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MILL FACTORS CORP. v. UNITED STATES

March 20, 1975

Mill Factors Corporation, Plaintiff
v.
United States of America, Defendant


Bonsal, District Judge.


The opinion of the court was delivered by: BONSAL

Memorandum

BONSAL, District Judge.

 Plaintiff, Mill Factors Corporation ("Mill Factors"), a Delaware corporation which was dissolved on or about October 11, 1971, commenced this action on July 30, 1974 against the United States of America. Jurisdiction is asserted under 28 U.S.C. §§ 1340 and 1346(a)(1). The government now moves pursuant to F.R. Civ. P. 12(b)(1) to dismiss the complaint for lack of jurisdiction over the subject matter.

 The following facts are alleged in the complaint:

 
As of January 1, 1970, Vamco, Inc. ("Vamco") and certain related corporations were indebted to Mill Factors for approximately $12 million, which indebtedness was secured in part by a lien on certain of Vamco's assets. On or about June 2, 1970, Mill Factors foreclosed on its lien and took possession of Vamco's property. The property was subsequently sold to Valley Industries, Inc.
 
In the latter part of 1970, the Internal Revenue Service ("IRS") made an assessment against Vamco in the amount of $85,196.41 for its alleged failure to withhold and deposit certain income, unemployment, and social security taxes during the six months ended June 30, 1970. A notice and demand for the taxes alleged to be due was served on Vamco on or about September 18, 1970. Vamco at that time had no assets.
 
On or about October 29, 1970, IRS attempted to levy upon Vamco property allegedly held by Mill Factors. However, by that time all such property had been sold. Mill Factors was subsequently advised by IRS that in view of its alleged control over Vamco's operations, Mill Factors would be treated by IRS as Vamco's "nominee" or "alter ego" and would be held responsible for payment of Vamco's assessed income, unemployment, and social security taxes. However, IRS never made an assessment directly against Mill Factors.
 
Upon being apprised of IRS's intention to levy against its assets, Mill Factors deposited in account number 027-1-060733 at a branch of the Chase Manhattan Bank, N.A., funds sufficient to make payment in the event of such a levy. On or about February 2, 1971, IRS levied on the bank account in the amount of $85,196.41. The notice of levy denominated Mill Factors as the "Nominee of Vamco" and referred to Mill Factors as the "taxpayer." (Exhibit A to the Complaint.)
 
A claim for wrongful levy was filed by Mill Factors on or about October 5, 1971 (Exhibit B to the Complaint) and was rejected by letter dated July 31, 1972. The letter, a copy of which is annexed to the Complaint as Exhibit C, states:
 
"This refers to your claim for refund filed on October 15, 1971 alleging that a Notice of Levy served upon the Chase Manhattan Bank, New York, New York against an account of Mills Factors Corp., New York, New York, as the nominee of Vamco, Inc., West Springfield, Massachusetts was wrongful within the meaning of the Internal Revenue Code of 1954, Section 6343(b).
 
Your claim for refund is hereby rejected.
 
It should be noted that you have a period of six months from the date of this rejection to institute suit."
 
On or about January 30, 1973 Mill Factors filed a claim for refund (Exhibit D to the Complaint), and to date no response has been received.

 Mill Factors asserts that this Court has jurisdiction to entertain the present action under 28 U.S.C. § 1346(a)(1), *fn1" ...


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