The opinion of the court was delivered by: Stewart, District Judge:
Plaintiffs Martin Greenhouse and Sherry Greenhouse brought
this action seeking relief from defendant's efforts to collect
sums of money allegedly due on plaintiffs' tax returns for
years 1982, 1986, and 1988. By Order to Show Cause, plaintiffs
seek a temporary restraining order and a preliminary injunction
pursuant to Rule 65 of the Federal Rules of Civil Procedure
("Fed.R. Civ.P."). Defendants are the Manhattan District
Director of the United States Internal Revenue Service ("IRS"),
as well as the Chief of the Collection Division of the IRS, and
an agent of the Collection Department of the IRS, Anselmo
Estwick (hereinafter "the government.")
In the first cause of action the plaintiffs seek to enjoin
the defendants from collecting any additional taxes, penalties
and interest on the plaintiffs' 1982, 1986 and 1988 taxes.*fn1
They also seek an order directing the Internal Revenue Service
to issue a release of the tax liens filed on November 21, 1989.
For the reasons stated below, we vacate the temporary
restraining order and deny plaintiffs' motion for a preliminary
injunction. We also deny plaintiffs' request for an order for
release of the tax liens.
This case deals with plaintiffs' problems in paying taxes
owed for several tax years, namely 1982, 1986, and 1988.
Defendant IRS has assessed plaintiffs for underpaid taxes,
penalties and interest. Although plaintiffs made several
payments over a period of time, the IRS claimed that the
plaintiff still owed $31,750.74 and therefore filed a federal
tax lien on November 21, 1989 in that amount. The IRS is also
proceeding to collect this sum by levy against the plaintiff's
business. Pltfs' Reply Brief at 2.
Following is a summary of the amounts in dispute according to
Tax Amt. IRS
Year Underpd. Assessed Paid by Plaintiff
1982 N/A*fn2 See n. 2 below $3,000.00 pd. 5/84-9/84
1986 $5,738.00 $6,020.69*fn3 as of 8/87 5,000.00 pd. 6/89
1988 23,495.00 24,072.24*fn4 as of 5/89 $25,000.00 pd. 12/89
Although it appears from the above that plaintiffs have paid
nearly the entire amount of the original assessments, it is
also apparent that plaintiffs did not pay the assessments
promptly. Under 26 U.S.C. § 6601 (hereinafter "Section 6601"),
the IRS may impose interest on amounts not paid within the
specified time period for payment, up to the date of
The IRS claims that plaintiffs' payments do not satisfy the
penalties and interest which accrued between the time of
assessment and the time of payment. Plaintiffs and the
government differ in how much plaintiffs owe because of their
difference in calculation of the interest charged on the
underpaid tax. Plaintiff asserts that pursuant to 26 U.S.C. § 6651
(hereinafter "Section 6651") the IRS may collect only .5
percent per month, or part of a month, from the due date to the
date of payment.*fn6 Complaint ¶ 6. Plaintiffs allege that the
IRS assessments include "illegal penalties and interest."
Complaint ¶ 9. Plaintiffs
also contend that IRS has used the wrong interest rate by
charging 1% a month. Complaint ¶ 18.
The government argues that it is permitted to charge interest
as well as a penalty for a failure to pay tax. Deft's Brief 6.
Defendant says that Section 6651 provides for the imposition of
a "penalty" for failure to pay tax. Id. In addition to a
penalty, the government contends that IRS may impose interest
on outstanding taxes, pursuant to Section 6601.
THE PRELIMINARY INJUNCTION
The government argues that the Anti-Injunction Act prohibits
a suit for the purpose of restraining the assessment or
collection of any tax. 26 U.S.C. § 7421(a) (hereinafter
"Section 7421" or "the Anti-Injunction Act. ")*fn7 Under
Section 6601(e)(1) the government contends that the term "tax"
refers not only to the tax itself but also to any additional
amounts added to the tax, such as penalty and interest charges:
"any reference in this title . . . to any tax imposed by this
title shall be deemed also to refer to interest imposed by this
section on such tax." In ...