Caposella v. Commissioner of Revenue
| Decision Date | 23 August 1988 |
| Docket Number | No. 87-1049,87-1049 |
| Citation | 527 N.E.2d 744,26 Mass.App.Ct. 359 |
| Parties | Domenic A. CAPOSELLA v. COMMISSIONER OF REVENUE. |
| Court | Appeals Court of Massachusetts |
John G. Neylon, Belmont, for plaintiff.
Despena Fillios Billings, Asst. Atty. Gen. (Robert A. Carleo, Jr., Boston, with her) for C.I.R.
Before DREBEN, KASS and FINE, JJ.
This case involves the plaintiff's claim for the return of amounts allegedly paid under duress by the plaintiff or wrongfully seized by the defendant on account of withholding and meals taxes owed by a corporation which is no longer doing business. The parties stipulated in the Superior Court that after the corporation ceased doing business in the summer of 1980, it owed the defendant corporate excise taxes, withholding taxes and meals taxes. 1
The corporation's only asset at that time was a liquor license on which the defendant had placed an administrative "hold." The effect of the hold, the parties stipulated, is that the Alcoholic Beverages Control Commission (ABCC) will not approve a sale without the defendant's consent. 2 See Arrowhead Estates, Inc. v. Boston Licensing Bd., 15 Mass.App.Ct. 629, 632, 447 N.E.2d 675 (1983) (). The defendant permitted the license to be sold and obtained the entire proceeds, 3 which were insufficient to pay all the corporation's tax obligations. Prior to the receipt of the proceeds by the defendant, counsel for the corporation wrote to the defendant requesting that payment be allocated first to the withholding obligations and then to the meals tax obligations. 4 The defendant, however, first applied the payment to the corporation's excise tax obligation.
The plaintiff moved for summary judgment claiming that the defendant was required to follow the corporation's designation of the payment, that in the absence of a judicial determination, the plaintiff could not be held individually liable for such taxes, and that since he was not held liable by a court, the levy which had been made under G.L. c. 62C, § 53, against the plaintiff's personal assets was improper. The plaintiff additionally urged that the defendant would be barred from seeking a judicial determination under G.L. c. 62C, § 47, as the statute of limitations has now run. A judge of the Superior Court denied the plaintiff's motion and entered summary judgment for the defendant pursuant to Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). We affirm.
1. Judicial determination. The plaintiff argues that in the absence of a judicial determination that he is a person responsible for taxes of the corporation under G.L. c. 62B, § 5 (withholding tax), and G.L. c. 64H, § 16 (meals tax), he is not liable and may recover sums improperly paid. We need not decide whether such a determination was necessary prior to the enactment of G.L. c. 62C, § 31A, 5 inserted by St.1985, c. 593, § 17, because the plaintiff has admitted liability for such taxes.
In an application for abatement filed by the plaintiff with the defendant in August, 1982, signed under penalties of perjury, the plaintiff stated: "Taxpayer, Domenic A. Caposella, was personally liable for certain meals and withholding taxes of the Massachusetts corporation known as Dom's Il Leopardo, Inc." The application was appended as an exhibit to the defendant's memorandum opposing the plaintiff's motion 6 and is an admission for purposes of Mass.R.Civ.P. 56. See Auto Drive-Away Co. of Hialeah, Inc. v. Interstate Commerce Commn., 360 F.2d 446, 449 (5th Cir.1966). See also Mourning v. Family Publications Serv., Inc., 411 U.S. 356, 362 n. 16, 93 S.Ct. 1652, 1657 n. 16, 36 L.Ed.2d 318 (1973). Nowhere does the plaintiff deny that he is an officer under a duty to pay the taxes. 7
2. Absence of assessment. Relying on Heritage Bank for Savings v. Doran, 399 Mass. 855, 860, 507 N.E.2d 690 (1987), the plaintiff argues that in the absence of an assessment against him personally no valid lien can arise. The record (other than the application for abatement, see note 6, supra ) does not show an assessment, and the statutory scheme prior to the enactment of G.L. c. 62C, § 31A, did not appear to provide for an assessment against the responsible corporate officer. Id. at 860-862, 507 N.E.2d 690. The brief of the plaintiff in the Superior Court and the answer of the defendant, however, both indicate that the levy upon the plaintiff's property was made under G.L. c. 62C, § 53, which does not require an assessment. Thus whether there was a valid lien under § 62C, § 50(a ), is irrelevant. There can be a tax liability which is incapable of having lien status. See Heritage, supra at 860, 507 N.E.2d 690. 8
3. Involuntary payment. For Federal tax purposes, a taxpayer does not have the right to designate the debt to which an involuntary payment is to be applied. O'Dell v. United States, 326 F.2d 451, 456 (10th Cir.1964). United States v. DeBeradinis, 395 F.Supp. 944, 952 (D.Conn.1975), affd., 538 F.2d 315 (2d Cir.1976). See First Natl. City Bank v. Kline, 439 F.Supp. 726 (S.D.N.Y.1977). "An involuntary payment of ... taxes means any payment received by [the taxing authorities] as a result of distraint or levy or from a legal proceeding in which the Government is seeking to collect its delinquent taxes or file a claim therefor." Amos v. Commissioner, 47 T.C. 65, 69 (1966).
The plaintiff does not suggest that a different rule applies to State taxes. He argues that the hold placed by the defendant, and honored by the ABCC, did not make the payment on behalf of the corporation involuntary because there was not an actual seizure of the license by the defendant; there was neither an enforced collection measure taken by the defendant nor judicial action ordering payment. See Muntwyler v. United States, 703 F.2d 1030, 1033 (7th Cir.1983), where a payment in response to the mere filing of a claim for payment with a trustee was held to be a voluntary payment.
"The limitation of involuntary payments to collections from levies of execution and judicial sales is too narrow." Arfanis v. Claremont Natl. Bank, 87 N.H. 380, 383, 180 A. 251 (1935). See New York ex rel. American Exchange Natl. Bank v. Purdy, 196 N.Y. 270, 277, 89 N.E. 838 (1909); Arnone v. United States, 79-1 U.S.T.C. (CCH) par. 9356 (N.D.Ohio 1979) (taxpayer asked Internal Revenue Service to place lien). The hold placed by the defendant was administrative action, a distraint 9 which enabled the defendant to receive the entire proceeds of the sale. It prevented any money from passing to the plaintiff and rendered the payment involuntary. The discharge of the hold did not restore the license to the plaintiff; rather "the effect of the discharge and payment was to retain and perfect the [defendant's] rights." Arfanis v. Claremont Natl. Bank, 87 N.H. at 382, 180 A. 251.
Judgment affirmed.
1 The following sums, it was stipulated, were owed:
Withholding taxes 2,086.93.
Meals taxes 16,204.59.
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Karll v. Minot Light Inc.
...See the various recourses available to the department under G.L. c. 62C, §§ 47A, 50, 53, 54; Caposella v. Commissioner of Revenue, 26 Mass.App.Ct. 359, 362, 363 n. 9, 527 N.E.2d 744 (1988). In the present case it seems a prior license holder, which merged with the seller, was in arrears.6 T......