defendant issued deficiency notices for the years in question and bifurcated the § 6038(b) penalties from them. Indeed, Dorchester's foreign tax credit reduction under § 6038(b) was included in its notice of deficiency, but those penalties were not in the notices sent to plaintiff.
Plaintiff has not, however, cited any authority to support this argument, and his analogy to late penalties pursuant to I.R.C. § 6651 is inapplicable to this case. Late penalties generally are not "deficiencies" and therefore not subject to the notice requirements of I.R.C. §§ 6211-13, even where plaintiff has challenged deficiencies for that year in the Tax Court. Brunwasser v. Davis, 1989 U.S. Dist. LEXIS 6325, 89-1 USTC P 9241, 1989 WL 62200, at *1-*2 (W.D. Pa. 1989); Estate of Scarangella v. Commissioner, 60 T.C. 184 (1973). However, the deficiency notice provisions do apply "to that portion of [a § 6651] addition which is attributable to a deficiency in tax described in section 6211." I.R.C. § 6665(b)(1).
§ 6038(b) additions also are not subject to the deficiency notice rules, and there is no provision making them so when they are "attributable to a deficiency." Furthermore, Dorchester's foreign tax credit came pursuant to 26 U.S.C. § 901, subtitle A, chapter 1, a provision that is subject to the notice requirements and Tax Court jurisdiction of §§ 6211-13, so the IRS was required to include the § 6038(b) reduction in the notice of deficiency. Plaintiff's penalties for failure to file Form 5471 are outside the statutory exception to the Anti-Injunction Act.
Plaintiff next argues that the judicially-created exception to the Anti-Injunction Act applies. Courts have recognized an exception to the Anti-Injunction Act where (1) viewing the facts and law in the light most favorable to the government, it appears that the government cannot prevail on the merits, and (2) movant meets the standard prerequisites for equitable relief, such as the absence of a remedy at law. Enochs v. Williams Packing Co., 370 U.S. 1, 7, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1962); Bob Jones Univ. v. Simon, 416 U.S. 725, 736-37, 40 L. Ed. 2d 496, 94 S. Ct. 2038 (1974); Flynn v. United States, 786 F.2d 586, 589 (3d Cir. 1986).
As to the three corporations at issue in the Tax Court proceeding, petitioner has not on the current record met the first prong of the test. The operative dispute is whether plaintiff holds a controlling ownership in ten foreign corporations, and another court in this district has already found "no evidence refuting" the IRS's assertion that plaintiff exercised control over these corporations. United States v. Wheaton, 791 F. Supp. 103, 107 (D.N.J. 1992) (Brotman, J.).
As to the remaining seven corporations, there is currently no evidence before the Court that would allow it to determine whether plaintiff controls these corporations. Normally, this would defeat plaintiff's claim, because plaintiff bears the burden of showing that the prerequisites to the Williams Packing exceptions to the Anti-Injunction Act are met. Flynn, 786 F.2d at 589. Plaintiff, however, argues that the government has not come forward with any evidence to support its claim that plaintiff controls these corporations, leaving plaintiff with the onerous burden of proving the negative that he does not own the corporations.
Normally, the burden of proof in a challenge to federal taxes lies with the taxpayer. Williams v. Commissioner, 92 T.C. 920, 934 (1989); Kamholz v. Commissioner, 94 T.C. 11, 16 (1990). One reason for this rule is because "the facts and figures on which tax liability rests are peculiarly within the taxpayer's knowledge." Williams, 92 T.C. at 936 (citing Campbell v. United States, 365 U.S. 85, 96, 5 L. Ed. 2d 428, 81 S. Ct. 421 (1961)). However, where information lies within the control of the government, courts have held that if the taxpayer makes a "plausible and believable" request for relief, the burden of proof may then shift to the government. Williams, 92 T.C. at 935; Kamholz, 94 T.C. at 15.
Even if the Court were to apply this rule here, plaintiff has not at this stage made a "plausible and believable" assertion that, viewing the facts and law most favorably to the government, the government is certain to fail on the merits of its case. In his affidavit, plaintiff simply denies control over the ten foreign corporations as that term is used in I.R.C. § 6038. (Wheaton Aff. at P 3.) Although in theory this allegation may be plausible and believable, the Court does not deem it sufficient to shift the burden of proof to the government in a case otherwise barred by the Anti-Injunction Act. Instead, plaintiff must come forward with information known or reasonably accessible to him regarding his knowledge of or ownership interest in the foreign corporations. While the Court will not rule out the possibility that plaintiff could make such a showing at a later date, he has not done so for the purposes of the current motion.
Plaintiff's only remaining avenue to challenge the § 6038(b) penalty is to pay the amount at issue and then sue for a refund. See 28 U.S.C. § 1346(a). See also Flora v. United States, 362 U.S. 145, 4 L. Ed. 2d 623, 80 S. Ct. 630 (1960) (suit under § 1346(a) requires prepayment of amount at issue); Miskovsky v. United States, 414 F.2d 954, 956 (3d Cir. 1969) (same). The Court recognizes that this leaves plaintiff in the position of paying a substantial tax penalty without prepayment review, but this is the remedy mandated by the Anti-Injunction Act. See Iannelli v. Long, 487 F.2d 317, 318 (3d Cir. 1973) (Anti-Injunction Act "reflects an evident purpose to protect the public revenue from court imposed delays in the collection of taxes, leaving aggrieved taxpayers to sue for refunds of any amounts improperly collected."). Because plaintiff has not shown that the Anti-Injunction Act does not apply to this case, the motion for preliminary relief will be denied.
Because plaintiff has not shown that the Anti-Injunction Act does not apply to this case, his motion for a preliminary injunction will be denied.
An appropriate order will enter on even date herewith.
Joseph E. Irenas
DATED: June 13, 1995