Joan Pansier v. United States ( 2021 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with FED. R. APP. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted November 8, 2021*
Decided November 12, 2021
Before
ILANA DIAMOND ROVNER, Circuit Judge
MICHAEL Y. SCUDDER, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
No. 20-2847
JOAN R. PANSIER, Appeal from the United States District
Plaintiff-Appellant, Court for the Eastern District of
Wisconsin.
v. No. 19-C-1906
UNITED STATES OF AMERICA, William C. Griesbach,
Defendant-Appellee. Judge.
ORDER
For decades, Joan Pansier and her late husband Gary have contested their federal
tax liability and the government’s collection methods. See, e.g., Pansier v. Comm’r,
623 F. App’x 809, 810 (7th Cir. 2015) (summarizing history); Pansier v. Comm’r,
No. 15-1386 (7th Cir. Oct. 20, 2015) (imposing sanction for Pansiers’ frivolous appeal). In
* We have agreed to decide the case without oral argument because the briefs and
record adequately present the facts and legal arguments, and oral argument would not
significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 20-2847 Page 2
today’s case, Joan claims that the Internal Revenue Service violated procedural rules
when attempting to collect Gary’s unpaid taxes for 1995 through 1998. Although both
Pansiers listed themselves as plaintiffs here, Gary died shortly after the district-court
complaint was filed. The district court dismissed the case, concluding that Gary was the
sole relevant taxpayer and that the suit therefore did not survive his death. We affirm
the judgment, albeit on different grounds.
The IRS used several means to pursue Gary’s unpaid taxes. These included a
collection lawsuit, liens against Gary’s assets, and a levy on his pension. The levy
prompted his pension fund to send him a letter explaining that it would now pay his
benefits to the government. According to the Pansiers, the IRS itself did not send any
formal notice of the levy, liens, or other collection efforts.
In September 2017 (a month after receiving the fund’s letter), Gary filed an
administrative complaint with the IRS, objecting to the lack of formal notice and
contending that the government’s collection activities were untimely in any event. The
agency denied administrative relief in January 2018. Over the next two years, the
Pansiers continued asking the agency for more information about the levy and about
Gary’s tax liability—to no avail until 2019, Joan says.
Meanwhile, in 2018, the Pansiers filed for bankruptcy. That action stayed the
IRS’s collection suit. Yet the levy on Gary’s pension remained, and (Joan says) the
government continued seeking payment. In July 2019, the Pansiers petitioned the
bankruptcy court for relief, claiming that the IRS had violated the automatic bankruptcy
stay and other bankruptcy orders. See 11 U.S.C. § 362(a), (k); FED. R. BANKR. P.
4001(a)(3). But the bankruptcy judge denied their petition, and we eventually held that
the federal courts could grant no further relief on that score because the Pansiers did
not timely challenge the bankruptcy court’s decision in the district court. Pansier v.
United States, 821 F. App’x 642 (7th Cir. 2020).
That takes us to today’s suit against the United States. The Pansiers filed it in
December 2019—more than two years after their administrative complaint. They cited
26 U.S.C. §§ 7432 and 7433, alleging that they each suffered financial harm from the
government’s attempts to collect Gary’s taxes. The allegations fell into two categories.
First, the Pansiers renewed their claims from the 2017 administrative complaint: that a
statute of limitations barred the government’s collection efforts, see 26 U.S.C. § 6502, and
that the government wrongly failed to give them formal notice, see id. §§ 6320(a),
6331(d), 7602(c). Second, they alleged that the government continued trying to collect
Gary’s tax liabilities in violation of the 2018 bankruptcy stay and other orders.
No. 20-2847 Page 3
Before any answer was due, the government moved to dismiss Joan’s claims for
lack of standing, and to stay Gary’s claims during the government’s separate collection
suit against the Pansiers. (Joan’s appeal in that collection suit was docketed last month
and remains pending. See United States v. Pansier, No. 21-2871 (7th Cir. Oct. 14, 2021).)
But then Gary died while the government’s motion was pending. The government filed
a suggestion of death, and Joan moved to be substituted as the proper party.
The district court, in turn, dismissed the entire case. Sovereign immunity protects
the United States from suit unless that immunity is waived—and, the district court
determined, the waivers of sovereign immunity in 26 U.S.C. §§ 7432 and 7433 extend
only to suits by the taxpayer whose liability triggered the government’s collection
activities. Joan, according to this view, was a third party who could not sue in her own
right. As for Joan’s request to be substituted, the district court inferred from the
sovereign-immunity rule that Joan could not do so; Gary’s death extinguished the suit.
Joan appeals. Yet even if we assume (without deciding) that she can pursue
claims for the collection of Gary’s 1995 to 1998 liabilities, we agree with the
government’s alternative arguments that all claims are barred by the statute of
limitations, by bankruptcy laws, or by the failure to exhaust administrative remedies.
We start with the time bar. Claims like the Pansiers’ must clear a two-year statute
of limitations under 26 U.S.C. §§ 7432(d)(3) and 7433(d)(3). The period runs not from the
date administrative remedies are exhausted (here, in January 2018), but rather from the
earlier date on which a plaintiff had “a reasonable opportunity to discover all essential
elements of a possible cause of action.” 26 C.F.R. §§ 301.7432-1(i)(2) & 301.7433-1(g)(2).
(The regulations include special provisions, not relevant here, for cases in which the
agency’s response to an administrative complaint would otherwise be too slow.
See id. §§ 301.7432-1(e)(1)(ii), (e)(2) & 301.7433-1(d)(1)(ii), (d)(2).) Here, then, any claims
covered in the administrative complaint had accrued—at the very latest—by the time
that complaint was filed in September 2017. And the district-court complaint was filed
more than two years later, in December 2019.
Joan counters that the claims did not accrue until April 2019—within the two-
year window—because it was only then that she and Gary received various documents
confirming the theories outlined in the September 2017 administrative complaint. But
“absolute legal certainty” is not needed for a claim to accrue. Kovacs v. United States,
614 F.3d 666, 675 (7th Cir. 2010). And the allegations from the administrative complaint
would suffice to lead a “reasonable person either to sue or to launch an investigation
that would likely uncover the requisite facts.” Keohane v. United States, 669 F.3d 325, 329
No. 20-2847 Page 4
(D.C. Cir. 2012). And so, all claims covered by the administrative complaint were
untimely filed in federal court. To be sure, Joan also objects that the government did not
cite the time bar in the district court. But the government did not waive the argument
there, because its answer to the complaint was not yet due. See FED. R. CIV. P. 8(c)(1),
12(a)(4).
Still, it is not clear that the time bar extends to claims arising from the
government’s alleged violation of the 2018 bankruptcy stay, which came after the
administrative complaint. But, as the government points out, by statute the Pansiers’
exclusive remedy for those claims was to petition the bankruptcy court for relief.
See 26 U.S.C. § 7433(e); Kovacs, 614 F.3d at 672–73. Indeed, the Pansiers did just that—
but the bankruptcy court rejected the claim. The tax suit before us today is not a proper
vehicle for relitigating the issue.
Finally, throughout this litigation, the Pansiers appeared to reference other
claims unrelated to the issues from the 2017 administrative complaint, although the
details are difficult to pin down. But, as the government observes, any claims omitted
from the administrative complaint would be unexhausted—and it would be too late to
exhaust them now. See 26 U.S.C. §§ 7432(d) & 7433(d); Goldberg v. United States, 881 F.3d
529, 533 (7th Cir. 2018).
We have considered Joan’s other arguments, but none has merit.
AFFIRMED