Scheafnocker v. Commissioner of Internal Revenue Service, No. 08-2655 (3d Cir. April 19, 2011)
To collect back taxes owed by Scheafnocker’s ex-husband, the IRS levied on their joint bank account in western Pennsylvania. The IRS never notified Scheafnocker, a California resident, of the levy.
In the Eastern District of California, Scheafnocker filed a complaint containing a wrongful levy claim and a due process claim seeking monetary damages, or in the alternative, a procedural remedy. The case was ultimately transferred to the Western District of Pennsylvania.
The district court granted the IRS’s motion to dismiss for lack of subject matter jurisdiction holding that Scheafnocker’s wrongful levy claim was time-barred. Scheafnocker appealed this decision to the Third Circuit.
In vacating the district court’s order and remanding the case, the Third Circuit held that the due process claim against the IRS for money damages is barred by sovereign immunity, but the due process claim for a strictly procedural remedy is permitted.
Analyzing the Administrative Procedures Act, the federal question statute and their amendments, the Third Circuit concluded that Congress expressly waived sovereign immunity in non-monetary claims against a federal government agency.