Opinion
Case No. 1:00-CV-753
January 30, 2002
JUDGMENT
In accordance with an Opinion filed this day,
IT IS HEREBY ORDERED that United States' Motion for Summary Judgment (Dkt. No. 27) is GRANTED.
IT IS FURTHER ORDERED that JUDGMENT IS ENTERED FOR PLAINTIFF in the amount of $11,328.90 for unpaid federal income tax for the 1992 tax year, plus any statutory interest allowed by law since the date of assessment of March 18, 1996; in the amount of $27,117.27 for unpaid federal income tax for the 1993 tax year, plus any statutory interest allowed by law since the date of assessment of September 11, 1995; and in the amount of $516 for the filing of a frivolous federal individual income tax return for tax year 1994, plus any statutory interest allowed by law since the date of assessment of September 11, 1996.
IT IS FURTHER ORDERED that "Request Leave of the Court to File a Supplemental Pleading" (Dkt. No. 47) is DENIED.
OPINION
This matter is before the Court on United States' Motion for Summary Judgment. The Court has reviewed Defendant's Response to United States Motion for Summary Judgment and will grant the United States' Motion.
Defendant Cris Timothy Hiliman also filed a document titled "First Addendum to Defendant's Response to United States Motion for Summary Judgment" (Dkt. No. 40). This document was untimely filed, since Defendant filed it on November 26, 2001. Defendant's response was due on November 21, 2001 pursuant to an enlargement of time to respond granted Defendant by Magistrate Judge Ellen S. Carmody.
Moreover, Defendant is not entitled to file numerous filings to respond, and Defendant did not show any good reason for needing to respond in two separate documents. Defendant alleges that he filed an Addendum because of "[n]ew evidence recently obtained. . . ." But the letter from the IRS official responding to his Freedom of Information Act (FOIA) request with the information on which Defendant bases his Addendum is dated November 8, 2001, which is one week before Defendant filed his Response to the motion for summary judgment on November 15, 2001 and thirteen days prior to the Court's deadline for filing a response. There is no reason that Defendant could not have included in his original Response whatever arguments he felt necessary to make based on his FOIA request. Nonetheless, in the interest of considering all of the arguments made by the parties in this matter, the Court still considered Defendant's argument based on his FOIA request, the "non-master file" argument.
Defendant's original Response also made reference to a third filing, titled "Notice of Misprision of Felony" (Dkt. No. 32). Again, the Court considered the argument encompassed in that filing that Defendant's Response referenced, as described below. But it is not the task of the Court to decipher Defendant's arguments from three separate, lengthy documents that cross-reference each other and frequently repeat arguments that the Court has already rejected. Despite Defendant's representation at the beginning of every filing he submits with the Court that the filing ". . . is not being presented for any improper purpose and is not intended to harass or to delay the proceedings in this instant action," the Court cannot imagine any legitimate reason for presenting his arguments in the manner described here.
In addition, Defendant has filed "Request Leave of the Court to File a Supplemental Pleading" in response to an Order of the Court striking as extremely untimely a counterclaim against Plaintiff filed by Defendant on December 6, 2001. For reasons explained herein, the Court will deny leave to Defendant to plead his counterclaim.
I. Standard for Summary Judgment
Summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, together with 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.Pro. 56(c). The initial burden is on the movant to specify the basis upon which summary judgment should be granted and to identify portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The burden then shifts to the non-movant to come forward with specific facts, supported by the evidence in the record, upon which a reasonable jury could find there to be a genuine fact issue for trial. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). If, after adequate time for discovery on material matters at issue, the non-movant fails to make a showing sufficient to establish the existence of a material disputed fact, summary judgment is appropriate. Celotex Corp., 477 U.S. at 323.
Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences are jury functions. Adams v. Metiva, 31 F.3d 375, 382 (6th Cir. 1994). The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in the non-movant's favor. Celotex Corp., 477 U.S. at 323 (quoting Anderson, 477 U.S. at 255). The factual record presented must be interpreted in a light most favorable to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Rule 56 limits the materials the Court may consider in deciding a motion under the rule: "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits." Fed.R.Civ.P. 56(c).
II. Facts
Plaintiff, the United States, has brought suit against Defendant Hillman for purposes of obtaining judgment on assessments made by the Internal Revenue Service (IRS) for unpaid federal individual income taxes for tax years 1992 and 1993 and for an assessment of $500 made for Defendant's filing of a frivolous federal individual income tax return for tax year 1994, pursuant to 26 U.S.C. § 6702, plus statutory interest. Plaintiff has presented copies of three Certificates of Assessments and Payments for Defendant's unpaid federal income taxes for tax years 1992 and 1993 and for the $500 assessment of a frivolous federal income tax return for tax year 1994. As of the dates of assessment, the Certificates of Assessments and Payments show Defendant to owe $11,328.90 from tax year 1992; $27,117.27 from tax year 1993; and $516 from the 1994 assessment, the extra $16 representing fees and costs. Plaintiff also asks judgment to include statutory interest according to law from the dates of assessment until payment.
This assessment was made on March 18, 1996. ( See Declaration of Richard D. Hannum, at 2, Attachment to United States' Response to Order Dated January 9, 2002.)
This assessment was made on September 11, 1995. ( See Declaration of Richard D. Hannum, at 3, Attachment to United States' Response to Order Dated January 9, 2002.)
This assessment was made on September 11, 1996. ( See Declaration of Richard D. Hannum, at 2, Attachment to United States' Response to Order Dated January 9, 2002.)
In its summary judgment motion, Plaintiff originally asked for a judgment from each year that already included statutory interest up until October 29, 2001. This meant that the amounts sought in judgment by Plaintiff for each year did not coincide with the Certificates of Assessments and Payments. To clarify, the Court ordered and received a filing from Plaintiff, United States' Response to Order Dated January 9, 2002 (Dkt. No. 48), satisfactorily explaining this difference.
Plaintiff's suit against Defendant, authorized and requested by a delegate of the Secretary of the Treasury and at the direction of the United States Attorney General, was brought pursuant to 26 U.S.C. § 7401, which is part of the Internal Revenue Code of 1986. Defendant's previous Motion to Dismiss for failure to state a claim was denied by the Court. Defendant also filed Defendant's Response to the Court's Opinion of November 6, 2001, which the Court construed as a Motion for Reconsideration of its decision to deny Defendant's Motion to Dismiss. The Court denied that motion in a separate Order Plaintiff now brings a Motion for Summary Judgment.
Defendant has also challenged the assessments made against him in several other cases which he has initiated. See Cris Timothy Hillman v. MA. Buechly, et al., Case No. 94-CV-10746DT (E.D. Mich.) (Gilmore, J.); Cris Timothy Hillman, et al., v. Old Kent Bank, et al., Case No. 1:97-CV-495 (W.D. Mich.) (Enslen, J.); Cris Timothy Hillman v. Secretary of Treasury, Case No. 1:99-CV-136 (W.D. Mich.) (Miles, J.).
III. Analysis
Internal Revenue Service (IRS) assessments are presumed to be correct and proper. Kearns v. Commissioner, 979 F.2d 1176, 1178 (6th Cir. 1992). The taxpayer, here Defendant, has the burden to show that an assessment is incorrect. Helvering v. Taylor, 293 U.S. 507, 515 (1935); United States v. Walton, 909 F.2d 915, 918 (6th Cir. 1990). A showing that federal taxes have been assessed and that balances remain due on each assessment is sufficient proof of tax liability. Helvering, 293 U.S. at 515. The taxpayer's burden of proof after such a showing by the IRS is a burden of persuasion by a preponderance of the evidence that the assessment is not correct. Sinder v. United States, 655 F.2d 729, 731 (6th Cir. 1981).
The Certificates of Assessments and Payments that have been provided by Plaintiff in this matter are presumptive proof of the adequacy and validity of notices and assessments unless the record reflects some reason to suspect those documents. Gentry v. United States, 962 F.2d 555, 558 (6th Cir. 1982). The Court finds that there is no issue of material fact for trial with regard to the accuracy of the income tax assessments made against Defendant. Defendant makes two arguments that the assessments are inaccurate or not proper assessments, but both of those arguments fail.
A. Defendant's Argument that Levies Satisfied the 1994 Assessment
Defendant alleges that he already paid the $516 assessment for filing a frivolous income tax return for tax year 1994 when the IRS levied his account at CoPoCo Credit Union and his wages at Consumers Power Company. However, Defendant's presented evidence is not sufficient to rebut Plaintiff's evidence such that there is a question of material fact.
Examination of the documents recording those levies shows that both levies occurred during 1994. Those levies must, then, be for unpaid assessments due the IRS other than the assessment for filing a frivolous income tax return for tax year 1994, since tax year 1994 did not end until December 31, 1994. The levies to which Defendant refers were executed by then and cannot have been executed to satisfy the $516 owed the IRS. No reasonable jury could find otherwise based on what was presented by Defendant.
This information was submitted by Defendant in a filing he titled "Notice of Misprision of Felony" (Dkt. No. 32). ( See Notice of Misprision of Felony, at 1-2.) Defendant made reference to this filing in his two filings responding to the United States' Motion for Summary Judgment.
B. Defendant's "Non-Master File" Argument
Defendant argues that the 1992 and 1993 assessments are not valid assessments because he asserts that the IRS has no "non-master file" specific to him for 1992 and 1993, and as a result, no valid assessments were made against him in those years. Notwithstanding whether any "non-master files" exist with respect to Defendant in 1992 and 1993, the Court is entirely unconvinced that as a matter of law, an assessment must exist in such a form to be valid.
Plaintiff notes that Defendant quotes from what he calls the "Internal Revenue Service manual entitled `AUTOMATED NON-MASTER FILE ACCOUNTING, MT 3 (17)00-27,'" but Defendant has not attached a copy of this document as an exhibit, and Plaintiff has represented that it cannot locate any such document. Moreover, the Court cannot locate any such document through either a search of the IRS website, which includes the Internal Revenue Manual, nor through a Westlaw search. As such, no evidence whatsoever has been presented to the Court that any of the propositions allegedly contained therein affect the validity of the assessments against Defendant.
Beyond that problem with Defendant's argument is Defendant's conclusion that a "non-master file" assessment must exist in order for the IRS to make a valid assessment. Defendant cites 26 C.F.R. Part 301.6203-1 as requiring a "summary record . . . [providing] identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment." All of this information is contained on the signed assessments provided by Plaintiff in support of its Motion for Summary Judgment. Defendant has cited no law or regulation that requires the summary record to be in the form in which he alleges it must be for validity. At most, the source that Defendant quotes, which the Court cannot even find, states that the "purpose [of a `non-master file'] is to provide a means for the assessment of taxes and collection of revenue." Nothing in that sentence indicates a "non-master file" is the only lawful method of assessment. Thus, the record of assessment provided by Plaintiff is sufficient to obtain summary judgment.
If, for example, Defendant were alleging that he needed more specific records to challenge that he derived income from a specific source or to challenge the amount of income derived, Defendant would be closer to establishing an issue of material fact for a jury to consider. But Defendant has not challenged any underlying facts of the assessment, like the amount of money he made in the years at issue, or intimated that he would challenge these type of facts.
C. Plaintiffs Notice and Demand of Defendant
Finally, the IRS is required to make notice and demand of the taxpayer. Even if one were to believe Defendant's claim that he has not had proper notice and demand for payment, a claim with very little, if any, credibility, the Sixth Circuit and other courts have held that the IRS is only required to mail a taxpayer notice and demand, but that actual receipt by the taxpayer is not required to discharge the IRS's notice and demand duty. See, e.g., United States v. Berman, 825 F.2d 1053, 1060 (6th Cir. 1987); Purcell v. United States, 1 F.3d 932, 941 (9th Cir. 1993) (citations omitted); Nassar v. United States, 792 F. Supp. 1040, 1042 (E.D. Mich. 1992). This Court will hold the same, and since the IRS has offered presumptive proof that it made notice and demand, without any credible evidence from Defendant to the contrary, the Court finds that there is no material issue on this point for trial.
IV. Defendant's Counterclaim
Defendant filed a counterclaim against Plaintiff on December 6, 2001. The Court struck this pleading as extremely untimely, given that the deadline for motions to amend the pleadings in this matter was April 20, 2001. The Court also gave Defendant the opportunity to request leave of the Court to re-file his counterclaim upon a showing that justice so required, e.g., the late pleading was the result of excusable error or was justified because due diligence could not have identified the claim earlier. Defendant then requested leave of the Court, but after reviewing the request, the Court finds that leave is not warranted.
Defendant wishes to assert a counterclaim that is based on his allegation that there is no "non-master file" with respect to him for the taxable years at issue, as described above in Section III.B. Thus, Defendant argues, the IRS has been attempting to collect an invalid assessment from him, and this entitles him to bring a claim against the IRS. The Court first notes that it found this assertion of Defendant to be without merit as a matter of law as it related to a defense to Plaintiff's claims.
Plaintiff also correctly noted that Defendant has pointed to no statute or other authority to establish a waiver of the United States' sovereign immunity with respect to Defendant's counterclaim. Further, to the extent that claims of constitutional rights violations do not require an additional waiver of sovereign immunity, Defendant has not made a colorable argument that any of his constitutional rights have been violated. There is no indication that failure to follow IRS regulations, if that happened, gives Defendant a legal claim of any kind. Finally, Plaintiff correctly notes that Defendant has previously brought claims under 26 U.S.C. § 7432-7433 in another lawsuit with respect to the tax liability at issue in this matter, and those claims were dismissed with prejudice.
See Cris Timothy Hillman v. Secretary of Treasury, Case No. 1:99-CV-136 (W.D. Mich.) (Miles, J.).
Because of any or all of these problems with Defendant's counterclaim, the counterclaim would be subject to a successful motion to dismiss by Plaintiff. Therefore, any supplementary pleading would be futile as the counterclaim is without merit, and leave to supplement should not be granted. See, e.g., Frank M. McDermott, Ltd. v. Moretz, 898 F.2d 418, 420-21 (4th Cir. 1990).
Additionally, according to Defendant's First Addendum to Defendant's Response to United States Motion for Summary Judgment (Dkt. No. 40), Defendant has been in possession of information from the IRS since November 19, 1997 that the IRS has no "non-master file" on him for tax years 1992 or 1993. Defendant represents that he obtained this information by FOIA request. The Court finds it difficult to believe that Defendant would request such information from the IRS prior to being aware of the argument that Defendant now makes as a result of that information. In short, the Court does not find that the argument on which Defendant wishes to base an extremely untimely counterclaim was only recently available.
V. Conclusion
There being no genuine issue of disputed material fact for trial in this matter, the Court will grant the United States' Motion for Summary Judgment. Plaintiff United States will be granted summary judgment as a matter of law against Defendant consistent with this Opinion in the amounts described in the Judgment accompanying this Opinion. Moreover, the Court will deny Defendant leave to file a supplemental pleading because of the Court's finding that justice does not so require, and in fact, it would offend justice to grant leave to supplement.