United States District Court, S.D. California
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
T. Benitez, United States District Judge
the Court is a Motion for Summary Judgment, filed by
Plaintiff United States of America (hereinafter “the
government”). (Docket No. 32.) Defendant William C.
Feuss did not file an opposition. The Court finds the Motion
suitable for determination on the papers without oral
argument, pursuant to Civil Local Rule 7.1.d.l. For the
reasons set for below, the Motion is
did not file a federal tax return for the tax years 2001 to
2016. (SUF ¶ 1.) The Internal Revenue
Service (“IRS”) conducted audit examinations for
each of the tax years 2001, 2002, 2003, 2004, 2005, 2006,
2008, 2009, 2011, and 2012. (SUF 1 2.) To determine and
assess the correct federal income tax liabilities for these
years, the IRS obtained information reported by third parties
on various IRS forms, including Forms 1098 (mortgage
interest) and 1099 (non-employee compensation). (SUF
¶ 3.) An authorized delegate of the
Secretary of the Treasury made timely assessments against
Defendant for the years 2001, 2002, 2003, 2004, 2005, 2006,
2008, 2009, 2011, and 2012. (SUF16.) The government issued
timely notice and demand for payments for these assessments
to Defendant, but Defendant neglected, failed, or refused to
fully pay the assessments for the aforementioned years, which
remain due and owing with an unpaid balance of $304, 834.13,
plus statutory interest and other additions accruing from
December 9, 2016. (SUF ¶ 7.)
government filed its Complaint on May 21, 2015. (Docket No.
1.) It seeks “to reduce federal income tax, penalty,
and interest assessments, along with other accruals that have
not yet been formally assessed against [Defendant] to
judgment.” (Compl ¶1.) Defendant filed his Answer
on August 31, 2015. (Docket No. 5.) On May 25, 2016 and July
26, 2016, the government filed two separate motions for
discovery sanctions, which were both granted in part by
Magistrate Judge Ruben B. Brooks. (Docket Nos. 15, 20, 23,
27.) Concurrently with the minute order granting in part the
government's second motion for discovery sanctions, Judge
Brooks issued a Report and Recommendation, recommending that
this Court grant the government's request for evidence
preclusion sanctions, pursuant to the provisions of 28 U.S.C.
§ 636(b)(1). (Docket No. 27.) On October 28, 2016, this
Court adopted Judge Brooks' Report and Recommendation,
and issued an order which precluded Defendant from presenting
documentary evidence (1) showing his entitlement to
deductions or (2) rebutting the accuracy of the
government's tax assessments when opposing a motion for
summary judgment or at trial. (Docket No. 31.)
motion for summary judgment must be granted when “the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. Proc. 56(a). “A
party seeking summary judgment always bears the initial
responsibility of informing the district court of the basis
for its motion” and identifying the portions of the
pleadings and discovery responses that demonstrate the
absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving
party can do so by negating an essential element of the
non-moving party's case, or by showing that the
non-moving party failed to make a showing sufficient to
establish an element essential to that party's case, and
on which the party will bear the burden of proof at trial.
Id. at 331. The burden then shifts to the non-moving
party to show that there is a genuine issue for trial.
Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035
(9th Cir. 2007).
evaluating the evidence to support or oppose a motion for
summary judgment, the court does not assume the jury
functions of determining credibility, weighing of evidence,
or drawing legitimate inferences from the facts. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)
(citing Adickes v. S.H. Kress & Co., 398 U.S.
144, 157 (1970)). Rather, “[t]he evidence of the
non-movant is to be believed, and all justifiable inferences
are to be drawn in his favor.” Ibid. However,
the inferences that may be drawn are not limitless. T. W.
Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n,
809 F.2d 626, 632 (9th Cir. 1987). Inferences must be based
on specific facts and only "'rational' and
‘reasonable'" inferences may be drawn. Id;
United Steelworkers of Am. v. Phelps Dodge Corp., 865
F.2d 1539, 1542 (9th Cir. 1989). Additionally, conclusory,
speculative testimony in affidavits and moving papers is
insufficient to raise genuine issues of fact and defeat
summary judgment. See Nelson v. Pima Community
College, 83 F.3d 1075, 1081-82 (9th Cir. 1996)
(“mere allegation and speculation do not create a
factual dispute for purposes of summary judgment”).
of whether the non-movant responded to a moving party's
summary judgment motion, a court may not grant summary
judgment unless the moving party has affirmatively shown
“there is no genuine issue as to any material fact and
that [it] is entitled to a judgment as a matter of
law.” Martinez v. Stanford, 323 F.3d 1178,
1182-83 (9th Cir. 2003) (internal citation omitted).
government bears the burden of proof in an action to collect
taxes. United States v. Stonehill, 702 F.2d 1288,
1293 (9th Cir. 1983). It can usually carry this burden by
introducing its assessment of taxes due, after which “a
presumption of correctness attaches to the assessment, and
its introduction establishes a prima facie case.”
Id. A Certificate of Assessments and Payments is
presumed to be correct evidence of a taxpayer's
liability, “and is the proper means of establishing
that assessments were properly made and that notices and
demand for payment were sent.” United States v.
Secapure, No. C 07-1050 TEH, 2008 WL 820719, at *2 (N.D.
Cal. Mar. 26, 2008) (citing Koff v. United States, 3
F.3d 1297, 1298 (9th Cir. 1993); Stonehill 702 F.2d
at 1293); see also United States v. Boyce, 38
F.Supp.3d 1135, 1152 (CD. Cal. 2014) (quoting United
States v. Vacante, 7X1 F.Supp.2d 992, 1004 (E.D. Cal.
2010) (“Certificates of Assessments and Payments
(‘Form 4340s') are highly probative and in the
absence of contrary evidence, are sufficient to establish a
tax assessment was properly made and notice and demand for
payment were sent.”)).
presumption does not arise unless it is supported by a
“minimal evidentiary foundation.” Oliver v.
United States, 921 F.2d 916, 920 (9th Cir. 1990)
(citing Stonehill at 1293). A factual foundation for the
assessment is laid by the government's introduction of
“some substantive evidence” that demonstrates
that the taxpayer received unreported income.
Stonehill at 1293 (quoting Edwards v.
Commissioner, 680 F.2d 1268, 1270 (9th Cir. 1982)).
government introduces the presumptively correct assessment,
the burden of proof shifts to the taxpayer to prove that the
assessment is “arbitrary or erroneous.”
Stonehill, 702 F.2d at 1294 (citing Helvering v.
Taylor,293 U.S. 507, 515 (1935); Cohen v.
Commissioner,266 F.2d 5, 11 (9th Cir. 1959)). If the
defendant successfully rebuts the presumption of correctness,
the burden shift back to the government to “establish
the correctness of the assessment by sufficient and competent
evidence.” Secapure, supra, 2008 WL 820719, at
*2 (quoting United States v. Molitor,337 F.2d 917,
923 (9th Cir. 1964)). However, “[i]f the taxpayer fails
to rebut the presumption, the government is entitled to
judgment as a matter of law.” Vacante, 717
F.Supp.2d at 1004 (citing Hansen v. United States, 7