Brief for the United States — Dean v. United States

pian Cath ial SA aaa CC th a Ble Ses oi a ae te ta ee a ae a a ta

Iu the Supreme Court of the United States

OCTOBER TERM, 1971

No. 71-1473

WILBUR DEAN, ET AL., PETITIONERS

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The court of appeals affirmed the judgment of the

_ district court without opinion (Pet. App. Al). The

findings and order of the district court (Pet. App.

A20-A21) were entered without opinion and are not

4 officially reported.

On the prior appeal, the opinions of the court of

_ appeals affirming a judgment of forfeiture (Pet. App.

A2-A14) and denying rehearing (Pet. App. A15-A17)

(1)

2

are reported at 392 F. 2d 672 and 397 F. 2d 782,

respectively. This Court’s order granting a petition

for writ of certiorari, vacating the judgment and

remanding the case for further consideration (Pet.

App. A18) is reported at 401 U.S, 715.

JURISDICTION

The judgment of the court of zppeals was entered

on February 16, 1972 (Pet. App. Al). The petition for

a writ of certiorari was filed on May 11, 1972. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

QUESTION PRESENTED

Whether, after forfeiture proceedings were vacated

and dismissed, the district court erred in directing

that currency in the possession of the United States

Marshal be surrendered to the Internal Revenue Serv-

ice pursuant to a tax levy on the Marshal in 1971

for income and wagering excise taxes assessed against

petitioners in 1965, 1966 and 1967, when the cur-

rency had been seized from petitioners in 1965 in

the execution of search warrants issued on probable

cause to believe that petitioners were engaged in

wagering without having paid the special occupa-

tional tax required by 26 U.S.C. 4411.

STATUTES INVOLVED

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

provides in pertinent part:

_

3

SEC. 6332. SURRENDER OF PROPERTY SUBJECT

TO LEVY.

(a) * * * any person in possession of (or ob-

ligated with respect to) property or rights to

property subject to levy upon which a levy has

been made shall, upon demand of the Secretary

or his delegate, surrender such property or rights

(or discharge such obligation) to the Secretary

or his delegate, except such part of the property

or rights as is, at the time of such demand, sub-

ject to an attachment or execution under any

judicial process.

* * * *

SEC. 7421. PROHIBITION OF SUITS TO RESTRAIN

ASSESSMENT OR COLLECTION.

(a) * * * no suit for the purpose of restrain-

ing 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.

a ” ~ *

Sec. 7422. Crvit ACTIONS FoR REFUND.

(a) * * * No suit or proceeding shall be main-

tained in any court for the recovery of any in-

ternal revenue tax alleged to have been errone-

ously 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 or his delegate, accord-

ing to the provisions of law in that regard, and

the regulations of the Secretary or his delegate

established in pursuance thereof.

=a PERSE GALS RIE EAL ZS ch aS rs ee aR

ee, bi aa ee eT a i a TIS Perce ¢ "

™

On April 5, 1965, certain automobiles and other

chattels, and $305,633.26 in currency, were seized

from petitioners’ home in the execution of search

warrants issued by a United States Commissioner

(R. 31-39).’ The district court (R. 29, 100) and the

court of appeals (R. 80) held that the affidavits sup-

porting these warrants (R. 40-59) established prob-

able cause to believe that petitioners were carrying

on the business of accepting wagers without having

registered, or having paid a special occupational tax,

in violation of Section 4411 of the Internal Revenue

Code of 1954. An order of the district court that this

property be forfeited to the United States (R. 74-75)

was affirmed on appeal (Pet. App. A2-A14), but was

vacated and remanded by this Court (Pet. App. A18)

for reconsideration in the light of United States v.

U.S. Coin & Currency, 401 U.S. 715.

On remand, the Government filed a motion (R.

90-91) in the district court to dismiss its libel com-

plaint, and requested the district court to order the

United States Marshal to deliver the currency to the

Internal Revenue Service pursuant to a levy served

by the Service on the Marshal on June 28, 1971, for

unpaid taxes owed by petitioners in a total amount

of $1,150,266.69, including statutory additions to tax.

4

STATEMENT

1“R.” references are to the appendix in the court of appeals.

—

5

The notice of levy” indicates that it was issued on

account of the following tax assessments:

Taxable Date of Kind of Amount of Additions

Period assessment tax tax to tax

1961 3-25-66 income 9,877.24 $ 2,531.97

1962 3-25-66 income 57,754.28 15,559.16

1963 3-25-66 income 58,073.55 16,484.97

1964 8-31-65 income 52,586.99 18,340.03

1965 8-21-66 income 15,629.31 4,515.06

4-1-63 to

4-5-65 11-24-67 wagering 755,031.41 148,898.72

lien fees 2.00

The district court held that the levy was proper

(R. 100) and directed the Marshal to give the cur-

rency to the Internal Revenue Service in partial pay-

ment of the tax assessments and liens and ordered

all other seized property to be returned to petitioners

(R. 100). The court of appeals affirmed without

opinion (Pet. App. Al).

ARGUMENT

Petitioners’ principal contention (Pet. 8-11) is that

upon termination of the forfeiture proceeding the

impounded currency was not subject to levy and

should have been returned. However, the currency

was properly subject to levy under the broad author-

ity of 26 U.S.C. 6332. Property of a taxpayer which

7A copy of the notice of levy has been lodged with the

Clerk of this Court. This document was furnished to the

court of appeals and accepted by it as part of the record on

appeal. In the district court, petitioners did not dispute

the amounts of the assessments or the validity of the levy

(Pet. App. A28-A27).

OEE I TIRE IEE ELE ANSE ALM ISNT

ie

is held in official custody is subject to levy even if its

original seizure was illegal. Cancino v. United States,

451 F. 2d 1028 (Ct. Cl.); United States v. Freed-

man, 444 F. 2d 1887 (C.A. 9); Carlo v. United

States, 286 F. 2d 841 (C.A. 2), certiorari denied,

366 U.S. 944; Field v. United States, 263 F. 2d 758

(C.A. 5), certiorari denied, 360 U.S. 918; Welsh v.

United States, 220 F. 2d 200 (C.A. D.C.). In any

event, contrary to petitioners’ argument (Pet. 5-8),

the seizure here, which was made prior to this Court’s

decisions in Marchetti v. United States, 399 U.S. 39,

and Grosso v. United States, 390 U.S. 62, pursuant

to warrants issued on the basis of probable cause,

was valid. See, e.g., Washington v. United States,

402 F. 2d 3 (C.A. 4), certiorari denied, 402 U.S.

978; United States v. Scaglione, 446 F. 2d 182 (C.A.

5), certiorari denied, 404 U.S. 941.

Petitioners’ contention (Pet. 9) that the assess-

ments constituting the basis for the levy might be ~

erroneous is in substance a request for a declaratory

judgment and injunctive relief, both of which are

prohibited with respect to tax matters. 26 U.S.C.

7421 and 28 U.S.C. 2201.* Petitioners’ proper rem-

6

r

* Petitioners’ contention as to the validity of the seizure is

based on United States v. U. S. Coin and Currency, 401 U.S.

715. That decision, however, did not hold the seizure of the

property invalid but rather barred its subsequent forfeiture.

That issue was mooted in this case by the dismissal of the

forfeiture action (Pet. App. A20-A21).

* Petitioners’ allusion (Pet. 9) to “counsel’s vested inter-

est” articulates no basis for a claim having priority over the

tax liens in this case.

_

7

edy is the filing of a claim for refund of the currency

which has been applied in payment of his tax liabil-

ity. Flora v. United States, 362 U.S. 145.

CONCLUSION

For the reasons stated, the petition for a writ of

certiorari should be denied.

Respectfully submitted.

ERWIN N. GRISWOLD,

Solicitor General.

Scott P. CRAMPTON,

Assistant Attorney General.

JOHN P. BURKE,

WILLIAM K. HOoGaAn,

Attorneys.

JUNE 1972.

% G. 8. covarnmant prinrine orice; 1972 469134 e839