Opinion
No. 02-CV-6299 (SLT)(JMA).
September 22, 2004
BARTHOLOMEW CIRENZA, ESQ., Trial Attorney, Tax Division, United States Department of Justice, Washington, D.C., Attorney for Plaintiff.
JAMES S. KAPLAN, ESQ., New York, NY, Attorney for Defendant.
Report and Recommendation
The United States brings this action against defendant Parviz Lavi to recover unpaid federal tax, interest, and penalty liabilities for the 1978 tax year. By order dated December 11, 2003, the Honorable Nina Gershon, United States District Judge, referred to me for report and recommendation defendant's motion for summary judgment and plaintiff's cross-motion for summary judgment pursuant to Fed.R.Civ.P. 56. For the reasons stated herein, I recommend that defendant's motion be denied and that plaintiff's cross-motion be granted.
BACKGROUND
This case arises from an alleged underpayment by defendant of his personal income tax for 1978. Except where noted, the facts are undisputed. On June 29, 1987, defendant and his then wife, Madeline Lavi, filed a petition with the United States Tax Court, challenging the Internal Revenue Service's ("IRS") assessed deficiency for the 1978 income tax year. By decision dated July 7, 1992, the Tax Court in Parvis Lavi and Madeline Lavi v. Commission of Internal Revenue, Docket No. 20736-87, determined that there was a deficiency in income tax due from defendant for the taxable year 1978 in the amount of $138,266.00, of which $4,161.00 had been paid. The decision further held that $18,961.00 of the deficiency for the taxable year 1978 was a substantial underpayment attributable to a tax motivated transaction, for the purposes of computing the interest payable with respect to such amount, pursuant to Internal Revenue Code § 6621(c), formerly § 6621(d). Neither party appealed this decision.Plaintiff reports that in December 1992, in accordance with the Tax Court decision, a delegate of the Secretary of the Treasury assessed defendant's additional 1978 income tax at $138,266.00 and accrued statutory restricted interest at $440,107.67, totaling $578,373.67. The IRS issued a notice and demand for payment to defendant, who has made some payments to this amount but according to plaintiff has failed to fully satisfy the assessed 1978 federal income tax liabilities.
On November 27, 2002, plaintiff filed the instant action against defendant for all unpaid assessed 1978 income tax, as well as all corresponding assessed and accrued penalties and interest. As of February 10, 2004, plaintiff claims that defendant's assessed and unpaid 1978 income tax liability totals $212,862.15, which amount represents $147,861.91 in assessed and unpaid tax and interest, $10,674.08 in accrued failure to pay tax penalty, $54,326.16 in accrued statutory interest. The $212,862.15 does not include assessed lien filing fees in the amount of $219.00 incurred by the IRS in filing notices of liens.
Defendant filed the instant motion for summary judgment on December 6, 2003, and plaintiff filed a cross motion on February 11, 2004. Various extensions were granted for the filing of opposition and reply papers, including an extension at defendant's request to secure counsel for a sur-reply. Defense counsel filed a sur-reply on July 30, 2004.
Defendant makes the following arguments: (1) that the instant action is barred by the statute of limitations; (2) that the instant action is an improper attempt to re-litigate facts previously decided by the United States Tax Court; (3) that contrary to his written designation, dated April 5, 1994, that all payments be applied first to the tax motivated portion of his 1978 tax liability, and contrary to Revenue Ruling 73-305, Rev. Rul. 73-305, 1973-2 C.B. 43, mandating that credits be applied to a taxpayer's earliest period of assessment, certain payments were improperly applied to defendant's liability for tax years 1979, 1980, and 1993, rather than 1978, thereby increasing the interest and penalties for the 1978 tax year.
In opposition and in support of its cross motion for summary judgment, plaintiff argues that its application of the $9690,00, $7922.00, and $5918.00 payments to tax years 1978, 1979, and 1980, respectively, and of the 2001 tax year overpayment of $20,000.00 to defendant's 1993 tax year liability was proper. As to defendant's claim that an $8070.58 payment was not credited, plaintiff argues that defendant has not established that such a payment was ever made.
DISCUSSION
A. Summary Judgment StandardSummary judgment may only be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "[T]he burden is upon the moving party to demonstrate that no genuine issue respecting any material fact exists," Gallo v. Prudential Residential Services, L.P., 22 F.3d 1219, 1223 (2d Cir. 1994), but "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "An issue of fact is `material' for these purposes if it `might affect the outcome of the suit under the governing law,'" while "[a]n issue of fact is `genuine' if `the evidence is such that a reasonable jury could return a verdict for the non-moving party.'" Konikoff v. Prudential Ins. Co. of America, 234 F.3d 92, 97 (2d Cir. 2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248.)
Affidavits on a motion for summary judgment must be based on personal knowledge and admissible evidence. Fed.R.Civ.P. 56(e). In assessing the record to determine whether genuine issues of material fact are in dispute, a court must resolve all ambiguities and draw all reasonable factual inferences in favor of the non-movant. Parkinson v. Cozzolino, 238 F.3d 145, 150 (2d Cir. 2001); Carlton v. Mystic Transp., Inc., 202 F.3d 129, 133 (2d Cir. 2000). The non-moving party, however, "must do more than show there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Mere conclusory allegations, speculation or conjecture will not avail a party resisting summary judgment. Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998); Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996). In sum, if the court determines that "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita Electric Industrial Co., 475 U.S. at 587 (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288 (1968)).
B. Statute of Limitations
Defendant argues that plaintiff's instant action is barred by the statute of limitations, directing this court to language written on the back of a Notice of Federal Tax Lien form. Defendant proffers that a tax collection action is timely only if the Notice of Lien is filed prior to the end of the statute of limitations, and that plaintiff's lien, dated August 23, 2003, falls outside the 10-year limitations period. This argument, however, is without merit.
The statute of limitations for collection of taxes is governed by Section 6502 of the Internal Revenue Code, which states in relevant part:
"Where the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun . . . within 10 years after the assessment of the tax".26 U.S.C.A. § 6502(a)(1). Here, the earliest disputed assessment against defendant was made on December 1, 1992, when a delegate of the Secretary of the Treasury assessed defendant's additional 1978 tax liability in accordance the prior the Tax Court decisions. The instant action was filed in the District Court on November 27, 2002, which is four days prior to the expiration of the statute of limitations on that assessment. As a matter of law, therefore, plaintiff timely filed the instant action.
C. Res Judicata and the Tax Court Decision
In asserting that the instant action is subject to res judicata, defendant suggests that the calculations of interest made by the IRS since a February 5, 1992 Tax Court decision are not in accordance with the decision of that court and that the instant action is an improper attempt to relitigate that decision more than 10 years later. The record before this court makes clear that this argument is also without merit.
When a taxpayer seeks to challenge a deficiency determination by the IRS, he or she files a petition for redetermination to the United States Tax Court, which redetermination is appealable only to the United States Court of Appeals. See 26 U.S.C.A. § 7482. Here, defendant filed a petition for redetermination on June 29, 1987, challenging the IRS's determination deficiency for the 1978 tax year. On July 7, 1992, the Tax Court issued a decision in which it determined that there was a deficiency in income tax due from defendant for the taxable year 1978 in the amount of $138,266.00, of which $4,161.00 had been paid. The decision further held that $18,961.00 of the deficiency for the taxable year 1978 was a substantial underpayment attributable to a tax motivated transaction, for the purposes of computing the interest payable with respect to such amount, pursuant to Internal Revenue Code § 6621(c), formerly § 6621(d). No appeal was taken from this decision.
In accordance with the Tax Court's ruling, a delegate of the Secretary of the Treasury assessed defendant's additional 1978 income tax. The IRS computed and assessed accrued interest on the $138,266.00 using regular interest under 26 U.S.C. § 6601, as to all but $18,961.00 of the assessment, and applied an increased rate of interest (120% of the regular underpayment interest rate for underpayments) on the remaining $19,961.00 of the assessment in accordance with 26 U.S.C. § 6621(c), as in effect at that time. Plaintiff evidences the same with IRS Form 4340 for 1978, 1979, and 1980 tax years, which form is "presumptive proof of a valid assessment." Geiselman v. United States, 961 F.2d 1, 6 (1st Cir. 1992). "A taxpayer who wishes to challenge the validity of the assessment, moreover, bears the burdens of both production and of persuasion." United States v. McCombs, 30 F.3d 310, 318 (2d Cir. 1994). Therefore, the burden here is on defendant to show that plaintiff's assessment does not conform with the findings of the Tax Court. Defendant, however, has offered no evidence that calls the accuracy of the assessment into question, and a review of the record reveals that his argument is based upon an interim decision by the Tax Court, dated February 5, 1992, which ruled on the applicability of specific case law to defendant's liability for increased interest under the Internal Revenue Code Section 6621(c) and for a penalty under Section 6673. However, plaintiff's assessment is directly based upon the subsequent and dispositive Tax Court decision dated July 7, 1992. The instant action, therefore, far from challenging the Tax Court's decision, seeks judgment against defendant to recover unpaid federal internal revenue tax based upon the Tax Court's redetermination of defendant's tax liability. Defendant's res judicata argument, therefore, is inapplicable. D. $9690.00, $7922.00, $5918.00, $8070.58 and $20,000.00 Payments
In his sur-reply, filed with the assistance of recently secured counsel, defendant suggests that this Court agreed to review the March 16, 1998 decision of the United States Tax Court in Parvis Lavi and Madeline Lavi v. Commission of Internal Revenue, Docket No. 8023-86, which decision considers defendant's liability for 1979 and 1980 tax years. The instant action, however, pertains solely to the 1978 tax year, and is the only tax year at issue before this Court. Prior to filing the Reply to his motion, defendant requested permission to submit additional documentation, beyond those relating only to 1978. This request was granted in the interest of allowing a then pro se defendant every opportunity to fully address his defense. However, this Court does not have jurisdiction to review decisions of the United States Tax Court, see 26 U.S.C.A. § 7482, and therefore will not consider arguments pertaining to the March 16, 1998 decision.
The decisive issue on this summary judgment determination is whether certain payments, alleged to have been made by defendant, were properly credited to defendant's tax liability for various tax years, or whether those amounts should have been first applied to defendant's liability for the 1978 tax year. The dispute involves five amounts: $9690.00, $7922.00, $5918.00, and $8070.58 are payments that defendant claims should be credited to his 1978 liability, and $20,000.00 is an overpayment made in 2001 which he similarly asserts should be credited to the 1978 tax year.
1. The Record Shows No Payment of $8,070.58
Before addressing the timeliness of these credits, it is necessary to consider whether defendant has established that each of the alleged payments were in fact made. Plaintiff concedes that defendant made payments of $9690.00, $7922.00, and $5918.00 on December 30, 1986, and had an overpayment of $20,000.00 for the 2001 tax year. There exists a dispute, however, as to whether defendant made a payment of $8070.58, which was not credited to his liability. Plaintiff's Form 4340 for tax years 1978, 1979, and 1980, does not list a credit for this amount, and viewed under the requisite presumption of correctness, defendant has the burden of establishing that plaintiff's calculations are erroneous. Geiselman, 961 F.2d at 6. Defendant claims that he remitted this amount to the IRS; however, he offers no proof of such — he has not produced a cancelled check or any other document evidencing a payment. Instead, defendant merely directs the court to an IRS computer printout on which this amount is recorded and states that it represents an overpayment. This printout, however, does not indicate that the $8,070.58 reflects an amount paid to the IRS by defendant, and defendant's mere assertion alone cannot support a finding that this amount was in fact paid. See United States v. Prince, 348 F.2d 746, 748 (2d Cir. 1965) (finding that mere conclusory statements are not sufficient to meet the burden of demonstrating that assessments are erroneous). In contrast, plaintiff argues that the $8,070.58 recorded on the printout in fact represents a balance due, and as evidence of the same, plaintiff offers a transcript of account showing that there was no overpayment on defendant's account in 1989. The transcript further shows that a net calculation of three amounts listed on the transcript between August and October 1991, leaves a balance due and owing of $8,070.58. Consequently, the record does not support a finding that defendant made an $8,070.58 payment, and plaintiff's failure to credit the same is presumed proper.
Government's Exhibit H shows, inter alia, three entries totaling a balance due of $8,070.58: August 12, 1991, -$21.71; October 7, 1991, -$8,730.51 dated October 7, 1991; and October 28, 1991, $681.64.
2. Application of the $9690.00, $7922.00, $5918.00, and $20,000.00 to Defendant's Liability
The pivotal issue on this motion, therefore, is whether plaintiff, when calculating defendant's liability, properly applied the $9690.00, $7922.00, $5918.00, and $20,000.00 to tax years 1978, 1979, 1980, and 1993, respectively. Defendant argues that plaintiff's calculation is inflated because the IRS failed to credit these amounts to his 1978 tax liability before applying the same to subsequent years, in violation of Revenue Ruling 73-305, Rev. Rul. 73-305, 1973-2 CB 43 before superseded by Rev. Proc. 2002-26, 2002-15 CB 746, and failed to credit these amounts first to the tax motivated portion of his 1978 liability before the ordinary liability pursuant to a 1994 letter of designation. Plaintiff argues that it credited these funds in the "best interest" of the Service, pursuant to Revenue Procedure 2002-26, Rev. Proc. 2002-26, 2002-15 CB 746, directing the court to IRS Form 4340 for tax years 1978, 1979, and 1980. The Certificate of Assessments and Payments attached to the IRS's Certificate of Official Record indicates that on December 30, 1986, defendant made a payment to the IRS which was applied as follows: for the year 1978, defendant received an advance deficiency payment credit of $4,161.00 and designated interest payment credit of $5,530.00, totaling $9,691.00 (rounded up to the nearest dollar); for the year 1979, defendant received an advance deficiency payment credit of $3,577.00 and designated interest payment credit of $4,345.00, totaling $7,922.00; and for the year 1980, defendant received an advance deficiency payment credit of $2,923.00 and designated interest payment credit of $2,995.00, totaling $5,918.00. By applying the amounts as it did, plaintiff argues that it acted properly and its calculation of defendant's liability is correct.
a. Revenue Procedure 2002-26 Governs this Case
This Court must determine which Revenue Ruling controls this case — Revenue Ruling 73-305, which was in effect in 1978, or Revenue Procedure 2002-26, which superceded 73-305. Section 7805(b) of the Internal Revenue Code confers broad authority upon the Secretary, (and in turn his delegate the Commission), to make tax rulings and regulations retroactive. Section 7805(b) provides:
The Secretary may prescribe the extent, if any, to which any ruling or regulation, relating to the internal revenue laws, shall be applied without retroactive effect.Id. In Revenue Procedure 68-37, 1968-2 Cum.Bull. 926 (superseded on other grounds), it was established that every revenue ruling is to be accorded retroactive treatment unless some specific statement of non-retroactivity is included by the Commissioner. The Supreme Court has gone so far, in recognizing these principals, to hold that the IRS may give retroactive application to a revenue ruling that reversed its previous acquiescence in a decision of the Tax Court. Dixon v. United States, 381 U.S. 68, 78-80 (1965).
In relevant part to the instant motion, Revenue Ruling 73-305, which was in effect during tax year 1978 and which defendant asserts is the rule governing this case, states:
A partial payment of assessed tax, penalty, and interest made by a cash method taxpayer with directions as to its application will be so applied. A partial payment on assessed deficiencies, or on deficiencies mutually agreed to but unassessed, received without instructions for its application will be applied to tax, penalty, and interest in that order, starting with the earliest period.Rev. Rul. 73-305, 1973-3 C.B. 43 before superseded by Rev. Proc. 2002-26, 2002-15 CB 746 (emphasis added). Revenue Ruling 73-305 was superceded, however, by Revenue Procedure 2002-26, which states in relevant part:
If additional taxes, penalty, and interest for one or more taxable periods have been assessed against a taxpayer . . . at the time the taxpayer voluntarily tenders a partial payment that is accepted by the Service and the taxpayer provides specific written directions as to the application of the payment, the Service will apply the payment in accordance with those directions. If . . . the taxpayer does not provide specific written directions as to the application of payment, the Service will apply the payment to periods in the order of priority that the Service determines will serve its best interest.Rev. Proc. 2002-26, 2002-15 C.B. 746 (emphasis added). And although Revenue Procedure 2002-26 does not expressly state whether it is to have retroactive effect, in the absence of limitations imposed by statute or the IRS, such rulings generally are entitled to retroactive application. The language of Internal Revenue Code 7805(b), 26 U.S.C.A. 7805(b) (1970), presumes that these agency rulings will be given retroactive effect unless otherwise specified. See also Wilson v. United States, 588 F.2d 1168 (6th Cir. 1978); Anderson Clayton Company v. United States, 562 F.2d 972 (5th Cir. 1977), cert. Denied, 436 U.S. 944, 98 S.Ct. 2845, 56 L.Ed.2d 785 (1978). Clearly, therefore, Revenue Ruling 73-305 does not apply to the instant case and the governing rule, having expressly superceded 73-305, is that stated in Revenue Procedure 2002-26.
b. Defendants April 5, 1994 Letter of Designation Does Not Apply to His $9690, $7922, $5918 nor to the $20,000 Overpayment
In applying defendant's credits in the best interest of the Service, plaintiff acted properly, but only if it can show that defendant did not effectively designate how such credits were to be applied to his liability. See Rev. Proc. 2002-26, 2002-15 C.B. 746 (where a taxpayer provides written directions as to the application of a voluntary partial payment at the time of payment, the Service will apply the payment in accordance with those directions). Specifically, this court must now consider whether defendant's letter dated April 5, 1994, directing the IRS to credit all previous and future payments to the tax motivated portion of his 1978 liability before any ordinary tax and interest assessment or any subsequent year, was an effective method of designating his payments of $9,690.00, $7922.00, and $5918.00 in 1986 and his $20,000.00 overpayment in 2001.
"When a taxpayer makes voluntary payments to the IRS, he [or she] has a right to direct the application of [those] payments to whatever type of liability he chooses." Muntwyler v. United States, 703 F.2d 1030, 1032 (7th Cir. 1983) (citing O'Dell v. United States, 326 F.2d 451, 456 (10th Cir. 1964)). "If the taxpayer makes a voluntary payment without directing the application of the fund, the IRS may make whatever allocation it chooses." Muntwyler, 703 F.2d at 1032 (citing Liddon v. United States, 488 F.2d 509, 513 (5th Cir. 1971), cert denied, 406 U.S. 918, 92 S.Ct. 1769, 32 L.Ed.2d 117 (1972)). See also Schoen v. United States, 582 F.Supp. 47 (N.D.Ill. 1984), vacated on other grounds, 759 F.2d 614 (7th Cir. 1985) (attempt to designate application of tax payment was not timely where designation was made seven days after payment). Therefore, if defendant properly designated his choice of how his payments were to be applied, the Service was bound to follow his instruction. His attempted designation, however, fails because it was not timely. See Hirsch v. United States, 396 F.Supp. 170, 172-73 (N.D.Ohio 1975) (designation following payment by 1-2 months held ineffective).
The right of the taxpayer to designate allocation of a payment is contractual in nature, the designation being viewed as a condition of payment. But the "contract" is complete when the payment is "accepted" by the Service. The taxpayer cannot unilaterally modify the terms of payment. Here, defendant's letter, dated April 5, 1994, purports to specifically designate payments to the tax motivated portion of his 1978 liability before crediting any amount to the ordinary tax and interest assessment; however, the payments at issue on this motion of $9,690.00, $7922.00, and $5918.00 were made on December 30, 1986, prior to defendant's letter. Consequently, the April 5, 1994 letter cannot serve to effectively designate these amounts to defendant's tax motivated interest liability, and plaintiff's application of these amounts in a manner serving the best interests of the Service, namely to tax years 1978, 1979, and 1980, was proper.
The analysis, however, is somewhat different for the $20,000.00 overpayment of the 2001 tax year, which the IRS applied to defendant's 1993 tax liability. Pursuant to Section 6402(a) of the Internal Revenue Code, the IRS is authorized to credit an overpayment against any tax liability of a taxpayer. In relevant part, Section 6402(a) states:
In the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall, subject to subsections (c) and (d), refund any balance to such person.26 U.S.C.A. § 6402(a); see also 26 U.S.C.A. § 6401(b)(1) (defining tax overpayment). Under the voluntary payment rule, when a taxpayer who has outstanding tax liabilities voluntarily makes a payment, the IRS usually will honor a taxpayer's request as to how to apply that payment. However, partial payments of delinquent tax debts are to be distinguished from overpayments, which are governed by the clear rule stated in Section 6402(a). Stated another way, the voluntary payment rule applies when a taxpayer voluntarily makes a partial payment on his tax liabilities and designates at the time of payment the liability that is to be credited; conversely, Section 6402(a) and not the voluntary payment rule, applies to money that comes into the hands of the government because of overpayment of a particular liability. See generally United States v. Ryan, 64 F.3d 1516, 1522-23 (11th Cir. 1995).
The Treasury Regulations promulgated under Section 6402(a) demonstrate that the IRS does not apply the voluntary payment rule to overpayments. Mirroring the statute, the regulations authorized the IRS to credit "any overpayment of tax" against "any outstanding liability for any tax. . . ." 26 C.F.R. § 301.6402-1 (1994). The Regulations do provide that a taxpayer can instruct the IRS to credit his overpayment against the estimated tax for the taxable year immediately succeeding the overpayment. 26 C.F.R. § 301-6402-3(a)(5) (1994). However, the regulations also provide that the IRS may override that election and apply the overpayment against "any outstanding liability for any tax. . . ." 26 C.F.R. § 301-6402-3(a)(6)(I) (1994). Moreover, the Second Circuit in Kalb v. United States rejected the argument that because a tax overpayment was voluntary, the IRS was bound to comply with the taxpayer's direction about how to apply that payment. Kalb v. United States, 505 F.2d 506, 509 (2d Cir. 1974), cert. denied, 421 U.S. 979, 95 S.Ct. 1981, 44 L.Ed.2d 471 (1975). The Court held that Section 6402(a) "clearly gives the IRS discretion to apply a refund to `any liability' of the taxpayer." Id.
Clearly, defendant's right to designate payments does not extend to overpayments, and his April 5, 1994 letter, therefore, cannot effectively designate the $20,000.00 overpayment to the tax motivated portion of his 1978 tax year liability. Moreover, plaintiff's application of the same to defendant's 1993 liability falls within its authority to credit overpayments to any liability for any tax year and was therefore proper.
This Court notes that plaintiff has offered to recommend that the $20,000.00 overpayment be credited to the 1978 tax year and that defendant's tax liability, including interest and penalties, be recalculated accordingly if defendant so designates. Plaintiff cautions defendant, however, that such designation will affect the tax liability of defendant's former spouse, Madeline Lavi. Ms. Lavi received innocent spouse relief for tax year 1978, and is not subject to liability for that year; however, Ms. Lavi did not obtain the same for tax year 1993, to which the $20,000.00 overpayment was credited. As a result, if defendant chooses to specifically designate this overpayment to his 1978 liability, the 1993 tax year liability will accordingly increase, thereby reducing the taxes paid in 1993 by the same amount and subjecting Ms. Lavi to additional liability for that year.
In sum, defendant has failed to show that plaintiff's application of his payments and overpayment was erroneous. Plaintiff has established that, as a matter of law, it properly applied payments of $9690.00, $7922.00, and $5918.00, and an overpayment of $20,000.00 to tax years 1978, 1979, 1980, and 1993, respectively. Moreover, plaintiff's failure to credit $8070.58 amount to defendant's liability was also proper since defendant has offered no evidence that he made such a payment. Accordingly, I respectfully recommend that defendant's motion for summary judgment be denied, and that plaintiff's cross motion for summary judgment be granted.
CONCLUSION
Based upon the foregoing, I respectfully recommend that defendant's motion for summary judgment be denied, and that plaintiff's cross motion for summary judgment be granted.
The federal income tax assessment made against defendant for the 1978 tax year should be reduced to judgment against defendant. However, pursuant to plaintiff's offer to recommend that defendant's $20,000.00 overpayment be applied to the 1978 tax year rather than the 1993 tax year, the parties should be given 30 days to reach an agreement as to the same. Entry of judgment, therefore, should be stayed for 45 days in order for plaintiff to recalculate defendant's liability, including statutory interest and penalties, up to the date of this Report and Recommendation and in accordance with the parties stipulation regarding application of the $20,000.00 overpayment, at which time judgment for the recalculated amount should be entered.
Any objections to this Report and Recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within ten (10) days of receipt of this Report. Failure to file objections within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. § 636(b)(1) (2000); Fed.R.Civ.P. 72, 6(a), 6(e).