Opinion
Case No. 01-C-787
August 21, 2003
DECISION AND ORDER
The United States filed this case on August 3, 2001, seeking to reduce federal tax assessments to judgment and foreclose federal tax liens against personal property. The United States also seeks to assess a penalty equal to 50% of his underpayment of taxes against McCarville for civil fraud. The case is presently before me on the United States' motion for summary judgment against the main defendant, Timothy McCarville.
I conclude that there is no dispute as to material fact regarding the assessment of taxes owed by McCarville and the tax liens against his personal property and therefore grant the government's motion as to those issues. As to the civil fraud penalty, however, I conclude that a factual dispute does exist and therefore deny summary judgment as to that issue.
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The moving party has the initial burden of demonstrating that it is entitled to summary judgment. Id. at 323. As a plaintiff moving for summary judgment, the United States must show that the evidence supporting its claims is so compelling that no reasonable jury could return a verdict for the defendant. See Select Creations, Inc. v. Paliafito Am., Inc., 911 F. Supp. 1130, 1149 (E.D. Wis. 1995); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). Once this burden is met, McCarville must designate specific facts to defend the cause of action, showing that there is a genuine issue of material fact for trial. Celotex, 477 U.S. at 322-24. There must be a genuine issue of material fact for the case to go to trial. Anderson, 477 U.S. at 247-48. "Material" means that the factual dispute must be outcome-determinative under governing law. Contreras v. City of Chicago, 119 F.3d 1286, 1291 (7th Cir. 1997). A "genuine" issue of material fact requires specific and sufficient evidence that, if believed by a jury, would actually support a verdict in a party's favor. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 249. Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Matsushita Elec. Indus, Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
In analyzing whether a question of fact exists, the court construes the evidence in the light most favorable to the party opposing the motion. Anderson, 477 U.S. at 255.
The United States filed its motion for summary judgment on April 2, 2003, together with several affidavits. Six days later McCarville, who represents himself, filed an "objection" to the motion for summary judgment; no evidence was presented by McCarville. Thinking perhaps that this was McCarville's brief in response to the motion, the United States filed a reply brief. Notwithstanding the local rules, which provide for only one response brief, Civil L.R. 7.1(c), McCarville also filed an "opposition" to the motion for summary judgment on May 1, again failing to submit any evidence. The United States filed a reply to McCarville's second brief as well.
Because McCarville proceeds pro se, I have been generous and have considered both briefs filed in response to the motion for summary judgment.
Then, because McCarville (as a pro se litigant) had not been properly warned about summary judgment procedures and the need for evidence, I gave McCarville those warnings and allowed him to file evidentiary materials if he desired. On July 7, he filed a "response" to the summary judgment motion. The first two pages are attested to under penalty of perjury. In other words, the first two pages of the response are verified, constituting some evidence. Almost everything McCarville says in those two pages, though, cannot be taken as facts in his favor. Other than his statement that for the years at issue he worked as a steamfitter, he merely sets forth his legal argument and legal conclusions. (See, e.g., Pl.'s Resp. to Gov't Motion for Summ. J. at 2 ("The law is a witness to the fact that I am not liable for a federal income tax.").) "Self-serving assertions without factual support in the record will not defeat a motion for summary judgment." Jones v. Merchants Nat'l Bank Trust Co., 42 F.3d 1054, 1058 (7th Cir. 1994).
I. UNDISPUTED FACTS
McCarville and his wife Evelyn reside in Iola, Waupaca County, Wisconsin. During the years for which the United States seeks recovery for unpaid taxes, McCarville worked as a steamfitter.
In February 1982, McCarville signed and filed a 1981 federal income tax return, jointly with his wife Evelyn. Federal income tax of about $2500 was withheld from his wages in 1 981. In 1 982, 1 983, and 1 984, however, McCarville filed form W-4 with his employers, claiming that he did not owe any federal income tax for the prior year and that he did not expect to owe any federal income tax in each then-present year. In 1 982, 1 983, and 1 984, McCarville claimed he was exempt from the federal income tax withholding requirements. In 1984, no federal income tax was withheld form McCarville's wages.
McCarville did not file timely form 1040 income tax returns for 1982 through 1 987. As a result, the Internal Revenue Service prepared substitutes for income tax returns for those years. The IRS determined that McCarville had federal income tax liability for 1982 through 1987 based on third-party information reported to the IRS (for example, employer W-2 reports of wages paid). A civil income tax audit for 1 982 to 1984 began in September 1985, but it was suspended in June 1986 due to a criminal investigation. In October 1988, McCarville was convicted of failing to file federal income tax returns for 1984 and 1985 and sentenced to a term of imprisonment. In 1 989, the civil income tax audit resumed for years 1 982 to 1 984, and another audit began for 1985 to 1987.
On February 27, 1990, McCarville filed late income tax returns for 1983 through 1988. Thereafter, a delegate of the Secretary of the Treasury assessed McCarville for unpaid federal income taxes and related interest and other additions, based on the substitute returns. The assessments were made on May 30, 1990, for tax years 1986 and 1987, for unpaid taxes of about $18,000 and $15,000 respectively (exclusive of interest); September 10, 1990, for tax year 1985, for unpaid taxes of about $18,000 (exclusive of interest); and March 15, 1991, for tax years 1982, 1983, and 1984, for unpaid taxes of about $13,000, $8,000, and $76,000 respectively (exclusive of interest and additions).
The United States did not seem to have these returns until McCarville provided the United States during discovery with copies stamped "received" by the IRS on February 27, 1 990. Taking the facts in McCarville's favor, those returns were indeed filed on February 27, 1990. No "received"-stamped copy was provided regarding 1 982, though, and McCarville has not sworn in his summary judgment filings that it was ever filed with the IRS.
The 1988 return was filed late on February 13, 1990. On April 23, 1990, a delegate of the Secretary of the Treasury assessed McCarville for unpaid federal income taxes and additions for 1988, in the amount of about $3,000 (exclusive of interest).
A delegate of the Secretary of the Treasury gave notice and demand to McCarville for the payment of federal income taxes, penalties, and interest for tax years 1982 through 1988. Despite the notices and demands, though, the assessments remain due and owing.
After discovery in this case resulted in the United States being provided with McCarville's copies the federal income tax returns for 1982 through 1988 and some W-2 forms, the IRS adjusted the tax liabilities assessed and some penalties against McCarville. As adjusted, the assessments, with interest and additions through March 10, 2003, are as follows:
Tax Assessment Amount Accrued Total Year Date Assessed, Interest and Liability Unpaid Balance Additions
1982 3/15/91 $26,078.44 $0.00 $26,078.44
1983 3/15/91 $20,009.59 $0.00 $20,009.59
1984 3/15/91 $79,953.54 $0.00 $79,953.54
1985 9/10/90 $16,931.64 $31,391.23 $48,322.87
1986 5/30/90 $17,924.10 $35,157.19 $53,081.29
1987 5/30/90 $15,355.07 $30,362.66 $45,717.73
1988 4/23/90 $3,008.93 $5,824.79 $8,833.72
According to the United States, the total liability (adding up the last column) owed as of March 10, 2003, was $281,997.18.
The IRS has an "integrated data retrieval system" (IDRS). IDRS transcripts are also known as Certificates of Assessment and Payments. The United States has submitted IDRS transcripts regarding the amounts McCarville owes. (Block Decl. ¶¶ 9, 17, Ex. H1-H7, J1-J7.) McCarville has presented no evidence to contradict any of the amounts the United States indicates is owed.
Notices of federal tax lien were filed against McCarville with the Register of Deeds Office for Waupaca County, Wisconsin as follows:
Tax Year Dates Notices of Tax Filed Lien
1982, 1983, 1984 6/27/91 and 2/12/01
1985, 1986, 1987 1/7/91 and 5/5/00
1988 7/3/90 and 1 2/24/02
McCarville submitted to the IRS two offers to compromise his federal income tax liabilities. The first offer in compromise (OIC) covered his liability for tax years 1983 to 1988. The QIC was accepted for processing by the IRS on January 28 1991, and was rejected by the IRS on June 9, 1 992. The form QIC that McCarville signed included a waiver provision by which he agreed to a tolling of the statute of limitations while the first OIC was under consideration, plus one year afterward.
Although a copy of the first OIC no longer exists (it was apparently destroyed after six years), the United States has presented evidence that the form at that time contained the waiver provision and that it would not have accepted the OIC if the waiver had not been made. McCarville has produced no contrary evidence.
McCarville's second QIC covered tax liability for 1982 to 1988 and was accepted for processing on August 1, 2000, and rejected by the IBS on March 16, 2001.
The U.A. Local Union Chapter 400 (UA) is located in Appleton, Wisconsin. Its members participate in the "Money Purchase Plan of Local 400 and Mechanical Contractors Association of Central Wisconsin" (the "Money Purchase Plan") pursuant to collective bargaining agreements between the UA and various employers represented by the Mechanical Contractors Association of Central Wisconsin, Inc. Defendant Bank One is the trustee of the Money Purchase Plan. Defendant Administrative Committee is the sponsor and plan administrator of the Money Purchase Plan. The Money Purchase Plan is an employee benefit plan under the Employee Retirement Income Security Act.
McCarville is a retired member of the UA and has been a member since 1966. An individual account under the Money Purchase Plan was established on his behalf. By virtue of employers' contributions to the Money Purchase Plan made on his behalf, McCarville accrued certain benefits under the Money Purchase Plan starting in 1 985. McCarville has a vested interest in the Money Purchase Plan. Upon retirement, McCarville is entitled to receive pension payments in the form of a qualified joint survivor annuity.
On February 18, 2002, McCarville applied for normal retirement benefits and asked that he be paid $2,000 per month. He will receive benefits as long as there is an account balance on his behalf under the Money Purchase Plan. His wife Evelyn consented to this election of benefits, waived any interest in a joint survivor annuity, and is the primary beneficiary for any death benefit. As of December 31, 2000, the vested account balance was $165,000.58, with a lump sum value of $197,193.29.
The proposed finding of fact submitted by the United States on this point indicates an amount of $197,193.99, but the exhibit itself, Choudoir Decl., Ex. F, indicates $197,193.29.
II. ANALYSIS
Over the course of this litigation McCarville filed numerous motions to dismiss the case on jurisdictional grounds. He argued that this court has no jurisdiction over him because he is not liable for income taxes. He raises those arguments again in response to the summary judgment motion. In addition, McCarville argues that the statute of limitations has expired for the claims of the United States in this case. I deal with the statute of limitations issue first, as it would be dispositive if McCarville is right.A. Statute of Limitations
The statute of limitations is an affirmative defense, Fed.R.Civ.P. 8(c), for which McCarville bears the burden of proof, see Law v. Medco Research, Inc., 113 F.3d 781, 786 (7th Cir. 1997).
The IRS has three years after the filing of a "return" within which to assess the amount of the tax. 26 U.S.C. § 6501 (a). '[R]eturn' means the return required to be filed by the taxpayer and does not include any return filed by a person from whom a taxpayer has received income. Id. When a person fails to file his return as required, the Secretary of the Treasury "shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise." 26 U.S.C. § 6020(b)(1). (For example, employers are required to report to the IBS the wages paid to employees and the amount withheld for federal income tax.) But the execution of a substitute return by the Secretary pursuant to § 6020(b) does not start the running of the statute of limitations period for assessment and collection. § 6501(b)(3).
If the IRS has assessed the amount of the tax within the permitted three year period, the tax may be collected by a proceeding in court filed within ten years after the assessment of the tax. 26 U.S.C. § 6502(a)(1).
The period provided by § 6502(a)(1) was expanded from six years to ten years, effective for taxes assessed after November 5, 1990, and taxes assessed before that date if the prior six-year period had not expired by November 5, 1990. Omnibus Budget Reconciliation Act of 1990, Pub.L. 101-508 § 11317(a)(1), (c), 104 Stat. 1 388. As the assessments against McCarville occurred in 1 990 and 1991, the ten year period applies for all tax years at issue in this case.
The Secretary has the authority to compromise any civil case arising under the Internal Revenue Code prior to referral for prosecution of such a case in court. 26 U.S.C. § 7122(a). An QIC must be submitted to the IRS on and according to its forms in order to be accepted. (See Third Kosmatka Decl, Ex. EE.) Generally, when an OIC is accepted for processing by the IRS, the running of the statute of limitations is suspended at least while the OIC is pending. See 26 U.S.C. § 6331 (1)(5), (k)(1). An OIC is pending beginning on the date the Secretary accepts such offer for processing. § 6331(k)(1).
For an OIC rejected before January 1, 2000, the running of the statute of limitations was suspended during the period that an OIC was pending with the Secretary plus one year. See, e.g., Treas. Reg. § 301.7122-1(f) (1960). Consideration of an OIC was conditioned on the taxpayer executing a waiver of the statute of limitations for that period. Id.; United States v. Harris Jr. Sav. Bank, 390 F.2d 285, 288 (7th Cir. 1968). (See also Third Kosmatka Decl., Ex. EE at 1.) For an OIC rejected on or after January 1, 2000, the running of the statute of limitations was to be suspended during the period that an OIC was pending plus thirty days. See § 6331(1)(5), (k)(1) (1998). However, as of December 21, 2000, Congress eliminated the suspension of the statute of limitations during the pendency of an OIC. Community Renewal Tax Relief Act of 2000, Pub.L. 106-554 App. G, § 313(b)(3), 114 Stat. 2763. (See also the discussion in PI's Reply at 9-1 0.)
McCarville argues that the United States has missed the statute of limitations because it is now 2003 and the tax years at issue were fifteen to twenty years ago. But the date of filing (in this case August 3, 2001) rather than the current date is the dispositive one for statute of limitations purposes. And McCarville's contention does not address the specific statute of limitations provisions of the tax code. If the United States filed its complaint within the time period allowed by the statutes, the action is not barred.
McCarville also argues that the dates upon which the statute of limitations started running for the various tax years were the dates his employer filed W-2s regarding the amounts McCarville was paid. McCarville cites 26 U.S.C. § 6103(b)(1)-(2) as support for his argument. Section 6103(b)(1) provides a definition of "return" that includes any tax return required by and filed with the Secretary by or on behalf of a person. According to McCarville, his employer's W-2s constituted returns filed on his behalf, in lieu of form 1040. Therefore, the assessments for tax years 1982 through 1 986 were all outside the three year period when made in 1 990 and 1 991.
Even assuming that a W-2 would constitute a return under the definition in § 6103(b), that subsection itself states that the definition McCarville cites applies only to § 6103, which governs confidentiality and disclosure of tax returns and return information. McCarville's contention flies in the face of § 6501(a), which defines "return" for purposes of the starting of the limitations period as the return required to be filed by McCarville, not his employer. That "return" is the return on the form described in 26 U.S.C. § 6011 and Treas. Reg. § 1.6012-1(a)(6) (describing 1040 and 1040A). The filing of a W-2 does not constitute the filing of a tax return for purposes of the statute of limitations. Bachner v. Comm'r, 81 F.3d 1274, 1279-81 (3d Cir. 1996); see United States v. Birkenstock, 823 F.2d 1026, 1030 (7th Cir. 1987). The substitute returns filed by the Secretary do not start the period, either. § 6501(b)(3).
McCarville does not provide evidence contradicting, nor does he even dispute, the calculations proffered by the United States in the Declaration of Pat Kosmatka, filed April 2, 2003, regarding the periods during which the OICs were pending and their effect on the statute of limitations dates. Thus, those calculations are taken as undisputed.
He does contend that the IPS Restructuring and Reform Act of 1998 (RRA) eliminated any ability for a taxpayer to agree to an extension of the statute of limitations. The portions of the law that he cites, though, appear to apply to an installment agreement, which both parties here agree they did not have. The RRA did amend § 6502 by limiting the IRS's ability to secure agreements from taxpayers to extend the statutory period for collection, but the revision, see Pub.L. 105-206, 11 2 Stat. 685, even if applicable to OICs, cannot affect the validity of the OIC waiver McCarville signed back in 1991.
McCarville did not file any return for 1 982, so the statute of limitations period did not commence (and thus could not have expired) before the United States assessed taxes on March 15, 1991. McCarville filed his returns for 1983 through 1 987 in February 1990, so the three-year statute of limitations period had not expired when the United States assessed the taxes on March 15, 1991 (1982-1984), September 10, 1990 (1985), and May 30, 1990 (1986-1987). McCarville filed his return for 1988 on February 13, 1990. The United States then had three years to assess the taxes, which it did within about two months, on April 23, 1990.
Based upon these assessment dates, the United States then initially had ten years from each assessment date (March 15, 2001, September 10, 2000, and May 30, 2000, and April 23, 2000) to file this case, pursuant to § 6502. An additional two years, four months, and eleven days are added on, though, for 1985 through 1 988 for the period of time during which McCarville's first OIC was pending (January 28, 1991, to June 9, 1992 — one year, four months, eleven days) and for one year afterward. Because the assessments for 1983 and 1984 were not made until the first OIC was already pending, the tolled time runs only from the assessment date of March 15, 1991, meaning that an additional one year, two months, and twenty-four days, plus one year, are added. An additional four months and twenty days are added on for 1982 through 1988 for the period of time during which McCarville's second OIC was pending from August 1, 2000, to December 21, 2000, the effective date of Congress' elimination of the provision suspending the statute of limitations during the pendency of an OIC.
The United States thus had to file this case by the times indicated in the following table.
Date Years Tolling Tolling Date
Tax Assessment Plus Ten OIC 1 OIC 2 New Statute Year Return Filed of Limitations 1982 2/27/90 3/15/91 3/15/01 4m, 20d 8/4/01 1983 2/27/90 3/15/91 3/15/01 2y, 2m, 24d 4m, 20d 10/28/03 1984 2/27/90 3/15/91 3/15/01 2y, 4m, 11d 4m, 20d 10/28/03 1985 2/27/90 9/10/90 9/10/00 2y, 4m, 11d 4m, 20d 6/10/03 1986 2/27/90 5/30/00 5/30/00 2y, 4m, 11d 4m, 20d 3/3/03 1987 2/27/90 5/30/90 5/30/00 2y, 4m, 11d 4m, 20d 3/3/03 1988 2/13/90 4/23/90 4/23/00 2y, 4m, 11d 4m, 20d 1/23/03 From the above table, it appears the only tax year for which the United States was in danger of missing the statute of limitations was 1 982. The case was filed one day before the limitations period expired even for that year. It therefore follows that McCarville's statute of limitations defense fails.McCarville contends that because of the IRS's delays in assessing and prosecuting his tax liability, the amount due has grown substantially. He provides no authority, though, for any equitable argument around Congressional statutes setting forth the statute of limitations periods. Moreover, he ignores the fact that if he did not have money withheld from his paychecks, he himself received the benefit from those funds all these years. I therefore reject this argument as well.
B. Liability for Tax
According to McCarville, he cannot be considered a "taxpayer" because he merely exercised his inalienable right to work as a steamfitter — an occupation he says was lawful and innocent and a common-law job. (See, e.g., Def's Objection to Summ. J. at 1 ("I still feel that applying the income tax against our constitutionally secured right to work is an abridgement of this sacred right.").) McCarville contends that no statute subjects him to tax liability; he often repeats his mantra of "NO STATUTE-NO JURISDICTION!" (See, e.g., Def.'s Opp'n to Summ. J., Ex. 1, Ex. 2 at 1.) He believes that the Internal Revenue Code is not positive law and does not subject him to tax liability. And even under the Internal Revenue Code, he says, federal taxes are due only from federal employees and corporate officers and those who voluntarily subject themselves to internal revenue laws.
I addressed these "jurisdictional" arguments previously and found them to be without merit. In short, the Internal Revenue Code is positive law that applies to McCarville, McCarville cannot declare himself to be outside the scope of the internal revenue laws, and although he has the right to work at the occupation of his choosing, taxes can be imposed on his income. See Peth v. Breitzmann, 611 F. Supp. 50, 53, 56 (E.D. Wis. 1985) (Reynolds, J.) ("For once and for all, wages are taxable income." "No reasonable person could seriously think that, for example, the revenue laws can be avoided, and the government's tax collection efforts can be brought to a standstill, by the contention that wages are not income."). Moreover, this court has jurisdiction over this case, as it involves federal law, and federal income taxation in particular. See 26 U.S.C. § 7402; 28 U.S.C. § 1340, 1345.
1. Liability for Assessed Taxes
Other than his jurisdictional and statute of limitations arguments, McCarville has not really argued any other defense to liability for assessed taxes, so I can assume he has none. In any event, the United States has established that no reasonable jury could find for McCarville on this issue.
Federal tax assessments are presumptively correct. Advo Delta Corp. Canada Ltd. v. United States, 540 F.2d 258, 262 (7th Cir. 1976). Once the United States puts forth evidence that federal tax assessments have been made and balances are due, a prima facie case of tax liability has been established and the burden shifts to the taxpayer to refute it. Id.; accord Pittman v. Comm'r, 100 F.3d 1308, 1313 (7th Cir. 1996); United States v. Stonehill, 702 F.2d 1288, 1293-94 (9th Cir. 1983). Certificates of Assessments and Payments carry a presumption of validity and are sufficient evidence to show that assessments were made against a taxpayer, in accordance with statutory and regulatory requirements. Hefti v. IRS, 8 F.3d 1169, 1172 (7th Cir. 1993); Long v. United States, 972 F.2d 1174, 1181 (10th Cir. 1992). To rebut the presumption of correctness, the taxpayer must show that the assessments are incorrect; he cannot meet his burden by simply denying liability generally. Advo Delta Corp., 540 F.2d at 262. The United States has submitted certified Certificates of Assessments and Payments reflecting adjusted outstanding federal income tax assessments against McCarville for 1982 through 1988, with a total amount due as of March 10, 2003, of $281,997.18.
The burden of proof provision of 26 U.S.C. § 7491 does not apply here, as examination of McCarville's tax liability commenced before the effective date of that provision. RRA, Pub. Law 105-206 § 300(c), 112 Stat. 685.
McCarville has filed nothing that draws into dispute the evidence proffered by the United States. McCarville implicitly admits that he did not file returns or pay the amount of taxes owed. He submits nothing even suggesting that the evidence of the United States regarding the assessments is incorrect. His arguments regarding the court's jurisdiction do not rebut the prima facie case established by the United States. No rational jury could fail to find for the United States on this issue.
Summary judgment will be granted for the United States on the matter of reducing the assessed amounts to judgment.
2. Liability for Fraud Penalty
In addition, the United States seeks to reduce to judgment the civil fraud penalties assessed against McCarville under 26 U.S.C. § 6653(b) for 1982, 1983, and 1984. Section 6653(b) provides that "if any part of the underpayment . . . of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 50 percent of the underpayment." Although the certificate of assessments and payments is proof of the assessment, the United States admits that the burden of proof does not shift to the taxpayer on this issue. The United States admits that it has the burden to prove fraud by clear and convincing evidence. (Pl.'s Mem. in Supp. at 6-7.) See a/so Pittman, 100 F.3d at 1319. To prove fraud, the United States needs to establish that a person intended to evade taxes that he knew or believed were owed. Id. The United States does not need to prove the precise amount of the underpayment resulting from fraud, but only that some part of the underpayment is attributable to fraud. Id.
Since the years in issue, § 6653 has been amended and this provision was deleted.
In support of its motion, the United States points to a several pieces of evidence from which a factfinder could reasonably conclude that McCarville's underpayment of his taxes for the years in question was due to fraud. While not conclusive, failure to file tax returns for an extended period of time is persuasive circumstantial evidence of an intent to defraud the United States. Marsellus v. Comm'r, 544 F.2d 883, 885 (5th Cir. 1977); Stoltzfus v. United States, 398 F.2d 1002, 1005 (3d Cir. 1968); Cast/Ho v. Comm'r, 84 T.C. 405, 409 (1985). Here, McCarville admits he failed to file returns for seven years. The United States has provided evidence that McCarville did file a 1 981 income tax return, establishing that McCarville knew about the need and had the ability to file. In addition, McCarville was convicted for willful failure to file a tax return for 1984 and thus is collaterally estopped from contesting that his failure to file for that year was willful. Castillo, 84 T.C. at 409-10.
But a willful failure to file an income tax return is not the same as fraud. Fraud denotes an intent to obtain an advantage by deceiving another with material misstatements of fact. McCarville claims that he is not liable for the taxes assessed against him. He claims he ceased filing returns after he "realized that [he] was a person not liable for the tax. . . ." (Def.'s Obj'n to Summ. J. at 4; Def.'s Opp'n to Summ. J., Ex. 10 at 1.)
Filing false W-4 forms also indicates an intent to evade the collection of taxes. Granado v. Comm'r, 792 F.2d 91, 92 (7th Cir. 1986); Castillo, 84 T.C. at 410. In Granado, the Seventh Circuit upheld the assessment of civil fraud penalties under § 6653(b), where the taxpayer filed false W-4 forms and failed to file tax returns. McCarville filed W-4 forms during 1 982, 1 983, and 1 984, in which he claimed to be exempt and avoid the withholding of federal income tax from he wages, when he was not so exempt. His W-r for 1 982 indicated that he had not paid taxes in 1 981, which he had. Under Granado, McCarville's false statements on his W-4s would support a finding of fraud under § 6653(b).
However, McCarville argues that his employer required him to fill out the W-4s in order to be employed and that he checked the statements that he did not incur a tax liability in the previous years and did not expect liability in those current years because those statements "were the closest language to not subject to available." (Def.'s Opp'n to Summ. J. at 2-3.) In other words, McCarville argues that he filled out the W-4s as he did because he believed he was not subject to taxation at all, not because he intended to deceive the government. He contends that "[a]ny mistakes, if there were any, were inadvertant, not fraud." (Id. at 3.) McCarville's claim that he truly believes he does not owe income taxes constitutes evidence from which a factfinder could conclude that his underpayment was not due to fraud. His claim that any false statements in his W-4s were inadvertent and constitute mistakes likewise raises an issue of fact that is not easily or properly resolved on summary judgment. While these self-serving claims may seem incredible in the face of the other evidence the United States has highlighted, the record does not disclose McCarville's education or level of sophistication. I am unable to conclude as a matter of law that no rational jury could find his claims to be sincere. Accordingly, summary judgment will not be granted on this issue.
3. Validity of Federal Tax Liens
If a person liable for federal taxes fails to pay them after assessment, notice and demand, the amount of the unpaid taxes and any interest and penalties "shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person." 26 U.S.C. § 6321. "[A]ll property and rights to property" is "broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have. Stronger language could hardly have been selected to reveal a purpose to assure the collection of taxes." United States v. Nat'l Bank of Commerce, 472 U.S. 713, 719-20 (1985) (citation omitted) (internal quotation marks omitted). The federal tax lien arises at the time the tax is assessed; it continues until the liability is satisfied or becomes unenforceable by reason of lapse of time. 26 U.S.C. § 6322.
In the present case, the federal tax liens thus arose on the same dates as the unpaid taxes were assessed: March 15, 1991, for the liabilities for the 1982, 1 983, and 1984 tax years; September 10, 1990, for the liability for the 1985 tax year; May 30, 1990, for the liabilities for the 1986 and 1987 tax years; and April 23, 1990, for the liability for the 1988 tax year. McCarville provides no evidence to dispute that the United States gave proper notice and demanded payment of the assessment. As the liens reach "all property and rights to property," there can be no dispute whatsoever that the liens reach all of McCarville's right and property interest in the Money Purchase Plan.
Under 26 U.S.C. § 6323, the liens are valid against certain persons when a Notice of Federal Tax Lien is filed. Here, the notices of federal tax lien for 1 982 to 1 984 were filed on January 7, 1991, and timely refiled on February 1 2, 2001. The notices of federal tax lien for 1985 to 1 987 were filed on June 27, 1991, and timely refiled on May 5, 2000. The notice of federal tax lien for 1988 was filed on July 3, 1990, but lapsed. Another notice of federal tax lien for 1 988 was filed on December 24, 2002. The notices of federal tax liens were filed in Waupaca County, where McCarville resides.
On January 7, 1991, and June 27, 1991, the IBS perfected its lien against the pension plan and related benefits by filing a tax lien in the personal property records of Waupaca County. See 26 U.S.C. § 6323(f)(2)(B).
McCarville argues that the notices of federal tax liens are not certified as required by Wisconsin law and not properly signed. (See Def's Opp'n to Summ. J., Ex. 8.) The matter of federal tax liens is one of federal, not state, law, however. United States v. Union Cent. Life Ins. Co., 368 U.S. 291, 293-94 (1961); Kivel v. United States, 878 F.2d 301, 303 (9th Cir. 1989). Title 26 U.S.C. § 6323(f)(3) provides that the Secretary prescribes the form and content of the notices and that such notices shall be valid notwithstanding any other provision of law. Delegation authority to sign notices of tax liens is set out in IRS Delegation Order 196 (see Locke Deck, Ex.) and McCarville has provided no evidence contradicting the evidence of the United States that the IRS officers who authorized the notices at issue in this case were proper designees.
III. McCARVILLE'S COUNTERCLAIM
The United States seeks summary judgment on its claim as well as on McCarville's counterclaim seeking release of the tax liens. Because the United States has established upon undisputed facts that the tax liens are valid, summary judgment must be granted against McCarville on his counterclaim.
IV. CONCLUSION
Summary judgment must be granted against Timothy McCarville in favor of the United States. The United States has not, however, moved for summary judgment against the other defendants and has not dismissed its claims against Evelyn McCarville even though it indicated in its opening brief that it no longer seeks a money judgment against her. McCarville also filed a crossclaim, which must be addressed. Therefore, I will set a telephonic status conference call to discuss the resolution of the remainder of this case.
For the foregoing reasons, IT IS ORDERED that the motion for summary judgment filed by the United States against Timothy McCarville is granted in part and denied in part. The motion is denied as to the civil fraud penalties. In all other respects the motion of the United States for summary judgment is granted.
IT IS ORDERED that McCarville's counterclaim is dismissed.
IT IS ORDERED that a telephonic status conference will be held on September 19, 2003, at 9:30 a.m. to discuss further proceedings in the case.