Lassoff v. Gray, Civ. A. No. 3626.
| Decision Date | 01 October 1958 |
| Docket Number | Civ. A. No. 3626. |
| Citation | 168 F. Supp. 363 |
| Parties | Benjamin LASSOFF and Irene Lassoff, Plaintiffs, v. William M. GRAY, District Director of Internal Revenue, Louisville, Kentucky, Defendant. |
| Court | U.S. District Court — Western District of Kentucky |
Daniel W. Davies and Davies & Hirschfeld, Newport, Ky., for plaintiffs.
J. Leonard Walker, U. S. Atty., Louisville, Ky., for defendant.
In this action filed June 17, 1958, the plaintiffs Benjamin Lassoff and his wife, Irene Lassoff, seek to invoke the equity jurisdiction of this Court to restrain William M. Gray, District Director of Internal Revenue at Louisville, Kentucky, in the collection of wagering taxes imposed by Section 4401 of the 1954 Internal Revenue Code, 26 U.S.C.A. § 4401, aggregating the sum of $300,264.46.
It is alleged in the complaint that the levy and assessment of the taxes were illegal, arbitrary, capricious, and wholly void for the reasons that:
1. During the months of March or April, 1956, plaintiff Benjamin Lassoff was not engaged in the business of accepting wagers on sports events or contests, did not conduct a wagering pool or lottery, and did not accept any wagers; he did not hold a Special Occupational Stamp of the United States to engage in said business and, therefore, was not liable for any tax imposed by the terms of Section 4401 of the 1954 Internal Revenue Code.
2. The levy and assessment were made without previous discussion with the plaintiff or his representative and the basis for the assessment has never been disclosed to plaintiff, despite his written protest against said assessment and his request for a conference with respect to same which plaintiff alleges he filed in writing September 19, 1956.
3. There has not been imposed upon plaintiff an assessment under Section 4411 of the 1954 Internal Revenue Code, 26 U.S.C.A. § 4411, for a Special Occupational Tax of $50 per year against persons liable for the tax under Section 4401 of the Code.
4. The levy and assessment were made by the defendant unreasonably, arbitrarily, and capriciously in that neither the defendant Director nor any subordinate acting under his direction or supervision had any basis for the levy and assessment, and no fact, tax return, or competent evidence upon which the tax could be determined, except some memoranda, notes and materials which were wrongfully and unlawfully seized from the premises at 1045 Monmouth Street in Newport, Kentucky, by agents of the Internal Revenue Service, the use of which materials was suppressed in the United States District Court for the Eastern District of Kentucky sitting at Covington, Kentucky, United States v. Lassoff, 147 F.Supp. 944.
5. Defendant Gray has levied and assessed the same tax, interest, and penalty for identically the same period against each of the following individuals: Myron Deckelbaum, Simon Klayman, and Robert Lassoff.
6. The levy and assessment against plaintiff are in violation of his rights under the Fifth Amendment to the Constitution of the United States in that they deprive the plaintiff of his property without due process of law.
The warrant of assessment was issued on September 12, 1956, and notices of the lien on plaintiffs' property were caused to be recorded in the offices of the County Clerks of Campbell and Kenton Counties, Kentucky, and in the office of the Recorder of Hamilton County, Ohio.
Plaintiff Benjamin Lassoff alleges that he does not have and cannot acquire funds or credit sufficient to pay the assessment and thereby be enabled to proceed under the provisions of Section 7422 of the 1954 Internal Revenue Code, 26 U.S.C.A. § 7422; that his written protest against the levy and assessment filed by him September 19, 1956, requesting a conference with the defendant, resulted only in a report being filed on May 17, 1957, rejecting said protest and request for conference.
Plaintiff alleges that publicity in the press and on the radio have caused him and his family to be held up to ridicule and scorn; that his credit and business reputation have been practically destroyed; that the sequestration of his property through said liens have prevented him from utilizing his property, or the income therefrom, for the maintenance of his family, and resulted in a reduction in the value of said property; all of which things have reduced plaintiff to the status of a pauper, and rendered him unable to follow any gainful occupation or to provide himself and his family with the necessities of life.
Plaintiff Irene Lassoff is the wife of Benjamin Lassoff. It is alleged that, under the law of the State of Ohio, she is entitled to homestead and is possessed of an inchoate right of dower in all of the real estate owned by her husband, and that a sale of that property, as threatened by the defendant, will deprive her of her right to homestead and dower to the extent that she will sustain irreparable damage for which she has no adequate remedy at law.
The above allegations are admitted for the purpose of considering defendant's motion to dismiss the complaint, in support of which motion defendant states that:
1. This Court is without jurisdiction by reason of the provisions of Section 7421(a) of the 1954 Internal Revenue Code, 26 U.S.C.A. § 7421(a).
2. The complaint fails to state a claim upon which relief can be granted because of the prohibition in Section 7421(a) of the 1954 Internal Revenue Code.
3. This Court lacks power to grant the relief sought because the assessment represents a federal tax and the United States is an indispensable party defendant.
Section 7421(a) of the 1954 Internal Revenue Code is as follows:
"Except as provided in sections 6212(a) and (c), and 6213(a), no suit for the purpose of restraining the assessment or collection...
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Lassoff v. Gray
...Court lacked jurisdiction to grant the relief sought. Defendant's motions were sustained and the complaints were dismissed. Lassoff v. Gray, D.C., 168 F.Supp. 363. On plaintiffs' appeal, the Court of Appeals for the Sixth Circuit reversed the judgment of this Court and remanded the actions ......