Court Opinion

ID: 6920930
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:01:14.21586+00
Date Added: 2024-06-11T16:06:47.840355
License: Public Domain

CLARK, Circuit Judge
(concurring).
I concur in the result reached by my brothers, but believe the exception for the granting of an injunction against the collection of a tax should be stated less broadly.
“A showing of extraordinary and exceptional circumstances must be found in the complaint if an escape is to be made from the prohibition of Section 7421, Internal Revenue Code.” Holdeen v. Raterree, D.C.N.D.N.Y., 155 F.Supp. 509, 510, affirmed on opinion below, 2 *509Cir., 253 F.2d 428. The complaint before us makes no such showing. Indeed, it does not even allege that plaintiffs are unable to pay the amount of the assessments and then sue for refunds. Paragraph 19 of the complaint states in eonelusory fashion that plaintiffs are suffering and will continue to suffer “irreparable harm and damage,” but this is insufficient to show the required “extraordinary and exceptional circumstances.” Furthermore, mere hardship or difficulty in raising the amount of the tax is insufficient to justify the injunction. E. g., Matcovich v. Nickell, 9 Cir., 134 F.2d 837. On the other hand, an injunction has been granted to prevent destruction of a business, John M. Hirst & Co. v. Gentsch, 6 Cir., 133 F.2d 247; Midwest Haulers v. Brady, 6 Cir., 128 F.2d 496, or to prevent reduction of the taxpayer to a state of destitution, Long v. United States, D.C.S.D.Ala., 148 F.Supp. 758. While the cases are not all consistent on the degree of hardship that must be shown, plaintiffs have not qualified under even the most lenient test.
The authorities relied on by my brothers deal principally with the proposition that a nontaxpayer may enjoin seizure of his property to pay taxes owed by another. These cases are not strictly applicable to the present case, since they involve “nontaxpayers” against whom the government was not asserting any liability. In the present case the government does assert liability against the plaintiffs. Somewhat closer to the present case are decisions enjoining collection of tax from alleged transferees, where the court has found that transferee liability was not properly imposed. Holland v. Nix, 5 Cir., 214 F.2d 317; Shelton v. Gill, 4 Cir., 202 F.2d 503. These cases, together with those relied upon by my brothers, indicate that a court will more readily find “extraordinary and exceptional circumstances” where the party seeking the injunction is not the primary taxpayer and where he makes a showing that he cannot be properly subjected to any derivative liability. The present complaint does not make a showing of such circumstances; but I am willing to join my brothers to permit the plaintiff to attempt to make such a showing, if he can, in an amended complaint.