Opinion
Civil Action No. 01-0463, Re: Doc. #4
February 19, 2002
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
I. RECOMMENDATION.
It is recommended that Defendant's Motion for Summary Judgment be granted.
II. REPORT.
Richard Dami ("Plaintiff") filed this suit under 26 U.S.C. § 6320, 6330. He alleges that he was denied a fair hearing by the Internal Revenue Service ("IRS") with regard to certain taxes, penalties and interest assessed against him. Defendant filed the instant Motion to Dismiss, or in the Alternative, for Summary Judgment. By Order dated July 20, 2001, this Motion is treated as a motion for summary judgment.
A. Statement of Facts.
On September 2, 1999, the IRS sent Plaintiff a certified letter which proposed the assessment of a Trust Fund Recovery Penalty against him ("Recovery Letter") and advised him of the manner in which he could appeal this assessment. The Recovery Letter indicated that the taxes were owed by QR Distribution, Inc., but that this action was being taken because it did not pay the taxes it owed and, under law, the IRS could impose this liability against him as the former President of QR Distribution, Inc. (Defendant's Memorandum in Support of Motion for Summary Judgment, Exhibit B). Because the amount to be collected was over $10,000.00, the Recovery Letter advised Plaintiff that any protest needed to be submitted in writing. The Recovery Letter told him that if he had "additional information to support" his case and wished to "resolve the matter informally," he could "contact the person named" within ten days. (Defendant's Memorandum in Support of Motion for Summary Judgment, Exhibit B). Plaintiff alleges that within ten days after he received the Recovery Letter, he did contact the IRS agent named in the letter, D. Blynn, Jr., and told him that the taxes in question were "rightfully owed by QR Distribution, Inc." and that he "was not responsible for payment of the taxes nor did Plaintiff have the ability to pay the taxes." (Plaintiff's Reply to Defendant's Motion for Summary Judgment at 1). In his reply, he states that Blynn advised him "not to worry because if the Plaintiff had no means to pay the taxes, the Internal Revenue Service would not pursue Plaintiff for payment." He complains that he was never told he had not successfully challenged the underlying tax liability, he was not asked for additional proof or documentation, and was not told that he had to file formal written documentation to effectively challenge the underlying tax liability.
On August 18, 2000, the IRS sent Plaintiff a Notice of Intent to Levy in which it proposed a levy to collect a Trust Fund Recovery Penalty assessed against him on January 10, 2000, in the amount of $33,350.08 for the unpaid withholding tax liabilities of QR Distribution, Inc. On September 16, 2000, Plaintiff filed a Request for a Collection Due Process Hearing. On January 31, 2001, the Appeals Officer, Susan M. Phillip, held a telephone hearing wherein, rather than challenging the collection activity being proposed by the IRS, Plaintiff attempted to challenge the underlying liability. The Appeals Officer refused to consider Plaintiff's challenges to the underlying liability under the theory that 26 U.S.C. § 6330 precluded him from challenging the liability at the collection due process hearing. (Defendant's Memorandum in Support of Motion for Summary Judgment, Exhibit D). On February 7, 2001, the Appeals Office issued a Notice of Determination sustaining the proposed collection activity.
Plaintiff filed the instant Complaint on March 9, 2001, alleging that he was improperly denied a fair hearing under 26 USCA §§ 6320, 6330. Defendant claims that there was no abuse of discretion in its determination not to consider Plaintiff's challenge to his tax liability raised at the January 31, 2001 hearing and that the collection activity was appropriate.
B. Standard for Summary Judgment.
Summary judgment is appropriate if, drawing all inferences in favor of the non-moving party, "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment may be granted against a party who fails to adduce facts sufficient to establish the existence of any element essential to that party's case, and for which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of identifying evidence which demonstrates the absence of a genuine issue of material fact. Once that burden has been met, the non-moving party must set forth "specific facts showing that there is a genuine issue for trial" or the factual record will be taken as presented by the moving party and judgment will be entered as a matter of law. Matsushita Elec. Indus. Corp. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). An issue is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty-Lobby, Inc., 477 U.S. 242, 248 (1986).
C. Discussion.
26 U.S.C. § 6330 provides, in pertinent part, as follows: "No levy may be made on any property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made." In the instant case, Plaintiff does not dispute that he received the Recovery Letter. Rather, he argues that he was deprived of the opportunity to challenge the underlying tax liability. Plaintiff's theory is based on his allegation that he contacted the appropriate representative for the IRS, he believed that this action constituted a proper challenge to the IRS notification, and that Blynn did not advise him that he needed to do anything further to challenge the tax liability. (Plaintiff's Brief in Support of Reply to Defendant's Motion for Summary Judgment at 2).
Notably, the information Plaintiff claims to have provided to the IRS agent, namely, that the liability belonged to QR Distribution, Inc. rather than to him personally, and that he lacked the funds to pay, was not "additional information" to dispute the amount of the tax liability in question, but only questioned his personal, as opposed to corporate, liability and his ability to pay. (Defendant's Memorandum in Support of Motion for Summary Judgment, Exhibit D). In other words, his statements concerning his personal rather than corporate liability, and those concerning his lack of funds to satisfy the liability, did not challenge the amount or appropriateness of the underlying liability itself.
In addition, although Plaintiff's reply treats Defendant's motion as one for summary judgment, he has presented his factual assertions that he believed that the alleged phone call to the IRS would constitute a proper appeals procedure and that he acquired this belief based on his conversation with D. Blynn, Jr., without an affidavit or declaration under penalty of perjury.
The language of the Recovery Letter itself describes in detail the proper procedure to follow if a taxpayer wishes to protest the action described therein. Further, even if Plaintiff had provided sufficient factual support for his claims, he has not cited legal authority for either an estoppel theory or a due process claim.
In addition, a plain reading of the statute does not offer a contrary result. Under 26 U.S.C. § 6330 (c)(2)(B) a taxpayer may "raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive statutory notice of the deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." Plaintiff has failed to cite any authority for his argument that the facts he alleges could have deprived him of the required opportunity to dispute such liability. As there is no dispute that Plaintiff received the Recovery Letter, and there is no reasonable basis to conclude that he could not have disputed this liability at the appropriate time, Defendant's Motion for Summary Judgment should be granted.
III. CONCLUSION.
For the reasons discussed above, it is recommended that Defendant's Motion for Summary Judgment be granted. In accordance with the Magistrates Act, 28 U.S.C. § 636 (b)(1)(B) and (C), and Rule 72.1.4 (B) of the Local Rules for Magistrates, the parties are allowed ten (10) days from the date of service to file objections to this report and recommendation. Any party opposing the objections shall have seven (7) days from the date of service of objections to respond thereto. Failure to file timely objections may constitute a waiver of any appellate rights.