Opinion
Case No. 2:04-167.
March 29, 2005
OPINION ORDER
This matter is before the Court on Defendant Prather's Motion to Cease Garnishment of Social Security Retirement Benefits (Doc. # 4). The Court has reviewed this matter and makes the following determination.
FACTUAL BACKGROUND
According to the complaint, Defendant Beckham Prather, Jr. owes the Federal Government $1,659,919.00 in back taxes, interest and penalties. On November 19, 2002, the United States District Court for the Southern District of Ohio, Western Division, determined that: 1) the B.S.P. Holding Trust was the alter ego of defendant Beckham Prather; 2) that the United States has valid and subsisting tax liens on the property of defendant and rights to property of defendant resulting from his failure to pay the assessments described above; 3) that the tax liens have attached to the property titled by Beckham Prather, Jr. in the name of B.S.P. Holding Trust; and 4) that based on the assessments, the United States was entitled to a judgment against Beckham Prather for $1,659,919.00. A review of the prior case in the Southern District of Ohio reveals that Defendant has had a respectable income and the garnishment of the social security benefits has not been alleged to be needed for living expenses.
The United States filed a complaint seeking to have the title to the properties held under B.S.P. Holding Trust to be set aside, a determination that the liens arising from the assessments are valid and that other certain property be foreclosed against and the proceeds be distributed and applied to the outstanding assessments.
Apparently, as part of the United States efforts to collect taxes, it has also garnished 100% of the Defendant's Social Security Retirement Benefits. Defendant claims that, pursuant to the "Tax Relief Act of 1997," the IRS is entitled to levy only 15% of monthly payments. Defendant seeks an order requiring the IRS to comply with the Act and collect only the 15%.
The issue presented to the Court for review is whether the IRS is entitled to collect 100% or 15% of the Defendant's Social Security Retirement Benefits to satisfy delinquent federal income taxes of over $1,000,000.00.
Defendant claims the IRS may collect only 15% and cites to the Tax Payer Relief Act in support. However, the USA claims they may collect 100% of the Defendant's social security retirement benefits pursuant to 26 U.S.C. $6331(a). They also assert that the United States is immune from suit because this is essentially a suit to enjoin the collection of federal income taxes and there is no waiver of sovereign immunity for this type of suit. Moreover, the United States asserts that the suit is barred by the Anti-injunction Act.
Based upon the following analysis, the Court finds that Defendant's Motion is barred by the Anti-Injunction Act and review of this dispute should be before the United States Tax Court.
ANALYSIS
Defendant asserts that the United States can only garnish up to 15% of his social security benefits. In support of this proposition, the Defendant attaches to his motion a copy of correspondence that addresses the Tax Payer Relief Act. It is not clear of what kind, if any, legal authority this correspondence represents.
Plaintiff asserts that the United States is immune from suit unless it consents to be sued, that the motion is barred by the Anti-Injunction Act and that even if the suit were allowed to go forward, the 100% garnishment is authorized by specific statutes.
This matter can be addressed most readily by reference to the Anti-Injunction Act. The purpose of the Anti-Injunction Act is "to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund." J.L. Enochs v. Williams Packaging Navigation Co., 370 U.S. 1, 7 (1962). Thus, the courts are specifically prohibited from exercising jurisdiction over a suit "for the purpose of restraining the assessment of or collection of any tax." Romp v. United States of America, 2003 WL 21805993 (N.D.Ohio) (citing 26 U.S.C. § 7421(a)).
The purpose of this motion by the Defendant is to restrain the collection of tax. Defendant would be hard pressed to argue that to reduce the amount by which his social security benefits are garnished is anything but an attempt to restrain the collection of tax. Therefore, this Court is without jurisdiction to proceed on this issue and it should be brought before the United States Tax Court.
Therefore, the Court being advised,
IT IS ORDERED that the Defendant's Motion to Cease Garnishment of Social Security Retirement Benefits be, and is hereby, DENIED.