Opposition — Shapiro v. Commissioner

11 1980

No. 80-743 | OE 11

suche BODAK, JR., CLERK |

1 oe tee

In the Supreme Court of the Hnited States

OCTOBER TERM, 1980

SAMUEL SHAPIRO AND BELLA SHAPIRO, PETITIONERS

Vv.

COMMISSIONER OF INTERNAL REVENUE

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

MEMORANDUM FOR THE RESPONDENT

IN OPPOSITION

WADE H. MCCREE, JR.

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

TABLE OF AUTHORITIES

Page

Cases:

Avco Delta Corp. Canada, Ltd. v. United States,

484 F. 2d 692 2... cceececccceccsccseecenes l

Ceco Steel Products Corp. v. Commissioner,

cee Ahk be eh eh ect eee veesercees 2

Cohen v. Beneficial Industrial Loan Corp.,

Te cub cokeceeseseseeeveveseese _ 3

Commissioner v. S. Frieder & Sons, 228 F. 2d

TRG e eb edeesscbecvisvecseseuvses 2

Commissioner v. Shapiro, 424 U.S. 614 ......... 4

Commissioner v. Smith Paper, 222 F. 2d 126 .. 2,4

Coopers & Lybrand v. Livesay, 437 U.S. 463 .... 4

Handshoe v. Commissioner, 252 F. 2d 328 ...... 2

Illinois Redi- Mix Corp. v. Coyle, 360 F. 2d

ets cc ek Peat eeale 60d eee bine |

Kiker v. Commissioner, 218 F. 2d 389 .......... 2

Licavoli v. Commissioner, 318 F. 2d 281 ........ 2

Lloyd v. Patterson, 242 F. 2d 742 .......eeeeees l

Louisville Builders Supply Co. v. Commissioner,

ES eee aa. . ews c a cae eeees t 2

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

New York City Transit Authority v. Beazer,

ain ch eta ue ee peeks ee beee l

Porter v. Commissioner, 453 F. 2d 1231 ........ 2

Rosenblum v. United States, 549 F. 2d 1140,

cert. denied, 434 U.S. 818 .......... cece eee |

II

Page

Cases—Continued:

Ryan v. Commissioner, 517 F. 2d 13,

cert. denied, 423 U.S. 892 ...cccccccccccceces 2

Ryan v. Commissioner, 568 F. 2d 531, cert.

Gomsed,; 4SP U.S. GAD oc cvcccccsvcevcccvccves 3

United States v. Brodson, 241 F. 2d 107,

cert. denied, 354 U.S. 911 ...ccccccescccscces l

United States v. Marshall, 526 F. 2d 1349 ....... |

W.W. Windlé.Co. v. Commissioner, 550 F. 2d 43,

cert. denied, 431 U.S. 966 ..........e ee eeees 2

Wilson v. Commissioner, 564 F. 2d 1317 ........ 2

Statutes:

Internal Revenue Code of 1954 (26 U.S.C.

(& Supp. I):

SOCHON 74ZB on. crccccccccvece Torre Tere ey 3

kL rer ee re 3

PE PIED bb 0 os dr0'e 6 beds be adeeieeeyse 3

EE EE Ge cbc dnennbas ener sebeeeu 2,3

er ere re 3

Section 7459(€) .....cccccsccccccvcveveces 3

PUT av nec ebsc cove seeeeseceenseeoes 3

BE FETED occ cneesecccccccdsutenessa 3

EEE Shh cake se daedscucues se ene cus 3

NU ois cavedcchéenracbasecesbes 3

Section 7478 (Supp. II) .........ceeeeeeees 3

Ill

Page

Statutes—Continued:

Section 7478(a) (Supp. IT) ............0008- 3

OME ED Add ee dcdcccvcccesovevees y a

eee 2, 4, 5

Fe iis LEPTEDD cv cedoccoccevecscveceues 2, 4, 5

Miscellaneous:

9 J. Mertens, Law of Federal Income Taxation

RE ee _ ae 2

Iu the Supreme Court of the Hnited States

OCTOBER TERM, 1980

No. 80-743

SAMUEL SHAPIRO AND BELLA SHAPIRO, PETITIONERS

Vv.

COMMISSIONER OF INTERNAL REVENUE

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

MEMORANDUM FOR THE RESPONDENT

IN OPPOSITION

Petitioners seek review of the decision of the court of

appeals determining that it had no jurisdiction to hear their

appeal from an interlocutory order of the Tax Court.

Petitioners had asked the Tax Court to order the Commissioner

of Internal Revenue to release assets seized after a jeopardy

assessment so that the released funds could be used to pay

attorneys’ fees in contesting the underlying tax liability. The

Tax Court denied the request,' and petitioners sought to

'The Tax Court’s denial of petitioners’ request and its ruling that any

claim of due process violation must await a decision on the merits (Pet.

App. 9a-10a) is in accord with the position taken by the courts of

appeals which have considered the question. Avco Delta Corp. Canada,

Lid. v. United States, 484 F.2d 692, 706-707 (7th Cir. 1973);

Rosenblum v. United States, 549 F. 2d 1140, 1146 (8th Cir.), cert.

denied, 434 U.S. 818 (1977); United States v. Marshall, 526 F. 2d 1349,

1353-1354 (9th Cir. 1975); Illinois Redi- Mix Corp. v. Coyle, 360 F. 2d

848, 849-850 (7th Cir. 1966); Lloyd v. Patterson, 242 F. 2d 742, 744 (Sth

2

take an immediate appeal prior to any determination of tax

liability. Petitioners alleged jurisdiction under both Section

7482 of the Internal Revenue Code of 1954 (26 U.S.C.) and

28 U.S.C. 1292(b).? The court of appeals ruled that it had no

jurisdiction under either provision (Pet. App. 2a-4a).

1. The courts of appeals correctly ruled that it lacked

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

of 1954 confers jurisdiction upon the court of appeals “to

review the decisions of the Tax Court.” Section 7459(c)

establishes the content of the term “decision” as “an order

specifying the amount of the deficiency.” Thus, the courts of

appeals have jurisdiction to review only “decisions” of the

Tax Court and not intermediate or interlocutory orders.’

When Congress has determined to provide for the review of

Cir. 1957); United States v. Brodson, 241 F, 2d 107, 109-111 (7th Cir.),

cert. denied, 354 U.S. 911 (1957). The Tax Court’s ruling is also in

accord with this Court’s admonitions that rulings on constitutional

issues should not be made unless clearly unavoidable. New York City

Transit Authority v. Beazer, 440 U.S. 568, 582 (1979), and cases cited

therein at n.22.

2The Tax Court purported to certify the question for an interlocutory

appeal under 28 U.S.C. 1292(b) (Pet. App. 13a-14a).

3Michael v. Commissioner, 56 F. 2d 825 (2d Cir. 1932); Ceco Steel

Products Corp. v. Commissioner, 150 F. 2d 698 (8th Cir. 1945); Kiker

v. Commissioner, 218 F. 2d 389 (4th Cir. 1955); Commissioner v.

Smith Paper, Inc., 222 F. 2d 126/\1st Cir. 1955); Commissioner v. S.

Frieder & Sons, 228 F. 2d 478 (3d Cir. 1955); Handshoe v.

Commissioner, 252 F.2d 328 (4th Cir. 1958); Licavoli v.

Commissioner, 318 F. 2d 281 (6th Cir. 1963); Porter v. Commissioner,

453 F. 2d 1231 (Sth Cir. 1972); Ryan v. Commissioner, 517 F. 2d 13(7th

Cir.), cert. denied, 423 U.S. 892(1975); W. W. Windle Co. v. Commissioner,

550 F. 2d 43, 45 (Ist Cir.), cert. denied, 431 U.S. 966 (1977); Wilson v.

Commissioner, 564 F. 2d 1317 (9th Cir. 1977). See also 9 J. Mertens,

Law of Federal Income Taxation § 51.13 (1977 rev.).

Petitioners claim (Pet. 14) that Louisville Builders Supply Co. v.

Commissioner, 294 F. 2d 333 (6th Cir. 1961), deviates from this

consistent line of authority. But that case did not involve a petition for

the redetermination of a deficiency by the Tax Court. Rather, the court of

3

a Tax Court action which does not satisfy Section 7459(c), it

has stated that the action shall be considered to be a

decision or shall be reviewable as such.‘ Since the order of

the Tax Court considered below was not a “decision,” the

court of appeals correctly determined that it had no

appellate jurisdiction under Section 7482 with respect to

that order.

2. In seeking to avoid the limitations upon review of Tax

Court orders other than decisions, petitioners invoke (Pet.

20) the so-called “collateral order” doctrine of Cohen v.

Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). The

“collateral order” doctrine has no relevance, however, for it

relates to the finality of an order. The question here was

whether the order was a decision reviewable under Section

7482, not whether it was final.

Moreover, even if the question here turned upon finality,

_the “collateral order” doctrine of the Cohen case would not

appeals held in that case that a special proceeding was beyond the

jurisdiction of the Tax Court, and therefore reviewable on that basis.

However, in a subsequent case, the Sixth Circuit ruled in accordance

with our submission, that it had no jurisdiction to review interlocutory

orders of the Tax Court in the usual type of proceeding to redetermine a

deficiency. See Licavoliv. Commissioner, supra; see also W. W. Windle

Co. v. Commissioner, supra, 550 F. 2d at 45 n.1

4The 1954 Code assimilates other final dispositions of proceedings by

the Tax Court to “decisions” as designated in Section 7459(c). Section

7459(d) provides that a decision dismissing a proceeding shall be consid-

ered a decision that the deficiency is the amount determined by the

Secretary. Section 7459(e) provides that if assessment or collection is

barred by the statute of limitations, a decision of the Tax Court to that

effect shall be considered a decision that there is no deficiency. More

recently, when the Tax Court has been given limited jurisdiction to

make declarations with respect to charitable organizations (26 U.S.C.

7428), certain retirement plans (26 U.S.C. 7476), transfers of property

from the United States (26 U.S.C. 7477), and the status of certain

governmental obligations (26 U.S.C. (Supp. II) 7478), Congress has

been careful in each instance to provide that such a declaration shall

have the force and effect of a decision of the Tax Court, “and shall be

4

support petitioners’ position. In Coopers & Lybrand v.

Livesay, 437 U.S. 463, 468 (1978), this Court held that to

come within the Cohen exception, a case must “be cifectively

unreviewable” on appeal from a final judgment. That

condition is not met here (see page 1, note 1, supra). Any

attempt to evaluate petitioners’ due process claim prior to

the actual deprivation of due process is a matter of complete

speculation. Petitioners have been represented in the past

without access to the. assets seized under the jeopardy

assessment and there is no reason to believe that such

representation will cease. See, e.g., Commissioner v. Shapiro,

424 U.S. 614 (1976). Only if and when petitioners actually

suffer an arguable deprivation of due process will their

claim be ripe for judicial consideration. It may then be

reviewed on appeal from the “decision” of the Tax Court

determining the amount of the deficiencies in their tax

liabilities.

3. The court of appeals also correctly ruled that it had no

jurisdiction under 28 U.S.C. 1292(b) to review the Tax

Court’s order. As the court of appeals stated (Pet. App. 2a):

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

reviewable as such.” See 26 U.S.C. 7428(a), 7476(a), 7477(a), and 26

U.S.C. (Supp. II) 7478(a).

If, in awarding the Tax Court a limited contempt power hy virtue of

Section 7456(d), Congress in 1969 failed to specify whether and how

punishment for contempt might be reviewed, that failure has little

bearing upon this case. Moreover, no question of jurisdiction other

than mootness was raised in Ryan v. Commissioner, 568 F. 2d 531 (7th

Cir, 1977), cert. denied, 439 U.S. 820 (1978), a contempt case relied

upon by petitioners (Pet. 14-15).

5

to the “district court,” and Rule 5 is expressly excluded

from application to the Tax Court by Rule 14.

Petitioners (Pet. 13) suggest that Section 7482(a) incorporates

28 U.S.C. 1292(b), where the former states that courts of

appeals have jurisdiction to review Tax Court decisions, “in

the same manner and to the same extent” as district court

decisions. But this argument is contrary to the only

authority on the subject, Commissioner v. Smith Paper,

Inc., 222 F. 2d 126, 128 (1st Cir. 1955), and ignores the fact

that 28 U.S.C. 1292(b) was enacted some ten years after the

relevant portion of Section 7482(a). Accordingly, Congress

could not have intended to incorporate Section 1292(b) in

Section 7482 of the Internal Revenue Code (see Pet. App.

3a).

It is therefore respectfully submitted that the petition for

a writ of certiorari should be denied.

WADE H. McCRreEE, JR.

Solicitor General

DECEMBER 1980