Dolores J. Russell v. United States

592 F.2d 1069 79-1 USTC P 9367 Dolores J. RUSSELL, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant. No. 77-1136. United States Court of Appeals, Ninth Circuit. March 9, 1979. Ferris F. Boothe (argued), of Black, Kendall, Tremaine, Boothe & Higgins, Portland, Or., for plaintiff-appellee. Leonard Henzke, Atty. (argued), of Dept. of Justice, Washington, D. C., for defendant-appellant. Appeal from the United States District Court for the District of Oregon. Before DUNIWAY and CHOY, Circuit Judges, and GRANT, * District Judge. DUNIWAY, Circuit Judge: 1 This appeal presents a question as to the jurisdiction of the District Court over an action for a refund of income tax when the Commissioner of Internal Revenue, after the taxpayer filed her claim for refund, and after she filed her action for refund in the District Court, asserted a deficiency and the taxpayer then petitioned the Tax Court for a redetermination. The District Court held that it retained jurisdiction over the taxpayer's claim for refund, and gave judgment for the taxpayer. The government appeals. We reverse. 2 I. The Facts. 3 The facts make interesting reading. The taxpayer (plaintiff-appellee), a…

This appeal presents a question as to the jurisdiction of the District Court over an action for a refund of income tax when the Commissioner of Internal Revenue, after the taxpayer filed her claim for refund, and after she filed her action for refund in the District Court, asserted a deficiency and the taxpayer then petitioned the Tax Court for a redetermination. The District Court held that it retained jurisdiction over the taxpayer’s claim for refund, and gave judgment for the taxpayer. The government appeals. We reverse.

I. The Facts.

The facts make interesting reading. The taxpayer (plaintiff-appellee), a former beauty contest winner, had been the recipient of gifts valued in excess of one million dollars which had been bestowed on her by Harold Kuhns, the founder and board chairman of Xerox Corporation. 'While accepting his favors, taxpayer became romantically involved with Allie Ianniello, reputed to be a member of the New York Cosa Nostra. Allie, upon discovering the wealth of the taxpayer, and with the help of his brother and their attorney, proceeded to swindle the taxpayer out of her money through investment ventures in “businesses” owned and operated by the…

concurring:

In concurring with the majority opinion, I wish, however, to comment on three areas: (1) the legislative history of 26 U.S.C. § 7422 (e); (2) a potentially misleading case, and (3) 26 U.S.C. § 7459 (b).

I— Both the Senate and House Reports 1 on Section 7422(e) evidence two policies: (1) to give jurisdiction over the cause of action to only one court, and thereby prevent relitigation of identical issues, and (2) to give the taxpayer the choice of which court shall have jurisdiction. This choice was intended to be given to the taxpayer rather than the government. Pfeiffer Company v. United States, 518 F.2d 124, 129 (8th Cir. 1975). In the case at bar, even if taxpayer would have paid the deficiency in order to preserve district court jurisdiction over the refund, the Pfeiffer case indicates that again her choice of forums to litigate the deficiency need not be recognized by the government. Under Pfeiffer, even if taxpayer pays the deficiency, the government “may —but seemingly is not required to — bring a counterclaim” 2 in the district court. See also Caleshu v. United States, 570 F.2d 711 (8th Cir. 1978). This view of the law might work to defeat the Congressional…