United States District Court, N.D. California, San Jose Division
ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT RE: DKT. NO. 20
J. DAVILA, UNITED STATES DISTRICT JUDGE
Chul Goo Park and Eun Lee Lee (collectively,
“Defendants”) are the proprietors of the Seoul
Gom Tang restaurant located in Santa Clara, California.
Plaintiff United States of America (the
“Government”) brings the instant action against
Defendants under 26 U.S.C. § 7402(a) to reduce to
judgment certain federal income tax and other assessments.
The Government also seeks an order enjoining Defendants from
further violations of federal tax laws.
jurisdiction arises pursuant to 28 U.S.C. § 1340.
Presently before the court is the Government’s motion
for summary judgment, which is unopposed. Dkt. No. 20. This
matter is suitable for decision without oral argument
pursuant to Civil Local Rule 7-1(b). Having carefully
considered the moving papers in conjunction with the record,
the court finds, concludes, and orders as follows:
motion for summary judgment should be granted if “there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); Addisu v. Fred Meyer, Inc., 198
F.3d 1130, 1134 (9th Cir. 2000). The moving party bears the
initial burden of informing the court of the basis for the
motion and identifying the portions of the pleadings,
depositions, answers to interrogatories, admissions, or
affidavits that demonstrate the absence of a triable issue of
material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). If the moving party meets this initial
burden, the burden then shifts to the non-moving party to go
beyond the pleadings and designate specific materials in the
record to show that there is a genuinely disputed fact.
Fed.R.Civ.P. 56(c); Celotex, 477 U.S. at 324.
court must draw all reasonable inferences in favor of the
party against whom summary judgment is sought. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986). However, the mere suggestion that facts are in
controversy, as well as conclusory or speculative testimony
in affidavits and moving papers, is not sufficient to defeat
summary judgment. See Thornhill Publ’g Co. v. GTE
Corp., 594 F.2d 730, 738 (9th Cir.1979). Instead, the
non-moving party must come forward with admissible evidence
to satisfy the burden. Fed.R.Civ.P. 56(c); see Hal Roach
Studios, Inc. v. Feiner & Co., Inc., 896 F.2d 1542,
1550 (9th Cir.1989). A genuine issue for trial exists if the
non-moving party presents evidence from which a reasonable
jury, viewing the evidence in the light most favorable to
that party, could resolve the material issue in his or her
favor. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248-49 (1986); Barlow v. Ground, 943 F.2d 1132,
1134-36 (9th Cir. 1991). Conversely, summary judgment must be
granted where a party “fails to make a showing
sufficient to establish the existence of an element essential
to that party’s case, on which that party will bear the
burden of proof at trial.” Celotex, 477 U.S.
Under 26 U.S.C. § 7402(a), district courts “shall
have such jurisdiction to make and issue in civil actions,
writs and orders of injunction . . . and such other orders
and processes, and to render such judgments and decrees as
may be necessary or appropriate for the enforcement of the
internal revenue laws.”
“The Internal Revenue Code requires employers . . . to
withhold federal social security and individual income taxes
from the wages of their employees, ” which are
otherwise known as “trust fund taxes.” Davis
v. United States, 961 F.2d 867, 869 (9th Cir. 1992)
(citing 26 U.S.C. §§ 3102(a), 3402(a)).
“Although an employer collects this money each salary
period, payment to the federal government takes place on a
quarterly basis.” Id. “In the interim,
the employer holds the collected taxes in trust for the
government.” Id. (citing 26 U.S.C. §
7501(a)). But “[b]ecause the trust fund taxes seem to
be a source of ready cash, it sometimes happens that a
company, which has cash flow difficulties, will draw upon
them rather than paying them over to the government.”
Buffalow v. United States, 109 F.3d 570, 572 (9th
Cir. 1997). And “[o]nce net wages are paid to the
employee, the taxes withheld are credited to the employee
regardless of whether they are paid by the employer, so that
the IRS has recourse only against the employer for their
payment.” Slodov v. United States, 436 U.S.
238, 243 (1978). “Other taxes, such as those directly
owed by the business, are referred to as ‘non-trust
fund taxes.’” Davis, 941 F.2d at 869.
“In an action to collect taxes, the government bears
the initial burden of proof.” In re Olshan,
356 F.3d 1078, 1084 (9th Cir. 2004) (quoting Palmer v.
United States, 116 F.3d 1309, 1312 (9th Cir. 1997)).
“The government can usually carry its initial burden .
. . merely by introducing its assessment of tax due.”
United States v. Stonehill, 702 F.2d 1288, 1293 (9th
Cir. 1983). “Normally, a presumption of correctness
attaches to the assessment, and its introduction establishes
a prima facie case.” Id. “Introduction
of the presumptively correct assessment shifts the burden of
proof to the taxpayer.” Id. at 1294. If the
taxpayer fails to rebut the presumption, the government is
entitled to judgment as a matter of law. See Hansen v.
United States, 7 F.3d 137, 138 (9th Cir. 1993).
“Generally, courts have held that IRS Form 4340
provides at least presumptive evidence that a tax has been
validly assessed under [26 U.S.C.] § 6203.”
Huff v. United States, 10 F.3d 1440, 1445 (9th Cir.
1993); Hughes v. United States, 953 F.2d 531, 535
(9th Cir. 1992) (“Official certificates, such as Form
4340, can constitute proof of the fact that the [tax]
assessments were actually made.”).
Here, the court finds the Government has produced sufficient
evidence to establish a prima facie case for its claims that
Park failed to pay employment taxes and unemployment taxes,
and that Defendants failed to pay income taxes. To that end,
the Certificate of Assessments and Payments (Form 4340s),
which are attached as Exhibits 7 through 9 to the Declaration
of Howard Baldwin, are presumptive proof that assessments
were made against Park, doing business as Seoul Gom Tang, for
$331, 523.79 in unpaid employment taxes for 2008 through 2011
and 2013, and $2, 000.12 in unpaid unemployment taxes for
2013. These documents also establish that assessments were
made against Defendants jointly for $430, 396.69 in unpaid
federal income taxes for 2006 through 2013, inclusive of
interest and penalties through February, 2016.
Because they did not respond to the motion, Defendants failed
to rebut the presumption of correctness that arises from the
Government’s evidence and have not disputed any of the
facts alleged. Stonehill, 702 F.2d at 1293. In fact,
the record shows Defendants admitted they filed the tax
returns upon which the assessments are based. Accordingly,
the Government is entitled to summary judgment on the first
two claims asserted in the Complaint. See Hansen, 7
F.3d at 138; see also Cristobal v. Siegel, 26 F.3d
1488, 1491 (9th Cir. 1994) (holding the court can grant an
unopposed motion for summary judgment if “the moving
party bears its burden of showing its entitlement to
remains is the Government’s third claim for a permanent
injunction. “Before a court may issue a permanent
injunction, a party must show (1) that it has suffered an
irreparable injury; (2) that remedies available at law, such
as monetary damages, are inadequate to compensate for that
injury; (3) that, considering the balance of hardships
between the plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not be
disserved by a permanent injunction.” W. Watersheds
Project v. Abbey, 719 F.3d 1035, 1054 (9th Cir. 2013)
(internal quotations omitted).
court finds the Government has satisfactorily demonstrated
the need for a permanent injunction. As the Government argues
in the motion, it will be irreparably harmed by the loss of
employment and unemployment taxes if Defendants continue with
their refusal to comply with the tax laws. And if the past if
any predictor of the future, Defendants may not voluntarily
comply with their obligations absent an order requiring them
to do so.
court further finds that other potentially available remedies
are inadequate, particularly when ongoing non-compliance
results in a significant balance that Defendants’
business assets cannot cover. The balance of hardships also
weighs in the Government’s favor because the