Opinion
Civil Action No. 04-0041.
October 15, 2004
AMENDED MEMORANDUM AND OPINION
Plaintiff Michael G. Blankenship brought this action to challenge a levy and lien that the IRS imposed to collect frivolous return penalties for the years 1997 and 2000 and to collect income tax liabilities for the years 1997 to 2000. Defendant, the United States, has moved to dismiss, or alternatively, for summary judgment. Based on a careful consideration of the pleadings; the motion; the parties' submissions; and the applicable law, this court grants the motion to dismiss based on insufficient service of process. This court also finds that even if Blankenship had properly effected service, the United States would be entitled to summary judgment on the merits. This suit is therefore dismissed with prejudice in a final judgment entered by separate order. The reasons for these rulings are set forth below.
I. Background
On November 19, 2002, the Internal Revenue Service sent Blankenship a Final Notice of Intent to Levy and Notice of Your Right to Hearing (the "Levy Notice"). (Docket Entry No. 7, Ex. 2). On November 25, 2002, the Internal Revenue Service sent Blankenship Letter 3172, entitled Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320 (the "Lien Notice"). ( Id., Ex. 3). Both the Levy Notice and the Lien Notice arose from Blankenship's 1997-2000 income tax liabilities and a frivolous return penalty imposed for 1997 and 2000. In response to both the Levy Notice and the Lien Notice, Blankenship requested an administrative collection due process hearing under 26 U.S.C. § 6320 and 6330. ( Id., Ex. 4). On February 26, 2003, Chakalis mailed Blankenship notice of the scheduling of the collection due process hearing and sent him transcripts showing that the frivolous return penalty had been assessed against Blankenship for 1997 and 2000. (Docket Entry No. 7, Ex. 9; Docket Entry No. 4, ¶ 25 and Ex. D). A collection due process hearing was held in May 2003 before settlement officer Chakalis. ( Id., Ex. 8). Chakalis determined that collection of the frivolous return penalty was appropriate. ( Id.).
The Notice of Determination resulting from the hearing upheld the issuance of levies to collect Blankenship's frivolous return penalties for 1997 and 2000 (and income tax liabilities for 1997 through 2000). The Notice of Determination was sent to Blankenship on July 31, 2003. (Docket Entry No. 4, Ex. 1). The Tax Court affirmed the settlement officer's determination. Blankenship filed this suit in January 2004, challenging the determination.
In this suit, Blankenship claims that the collection due process hearing held in May 2003 was invalid because Chakalis failed to produce the proper verification forms showing that the requirements of applicable law and administrative procedures had been met. (Docket Entry No. 4, at ¶¶ 20-27). Blankenship also alleges that he never received notice and demand for payment of the frivolous return penalty (Docket Entry No. 4, at ¶ 60.b). The United States submits summary judgment evidence showing that the administrative files contained numerous responses by Blankenship to Internal Revenue Service notices demanding payment of the frivolous return penalty. (Docket Entry No. 7, Exs. 10, 11).
This court issued an order requiring Blankenship to file proof of service no later than May 7, 2004 and admonished him that the failure to file proof of such service would lead to the dismissal of his action without prejudice. (Docket Entry No. 5). Blankenship has submitted proof that he served the United States Attorney's office in Houston, Texas on April 27, 2004, but has not provided this court with proof of service on the Internal Revenue Service. Blankenship has not responded to the motion to dismiss or for summary judgment.
II. The Summary Judgment Standard
Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56. Under FED. R. CIV. P. 56(c), the moving party bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Stahl v. Novartis Pharmaceuticals Corp., 283 F.3d 254, 263 (5th Cir. 2002). The party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, but need not negate the elements of the nonmovant's case. Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1074 (5th Cir. 1997). If the moving party fails to meet its initial burden, the motion for summary judgment must be denied, regardless of the nonmovant's response. Baton Rouge Oil and Chemical Workers Union v. ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir. 2002).
When the moving party has met its Rule 56(c) burden, the nonmovant cannot survive a motion for summary judgment by resting on the mere allegations of its pleadings. See Prejean v. Foster, 227 F.3d 504, 508 (5th Cir. 2000). The nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial. See id. The nonmovant must "do more than simply show that there is some metaphysical doubt as to the material facts." Webb v. Cardiothoracic Surgery Assocs., 139 F.3d 532, 536 (5th Cir. 1998) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253 (1986).
In deciding a summary judgment motion, the court reviews the facts drawing all reasonable inferences in the light most favorable to the nonmovant. Cabillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th Cir. 2002); Anderson, 477 U.S. at 255. "Rule 56 ' mandates the entry of summary judgment, after adequate time for discovery, and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Celotex, 477 U.S. at 322).
III. Analysis
A. Service of Process
The United States has moved to dismiss Blankenship's complaint for failure to serve the Internal Revenue Service. In the absence of valid service of process, proceedings against a party are void. Aetna Business Credit, Inc. v. Universal Decor Interior Design, Inc., 635 F.2d 434, 435 (5th Cir. 1981). When service of process is challenged, the party making service has the burden to establish its validity. Id. Under Rule 4(i) of the Federal Rules of Civil Procedure, a plaintiff such as Blankenship must serve a copy of the summons and complaint on the agency against which relief is being sought, by registered or certified mail. FED. R. CIV. P. 4(i)(2). Blankenship has served the United States Attorney's office in Houston with process, but there is no evidence that he has served the Internal Revenue Service. Blankenship has failed to provide proof of service, in violation of the court order requiring him to do so. The complaint is subject to dismissal for insufficient service of process.
B. The Merits
The United States also moves for summary judgment based on Blankenship's inability to establish a right to relief. The United States has submitted uncontroverted summary judgment evidence establishing, as a matter of law, that each of Blankenship's allegations is without merit. Blankenship alleges that the settlement officer did not provide documentary proof that the frivolous return penalty was assessed under appropriate authority. In a collection due process hearing, "the appeals officer shall . . . obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." 26 U.S.C. § 6330(c)(1). Blankenship claims that the collection due process hearing in May 2003 was invalid because the settlement officer, Chakalis, did not produce verification that the requirements of applicable law and administrative procedures had been met. (Docket Entry No. 4, at ¶¶ 20-27). Section 6330(c)(1) does not require the settlement officer to rely on a particular form to satisfy the verification requirement imposed. Nor does section 6330(c)(1) require the settlement officer to provide a taxpayer a copy of the verification on which the settlement officer relied. Roberts v. Commissioner, 119 T.C. 252, 261-262 (2002), aff'd., 329 F.3d 1224 (11th Cir. 2003). The summary judgment record shows that the settlement officer provided Blankenship with transcripts showing the assessment of the frivolous return penalty. On February 26, 2003, Chakalis mailed Blankenship transcripts showing that the return penalty was assessed for each of the taxable years 1997 and 2000. (Docket Entry No. 7, Ex. 9; Docket Entry No. 4, ¶ 25 and Ex. D). Based on the record, the Internal Revenue Service properly verified for purposes of section 6330(c)(1) that the applicable laws and administrative procedures were met. There is no fact issue as to any irregularity in the assessment procedure or the validity of the assessment.
Blankenship also alleges that he never received notice and demand for payment of the frivolous return penalty (Docket Entry No. 4, at ¶ 60.b). The administrative files contain numerous responses by Blankenship to notices from the Internal Revenue Service for payment of the frivolous return penalty. (Docket Entry No. 7, Exs. 10, 11). Blankenship's responses clearly indicate the receipt of a notice and demand letter for payment of the frivolous return penalty. Based on the undisputed evidence in the summary judgment record, Blankenship's claim of lack of notice lacks merit.
The motion for summary judgment is granted.
III. Conclusion
This case is dismissed with prejudice.