another. Raffaele v. Granger, 196 F.2d 620; Rothensies v. Ullman, 110 F.2d 590. See also Adler v. Nicholas, 10 Cir., 166 F.2d 674; Glenn v. American Surety Co., 6 Cir., 160 F.2d 977. We are of the opinion that the enforcement of the full amount of the assessments against the plaintiffs, either jointly or severally, in the absence of a determination of the issue of liability other than the preliminary determination heretofore made by the Director of Internal Revenue, would be tantamount to such a seizure, and oppressive. Botta et al. v. Scanlon, supra.
Available Legal Remedy
We assume, in the absence of any denial by the defendants, that the allegations of the separate verified complaints are true. It would appear from these allegations that the plaintiffs would be without an adequate remedy at law if they were compelled to pay the full amount of the assessments as a condition precedent to their right to litigate the issue of liability. It is our opinion that such payment of the full amount of the assessments cannot be required.
The taxes which the employer was required to deduct and withhold from the wages of the employees, pursuant to Sections 3402 and 3102(a) of the Internal Revenue Act, supra, constituted separate taxes as to each employee. The taxes collected pursuant to the former are credited against the potential income tax liability of the individual employee; the taxes collected pursuant to the latter are the taxes imposed upon the individual employee under Section 3101. It follows that these taxes are divisible, and the liability of the employer therefor is separate. The full payment rule is not applicable to an assessment of divisible taxes. Steele v. United States, 8 Cir., 280 F.2d 89; see also Flora v. United States, 362 U.S. 145, 171 et seq., footnotes 37 and 38, 80 S. Ct. 630, 4 L. Ed. 2d 623.
The penalty imposed by Section 6672, supra, is an amount 'equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.' The penalties are measured by the amount of the taxes due for each employee and these penalties, like the amount of the taxes by which they are measured, are divisible, and the liability imposed by Section 6672, supra, must be regarded as separate. Steele v. United States, supra. This conclusion was 'in effect' conceded by the defendant in the cited case.
The remedy of the plaintiffs seems obvious. They may pay to the Director of Internal Revenue the penalties equal to the amount of the taxes due for one or more individual employees and for each of the quarters here in question. They may then file with the Commissioner of Internal Revenue a claim for refund and therein request a determination of the legality of the assessment, the amount thereof, and their liability therefor. If the claim for refund is denied there is available to the plaintiffs an adequate remedy under Section 7422 of the Internal Revenue Code, supra, 26 U.S.C.A. 7422, and Section 1346(a)(1) of Title 28 U.S.C.A. It is the opinion of the Court that the plaintiffs should be afforded an opportunity to pursue this remedy.
Declaratory Judgment Action
The argument of the defendants that the present action is one for declaratory judgment under Section 2201 of Title 28 U.S.C.A., is without merit. However, even if it should be so regarded, the question becomes moot by reason of our disposition of the case.
The motion of the United States of America to dismiss the action as to it on the ground of lack of jurisdiction is granted.
The motion of the Director of Internal Revenue to dismiss the action as to him is denied for the reasons herein discussed.
The plaintiffs are directed to pursue the legal remedy hereinabove outlined within 60 days from the date hereof.
The temporary restraining order heretofore entered will be so modified as to protect the property of the plaintiffs against the enforcement of the assessments pending the determination of the claim for refund, provided, however, that the claim for refund shall be filed within 60 days from the date hereof.
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