Bremson v. United States
| Decision Date | 06 October 1978 |
| Docket Number | No. 78-0496-CV-W-2.,78-0496-CV-W-2. |
| Citation | 459 F. Supp. 128 |
| Parties | Charles D. BREMSON, Jr., Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Western District of Missouri |
Robert R. McQuain, Robert W. Boland, Jr., Kansas City, Mo., for plaintiff.
Angello I. Castelli, Tax. Div., Dept. of Justice, Washington, D. C., Frederick O. Griffin, Jr., Asst. U. S. Atty., Kansas City, Mo., for defendant.
This is an action to enjoin the collection of income taxes.1 Plaintiff's income tax liability for the period of January 1, 1978 through May 13, 1978 was calculated pursuant to a termination assessment under the provisions of 26 U.S.C. § 6851. The facts of the case, and the history of the proceedings in this Court, are fully set out in the Court's order of August 31, 1978. Bremson v. United States, 459 F.Supp. 121 (W.D.Mo.1978).
At plaintiff's request, the Court has taken judicial notice of all relevant provisions of the Internal Revenue Code. (Tr. 61). The Court will also take judicial notice of facts brought to its attention, with necessary information, in correspondence from plaintiff's counsel. Rule 201(d), Fed.R. Evid. Accordingly, the Court judicially notices the fact that foreclosure proceedings have begun under the tax liens at issue in this case.2 Further, the Court judicially notices the fact that the bonding company covering plaintiff's $100,000.00 bond in the related criminal proceedings3 has surrendered plaintiff to the United States Marshal as a result of these foreclosure proceedings and that plaintiff is now in federal custody in the Wyandotte County Jail.4
Suits to enjoin tax collection are generally barred by 26 U.S.C. § 7421(a), which provides:
(a) Tax. — Except as provided in sections 6212(a) and (c), 6213(a), 7426(a) and (b)(1), and 7429(b), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.
Thus, unless plaintiff can bring this case within one of the stated exceptions enumerated in the statute, or within the judicially created exception enunciated in Miller v. Nut Margarine Co., 284 U.S. 498, 509-510, 52 S.Ct. 260, 76 L.Ed. 422 (1931), and Enochs v. Williams Packing and Navigation Co., 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962), this Court has no jurisdiction to enjoin collection of the tax. State of Minnesota v. United States, 525 F.2d 231, 233 (8th Cir. 1975); Transport Manufacturing and Equipment Co. v. Trainor, 382 F.2d 793, 797 (8th Cir. 1967).5 In Williams Packing, the Supreme Court stated the law as follows:
The manifest purpose of § 7421(a) is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund. In this manner the United States is assured of prompt collection of its lawful revenue. Footnote omitted. Nevertheless, if it is clear that under no set of circumstances could the Government ultimately prevail, the central purpose of the Act is inapplicable and, . . ., the attempted collection may be enjoined if equity jurisdiction otherwise exists.
Enochs v. Williams Packing Co., supra, 370 U.S. at 7, 82 S.Ct. at 1129. For the reasons set forth below, the Court concludes that it does not have jurisdiction to enjoin the collection of taxes in this case and judgment will be rendered against plaintiff on Count I of the complaint.
Of the four statutory exceptions set forth in 26 U.S.C. § 7421(a), three are obviously inapplicable.6 The only possibly viable exception, and the one asserted by plaintiff, is provided in 26 U.S.C. § 6213(a). That statute, in relevant part, provides:
(a) Time for filing petition and restriction on assessment — Within 90 days, . . ., after the notice of deficiency authorized in section 6212 is mailed . . the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency. Except as otherwise provided in section 6851 or section 6961 no assessment of a deficiency . . . and no levy or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer . . . Notwithstanding the provisions of section 7421(a), the making of such assessment or the beginning of such proceeding or levy during the time such prohibition is in force may be enjoined by a proceeding in the proper court. (Emphasis added.)
Plaintiff contends that the IRS has not followed the proper statutory procedures in making the assessment and levies in this case.7 Specifically, plaintiff contends that he was not afforded an opportunity to fail or refuse to pay the tax liability set forth in the notice of assessment. 26 U.S.C. § 6331.
In an ordinary tax collection case, the IRS is authorized to levy on all property subject to its lien, 26 U.S.C. § 6321, 10 days after notice and demand for payment. 26 U.S.C. § 6331. However, the last sentence of sub-section (a) of that statute provides:
If the Secretary or his delegate makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary or his delegate and, upon failure or refusal to pay such tax, collection thereof by levy shall be lawful without regard to the 10-day period provided in this section. (Emphasis added.)
Accordingly, when there has been a "jeopardy" finding,8 the tax assessed is due immediately after notice and demand for payment. The termination assessment statute, 26 U.S.C. § 6851, under which the IRS acted in this case, directs the Secretary to make an immediate determination of the tax liability for the time period in question and to ". . . cause notice of such determination and assessment to be given to the taxpayer, together with a demand for immediate payment of such tax." (Emphasis added.)
The key word in these complementary statutory provisions is "immediate." The primary purpose behind the termination procedure is to insure immediate payment of disputed taxes. Accordingly, the tax is due when notice has been served and a demand for payment has been made. Resolution of the taxpayer's ultimate tax liability is postponed. See, note 5, Order of August 31, 1978. In this case, plaintiff was served with a Notice of Termination Assessment of Income Tax and a Notice and Demand for Payment at 2:15 p. m. on May 18, 1978. At that time, plaintiff indicated that he would have to consult with his attorney. (Carter Affidavit, ¶ 8). The levies were accomplished a few minutes later. (Tr. 27-28). Under the terms of the statutes, this immediate action was proper. Since "demand for immediate payment," 26 U.S.C. § 6851, was made, and since plaintiff did not make immediate payment, the levies were lawful. In the termination assessment situation, the "failure or refusal to pay" language in 26 U.S.C. § 6331 is modified by the provision of the same statute calling for a demand for immediate payment.9
The cases relied upon by plaintiff do not state a contrary rule. In both L. O. C. Industries, Inc. v. United States, 423 F.Supp. 265 (M.D.Tenn.1976), and Mrizek v. Long, 187 F.Supp. 830 (N.D.Ill.1959), the levy in question preceded notice and demand for immediate payment. See also, Shapiro v. Secretary of State, 162 U.S.App. D.C. 391, 395-396 n.12, 499 F.2d 527, 531-532 n.12 (1974), aff'd 424 U.S. 614, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976).
In view of the foregoing discussion, the Court holds that this case is not controlled by any statutory exception to the anti-injunction statute, 26 U.S.C. § 7421(a), and plaintiff's request for injunctive relief on this ground will be denied.
As previously indicated, an injunction is not barred by 26 U.S.C. § 7421(a) if the taxpayer can show extraordinary circumstances causing irreparable harm for which he has no adequate legal remedy and that under the most liberal view of the law and the facts the government cannot establish its claim. C. I. R. v. Shapiro, 424 U.S. 614, 623, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976), quoting Enochs v. Williams Packing and Navigation Co., 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962).
In this case, as in Shapiro, the taxpayer relies on the pendency of criminal proceedings against him to establish the traditional elements of equity jurisdiction. In Shapiro, money which the taxpayer intended to use as bail in connection with criminal fraud charges against him in Israel was frozen in the taxpayer's American banks when the IRS served notices of levy pursuant to a jeopardy assessment. Prior to his extradition to Israel to face the criminal charges, the taxpayer filed an injunction suit in the district court alleging that his case fell within the Williams Packing exception to the anti-injunction statute, 26 U.S.C. § 7421(a). The proceedings in all courts were directed primarily toward the second element of the test, i. e., whether the government could prevail under any circumstances. The Court of Appeals and the Supreme Court assumed, without expressly deciding, that the threat of immediate incarceration constituted irreparable injury for which there was no adequate legal remedy. Shapiro v. Secretary of State, 162 U.S.App.D.C. at 396, 499 F.2d at 532; C. I. R. v. Shapiro, 424 U.S. at 633, 96 S.Ct. 1062. In this case, the Court has taken judicial notice of the fact that plaintiff is now incarcerated because of the surrender of his bond in the criminal case. Accordingly, the Court holds that plaintiff has shown irreparable injury for which he has no adequate legal remedy.10
However, plaintiff cannot satisfy the second element of the Williams Packing exception. The Court has already held that there was a factual basis for the...
To continue reading
Request your trial
-
Allen v. United States
...Yannicelli v. Nash, 354 F.Supp. 143 (D.N.J.1972); Hill v. McMartin, 432 F.Supp. 99 (E.D.Mich.1977); but see Bremson v. United States, 459 F.Supp. 128 (W.D.Mo.1978), or whether the proper jeopardy assessment procedures were followed. Fidelity Equipment Leasing Corp. v. United States, 462 F.S......
-
Martinez v. U.S., 80-5540
...fail or refuse to pay the tax." L.O.C. Industries, Inc. v. United States, 423 F.Supp. 265, 273 (M.D.Tenn.1976). In Bremson v. United States, 459 F.Supp. 128, 131 (W.D.Mo.1978), the levy was made minutes after the taxpayer had responded to notice and demand for payment by stating that he wou......