Since the basic premise in Pipola was found to have been incorrect, its holding that the merits of the assessment could not be raised in a suit under 28 U.S.C.A. § 2410 was of doubtful validity. In Falik v. United States, 206 F. Supp. 181 (E.D.N.Y. 1962), the district court adopted this view, and held that the merits of an assessment could be challenged under section 2410. The Government says in effect that the Falik case was incorrectly decided, and that the O'Connor overruling of Pipola was limited to cases involving a section 7403 lien foreclosure suit by the Government.
The lien was for withholding and social security taxes due from two corporations, of which the Commissioner of Internal Revenue had found her to have been a responsible officer, see Internal Revenue Code of 1954, §§ 3102, 3403, 6672; Mrs. Falik alleged that this finding was erroneous. The United States made a motion to dismiss for want of jurisdiction, amplified by an accompanying affidavit which spoke of sovereign immunity and the bar against injunctive or declaratory tax relief; Judge Dooling denied the motion, 206 F. Supp. 181 (1962). Two and a half years later the Government made a second motion to dismiss for want of jurisdiction or other appropriate relief, citing decisions in other districts contrary to Judge Dooling's; the motion contained a request that, in the event of denial, the judge should grant a certificate for an interlocutory appeal under 28 U.S.C. § 1292(b).
Second Circuit announced Pipola was overruled in an opinion which held that a taxpayer may challenge the merits of a tax assessment in an action to enforce tax liens. United States v. O'Connor, 291 F.2d 520, 527 (2d Cir. 1961) (in suit under § 7403, assessment is presumptive but not conclusive). O'Connor created considerable confusion and some disagreement as to the extent to which it overruled Pipola. Compare, e.g., Quinn v. Hook, 231 F. Supp. 718, 721 (E.D.Pa. 1964) (district court opinion in Pipola has survived as the correct interpretation of § 2410), aff'd, 341 F.2d 920 (3d Cir. 1965) and Cooper Agency, Inc. v. McLeod, 235 F. Supp. 276, 284 (E.D.S.C. 1964) ( O'Connor court did not intend to overrule holding in Pipola that non-taxpayer could not commence action under § 2410 and inquire into merits of assessment), aff'd, 348 F.2d 919 (4th Cir. 1965), with Sonitz v. United States, 221 F. Supp. 762 (D.N.J. 1963) (plaintiff in § 2410 action may challenge merits of tax assessment) and Falik v. United States, 206 F. Supp. 181 (E.D.N.Y. 1962) (third party may attack validity of lien, as distinct from assessment, under § 2410), rev'd, 343 F.2d 38 (2d Cir. 1965). The Pipola court had reasoned that a challenge to the assessment by a third party was prohibited because the taxpayer himself could not test the validity of the assessment in a government action to enforce under § 7403.
The great weight of case law authorities have, however, taken a somewhat more restrictive view of the jurisdictional scope of § 2410, and have held that a taxpayer may not use § 2410 as a means to contest the merits of a tax assessment. Floyd v. United States, 241 F. Supp. 996 (W.D.S.C. 1965), aff'd., 361 F.2d 312 (4 Cir. 1966); Cooper v. McLeod, 235 F. Supp. 276 (E.D.S.C. 1964), aff'd., 348 F.2d 919 (4 Cir. 1965); Broadwell v. United States, 234 F. Supp. 17 (E.D.N.C. 1964), aff'd., 343 F.2d 470 (4 Cir. 1965), cert. den'd., 382 U.S. 825, 86 S.Ct. 57, 15 L.Ed.2d 70 (1965); Quinn v. Hook, 231 F. Supp. 718 (D.C.Pa. 1964), aff'd., 341 F.2d 920 (3 Cir. 1965); Batts v. United States, 228 F. Supp. 272 (E.D.N.C. 1964); Falik v. United States, 206 F. Supp. 181 (E.D.N.Y. 1962), rev'd., 343 F.2d 38 (2 Cir. 1965); Remis v. United States, 172 F. Supp. 732 (D.Mass. 1959), aff'd., 273 F.2d 293 (1 Cir. 1960); Coson v. United States, 169 F. Supp. 671 (S.D.Cal. 1958), modified and aff'd., 286 F.2d 453 (9 Cir. 1961).
The Third Circuit Court of Appeals in 1965 affirmed per curiam (341 F.2d 920), the opinion of former District (now Circuit) Judge Freedman in Quinn v. Hook, District Director, D.C.Pa. 1964, 231 F. Supp. 718, and cited also Baglivio v. Commissioner, D.C.Pa. 1964, 235 F. Supp. 493. In Quinn, Judge Freedman held the provisions of § 2410 unavailable to a plaintiff in a situation substantially similar to that of the plaintiff herein, and characterized Sonitz v. United States, D.C.N.J. 1963, 221 F. Supp. 762 and Falik v. United States, D.C.N.Y. 1962, 206 F. Supp. 181, as "unreal" in seeking "complete symmetry between proceedings by the Government and those against it, for this ignores the all-pervasive distinction that taxpayers are private citizens subject generally to suit, whereas the Government may be sued only with its consent * * * To read § 2410(a) as authorizing an inquiry into the validity of the assessment and the liability for the tax would * * * vitiate the congressional purpose behind the prohibitions of declaratory and injunctive relief in federal tax controversies. The consent of the United States to be made a party in mortgage foreclosure and quiet title proceedings where government liens are involved [ 28 U.S.C. § 2410] does not uproot these well established principles.
Quinn et al. v. Hook, supra, at 231 F. Supp. 718. Sonitz v. United States, 221 F. Supp. 762 (D.C.N.J. 1963); Falik v. United States, 206 F. Supp. 181 (E.D.N.Y. 1962) In light of the legislative history of Section 2410(a) it is apparent that the consent of the government, given under that section, does not extend to a taxpayer's attack on the merits of a tax assessment through the vehicle of a suit to quiet title.
This view is supported by the decisions in Batts v. United States, 228 F. Supp. 272 (E.D.N.C.); Quinn v. Hook, 231 F. Supp. 718 (E.D.Pa.); Gordon v. Bank of America National Trust Savings Association, 150 F. Supp. 772 (N.D.Calif.); and Commercial Credit Corp. v. Schwartz, 126 F. Supp. 728 (D.C.Ark.). See also Remis v. United States, supra. Contra are Falik v. United States, 206 F. Supp. 181 (E.D.N.Y.), and Sonitz v. United States, 221 F. Supp. 762 (D.C.N.J.). It is believed the latter two decisions are incorrect and do not represent the proper construction of Section 2410. It is necessary to trace the precedents relied on by the courts in Falik and Sonitz to understand why these decisions are incorrect.
See United States v. Leary, 228 F. Supp. 467 (D.Conn. 1963) and references therein. O'Connor was interpreted as completely overruling Pipola in Sonitz v. United States, 221 F. Supp. 762 (D.N.J. 1963) and Falik v. United States, 206 F. Supp. 181 (E.D.N.Y. 1962). The assessment has the effect of a judgment for taxes found due.
The plaintiffs, on the other hand, argue that since a statutory lien has attached to their property and the government has threatened to levy thereon, they are authorized by this section to test the validity of the deficiency assessments in seeking the removal of the cloud from the title to their property. Supporting this view they cite: United States v. O'Connor, 2 Cir., 291 F.2d 520 § 9495 (C.C.A.2d 1961); Falik v. United States, 206 F. Supp. 181 (E.D.N.Y. 1962); Sonitz v. United States, 221 F. Supp. 762 (D.C.N.J. 1963); Coson v. United States, D.C. Cal., 169 F. Supp. 671, modified and affirmed 286 F.2d 453 (C.C.A.9th 1961). Most of the confusion which evolves around § 2410 relates back to the decision by the Second Circuit in Pipola v. Chicco, 2 Cir., 274 F.2d 909 (1960), and its subsequent overruling by United States v. O'Connor, 2 Cir., 291 F.2d 520 (1961).
to enforce tax liens. United States v. O'Connor, 291 F.2d 520, 527, 7 A.F.T.R.2d (P-H) 1541 (2d Cir. 1961) (in suit under § 7403, assessment is presumptive but not conclusive). O'Connor created considerable confusion and some disagreement as to the extent to which it overruled Pipola. Compare, e.g., Quinn v. Hook, 231 F. Supp. 718, 721, 14 A.F.T.R.2d (P-H) 5136 (E.D. Pa. 1964) (district court opinion in Pipola has survived as the correct interpretation of § 2410), aff'd, 341 F.2d 920, 15 A.F.T.R.2d (P-H) 466 (3d Cir. 1965) and Cooper Agency, Inc. v. McLeod, 235 F. Supp. 276, 284, 14 A.F.T.R. (E.D.S.C. 1964) (O'Connor court did not intend to overrule holding in Pipola that non-taxpayer could not commence action under § 2410 and inquire into merits of assessment), aff'd, 348 F.2d 919, 16 A.F.T.R.2d (P-H) 5445 (4th Cir. 1965), with Sonitz v. United States, 221 F. Supp. 762, 12 A.F.T.R.2d (P-H) 5614 (D.N.J. 1963) (plaintiff in § 2410 action may challenge merits of tax assessment) and Falik v. United States, 206 F. Supp. 181, 10 A.F.T.R.2d (P-H) 5589 (E.D.N.Y. 1962) (third party may attack validity of lien, as distinct from assessment, under § 2410), rev'd, 343 F.2d 38, 15 A.F.T.R.2d (P-H) 566 (2d Cir. 1965). The Pipola court had reasoned that a challenge to the assessment by a third party was prohibited because the taxpayer himself could not test the validity of the assessment in a government action to enforce under § 7403.