Section 1346 was originally enacted
as Section 1310 (c) of the Revenue Act of 1921.
3 Its essential language seems to have
been copied from R. S. 3226, the predecessor of the present claim-for-refund
statute, 26 U.S.C. (Supp. V) 7422 (a). Those statutes use language
identical to that appearing above to provide that no suit for the
refund of a "tax," "penalty," or "sum" shall be maintained until
similar relief has been sought from the Secretary or his delegate.
4 The meaning that has been ascribed
to this language in the claim-for-refund statute provides the key
to what Congress intended when it used that language in the jurisdictional
provision. [357 U.S. 63, 66]
The original claim-for-refund statute,
Section 19 of the Revenue Act of July 13, 1866, provided that no
suit should be maintained in any court for the recovery of "any
tax alleged to have been erroneously or illegally assessed or collected,
until appeal shall have been duly made to the commissioner of internal
revenue . . . ." 5 On this "appeal"
the Commissioner was empowered to "remit, refund, and pay back"
all taxes or penalties improperly assessed or collected.
6 When the appeal requirement was restated
in Section 3226 of the Revised Statutes,
7 Congress added the "penalty" and "sum" clauses, bringing together
for the first time the three-way division that survives in 26 U.S.C.
(Supp. V) 7422 (a) and 28 U.S.C. 1346 (a) (1). The revisers left
no indication of what significance, if any, was to be attached to
this addition.
During the period of this formative
legislation refund suits could not be brought against the United
States because of its sovereign immunity. Tax litigation took the
form of an action of assumpsit against the collector. [357 U.S.
63, 67] See Philadelphia v. Collector, 5 Wall. 720.
8 Such suits were of course subject
to the provision in Section 19 of the 1866 Act that they must be
preceded by "appeal" to the Commissioner. The meaning of that command,
which later became R. S. 3226 and eventually, as amended, 26 U.S.C.
(Supp. V) 7422 (a), was considered in Cheatham v. United States,
92 U.S. 85 . There, in response to an appeal, the Commissioner
of Internal Revenue had set aside the first assessment of taxpayer's
1864 income taxes and directed the local assessor to make a second
one. The taxpayer paid the second assessment and sued the collector
for refund. The Court held that by failing to appeal from the second
assessment the taxpayer failed to comply with Section 19 and hence
had no right of action. In the course of its opinion the Court made
this careful statement of the remedies then available to taxpayers
who sought to contest the correctness of their tax:
"So also, in the internal-revenue
department, the statute which we have copied allows appeals
from the assessor to the commissioner of internal revenue; and,
if dissatisfied with his decision, on paying the tax the party
can sue the collector; and, if the money was wrongfully exacted,
the courts will give him relief by a judgment, which the United
States pledges herself to pay.
. . . . . [357 U.S. 63, 68]
". . . While a free course of
remonstrance and appeal is allowed within the departments before
the money is finally exacted, the general government has wisely
made the payment of the tax claimed, whether of customs or of
internal revenue, a condition precedent to a resort to the courts
by the party against whom the tax is assessed. . . . If the
compliance with this condition [that suit must be brought within
six months of the Commissioner's decision] requires the party
aggrieved to pay the money, he must do it. He cannot, after
the decision is rendered against him, protract the time within
which he can contest that decision in the courts by his own
delay in paying the money. It is essential to the honor and
orderly conduct of the government that its taxes should be promptly
paid, and drawbacks speedily adjusted; and the rule prescribed
in this class of cases is neither arbitrary nor unreasonable.
. . .
"The objecting party can take
his appeal. He can, if the decision is delayed beyond twelve
months, rest his case on that decision; or he can pay the amount
claimed, and commence his suit at any time within that period.
So, after the decision, he can pay at once, and commence suit
within the six months. . . ." 9
(Emphasis added.)
From this carefully considered dictum
it is unmistakably clear that the Court understood the statutes
of that time to require full payment of an assessed tax as a condition
precedent to the right to sue the collector for a refund.
This understanding of the statutory scheme appears to have prevailed
for the succeeding fifty or sixty years. It was never suggested
that the addition in R. S. 3226 of the clause beginning "any sum"
effected any change. The Cheatham case was decided after that [357
U.S. 63, 69] addition was made, and it gave no
indication that the "condition precedent" of which it spoke had
already been abrogated by Congress. Consistent with that understanding,
there does not appear to be a single case before 1940 in which a
taxpayer attempted a suit for refund of income taxes without paying
the full amount the Government alleged to be due. Court opinions
that took occasion to comment on the extent of payment are consistent
with the Cheatham declaration, 10
and that case has continued to be cited with approval to the present
day. 11 Such was the understanding
of the necessity for full payment in the suit against the collector.
Since the statute now under consideration,
28 U.S.C. 1346 (a) (1), employs language identical to that in the
statute under which the full-payment understanding developed, R.
S. 3226, a construction requiring full payment would appear to be
more consistent with the established meaning of the statutory language.
Furthermore, the situation with respect to tax suits against the
United States at the time 28 U.S.C. 1346 (a) (1) was enacted, the
express purpose of its enactment, and subsequent [357 U.S. 63, 70]
expressions of congressional intent all suggest
that the principle of full payment was to be preserved.
The jurisdictional provision that
is now 28 U.S.C. 1346 (a) (1) was first enacted in Section 1310
(c) of the Revenue Act of 1921. 12
At that time the United States was already suable in the District
Courts. Since 1887 the Tucker Act had allowed suit against the United
States for claims less than $10,000 "founded upon . . . any law
of Congress . . .," 13 and that language
included suits to obtain refund of income taxes. United States v.
Emery, Bird, Thayer Realty Co.,
237 U.S. 28 . Since R. S. 3226 was cast in the broadest of terms,
its requirement that refund suits be preceded by an "appeal" to
the Commissioner clearly applied to the Tucker Act cases, United
States v. Michel,
282 U.S. 656 , and the related requirement that full payment
must be made prior to suit seems to have been assumed to be equally
applicable. For amounts in excess of the $10,000 Tucker Act limitation
the taxpayer could invoke his old remedy against the collector.
The complementary nature of the two
District Court remedies was impaired when this Court re-emphasized
the rule requiring the collector to be sued personally. A suit against
the office or the successor in office of a deceased collector could
not be maintained. Smietanka v. Indiana Steel Co.,
257 U.S. 1 (1921). Senator Jones of New Mexico interrupted floor
debate on the Revenue Act of 1921 to call attention to this decision.
In his view it meant that when the particular collector was dead
a taxpayer suing for more than $10,000 had to bring suit in the
Court of Claims. In addition to the extra expense and inconvenience
of litigating in Washington, a Court of Claims [357 U.S. 63, 71]
judgment carried no interest. The Senator proposed
an amendment, stating:
"What is here proposed is that
we shall remedy that situation by providing that where the collector
to whom the revenue was paid has died then the claimant may
sue the United States. It simply brings about an equitable situation
and prevents the taxpayer from having to suffer the hardships
which would be brought upon him simply through the accident
of the death of the collector to whom he paid the money. I offer
the amendment for the purpose of remedying that situation."
14
The amendment, which was accepted
without further comment, conferred jurisdiction on the District
Court,
"Concurrent with the Court of
Claims, of any suit or proceeding, commenced after the passage
of the revenue act of 1921, for the recovery of any internal
revenue tax alleged to have been erroneously or illegally assessed
or collected, or of any penalty claimed to have been collected
without authority or any sum alleged to have been excessive
or in any manner wrongfully collected under the internal-revenue
laws, even if the claim exceeds $10,000, if the collector of
internal revenue by whom such tax, penalty, or such was collected
is dead at the time such suit or proceeding is commenced."
15
The amendment's narrow-stated purpose
refutes any suggestion that Congress intended further to expand
or even [357 U.S. 63, 72] to restate the jurisdiction
of the District Court in refund suits brought against the United
States. As we have seen, the District Courts already had such jurisdiction
under the Tucker Act, and there is no indication that Congress intended
any change in the terms on which that action was made available
other than the change that was clearly set forth. The statute that
is now 28 U.S.C. 1346 (a) (1) was enacted merely to remove the jurisdictional
amount limitation of the Tucker Act in the special situation where
the collector could not be sued. See Lowe Bros. Co. v. United States,
304 U.S. 302, 305 . The House Conference Report and a contemporary
Treasury Department declaration confirm this view of the statute's
effect. 16
The similarity of essential language
leaves no doubt that the terms of the jurisdictional provision were
copied from the claim-for-refund statute, R. S. 3226, as amended
by Section 1318 of the Revenue Act of 1921.
17 The fact that this language
had for many years been considered to require full payment before
suing the collector, and the fact that the avowed purpose of the
1921 amendment was merely to cure an inadequacy in the suit against
the collector, combine as persuasive indications that no change
was intended in the full-payment principle declared in Cheatham
v. United States, supra.
When Congress created the Board of
Tax Appeals in 1924, 18 it demonstrated
a clear understanding that refund suits could only be maintained
upon full payment of the [357 U.S. 63, 73] tax
alleged to be due. The House Committee proposing the bill explained
its purpose as follows:
"The committee recommends the
establishment of a Board of Tax Appeals to which a taxpayer
may appeal prior to the payment of an additional assessment
of income, excess-profits, war-profits, or estate taxes. Although
a taxpayer may, after payment of his tax, bring suit for the
recovery thereof and thus secure a judicial determination of
the questions involved, he can not, in view of section 3224
of the Revised Statutes, which prohibits suits to enjoin the
collection of taxes, secure such a determination prior to the
payment of the tax. The right of appeal after payment of the
tax is an incomplete remedy, and does little to remove the hardship
occasioned by an incorrect assessment. The payment of a large
additional tax on income received several years previous and
which may have, since its receipt, been either wiped out by
subsequent losses, invested in nonliquid assets, or spent, sometimes
forces taxpayers into bankruptcy, and often causes great financial
hardship and sacrifice. These results are not remedied by permitting
the taxpayer to sue for the recovery of the tax after this payment.
He is entitled to an appeal and to a determination of his liability
for the tax prior to its payment."
19
Petitioner argues that the "hardship"
the Board of Tax Appeals was created to alleviate was not the taxpayer's
inability to sue without paying the whole tax - for petitioner erroneously
concludes that the 1921 amendment conferred that right - but the
Government's power to [357 U.S. 63, 74] collect
the balance due while a refund suit was in progress. But the Committee
Report quoted above clearly demonstrates that the hardship about
which the Congress was concerned was the hardship of pre-litigation
payment, not post-litigation collection. Old Colony Trust Co. v.
Commissioner of Internal Revenue,
279 U.S. 716, 721 . 20
The final step in the evolvement
of 28 U.S.C. 1346 (a) (1) took place in the Act of July 30, 1954,
21 which removed the $10,000 jurisdictional
limitation and eliminated the condition about the collector being
dead or out of office. Far from indicating an intent to allow suit
without full payment of the tax due, the legislative history of
that amendment shows a clear understanding of the Cheatham requirement,
and demonstrates a narrow purpose in no way inconsistent with that
requirement. The House Report states:
"The purpose of this bill is
to permit taxpayers a greater opportunity to sue the United
States in the district court of their own residence to recover
taxes which they feel have been wrongfully collected. This is
done by removing the jurisdictional limitation of $10,000 now
imposed on such suits." 22
In explaining the present state of
the law the Report goes on to point out that a taxpayer may contest
a deficiency assessment by a petition in the Tax Court. "The tax
[357 U.S. 63, 75] payer may, however," the Report
continues, "elect to pay his tax and thereafter bring suit to recover
the amount claimed to have been illegally exacted."
23
The foregoing study of the
legislative history of 28 U.S.C. 1346 (a) (1) and related statutes
leaves no room for contention that their broad terms were intended
to alter in any way the Cheatham principle of "pay first and litigate
later." 24 For many years that
principle has been reinforced by the rule that no suit can be maintained
for the purpose of restraining the assessment or collection of any
tax. 25 More recently, Congress
took care to except from the operation of the Federal Declaratory
Judgments Act any controversies "with respect to Federal taxes."
26 To ameliorate the hardship produced
by these requirements Congress created a special court where tax
questions could be adjudicated in advance of any payment. But there
is no indication of any intent to create the hybrid remedy for which
petitioner contends.
It is suggested that a part-payment
remedy is necessary for the benefit of a taxpayer too poor to pay
the full amount of the tax. Such an individual is free to
litigate in the Tax Court without any advance payment. Where the
time to petition that court has expired, or where for some other
reason a suit in the District Court seems more desirable, the requirement
of full payment may in some instances work a hardship. But since
any hardship would grow out of an opinion whose effect Congress
in successive [357 U.S. 63, 76] statutory revisions
has made no attempt to alter, if any amelioration is required it
is now a matter for Congress, not this Court.
[Flora
v. United States, 357 U.S. 63 (1958)]
TITLE 28 >
PART IV >
CHAPTER 85 > § 1346
§ 1346. United States as defendant
(a) The district courts shall have
original jurisdiction, concurrent with the United States Court of
Federal Claims, of:
(1) Any civil action against the United
States for the recovery of any internal-revenue tax alleged to have
been erroneously or illegally assessed or collected, or any penalty
claimed to have been collected without authority or any sum alleged
to have been excessive or in any manner wrongfully collected under
the internal-revenue laws;
TITLE 26 >
Subtitle F >
CHAPTER 76 >
Subchapter B > § 7422
§ 7422. Civil actions for refund
(a) No suit prior to filing claim for refund
No suit or proceeding shall be maintained in any court for the
recovery of any internal revenue tax alleged to have been erroneously
or illegally assessed or collected, or of any penalty claimed to
have been collected without authority, or of any sum alleged to
have been excessive or in any manner wrongfully collected, until
a claim for refund or credit has been duly filed with the Secretary,
according to the provisions of law in that regard, and the regulations
of the Secretary established in pursuance thereof.
Passeri v. State, B271821, at *2 (Cal. Ct. App. Unpub. LEXIS 7823, Nov. 15, 2017)
“It is a long established, constitutionally enshrined, and virtually impregnable rule that an unwilling taxpayer must pay any disputed tax before filing suit to challenge its validity. The rule is firmly rooted in public policy, and may not be circumvented by creative litigation ostensibly designed for other purposes. Here, Micaela Passeri sued the State Board of Equalization purportedly to vindicate her rights under the Harris-Katz California Taxpayers' Bill of Rights. (Rev. & Tax. Code, § 7080 et seq. (hereafter Taxpayers' Bill of Rights).) However, because the only grievance of which she complains is subjection to a tax she has not paid and claims she does not owe, the trial court concluded the lawsuit was intended to circumvent the bar against prepayment tax disputes. It therefore sustained the state's demurrer without leave to amend and dismissed the action. We affirm.”
[. . .]
Article XIII, section 32 of the California Constitution prohibits a court from issuing any "legal or equitable process . . . against this State or any officer thereof to prevent or enjoin the collection of any tax," and provides that "[a]fter payment of a tax claimed to be illegal," an action may be brought to recover the tax paid. "Together, these two portions of section 32 establish that a taxpayer's sole legal avenue for resolving a dispute over the legality of a tax is a postpayment refund action." (Woosley v. State of California (1992) 3 Cal.4th 758, 789, 13 Cal. Rptr. 2d 30, 838 P.2d 758; Garg v. People ex rel. State Bd. of Equalization (1997) 53 Cal.App.4th 199, 208, 61 Cal. Rptr. 2d 376; see § 6931 [no legal action may "prevent or enjoin the collection . . . of any tax or any amount of tax required to be collected"].)
“Thus, a "taxpayer may not go into court and obtain adjudication of the validity of a tax which is due but not yet paid. [¶] The important public policy behind this constitutional provision 'is to allow revenue collection to continue during litigation so that essential public services dependent on the funds are not unnecessarily interrupted.' [Citation.] 'The fear that persistent interference with the collection of public revenues, for whatever reason, will destroy the effectiveness of government has been expressed in many judicial opinions. [Citation.] As was said by Mr. Justice Field in Dows v. City of Chicago, 11 Wall. (78 U.S.) 108, 110 , "Any delay in the proceedings of the officer, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public." ' [Citation.] [¶] ' "The prompt payment of taxes is always important to the public welfare. It may be vital to the existence of a government. The idea that every taxpayer is entitled to the delays of litigation is unreason." ' " (State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638-639.)”
"The constitutional provision has been construed broadly to bar not only injunctions but also a variety of prepayment judicial declarations or findings which would impede the prompt collection of a tax." (State Bd. of Equalization v. Superior Court, supra, 39 Cal.3d at p. 639.) Thus, a taxpayer may not circumvent the restraint on prepayment tax litigation by seeking ostensibly only an "injunction or writ of mandate or other legal or equitable process" the effect of which would be to restrain collection of the tax. (§ 6931; State Bd. of Equalization v. Superior Court, at p. 642 [action for refund of partial payment barred where validity of the tax was challenged before full payment made]; Modern Barber Col. v. Cal. Emp. Stab. Com. (1948) 31 Cal.2d 720, 722, 192 P.2d 916 [prepayment mandamus proceeding to adjudicate whether petitioner [*9] fell within statutory definition of "taxpayer" was barred]; Pacific Gas & Electric Co. v. State Board of Equalization (1980) 27 Cal.3d 277, 279, 165 Cal. Rptr. 122, 611 P.2d 463 [prepayment mandamus proceeding to compel the board to adjust petitioner's real property assessment was barred].)
[. . .]
Passeri argues the bar against a prepayment tax dispute does not apply because she does not dispute the tax itself, merely her status as the taxpayer, and does not seek to enjoin collection of the tax as against Maison Saint Marie, the true taxpayer. The argument is without merit. A "tax" is a vectored obligation, an "enforced proportional contribution from persons and property." (Black's Law Dict. (10th ed. 2014). A tax thus has two components—the amount charged and the person against whom it is charged, and its validity depends both on a correct amount and a proper assessee. To contest either is to dispute the validity of the "tax." Here, by contending Maison Saint Marie, not she, is the proper retailer, Passeri disputes the validity of the tax itself.”
[Passeri v. State, B271821, at *2 (Cal. Ct. App. Unpub. LEXIS 7823, Nov. 15, 2017)]
[EDITORIAL: Note the use of the phrase "public policy" rather than just LAW. This is a big red flag.
1. The person who designed our Three Branch system of government, Montesquieu, delared that POLITICAL law and CIVIL law should never conjoin and should remain separation. POLITICAL law regulates public officers while CIVIL law, meaning the COMMON law, should regulate civlians. See:
Why Statutory Civil law is Law for Government, and Not Private Persons, Form #05.037, Section 6.7: "Political (PUBLIC) law" v. "civil (PRIVATE/COMMON) law"
https://sedm.org/Forms/05-MemLaw/StatLawGovt.pdf
2. Real constitutional courts (Article III courts) cannot enforce "public policy" against the public. They can only enforce statutes and the constitution against those CONSENSUALLY domiciled within their exclusive legislative jurisdiction (Form #05.002).
“Political questions. Questions of which courts will refuse to take cognizance, or to decide, on account of their purely political character, or because their determination would involve an encroachment upon the executive or legislative powers.
“Political questions doctrine” holds that certain issues should not be decided by courts because their resolution is committed to another branch of government and/or because those issues are not capable, for one reason or another, of judicial resolution. Islamic Republic of Iran v. Pahlavi, 116 Misc.2d. 590, 455 N.Y.S.2d. 987, 990.
A matter of dispute which can be handled more appropriately by another branch of the government is not a “justiciable” matter for the courts. However, a state apportionment statute is not such a political question as to render it nonjusticiable. Baker v. Carr, 369 U.S. 186, 208-210, 82 S.Ct. 691, 705-706, 7 L.Ed.2d. 663.
[Black’s Law Dictionary, Sixth Edition, pp. 1158-1159]
2. If courts ARE enforcing public policy rather than merely common or criminal law, then this is an admission that they are not constitutional courts in the Judicial branch, but franchise courts acting in a purely political capacity in the Executive Branch against public officers ONLY, and in an Article I or Article IV capacity, just like Tax Court, Traffic Court, and Famiy Court.
3. If these corrupt franchise courts enforce "public policy" in a political capacity against those not lawfully WITHIN the executive branch, then they are criminally:
3.1 Impersonating a public officer by treating you as one.
3.2 Simulating legal process against a nonresident.
3.3 Soliciting a bribe from the defendant disguised as a "tax" to treat them AS IF they are a public officer. 18 U.S.C. §210
3.4 Engaging in a conspiracy to get you to illegally impersonate an executive branch officer or employee.
3.5 Engaging in criminal identity theft in violation of 18 U.S.C. §912 and 4 U.S.C. §72.]
United States of America v. Forma, Case No. No. 93-6234, 1994
Footnote 14:
"The full payment rule is ultimately a judicial construction
[legislating from the bench, which is ILLEGAL] of the jurisdictional
provision, 28 U.S.C. § 1346(a)(1), that provides for refund suits
in the district courts, see Flora v. United States, 362 U.S. 145
(1960), and the provision itself says nothing about a full payment
requirement. Since a "traditional" application of the full
payment rule in this context can lead to the absurd results discussed
before, see supra note 12, it would not be unreasonable for a court
to hold that Congress meant the full payment requirement to be applied
in a delayed manner whenever the Government has itself placed the
payment issue before a court. In any event, the issue is not before
us today, since irrespective of full payment, the Formas have clearly
failed to meet the condition that an administrative claim for a
refund must be made."
[United States of America v. Forma, Case No. No. 93-6234, 1994]
Steele v. United States, 280 F.2d 89 (8th Cir. 1960)
[United States confessed error and stipulated that the full payment
rule for income tax refund actions, discussed in Flora v. United
States, 357 U.S. 63 (1958), does not apply to assessments of divisible
taxes such as the TFRP.]
[Steele v. United States, 280 F.2d 89 (8th Cir. 1960)]
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