Hansen v. United States, 78-4069-CV-C.

• Decision Date: 19 September 1978
• Docket Number: No. 78-4069-CV-C.,78-4069-CV-C.
• Parties: Roy R. HANSEN and Dollie L. Hansen, Plaintiffs, v. UNITED STATES of America, Department of the Treasury, and Internal Revenue Service, Defendants.
• Court: U.S. District Court — Western District of Missouri

455 F. Supp. 1367

Roy R. HANSEN and Dollie L. Hansen, Plaintiffs, v. UNITED STATES of America, Department of the Treasury, and Internal Revenue Service, Defendants.

No. 78-4069-CV-C.

United States District Court, W. D. Missouri, C. D.

September 19, 1978.

Roy R. Hansen, pro se.

Dollie L. Hansen, pro se.

Samuel M. Simpson, Trial Atty., Tax Div., Dept. of Justice, Washington, D. C., for defendants.

MEMORANDUM AND ORDER

ELMO B. HUNTER, District Judge.

Plaintiffs, owners of the Linncreek Auction establishment in Linn Creek, Missouri, have filed a civil suit for refund of certain taxes paid to defendants for the year 1974 and for declaratory relief concerning tax liability for the years 1974 and 1975.

From the complaint, it appears that plaintiffs operate an auction house in Camden County, Missouri. They assert that auctioneers who conduct sales at the auction house are independent contractors; on this basis plaintiffs allege that they are not obligated to withhold FICA taxes from the auctioneers' pay or submit the fruits of that withholding to the Internal Revenue Service (IRS). The complaint alleges that plaintiffs sought advice from the Springfield, Missouri, IRS office in March 1974 concerning the necessity for withholding FICA taxes from the auctioneers' pay. Springfield IRS officials allegedly advised plaintiffs not to withhold FICA taxes and to treat their workers as independent contractors for tax purposes. The complaint also asserts that another IRS employee determined in September 1976 that plaintiffs were liable for FICA taxes for their workers. An assessment of approximately $4500 was imposed as the result of this determination. Plaintiffs allege that they faithfully attempted to exhaust administrative remedies with the IRS and that they tendered a check for $92.66, their liability for the first quarter of 1974, on December 22, 1977. The check was apparently returned to them in February 1978. This action results from plaintiffs' continuing efforts to resolve their difficulties with the IRS.

On May 26, 1978, Robert Livingston, Chief of the IRS Western Region Civil Trial Section sent plaintiffs a letter which sheds further light on the issues presented by this case:

The basic problem which confronts us is that you're sic payment of $92.66 on December 22, 1977 was premature. As of that date, there had not yet been a tax assessment against you for the subject employment taxes. Since no assessment had been made, you were mailed a check dated February 3, 1978 for $93.25 representing a return of your $92.66 payment.

Please be advised that by sending you the $93.25 check, we in no way meant to suggest that we were conceding that you are not liable for the employment taxes which were subsequently assessed on March 13, 1978. On the contrary, it is our opinion that you are indeed responsible for the payment of these taxes. The fact that our issuance of the $93.25 check closely followed your December 27, 1977 letter requesting a "repayment or refund" was purely coincidental and we apologize for any confusion this might have caused. Since you forwarded your $92.66 check before the tax assessment was made against you, it did not serve as a "payment" towards such tax assessment. You cannot pay a tax assessment which is not yet in existance sic . ..

This now brings us to the crux of the problem. As of the date you filed your complaint, you had not paid the March 13, 1978 tax assessment and had not filed a claim for refund. Therefore, your lawsuit was defective and the Court is without jurisdiction.

. . .

You can . . . cure the jurisdictional defects with relative ease. Since you returned the $93.25 check, and we received it after the March 13, 1978 tax assessment date, we have treated it as a "payment" towards said assessment. You can now file a claim for refund with the Internal Revenue Service if you wish. As part of your claim for refund, you can request an immediate disallowance of said claim, upon receipt of which you can file another lawsuit in Federal District Court. If you don't request an immediate disallowance you can file another lawsuit following the expiration of six months from the date you file your claim for refund, or after your claim has been formally disallowed, whichever date occurs first.

We encourage you to take the steps outlined above to cure the jurisdictional problems present in this case. Also, we request that you seek to have the present lawsuit dismissed with the understanding that you may file another lawsuit after satisfying all jurisdictional prerequisites. . . .

As noted by Mr. Livingston, the "crux of the problem" is whether this Court currently has jurisdiction to hear plaintiffs' claims. In their answer to plaintiff's complaint, defendants contend that the Court currently lacks jurisdiction over this suit. They seek its dismissal on that basis. Plaintiffs, on the other hand, apparently argue that even though no formal assessment was made against them by the IRS until March 1978, their December payment of part of their total liability together with a letter requesting repayment or refund was sufficient to satisfy the jurisdictional prerequisites involved in this action.

Title 26 U.S.C. § 7422(a), which is cited by defendants as authority for their contention that this Court lacks jurisdiction over this suit, states:

No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . until a claim for refund or credit has been duly filed . . according to the provisions of law in that regard . . ..

Section 6532 of the Internal Revenue Code states that no suit under section 7422 may be brought until "the expiration of six months from the date of filing the claim required under that section unless the Secretary of the Treasury or his delegate renders a decision thereon within that time . . .."

For purposes of this suit, then, the Court lacks...