Laing v. United States
423 U.S. 161 (1976)

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U.S. Supreme Court

Laing v. United States, 423 U.S. 161 (1976)

Laing v. United States

No. 73-1808

Argued January 21, 1975

Reargued October 15, 1975

Decided January 13, 1976*

423 U.S. 161

Syllabus

These cases involve two income tax payers whose taxable years were terminated by the Internal Revenue Service (IRS) prior to their normal expiration dates pursuant to the jeopardy termination provisions of § 6851(a)(1) of the Internal Revenue Code of 1954 (Code), which allow the IRS immediately to terminate a taxpayer's taxable period when it finds that the taxpayer intends to commit any act tending to prejudice or render ineffectual the collection of his income tax for the current or. preceding taxable year. Under § 6851, the tax is due immediately upon termination, and, upon such termination, the taxpayer's taxable year comes to a close. In each case, after the taxpayer failed to file a return or pay the tax assessed as demanded, the IRS levied upon and seized property of the taxpayer without having sent a notice of deficiency to the taxpayer, a jurisdictional prerequisite to a taxpayer's suit in the Tax Court for redetermination of his tax liability, and without having followed the other procedures mandated by § 6861 et seq. of the Code for the assessment and collection of a deficiency whose collection is in jeopardy. The Government contends that such procedures are inapplicable to a tax liability arising after a § 6851 termination because such liability is not a "deficiency" within the meaning of § 6211(a) of the Code, where the term is defined as the amount of the tax imposed less any amount that may have been reported by the taxpayer on his return. In No. 73-1808 the District Court held that a deficiency notice is not required when a taxable period is terminated pursuant to § 6851(a)(1), and dismissed the taxpayer's suit for injunctive and declaratory relief on the ground, inter alia, that it was prohibited by the Anti-Injunction Act, § 7421(a) of the Code, and the Court of Appeals affirmed. In No. 74-75, the District Court granted the taxpayer injunctive relief, holding that the Anti-Injunction Act was inapplicable because of the IRS's failure to follow the procedures

Page 423 U. S. 162

of § 6861 et seq., and the Court of Appeals affirmed.

Held: Based on the plain language of the statutory provisions at issue, their place in the legislative scheme, and their legislative history, the tax owing, but not reported, at the time of a § 6851 termination is a deficiency whose assessment and collection is subject to the procedures of § 6861 et seq., and hence, because the District Director in each case failed to comply with these requirements, the taxpayers' suits were not barred by the Anti-Injunction Act. Pp. 423 U. S. 169-185.

(a) Under the statutory definition of § 6211(a), the tax owing and unreported after a jeopardy termination, which in these cases, as in most § 6851 terminations, is the full tax due, is clearly a deficiency, there being nothing in the definition to suggest that a deficiency can arise only at the conclusion of a 12-month taxable year and it being sufficient that the taxable period in question has come to an end and the tax in question is due and unreported. Pp. 423 U. S. 173-175.

(b) To deny a taxpayer subjected to a jeopardy termination the opportunity to litigate his tax liability in the Tax Court, as would be the case under the Government's view that the unreported tax due after a jeopardy termination is not a deficiency and that, hence, a deficiency notice is not required, would be out of keeping with the thrust of the Code, which generally allows income tax payers access to that court. Pp. 423 U. S. 176-177.

(c) The jeopardy assessment and jeopardy termination provisions have long been treated in a closely parallel fashion, and there is nothing in the early codification of such provisions to suggest the contrary. Pp. 423 U. S. 177-183.

No. 73-1808, 496 F.2d 853, reversed and remanded; No. 74-75, 493 F.2d 1211, affirmed.

MARSHALL, J., delivered the opinion of the Court, in which BRENNAN, STEWART, WHITE, and POWELL, JJ., joined. BRENNAN, J., filed a concurring opinion, post, p. 423 U. S. 185. BLACKMUN, J., filed a dissenting opinion, in which BURGER, C.J., and REHNQUIST, J., joined, post, p. 423 U. S. 188. STEVENS, J., took no part in the consideration or decision of the cases.

Page 423 U. S. 163

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