Taxation-Federal Income Tax-Enjoining Collection
Taxpayer sued to enjoin collection of federal insurance contributions and unemployment taxes with respect to certain fishermen who worked on boats operated by the corporate taxpayer. The Government contended that under the Internal Revenue Code an injunction could not be sustained on a showing of non-liability. The district court issued the injunction on the grounds that the tax was illegal because no employer-employee relationship in fact existed and that collection of the tax would ruin the corporation financially. The court of appeals affirmed, holding that a taxpayer may enjoin the collection of a federal tax when he shows its illegality plus special and extraordinary circumstances. On certiorari to the United States Supreme Court, held, reversed. The collection of federal taxes may be enjoined only when under the most liberal view of law and fact the Government cannot establish its claim at the time of suit, and equity jurisdiction otherwise exists. Enochs v. Williams Packing & Nav. Co., 370 U.S. 1 (1962).