Summary
granting summary judgment in light of the defendant's failure to present any evidence contradicting the IRS's assessment or otherwise raising any issue of fact
Summary of this case from United States v. CarterOpinion
CIVIL NO. Y-97-3026
November 8, 2000
Gregory S. Hrebiniak, Esquire, Washington, D.C., counsel for United States.
John L. Sasscer, pro se.
MEMORANDUM OPINION
The United States brought suit against John Sasscer on September 7, 1997, seeking to reduce to judgment tax assessments made against Sasscer for more than $1.2 million including penalties and interest, covering the years 1978 through 1989. The case is now before the Court on a motion for summary judgment filed by the United States.
The United States has served Sasscer with a Request for Admission, inquiring whether he had failed to file tax returns during the period between 1978 and 1989. Sasscer responded to the questions by asserting his Fifth Amendment right against self-incrimination.
Following discovery, Sasscer filed a motion to dismiss, which the Court denied on October 27, 1999. Sasscer appealed that decision to the Fourth Circuit, which dismissed the appeal as interlocutory. See United States v. Sasscer, No. 00-1177 (4th Cir. June 13, 2000). Sasscer filed a motion to dismiss for lack of jurisdiction on July 24, 2000, and a motion for summary judgment on August 16, 2000, which were both denied on August 25, 2000. At a scheduling conference on September 12, 2000, the Court urged Sasscer to seek the advice of counsel and discussed the appointment of counsel. Sasscer later advised the Court by letter that he would prefer to proceed pro se.
Summary judgment is proper if the evidence shows 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.P. 56(c). A genuine dispute as to a material fact exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must draw all reasonable factual inferences in favor of the non-movant. 477 U.S. at 255. Summary judgment can be appropriate in civil tax collection cases. See, e.g., United States v. Freeman, 1993 WL 179115 at *1 n. 1 (D.N.J. 1993).
Sasscer appears to argue that genuine disputes of material fact preclude summary judgment and lists several such disputes. Since a genuine dispute of material fact would preclude summary judgment at least in part, the Court will first address his list and then address the government's motion.
Sasscer argues that Stephen Bocchetti, an employee of the IRS, "has no authority to make a quasi-judicial ruling that the Defendant had a "tax liability"" in his declaration accompanying the government's motion for summary judgment. Sasscer is correct that it is this Court that will determine the amount of any civil judgment for the government against him. His objection to Bocchetti's declaration does not, however, raise a genuine dispute of material fact.
Sasscer cites Bothke v. Fluor Engineers Constructors, 713 F.2d 1405 (9th Cir. 1983), a case limiting the immunity of IRS officials in some circumstances. The case was vacated and remanded by the Supreme Court in light of Davis v. Scherer, 468 U.S. 183 (1984). See Terry v. Bothke, 104 S.Ct. 3566 (1984). On a second appeal after remand to the district court, the Ninth Circuit concluded that the IRS official involved possessed qualified immunity. 834 F.2d 804 (9th Cir. 1987). None of the versions of Bothke, whether good or bad law presently, support Sasscer's argument.
Sasscer denies that he received the "amounts of monies" listed in the government's exhibits, particularly "proceeds from the alleged sale of shares" in Rapid American Corporation. Similarly Sasscer denies that he was employed or "ever receive[d] any compensation from any employer" in the years at issue. However, 26 U.S.C. § 6020(b)(2) provides that "any return" made by the IRS for a person who had failed to make a required return or made a false or fraudulent return "shall be prima facie good and sufficient for all legal purposes." The IRS has thus established its prima facie case, and Sasscer offers only a bare denial in rebuttal. (The Court discusses the effect of Sasscer's Fifth-Amendment claims below.)
Sasscer argues that neither he nor the IRS ever prepared an income tax return for him during the years in question. 26 U.S.C. § 6020 authorizes the IRS to make a return for Sasscer that shall be good for all legal purposes. Sasscer has raised no genuine dispute that such returns were prepared. Sasscer argues that "there is no implementing regulation authorizing the preparation by IRS of any income tax return or Form 1040 return suggesting or establishing any tax liability on the part of Defendant for any personal "income" tax." Sasscer thus raises a question of law, not fact. The IRS is empowered under 26 U.S.C. § 6020 (b)(1) to prepare and file such returns.
Sasscer argues that no assessments against him were ever made and no notices of assessments were ever sent to him for the years at issue. The government has supplied copies of notices of deficiency for each of the years at issue.
Sasscer argues that the United States has failed to cite "the specific Internal Revenue regulation[s] which authorize the civil action for enforcement of the income tax claim" against him. This is a question of law, not of fact. The civil action is authorized under 26 U.S.C. § 7401 and 7403(a). The Court is obliged to rule on questions of law, but not to compel the government to answer the defendant's legal questions, even if they are posed in interrogatories. Sasscer argues that the United States has failed to cite federal regulations authorizing "any of Plaintiff's action [sic] in response to Plaintiff's claims in this action." This assertion raises only questions of law as to the general legal authority of the Internal Revenue Service, the answers to which are well settled and the raising of which is frivolous at this level of generality.
Sasscer's evident confusion, both between statutes and regulations and as to their import, is not surprising in a pro se plaintiff, but cannot advance his arguments.
Sasscer argues that "any IR Code section without an implementing regulation has no force of law and authorizes no action by IRS personnel," and cites California Bankers Association v. Shultz, 416 U.S. 21 (1974), and Caha v. United States, 152 U.S. 211 (1894). California Bankers' Association noted in upholding the Bank Secrecy Act (not the tax laws) "that the [Bank Secrecy] Act's civil and criminal penalties attach only upon violation of regulations promulgated by the Secretary; if the Secretary were to do nothing, the Act itself would impose no penalties on anyone." 416 U.S. at 26. A provision of the Bank Secrecy Act is irrelevant to Sasscer's tax liability and the authority of the IRS. Caha affirmed a conviction of perjury, finding that the district court had jurisdiction and that a law, not "a mere regulation of a department," had been broken. 152 U.S. at 218. Neither case can help Sasscer's claims.
Sasscer objects to the form and some contents of the declaration supporting the government's motion for summary judgment. The Court finds the declaration acceptable under the appropriate rules.
The Court accordingly disposes of Sasscer's purported genuine disputes of material fact.
The government argues that the assessments of the Internal Revenue Service [IRS] are presumed to be correct in civil tax collection actions, and that it is Sasscer's burden to rebut them by competent evidence, which he has refused to provide. The government cites a series of cases that are not relevant. United States v. Pomponio, 635 F.2d 293, 297 (4th Cir. 1980) (directing entry of judgment for the United States because the taxpayers had the burden to show the IRS assessment was erroneous in § 6672 employer withholding cases); Freck v. IRS, 37 F.3d 986, 991-92 (3d Cir. 1994) (noting that taxpayers in refund actions have the burden); Brounstein v. United States, 979 F.2d 952, 954 (3d Cir. 1992) (describing shift of burden to taxpayer in employer withholding case); United States v. Vespe, 868 F.2d 1328, 1331 (3d Cir. 1989) (same); Cooper v. United States, 539 F. Supp. 117 (E.D.Va. 1982) (noting that taxpayer has the burden in lawsuit for refund brought against government by taxpayer); United States v. Posner, 405 F. Supp. 934, 937 (D.Md. 1975) (ruling on remaining limitations issue where taxpayer defendants had consented to entry of judgment as to their personal income taxes). IRS assessments of tax deficiencies are indeed presumed to be correct, and Sasscer has the burden of proving that the assessment is incorrect. Schaffer v. C.I.R., 779 F.2d 849, 857-58 (2d Cir. 1985); United States v. Cooper, 1994 WL 592669 at *1 (S.D.N Y 1994). "The taxpayer generally must prove the notice of deficiency incorrect by a preponderance of the evidence." 779 F.2d at 858. Sasscer has "failed to present any evidence contradicting the Internal Revenue Service's assessment or otherwise raising any issue of fact. Therefore, the assessment is taken to be correct." 1994 WL 592669 at *2.
The Supreme Court has discussed this scheme of proof for a civil collection case and used it "for the purposes of" a case, characterizing it as "usual." United States v. Janis, 428 U.S. 433, 440-01 (1976).
Sasscer has cited the Fifth Amendment in refusing to respond to several of the government's Requests for Admissions. In a civil case, a negative inference may be drawn based on an assertion of Fifth-Amendment privilege, and as long as other evidence supports it, summary judgment may properly be given. LaSalle Bank Lake View v. Seguban, 54 F.3d 387 (7th Cir. 1995); see also Federal Deposit Insurance Corporation v. Elio, 39 F.3d 1239, 1248 (1st Cir. 1994); United States v. Ianniello, 824 F.2d 203, 208 (2d Cir. 1987). Accordingly, Sasscer's assertion of his Fifth-Amendment privilege in this civil context does not preclude summary judgment.
Finally, Sasscer invokes an "absolute" right to a jury trial under the Fifth and Seventh Amendments to the United States Constitution. The Federal Rules of Civil Procedure authorize the Court to give judgment as a matter of law if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The government is so entitled.
ORDER
In accordance with the attached Memorandum, it is this ___ day of November 2000, by the United States District Court for the District of Maryland, ORDERED that:
1. Plaintiff's Motion for Summary Judgment BE, and the same hereby IS, GRANTED;
2. Judgment is hereby GRANTED in favor of the United States in the amount of $763,928.42 for assessed income tax, penalties, and interest for the years 1978 through 1989, with interest as a matter of law from the dates of the assessments for each of the years; and
3. A copy of this Memorandum and Order be mailed to defendant Sasscer and counsel for the United States.