Sipkoff v. Whinston
Decision Date | 04 January 1973 |
Docket Number | Civ. No. 72-582. |
Parties | Saul SIPKOFF, Plaintiff, v. Alfred L. WHINSTON, District Director, Internal Revenue Service, Defendant. |
Court | U.S. District Court — Middle District of Pennsylvania |
Patrick H. Mulvany, York, Pa., for plaintiff.
S. John Cottone, U. S. Atty., Scranton, Pa., Fred D. Scott, Jr., U. S. Dept. of Justice, Washington, D. C., for the Government.
The United States of America has moved to dismiss plaintiff's complaint for a preliminary injunction.1
Plaintiff seeks to enjoin the defendant from levying on his assets until plaintiff's claim for a refund has been determined. On September 18, 1972, plaintiff was assessed a 100% penalty of $8,330.39 for the alleged willful failure to remit income and FICA withholding taxes from employees of Wilkay, Inc. for the final quarter of 1969 and for January 1970. On September 28, 1972, plaintiff payed to defendant $250.00, as payment for the taxes due for one employee for the periods in question, and filed a claim for a refund of that amount. Plaintiff argues that he is not the responsible "person" contemplated in Internal Revenue Code of 1954, Section 6671(b), and that failure to comply with the Code was not due to any "willfulness" on his part, pursuant to Internal Revenue Code of 1954, Section 6672.
The United States of America moved to dismiss on the ground that not only has the United States not waived its sovereign immunity, but there is a specific statute prohibiting this suit.
Plaintiff was the president of Wilkay, Inc., Littlestown, Pennsylvania. He alleges he is not the person responsible for payment of the tax, but that the bookwork, accounting and the handling of the payroll account were managed by other corporate officials. Plaintiff contends a levy on his property will result in his insolvency. Besides possible loss of home, automobile and other property, he would also lose his business and job. Plaintiff says he cannot borrow the money to pay the tax because of the IRS assessment.
Plaintiff argues that Section 7421(a) is not applicable since he does not seek to permanently restrain the assessment or collection of the tax, nor to contest the merits of the assessment. He seeks to enjoin preliminarily the tax levy until a determination is made on his refund claim. The statute, however, makes no distinction between a temporary or permanent restraint, nor has the plaintiff cited or the court found any authority to support this contention. See, e. g., Wahler v. Church, E.D.N.Y. 1966, 260 F.Supp. 307; Cooper Agency v. McLeod, E.D.S.C.1965, 247 F.Supp. 57, in which actions for a temporary and preliminary injunction were dismissed.
Plaintiff contends if Section 7421(a) is applicable, the circumstances here come within the exception to the statute set forth in Miller v. Nut Margarine Co., 1932, 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed. 422, and Enochs v. Williams Packing and Navigation Co., Inc., 1962, 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed. 2d 292. In Miller, the Court found plaintiff's product not to be within the Oleomargarine Tax Act, and therefore held the tax was clearly illegal. The Court laid down two criteria to enjoin a tax collection: ". . . in cases where complainant shows that in addition to the illegality of an exaction in the guise of a tax there exist special and extraordinary circumstances sufficient to bring the case within some acknowledged head of equity jurisprudence, a suit may be maintained to enjoin the collector." p. 509 of 284 U.S., p. 263 of 52 S.Ct. In Enochs, the Court elaborated on the criteria established in Miller:
The burden is on the plaintiff to demonstrate that this case comes within the narrow exception of Miller and Enochs. Plaintiff has not met this heavy burden, and therefore the action must be dismissed.
Plaintiff's situation undoubtedly comes within the head of equity jurisprudence. At this time he lacks an adequate legal remedy. He must wait six months or until the Internal Revenue Service makes the refund determination before suit can be commenced. Internal Revenue Code of 1954, Section 6532(a) (1). A later suit for a refund would be inadequate after a loss of property and job. Irreparable harm alone, however, is not sufficient to overcome Section 7421(a). Plaintiff must also show the tax is clearly illegal. He acknowledges that he was the president of Wilkay's with certain responsibilities and privileges. He has not established under the Enochs test that "under the most liberal view of the law and the facts, the United States cannot establish its claim," i. e., the plaintiff, as president, was not the "person" within the meaning of Section 6671(b), and he did not willfully evade the tax, Section 6672. Galanti v. United States, D.N.J.1965, 244 F.Supp. 528; McCann v. United States, E.D.Pa.1965, 248 F.Supp. 585; Kelly v. Lethert, 8 Cir. 1966, 362 F.2d 629; Quinn v. Hook, E.D.Pa.1964, 231 F.Supp. 718, aff'd, 341 F.2d 920; Wahler v. Church, supra. Plaintiff cites Ruby v. Mayer, D.N.J.19...
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...remedy barring equitable relief. See Westgate-California Corp. v. United States, 496 F.2d 839, 843 (9th Cir.1974). In Sipkoff v. Whinston, 354 F.Supp. 683 (M.D.Pa.1973), the IRS threatened to levy on a taxpayer's assets. The court found irreparable injury because the levy would allegedly ha......
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Commonwealth Development Ass'n of Pa. v. United States
...v. Nut Margarine Co., 1932, 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed. 422; Iannelli v. Long, 3 Cir. 1973, 487 F.2d 317; Sipkoff v. Whinston, M.D.Pa.1973, 354 F. Supp. 683. Plaintiff claims Section 7421(a) is not applicable here since it does not seek to restrain the assessment or collection of a......
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