UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

David West,

Plaintiff

v. Civil No.05-cv-389-SM

Opinion No. 2006 DNH 080

Secretary of the U.S. Treasury,

Defendant

O R D E R

David West has sued the Secretary of the Treasury, under the

Administrative Procedure Act (“APA”) and the Revenue

Restructuring Act of 1998. He seeks various forms of injunctive

relief for alleged abuses of discretion committed by the Internal

Revenue Service (“IRS”) in rejecting his offer in compromise

relating to an income tax deficiency. Before the court is the

government’s motion to dismiss. West objects. For the reasons

given, the motion to dismiss is granted.

In 1999, West suffered losses in the stock market. Under

the tax code, he was unable to “match” those losses against

corresponding gains during the same time period, leaving him with

an income tax liability for that year in excess of $90,000. In

2003, the IRS made an assessment against West and later began the

process of levying against his bank account. Subsequently, West

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made an offer in compromise to the Secretary of the Treasury,

pursuant to 26 U.S.C. § 7122. His offer was based upon the

following regulation:

If there are no grounds for compromise under

paragraphs (b)(1) [doubt as to liability], (2) [doubt

as to collectibility], or (3)(I) of this section

[economic hardship], the IRS may compromise to promote

effective tax administration where compelling public

policy or equity considerations identified by the

taxpayer provide a sufficient basis for compromising

the liability. Compromise will be justified only

where, due to exceptional circumstances, collection of

the full liability would undermine public confidence

that the tax laws are being administered in a fair and

equitable manner. A taxpayer proposing compromise

under this paragraph (b)(3)(ii) will be expected to

demonstrate circumstances that justify compromise even

though a similarly situated taxpayer may have paid his

liability in full.

26 C.F.R. § 301.7122-1(b)(3)(ii) (emphasis added). West argued

that his tax liability was inequitable because it resulted from

an “arbitrary administrative technicality” that worked

“essentially the same [way] as a tax loophole, except that the

unfair benefit operate[d] in reverse” and “not in the best

interests of anybody.” In other words, West conceded liability

under the tax code, but argued that he was entitled to

consideration because of the “inequity” of tax code provisions

that operated to his disadvantage. West’s offer in compromise

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1 The APA is not a proper basis for jurisdiction in this

case. See Am. Ass’n of Commodity Traders v. Dep’t of Treasury,

598 F.2d 1233, 1235 (1st Cir. 1979) (citing Califano v. Sanders,

430 U.S. 99, 107 (1977)).

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was rejected in the first instance, and on appeal. He requested

an administrative hearing but was not granted one. 

After West’s appeal was rejected, the IRS filed a Notice of

Federal Tax Lien. West then requested a Collection Due Process

(“CDP”) hearing, which has yet to be held.

West also filed this action, asserting jurisdiction under

both the Administrative Procedure Act1 and the Revenue

Restructuring Act of 1988. He asks the court to order the IRS

to: (1) accept his offer in compromise; (2) waive payment of the

amount he offered, $8974, in consideration of the expenses he

incurred in fighting the IRS’s denial of his right to due

process; (3) remove the lien on his home; (4) provide a letter,

addressed “to whom it may concern,” stating that the lien against

his home and the levy against him was the result of an

administrative mistake; and (5) suspend any and all collection

activities until this action is settled.

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The United States moves to dismiss on grounds that West’s

suit is barred by 26 U.S.C. § 7421, the Anti-Injunction Act. 

That statute provides:

Except as provided in sections 6015(e), 6212(a)

and (c), 6213(a), 6225(b), 6246(b), 6330(e)(1),

6331(I), 6672(c), 6694(c), 7426(a) and (b)(1), 7429(b),

and 7436 [none of which is applicable here], no suit

for the purpose of restraining the assessment or

collection of any tax shall be maintained in any court

by any person, whether or not such person is the person

against whom such tax was assessed.

26 U.S.C. § 7421(a). Moreover, “[t]he prohibition against

restraint on the assessment and collection of taxes ‘is

applicable not only to the assessment or collection itself, but

. . . to activities which are intended to or may culminate in the

assessment or collection of taxes.’” Colangelo v. United States,

575 F.2d 994, 996 (1st Cir. 1978) (quoting United States v. Dema,

544 F.2d 1373, 1376 (7th Cir. 1976)) (holding that “[t]he

prohibition of § 7421(a) is broad enough to proscribe judicial

interference with federal tax liens absent exceptional

circumstances”). In addition, “[t]he Anti-Injunction Act is in

the nature of a jurisdictional bar.” Ross v. United States, 861

F. Supp. 406, 407 (E.D.N.C. 1994) (citing Enochs v. Williams

Packing & Navigation Co., 370 U.S. 1 (1962); Bennett v. United

States Director of Internal Revenue, 469 F.2d 584 (4th Cir.

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1972); Johnson v. Wall, 329 F.2d 149 (4th Cir. 1964)); see also

McCarthy v. Marshall, 723 F.2d 1034, 1037 (1st Cir. 1983) (“The

jurisdictional boundaries in tax cases are drawn by the AntiInjunction Act . . .”). However,

[a] judicially-created exception to this clear

statutory bar to injunctive relief in tax cases was

announced in Enochs v. Williams Packing & Navigation

Co., 370 U.S. 1 (1962). Under that exception, “if it

is clear that under no circumstances could the

Government ultimately prevail, . . . and . . . if

equity jurisdiction otherwise exists,” id. at 7, then

the bar of section 7421(a) is inapplicable.

Lane v. United States, 727 F.2d 18, 20 (1st Cir. 1984) (emphasis

added, parallel citations omitted).

Here, all the relief West seeks falls within the scope of

the Anti-Injunction Act. See Colangelo, 575 F.2d at 996

(citation omitted). Thus, the only question is whether the facts

of this case, as alleged by West, bring his claims within the

exception described in Enochs. They do not.

West does not meet the first prong of the Enochs test; it is

hardly clear that there are no circumstances under which the

government could prevail in West’s action against it. Rather,

the opposite conclusion would appear to be correct; it is

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difficult to conceive of any circumstances under which West could

prevail against the government.

The statute governing offers in compromise provides that

“[t]he Secretary may compromise any civil or criminal case

arising under the internal revenue laws . . .” 26 U.S.C.

§ 7122(a) (emphasis added). The Code of Federal Regulations

further explains: “If the Secretary determines that there are

grounds for compromise under this section, the Secretary may, at

the Secretary’s discretion, compromise any civil or criminal

liability arising under the internal revenue laws . . .” 26

C.F.R. § 301.7122-1(a)(1) (emphasis added). Given the permissive

language of the statute, “[t]he decision to accept or reject a

compromise offer is discretionary and cannot be compelled by any

action.” Addington v. United States, 75 F. Supp. 2d 520, 524

(S.D. W. Va. 1999) (citing Carroll v. IRS, 14 AFTR2d 5564

(E.D.N.Y. 1964)). As the court of appeals for this circuit has

explained, “the handling and processing of an offer in compromise

not submitted in conjunction with a CDP [collection due process]

hearing is not subject to judicial review at all.” Olsen v.

United States, 414 F.3d 144, 156 (1st Cir. 2005). Because West’s

offer in compromise was not submitted in conjunction with a CDP

hearing, it is not subject to judicial review, and because West

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is not entitled to judicial review, he does not qualify for the

Enochs exception to the Anti-Injunction Act. Because West cannot

meet the first part of the Enochs test, there is no need to

consider the second part. Several matters raised in plaintiff’s

complaint warrant some comment. West relies heavily on the

concepts of “abuse of discretion” and “due process,” but under

the circumstances and applicable law, his reliance on those

concepts is misplaced. At least one court has held that

“[a]llegations of irreparable injury and abuse of discretion are

simply not enough to negate the anti-injunction provisions of 26

U.S.C. § 7421(a).” P.K. Family Rest. v. IRS, 535 F. Supp. 1223,

1224 (N.D. Ohio 1982). Moreover, because 26 U.S.C. § 7122 “only

provides that the Secretary [of the Treasury] may consider an

offer [in compromise]” but “does not afford taxpayers the right

to have their offers considered,” it is not at all clear – and in

fact it is highly unlikely – that the Secretary is constrained by

the principles of due process in considering offers in

compromise. See Christopher Cross, Inc. v. United States, 363 F.

Supp. 2d 855, 858 (E.D. La. 2004). Thus, West appears to be

mistaken in his belief that he was entitled to a hearing on his

offer in compromise, a form of process that is contemplated in

neither the relevant statute nor its implementing regulations. 

Because there is no constitutional, statutory, or regulatory

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requirement that the IRS grant hearings to taxpayers extending

offers in compromise, the IRS did not act unlawfully in denying

West the hearing he requested.

For the reasons given, West’s action is barred by the AntiInjunction Act. Accordingly, his complaint is dismissed for lack

of subject matter jurisdiction. 

SO ORDERED.

____________________________

Steven J. McAuliffe

Chief Judge

July 11, 2006

cc: David West, pro se

Thomas P. Cole, Esq.

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