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WHITE v. UNITED STATES

August 6, 1973

JOHN M. WHITE AND ANGELA B. WHITE, PLAINTIFFS,
v.
THE UNITED STATES OF AMERICA ET AL., DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

This cause comes on the defendants motion to dismiss the complaint.

This is an action for an interlocutory and permanent injunction restraining the enforcement of the levy of a jeopardy assessment provided for under 26 U.S.C. § 6862(a) and to restrain the collection of the Federal tax claimed to be due and owing on the grounds that the asserted assessment is allegedly excessive, arbitrary, capricious, without factual foundation, and based on illegally obtained evidence. The plaintiffs also seek a declaratory judgment pursuant to 28 U.S.C. § 2201 as to the invalidity of the purported assessment.

The plaintiffs are John M. White and Angela B. White, who are both citizens of the United States and residents of the City of Chicago, Illinois. The individual defendants are Roger C. Beck, Director of the Internal Revenue for Chicago, Illinois; Johnnie M. Walters, Commissioner of Internal Revenue of the United States; and James B. Conlisk, Superintendent of the Chicago Police Department.

The plaintiffs, in the complaint, allege, inter alia, the following facts:

  1.  On or about March 16, 1971 a jeopardy
      assessment of $9,320.20 was made against
      plaintiff, John M. White, by the United
      States of America acting through its agents,
      Edwin P. Trainor, then District Director of
      Internal Revenue for Chicago, Illinois, and
      Randolph W. Thrower, then Commissioner of
      Internal Revenue of the United States. On
      March 17, 1971 a similar jeopardy assessment
      of $9,320.00 was made against the plaintiff
      Angela B. White.
  2.  On or about March 16 and 18, 1971, a notice
      of levy was filed by the United States of
      America, in the amount of $9,320.00 against
      certain funds in the possession of the
      Chicago Police Department which funds are the
      property of the plaintiffs and were allegedly
      seized from the possession of the plaintiffs.
      No indication was given to the plaintiffs
      that assessments made were for unpaid
      wagering, excise and occupational taxes,
      pursuant to the provisions of 26 U.S.C. § 4401
      and 26 U.S.C. § 4411 and 4412. A conference
      between attorneys for plaintiffs and agents of
      the Internal Revenue Service indicated that the
      taxes assessed were, in fact, taxes on wagering
      for the period from January 1, 1971 to March
      21, 1971. No information was made available to
      plaintiffs or their attorneys concerning the
      basis for such assessments, and plaintiffs
      believe that it was made on the basis of

      illegally seized evidence. No returns
      concerning the excise tax imposed by
      26 U.S.C. § 4401 or for the special occupation tax
      imposed by 26 U.S.C. § 4411 and § 4412 were
      filed by the plaintiffs.
  3.  On August 20, 1971 a written request was made
      to the District Director of Internal Revenue
      to cancel the jeopardy assessment and to
      release the notice of levy. No action on such
      request has been taken and requests for a
      further conference with the District
      Director's staff have been ignored. On
      November 4, 1971 an order was entered by the
      Circuit Court of Cook County, Illinois,
      directing that the sum of $6,771.00 seized
      from the possession of John M. White be
      returned to him by the Chicago Police
      Department subject only to the levy of the
      Internal Revenue Service. Under the provision
      of 26 U.S.C. § 6321 and 6862, a tax claim
      becomes a lien in favor of the United States
      Government on all property of the taxpayer upon
      assessment.
  4.  Unless the plaintiffs can restrain the
      assessment and collection of the taxes
      alleged to be due and owing, the plaintiffs
      will be compelled to waive their Fifth
      Amendment privilege against self
      incrimination by filing a suit for refund.
      The remedy available to the plaintiffs of
      filing a suit for a refund is inadequate,
      since in any suit for refund the plaintiffs
      would have the burden of proving (a) that the
      assessment is invalid and (b) the amount of
      tax, if any, to which the United States
      Government would be entitled. To meet the
      burden of proof required of them under a suit
      for refund, the plaintiffs would necessarily
      be forced to testify as to gambling
      activities thereby exposing themselves to
      prosecution under state and federal law.
      Unless the plaintiffs are granted an
      injunction as requested they will suffer
      immediate and irreparable damage, and all of
      their property will become subject to seizure
      for the payment of the tax claim asserted by
      the United States Government, and plaintiffs
      have no adequate remedy at law. The levy and
      seizure of plaintiffs' funds violates the
      Fourth Amendment of the Constitution of the
      United States in that such levy and seizure
      Were not based upon reasonable cause. The
      Seizure of plaintiffs' records and funds upon
      which the jeopardy assessment was made
      violates the Fifth Amendment of the
      Constitution of the United States in that the
      use of such personal records compels
      plaintiffs to be witnesses against
      themselves.
  5.  The plaintiffs are entitled to and desire
      that this Court issue an interlocutory
      injunction and in due course a permanent
      injunction restraining and enjoining the
      defendants, acting through their agents,
      servants, employees and attorneys, and any
      and all other persons in active concert or
      participation with them, from continuing the
      following unconstitutional and unlawful acts:
      (a) continuing to detain, seize, and hold
      plaintiffs' money;
      (b) refusing to return to plaintiffs
      forthwith the said money that has been
      seized; and
      (c) instituting any further proceedings
      seeking to forfeit the money seized and held
      pursuant ...

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