Harry Schildcrout v. Robert M. McKeever District Director, Internal Revenue Service

The taxpayer, Harry Schildcrout, commenced this action in United States district court to enjoin the Internal Revenue Service from imposing a jeopardy assessment and from implementing the procedures necessary to enforce collection. The injunctive relief requested by the taxpayer was granted in part and denied in part by the district court.

The Internal Revenue Service imposed a jeopardy assessment against Schildcrout on March 31, 1973 under Internal Revenue Code section 6862. The IRS alleged nonpayment of the excise tax on wagering imposed by I.R.C. § 4401 and made a jeopardy assessment against Schildcrout for some $97,500, plus interest. The Government alleged that excise taxes were owed for wagering during a thirteen-month period from March 1, 1972 to March 31, 1973. The Government had direct evidence of the volume of wagering activity for only ten days of this period, March 9, 1973 to March 18, 1973. The jeopardy assessment for the thirteen-month interval was based on the Government’s conclusion that gambling activities were carried on during the entire thirteen months and on an estimation of the volume of wagering activity during those thirteen months. The Government made its…