Opinion
C. A. 3:20-2714-CMC-PJG
08-13-2021
United States of America, Plaintiff, v. James T. McLaren, Defendant.
REPORT AND RECOMMENDATION
PAIGE J. G SETT, UNITED STATES MAGISTRATE JUDGE
The Government filed this tax case seeking a judgment against James T. McLaren, a self-represented defendant, for unpaid federal income taxes for tax years 2003 through 2009 and 2012 through 2015. This matter is before the court pursuant to 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2) (D.S.C.) for a Report and Recommendation on the Government's motion for summary judgment. (ECF No. 26.) Pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), the court advised McLaren of the summary judgment and dismissal procedures and the possible consequences if he failed to respond adequately to the Government's motion. (ECF No. 27.) McLaren filed a response in opposition to the motion (ECF No. 36), and the Government filed a reply (ECF No. 38). Having reviewed the record presented and the applicable law, the court concludes that the Government's motion for summary judgment should be granted.
BACKGROUND
The following facts are either undisputed or are taken in the light most favorable to McLaren, to the extent they find support in the record. The Government has no record of McLaren having filed federal income tax returns for tax years 2003 through 2009. Therefore, in 2010 and 2011, pursuant to I.R.C. § 6020(b), the Government determined McLaren's tax liability based on data available to it and assessed his tax liabilities for tax years 2003 through 2009. Thereafter, in April and May of 2011, McLaren's attorney in fact filed returns on his behalf for tax years 2003 through 2009. The Government accepted these returns and adjusted McLaren's tax liabilities for tax years 2003 through 2009, including assessing additional tax for tax year 2004, but it also assessed penalties and interest. Additionally, for tax years 2012 through 2015, McLaren filed federal income tax returns but did not pay the tax due. Accordingly, between 2013 and 2016, the Government assessed those taxes against McLaren, including penalties and interest.
The Government gave McLaren notice of the unpaid assessments and demanded payment. A summary of McLaren's tax liabilities, including penalties and interest, for tax years 2003 through 2009 and 2012 through 2015 are reflected in the Certificates of Assessments, Payments, and Other Specified Matters (Forms 4340), as compiled by United States Department of the Treasury, Internal Revenue Service (“IRS”) Revenue Officer Walter Hayes. (Hayes Decl. ¶¶ 1-11, ECF No. 26-2 at 2-6.) To date, McLaren has not paid the assessments. As of June 1, 2021, McLaren owes the Government $3,349,050.56, and penalties and interest continue to accrue.
DISCUSSION
A. Summary Judgment
Summary judgment is appropriate only if the moving party “shows that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A party may support or refute that a material fact is not disputed by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). Rule 56 mandates entry of summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
In deciding whether there is a genuine issue of material fact, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, “[o]nly 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 that are irrelevant or unnecessary will not be counted.” Id. at 248.
The moving party has the burden of proving that summary judgment is appropriate. Once the moving party makes this showing, however, the opposing party may not rest upon mere allegations or denials, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(c), (e); Celotex Corp., 477 U.S. at 322. Further, while the federal court is charged with liberally construing a pleading filed by a pro se litigant to allow the development of a potentially meritorious case, see, e.g., Erickson v. Pardus, 551 U.S. 89 (2007), the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege facts which set forth a federal claim, nor can the court assume the existence of a genuine issue of material fact where none exists. Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990).
B. The Government's Motion
The Government argues that it is entitled to summary judgment because the undisputed facts show that McLaren owes $3,349,050.56 in unpaid income taxes, interest, and penalties for tax years 2003 through 2009 and 2012 through 2015. The court agrees.
In an action seeking judgment for unpaid taxes, the Government must first make a prima facie showing that the taxpayer has unpaid taxes. See United States v. White, 466 F.3d 1241, 1248 (11th Cir. 2006) (citing Palmer v. U.S. I.R.S., 116 F.3d 1309, 1312 (9th Cir. 1997)). The Government can meet this burden by introducing the IRS's assessment of the taxes due, which is entitled to a presumption of correctness. See United States v. Fior D'Italia, Inc., 536 U.S. 238, 242 (2002). The tax assessment is presumptively correct so long as it is supported by some evidence. Palmer, 116 F.3d at 1312 (“The Commissioner's deficiency determinations and assessments for unpaid taxes are normally entitled to a presumption of correctness so long as they are supported by a minimal factual foundation.”); United States v. Walton, 909 F.2d 915, 919 (6th Cir. 1990); see also United States v. Janis, 428 U.S. 433, 443 (1976).
If the Government shows that the assessment was properly made, the burden shifts to the taxpayer to prove that the assessment is erroneous. United States v. Pomponio, 635 F.2d 293, 296 (4th Cir. 1980); United States v. Lovely, 420 F.Supp.3d 398, 404 (M.D. N.C. 2019). The taxpayer must do more than rely on their own conclusory, unsworn statements to rebut the presumption. United States v. Stein, 881 F.3d 853, 857 (11th Cir. 2018); Lovely, 420 F.Supp.3d at 404; United States v. Brooks, C/A No. 6:17-CV-2010-TMC, 2019 WL 642917, at *3 (D.S.C. Feb. 15, 2019)). The taxpayer's failure to rebut this presumption by a preponderance of the evidence requires the court to enter summary judgment in favor of the Government for the amount of taxes due. Lovely, 420 F.Supp. at 404-05 (quoting Brooks, 2019 WL 642917, at *3).
Here, the Government relies on the sworn declaration of a revenue officer to meet its initial burden of proof. See, e.g., United States v. Goodman, 527 Fed.Appx. 697, 699 (10th Cir. 2013) (finding that a declaration by an IRS revenue officer and accompanying documentation created an adequate factual foundation to meet the Government's prima facie burden of showing that the taxpayer had unpaid taxes, triggering the presumption of correctness) (citing United States v. Hayes, 861 F.2d 1225, 1228 (10th Cir. 1988)); United States v. Kramer, C/A No. 2:14-cv-2651, 2017 WL 3600443, at *4 (S.D. Ohio Aug. 18, 2017) (collecting cases that rely on evidence other than Forms 23-C summary records or Forms 4340 Certificates of Assessments and Payments to support the Government's assertion of taxpayer liability), aff'd, No. 17-3900, 2018 WL 1954260 (6th Cir. Apr. 5, 2018). The Government provides a declaration from IRS Revenue Officer Walter Hayes who declares that the IRS's computer system for storing and tracking information about taxpayer's accounts, the Integrated Data Retrieval System (“IDRS”), shows that the IRS made federal income tax assessments against McLaren for tax years 2003 through 2009 and 2012 through 2015. (Hayes Decl. ¶¶ 6-11, ECF No. 26-2 at 3-4.) Those assessments show that as of June 1, 2021, McLaren owes the Government $3,349,050.56 and penalties and interest continue to accrue. (Hayes Decl. ¶¶ 13-16, ECF No. 26-2 at 6.) Thus, the Government has met its prima facie burden of showing that McLaren has unpaid federal taxes for tax years 2003 through 2009 and 2012 through 2015, which the court presumes to be correct unless McLaren can produce evidence to rebut the presumption.
McLaren, however, fails to forecast any evidence to rebut the presumption that he owes the Government $3,349,050.56 plus further penalties and interest. McLaren argues that he timely filed his tax returns for tax years 2003 through 2009. (Pl.'s Resp. Opp'n Summ. J. ¶ 4, ECF No. 36 at 1.) McLaren asserts that he “personally prepared and filed the returns” for tax years 2003 through 2009 (id. ¶ 14, ECF No. 36 at 2), but he points to no evidence in the record that would contradict the Government's records showing that no such returns were filed. See generally Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002) (stating the non-moving party has “the ultimate burden of demonstrating a genuine issue of material fact for trial” and that “[c]onclusory or speculative allegations do not suffice”) (citing Celotex, 477 U.S. at 322-23)). McLaren actually admits that he has had difficulty finding the tax records he would like to produce to support his argument. (Pl.s' Resp. Opp'n Summ. J. ¶ 7, ECF No. 36 at 1.) McLaren also argues that the tax returns he filed in April and May 2011 after the Government sent him notice of the assessment for tax years 2003 through 2009 are evidence that he timely filed tax returns for those years. (Id. ¶¶ 8-9, ECF 36 at 1-2.) However, even assuming that those returns were timely and contemporaneously completed (a dubious assumption considering only one of the returns- for 2007-is dated), McLaren points to no evidence in the record that the returns were actually submitted before 2011. See, e.g., Maine Med. Ctr. v. United States, 675 F.3d 110, 114 (1st Cir. 2012) (affirming the dismissal of a taxpayer's refund suit where the taxpayer failed to produce evidence that it mailed its refund claim by producing a mail receipt or other proof that it submitted the claim). Thus, McLaren has failed to forecast any evidence that he timely filed his tax returns for tax years 2003 through 2009, nor does McLaren make any argument that he paid the taxes assessed by the Government for tax years 2003 through 2009 or 2012 through 2015. Therefore, McLaren fails to provide any evidence to rebut the Government's assessment, and the Government is entitled to judgment as a matter of law.
McLaren's response in opposition to the Government's motion for summary judgment is also titled as a “Declaration” and states “The undersigned affirms that this declaration is made in good faith and the facts set forth herein are based upon my personal knowledge and are believed to be truthful and accurate.” (Pl's Resp. Opp'n Summ. J. ¶ 18, ECF No. 36 at 1-2.) However, McLaren's purported declaration is not sworn, notarized, or declared under penalty of perjury. See Fed R. Civ. P. 56(c) (providing that assertions of fact must be supported by, among other things, affidavits or declarations based on personal knowledge that set out admissible facts and show the affiant or declarant is competent to testify on the matters); see also 28 U.S.C. § 1746. Also, statements made based on mere “belief” are not sufficient to demonstrate a genuine issue of material fact. See 10B Charles Alan Wright, et al., Federal Practice and Procedure § 2738 (3d ed. 1998). Therefore, McLaren' assertions in the response cannot, without supporting evidence in the record, create a genuine issue of material fact under Rule 56.
McLaren also argues he should be provided more time to produce the records (Pl.'s Resp. Opp'n Summ. J. ¶¶ 16-17, ECF No. 36 at 2.) However, pursuant to the court's second amended scheduling order, discovery in this case was due on May 10, 2021, and McLaren did not seek an extension of that deadline.
RECOMMENDATION
Based on the foregoing, the court recommends the Government's motion for summary judgment be granted. (ECF No. 26.)
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.' ” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
901 Richland Street
Columbia, South Carolina 29201
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).