Carol Smith Shannon v. United States

The government appeals from two orders by which the district court (1) denied the defendant’s motion to dismiss for lack of jurisdiction and (2) granted a preliminary injunction against the Inter nal Revenue Service (IRS) enjoining the enforcement of a levy against Shannon’s assets. This court has jurisdiction under 28 U.S.C. § 1292 (a)(1).

FACTS

On August 1, 1973 a jeopardy assessment was made against C. Arnholt Smith for over $22.8 million for unpaid 1969 income taxes. On October 3 of that year a notice of levy was served upon Carol Smith Shannon, appellee, as the alleged nominee, agent, or transferee of Mr. Smith.

The notice of levy for approximately $23.3 million sought to attach all of Smith’s interest in $478,366.35 allegedly withdrawn by Shannon from an account in the United California Bank about August 3, 1973.

About October 19, 1973, pursuant to 26 U.S.C. §§ 6861 (a) and 6901 (I.R.C.1954), a jeopardy transferee assessment was made against Shannon for over $2.6 million, a notice of levy was served and a lien filed against Shannon’s property in the county recorder’s office. The amount of the transferee assessment was later reduced to $630,635.90 and on December…