Summary
listing specific prerequisites for IRS to file notice of Federal tax lien against taxpayer and finding that IRS had satisfied all of them, by means of Appeals Officer's declaration
Summary of this case from Medlock v. United StatesOpinion
Case No. CV 00-12379 NM (Ex)
August 20, 2001
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
Mikhail Pikover ("Plaintiff") seeks judicial review of the Internal Revenue Service's decision to file a federal tax lien against him. Defendant moves for summary judgment on the grounds that there is no genuine issue of material fact.
II. FACTS
On March 3, 1995, Plaintiff pled guilty to conspiracy to defraud the United States and tax evasion. Complaint ¶ 7; Magnuson Decl. at 98. The charges stemmed from a conspiracy to avoid paying certain gasoline excise taxes. Coker Decl., Ex. A. On October 6, 1997, the Internal Revenue Service ("IRS") notified Plaintiff that he was personally liable for $24,715,559 in excise taxes incurred by Ampetrol, Inc. in connection with the conspiracy. See id., Exs. B, C. The IRS again notified Plaintiff of his tax liability on or about February 17, 1998. Complaint ¶ 8. On March 20, 1998, Plaintiff filed a protest with the IRS contesting liability for the excise taxes. Coker Decl., Ex. C. Upon reviewing Plaintiffs' protest, the IRS informed Plaintiff November 12, 1998 that he was liable for the taxes. Id., Ex. D. Plaintiffs' counsel sent a letter to the IRS concerning Plaintiffs' tax liability November 20, 1998. Id., Ex E. The Manhattan Appeals Office of the IRS subsequently reviewed Plaintiffs' protest, notifying Plaintiff March 30, 1999 that he would be liable for the taxes at issue. Id., Ex. F.
Stipulations and admissions in the pleadings are generally binding on the parties. See American Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988) (citations omitted).
The IRS assessed $24,715,559 against Plaintiff for the unpaid excise taxes April 26, 1999. Snyder Decl. ¶ 3. The IRS sent Plaintiff two (2) Notices of Assessment demanding payment on or about April 26, 1999 and June 7, 1999, respectively. Id. Plaintiff received another notice of his tax liability September 24, 1999. Magnuson Decl., Ex. 101. The IRS contacted Plaintiffs' attorney October 19, 1999 to discuss settlement options. Snyder Decl. ¶ 6. The IRS filed a federal tax lien against Plaintiff November 19, 1999. See Magnuson Decl., Ex. 102. Plaintiff appealed the imposition of the lien to the Appeals Office of the IRS December 17, 1999. Complaint ¶ 10. On October 25, 2000, the Appeals Office issued a "Notice of Determination," finding the imposition of the lien against Plaintiff was appropriate. Coker Decl., Ex. H.
Plaintiff appeals the Notice of Determination to this court pursuant to 26 U.S.C. § 6320 (c) 6330(d), which provide due process protections for taxpayers in tax collection actions. See Goza v. Commissioner of Internal Revenue, 114 T.C. 176, 179 (T.C. 2000) (Cohen, CJ). Section 6320 generally provides that the IRS cannot proceed with the collection of taxes by way of a lien on a taxpayer's property until the taxpayer has been given notice of and the opportunity for an administrative review of the matter. See id.
26 U.S.C. § 6320 applies to tax liens while 26 U.S.C. § 6330 applies to tax levies. Section 6320(c) provides for judicial review as delineated by Section 6330(d).
Defendant filed a motion for summary judgment June 6, 2001. Plaintiff filed his opposition June 27, 2001, arguing: 1) the federal tax lien was recorded after the statute of limitations period expired; 2) he was not notified that he was subject to the tax assessment; and 3) he is not liable for the taxes.
III. SUMMARY JUDGMENT ANALYSIS A. Standard
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just. speedy and inexpensive determination of every action.'" Celotex Corporation v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555 (1986) (quoting Fed.R.Civ.P. 1). Determinations of credibility, however, should be left to the trier of fact. See Hanon v. Dataproducts Corp., 976 F.2d 497, 507 (9th Cir. 1992). Accordingly, issues that turn on such determinations should not be resolved at the summary judgment stage. See id.; see also Palacios v. City of Oakland, 970 F. Supp. 732, 738 (N.D. Ca. 1997) ("In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence[.]").
In a trio of 1986 cases, the Supreme Court clarified the applicable standards for summary judgment. See Celotex, supra; Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 106 S.Ct. 2505 (1986); Matsushita Electrical Industry Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 (1986). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. The governing substantive law dictates whether a fact is material; if the fact may affect the outcome, it is material. See id. at 248, 2510. If the moving party seeks summary adjudication with respect to a claim or defense upon which it bears the burden of proof at trial, it must satisfy its burden with affirmative, admissible evidence. By contrast, when the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out the absence of evidence submitted by the non-moving party. The moving party need not disprove the other party's case. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554.
If the moving party meets its initial burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). When assessing whether the non-moving party has raised a genuine issue, the court must believe the evidence and draw all justifiable inferences in the non-movant's favor. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513 (citing Adickes v. S.H. Kress and Company, 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09 (1970)). Nonetheless, "the mere existence of a scintilla of evidence" is insufficient to create a genuine issue of material fact. Id. at 252, 2512. As the Supreme Court explained in Matsushita,
[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial."
Id., 475 U.S. at 586-87, 106 S.Ct. at 1356 (citations omitted).
To be admissible for purposes of summary judgment, declarations or affidavits must be based on personal knowledge, must set forth "such facts as would be admissible in evidence," and must show that the declarant or affiant is competent to testify concerning the facts at issue. Fed.R.Civ.P. 56(e). Declarations on information and belief are insufficient to establish a factual dispute for purposes of summary judgment. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989).
B. Standard of Review
Section 6330(d) does not specify the standard of review a district court should apply to an appeal of a Notice of Determination. The legislative record indicates that the court should conduct a de novo review "where the validity of the tax liability was properly at issue at the administrative hearing." H. Conf. Rept. 105-599, 105th Cong.2d Sess. 266 (1998). The court reviews a Notice of Determination for abuse of discretion where the amount of the underlying tax liability is not properly part of the appeal Id.; Sego v. Commissioner of Internal Revenue, 114 T.C. 604, 609-10 (T.C. 2000); Goza, 114 T.C. at 179-80. See also AJP Mgmt. v. United States, No. CV 99-1541 AHS (ANx), 2000 WL 33122693, at *1-2 (C.D. Cal. Nov. 27, 2000) (Stotler, J.); TKK Mgmt. v. United States, No. CV 99-1542 AHS (ANx), 2000 WL 33122706, at *1-2 (C.D. Cal. Nov. 21, 2000) (Stotler, J.).
Plaintiffs' underlying tax liability was not properly part of the collection hearing at issue. Section 6330(c) provides for an administrative hearing to address collection issues, such as spousal defenses, the appropriateness of an intended collection action, and possible alternative means of collection. Sego, 114 T.C. at 609. The existence and amount of Plaintiffs' tax liability may not be contested at the collection hearing unless: 1) the taxpayer did not receive notice of a deficiency for the taxes in question; or 2) the taxpayer did not otherwise have an earlier opportunity to dispute such tax liability.
The record in this case clearly demonstrates that Plaintiff received notice of his tax liability. The Ninth Circuit has held that notice is satisfied upon informing the taxpayer of the amount due and demanding payment of the tax. Hughes v. United States, 953 F.2d 531, 536 (9th Cir. 1992). The IRS initially notified Plaintiff of this matter October 6, 1997. The IRS again contacted Plaintiff concerning his tax liability February 17, 1998; November 12, 1998; and March 30, 1999. The IRS sent Plaintiff Notices of Assessment demanding payment on or about April 26, 1999 and June 7, 1999. The IRS again notified Plaintiff of his tax liability September 24, 1999 and contacted his attorney October 19, 1999 to discuss settlement options. The record evidences that Plaintiff received ample notice of his tax liability before the IRS filed a federal tax lien November 19, 1999.
Although Plaintiff argues that he first received written notice of the tax liability September 24, 1999, he makes no attempt to dispute the record proving otherwise. Plaintiff also fails to explain his admission that he received notice of the tax liability on or about February 17, 1998. Complaint ¶ 8.
Plaintiff also had opportunities to dispute the tax liability. Plaintiff was charged and convicted of conspiring to evade the taxes at issue. Additionally, Plaintiff protested his tax liability to the IRS and appealed the assessment to the Manhattan Appeals Office of the IRS.
The validity of Plaintiffs' tax liability was not properly at issue during the collection hearing and is therefore not part of this appeal. Accordingly, the court reviews the hearing officer's decision to file a tax lien for an abuse of discretion. Abuse of discretion may be found only if there is no evidence to support the challenged decision or if the decision was based on an improper understanding of the law. Song Jook Suh v. Rosenberg, 437 F.2d 1098, 1102 (9th Cir. 1971).
C. Review of the Tax Lien
A federal tax lien arises automatically when: 1) a tax assessment has been made; 2) the taxpayer has been given notice of the assessment and payment was demanded within sixty (60) days of the assessment; and 3) the taxpayer failed or refused to pay the amount assessed within ten (10) days after the notice and demand. 26 U.S.C. § 6203, 6303(a), 6321. See also United States v. Templeman, 111 F. Supp.2d 85, 90 (D.N.H. 2000). The hearing officer must verify that the requirements of any applicable law or administrative procedure have been met. 26 U.S.C. § 6330 (c)(1).
First, the hearing officer determined that a tax assessment had been made. The hearing officer determined that Plaintiff had pled guilty to conspiracy to defraud the United States and tax evasion in connection with a scheme to evade payment of excise taxes. Snyder Decl. ¶ 3. The hearing officer also determined that the IRS assessed the unpaid excise taxes of Ampetrol, Inc. in the amount of $24,715,559 against Plaintiff. Id.
Plaintiff argues that the assessment was barred by the statute of limitations. However, taxes may be assessed "at any time" in cases involving fraud. 26 U.S.C. § 6501 (c)(2). Plaintiffs' criminal convictions establish fraud pursuant to the doctrine of collateral estoppel. See Blohm v. Commissioner of Internal Revenue, 994 F.2d 1542, 1554 (11th Cir. 1993).
Second, The hearing officer determined that Plaintiff had been given notice of the assessment and related demands for payment. The hearing officer's finding is clearly supported by the record, as discussed supra. The record also indicates that the Notices of Assessment were issued within sixty (60) days of the assessment on April 26, 1999.
The Notices of Assessment were issued April 26 and June 7, 1999. Coker Decl., Ex. H; Snyder Decl. ¶ 3.
Finally, the hearing officer determined that Plaintiff had failed to pay the amount within ten (10) days of the demand. Snyder Decl. ¶ 8-10. The IRS sent Plaintiff two Notices of Assessment, neither of which resulted in Plaintiffs' payment. The hearing officer also concluded that Plaintiff was unwilling to consider repayment terms, as he disputed the underlying liability giving rise to the tax. Id. ¶ 9. The hearing officer's determination that the IRS had made reasonable efforts to afford Plaintiff an opportunity to make payment is supported by the record.
Plaintiff cites no evidence to dispute these findings. Plaintiff merely argues in his opposition that he did not receive notice of his tax liability prior to imposition of the lien. The record clearly contradicts his assertion.
Plaintiff argues that he is not liable for the taxes because he had no connection with the operation of the business known as Ampetrol, Inc. However, this court does not have jurisdiction to reach the merits of this argument.
Plaintiffs' assertions are unsupported by any sworn declaration by Plaintiff himself.
IV. CONCLUSION
Defendant's motion for summary judgment is GRANTED.
IT IS SO ORDERED
JUDGMENT
On June 6, 2001, Defendant filed the instant motion for summary judgment. Upon full consideration of the moving, opposition, and reply papers, the relevant authorities, the parties' arguments, and the entire file herein, the court granted Defendant's motion. The issues having been duly heard, and a decision having been duly rendered,
It is Ordered and Adjudged that Plaintiff take nothing.
PROCEEDINGS: IN CHAMBERS
Counsel have previously been notified that the Court will issue a ruling regarding defendant's motion for summary judgment plaintiffs' request for judicial notice without oral argument. The motion request are taken off the 8/27/01 calendar. The matter stands submitted.