The opinion of the court was delivered by: Barry Ted Moskowitz, Chief Judge United States District Court
ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING MOTION TO DISMISS
Plaintiff, the United States, has filed a motion for partial summary judgment on its First claim and Third claim, as well as Defendants' statute of limitations defense, innocent spouse claim, and Counterclaim. Defendants have filed a motion to dismiss the United States' Amended Complaint. For the reasons set forth below, the Court GRANTS Plaintiff's motion for partial summary judgment, and DENIES Defendants' motion to dismiss.
This action has been brought by the United States to reduce to judgment tax assessments against defendant Charles P. LeBeau and Victoria LeBeau and LeBeau's former law practice, the Law Offices of Charles P. LeBeau. In its Amended Complaint, the United States seeks to reduce to judgment the following assessments:
1st Claim: The federal income tax, penalty and interest assessments made against defendants Charles P. LeBeau and Victoria LeBeau (the "LeBeaus" or "Defendants") regarding the joint income tax returns that they filed for their 1992, 1993, 1994, 1995, 1997, 1998 and 1999 tax years;
2nd Claim: The federal income tax, penalty and interest assessments made against defendant Charles P. LeBeau regarding income tax returns that he filed for the years 2002 through 2007;
3rd Claim: The federal tax and other assessments made against Charles P. LeBeau for the payroll tax liabilities owed by him and his sole proprietorship law firm, the Law Offices of Charles P. LeBeau, for eighteen different tax quarters during the time period from 1994 through 2001 (Mr. LeBeau and his sole proprietorship law firm are collectively referred to as "the law firm"); and
4th Claim: The assessment of the civil penalty made under 26 U.S.C. § 6721 against the law firm.
In their answer to the Amended Complaint, the LeBeaus assert a Counterclaim against the United States. In their Counterclaim, the LeBeaus assert that the United States has placed unauthorized tax liens against the sole and separate residential property of Victoria LeBeau. The LeBeaus request that the unauthorized tax liens be removed and also seek damages under 26 U.S.C. §§ 7432 and 7433. The LeBeaus also assert that the IRS is precluded from the collecting the taxes, penalties and interest set forth in the United States' First and Second Claim because they are barred by the statute of limitations.
In an order filed on June 13, 2011, the Court stayed litigation regarding the United States' Second Claim pending resolution of Mr. LeBeau's Tax Court petition, which concerns the same tax years.
The United States seeks summary judgment on (1) its First Claim pertaining to the LeBeaus' joint income tax returns for the1992, 1993, 1994, 1995, 1997, 1998 and 1999 tax years; and (2) its Third Claim regarding payroll tax liabilities owed by Charles LeBeau and his law firm during the time period from 1994 through 2001. The United States also seeks summary judgment on Defendants' innocent spouse claim, statute of limitations defense, and Counterclaim. Defendants, in turn, have filed a motion to dismiss the United States' Amended Complaint. Defendants' arguments in opposition to the motion for summary judgment are the same as their arguments in support of their motion to dismiss. As discussed below, the Court finds that these arguments lack merit and therefore grants the United States' motion for partial summary judgment and denies Defendants' motion to dismiss.
A. Correctness of Assessments
The government bears the initial burden of proof in an action to collect taxes. Palmer v. IRS, 116 F.3d 1309, 1312 (9th Cir. 1997). The government'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." Id. at 1312. The burden of proof then shifts to the taxpayer who must show that the determination was incorrect. Id. A Form 4340 Certificate of Assessments and Payments "is probative evidence in and of itself and, in the absence of contrary evidence, [is] sufficient to establish that notices and assessments were properly made." Hansen v. United States, 7 F.3d 137, 138 (9th Cir.1993) (internal quotation omitted).
The government has established its prima facie case by supporting its claims with copies of Defendants' tax returns and Forms 4340 for the tax years in question. (Duffy Decl., Exs. A-D; Horger Decl., Exs. A-D.) For many of the tax years in question, the amount of the tax assessment is the same as the amount due reported on the corresponding tax return. For other years, the amount of the tax assessment includes adjustments and/or corrections as reflected on the Forms 4340. The Forms 4340 also reflect assessments of penalties, interest, and fees and collection costs.
Defendants have not come forward with evidence showing that the assessments were incorrect. Defendants make evidentiary objections to the Forms 4340. However, these objections are overruled. The Forms 4340 are not hearsay because they fall within the public records exception of Fed. R. Evid. 803(8). Hughes v. United States, 953 F.2d 531, 539-40 (9th Cir. 1992). The Forms are also self-authenticating ...