A BUSINESSMAN has requested the federal court to enjoin and temporarily restrained the federal government from collecting or attempting to collect the $5.6 million tax from him because the “assessment was illegal and invalid.”
John K. Baldwin, through his lawyers Gregory J. Koebel and Robert J. O’Connor, sued the federal government for making illegal assessment of tax amounting to $5,603,892.
Baldwin is asking the U.S. District Court for the NMI to adjudge the assessment illegal and invalid as it relates to the partnership loss of $5,603,892.
The businessman is seeking that the federal government be enjoined, both permanently and during the pendency of his action and pending the hearing on the preliminary injunction, from collecting or attempting to collect from him any tax, interest or penalties purportedly sought to be assessed as a result of the partnership loss.
Baldwin is also seeking judgment enjoining the defendant from perfecting any tax lien arising from the assessment against him as it relates to the partnership loss of $5.6 million.
The plaintiff is asking the federal court to set a hearing at the earliest possible time for his application for preliminary injunction and injunctive relief for a full trial on the issues, and to issue a permanent injunction against the federal government.
Baldwin filed his complaint on Friday and it will be mailed to U.S. Attorney General Michael Mukasey, with copies furnished to Rick Ward, Tax Division, Washington, D.C., and to Rosalee Hofman, Internal Revenue Service in Maitland, Florida.
The complaint stated that in 2002, Baldwin was a 99.99 percent shareholder of Sunset Management LLC, a partner of Fulham LLC.
The federal government made an income tax assessment against Baldwin in the amount of $5,131,076 for tax year 2002.
The complaint stated that included in the adjustment to the plaintiff’s income for 2002 was the disallowance of a loss of $5,603,892 from Sunset. This loss from Sunset was claimed by Baldwin as a pass-through loss originating from Fulham.
The complaint stated that Fulham is a partnership regulated by the Tax Equity and Fiscal Responsibility Act of 1982 and therefore, its tax treatment is determined at the partnership level pursuant to IRC §6221 and is subject to the provisions of IRC§§6221 through 6234.
The complaint stated that Fulham is the subject of a Tax Equity and Fiscal Responsibility Act investigation through the Maitland, Florida IRS office.
Baldwin, in his complaint, stated that the federal government lacks legal authority to assess a deficiency against Baldwin that is attributable to Fulham until the completion of the Tax Equity and Fiscal Responsibility Act proceedings.
The plaintiff stated that the assessment as it relates to the disallowance of the loss of $5.6 million originating from Fulham and passing through to Baldwin via Sunset was void at its inception.
The purported assessment is merely an extraction in the guise of a tax, the complaint stated.
It added that Baldwin has attempted to resolve the matter administratively and while the defendant has admitted the assessment is premature and wholly illegal, the revenue agent assigned to the case, the collection service center and the taxpayer advocate all say they are either unwilling and or without power to correct the situation.
According to the complaint, the defendant has expressed its intention to levy on Baldwin’s property to satisfy the illegal and void assessment, totaling with associated penalties an amount in excess of $7 million.
The plaintiff, in his complaint, stated that he has no adequate remedy at law and will suffer irreparable injury and will be without an adequate remedy at law unless the defendant is enjoined — both permanently and during the pendency of this action — from collecting $5.6 million from him.
