Reply Brief — W. C. Garcia & Associates, Inc. v. Miceli

No. 89-1293 A Supreme 7" >

JOSEPH F. SPANIOL. JR

IN THE =

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Supreme Court of the United States

OCTOBER TERM, 1989

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W.C. GARCIA & ASSOCIATES, INC.,

Petitioner,

—V.—

FRANK S. MICELI, DISTRICT DIRECTOR,

INTERNAL REVENUE SERVICE,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER IN RESPONSE

TO BRIEF FOR THE RESPONDENT IN OPPOSITION

JAMES F. KENNEDY

767 Fifth Avenue

47th Floor

New York, New York 10153

(212) 909-5340

Counsel of Record

GEORGE T. DONOGHUE, JR.

230 W. Monroe Street

Suite 2040

Chicago, Illinois 60606

(312) 236-4711

Attorneys for Petitioner

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TABLE OF CONTENTS

TABLE OF AUTHORITIES

Cases:

Cool Fuel, Inc. vy.

SR eas tc

Connett, 685 F.2d 309 (9th Cir.

lt elt A vin eed me ee eo WW a ee ee a

Sv, ey et Oe 188 CIS ro

Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982)...

Statutes:

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

ig ia thes a EES On a Oe ee TRS

Section 7422(a)

alt Rh ata OS eS ee a Wa ee ye ee er

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-1293

>

W.C. GARCIA & ASSOCIATES, INC.,

Petitioner,

—-

FRANK S. MICELI, DISTRICT DIRECTOR,

INTERNAL REVENUE SERVICE,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO TIIE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

—_

REPLY BRIEF FOR THE PETITIONER IN: RESPONSE

TO BRIEF FOR THE RESPONDENT IN OPPOSITION*

ARGUMENT

»

The Government makes two arguments: this injunction

action is moot and, in any event, money seized or collected in

violation of § 6213(a) can only be recovered in a refund suit

under § 7422(a).

In order to evaluate the serious flaw in the Government’s

mootness argument, it is helpful to consider the Taxpayer's

first action. If the ‘‘capable of repetition, yet evading

° The Rule 29.1 listing was complied with in the Petition

review’’ argument had been raised in that case, no doubt the

Government would have argued that since the assessment has

been satisfied, it is not at all likely the Government will fur-

ther pursue the Taxpayer. But in this second case, it is shown

the Government has again made an illegal assessment and

again threatened the Taxpayer with collection action if the

second illegal assessment was not paid. By continuing to

argue that such illegal collections can only be corrected by

refund suits, under § 7422(a), the Government strengthens

the Taxpayer’s argument that such action can easily escape

review under § 6213(a).

The most glaring vacancy in the Government’s mootness

argument is its abstinence from reconciling it with the

Court’s holding in Laing v. United States, 423 U.S. 161

(1976), that an injunction there should be issued under

§ 6213(a) although all the assessments in issue had been col-

lected and a refund suit was pending in the district court

while this Court was considering the injunction action. /d., at

165-166, n.6. There was no mention of mootness in Laing.’

Surprisingly, the Government unequivocally argues that

even if a premature assessment is made in violation of

§ 6213(a), the district court can not order the return of funds

seized based on such illegal assessment (Br. 8-9). The Govern-

ment does so without attempting to refute our argument that

the district court in this case had all the inherent equitable

powers to order the return to the Taxpayer of funds seized or

collected in satisfaction of the illegal assessments, regardless

of whether the injunction issue is moot, once it had jurisdic-

tion under § 6213(a) (See Pet. 16-18). It is of little comfort to

the Taxpayer if the Government can make illegal tax collec-

tions in direct violation of § 6213(a), but § 6213(a) can be

frustrated by limiting the district court to ordering the Gov-

ernment to stop.

l Nor did the Court indicate in granting an injunction under § 6213(a)

there first must be a finding of irreparable harm and no other adequate

legal remedy. Subsequently, the Ninth Circuit added such required

findings in Cool Fuel v. Connett, 685 F.2d 309 (9th Cir. 1982).

The remedy under § 6213(a) of an injunction suit would be

of no value to a taxpayer once the Government has seized the

funds under an illegal assessment, if the Government’s argu-

ment is to be accepted. Once the illegal assessment is col-

lected the Government argues the case is moot, as was done

in the first Garcia case,” and once any funds are collected

they can only be recovered through a refund suit. Thus, the

very purpose of § 6213(a) can be completely frustrated, if the

Government’s argument is to be accepted, and taxpayers,

such as here, can be denied access to the Tax Court through

Government violations of expressed prohibitions of § 6213(a).

The Government has not answered our argument that

exceptions exist to the general rule that refund suits are

required to obtain the return of tax dollars, nor has the Gov-

ernment acknowledged our consistent argument that this is

not a refund suit anymore than a mandamus action is a

refund suit (See Pet. 19-20).

There has never been a finding by any court that the assessment and

collection actions in the first case were lawful and the Taxpayer there

consistently argued the assessment and collection actions were illegal

When that case was held to be moot, the Government was able to

avoid litigating the issue, and thereby avoid answering the Taxpayer's

argument that Cool Fuel, Inc. v. Connett, supra, 685 F.2d 309 (%th

Cir. 1982) failed to follow Laing v. United States, supra, 423 U.S. 161

(1976), by misapplying Weinberger v. Romero-Barcelo. 456 U.S. 305

(1982), and failed to apply TVA v. Hill, 437 U.S. 153 (1978) (See Pet.

13-15)

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CONCLUSION

For the foregoing reasons and the additional reasons stated

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in the petition, the petition for a writ oO! certiorarl snould be

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JAMES F. KENNEDY

767 Fifth Avenue

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714 V2 67714

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