United States District Court, D. New Jersey
STANLEY R. CHESLER UNITED STATES DISTRICT JUDGE
matter comes before the Court upon the motion of Plaintiff
Schwartz Simon Edelstein & Celso, LLC,
(“Plaintiff”), brought by Order to Show Cause,
for a preliminary injunction against Defendants Gina
Ricigliano and the United States Internal Revenue Service
(the “IRS”) (collectively,
“Defendants”). (ECF No. 4; ECF No. 5.) Plaintiff
seeks to enjoin Defendants from issuing notices of levies to
Plaintiff's clients while Plaintiff's appeals of an
underlying tax obligation are pending before the IRS and the
United States Tax Court. The Court has reviewed the
parties' submissions and heard oral argument on the
motion. For the reasons set forth below, Plaintiff's
motion will be denied.
2014, Plaintiff and the IRS entered into an installment
agreement (the “Installment Agreement”), through
which Plaintiff agreed to make payments of $20, 000.00 per
month to satisfy an outstanding tax liability equaling $493,
891.94 as of May 2014. (ECF No. 06-3, Declaration of Clyde H.
Horton, Jr. (“Clyde Decl.”), Exhibit 2, Letter
from Gina Ricigliano to Shwartz Simon Edelstein Celso &
Kessler Ptrs dated May 8, 2014, and attached Installment
Agreement (“Installment Agreement”), at 3.) Under
the Installment Agreement, Plaintiff was required to timely
pay any future federal taxes that it owed. (Id. at
1) The Installment Agreement provides, further, that if
Plaintiff failed to meet any of its obligations, the IRS
would cancel the agreement and “may collect the entire
amount [Plaintiff] owe[d] by levy on [Plaintiff's]
income, bank accounts or other assets, or by seizing [its]
on the submissions to the Court on this motion, it is unclear
whether the parties dispute what happened next. Defendants
assert that, at some point thereafter, Plaintiff failed to
timely make monthly payments under the Installment Agreement.
A declaration from an IRS revenue officer, included as a part
of Defendants' opposition to this motion, indicates that
the purported default occurred no later than August 2015.
(Clyde Decl., ¶ 15.) Thereafter, the IRS began issuing
Notices of Intent to Levy to Plaintiff's clients. Based
on the record before the Court, Plaintiff's clients
appear to have made at least some payments to the IRS. Citing
account transcripts included with their opposition papers
(Clyde Decl., ¶ 16), Defendants contend that,
nonetheless, as of July 2017 Plaintiff's outstanding
liability for the amounts covered by the Installment
Agreement-including taxes, penalties, and interest-exceeds
March 31, 2017, Plaintiff filed a petition in the United
States Tax Court to challenge the amount owed. On June 6,
2017, Plaintiff commenced the instant action. Subsequently,
on July 5, 2017, Plaintiff filed this motion for a
preliminary injunction. Defendants oppose the motion on the
grounds that the relief requested is barred by the
Anti-Injunction Act, 26 U.S.C. § 7421(a).
plaintiff seeking a preliminary injunction must establish
that he is likely to succeed on the merits, that he is likely
to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest.”
Winter v. Natural Res. Def. Council, Inc., 555 U.S.
7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). A Court may not
grant injunctive relief, “regardless of what the
equities seem to require, ” unless a movant carries its
burden of establishing a likelihood of success on the merits
and irreparable harm. Adams v. Freedom Forge Corp.,
204 F.3d 475, 484 (3d Cir.2000). Because preliminary
injunction is an “extraordinary remedy, ” it
should be granted only “upon a clear showing that the
plaintiff is entitled to such relief.” Groupe SEB
USA, Inc. v. Euro-Pro Operating LLC, 774 F.3d 192, 197
(3d Cir. 2014) (quoting Winter, 555 U.S. at 22, 24).
Anti-Injunction Act provides, in pertinent part, that
“no suit for the purpose of restraining the assessment
of collection of any tax shall be maintained in any court by
any person, whether or not such a person is the person
against whom such tax was assessed.” 26 U.S.C. §
7421(a). The Supreme Court has recognized a judicial
exception to this bar, however, if two conditions are
satisfied: (1) the government cannot prevail on the merits,
even if the facts and law are viewed in a light most
favorable to the government; and (2) “equity
jurisdiction otherwise exists” because the plaintiff
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).
Defendants argue that Plaintiff's motion for a
preliminary injunction, insofar as it seeks to enjoin the
IRS's collection activities, is barred by the
Anti-Injunction Act. Thus, Defendants contend, Plaintiff
cannot establish that it is likely to succeed on the merits.
The Court agrees.
clear that, insofar as Plaintiff seeks a preliminary
injunction, its claim is subject to Anti-Injunction Act.
Plaintiff, however, has failed to establish that its claim
falls within the narrow judicial exception to the
Anti-Injunction Act. In the first place, it has failed to
show that Defendants are certain to fail on the merits of
this case even if the facts and law were viewed in a light
most favorable to the them. Indeed, that would only be true
if, viewing the evidence before the Court in a light most
favorable to Defendants, no fact finder could reasonably
conclude that Plaintiff owed any additional amounts to the
IRS for the liabilities from which the Installment Agreement
arose. Certainly, the accounting transcripts and the revenue
officer's declaration justify such a conclusion, however.
Indeed, Plaintiff does not even appear to assert that it owes
nothing; it only contends that the amount owed is far less
than the IRS claims.
Plaintiff has not established an independent basis for
equitable jurisdiction, as it has an adequate remedy at law.
Specifically, Plaintiff can pay the unpaid taxes and
penalties in full and file a claim for a refund. See
Iannelli v. Long, 487 F.2d 317, 318 (3d Cir. 1973).
Therefore, the Court finds that Plaintiff has failed to
satisfy its burden for purposes of this motion for a