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ENGLAND v. WHITE

September 3, 1958

WILLIAM ENGLAND, PLAINTIFF,
v.
H.J. WHITE, INDIVIDUALLY AND AS DIRECTOR OF INTERNAL REVENUE FOR THE EASTERN DISTRICT OF ILLINOIS, AND O.E. DIECKMANN, INDIVIDUALLY AND AS REVENUE OFFICER OF THE INTERNAL REVENUE FOR THE EASTERN DISTRICT OF ILLINOIS, DEFENDANTS.



The opinion of the court was delivered by: Juergens, District Judge.

The plaintiff filed his complaint, asking this court to enjoin the defendants and all other persons in active concert with them from proceeding further with a levy to collect an alleged tax indebtedness by distraint until there has been a final determination of a case heretofore presented to this court, England v. United States, D.C., 164 F. Supp. 322 and presently pending final decision on appeal by the United States Circuit Court of Appeals for the 7th Circuit. [See 261 F.2d 455.]

The plaintiff heretofore filed a complaint in this court entitled "William England and Mary England v. United States of America" and known as "Civil No. 3773". The plaintiffs therein asked, among other things, for a declaratory judgment declaring a certain tax lien null and void, and to cancel a certain tax lien assessed by the United States Government against certain realty owned by the plaintiffs. This court denied the relief asked, since the provisions of the declaratory judgment act specifically exclude questions concerning federal taxes. From that decision the plaintiffs perfected an appeal to the United States Circuit Court of Appeals for the 7th Circuit, where the cause is currently pending decision.

In this action the plaintiff asks the court to issue an injunction prohibiting the collection of the tax, pending final outcome of the appeal referred to above.

The plaintiff has also presented his motion for preliminary injunction for basically the same reasons given in his complaint for injunction.

The defendants have filed their motion to dismiss the complaint for injunction and the motion for preliminary injunction for the reason that this court lacks jurisdiction over the subject matter and for the further reason that the complaint for injunction fails to state a claim upon which relief can be granted.

Under the provisions of Section 7421 of the Internal Revenue Code, 1954, 26 U.S.C.A. § 7421, suits to restrain assessment or collection of any tax are prohibited.

Section 7421, Internal Revenue Code, 1954, provides in pertinent parts as follows:

    "§ 7421. Prohibition of suits to restrain
  assessment or collection.
    "(a) Tax. — Except as provided in sections 6212(a)
  and (c), and 6213(a), no suit for the purpose of
  restraining the assessment or collection of any tax
  shall be maintained in any court."

Sections 6212(a) and (c) and 6213(a), 26 U.S.C.A. §§ 6212(a, c), 6213(a), are in no way applicable to the situation here presented; therefore, the prohibition against suit for the purpose of restraining an assessment or collection of any tax is pertinent to the present situation.

The plaintiff asserts that the section above referred to does not prohibit suits to enjoin the collection of a tax in all situations, that there are exceptions to the rule, and where exceptional circumstances exist a court may enjoin the collection of a tax notwithstanding the provisions of Section 7421. In this contention the plaintiff is correct. In Miller v. Standard Nut Margarine Company, 284 U.S. 498, 52 S.Ct. 260, 263, 76 L.Ed. 422, it was said:

    "Independently of, and in cases arising prior to,
  the enactment of the provision * * * which became
  Rev.St., § 3224 (now Section 7421), this court, in
  harmony with the rule generally followed in courts of
  equity, held that a suit will not lie to restrain the
  collection of a tax upon the sole ground of its
  illegality. The principal reason is that, as courts
  are without authority to apportion or equalize taxes
  or to make assessments, such suits would enable those
  liable for taxes in some amount to delay payment or
  possibly to escape their lawful burden, and so to
  interfere with and thwart the collection of revenues
  for the support of the government. And this court
  likewise recognizes the rule that, in cases where
  complainant shows that in addition to 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." (Insert added.)

In accordance with the holding of the United States Supreme Court in the Miller case, this court must look to the complaint and motion for preliminary injunction to determine whether or not such extraordinary circumstances exist, which would warrant this court in assuming jurisdiction of the case notwithstanding the prohibition of the statute.


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