiffs
in 1984. On August 6, 1987, Plaintiffs paid to the IRS the sum
of $27,999.93, representing full payment of all tax, interest,
and penalties then due. The IRS, however, mistakenly credited
the August 6, 1987 payment twice to Plaintiffs' account for
1984, creating what appeared to be an overpayment and
generating a refund of $28,925.39 ($27,999.93 plus $925.46 in
accrued interest), which was sent to Plaintiffs by check dated
January 1, 1988, from the United States Treasury. Sometime
later in 1988, the IRS discovered its error and demanded
repayment of the refunded amount plus accrued interest,
After discovery of its error, the IRS did not make a new
assessment for 1984, but rather claimed that the original
assessment for 1984 remained outstanding. The United States
apparently formed this belief because the amount originally
paid by Plaintiffs was erroneously refunded, leaving the
government without an actual payment for 1984. Meanwhile,
Plaintiffs made the following payments which the IRS applied
to the 1984 assessment:
April 15, 1988 $840.00 1987 income tax
April 3, 1989 $5,000.00 Payment by Plaintiffs
April 15, 1989 $1,117.00 1988 income tax