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Rappaport v. United States

decided: July 17, 1978.


Appeal from the United States District Court for the Northern District of Illinois. Eastern Division. No. 76 C 887 - John F. Grady, Judge.

Before Fairchild, Chief Judge, Cummings, Circuit Judge, and Grant, Senior District Judge.*fn**

Author: Per Curiam

Appellant Julius Rappaport (hereinafter referred to as the "taxpayer") appeals from a judgment of the district court in favor of defendant. The district court held that an action brought by taxpayer to have a tax assessment made against him for 1970 declared invalid and to enjoin the collection of the taxes allegedly owed by him for that period was barred by the Anti-Injunction Act, § 7421 of the Internal Revenue Code,*fn1 and the Declaratory Judgment Act, 28 U.S.C. § 2201.*fn2 We affirm.


The facts are not in dispute and can be summarized as follows. For most of 1970, taxpayer was employed as an office manager and agent for American Agronomics in the Cleveland, Ohio area. On November 2, 1970, taxpayer was indicted by an Ohio grand jury for allegedly embezzling more than $181,000 from American Agronomics during the period from April 18, 1970 through August 31, 1970. Taxpayer, however, had left the Cleveland area sometime in 1970 or 1971 and moved to Chicago, Illinois, where he lived under an assumed name.

In late 1973, taxpayer was finally brought before an Ohio court where he pleaded guilty to charges that he had embezzled over $181,000 from American Agronomics. The court imposed a five-year sentence, provided taxpayer make restitution of at least $90,000 of the embezzled funds over the next fifteen years in installments of at least $500 each month.

After an audit, the Commissioner determined that the embezzled funds plus an additional $16,950 should have been reported by taxpayer as part of his 1970 taxable income. On November 15, 1973, the Commissioner sent taxpayer by certified mail a deficiency notice pursuant to § 6212 of the Internal Revenue Code.*fn3 This notice stated that there was a deficiency in taxpayer's 1970 tax, gave the grounds for this determination, and further stated that the Commissioner was required by law to assess the tax in question ninety days from the date the notice was mailed unless taxpayer filed a petition in the United States Tax Court during this ninety-day period. Although the notice was mailed to the most current address available in the Service's files, taxpayer never received the notice since he had assumed a different name and had moved to Chicago without leaving a forwarding address.

After the ninety-day period described in the deficiency notice had elapsed, the Commissioner proceeded to assess the taxes owed by taxpayer. Sometime thereafter, taxpayer received a letter from the Service, dated May 24, 1974, sent to the same address to which the deficiency notice had been mailed. This letter requested payment of the taxes that had been previously assessed against taxpayer for 1970. Rather than paying the tax in question and suing for a refund, taxpayer brought an action in the district court for declaratory and injunctive relief. The district court granted the government's motion for summary judgment and this appeal followed.


At the outset, taxpayer is faced with several jurisdictional hurdles which must be overcome before a district court could hear his claims for relief. The Anti-Injunction Act, § 7421 of the Internal Revenue Code, 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 . . . ." The language of the statute "could scarcely be more explicit." Bob Jones University v. Simon, 416 U.S. 725, 736, 94 S. Ct. 2038, 2046, 40 L. Ed. 2d 496 (1973). The primary purpose of the statute is "protection of the Government's need to assess and collect taxes with a minimum of pre-enforcement judicial interference . . . ." Id. The Court has also suggested that a collateral purpose of the Act is the protection of the collector from litigation pending a refund suit. Enochs v. Williams Packing Co., 370 U.S. 1, 7-8, 82 S. Ct. 1125, 8 L. Ed. 2d 292 (1962). To accomplish these goals, § 7421 "withdraw(s) jurisdiction from the state and federal courts to entertain suits seeking injunctions prohibiting the collection of federal taxes." Id. at 5, 82 S. Ct. at 1128.

The Anti-Injunction Act thus seemingly precludes any suit to enjoin the collection of a tax. Taxpayer, however, relies on both statutory and non-statutory exceptions to the Act.

Taxpayer's statutory argument is apparently based on his failure to receive actual notice of the deficiency claim. Under § 6212(a) of the Code, if the Secretary determines that a deficiency exists, "he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail." Section 6212(b) provides that it is "sufficient" if the deficiency notice "is mailed to the taxpayer at his last known address." If these notice provisions are not complied with, § 6213(a) allows the taxpayer to enjoin the assessment and collection of a tax.*fn4

This statutory exception to the Anti-Injunction Act, however, is of little benefit to the taxpayer in the present case. It is undisputed that the Commissioner mailed a deficiency notice to taxpayer on November 15, 1973, and that this notice was sent to taxpayer's last known address. The only reason that taxpayer did not receive the notice was that he had moved to Chicago without leaving a forwarding address and was living there under an assumed name. Thus the Commissioner fully complied with the statutory requirement of § 6212(b) that notice be "mailed to the taxpayer at his last known address."

The cases which have considered the statutory argument made by taxpayer in this case have uniformly held that § 6212 is satisfied by mailing notice to taxpayer's last known address whether or not actual notice is ever received. E.g., Brown v. Lethert, 360 F.2d 560 (8th Cir. 1966); Cohen v. United States, 297 F.2d 760 (9th Cir. 1962), Cert. denied 369 U.S. 865, 82 S. Ct. 1029, 8 L. Ed. 2d 84 (1962); Luhring v. Glotzbach, 304 F.2d 556 (4th Cir. 1962). In Cohen v. United States, supra, for example, the mailing of notice to taxpayer's last known address was held to satisfy the statute even though the Commissioner knew that ...

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