Rinieri v. Scanlon

• Decision Date: 20 April 1966
• Docket Number: No. 63 Civ. 3279.,63 Civ. 3279.
• Citation: 254 F. Supp. 469
• Parties: Antoine B. RINIERI, Plaintiff, v. Thomas E. SCANLON, District Director of Internal Revenue for the District of Brooklyn, New York, Defendant.
• Court: U.S. District Court — Southern District of New York

254 F. Supp. 469

Antoine B. RINIERI, Plaintiff, v. Thomas E. SCANLON, District Director of Internal Revenue for the District of Brooklyn, New York, Defendant.

No. 63 Civ. 3279.

United States District Court S. D. New York.

April 20, 1966.

Joy, Hallinan & Finn, New York City, for plaintiff, C. Joseph Hallinan, Jr., Harris, Witlin & Fishkin, Saul L. Harris and Jesse Fishkin, New York City, of counsel.

Robert M. Morgenthau, U. S. Atty., for defendant, Arthur S. Olick, Asst. U. S. Atty., of counsel.

LEVET, District Judge.

This is an income tax refund action. It was assigned to me for all purposes under Rule 2, General Rules of the Southern and Eastern Districts of New York. Plaintiff has moved for summary judgment.

The action grows out of the fact that on June 18, 1962, plaintiff was found to have in his possession at Idlewild Airport, New York, New York, the sum of $247,500 in United States currency. Plaintiff is a French citizen and landed at New York as a passenger on a flight which departed from Chicago, Illinois, and was scheduled to terminate in Zurich, Switzerland.

Once it was learned that plaintiff had the sum of money in his possession, it is undisputed that the following actions were taken:

1. On June 18, 1962, the Federal Narcotics Bureau seized the money ($247,500) in the hands of plaintiff and turned it over to the Internal Revenue Service (IRS).

2. On June 21, 1962, allegedly pursuant to Section 6861, Internal Revenue Code of 1954, a jeopardy assessment in the amount of $247,820 was levied against plaintiff and his assets.

3. On or about June 25, 1962, the District Director notified plaintiff in writing that:

(a) Plaintiff had concealed his property in order to hinder collection of income taxes justly due and to become due for the period January 1, 1962 to June 21, 1962.

(b) In accordance with Section 6851 of the Internal Revenue Code of 1954, the Director immediately terminated the taxable year of plaintiff beginning January 1, 1962 and ending June 21, 1962 and declared the income taxes therefor immediately due and payable.

(c) The taxes due for the period were $247,820, which amount was to be paid immediately. (See Pl. Ex. J, 9/26/65)

4. On or about June 21, 1962, the Director, allegedly pursuant to Section 6020, Internal Revenue Code of 1954, filed a so-called "Dummy" return for plaintiff, Form 1040B, "U. S. Non-Resident Alien Income Tax Return." The "Dummy" return and accompanying papers showed taxes due for the period from January 1, 1962 through June 21, 1962 in the sum of $247,820.

5. On August 23, 1962, the Director acknowledged receipt of $247,500. On October 26, 1962, a refund of $10,000 was made to plaintiff.

6. On December 27, 1962, plaintiff executed a "U. S. Departing Alien Income Tax Return" showing no income earned in the United States and no tax due.

7. Plaintiff duly filed a claim for refund for the entire amount in the hands of the government, which was denied, and thereafter plaintiff duly instituted this action.

STATUTES

The statutes involved herein are as follows:

1. Sections 6851(a) (1) and (d), Internal Revenue Code of 1954, which are as follows:

"§ 6851. Termination of taxable year

"(a) Income tax in jeopardy.—

"(1) In general—If the Secretary or his delegate finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the income tax for the current or the preceding taxable year unless such proceedings be brought without delay, the Secretary or his delegate shall declare the taxable period for such taxpayer immediately terminated, and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable year or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall thereupon become immediately due and payable. In any proceeding in court brought to enforce payment of taxes made due and payable by virtue of the provisions of this section, the finding of the Secretary or his delegate, made as herein provided, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of jeopardy.

* * * * * *

"(d) Departure of alien.—Subject to such exceptions as may, by regulations, be prescribed by the Secretary or his delegate—

"(1) No alien shall depart from the United States unless he first procures from the Secretary or his delegate a certificate that he has complied with all the obligations imposed upon him by the income tax laws.

"(2) Payment of taxes shall not be enforced by any proceedings under the provisions of this section prior to the expiration of the time otherwise allowed for paying such taxes if, in the case of an alien about to depart from the United States, the Secretary or his delegate determines that the collection of the tax will not be jeopardized by the departure of the alien."

2. Sections 6861(a) and (b), Internal Revenue Code of 1954, which are as follows:

"§ 6861. Jeopardy assessments of income, estate, and gift taxes

"(a) Authority for making.—If the Secretary or his delegate believes that the assessment or collection of a deficiency, as defined in section 6211, will be jeopardized by delay, he shall, notwithstanding the provisions of section 6213(a), immediately assess such deficiency (together with all interest, additional amounts, and additions to the tax provided for by law), and notice and demand shall be made by the Secretary or his delegate for the payment thereof.

"(b) Deficiency letters.—If the jeopardy assessment is made before any notice in respect of the tax to which the jeopardy assessment relates has been mailed under section 6212(a), then the Secretary or his delegate shall mail a notice under such subsection within 60 days after the making of the assessment."

(3) Section 6020, Internal Revenue Code of 1954, which is as follows:

"§ 6020. Returns prepared for or executed by Secretary

"(a) Preparation of return by Secretary. —If any person shall fail to make a return required by this title or by regulations prescribed thereunder, but shall consent to disclose all information necessary for the preparation thereof, then, and in that case, the Secretary or his delegate may prepare such return, which, being signed by such person, may be received by the Secretary or his delegate as the return of such person.

"(b) Execution of return by Secretary.—

"(1) Authority of Secretary to execute return—If any person fails to make any return (other than a declaration of estimated tax required under section 6015 or 6016) required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the Secretary or his delegate shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise.

"(2) Status of returns—Any return so made and subscribed by the Secretary or his delegate shall be prima facie good and sufficient for all legal purposes."

The government also cites Sections 861 (a) (3) and 871(c), Internal Revenue Code of 1954.

PROOF OF THE PLAINTIFF

On this motion plaintiff has submitted his own affidavit, sworn to January 27, 1964; a lengthy deposition of plaintiff taken in Paris, France at the instance of the United States; and certain documentary exhibits. The plaintiff's testimony is substantially as follows:

1. On June 12, 1962, plaintiff arrived in New York City by air from Paris, France. He brought with him cash of approximately $247,000 which he said represented what he had earned over a period of time buying and selling art.

2. Plaintiff came to the United States in order to buy an art object. He hoped to purchase same from a Mr. Anderson.

3. After arriving at Idlewild at 7:30 P.M. on June 12, 1962, plaintiff went to the Plaza Hotel at Fifth Avenue and 59 Street, registered and deposited this money in a safe deposit box at the hotel.

4. Rinieri went to the "21" Club after registering at the Plaza. Here he had an appointment with the prospective vendor. No one appeared. He remained at the "21" Club until 10:30 P.M., paid his check and returned to the Plaza.

5. The next day, June 13, 1962, plaintiff traveled by air from Newark Airport, Newark, New Jersey, to Charlotte, North Carolina via Eastern Airlines, arriving at Charlotte at 9:05 A.M., and then going from Charlotte to Asheville, where he arrived at 10:15 A.M.

6. In Asheville plaintiff stayed with a friend, one Gennett, as a guest from June 13 to June 18, 1962. Gennett introduced plaintiff to the Wachovia Bank in Asheville, where plaintiff put the money into a safe deposit box registered in the joint names of plaintiff and Gennett.

7. On June 18, 1962 plaintiff flew from Asheville to Chicago and there boarded a Swiss airplane which was to fly via Montreal, Canada to Zurich, Switzerland. The plane was rerouted to New York. That evening plaintiff had in his possession $247,500 in United States currency. Plaintiff was arrested at Idlewild Airport.

The affidavit and the deposition are generally consistent. The government goes to some lengths to point out alleged inconsistencies, but it is far from clear that the various statements are inconsistent. In my view they do not conflict. Moreover, the government points to no inconsistency in the material portions of the testimony—whether the money was earned here or brought in with plaintiff, what plaintiff's purpose was in coming to this country, and what plaintiff's actions and movements were while in this country.

In further support of his position, plaintiff offers, among other documents, various letters...