Steiner v. Nelson, 12274.

• Decision Date: 16 October 1958
• Docket Number: No. 12274.,12274.
• Citation: 259 F.2d 853
• Parties: Harold G. STEINER and Ollie Mae Steiner, Plaintiffs-Appellees, v. Emil J. NELSON, as District Director, United States Treasury Department, Internal Revenue Service for the State of Wisconsin, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

259 F.2d 853 (1958)

Harold G. STEINER and Ollie Mae Steiner, Plaintiffs-Appellees, v. Emil J. NELSON, as District Director, United States Treasury Department, Internal Revenue Service for the State of Wisconsin, Defendant-Appellant.

No. 12274.

United States Court of Appeals Seventh Circuit.

October 16, 1958.

Charles K. Rice, Asst. Atty. Gen., Grant W. Wiprud, Atty., Tax Division, U. S. Dept. of Justice, Washington, D. C., Edward G. Minor, U. S. Atty., Milwaukee, Wis. (Lee A. Jackson, I. Henry Kutz, S. Dee Hanson, Attys., Dept. of Justice, Washington, D. C., Francis L. McElligott, Asst. U. S. Atty., Milwaukee, Wis., on the brief), for appellant.

William M. Ward, Chicago, Ill. (Robert J. Downing, Chicago, Ill., on the brief; Mitchell & Conway, Chicago, Ill., of counsel), for plaintiffs-appellees.

Before FINNEGAN, SCHNACKENBERG and PARKINSON, Circuit Judges.

FINNEGAN, Circuit Judge.

In this case, during the hearings below, government counsel representing the defendant-appellant, District Director, conceded that Form 870M, U.S. Treasury Department, "Waiver of Restrictions on Assessment and Collection of Deficiency in Tax" was "not accepted personally by the Commissioner in Washington," and "As a matter of fact, although it does not appear from the record . . . counsel would concede that this waiver was not forwarded to the Commissioner in Washington. It was acted on, accepted, and the assessment based upon that acceptance was made by the defendant in this action."¹ The "90-day letter," or statutory notice, mandated by I.R.C.1939, § 272,² as amended, was not sent to the taxpayers, Harold G. Steiner and Ollie Mae Steiner, his wife. Acting under I.R.C.1954, § 6213, 26 U.S. C.A. § 6213 (formerly § 272(a), I.R.C. 1939) the defendant District Director proceeded to make levies on taxpayers' property and they filed a complaint for injunction in the district court seeking to have defendant, and other Revenue Department officials, enjoined "from making, beginning or prosecuting any distraint or proceeding in court or from issuing any summonses, subpoenas or levies for the collection of the taxes allegedly due the United States Government for the year 1945 from Harold G. Steiner, one of the plaintiffs herein for the years 1946 and 1947 from Harold G. Steiner and Ollie Mae Steiner, plaintiffs herein, until the expiration of the 90-day period after notice of a determination of deficiency is properly mailed in the manner set forth and within the time limited by the appropriate provisions of the Internal Revenue Code to the Plaintiffs by the Commissioner of Internal Revenue, or, if a petition is filed with the Tax Court, until the decision of the Tax Court may become final," and plaintiffs further prayed: "that the levies heretofore made by the Defendant herein pertaining to the collection of alleged income tax due from the Plaintiffs pertaining to the years 1945, 1946 and 1947 be declared null and void and to take such action as is necessary to release any and all of said levies and to return to Plaintiffs any and all monies collected pursuant to said illegal levies."

The Director's motion to dismiss taxpayers' complaint for injunction was overruled by an opinion reported below as Steiner v. Reisimer, D.C.Wis.1957, 148 F.Supp. 192, in which the district judge concluded there was jurisdiction under 26 U.S.C. § 6213(a), and that 26 U.S.C. § 7421 would not, under the relevant facts, bar injunctive relief. After his motion was denied the Director filed an answer to the complaint and taxpayers moved for summary judgment, supporting their motion with affidavits. Counter-affidavits were interposed by the Director who has appealed from the order of summary judgment for taxpayers entered July 10, 1957, as well as from an order refusing amendment of the order granting permanent injunction.³

Exhibits "A" and "B", attached to the complaint, are two U. S. Treasury Department Forms 870M. It is undisputed that Harold G. Steiner signed Exhibit A and he and his wife each, respectively, signed Exhibit B. Moreover, it is admitted that government conferee Steers directed the insertion of typewritten paragraphs, indicated below, on these forms before they were mailed out to these taxpayers. For convenience we show a composite of these two exhibits since they are identical save for the lines indicated "A" and "B".

"In re: Harold G. Steiner, Mauston, Wisconsin. O:A:OA-1 DCS-2

"Waiver Of Restrictions On Assessment and Collection Of Deficiency In Tax

"Pursuant to the provisions of Section 272(d) of the Internal Revenue Code, and/or the corresponding provisions of prior internal revenue laws, the restrictions provided in 272(a) of the Internal Revenue Code, and/or the corresponding provisions of prior internal revenue laws, are hereby waived and consent is given to the assessment and collection of the following deficiency or deficiencies in income tax and/or excess profits tax, and penalty or penalties, together with interest on the deficiency in tax as provided by law:

                  Per Exhibit "A"                      Addition    Addition
                                                          Section     Section
                    "Year  Deficiency 50%     Penalty  294(d)(1)(A)  294(d)(2)
                     1945  $15,447.95      $7,723.98                   $926.88
                  *      *      *      *      *      *      *      *      *
                  Per Exhibit "B"                      Addition    Addition
                                                          Section     Section
                    "Year  Deficiency 50%     Penalty  294(d)(1)(A)  294(d)(2)
                     1946   $77,361.33     $38,680.66      ---       $4,641.68
                     1947    60,212.05      30,106.03     $6,239.41   3,612.72
                           ___________     __________     _________  _________
                  Totals   $137,573.38     $68,786.69     $6,239.41  $8,254.40
                  *      *      *      *      *      *      *      *      *
                

Typewritten Material

"This waiver of restrictions is subject to acceptance by the Commissioner on the basis of the settlement hereinbefore proposed and if not accepted, it will be of no force or effect.

Typewritten Insert

"If this proposal is accepted, the taxpayer agrees not to file thereafter any claim for refund for the year 1945: and upon request of the Commissioner, will execute at any time a final closing agreement under the provisions of section 3760 of the Internal Revenue Code 26 U.S. C.A. § 3760.

Signature Lines Omitted

* * * * * * * * *

Date: September 7, 1954.

By ........, ...................

"Note. — The execution and filing of this waiver at the address shown in the accompanying letter will expedite the adjustment of your income tax liability as indicated above. It is not, however, a final closing agreement under section 3760 of the Internal Revenue Code and does not, therefore, preclude the assertion of a further deficiency in the manner provided by law should it subsequently be determined that additional tax is due, nor does it extend the statutory period of limitation for refund assessment, or collection of the tax.

"If this waiver is executed with respect to a year for which a joint return of a husband and wife was filed, it must be signed by both spouses, except that one spouse may sign as the agent for the other.

"Where the taxpayer is a corporation, the waiver shall be signed with the corporate name, followed by the signature and title of such officer or officers of the corporation as are empowered to sign for the corporation, in addition to which the seal of the corporation must be affixed."

In this instance, the government insists on a chance to explain away its own admission that the Commissioner simply did not accept the waivers. To aid its contention that summary judgment under Rule 56, Federal Rules of Civil Procedure, 28 U.S.C., was improper, the Director refers to various factual questions he claims roam widely over the intellectual terrain objectified by the pleadings and affidavits. Defendant's theme is summarized in his brief, at one place, by this passage: "The Director claims that under the record circumstances he is entitled to a trial and to be allowed to offer oral and written evidence to show that the waiver here was under its terms effective and the Government had evidenced sufficiently that the assessments would be in the amounts stated in the Forms 870M `on the basis of the settlement hereinbefore proposed' * * at the conference between Steers and taxpayer and his representatives." But this ignores one of the outstanding aspects of the case and dominating the proceedings below when the following colloquy occurred:

"The

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