Petition — Shapiro v. Commissioner

Supreme Court, U.S. |

FILED

8 Q - HEF | mictiner RooAk. JR., CLERK

No.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

SAMUEL SHAPIRO and BELLA SHAPIRO,

Petitioners,

Uv.

COMMISSIONER OF INTERNAL REVENUE,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

NATHAN LEWIN

STEPHEN L. NIGHTINGALE

MILLER, CASSIDY,

LARROCA & LEWIN

2555 M Street, N.W.

Suite 500

Washington, D.C. 20037

(202) 293-6400

Attorneys for Petitioners.

eae

Washington, O.C. © THIEL PRESS © (202) 638-4521

(t)

QUESTIONS PRESENTED

1. Whether the courts of appeals, which have statutory

jurisdiction to review decisions of the United States Tax

Court “in the same manner and to the same extent as

decisions of the district courts in civil actions,” may hear

an interlocutory appeal of an order of the Tax Court

which has been certified under the standards of 28 U.S.C.

§ 1292(b).

2. Whether the United States Tax Court has the power

to order the release of funds, seized by the Internal

Revenue Service from taxpayers pursuant to a jeopardy

assessment, if the funds are needed by the taxpayers, who

are otherwise without sufficient means, to pay the costs

of counsel and other expenses necessarily incurred in

litigating allegations of substantial liabilities for back

taxes and penalties.

3. Whether a Tax Court order denying release of funds

for payment of counsel fees and litigation expenses to

Tax Court petitioners before trial is appealable as a “‘final

collateral order.”

Page

TABLE OF CONTENTS

MPT scp sek esse cenepeceseccececcesss 1

PETE cocdcorcecocodvececnecesesesereos 1

ewer bec ope es eo recebbotecteeas 2

DEE bb cS rccccBesvonecsdveseversesvecrves 4

PA Ore ANONOUNR 5 ccc ccc cceecedeceseecie +

2. The Initiation of Proceedings In the

. ° Te rrrrrrere eee er eee ee 5

3. This Court’s Decision In A Closely

| re ee ee ee ee ee 6

4. The Motion For A Release of Funds

i Ce Sco he vet ences cs tes cov enee 8

o wee seamen of the Tax Court .. wc cccccccccces 9

6. Certification of An Appeal Under

MOCHOM TZOZID) 0 occ ccc ccccccccceccecsccees 10

7. The Decision of the Court of Appeals ............ 11

REASONS FOR GRANTING THE WRIT.............-. 12

1. The Court of Appeals Erroneously Fore-

closed Judicial Discretion To Hear Inter-

locutory Appeals From the Tax Court ............ 13

8.

(i)

. Petitioners’ Important Due Process Claim

Cannot Practically Be Deferred Until

SE EE HU Co ect b reece cece cr resccseses 17

The Court of Appeals Misapplied This

Court’s Decisions In Refusing To Treat

The Tax Court’s Order As A Reviewable

Cameteral Order 2... cece ccces ‘he bles © eek wees 19

CORNGLLUGION 2. nc ccc ccccccvrccccccvcsscvecseces 21

(iii)

TABLE OF AUTHORITIES =

Cases:

Abney v. United States, 431 U.S. 651 (1977) ...... ‘ove me

Argersinger v. Hamlin, 407 U.S. 25 (1972) .........06. 18

Baldasar v, Illinois, 100 S.Ct. 1585 (1980) ............ 18

Chabot v, National Securities & Research Corp.,

200: Fe GBT (PS Ge, 19GR on vtec ca ces occcns 20

Cohen v. Beneficial Industrial Loan Corp., 337

U.S. 541 (1949) ...... TEPUTiLT TT. CETTE 10, 20

Commissioner of Internal Revenue v. Shapiro,

Oe Uae BUS CARTES oe odbc wc acisvereese's 4, 6. 7, 18

Commissioner v. Smith Paper, Inc., 222 F.2d 126

bogs | Pe ry eT ey eT eer See ee ee 13

Coopers & Lybrand v. Livesay, 437 U.S. 463

FOUNe bina aoe Sith sau CEA ee ees Seman ee 19, 20

Cuyler v. Sullivan, 100 S.Ct. 1708 (1980)....... Reet 19

Fielding v. Allen, 181 F.2d 163 (2d Cir.),

cert. denied, 340 U.S. 817 (1950) ...... Terre r ree 20

Hadjipateras v. Pacifica, §.A., 290 F.2d 697

gt Ae | Per ee eee ee ERE UTE ee 15

Holloway v. Arkansas, 435 U.S. 475 (1978) ........6.. 19

Human Engineering Institute v. Commissioner,

C2 TE. CETTE occ cncsiccsecceses ecoscesen 17

Louisville Builders Supply Co. v. Commissioner,

294 F.2d 888 (Gth Cir. 1961) 0. wc ccccccccccccces 14

Michael v, Commissioner, 56 F.2d 825 (2d

Cir. 1932) . wee bes epenee wo sevcccceccsoces 14

Phillips v. Commissioner, 283 U.S. 589 '

(1982) wc ccccdscesvivcvcecsocere seecevecees a

Ryan v. Commissioner, 517 F.2d 13 (7th Cir.),

cert. denied, 423 U.S. 892 (1975)........ oo ccce ie.

Ryan v. Commissioner, 568 F.2d 531 (7th Cir.

(1977), cert. denied, 439 U.S. 820 (1978) .......--08. 14

Shapiro v. Commissioner of Internal Revenue, 73

TH BUS CIOTE) ccc ctecwnsccddcness TRECEEE ET 1

(tv)

Cases, continued: Page

Shapiro v. Ferrandina, 478 F.2d 894 (2d Cir.),

cert, dismissed, 414 U.S. 884 (1973), aff’g

in part and rev’g in part, 355 F.Supp. 563

Sea ONE a ae We on Cbs ee ccs «ed bee 0% 4,5

Shapiro v. Secretary of State, 499 F.2d 527

Ss Os SETEE Ce UeH ies ee hn we ebadabeaeuse ees 6

Shapiro v. Secretary of State, 76-2 U.S. Tax

Gases (OG3) S96G07 (DING. ISTE) 2... cc eve ccas 7

Swift & Co. Packers v. Compania Colombiana

Dat Garis, Bee Uk GE (IOOe) 0 6 occ cs cece ecveecs 20

Tirado v. Commissioner, No. AD-8099 (2d

Sec TU CU EUG oo ds 0 'e-6 6s be eh Oe te a Os Kw 16

United States v. Brodson, 241 F.2d 107 (7th

een ce whee ne ak oo 6.0 ews oka 40 06 Owe 19

Statutes and Regulations:

28 U.S.C.

ED a6 ns 6078 6 8 Gn kb KO Ao 8 ORS O eeeS 2

AP eT rer ee Peres ee re re 20

er ae. 2, 4, 10, 11, 13, 14, 15, 16

26 U.S.C.

ES 5.66 ah 0d «SORES EOS oh ee OR CERO OES 5

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eee ree we ee ee ee eee ee +

BOUND 084 cee esters ee eCeeeereeNN Tes 2, 7,10

DPUNGL oe a ee vewceeéctveeeewe vor ennes 3, 14, 15

(, JS ser Weevrvrr REET TLC 15

0 rr err rer? iT cee ee ee ee Ce 3, 11, 18

Other Authorities:

United States Tax Court Rules

fi)! Aeris, ee eee ee ee ee ee ee 15

Bi: | BrPerererrrerererener eee ae eee 15

Note, Interlocutory Appeals in the Federal Courts

Under 28 U.S.C. §1292(b), 88 Harv. L. Rev.

GOT CERISE) 6 cc cc ccc es ee weeh chm he eeceerneues 16

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

No.

SAMUEL SHAPIRO and BELLA SHAPIRO,

Petitioners,

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

OPINIONS BELOW

The memorandum order of the court of appeals (Pet.

App. A, infra, pp. la-4a) is not yet reported. The

opinion of the Tax Court (Pet. App. B, infra, pp. 5a-11a)

is reported at 73 T.C. 313.

JURISDICTION

The order of the court of appeals dismissing petition-

er’s appeal from the Tax Court (Pet. App. A, infra, pp.

la-4a) was entered on June 30, 1980. On September 18,

]

2

1980, Mr. Justice Marshall entered an order extending the

time in which to file a petition for a writ of certiorari to

and including October 28, 1980. (Pet. App. E, infra, p.

15a). On October 16, 1980, Mr. Justice Marshall entered

an order further extending the time in which to file a

petition for a writ of certiorari to and _ including

November 7, 1980. (Pet. App. F, mfra, p. 16a). The

jurisdiction of this Court is invoked pursuant to 28

U.S.C. §1254(1).

STATUTES INVOLVED

Section 1292(b) of Title 28 of the United States Code

provides:

When a district judge, in making in a civil action an

order not otherwise appealable under this section,

shall be of the opinion that such order involves a

controlling question of law as to which there is

substantial ground for difference of opinion and

that an immediate appeal from the order may

materially advance the ultimate termination of the

litigation, he shall so state in writing in such order.

The Court of Appeals may thereupon, in its discre-

- tion, permit an appeal to be taken from such order,

if application is made to it within ten days after the

entry of the order: Provided, however, That applica-

tion for an appeal hereunder shall not stay proceed-

ings in the district court unless the district judge or

the Court of Appeals or a judge thereof shall so

order.

Section 7421(a) of the Internal Revenue Code (Title 26

of the United States Code) (Supp. 1978) provides:

Except as provided in sections 6212(a) and (c),

6213(a), 6672(b), 6694(c), 7426(a) and (b)(1), and

7429(b), no suit for the purpose of restraining the

3

assessment or collection of any tax shall be main-

tained in any court by any person, whether or not

such person is the person against whom such tax was

assessed.

Section 7459(c) of the Internal Revenue Code (Title 26

of the United States Code) provides:

A decision of the Tax Court (except a decision

dismissing a proceeding for lack of jurisdiction) shall

be held to be rendered upon the date that an order

specifying the amount of the deficiency is entered in

the records of the Tax Court or, in the case of a

declaratory judgment proceeding under part IV of

this subchapter or under section 7428, the date of

the court’s order entering the decision. If the Tax

Court dismisses a proceeding for reasons other than

lack of jurisdiction and is unable from the record to

determine the amount of the deficiency determined

by the Secretary, or if the Tax Court dismisses a

proceeding for lack of jurisdiction, an order to that

effect shall be entered in the records of the Tax

Court, and the decision of the Tax Court shall be

held to be rendered upon the date of such entry.

Section 7482(a) of the Internal Revenue Code (Title

26 of the United States Code) provides:

The United States Courts of Appeals shall have

exclusive jurisdiction to review the decisions of the

Tax Court, except as provided in section 1254 of

Title 28 of the United States Code, in the same

manner and to the same extent as decisions of the

district courts in civil actions tried without a jury;

and the judgment of any such court shall be final,

except that it shall be subject to review by the

Supreme Court of the United States upon certiorari,

in the manner provided in section 1254 of Title 28

of the United States Code.

4

STATEMENT

This case is a sequel to Commissioner of Internal

Revenue v. Shapiro, 424 U.S. 614 (1976), decided by this

Court four and one-half years ago. In 1973, the petition-

ers, Mr. and Mrs. Samuel Shapiro, were the subject of a

jecpardy assessment, see I.R.C. §6861,' by which all of

their substantia] assets were summarily seized or frozen.

As a result, they were forced to litigate in the United

States Tax Court the validity of allegations by the

Internal Revenue Service that they are liable for over

$300,000 in back taxes and penalties. In advance of the

scheduled trial date, they moved for an order releasing

funds from the jeopardy assessment, upon showings that

they had no funds available to pay the costs of counsel or

other litigation expenses beyond the funds seized by the

IRS and that their indigiency seriously jeopardized their

opportunity for a fair determination of their tax liability.

The Tax Court (Theodore Tannenwald, Jr., Judge) denied

the motion, holding that it lacked authority to grant the

requested relief. However, it certified an immediate

appeal to the court c° appeals in accordance with the

procedure set out in 28 U.S.C. §1292(b). (See Pet. App.

D, infra, pp. 13a-14a). The court of appeals dismissed

that appeal for lack of jurisdiction. (Pet. App. A, infra,

pp. la-4a).

1. The Jeopardy Assessment

In 1972 and 1973, Mr. Shapiro was the subject of

extradition proceedings instituted by the Government of

Israel. See Shapiro v. Ferrandina, 478 F.2d 894 (2d Cir.),

‘In this Petition, all citations to the Internal Revenue Code,

Title 26 of the United States Code, will be in the form “I.R.C.

Gana.”

5

cert. dismissed, 414 U.S. 884 (1973), affirming in part

and reversing in part, 355 F.Supp. 563 (S.D.N.Y. 1973).

After extensive litigation, the extradition proceedings

were resolved through an agreement under which Mr.

Shapiro agreed to surrender voluntarily and retum to

Israel after the birth of his child, which was expected in

late November or early December 1973.

On December 6, 1973, without prior warning of any

kind and after Mr. Shapiro’s departure for Israel had been

set for December 9, the IRS entered a jeopardy assess-

ment for back taxes and penalties totalling approximately

$90,000 against Mr. Shapiro. Simultaneously, it seized

(through notices of levy) the balances in four bank

accounts maintained by Mr. Shapiro—a total of approxi-

mately $35,000. In addition, the jeopardy assessment

created a lien (I.R.C. § §6321-22) upon the remainder of

Mr. Shapiro’s real and personal property, including

a home in Monsey, New York, in which Mr. and Mrs.

Shapiro reside. As a result of these seizures, Mr. Shapiro

has for seven years been totally unable to use any of his

property, including his bank deposits, to defend himself

against the government’s allegations of tax liability.

2. The Initiation of Proceedings In the Tax Court

Following the imposition of the jeopardy assessment,

the IRS mailed two notices determining deficiencies in

the petitioners’ tax returns. The first, dated December

12, 1973, alleged a'liability of approximately $90,000

arising out of Mr. Shapiro’s individual returns for 1970

and 1971. (See Pet. App. B, infra, p. 5a). The second,

dated April 13, 1976, alleged liabilities totalling almost

$240,000 for the petitioners’ joint returns for 1972 and

1973. The latter deficiency notice sought the 50%

6

penalty for fraud against Mr. Shapiro, I.R.C. §6653(b).

(See Pet. App. B, infra, p. 6a).

The deficiencies were based primarily on the charge

that Mr. Shapiro realized on a regular basis, but failed to

report, income from very large sales of hashish. The

amount of this alleged “‘unreported income” was com-

puted by assigning to Mr. Shapiro sales of certain quan-

tities of hashish, hypothesizing a selling price and cost per

pound, and multiplying to yield a total profit from drug

sales. The IRS’s “projections” attribute a total of nearly

$500,000 in income to Mr. Shapiro for the 1971-1973

period.

Following receipt of each of the IRS deficiency

notices, Mr. and Mrs. Shapiro filed, in the Tax Court,

timely petitions to redetermine the asserted deficiencies.

The petitions also denied all of the factual allegations on

which those deficiencies were based. These suits, which

were consolidated by the Tax Court, are the source of

this Petition.

3. This Court’s Decision in A Closely Related Case

In addition to initiating these proceedings in the Tax

Court, Mr. Shapiro also filed an action in the United

States District Court for the District of Columbia seeking

equitable relief from the jeopardy assessment. The

complaint alleged that the summary seizure of Mr.

Shapiro’s property would leave him without any means

of making bail in Israel following his imminent return to

that country and that he would be unable, once

incarcerated, to litigate his tax liability in this country in

the Tax Court. See Commissioner of Internal Revenue v.

v. Shapiro, 424 U.S. 614, 620 (1976). The district court

dismissed the complaint, but the court of appeals rever-

sed. Shapiro v. Secretary of State, 499 F.2d 527 (D.C.

Cir. 1974).

7

This Court granted the government’s petition for

certiorari and affirmed. Rejecting the government’s con-

tention that relief was barred by the Anti-Injunction Act,

26 U.S.C. §7421(a) (1976), this Court held that when

the government has seized a taxpayer’s property through

a jeopardy assessment, it has an “obligation to disclose

the factual basis for its assessments.” (424 U.S. at 626-27).

In reaching this conclusion, the Court emphasized that a

jeopardy assessment is a deprivation of property that

must be accompanied by procedural due process. (424

U.S. at 629-34). The opinion recalled and amplified the

Court’s statement, in Phillips v. Commissioner, 283 U.S.

589, 595, 596-97 (1931), that such summary collection

procedures can only be reconciled with the requirements

of due process “if the opportunity given for the ultimate

judicial determination of the lability is adequate...”

(424 U.S. at 631-32) (emphasis in original). Finally,

although the Court held that Mr. Shapiro’s complaint

stated a claim, it also raised the question whether events

occurring while the matter had been on appeal had

mooted his claim of irreparable injury. Referring to the

fact that Mr. Shapiro had for the moment avoided

incarceration in Israel, the Court stated that a “‘prelimi-

nary task’? on remand would be to determine whether

some other sort of irreparable injury could be estab-

lished. (424 U.S. at 633-34).

On remand in the district court, Mr. Shapiro attempted

to satisfy the requirement of irreparable injury by

demonstrating that the jeopardy assessment had left him

without any resources to finance necessary costs of

litigating the substantial claims being asserted against him

in the Tax Court. He sought a release of funds for that

purpose. The district court found that Mr. Shapiro’s

8

affidavit of indigency was “unquestioned,” but held that

the proper forum in which to raise the claim that funds

should be released to finance Tax Court proceedings was

that court. (Shapiro v. Secretary of State, 76-2 US.

Tax Cases (CCH) 49507, at p. 84,610 (D.D.C. 1976)

(emphasis added)):

Initially, it is clear to this Court that it lacks

jurisdiction to order that monies be released by the

defendants so that the plaintiff can continue to

litigate in the Tax Court. That ts a matter totally

within the ambit of that Court.

4. The Motion For A Release of Funds In The Tax

Court

After various proceedings, a trial date in the Tax Court

cases was set for December 10, 1979. As attempts at trial

preparation by petitioners’ counsel progressed, it became

increasingly apparent that the petitioners’ inability to pay

any counsel fees or even out-of-pocket expenses would

make a fair trial virtually impossible. It emerged that

none of the government’s principal witnesses could be

interviewed without incurring substantial travel expenses.

Moreover, although many of these witnesses had been

convicted or accused of drug-related offenses, counsel did

not even have the resources to search available public

records for impeachment material or facts that would

exculpate Mr. Shapiro.” Finally, the lack of funds pre-

cluded paying travel expenses to bring favorable witnesses

to the trial. For example, one witness had filed an

affidavit in the Tax Court attesting that funds character-

ized by the IRS as income from drug-dealing were

2 After his return from Israel, Mr. Shapiro pleaded guilty to a

drug-related offense in the Eastern District of New York, and was

given a suspended sentence.

actually the proceeds of property that Mr. Shapiro had

asked her to hold for safe-keeping, but she resided in

Switzerland and was, therefore, inaccessible to counsel.

In short, the petitioners faced the prospect of a trial

involving serious allegations of criminal misconduct, but

lacked the means to engage in even the most rudimentary

trial preparation. Consequently, they filed a motion

seeking the release of $15,000 to finance their defense.

An uncontested affidavit by counsel established that the

petitioners had been unable, since 1975, to pay over

$40,000 in fees and expenses. During a hearing on the

motion, Mr. Shapiro testified (and was cross-examined)

regarding the petitioners’ financial straits. He confirmed

that they had no substantial assets (other than those

seized or frozen under the jeopardy assessment) or

sources for borrowing with which to pay necessary

litigating costs. He also testified that he and his wife both

worked, but had a combined take-home pay of only $325

per week.

5. The Decision of the Tax Court

On this record, Judge Tannenwald issued, on Novem-

ber 26, 1979, an Opinion and Order denying the motion.

(Pet. Apps. B and C, infra). As an initial matter, he

found that (p. 7a, infra):

[A]t the present time, neither of the petitioners has

sufficient assets or sources of income or funds from

which to pay litigation costs.

He also recognized that the effect of the jeopardy

assessment had been severe, observing that ‘the unavaila-

bility of funds obviously has a direct and adverse impact

upon the ability of a taxpayer to be provided with the

effective assistance of counsel” and that “there is an

element of unfairness involved [which] cannot be denied,

10

particularly where, as is the case herein, such funds would

in all likelihood have been available but for” the jeopardy

assessment. Jd.

Nevertheless, Judge Tannenwald concluded that he had

“no alternative but to deny petitioner’s motion.” He

ruled that the requested release of funds was barred by

the Anti-Injunction Act, I.R.C §7421(a), and that the

Shapiros’ only recourse was to _articipate in the trial and

then seek a post-trial determination of the jeopardy

assessment’s impact on its fairness (pp. 9a-1 la, infra).

6. Certification Of An Appeal Under Section 1292(b)

Petitioners filed a notice of appeal? and also moved for

certification of an appeal under the procedures set out in

28 U.S.C. §1292(b). On February 4, 1980, Judge

Tannenwald modified his prior order to include the two

findings required by 28 U.S.C. §1292(b). He certified (1)

that the order “involv[ed] a controlling question of law

as to which there is substantial ground for difference of

opinion,” and (2) that ‘an immediate appeal... may

materially advance the ultimate termination of the

litigation.” (Pet. App. D, infra, p. 13a). With regard

to the latter finding, the judge determined that an im-

mediate appeal could “‘[afford] petitioners a greater

opportunity for a full and complete trial... and [avoid]

a possible protracted and expensive retrial . . .””*

3The notice was predicated on the theory that the denial of the

release of funds was a ‘‘final collateral order” within the meaning

of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949),

and its progeny.

4 Proceedings in the Tax Court were stayed pending appellate

review.

SRS HERS ee SSR IL | EY 5 SE NA SE RE A a SE

11

7. The Decision of the Court of Appeals

The petitioners made a timely application for leave to

bring a discretionary appeal. The government opposed

this application and moved to dismiss the appeal. After

plenary briefing and argument (as to both jurisdiction

and the merits), the court of appeals denied the petition-

ers’ motion for leave to appeal and granted the govern-

ment’s motion to dismiss (Pet. App. A, infra, pp. la-4a).

The court of appeals confirmed that the issue pre-

sented by the appeal was “‘important”’ (p. 2a, infra):

[T] he question whether an IRS jeopardy assessment

can be used to freeze assets of a taxpayer needed to

pay attorney’s fees and to prepare his case fully is a

question that has never been resolved by this court

and appears to raise an important legal question.

Indeed, the Court observed that had the appeal

originated in a district court, it “‘might well accept a

certification [under Section 1291(b)].” However, the

court of appeals interpreted the relevant jurisdictional

statutes to foreclose this procedure. It stated that the

references to “district court” and “district judge” in

Section 1292(b), preclude its use in Tax Court cases. It

also held that Section 7482(a) of the Internal Revenue

Code (see p. 3, supra), which prescribes review of Tax

Court decisions “in the same manner and to the same

extent” as district court decisions, did not encompass the

order denying a release of funds.

12

REASONS FOR GRANTING THE WRIT

A highly experienced Tax Court judge and the Court

of Appeals for the Circuit which includes the financial

hub of the United States both believe that the substan-

tive constitutional issue presented in this case is import-

ant. (See pp. 12a,13a-1 4a, infra).° Whether the same gov-

ernment agency may, in one official action, preemptorily

seize all of an individual’s property, and, at the same time,

refuse to release funds so he can defend himself against

the agency’s effort to secure an enormous tax judgment

against him raises serious Due Process questions. Not only

do these questions affect the intrinsic fairness of any Tax

Court proceeding, but they present an issue which is

likely to recur. Nonetheless, refusing to apply literally

the governing statutory provision, which would permit

courts of appeals to consider issues of this kind if they

and the trial judge of the Tax Court believe interlocutory

appeal is warranted, the court below dismissed the only

meaningful opportunity a taxpayer has to present this

issue for judicial examination.

5 Judge Tannenwald explained his certification at the conclusion

of oral argument as follows:

I also am prepared to certify because...I feel strongly

enough about the importance of the basic substantive issue

that’s involved, namely, the availability of funds to a

taxpayer who has no other sources of funds, other than those

that have been seized by the government, to conduct what is

important litigation to him, that that’s a sufficiently im-

portant question that I’d like the record to show ... to the

Court of Appeals that I believe that this is a sufficiently

important issue that they ought to take hold of it and deal

with it as promptly and as expeditiously as possible.

13

1. The Court of Appeals Erroneously Foreclosed Judi-

cial Discretion To Hear Interlocutory Appeals From

The Tax Court

The court of appeals saw petitioners’ appeal as one it

“might well accept,” recognizing that it raised ‘‘an

important legal question” which it had not resolved, and

that the “alleged imposition on the taxpayers . . . appears

to be substantial.” (See p. 2a, infra). Yet it concluded

that the relevant statutes foreclosed a discretionary

appeal. Section 7482(a) of the Internal Revenue Code

(See p. 3, supra) provides clearly and unequivocally

that the courts of appeals have jurisdiction to review

Tax Court decisions ‘in the same manner and to the same

extent” as decisions of the district courts. The statutory

language does not require, in addition, that a statute such

as 28 U.S.C. §1292(b), describing one ‘“‘manner’’ in

which district court decisions are reviewed, “state explic-

itly” that it is applicable to Tax Court decisions. Nor

does it limit the courts of appeals to those ‘“‘manners”’ of

review which existed prior to the passage of Section

7482(a).°

There is nothing in the legislative history of 28 U.S.C.

§1292(b) that suggests that Congress rejected the concept of

making discretionary appeals available in Tax Court proceedings. In

Commissioner v. Smith Paper, Inc., 222 F.2d 126 (1st Cir. 1955),

the First Circuit did state that Section 7482(a) did not incorporate

by reference the jurisdictional statutes which govern appeals from

the district courts. However, the procedural posture of that case

makes it weak authority. The Smith Paper court’s position on Sec-

tion 7482(a) had not been argued by either party, see 222 F.2d at

127-28, and, as the First Circuit recognized, it was unnecessary to

the decision in the case. The order on appeal was “in substance no

more than an interlocutory procedural order striking an amend-

ment to the Commissioner’s answer” which would not have been

appealable under any jurisdictional provision available in the dis-

trict courts.

14

The court of appeals erroneously concluded that the

phrase “decisions of the Tax Court” in Section 7482(a) is

a term of art limited to “final Tax Court decisions.” This

suggestion was based upon several cases following the

Second Circuit’s one-page opinion in Michael v. Commis-

stoner, 56 F.2d 825 (2d Cir. 1932), which have relied

upon the meaning of the term “decision” as used in

Section 7459(c) of the Internal Revenue Code. (See p.

3, supra). However, the Michael case was decided

before Congress authorized discretionary appellate review

of interlocutory rulings in 28 U.S.C. §1292(b). More-

over, Section 7459(c) does not purport to be a defini-

tional section. It is no more than a housekeeping provis-

ion fixing the date on which a Tax Court ruling is final.

As the Sixth Circuit stated in Loutsville Builders Supply

Co. v. Commissioner, 294 F.2d 333, 336 (6th Cir. 1961):

If Congress intended to make such a limiting

definition of the words, “decisions of the Tax

Court” it could have done so in precise language. We

are not persuaded that Congress left such an intent

to be inferred from the language of a subsection of

the statute which had for its only purpose the fixing

of the date to be applied to certain types of

decisions.

More modern decisions have not followed the Second

Circuit’s literalistic approach. In Ryan v. Commissioner,

517 F.2d 13 (7th Cir.), cert. denied, 423 U.S. 892

(1975), the Seventh Circuit resolved the issue of the

appealability of a Tax Court discovery order by reference

to its cases on analogous orders in the district courts. And

in Ryan v. Commissioner, 568 F.2d 531 (7th Cir. 1977),

cert. denied, 439 U.S. 820 (1978), the same court

15

undertook review of a contempt order that would not

have fit the “definition” set out in Section 7459(c).’

The decision of the court of appeals needlessly disables

the Tax Court from resolving issues of law promptly

when a decision could ‘‘materially advance the ultimate

termination of the litigation,” as prescribed by Section

1292(b). Under this statute, interlocutory appeals cannot

be forced upon tribunals which do not believe they meet

such rigorous standards. Indeed, the impetus for the

passage of Section 1292(b) was provided by trial judges

themselves. It was “judge-sought, judge-made, judge-

sponsored” legislation, Hadjipateras v. Pacifica, S.A., 290

F.2d 697 (5th Cir. 1961), whose purpose was to give trial

judges, under the watchful eye of an appellate panel,

flexible means of obtaining prompt appellate resolu-

tion of difficult and unsettled legal questions with-

out first having to commit valuable judicial resources

to further proceedings that may be wiped out on appeal.

7Nor has the word “decision” been used as a term of art in

other provisions of the Tax Code. The immediately following

section (§7460) uses the words “determination” and ‘final

disposition” in referring to orders which conclude the Tax Court

litigation. Indeed, subsection 7460(b) speaks of a “final decision,”’

a patent superfluity if the term “decision” itself means only a

“final” judgment.

And the Tax Court itself has not given the same meaning to the

term “decision” that the Court below applied, In its Rules, the Tax

Court describes as “decisions” its dispositions of motions for

complete or partial summary judgment (see Rule 121(b), U.S. Tax

Ct. Rules) and rulings following a default judgment (see Rule

123(b)). Surely the Tax Court would have chosen to assign a

different label to these interlocutory rulings if the term ‘‘decision”’

was the talisman of appellate review.

16

In a manageable but significant number of cases,® the

availability of discretionary appeals results in substantial

savings to courts and litigants. In the paradigm cases, a

timely interlocutory appeal will vitiate the risk that

disagreement between a trial court and the court of

appeals on a central, and concededly debatable, point of

law will result in an expensive and time-consuming

second trial. There is no reason to believe that such

savings in resources are any less available or any less

valuable in the Tax Court than in the district courts.

Finally, there is no reason for this Court to wait for a

conflict among Courts of Appeals before reviewing this

issue. In view of the decision of the Second Circuit, it is

most improbable that any Tax Court judge will, in the

future, certify an interlocutory ruling for immediate

appellate review, even if he believes that the criteria of

Section 1292(b) have been met.? Consequently, the

ruling below effectively decides the issue for all time,

since the question can only reach a court of appeals if

and when a certification is made by the trial judge.

SOne commentator has reported that about 100 applications

under Section 1292(b) are lodged each year and that about half are

granted. Note, /nterlocutory Appeals in the Federal Courts Under

28 U.S.C. §1292(b), 88 Harv.L.Rev. 607, 609 n.5 (1975).

* Indeed, the government represented to the court below that

the availability of an interlocutory appeal “appears’’ to be ‘“‘a recur-

ring question’’ in seeking to have the decision below published for

its use as authority. It then utilized the published opinion in secur-

ing a dismissal of another interlocutory appeal which a Tax Court

judge had certified. Tirado v. Commissioner, (2d Cir.) No. AD-

8099 (petition for leave to appeal denied) (August 19, 1980). It

seems unlikely, in light of these actions, that a Tax Court judge

will ever be hardy enough to certify any future interlocutory

appeal.

17

2. Petitioners’ Important Due Process Claim Cannot

Practically Be Deferred Until After Their Trial

After seizing all of petitioners’ assets, the Internal

Revenue Service served notices of deficiency which add

up to a claim for back taxes and penalties totalling over

$300,000. This confonts the petitioners with the pros-

pects of permanently losing the property which was the

subject of the jeopardy assessment and of overall finan-

cial ruin. The only way the petitioners can avoid the

permanent loss of their property is to litigate in the Tax

Court. There, the IRS is represented by experienced

counsel and will have the assistance of government agents

in preparing and presenting its case. Rules of evidence

and procedure will be in effect, and the outcome at trial

may well depend on the petitioners’ ability to impeach

through cross-examination adverse witnesses who can be

expected to testify that Mr. Shapiro engaged in drug-

dealing. But the petitioners will have no money to pay

for any of the necessary trial preparation or the cost of

counsel. 1.9

Both courts below took notice of the obvious unfair-

ness of the situation. The Tax Court observed that ‘‘the

unavailability of funds obviously has a direct and adverse

impact upon the ability of a taxpayer to be provided with

the effective assistance of counsel.” (p. 7a, infra). The

court of appeals confirmed that the “imposition” on the

petitioners “appears to be substantial.” (p. 2a, infra).

The problem is a recurring one. The Tax Court has

previously wrestled with the issue, Human Engineering

Institute v. Commissioner, 61 T.C. 61, 66-68 (1973), and

it is fair to assume that a jeopardy assessment may

frequently tie up the assets that a taxpayer could

otherwise commit to the Tax Court litigation.

18

This Court recently re-emphasized that the jeopardy

assessment procedure cannot be squared with Due Pro-

cess unless the taxpayer obtains an “adequate” subse-

quent opportunity to contest the alleged tax liability.

Commissioner of Internal Revenue v. Shaptro, 424 US.

614, 631-32 (1976). That standard is not met where, as

here, the jeopardy assessment operates to deprive a tax-

payer of the only assets available to present a case in the

Tax Court. Thus, this is not at case testing whether a liti-

gant against the government in a civil lawsuit is entitled

to have an attorney appointed to represent him? In this

case, the same government agency simultaneously disables

the individual from adequately contesting the agency’s

cliam while pursuing that cliam in a judicial forum. This

is a double-barreled attack which, we submit, cannot be

constitutionally permissible.

The Tax Court must have the inherent authority to

assure that its proceedings meet minimum constitutional

standards. Like any other court, it bears the ultimate

responsibility for the conduct of its proceedings. It is best

situated to make the discretionary judgment whether the

jeopardy assessment poses a fundamental threat. And it is

best able to supervise the release of funds and their

commitment to litigation of contested liabilities. This was

the conclusion reached by the United States District

Court for the District of Columbia in this case when it

held that a release of funds to finance Tax Court

!0ln several recent decisions, this Court has recognized that the

assistance of counsel is essential in even relatively minor criminal

confrontations between an individual and the government. See

Baldasar v. Illinois, 100 S.Ct. 1585 (1980); Argersinger v. Hamlin,

407 U.S. 25 (1972).

19

litigation ‘“‘was a matter totally within the ambit of that

Court.” (See p. 8, supra).

Nor does this case involve a situation, like United

States v. Brodson 241 F.2d 107 (7th Cir, 1957), and its

progeny, where the decision on how to respond to the

unfairness posed by a jeopardy assessment could be

postponed until after a trial had been held. Unlike

Brodson, the taxpayers are not seeking dismissal of an

indictment (or any form of relief which amounts to a

disposition in their favor), but only the opportun‘ty to

litigate in a fair proceeding. Subsequent review would be

inadequate, since the trial record will not reveal the

omissions that would accompany inadequate preparation

or the inability to compensate counsel. See Cuyler v.,

Sullivan, 100 S.Ct. 1708 (1980); Holloway v. Arkansas,

435 U.S. 475, 491-92 (1978).

3. The Court of Appeals Misapplied This Court’s

Decisions In Refusing To Treat The Tax Court’s

Order As A Reviewable Collateral Order

The court of appeals erroneously concluded that the

“collateral order” standard for appellate review most

recently applied by this Court in Coopers & Lybrand v.

Livesay, 437 U.S. 463 (1978), is not satisfied because

“the denial of the taxpayers’ motion may be reviewed on

the entry of a final judgment.”’ (p. 3a, mfra). In fact, as

we have previously shown, it is highly improbable that

the true impact of the deprivation of the effective

assistance of counsel could be proved more specifically at

that juncture than it can today. And the substantial harm

of putting petitioners through an unfair trial will have

been done. A ruling such as the one at issue here—which

refuses to release funds for purposes which are not

20

dependent upon the ultimate merits of the claim—is a

classic illustration of an order which ‘conclusively

determine[s] the disputed question, resolve[s] an im-

portant issue completely separate from the merits of the

action, and [is] effectively unreviewable on appeal from

a final judgment.” Coopers & Lybrand v. Livesay, 437

US. 463, 468 (1978). See Abney v, United States, 431

U.S. 651, 658 (1977); Cohen v. Beneficial Industrial

Loan Corp., 337 U.S. 541, 546 (1949).

The order is analogous to rulings concerning prejudg-

ment security that this Court and lower courts have held

to be final collateral orders for purposes of appellate

review. Cohen v. Beneficial Industrial Loan Corp., supra,

was itself an appeal of an order denying security for

costs. See also Fielding v. Allen, 181 F.2d 163 (2d Cir.),

cert. denied, 340 U.S. 817 (1950); Chabot v. National

Securities & Research Corp., 290 F.2d 657 (2d Cir.

1961); cf. Swift & Co. Packers v. Compania Colombiana

Del Caribe, 339 U.S. 684, 688-89 (1950) (“the pro-

vision for appeals only from final decisions ... should

not be construed so as to deny effective review of

a claim fairly severable from the context of a larger

litigious process.’’).

The decision below was inconsistent with the standards

this Court has applied in determining appealability under

28 U.S.C. §1291. It should be promptly reversed.

21

CONCLUSION

For the foregoing reasons, this petition for a writ of

certiorari should be granted.

Respectfully submitted,

NATHAN LEWIN

STEPHEN L. NIGHTINGALE

MILLER, CASSIDY,

LARROCA & LEWIN

2555 M Street, N.W.

Suite 500

Washington, D.C. 20037

(202) 293-6400

Attorneys for Petitioners.

la

APPENDIX A

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a Stated Term of the United States Court of

Appeals, in and for the Second held at the United States

Court House, in the City of New York, on the thirtieth

day of June, one thousand nine hundred and eighty.

Present:

Hon. James L. Oakes,

Hon. Ellsworth A. Van Graafeiland,

Circuit Judges.

Hon. Edward R. Neaher,

District Judge.

Filed: June 30, 1980

Samuel Shapiro,

Appellant,

v.

Commissioner of Internal Revenue,

Appellee.

Samuel and Bella Shapiro,

Appellants,

v.

Commissioner of Internal Revenue,

Appellee.

2a

ORDER

In our view taxpayers’ motion for leave to appeal

under 28 U.S.C. §1292(b) should be denied and the

Commissioner’s motion to dismiss the appeal should be

granted.

If this were an appeal from the interlocutory order of a

district court as opposed to the Tax Court, we might well

accept a certification, because the question whether an

IRS jeopardy assessment can be used to freeze assets of a

taxpayer needed to pay attorneys’ fees and to prepare his

case fully is a question that has never been resolved by

this court and appears to raise an important legal

question. The Tax Court judge here stated he felt the case

was “‘difficult,’’ and he certified the question for appeal

after refusing to release the funds requested. The resolu-

tion of this issue arguably could affect the outcome and

conduct of the trial, and the alleged imposition on the

taxpayers in not having access to these funds to proceed

with their litigation appears to be substantial.

The argument of the Commissioner that an appeal

cannot be taken under §1292(b) from an interlocutory

order of the Tax Court is irrefutable, however. The

language of §1292(b) refers only to orders by a “‘district

judge” and proceedings in a “district court,” making no

reference to orders of any other court. Moreover, Fed. R.

App. P. 5, governing appeals from interlocutory orders

under §1292(b), also refers solely to the “district court,”

and Rule 5 is expressly excluded from application to the

Tax Court by Rule 14.

Taxpayers attempt to rely on the language of 26

U.S.C. §7482(a) giving courts of appeal jurisdiction to

review Tax Court decisions “in the same manner and to

the same extent as decisions of the district courts in civil

3a

actions tried without a jury.” But, as the Commissioner

points out, this sentence has always been interpreted to

apply to final Tax Court decisions, and there is no

indication that the sentence was meant to encompass

appeals of interlocutory Tax Court orders by implicitly

incorporating into the term “decision of the district

court” interlocutory orders of district court appealable

under §1292. See Commissioner v. Smith Paper, Inc.,

222 F.2d 126, 128 (1st Cir. 1955). Indeed, §1292(b) was

added to the Code ten years after the “same extent”

language in §7482(a), and hence the fact that §1292(b)

only refers to “district courts” indicates that there was

no intention under §7482(a) to make interlocutory Tax

Court orders appealable when any such intention could

have been stated explicitly in §1292(b).

And since this is clearly not a final decision, the

alternate notice of appeal under § 1292 is unavailing. The

attempt to invoke the “collateral order’ doctrine of

Cohen v. Beneficial Loan Corp., 337 U.S. 541 (1949), is

equally so. The requirements of Coopers & Lybrand v.

Livesay, 437 U.S. 463, 468 (1978), are not met since the

denial of the taxpayers’ motion may be reviewed on the

entry of a final judgment. As the Eighth Circuit said in a

different context, assuming arguendo that the taxpayers

have a constitutional right to be represented by compe-

tent counsel in tax court proceedings, “‘it does not follow

that they have a constitutional right to be represented by

a particular law firm for a particular fee agreed upon in

advance.”” See Rosenblum v. United States, 549 F.2d

1140, 1146 (8th Cir.), cert. denied, 434 U.S. 818 (1977);

cf. Association of National Advertisers, Inc. v. FTC, 565

F.2d 237, 240 (2d Cir. 1977) (expense of administrative

proceeding precluding proper preparation not sufficiently

irreparable to give interlocutory jurisdiction to district

jurisdiction).

da

Appeal dismissed; leave to appeal under 28 U.S.C.

§ 1292(b) denied for lack of jurisdiction.

Circuit Judges.

District Judge.

We

5a

APPENDIX B

UNITED STATES TAX COURT

SAMUEL SHAPIRO, Petitioner v. COMMISSIONER OF

INTERNAL REVENUE, Respondent

SAMUEL SHAPIRO and BELLA SHAPIRO, Petitioners

v. COMMISSIONER OF INTERNAL REVENUE,

Respondent

Docket Nos. 178-74, 6489-76. Filed November 26, 1979.

Held, petitioners are not entitled to an order directing

respondent to release funds subject to a lien of a jeopardy

assessment in order to pay fees to counsel for representa-

tion in the above-docketed cases.

Nathan Lewin, for the petitioner.

St. Clair Reeves, for the respondent.

OPINION

TANNENWALD, Judge: Respondent has asserted defi-

ciencies in petitioners’ income taxes as follows:

Additions to tax

Under

estimation

Delinquency Negligence of tax

(Sec. (Sec. (Sec.

Docket Deficiency 6651(a),' 6653(a), 6654(a),

No. Year of tax IRC 1954) IRC 1954) IRC 1954)

178-74 1970 $ 5,137.89 $1,284.47 $ 256.90 $164.42

1971 79,368.50 — 3,968.43 —

All statutory references, unless otherwise indicated, are to the

Internal Revenue Code of 1954, as amended.

6a

Addition to tax

Fraud Liability of Bella

Docket Deficiency (Sec. 6653(b), Shapiro limited to

No. Year of tax IRC 1954) deficiency of tax

6489-76 1972 $ 22,562.63 $11,281.31 $ 22,562.63

1973 136,578.10 68,289.05 136,578.10

Respondent also, on December 6, 1973, issued a

jeopardy assessment and seized some $35,000 of assets in

respect of the tax liabilities asserted in docket No.

178-74.

With minor exceptions, the asserted deficiencies are

based upon income alleged to have been derived from

dealings in narcotics by Samuel Shapiro and reflect

projections of such income based upon alleged specific

transactions.”

On September 28, 1979, petitioners filed a motion for

the release of $15,000 from the lien created as the result

of the jeopardy assessment in order to enable petitioner

to pay attorneys’ fees and costs in connection with the

above-docketed cases. A hearing was held in respect of

said motion on October 24, 1979, at which petitioner

Samuel Shapiro testified as to the financial position of

himself and his wife, who is the co-petitioner in docket

No. 6489-76.

?There has been extensive ancillary litigation with respect to

matters related to those involved in the above-docketed cases.

Commissioner v. Shapiro, 424 U.S. 614 (1976); Shapiro uv.

Secretary of State, an unreported case (D.D.C. 1976, 38 AFTR 2d

76-5453, 76-2 USTC par. 9507), and subsequent hearing held on

July 6, 1976 in that action. Throughout the proceedings herein and

in these cases, petitioners have been represented by counsel.

7a

Although the record as to petitioner’s financial posi-

tion is not crystal clear, at least as far as concerns the

possible availability, for the payment of litigation costs,

including counsel fees, of assets not subject to the

jeopardy assessment during earlier periods of the pend-

ency of these cases, we are satisfied and we find that, at

the present time, neither of the petitioners has sufficient

assets or sources of income or funds from which to pay

such litigation costs.

The issue of the release of funds, which are the subject

of a jeopardy assessment, to pay litigation costs of a

taxpayer who has no other sources for the payment of

such costs is a difficult one. See Human Engineering

Institute v. Commissioner, 61 T.C. 61, 66-68 (1973). On

the one hand, there is no question that, as able counsel

for petitioners has so forcefully argued, the unavailability

of funds obviously has a direct and adverse impact upon

the ability of a taxpayer to be provided with the effective

assistance of counsel. That there is an element of

unfairness involved cannot be denied, particularly where,

as is the case herein, such funds would in all likelihood

have been available but for the action of respondent in

making the jeopardy assessment.

On the other hand, the courts have recognized the

barrier of the Anti-Injunction Act (section 7421(a))* and

have held that in order for a taxpayer to avoid the impact

> That section provides:

SEC. 7421(a). Tax—Except as provided in sections

6212(a) and (c), 6213(a), 6672(b), 6694(c), 7426(a) and

(b)(1), and 7429(b), 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.

8a

of that act, where a jeopardy assessment is involved, he is

required to show that (a) he will suffer irreparable injury

and (b) under no circumstances could the Government

ultimately prevail. See Commissioner v. Shapiro, 424 US.

614, 623 (1976); Enochs v. Williams Packing Co., 370

U.S. 1, 7 (1962). The underlying purpose of such a

restrictive view is to assure the Government of its ability

to collect revenue promptly. See Enochs v. Williams

Packing Co., supra. To a certain extent, that restrictive

view has been statutorily relaxed by the enactment of

section 7429 in 1976 permitting review of a jeopardy

assessment by United States District Courts to determine

whether it is “reasonable under the circumstances.” See

section 7429(b)(2)(A).* In this connection, we note that

there is not the slightest suggestion in the legislative

history of section 7429 that the review of jeopardy

assessments provided for therein should include a power

to release funds to pay litigatjon costs and it is obvious

that the statute itself does not so provide. See H. Rept.

94-658, 299-304 (1975), 1976-3 C.B. (Vol. 2) 695,

991-996; S. Rept. 94-938, 359-367 (1976), 1976-3 C.B.

(Vol. 3) 49, 397-405. Moreover, we think it of some

significance that, when Congress recently provided for

the allowance of attorneys’ fees as part of litigation costs

in connection with suits by the United States Govern-

ment to enforce the provisions of the Internal Revenue

Code (Pub. L. 94-559, 90 Stat. 2641, amending 42 U.S.C.

sec. 1988; see also Key Buick Co. v. Commissioner, 68

T.C. 178 (1977), on appeal (5th Cir., Aug. 15, 1977)), it

*That section is not applicable herein, not only because this

Court is not given jurisdiction over such actions, but also because it

was made applicable only where notice and demand for the

payment of the tax occurs after February 28, 1977.

9a

limited such allowance to the “prevailing party,” which

quite obviously postpones the determination until the

conclusion of the litigation.

Where the courts have been faced with the problem,

they have uniformly refused, albeit sometimes reluc-

tantly, to sanction the release of funds for the purpose of

paying litigation costs, including counsel fees, on the

ground that the only basis for a constitutional claim on

the part of the taxpayer, whose assets have been seized, is

the guaranty of a fair trial under the due process clause of

the Constitution—a determination which they have held

can only be made post-trial. See Avco Delta Corp. Canada

Ltd. v. United States, 540 F.2d 258 (7th Cir. 1976) and

484 F.2d 692 (7th Cir. 1973); United States v. Marshall,

526 F.2d 1349 (9th Cir. 1975); United States v. Bello,

470 F. Supp. 723 (S.D. Cal. 1979); Stone v. United

States, 405 F. Supp. 642 (S.D.N.Y. 1975), affd. without

published opinion 538 F.2d 314 (2d Cir. 1976); see

Human Engineering Institute v. Commissioner, supra, and

cases cited and discussed at 61 T.C. 67. See also

Rosenblum v. United States, 549 F.2d 1140 (8th Cir.

1977). In reaching their conclusions, the courts have

frequently observed that, in any event, there is no

constitutional right to obtain funds to pay for counsel of

one’s own choosing. See United States v. Marshall, supra

at 1355; United States v. Bello, supra at 725; Human

Engineering Institute v. Commissioner, supra at 67. Nor

have the courts found any basis for applying a different

approach where a criminal prosecution was involved. See

United States v. Marshall, supra; United States v.

Brodson, 241 F.2d 107 (7th Cir. 1957); United States v.

Bello, supra. Under these circumstances, we find unper-

suasive petitioners’ attempt to distinguish the decided

cases on the ground that the deficiency notices herein are

10a

rooted in alleged criminal activity, i.e., dealing in nar-

cotics. See also Helvering v. Mitchell, 303 U.S. 391

(1938).

Similarly, petitioners’ attempt to invoke the Sixth

Amendment must also fail; aside from the question

whether that amendment provides any constitutional

basis for the payment of counsel fees, it applies only to

criminal prosecutions. Hannah v. Larche, 363 U.S. 420,

440, n. 16 (1960); United States v. Zucker, 161 U.S. 475,

480-481 (1896); United States v. Rogers, 534 F.2d 1134,

1135 (5th Cir. 1976); Ferguson v. Gathright, 485 F.2d

504, 506 (4th Cir. 1973); Grabinger v. Conlisk, 320 F.

Supp. 1213, 1218 (N.D. Ill. 1970).

Moreover, we are, in any event, not prepared to accept

petitioners’ attempt to invoke what they describe as the

doctrine of affirmative government interference with the

lawyer-client relation, citing Geders v. United States, 425

U.S. 80 (1976) (ability to consult with counsel), and

Black v. United States, 385 U.S. 26 (1966) (monitoring

of attorney-client conversation) and extend any such

doctrine to the financial relationship, as distinguished

from the privilege in respect of communications. Nor

does petitioners’ reliance on the All Writs Act (28 U.'3.C.

sec. 1651) have any merit. See Shapiro v. Secretary of

State, an unreported case, footnote 1, supra. Whatever

thrust that Act may have in respect of actions by this

Court as a court “established by Act of Congress”? must

yield to the specific prohibitions contained in the

anti-injunction provisions of section 7421(a). Cf. Enochs

v. Williams Packing Co., supra, in which the Supreme

Court indicated that, where it is clear that the Govern-

ment will under no circumstances prevail, the alleged tax

is really not a tax, with the result that the anti-injunction

lla

provisions do not apply. See 370 U.S. at 7. In Commis-

sioner v. Shapiro, supra, the Supreme Court carefully

preserved that rationale, merely holding that a taxpayer is

entitled to an opportunity to show that a jeopardy

assessment is without any basis in fact. See 424 US. at

629.

In light of the foregoing, we conclude that we have no

alternative but to deny petitioner’s motion. We think that

it is also appropriate to observe that whatever vitality our

comment in Human Engineering Institute v. Commis-

stoner, 61 T.C. at 67-68, regarding the possibility of

“some action by the trial judge” in situations of this

kind, may have had at the time it was made has been

sapped to the point of nonexistence by subsequent

judicial and legislative developments.

An appropnate order

will be issued.

12a

APPENDIX C

UNITED STATES TAX COURT

WASHINGTON

SAMUEL SHAPIRO,

Petitioner,

Vv. Docket No. 178-74

COMMISSIONER OF INTERNAL

REVENUE,

Respondent.

SAMUEL SHAPIRO and BELLA

SHAPIRO,

Petitioners,

v. Docket No. 6489-76

COMMISSIONER OF INTERNAL

REVENUE,

Respondent.

ORDER

Petitioners having, On September 28, 1979, filed a

Motion for a Release of Funds to Pay Petitioners’

Litigation Expenses and a hearing having been held

thereon on October 24, 1979, itis .

ORDERED that, for the reasons appearing in the

Opinion of the Court, filed November 26, 1979, petition-

ers’ motion is denied.

Dated: Washington, D.C. Judge

November 26, 1979

13a

APPENDIX D

UNITED STATES TAX COURT

WASHINGTON

SAMUEL SHAPIRO, ET AL.,

Petitioners,

Vv. Docket Nos. 178-74,

COMMISSIONER OF INTERNAL 6489-76.

REVENUE,

Respondent.

ORDER

Pursuant to the Opinion filed on November 26, 1979,

the Court issued an order, dated November 26, 1979,

denying the petitioners’ motion to release funds to pay

petitioners’ litigation expenses. Petitioners, on January

31, 1980, filed a notice of appeal from said order and, on

the same date, filed a motion to supplement said order of

the Court dated November 26, 1979 so as to include

therein a statement for an interlocutory appeal pursuant

to 28 U.S.C. sec. 1292(b). After due consideration of

petitioners’ motion and the grounds set forth in support

thereof and after argument in open court on February 4,

1980, it is the opinion of the Court that its order dated

November 26, 1979 involves a controlling question of law

as to which there is substantial ground for difference of

opinion and that an immediate appeal from said order

may materially advance the termination of this litigation.

Accordingly, it is

ORDERED that petitioners’ motion to supplement the

Court’s order dated November 26, 1979 be, and the same

l4a

hereby is, granted and said order is hereby modified by

including ‘herein the additional provisions required by 28

U.S.C. sec. 1292(b), to wit:

This order involves a controlling question of law

as to which there is a substantial ground for

difference of opinion, namely, whether this Court

has the power and authority to order the release of

funds, seized by respondent pursuant to a jeopardy

assessment, to pay litigation costs of a taxpayer who

has no other sources for the payment of such costs,

and as to which an immediate appeal from said

order may materially advance the ultimate termina-

tion of this litigation, including, but not limited to,

affording petitioners a greater opportunity for a full

and complete trial of the above-docketed cases and

the avoidance of a possible protracted and expensive

retrial of such cases,

Judge

Dated: Washington, D.C.

February 4, 1980

l5a

APPENDIX E

SUPREME COURT OF THE UNITED STATES

No. A-249

SAMUEL SHAPIRO AND BELLA SHAPIRO,

Petitioners,

v.

COMMISSIONER OF INTERNAL REVENUE

ORDER EXTENDING TIME TO FILE PETITION FOR

WRIT OF CERTIORARI

UPON CONSIDERATION of the application of coun-

sel for petitioner(s),

IT IS ORDERED that the time for filing a petition for

writ of certiorari in the above-entitled cause be, and the

same is hereby, extended to and including October 28,

1980.

/s/ Thurgood Marshall

Associate Justice of the Supreme

Court of the United States

Dated this 18th

day of September, 1980.

l6a

APPENDIX F

SUPREME COURT OF THE UNITED STATES

No. A-249

SAMUEL SHAPIRO, ET AL.,

Petitioners,

v.

COMMISSIONER OF INTERNAL REVENUE

ORDER FURTHER EXTENDING TIME TO FILE

PETITION FOR WRIT OF CERTIORARI

UPON CONSIDERATION of the application of coun-

sel for petitioner(s),

IT IS ORDERED that the time for filing a petition for

writ of certiorari in the above-entitled cause be, and the

same is hereby, further extended to and including

November 7, 1980.

/s/ Thurgood Marshall

Associate Justice of the Supreme

Court of the United States

Dated this 16th

day of October, 1980.