The opinion of the court was delivered by: PATEL
Plaintiff Albert J. Miller ("Miller") brings this action against defendant United States of America ("Government") seeking: a) damages for failure to release a lien pursuant to 26 U.S.C. § 7432; b) reimbursement of attorneys' fees under 26 U.S.C. § 7430; and c) damages for unauthorized collection actions pursuant to 26 U.S.C. § 7433. The Government now moves for summary judgment on the section 7432 and 7433 claims. For the reasons discussed below, the Government's motion is DENIED.
This case concerns an Internal Revenue Service ("IRS") assessment and collection proceeding. Ordinarily, after the IRS has determined that a taxpayer has an income tax deficiency, the Commissioner must mail a Notice of Deficiency to the taxpayer before the deficiency is assessed or any collection action taken against the taxpayer.
26 U.S.C. § 6212(a).
The taxpayer has ninety days after the notice is mailed to file a petition in the United States Tax Court for a redetermination of the deficiency. Section 6213(a). Within this ninety-day period, the IRS is prohibited from assessing the proposed deficiency or taking any action to collect the tax. Id. Additionally, if the taxpayer chooses to file a petition with the United States Tax Court, the IRS is forbidden from assessing or collecting the deficiency at issue until the tax court's decision becomes final. Id.
Miller was audited by the IRS in the early and mid 1980's for certain limited partnerships he had formed. In 1987, the audit was concluded and the IRS (via the auditing agent, Jon A. Tamaki) recommended that approximately $ 16 million in federal withholding tax deficiencies and penalties be assessed against Miller. Tamaki Decl. paras. 1-7.
Agent Tamaki's audit report, completed in August 1987, was then lost for two years. Upon its rediscovery in June or July 1989, the audit file was hastily sent to the IRS' Philadelphia Service Center for processing.
Janich Decl. para. 2.
No ninety-day Notice of Deficiency was sent to Miller by either the San Francisco or San Jose IRS offices. Winnick Decl. para. 9. The Philadelphia Service Center assesses, but does not issue notices of deficiency. Id. at para. 7. Consequently, Miller was not sent any ninety-day Notice of Deficiency by the IRS prior to the first assessments being mailed. Id. at para. 9.
The first assessments were made on September 4, 1989, by the Philadelphia Service Center. See "Statements of Tax Due IRS" Forms, attached to First Amended Complaint as Exs. 7a-7e. On October 16, 1989, the Center mailed a second round of collection notices. See "Dear Taxpayer" Letters, attached to Complaint as Exs. 8a-8e.
Miller received both sets of documents near the end of October 1989 and promptly contacted his attorney, Edward Mevi. Miller Decl. para. 12. Mr. Mevi telephoned the Philadelphia Service Center one or more times in late October. Id. at para. 13. Although Mevi's conversations with the Philadelphia Service Center obviously concerned the assessment and collection notices that Miller had received, the substance of those conversations is unclear.
On April 26, 1990 Kenneth Whitmore, the IRS agent assigned to the collection of Miller's tax liabilities, accompanied by Agent Jules Tupaj, attempted to question Miller at his home. Whitmore Decl. para. 7. During this interview, Agent Tupaj allegedly informed Miller that he was there to "collect his unpaid tax liabilities," and Miller apparently responded that he preferred to deal with the IRS through his attorney. See Id.; Miller Decl. paras. 17-21.
A notice of federal tax lien against Miller, manually prepared by Agent Tupaj at Agent Whitmore's request, was filed on May 1, 1990. On May 17, 1990, a duplicate and redundant notice of federal tax lien was filed "automatically" by the IRS computer. Whitmore Decl. paras. 8, 13.
On June 5, 1990, Mr. Brookes, Miller's new counsel, wrote to the IRS requesting a copy of the ninety-day Notice of Deficiency. See "Brookes Letter to IRS," attached to Complaint as Ex. 11. On July 10, 1990, the IRS Regional Counsel responded that it was attempting to locate a copy of the Notice of Deficiency. Winnick Decl. at Ex. C. On July 27, 1990, the Regional Counsel determined that no Notice of Deficiency had been sent by any IRS office and that a statutory Notice of Deficiency was required for the assessments to be legally valid. Id. at para. 9. The IRS released the notices of federal tax lien on July 27, 1990. Id. at para. 10.
On August 3, 1990, a request for abatement of the Miller tax assessments was transmitted to the Philadelphia Service Center. Id. at para. 11. The assessments were abated on August 29, 1990. See "Notice of Adjustment" Forms, attached to Complaint as Exs. 13a-13e.
Plaintiff filed the pending complaint in issue on October 31, 1990.
Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-32, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). See also T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (the nonmoving party may not rely on the pleadings but must present specific facts creating a genuine issue of material fact); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (a dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party").
The court's function, however, is not to make credibility determinations. Anderson, 477 U.S. at 249. The inferences to be drawn from the facts must be viewed in a light most favorable to the party opposing the motion. T.W. Elec. Serv., 809 F.2d at 631.
Plaintiff's first cause of action seeks civil damages for failure to release a lien pursuant to section 7432(a), part of the so-called "Taxpayer's Bill of Rights" enacted in the Technical and Miscellaneous Revenue Act of 1988, § 6240(c), Pub. L. No. 100-647, 102 Stat. 3746. This section provides, in pertinent part, that "if any officer or employee of the Internal Revenue Service knowingly, or by reason of negligence, fails to release a lien under section 6325 on property of the taxpayer, ...