Opinion
No. CV-S-03-546-RCJ (RJJ).
May 12, 2004
ORDER
Plaintiff's Motion for Summary Judgment (#14) came on for hearing in the above entitled court on May 10, 2004. Upon consideration of the parties' arguments and pleadings, IT IS HEREBY ORDERED that Plaintiff's Motion for Summary Judgment is GRANTED.
I. BACKGROUND
On August 20, 1984, Bidegary filed his 1983 federal income tax return. On August 3, 1987, the IRS issued a notice of deficiency asserting that Bidegary underpaid his federal taxes for 1983 by $569,190.00, and proposing penalties of $199,216.50.Bidegary filed a petition, challenging the IRS's notice of deficiency in tax court. On January 5, 1993, the Tax Court dismissed Bidegary's petition and entered an order finding a deficiency of $569,190.00. The Court also found that Bidegary was required to pay penalties.
On May 15, 2003, the United States filed a Complaint seeking to reduce to judgment the tax assessments made by the IRS against Defendant for the 1983 federal tax year. As of January 30, 2004, Bidegary owes $5,419.959.00, plus interest and statutory additions accrued thereafter.
II. ANALYSIS A. Standard of Review
The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court.Northwest Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). The moving party is entitled to summary judgment as a matter of law where, viewing the evidence and the inferences arising therefrom in favor of the nonmovant, there are no genuine issues of material fact in dispute. Fed.R.Civ.P. 56(c). Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995), cert. denied, 516 U.S. 1171, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996).
The moving party bears the burden of informing the court of the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the party opposing the motion may not rest upon the mere allegations or denials of his pleadings but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
In evaluating the appropriateness of summary judgment, three steps are necessary: (1) determining whether a fact is material; (2) determining whether there is a genuine issue for the trier of fact, as determined by the documents submitted to the court; and (3) considering that evidence in light of the appropriate standard of proof. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. As to materiality, only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes which are irrelevant or unnecessary will not be considered. Id. Where there is a complete failure of proof concerning an essential element of the nonmoving party's case, all other facts are rendered immaterial, and the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Summary judgment is not a disfavored procedural shortcut, but an integral part of the federal rules as a whole. Id.
B. Discussion
The United States has the initial burden of proof in an action to collect federal taxes. Palmer v. Internal Revenue Service, 116 F.3d 1309, 1312 (9th Cir. 1997). The United States' burden is satisfied through introduction of proof of the tax assessments, which are entitled to a presumption of correctness so long as they are supported by a minimal factual foundation. Id. Certificates of Assessments and Payments are "routinely used to prove that tax assessment[s] ha[ve] in fact been made." Geiselman v. United States, 961 F.2d 1, 6 (1st Cir., cert denied, 506 U.S. 891 (1992). Such Certificates of Assessments and Payments are presumptive proof of a valid assessment. Huff v. United States, 10 F.3d 1440, 1445 (9th Cir. 1993), cert. denied, 512 U.S. 1219 (1994).After the Government meets its burden of proof, the taxpayer must prove that the IRS' determinations and assessments of liabilities are incorrect. Palmer, 116 F.3d at 1312. Where taxpayers fail to meet their burden of showing the assessments to be incorrect, summary judgment in favor of the Government is appropriate. Adams v. United States, 358 F.2d 986, 994 (Ct.Cl. 1966).
The facts of this case are generally undisputed. Defendant filed his return on August 20, 1984. The Government filed its notice of deficiency on August 3, 1987, asserting that Bidegary underpaid his federal taxes for 1983 by $569,190.00, and proposing penalties of $199,216.50. Defendant filed a petition in the Tax Court, challenging the notice of deficiency. On January 5, 1993, the Tax Court dismissed Defendant's petition. The United States made an assessment of $2,323,769.41 on June 7, 1993. The Government has submitted an affidavit from Sandra Davaz, a Technical Services Advisor with the IRS, who states that as of January 30, 2004, Defendant owes $5,419,959.90.
Defendant claims that he filed his tax return on August 15, 1994, not August 20, 1994. However, whether Defendant filed on the fifteenth or twentieth has no impact on the outcome of this case. In addition, Defendant argues that the Government made its assessment on January 5, 1993, not June 7, 1993. The Government has submitted Form 4340, Certificate of Assessments, Payments and Other Specified Matters that states the assessment date was June 7, 1993. However, Defendant has not explained why he thinks the assessment was made on January 5, 1993, nor has he provided any evidence supporting this assertion. Defendant likely presumes that the date the Tax Court issued its decision, January 5, 1993, is the date of assessment. But the Tax Court's issuance of its decision did not constitute an assessment.
As a matter of law, the Government has satisfied its burden that the tax assessment is valid. The Government has submitted a Certificates of Assessments and Payments along with the affidavit of Sandra Davaz, which establish income tax liability amounting to $5,419,959.90. Defendant has not submitted evidence to show that the IRS' determinations and assessments are incorrect as required by Palmer v. Internal Revenue Service, 116 F.3d 1309, 1312 (9th Cir. 1997).
Contrary to Defendant's position, the Government made its assessment in a timely manner. With respect to the period of time for making an assessment, section 6501 of the Internal Revenue Code provides that the Government has three years after the return was filed to make an assessment. I.R.C. § 6501. Section 6503(a)(1) provides that section 6501's three year time period is suspended upon the mailing of a notice of deficiency. I.R.C. § 6503(a)(1). This section further provides that upon suspension, the three year period begins running again 60 days after the Tax Court's decision becomes final. Id. Under section 7483, a Tax Court decision becomes final 90 days after it is entered. United States v. Hans, 921 F.2d 81 (6th Cir. 1990). Any unexpired portion of that limitation period begins to run again after the Tax Court decision becomes final. United States v. Anderson, 169 F. Supp.2d 952 (N.D. Ind. 2001); Shannahan v. United States, 47 F. Supp.2d 1128 (S.D. Cal. 1999); Olds Whipple, Inc. v. United States, 22 F. Supp. 809, 819 (Ct.Cl. 1938).
Here, the three year period within which the Government was required to file an assessment was suspended when it sent a notice of deficiency to Defendant. The three year period was suspended until 60 days after the Tax Court's order became final, or until June 3, 1993. On June 3, 1993, the three year period began running again. Since the Government sent its notice of deficiency to Defendant 17 days before the three year period ran, the Government had 17 days after June 3, 1993 to make an assessment, or until June 20, 1993. The Government made its assessment on June 7, 1993.
The Government's collection action was also filed in a timely manner. Section 6502(a) allows the Government to collect on a tax assessment by proceeding in court if the court proceeding is begun within 10 years after the assessment of the tax. I.R.C. § 6502(a). Here, the tax was assessed on June 7, 1993, and the Government filed its Complaint on May 15, 2003.
Defendant contends that a "seven year" statute of limitations applies in this case rather than the ten year period of limitation, and that the Government was required to file its Complaint within seven years of assessing the tax. In 1990, section 6502(a)(1) was amended. "10 years" was substituted for "6 years." Pub.L. 101-508 § 11317(a)(1990). This 1990 amendment applies to taxes assessed after November 5, 1990. Pub.L. 101-508 § 11317(c) (1990). Here, an assessment was made on June 7, 1993, well after the effective date of the 1990 amendment. Therefore, the ten year period of limitations clearly applies.
III. CONCLUSION
Defendant has not submitted evidence showing that the Government's determinations and assessments are incorrect. The Government has complied with the assessment and collections requirements as set forth in the Internal Revenue Code.For the foregoing reasons, IT IS HEREBY ORDERED that Plaintiff's Motion for Summary Judgment is GRANTED. The court orders that the amount of $5,419,959.00 plus interest and statutory additions accrued after January 30, 2004 to present is reduced to judgment.