James v. U.S.

• Decision Date: 09 September 1976
• Docket Number: No. 74-1867,74-1867
• Citation: 542 F.2d 16
• Parties: 76-2 USTC P 16,233 Luther Albert JAMES, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 16

542 F.2d 16

76-2 USTC P 16,233

Luther Albert JAMES, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 74-1867.

United States Court of Appeals, Sixth Circuit.

Sept. 9, 1976.

Charles C. McConnell, McConnell & Hough, Robert A. Kohn, Taustine, Post, Berman, Fineman & Kohn, Louisville, Ky., for plaintiff-appellant.

George J. Long, U. S. Atty., Louisville, Ky., Scott P. Crampton, Gary R. Allen, Asst. Atty. Gen., Tax Div. Dept. of Justice, Meyer Rothwacks, Ernest J. Brown, Jeffery Blum, Washington, D. C., for defendant-appellee.

Before PHILLIPS, Chief Judge, and CELEBREZZE and McCREE, Circuit Judges.

PHILLIPS, Chief Judge.

This case is before the court on remand from the Supreme Court. --- U.S. ----, 96 S.Ct. 1452, 47 L.Ed.2d 728 (1976).

In a per curiam opinion published at 510 F.2d 860 (6th Cir. 1975), this court affirmed the judgment of the District Court denying an application for an injunction to restrain the assessment or collection of wagering taxes.

On March 22, 1976, the Supreme Court entered the following order:

ON CONSIDERATION WHEREOF, it is ordered and adjudged by this Court that the judgment of the said United States Court of Appeals in this cause be, and the same is hereby, vacated with costs; and that this cause be, and the same is hereby, remanded to the United States Court of Appeals for the Sixth Circuit for further consideration in light of Commissioner of Internal Revenue v. Shapiro, 424 U.S. ---, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976).

It is further ordered that the said petitioner Luther Albert James, recover from the United States One Hundred Dollars ($100) for his costs herein expended.

The parties have filed supplemental briefs. The taxpayer contends that, upon authority of the decision of the Supreme Court in Commissioner of Internal Revenue v. Shapiro, 424 U.S. ---, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976), this court should reverse the decision of the District Court and enter the injunction as prayed in his complaint and amended complaint. The Tax Division of the Department of Justice asserts that the judgment of the District Court is in accord with the Supreme Court's decision in Shapiro and should be affirmed.

We conclude that the taxpayer in the present case has failed to satisfy either prong of the test enunciated in Enochs v. Williams Packing Co., 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962); and that the Government's affidavits meet the requirement that the assessment here in question have a basis in fact under the test enunciated in Shapiro.

Accordingly, we adhere to our affirmance of the judgment of the District Court.

The sole question to be decided on remand is whether the affidavits setting forth the basis of the jeopardy assessment, which were filed in support of the Government's motion for summary judgment, satisfied the requirements set forth in Shapiro with respect to the obligation of the Government to disclose the factual basis for the assessment in question.

Suits to enjoin the assessment and collection of taxes are prohibited by 26 U.S.C. § 7421. In Williams Packing the Supreme Court recognized a narrowly limited judicial exception to § 7421. It was held that the collection of the tax can be enjoined only if (1) under the most liberal view of the law and facts, the Government cannot prevail ultimately with respect to its claim, and (2) the traditional requisites for equitable relief are present. 370 U.S. at pp. 6-8, 82 S.Ct. 1125. In so holding, the Supreme Court noted that the question of whether the Government has a chance of prevailing is to be determined on the basis of information available to it at the time of suit. 370 U.S. at 7, 82 S.Ct. 1125.

We do not read Shapiro as departing from the standard enunciated in Williams Packing, nor does it relieve the taxpayer of the ultimate burden of persuading a District Court that both of the Williams Packing prerequisites for obtaining relief have been established. We construe Shapiro to hold that the Government has some obligation to disclose the factual basis for its assessment in response to a discovery request or court order, particularly where "the seizure will injure the taxpayer in a way that cannot be adequately remedied." 424 U.S. at ---, 96 S.Ct. at 1073.

The record in the present case demonstrates to our satisfaction that the facts presented here are different from those presented in Shapiro and that the proceedings in the District Court and the decision of this court fall well within the guidelines of Shapiro.

In Shapiro the Government provided no adequate explanation of assessments against a taxpayer who was scheduled to be extradited to Israel three days later for trial on criminal fraud charges. In the present case the Government disclosed the information required by Shapiro. It was upon the basis of this showing that the District Court concluded that the taxpayer could not establish the Government...