う

LAING 2. UNITED STATES

App. in No. 74-75. at 11 Ching 5571, the acting Director declared respondents taxatie period for the first 30 days of 1973 Timmediatly seed" and her mcome tax for that period immediately due and payacle." Toud. He Urther informed respodent that a tax in the amount of 352.250.25 for the penod will be immediately assessed' and that alemand for immediate payment of the fill amount of this tax N bereby made. bui. A return for the terminated period pursuant to §43 3 3 3 of the Code. 2. S. C. § 443 (a) 31, was requested but not fed. The formal assessment was made on Fecriary 1 As was the case with Mr. Laing, Mrs. Hall received no dedmenry actite under Sosol and no speede information about how the amount of the tax had been determined

Respondent was unable to pay the tax so assessed. Therefore, IRS, acting pursuant to §6561, levied upon and seized respondent's 1970 Volkswagen and offered it for sale.

Respondent Hall instituted suit on February 13 in the United States District Court for the Western District of Kentucky, seeking injunctive relief and compensatory and panitive damages. The court issued an order temDorarily restraining IRS from selling the automobile and from selling any more of respondent's property. Thererer, relying upon Schreck v. United States. 301 F. Supp. Md. 1969), the court held that the federal Anti

1

1

tion Act, $7421 (a), was inapplicable because of lure to follow the procedures of § 6861 et seq. tordered the return of respondent's automobile hooting a bond in the amount of its fair market

for respondent Hall asserted that IRS also "seized Nyik account," and that it would, or did, seize her Oral Arg. 46 (Jan. 21, 1975). Counsel also stated erinded to Mrs. Hall. Id., at 57. We are not

unount was computed.

LAING v. UNITED STATES

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tion Act, § 7421 (a) of the Code, 26 U. S. C. § 7421 (a), and as within the plain wording of the exception to the Declaratory Judgment Act, 28 U. S. C. § 2201, for a controversy with respect to federal taxes. 364 F. Supp. 469 (1973).

Adhering to its earlier ruling in Irving, the Second Circuit affirmed per curiam. 496 F. 2d 853 (1974). It expressly declined to follow the Sixth Circuit's decision in Rambo v. United States, 492 F. 2d 1060 (1974)." These rulings of the Second Circuit, and one of the Seventh Circuit, Williamson v. United States, 31 AFTR 2d 73-800 (1971), appeared to be in conflict with holdings by other courts of appeals, Rambo v. United States, supra; United States v. Hall, 493 F. 2d 1211 (CA6 1974); and Clark v. Campbell, 501 F. 2d 108 (CA5 1974). Suggesting that the conflict was irreconcilable and noting that some 70 pending cases in the federal courts depended on its resolution, the Solicitor General did not oppose Mr. Laing's petition for certiorari. We granted certiorari to resolve the conflict."

824 (1974).

419 U. S.

B. No. 74-75, United States v. Hall. Respondent Elizabeth Jane Hall is a resident of Shelbyville, Ky. After the arrest of her husband in Texas on drug-related charges, Kentucky state troopers obtained a warrant and searched respondent's home on January 31, 1973. They found controlled substances there. The next day the acting District Director notified respondent Hall by letter that he found her "involved in illicit drug activities, thereby tending to prejudice or render ineffectual collection of income tax for the period 1-1-73 thru 1-30-73."

'Rambo is before us as No. 73-2005, Pet. for Cert. pending. 8 Pet. for Cert. pending, No. 74–722.

• The developing conflict among the federal courts was recognized in Willits v. Richardson, 497 F. 2d 240, 246 n. 4 (CA5 1974), and Jones v. Commissioner, 62 T. C. 1, 2-3 (1974).

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LAING v. UNITED STATES

App. in No. 74-75, at 11. Citing § 6851, the acting Director declared respondent's taxable period for the first 30 days of 1973 "immediately terminated" and her income tax for that period "immediately due and payable." Ibid. He further informed respondent that a tax in the amount of $52,680.25 for the period "will be immediately assessed" and that "[d]emand for immediate payment of the full amount of this tax is hereby made." Ibid. A return for the terminated period, pursuant to § 443 (a)(3) of the Code, 26 U. S. C. § 443 (a)(3), was requested but not filed. The formal assessment was made on February 1. As was the case with Mr. Laing, Mrs. Hall received no deficiency notice under § 6861 (b) and no specific information about how the amount of the tax had been determined.

Respondent was unable to pay the tax so assessed. Therefore, IRS, acting pursuant to § 6331, levied upon and seized respondent's 1970 Volkswagen and offered it for sale,10

Respondent Hall instituted suit on February 13 in the United States District Court for the Western District of Kentucky, seeking injunctive relief and compensatory and punitive damages. The court issued an order temporarily restraining IRS from selling the automobile and from seizing any more of respondent's property. Thereafter, relying upon Schreck v. United States, 301 F. Supp. 1265 (Md. 1969), the court held that the federal AntiInjunction Act, § 7421 (a), was inapplicable because of IRS' failure to follow the procedures of § 6861 et seq. The court ordered the return of respondent's automobile upon her posting a bond in the amount of its fair market

10 Counsel for respondent Hall asserted that IRS also "seized $57 from her bank account," and that it would, or did, seize her paycheck. Tr. of Oral Arg. 46 (Jan. 21, 1975). Counsel also stated that $77 was later refunded to Mrs. Hall. Id., at 57. We are not advised how the latter amount was computed.

LAING v. UNITED STATES

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value." It issued a preliminary injunction restraining the defendants (the United States, the acting District Director, the Group Supervisor of Internal Revenue, and a Lieutenant of the Kentucky State Police) "from harassing or intimidating [respondent] in any manner including but not limited to trespassing on, seizing or levying upon any of her property of whatever nature, be it rental property or not." Petition for Certiorari 5a.

On appeal, the United States Court of Appeals for the Sixth Circuit affirmed per curiam, 493 F. 2d 1211 (1974), relying upon its opinion and decision in Rambo v. United States, supra, decided one month earlier. In Rambo the court had held that the failure of IRS to issue a deficiency notice for a terminated taxable period, and the consequent unavailability of a remedy in the United States Tax Court, entitled the taxpayer to injunctive relief. Because of the conflict, indicated above, we also granted certiorari in Mrs. Hall's case. 419 U. S. 824 (1974).

II

In these cases, the taxpayers seek the protection of certain procedural safeguards that the Government claims were not intended to apply to jeopardy terminations. Specifically, the taxpayers argue that the procedures mandated by § 6861 et seq. for assessing and collecting deficiencies whose collection is in jeopardy also govern assessments of taxes owing, but not reported, after the termination of a taxpayer's taxable period under § 6851. Resolution of this claim requires analysis of the interplay between these two basic jeopardy provisions-§ 6851, the jeopardy termination provision, and § 6861, the jeopardy assessment provision.

The initial workings of the jeopardy termination provision, which essentially permits the shortening of a tax

11 A corporate surety bond in the amount of $1,650 was duly filed.

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LAING v. UNITED STATES

able year, are not in dispute. When the District Director determines that the conditions of § 6851 (a) are met generally, that the taxpayer is preparing to do something that will endanger the collection of his taxes 12-the District Director may declare the taxpayer's current tax year terminated. The tax for the shortened period and any unpaid tax for the preceding year become due and payable immediately, § 6851 (a), and the taxpayer must file a return for the shortened year. § 443 (a)(3).

The disagreement between the taxpayers and the Government focuses on the applicability of the jeopardy assessment procedures of § 6861 et seq. to the assessment 13 and collection of taxes that become due upon a § 6851 termination. Section 6861 (a) provides for the immediate assessment of a deficiency, as defined in § 6211 (a), whenever the assessment or collection of the deficiency would be "jeopardized by delay." By allowing an immediate assessment, § 6861 (a) provides an exception to the general rule barring an assessment until the taxpayer

12 The precise findings required are: (1) that the taxpayer designs quickly to depart from the United States or to remove his property therefrom; or (2) that he intends to conceal himself or his property therein; or (3) that he is about to do any other act tending to prejudice or render wholly or partly ineffectual proceedings to collect income tax for the current or preceding year. § 6851 (a). See n. 1, supra.

13 The "assessment," essentially a bookkeeping notation, is made when the Secretary or his delegate establishes an account against the taxpayer on the tax rolls. 26 U. S. C. § 6203. In both of the cases at bar, the assessments were made immediately upon termination of the taxpayers' taxable years.

In the past, the Government has argued that § 6851 contained its own assessment authority, see Schreck v. United States, 301 F. Supp. 1265 (Md. 1969), but it has since abandoned that position, see Lisner v. McCanless, 356 F. Supp. 398, 401 (Ariz. 1973), and it does not press the point here. Cf. n. 17, infra.