Katz v. Commissioner of the Internal Revenue Service

Full title: MICHAEL KATZ, Plaintiff, v. COMMISSIONER OF THE INTERNAL REVENUE SERVICE…

Court: United States District Court, N.D. Texas, Dallas Division

Date published: Mar 11, 2003

3:02-CV-2687-M (N.D. Tex. Mar. 11, 2003)

Opinion

3:02-CV-2687-M

March 11, 2003

ORDER

BARBARA M. G. LYNN, United States District Judge.

Before the Court is Plaintiff's Request for Injunctive Relief, filed December 16, 2002, and Defendant's Motion to Dismiss, filed December 24, 2002. For reasons stated below, the Court finds that Defendant's Motion should be granted.

On November 11, 2002, the Internal Revenue Service ("IRS") sent Plaintiff a notice of intent to levy unless Plaintiff paid within ten days $148,215.00 in taxes and interest due for the 1988 tax period. Plaintiff seeks an injunction that would prevent Defendant's collection activities.

The Anti-Injunction Act, 26 U.S.C. § 7421, provides that. . . . no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person. . . .¹ Statutory exceptions to the Anti-Injunction Act exist, but none are asserted here. Instead, Plaintiff relies on a narrow judicial exception. In order for the exception to apply, the taxpayer must establish that (1) under no circumstances could the Government ultimately prevail; and (2) equity jurisdiction exists because the taxpayer would suffer irreparable injury.²

1 26 U.S.C. § 7421 (a).

2 Smith v. Rich, 667 F.2d 1228, 1230-31 (5th Cir. 1982) (citing Enochs v. Williams Packing and Navigation Co., 370 U.S. 1, 6-7 (1962)).

The Court must be satisfied that both these requirements apply before exercising its jurisdiction. First, the Court must determine that there are no circumstances under which the Government would prevail in this action. Plaintiff contends that his tax liability is cancelled by the tax credit he claimed in 2002, alleged "improper offsets" by the IRS, and the IRS's alleged failure to pay him a tax refund. However, the proof Plaintiff offers in support of his allegations fails to convince the Court that the Government cannot prevail in this action.

Attached to his request for injunction, Plaintiff presents a copy of a 1040 form dated September 2, 2002 on which he claimed an adjusted gross income of-$259,257. It is unclear whether this form was ever filed with the IRS and whether it reports Plaintiff's income or income of a business or corporate entity. Additionally, there is no explanation why Plaintiff's negative adjusted gross income in 2002 obviates his responsibility to pay his 1988 tax bill. Plaintiff presents a copy of an unidentified document apparently detailing transactions between November 11, 1977 and November 12, 1990 relating to his income tax balance. This document does not make clear to the Court that the IRS owes Plaintiff any money. Plaintiff also alleges that he requested a refund in 1979 but fails to state the amount requested and offers no proof that he made the request or that the IRS improperly failed to remit a refund to him.

Finally, Plaintiff contends that the IRS's collection activities as to Plaintiff's 1988 tax bill are barred by the statute of limitations. The Court requested the Government to provide documentary evidence in connection with the assessment dates as related to the statute of limitations issue. In response, the Government provided a copy of a judgment in a criminal case which states that Plaintiff pled guilty to charges that he filed a false tax return in 1988. Where an individual has either filed a false or fraudulent tax return with intent to evade tax or where an individual has willfully attempted to evade payment of tax, the "tax may be assessed . . . at any time."³ Thus, Plaintiff cannot show that the statute of limitations bars the Government's assessment and collection of the taxes due in 1988.

3 26 U.S.C. § 6501 (c)(1) and (2).

The purpose of the Anti-Injunction Act is "`the protection of the Government's need to assess and collect taxes as expeditiously as possible with a minimum of pre-enforcement judicial interference and to require that the legal right to the disputed sums be determined in a suit for refund.'"⁴ Because Plaintiff has failed to show that the Government cannot prevail in this action, the exception cited by Plaintiff to the Anti-Injunction Act does not apply and the Court will not exercise jurisdiction in this case. Defendant's Motion to Dismiss is therefore GRANTED, and this case is dismissed with prejudice, with costs taxed to the Plaintiff.

4 Smith, 667 F.2d at 1230 (quoting Bob Jones University v. Simon, 416 U.S. 725, 736 (1974)).

SO ORDERED.