Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-12-18
Transit Wins Court Order
Blocking D. c. Tax Seizure
Hearing Slated
After New Year
On $422,562 Levy

The D. c. Transit System, Inc.
today obtained a Federal Court
order restraining District authors
tiles from moving to seize its
property in connection with a
$422,562 tax dispute.
The transit company filed an
Injunction suit yesterday asking
the court to prohibit the city
from Selling its property for pay
ment of the first half of the tax.
levied on the gross receipts of the
old Capital Transit Co, for last
fiscal year.
The first half, or $2l1, 281, was
held due last September. and the
city has now added a penalty Of
$6.338.
Hearing After New Year
Judge Burnita Shelton Mat
thews of the U. S. District Court
for the District of Columbia to-
day granted a temporary re-
straining order pending hearing
on the suit, probably soon after
| New Years.
4 In the franchise by which D. c.
Transit succeeded Capital trans
it as operator Of the bus and
streetcar system here, D. c.
Transit was exempted from pay
ment of gross receipts taxes. On
acquiring Capital Transit's as
sets last August is. it also assurn-
led the old company's liabilities.
The injunction suit filed
yesterday through Harvey M.
Spear. attorney for D. C. Transit.
took the position that notice of
the tax liability did not appear
to have been served on Capital
Transit. and the tax was not
assessed to D. C. Transit.
Sequence Of Events
The suit gave this sequence
Iof events:
On September 4, bill for
Capital Transit indicating that
$211. 281 was due that month al
the first half of the tax based
on Capital Transit's gross
receipts for the fiscal year ended
June 80 was received in the
d. c. Transit Offices.
On December 6. a letter came
from Tax Collector Guy Pear
son entitled delinquent notice"
for the $211,281, plus a penalty
of $6.338. The letter said that
unless the money was paid with
in 10 days, the tax collector
could serve distraint levy and
seize and sell properties of D. c.
Transit for payment. The dead
line was yesterday.
The papers commended that
these circumstances might cut
of the transit company's avenue
to a judicial review Of the
legality and validity Of the tax.
IrreparabIy Damage Seen
"A disruption of the transit
system operations by the de-
PENDANTS to collect a tax
which the plaintiff has offered
to pay, provided judicial review
can be assured, would be
uniquely and irreparably damag.
ing to plaintiff. the suit said.
/ The court was asked to enjoin
the defendants. Mr.. Pearson and
Assessor James L. Martin, from
Seizure.
I District authorities do not
contemplate that the company's
buses and st:eetcars or real
property would be seized under
such an action. assuming that
its bank account would more
than cover the amount due.
| The city officials have con.
tended that the release Of d. C.
Transit under its franchise from
paying gross receipts taxes was
mot retroactive to the operations
OF Capital Transit prior to Au-
lgust 10.
With addition Of the 2 per
cent tax for the period between
the close Of the fiscal year June
80 and the beginning of D. c.
Transit operation August Is. the
total amount Of the tax due Is
expected to run around $500. 900.