Lori Rabin Williams v. United States

Opinion by Judge O’SCANNLAIN

We must decide whether one who erroneously pays the taxes of another may sue for a refund.

I

In April 1975, Jerrold Rabin (“Rabin”) and his then wife Lori Rabin (now Lori Williams) (“Williams”) purchased a house in Pacific Palisades, California. On June 29, 1987, and March 28, 1988, the government assessed employment tax liabilities against Rabin. On October 20,1988, Rabin transferred all of his interest in the house to Williams as her separate property. On October 25,1988, Rabin recorded a quitclaim deed giving title to “Lori Williams an unmarried woman.” On November 10, 1988, the Internal Revenue Service (“IRS”) filed the first in a series of tax liens against the property in order to satisfy outstanding employment taxes owed by Rabin and Mareo Polo 1, a partnership in which Rabin was a general partner. On January' 19,1989, Williams filed a petition for dissolution of her marriage to Rabin.

On approximately May 9, 1989, Williams entered into an escrow agreement to sell the house. On June 26, 1989, the IRS recorded another lien. Under protest, Williams authorized disbursement of $41,369 to the IRS so that she could convey clear title. On March 19,…