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Denton v. United States

decided: June 29, 1956.


Author: Staley

Before GOODRICH, KALODNER and STALEY, Circuit Judges.

STALEY, Circuit Judge.

Taxpayer, Owens L. Denton, has appealed from an order of the United States District Court for the District of New Jersey which dismissed with prejudice his complaint against the United States and the District Director of Internal Revenue.*fn1

The facts, taken from the district court's opinion, are brief and simple. On January 15, 1947, the taxpayer filed an income tax return for the year 1946 which called for a refund of $1551.52. Two months later, on March 15, an amended return was filed in which the amount due as a refund was increased to $2008 because of certain adjustments. Subsequently, taxpayer received two checks from the government; the first was for $1551.52 and the second for $2008. In sending the second check, the government erroneously disregarded the payment of the first check. The net effect was that taxpayer received $1551.52 more that he should have received. This fact is not disputed.

On December 8, 1950, the Commissioner of Internal Revenue issued an assessment for the $1551.52, plus interest, against taxpayer. The complaint in the district court, which was dismissed with prejudice, sought to enjoin the collection of the assessment and to vacate it. We think the district court properly dismissed the complaint.

Section 3653(a) of the Internal Revenue Code of 1939 reads:

"Except as provided in sections 272(a), 871(a) and 1012(a), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court." 26 U.S.C. ยง 3653(a).

This section makes it quite clear that the taxpayer is not entitled to the relief sought unless his situation falls within one of the mentioned exceptions. Taxpayer has argued that he comes under the section 272(a) exception. That section provides that injunctive relief may be given if the Commissioner of Internal Revenue assesses or attempts to collect a deficiency without having first complied with certain specified procedures.*fn2

It is not disputed that the specified procedures were not followed here, but there was no need to do so because the procedure outlined in Section 272(a) must be followed only in the case of an assessment of a deficiency . Here the Commissioner was not imposing an assessment in respect of a deficiency.

The term deficiency is explicitly defined in Section 271(a) of the Code and exists where the proper amount of tax imposed exceeds the amount shown as due by the taxpayer on his return plus any amounts previously assessed (or collected without assessment) as a deficiency minus the amount of any rebates.*fn3

In this case, the taxpayer and the government agree that a certain amount of tax was due for the year 1946.*fn4 They disagree only as to whether the tax due for 1946 has been paid.*fn5 The assessment of an amount of tax which the government says has not been paid and which the taxpayer says has been paid is not the assessment of a deficiency as defined in Section 271, and so the taxpayer cannot take advantage of the Section 272(a) exception mentioned in Section 3653(a).

In addition to the question of whether he paid his 1946 taxes, the taxpayer has raised other questions involving the statute of limitations, the government's authority to assess in this situation, and the propriety of an assessment rather than an assumpsit action. These and other arguments may or may not be valid to defeat the government's claim, but they do not concern us here. A taxpayer may have many contentions as to why an assessment of tax is not proper. This does not entitle him to injunctive relief. Graham v. duPont, 1923, 262 U.S. 234, 43 S. Ct. 567, 67 L. Ed. 965; Bailey v. George, 1922, 259 U.S. 16, 42 S. Ct. 419, 66 L. Ed. 816; Dodge v. Osborn, 1916, 240 U.S. 118, 36 S. Ct. 275, 60 L. Ed. 557; Shelton v. Platt, 1891, 139 U.S. 591, 11 S. Ct. 646, 35 L. Ed. 273; Cadwalader v. Sturgess, 3 Cir., 1924, 297 F. 73. He must pay the assessed amount either voluntarily or involuntarily and then pursue legal remedies for a refund. The reasons for such procedures in tax matters have been well stated previously and repetition is not necessary. See Bull v. United States, 1935, 295 U.S. 247, 259-260, 55 S. Ct. 695, 79 L. Ed. 1421.

For the foregoing reasons the order of the district court ...

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