Opinion ID: 433527
Heading Depth: 1
Heading Rank: 2

Heading: R.C. Sec. 7422(a) states:

Text: (a) No suit prior to filing claim for refund No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof. 26 U.S.C. Sec. 7422(a) (1976). 3 In the court below the federal defendants made the argument that the action is barred by the Anti-Injunction Act, section 7421(a) of the Internal Revenue Code of 1954. They have not renewed this argument on appeal 4 26 U.S.C. Sec. 6401 (1976 & Supp. V 1981) provides as follows: Amounts treated as overpayments (a) Assessment and collection after limitation period. The term overpayment includes that part of the amount of the payment of any internal revenue tax which is assessed or collected after the expiration of the period of limitation properly applicable thereto. (b) Excessive credits If the amount allowable as credits under sections 31 (relating to tax withheld on wages) and 39 (relating to certain uses of gasoline, special fuels, and lubricating oil), and 43 (relating to earned income credit), exceeds the tax imposed by subtitle A (reduced by the credits allowable under subpart A of part IV of subchapter A of chapter 1, other than the credits allowable under sections 31, 39, and 43), the amount of such excess shall be considered an overpayment.... (c) Rule where no tax liability An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid. 5 Judge Blumenfeld reasoned in part as follows: When originally enacted, the earned income credit was to be taken into account as other income under the Social Security Act and thus would cause a reduction in payments of aid to families with dependent children for the month in which it was to be received. See S.Rep. No. 94-36 [94th Cong., 1st Sess.], at 35, reprinted in [1975] U.S.Code Cong. & Admin.News 54, 85-86. Congress later enacted Sec. 2(d) of the Revenue Adjustment Act of 1975, providing that funds received under I.R.C. Sec. 43 shall not be taken into account as income or receipts for purposes of determining ... eligibility ... or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds, but only if [the taxpayer] ... is a recipient of benefits or assistance under such a program for the month before the month in which such refund is made. Pub.L. No. 94-164, Sec. 2(d), 89 Stat. 970, 972 (1975). Thus Congress indicated that needy families should receive the earned income credit in addition to any public assistance they are eligible to receive at the time the credit is paid. This distinguishes the earned income credit from all other tax refunds, which are considered other income for purposes of calculating eligibility for public assistance, and further emphasizes the importance to Congress of stimulating spending, supporting needy families, and providing an incentive to work through the earned income credit. 445 F.Supp. at 753