Emily Oatman, on Behalf of Herself and Others Similarly Situated v. Department of Treasury-Internal Revenue Service United States of America

Emily Oatman challenged the Department of Treasury’s refusal to return her share of a joint tax refund, which it withheld to satisfy her husband’s past-due child support. She filed her action individually and on behalf of a class of similarly situated taxpayers. The district court dismissed for lack of jurisdiction, 814 F.Supp. 912 . We vacate the judgment and remand.

FACTS AND PRIOR PROCEEDINGS

Oatman filed a joint tax return with her husband and was due to receive a refund for overpayment. The Treasury Department sent a notice, as required by 42 U.S.C. § 664 (a), that it had withheld the overpayment under 26 U.S.C. § 6402 (c) to satisfy her husband’s past-due support for a child of a former marriage. She followed the procedures required in the notice to secure her one-half community interest in the overpayment. The Treasury denied her claim, asserting that under Idaho law her share of community property could be used to satisfy her husband’s separate debt.

Oatman challenged the denial in district court. She sued on behalf of herself and a class of similarly situated “innocent spouses” in Idaho. The court dismissed for lack of subject matter jurisdiction under 26 U.S.C. § 6402…