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United States v. Burrell

United States District Court, Ninth Circuit

August 29, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
STANLEY K. BURRELL; STEPHANIE D. BURRELL; IMAGE, LIKENESS, POWER LLC, Defendants.

ORDER

GARLAND E. BURRELL, Jr., Senior District Judge.

Plaintiff moves for summary judgment "reduc[ing] to judgment federal tax assessments for the taxable years ending December 31, 1996, and December 31, 1997, (the years at issue') against [Defendants]." (Pl.'s Counter-Mot. for Summ. Judg. ("Pl.'s Mot.") 14:25-28, ECF No. 13.) Defendants filed a late opposition to Plaintiff's motion, which was mislabeled as a reply to a previously denied motion and was therefore stricken. However, since that reply was mislabeled, it is considered as Defendants' opposition to Plaintiff's motion.

I. BACKGROUND

Local Rule 260 requires a summary judgment motion to be accompanied by a "Statement of Undisputed Facts" to which the nonmovant is required to respond. Defendants have not responded to Plaintiff's "Statement of Undisputed Facts". The procedure prescribed in Local Rule 260 contemplates identification of the facts that the parties assert are material, disputed or undisputed. If the nonmovant does not "specifically... [controvert duly supported] facts identified in the [movant]'s statement of undisputed facts, " the nonmovant "is deemed to have admitted the validity of the facts contained in the [movant]'s statement." Beard v. Banks , 548 U.S. 521, 527 (2006).

The following uncontroverted facts exist under Local Rule 260. Plaintiff brings suit "to reduce to judgment federal tax assessments for the [years at issue] against [Defendants]." (Pl.'s Statement of Undisputed Facts ("UF") 1 (citing Answer, ECF No. 5), ECF No. 13-1.) "There is no dispute as to the amount of the tax liabilities for the years at issue, which were assessed from amounts reported by [Defendants] on their federal individual income tax returns." (UMF 2 (citing Burrell Response to U.S. Req. for Adm. Nos. 1-2; Certificates of Assessments & Payments, Jennings Decl., Exs. B, C).)

"[Defendants] filed a voluntary Chapter 11 bankruptcy petition on April 1, 1996, in the U.S. Bankruptcy Court for the Northern District of California." (UMF 3 (citing Burrell Response to Req. for Adm. No. 3).) "On February 20, 1997, the [IRS] filed an amended proof of claim (No. 52) in the total amount of $1, 603, 017.95 for [Defendants'] taxable years ending December 31, 1993, 1994, and 1995." (UMF 5 (citing Burrell Response to Req. for Adm. No. 5).)

"On January 9, 1998, the [IRS] objected to the confirmation of the proposed Chapter 11 plan, " "stat[ing] that [Defendants] had incurred additional federal income tax liabilities for post-petition periods (taxable years 1996 and 1997).'" (UMF 7-8 (citing Burrell Response to Req. for Adm. Nos. 7-8).) "The Chapter 11 bankruptcy case was converted to a Chapter 7 bankruptcy case on September 23, 1998, " which prevented the IRS "from collecting the 1996 and 1997 tax liabilities since they were treated as pre-petition." (UMF 10 (citing Burrell Response to Req. for Adm. Nos. 10-12); UMF 24 (citing 11 U.S.C. § 348(d).)

"On June 29, 2000, the Bankruptcy Court approved and filed a... Stipulation and Order-Doc. No. 603, " based on the "second amended proof of claim (hereinafter Claim No. 85')... for [Defendants'] taxable years ending December 31, 1993, 1994, and 1995"; the Stipulation and Order "was signed by counsel for the Chapter 7 Trustee... and by counsel... for [Plaintiff] ([IRS] as creditor)." (UMF 11, 13-14 (citing Burrell Response to Req. for Adm. Nos. 13-15).)

"[T]he running of the 10-year period to file a tax collection suit was suspended from date of conversion, September 23, 1998, to the date the discharge was denied, April 23, 2002, plus six months, pursuant to 26 U.S.C. § 6503(h)." (UMF 21, 25 (citing Burrell Response to Req. for Adm. Nos. 23, 25).)

II. DISCUSSION

A. Federal Tax Assessments

Plaintiff argues that "[a]n assessment for unpaid federal taxes, when properly certified [(Certificate of Assessment' or Form 4340')], is presumptively correct evidence of a taxpayer's liability and satisfies the Government's burden of proof so that the United States may rest its case." (Pl.'s Mot. 15:8-10 (citing United States v. Janis , 428 U.S. 433, 440-41 (1976); United States v. Stonehill , 702 F.2d 1288 (9th Cir. 1983); Gentry v. United States , 962 F.2d 555, 557 (6th Cir. 1992)).) Plaintiff also contends that "Form 4340 is highly probative and, in the absence of contrary evidence, is sufficient to establish that an assessment was properly made and that notices and demand for payment were sent." (Id. 15:17-19 (citing Hughes v. United States , 953 F.2d 531, 535 (9th Cir. 1992)).) Defendants do not respond to Plaintiff's argument about the Certificates of Assessment. (See Defs.' Opp'n.)

A Certificate of Assessment is "routinely used to prove that [tax] assessment[s] ha[ve] in fact been made." (Id. 15:14-16 (citation omitted) (citing Rocovich v. United States , 933 F.2d 991, 994 (Fed. Cir. 1991); Hughes , 953 F.2d at 535).) "[A] presumption of correctness attaches to the [Certificate of A]ssessment, and its introduction establishes a prima facie case." United States v. Stonehill , 702 F.2d 1288, 1293 (9th Cir. 1983) (citing Welch v. Helvering , 290 U.S. 111, 115 (1933); United States v. Molitor , 337 F.2d 917, 922 (9th Cir. 1964)). "The presumption does not arise unless it is supported by a minimal evidentiary foundation." Id . (citing Weimerskirch v. Comm'r , 596 F.2d 358, 360 (9th Cir. 1979)). "[I]n the absence of contrary evidence, [a Certificate of Assessment is] sufficient to establish that notices and assessments were properly made." Hansen v. United States , 7 F.3d 137, 138 (9th Cir. 1993).

Plaintiff attaches Certificates of Assessment for taxable years 1996 and 1997 to its motion. (Jennings Decl., Exs. B, C.) "There is no dispute as to the amount of the tax liabilities for the years at issue [(1996 and 1997)], which were assessed from amounts reported by [Defendants] on their federal, individual income tax returns." (UF 2.) This undisputed fact, supported by Defendants' Response to Plaintiff's Request for Admissions, provides a "minimal evidentiary foundation"; therefore, the "presumption of correctness attaches to the [Certificate of A]ssessment." Stonehill , 702 F.2d at 1293. "Defendants fail to identify any facts rebutting the legitimacy of [Plaintiff]'s Form 4340s as to the [1996] and [1997] tax ...


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