Opinion
Civil Action No. 2:00-CV-1092
December 19, 2002
OPINION AND ORDER
This is an action under 26 U.S.C. § 7401, 7403, to reduce to judgment the personal tax liability of defendant Jeffrey Peterson ["Peterson"], to establish the validity of liens on certain real property and to foreclose those liens. Defendant Teresa Peterson asks that her 50 percent equitable interest in the property be recognized. With the consent of the parties, 28 U.S.C. § 636(c), this matter is now before the Court on plaintiff's July 31, 2002, motion for summary judgment. Although defendant Peterson was granted to November 15, 2002, to respond, Opinion and Order (September 18, 2002), at 7, there has nevertheless been no response to the motion for summary judgment.
In its motion for summary judgment, the United States asks that this Court enter judgment that, as a matter of law:
1. Peterson is liable for unpaid federal taxes as set forth in the complaint,
2. Peterson is the actual legal owner of certain property titled in the name of Inscon Properties or, alternatively, that the property titled in the name of Inscon Properties is being held by it as a nominee for Peterson and,
3. The government's tax liens be foreclosed and that both the property titled in the name of Inscon Properties and the property jointly owned by Peterson and Theresa Peterson be sold and the proceeds distributed in accordance with law.United States' Motion and Supporting Memorandum of Law for Summary Judgment Against Jeffrey Peterson, at 1.
Summary judgment is appropriate if the record establishes that there exists no genuine issue of material fact. Rule 56, F.R. Civ. Pro. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The mere existence of a scintilla of evidence in support of the opposing party's position will be insufficient; there must be evidence on which the jury could reasonably find for the opposing party. Anderson, 477 U.S. at 251. See also Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
At issue in this action is defendant Peterson's tax liability for the years 1991, 1992, 1994 and 1995. The uncontroverted evidence establishes the following: The tax returns filed by defendant Peterson reported tax liabilities of $41,785.75 for the tax year 1991, Plaintiff's Exhibit A, attached to Motion for Summary Judgment, $43,778.00 for the tax year 1992, Plaintiff's Exhibit B, attached to Motion for Summary Judgment, $70,584.00 for the tax year 1994, Plaintiff's Exhibit C, attached to Motion for Summary Judgment, and $2,539.00 for the tax year 1995, Plaintiff's Exhibit D, attached to Motion for Summary Judgment. No payments accompanied those returns. Affidavit of Joan Flach, Revenue Office, Advisor, ¶ 4. Notices of assessments and demands for payment were made. Id., ¶ 5. As of July 22, 2002, the principal amount of taxes owed, along with penalties and interest for these four tax years, totaled $340,480.00. Id., ¶ 3. Notices of federal tax liens have been filed. Plaintiff's Exhibits E-M, attached to Motion for Summary Judgment.
In October 1981, defendant Peterson and one Douglas C. Stewart agreed to form a partnership by the name of "Inscon Properties" for the purpose of owning, purchasing and operating rental properties. Plaintiff's Exhibit O, attached to Motion for Summary Judgment. In December of that year, Inscon purchased rental property located at 242-244 Barthman Avenue, Columbus, Ohio. Plaintiff's Exhibit P. attached to Motion for Summary Judgment. Stewart disclaimed any interest in the partnership following his personal bankruptcy in 1982, Plaintiff's Exhibit N, attached to Motion for Summary Judgment, and defendant Peterson conceded on deposition that he is "the sole surviving partner" of Inscon. Deposition of Jeffrey Peterson, at 33. Defendant Peterson also testified that he was unaware of any partnership tax returns having been filed on behalf of Inscon. Deposition of Jeffrey Peterson, at 38.
The Barthman Avenue property was forfeited to the State of Ohio in May 1993 for non-payment of taxes. Plaintiff's Exhibit P, attached to Motion for Summary Judgment. In April 1994, Inscon Properties redeemed this property upon payment to the Franklin County Treasurer all of the taxes, assessments, penalties and interest due in connection with the property. Plaintiff's Exhibit R, attached to Motion for Summary Judgment. Defendant Peterson testified in deposition that he regards the Barthman Avenue property as his own: "I believe that I've always just counted on it as being my property." Deposition of Jeffrey Peterson, at 38.
Defendant Peterson, along with defendant Teresa Peterson, purchased real property located at 11585 Lake Avenue, Lakeview, Ohio, in 1989. Deposition of Jeffrey Peterson, at 44. The original land contract was paid in July 1997, Plaintiff's Exhibit S, attached to Motion for Summary Judgment, following which a warranty deed was issued and recorded. Plaintiff's Exhibit T, attached to Motion for Summary Judgment. At the time of his deposition, defendant Peterson was living at this property. Deposition of Jeffrey Peterson, at 33.
Tax assessments are presumed to be correct and proper. Kearns v. Commissioner, 979 F.2d 1176, 1178 (6th Cir. 1992). Absent evidence to the contrary, the unpaid assessment is a sufficient basis upon which to enter judgment. Helvering v. Taylor, 293 U.S. 507, 515 (1935); United States v. Walton, 909 F.2d 915, 918 (6th Cir. 1990). Thus the plaintiff's motion for summary judgment, which is supported by the declaration of the revenue agent and which remains uncontroverted by defendant Peterson, is a sufficient basis upon which to enter judgment in favor of the United States on those assessments. Accordingly, plaintiff is entitled to judgment against defendant Peterson in the amounts sought for the taxable years 1991, 1992, 1994 and 1995.
Plaintiff also seeks to collect on the assessed tax liability by foreclosing its liens on the Barthman Avenue and Lakeview properties. Pursuant to 26 U.S.C. § 7403, the United States may "subject any property, of whatever nature," in which the taxpayer has any right, title or interest, to collection efforts. 26 U.S.C. § 7403(a). Upon demonstration of a valid lien on the property, the Court is authorized to "decree a sale of such property . . . and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States." 26 U.S.C. § 7403(c). A federal tax lien ordinarily arises "at the time the assessment is made and shall continue until the liability for the amount so assessed . . . is satisfied or becomes unenforceable by reason of lapse of time." 26 U.S.C. § 6322. Moreover, foreclosure and sale of property subject to a tax lien may be authorized notwithstanding the existence of another person's interest in the property. 26 U.S.C. § 7403(b) ["All persons having liens upon or claiming any interest in the property involved in such action shall be made parties thereto."] See also United States v. Rodgers, 461 U.S. 677 (1983).
The Barthman Avenue property, although titled in the name of Inscon Properties, is in reality the property of defendant Peterson, who testified on deposition that he is the "sole partner" in Inscon and that he regards the property as his own. Accordingly, whether because there is no partnership in existence following the bankruptcy of one of the two partners, see O.R.C. § 1775.30, or because Inscon Properties is the alter ego or nominee of defendant Peterson, the Barthman Avenue property is his. There is no dispute that defendant Peterson, along with Teresa Peterson, are the legal owners of the Lakeview property. Both properties, therefore, are proper objects of plaintiff's collection efforts.
Accordingly, plaintiff's motion for summary judgment is meritorious and it is therefore GRANTED. The Clerk shall enter JUDGMENT in favor of the United States that, (1) defendant Peterson is liable to the United States for the amount of his unpaid federal tax liabilities for the 1991, 1992, 1994 and 1995 tax years in the total amount of $340,480 as of July 22, 2002, plus statutory additions; (2) defendant Peterson is the actual owner of the Barthman property or, alternatively, that Inscon Properties is the nominee of defendant Peterson; (3) the federal tax liens attach to the Barthman property, the tax liens should be foreclosed upon such property and that the Barthman property should be sold by an officer of this Court free and clear of any of the rights, titles, claims, interests of any of the parties to this action and the proceeds distributed to the United States; and (4) the federal tax liens attach to the Lakeview property, that the tax liens should be foreclosed upon such property, and that the property should be sold by an officer of this Court free and clear of any of the rights, titles, claims, interests of any of the parties to this action and the proceeds distributed to the United States and Teresa Peterson, fifty percent each, after the costs of sale.