Wroblewski et al v. United States of America et alMOTION to Dismiss for Failure to State a Claim , MOTION to Dismiss for Lack of JurisdictionS.D. Cal.November 17, 2016 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 CAROLINE D. CIRAOLO Acting Assistant Attorney General CHARLES M. DUFFY Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044-0683 Telephone: (202) 307-6406 Facsimile: (202) 307-0054 Email: charles.m.duffy@usdoj.gov LAURA E. DUFFY United States Attorney Southern District of California Of Counsel Attorneys for Plaintiff, United States of America UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA GERALD WROBLEWSKI and SHARON WROBLEWSKI Plaintiffs, v. UNITED STATES OF AMERICA and Does 1 to 10 Defendants. Case No. 16-CV-1705-L-DJB UNITED STATES’ NOTICE OF MOTION AND MOTION TO DISMISS Hearing Date: December 19, 2016 Time: 10:30 a.m. (No Oral Argument Unless Requested by the Court) The United States, the defendant in this matter, hereby moves to dismiss this case pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Support for this motion is set forth in the Memorandum in Support, the Case 3:16-cv-01705-L-DHB Document 8 Filed 11/17/16 Page 1 of 2 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Declaration of Charles M. Duffy and the Declaration of Julie A. Piazza, all of which are filed herewith. Dated: November 17, 2016 Respectfully submitted, CAROLINE D. CIRAOLO Acting Assistant Attorney General /s/ Charles M. Duffy CHARLES M. DUFFY Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 683 Ben Franklin Station Washington, D.C. 20044 Tel: (202) 307-6406 Fax: (202) 307-0054 Email: charles.m.duffy@usdoj.gov Attorneys for the United States of America LAURA E. DUFFY United States Attorney Southern District of California Of Counsel Case 3:16-cv-01705-L-DHB Document 8 Filed 11/17/16 Page 2 of 2 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 CAROLINE D. CIRAOLO Acting Assistant Attorney General CHARLES M. DUFFY Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044-0683 Telephone: (202) 307-6406 Facsimile: (202) 307-0054 Email: charles.m.duffy@usdoj.gov LAURA E. DUFFY United States Attorney Southern District of California Of Counsel Attorneys for Plaintiff, United States of America UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA GERALD WROBLEWSKI and SHARON WROBLEWSKI Plaintiffs, v. UNITED STATES OF AMERICA and Does 1 to 10 Defendants. Case No. 16-CV-1705-L-DJB MEMORANDUM IN SUPPORT OF THE UNITED STATES’ MOTION TO DISMISS Hearing Date: December 19, 2016 Time: 10:30 a.m. (No Oral Argument Unless Requested by the Court) I. STATEMENT This is an action brought under 26 U.S.C. § 7433 which authorizes civil damages where the Internal Revenue Service (“IRS”) “recklessly or intentionally, Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 1 of 10 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 or by reason of negligence” disregards a provision in the Internal Revenue Code (Title 26, U.S.C.) or a regulation promulgated under the Code when collecting taxes. In the complaint, the plaintiffs - Gerald Wroblewski and Sharon Wroblewski (hereafter “the Wroblewskis”) - acknowledge that they “legally” owe federal income tax liabilities for many tax years in the approximate aggregate amount of $577,000. See the complaint, at ¶ 6. The Wroblewskis legally owe the taxes because of this Court’s judgment in United States v. Gerald and Sharon Wroblewski, et al., Civil Number 3:07-cv-81-BTM-WMC (“the 2007 case”).1 In the 2007 case the Court granted the United States’ dispositive motion as it related to the Wroblewskis’ 1994 through 2002 federal tax liabilities and a judgment was entered against them. See Exhibits B and C (“Duffy Dec. Ex’s”) attached to the Declaration of Charles Duffy, which is filed herewith (copies of the Court’s order and amended judgment in the 2007 case). The United States was represented in the 2007 case by the United States Department of Justice (hereafter “DOJ”).2 See e.g., Duffy Dec. Ex A. The IRS 1 A copy of the amended complaint in the 2007 case is Exhibit A to the Declaration of Charles Duffy, which is filed herewith. The United States requests the Court to take judicial notice of the filings in the 2007 case. 2 The DOJ attorneys who represented the United States in the 2007 case were Justin S. Kim and Michael G. Pitman. See Duffy Dec. Ex A. Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 2 of 10 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 authorized and requested DOJ to file the 2007 case. Id., at ¶ 2. The fact that DOJ represented the United States in the 2007 case is relevant here because - pursuant to 26 U.S.C. § 7122(a) - once a tax matter is referred by the IRS to DOJ, only DOJ has the authorization to settle the tax liabilities and claims at issue in the matter. The Wroblewskis - in 2013 - tried to settle the tax liabilities that were adjudged against them in the 2007 case with the IRS rather than DOJ. Specifically, they sent settlement offers to the IRS on June 25, 2013 to settle their 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001 and 2002 tax liabilities. 3 See the complaint, at ¶ 7; see also Duffy Dec. Ex A, at ¶¶ 19 and 23. In September, 2013, the IRS accepted the Wroblewskis’ offers. See the complaint, at ¶ 7. But later, on July 2, 2014, the IRS rescinded the acceptance of the offers because most of the tax liabilities at issue in the settlement were “under the jurisdiction of the Department of Justice” and thus, could not be settled by the IRS. Id., at ¶ 11; see also Exhibit A to the complaint (IRS’s July 2, 2014 letter). The Wroblewskis contend that “[t]he unilateral revocation” of their offers by the IRS was a “reckless, intentional and negligent disregard of 26 U.S.C. § 7122” and was “without legal justification.” See the complaint, at ¶ 12. But, as explained 3 In addition to the tax liabilities at issue in the 2007 tax case, the Wroblewskis also sought to settle their 2005, 2006 and 2010 tax liabilities. See the complaint, at ¶ 7. Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 3 of 10 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 below, the IRS was acting consistent with Section 7122 when it rescinded the acceptance of the offers since only DOJ had the authority to settle the tax liabilities that were at issue in the 2007 case. II. DISCUSSION A. The Complaint Should be Dismissed Under Federal Rule of Civil Procedure 12(b)(6). Under Fed. R. Civ. P. 8(a), a complaint must contain (1) “a short and plain statement of the grounds for the court’s jurisdiction” and (2) “a short and plain statement of the claim showing that the pleader is entitled to relief.” This standard requires facts sufficient to state facially plausible allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotes omitted). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. These requirements are met when the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A claim is actionable under Section 7433 where the IRS “recklessly or intentionally, or by reason of negligence” disregarded a provision in the Internal Revenue Code or a regulation promulgated thereunder in connection with the collection of federal taxes. See U.S.C. § 7433(a); Shwarz v. United States, 234 Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 4 of 10 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 F.3d 428, 433-34 (9th Cir. 2000). The Wroblewskis’ main assertion is that 26 U.S.C. § 7122 was disregarded when the IRS rescinded its acceptance of their June 25, 2013 offers. See the complaint, at ¶¶ 12 and 22. The critical fact in this case - which is undisputed - is that most of the liabilities that the Wroblewskis tried to settle in 2013 with the IRS were at issue in the 2007 court case in which DOJ represented the United States’ interests. Under 26 U.S.C. § 7122(a) “from the moment a taxpayer’s case is referred to DOJ for prosecution (or defense), the Commissioner loses his authority to compromise the taxpayer’s tax liabilities unless authorized by DOJ.” Isley v. Commissioner, 141 T.C. 349, 363-364 (U.S. Tax Court) (citing unpublished decisions from the United States Court of Appeals for the Third and Ninth Circuits). When the IRS rescinded its acceptance of the Wroblewskis’ June, 2013 offers (which is what they are complaining about), the IRS was correctly acknowledging under applicable law that only DOJ had the authority to settle the tax liabilities at issue in the 2007 case. In other words, when the IRS rescinded its acceptance, it was acting consistent with Section 7122; it was not acting in disregard of that statute. Clearly, no Section 7433 claim can exist where, as here, the IRS’s actions in question were consistent with the statute in question. See White v. Commissioner, 899 F.Supp. 767, 773 (D.Mass. 1995) (plaintiff failed to state a Section 7433 claim Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 5 of 10 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 where “the IRS was simply following the Code”); Addington v. United States, 75 F.Supp. 2d 520, 524-525 (S.D.W.Va. 1999) (court rejected a 7433 claim in part where the IRS’s actions “were in observance of the Code, not a violation of it”). In paragraphs 14, 16, 17 and 18 of the complaint, the Wroblewskis also rely on Section 7122, and argue in different ways that the IRS should have known about the 2007 tax case and also that only DOJ had the authority to settle the liabilities at issue in that case. As a preliminary matter, most or all of the allegations paragraphs 14, 16, 17 and 18 of the complaint, are not stated requirements of Section 7122. Thus, the allegations cannot support a Section 7433 claim in any event. See Boritz v. United States, 685 F.Supp. 2d 113, 128 (D.D.C. 2010) (the Internal Revenue Code section that the taxpayer relied on did not require what was alleged and, thus, the Section 7433 claim could not succeed). 4 4 A background point that sheds light but is not necessary to resolve the issues raised by the United States is that within the context of their negotiations with the IRS, the Wroblewskis submitted an IRS Form 433-A (OIC) (“the Form 433”) to give the IRS information about their financial condition in or about December, 2012. See Duffy Dec. Ex. D (copy of the Form 433 from the IRS files). On the Form 433, the Wroblewskis were asked whether they “[h]ave been a party to a lawsuit.” Id., at Section 7 (page 7 of 7). The Wroblewskis responded falsely - under penalties of perjury - that they had not, ignoring that they had been parties to the 2007 case. Id. If the Wroblewskis would have truthfully reported on the Form 433 that they had been parties to the 2007 case, perhaps the IRS would have realized sooner that it did not have the authority to settle the subject tax liabilities. Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 6 of 10 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 The Wroblewskis’ assertions should also be rejected since they bore the risk of trying to settle the 2007 case liabilities with the IRS - which was not authorized to settle. In this regard, it is well established that “anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority.” Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 384 (1947). In paragraph 21 of the complaint, the Wroblewskis argue that Section 7122 was somehow disregarded when, after the IRS rescinded the acceptance of the 2013 offers, the IRS issued a levy to collect a tax liability that was adjudged against them in the 2007 tax case after the IRS rescinded its acceptance of the offer. But since the IRS did not have the authority to settle the 2007 case tax liabilities, the liabilities were still owed and an IRS levy was a proper procedure under the Internal Revenue Code to collect tax liabilities. See 26 U.S.C. § 6331(a). In paragraphs 13 and 15 of the complaint, the Wroblewskis allege that the IRS violated the Internal Revenue Code Manual, but even assuming arguendo that a provision in that Manual was violated, such a violation cannot support a Section 7433 claim. See Gonsalves v. United States, 782 F.Supp. 164, 170-71 (D. Maine). Since the IRS was acting consistent with Section 7122 when it rescinded its acceptance of the 2013 offers, the Wroblewskis have not alleged facts that would allow the Court “to draw a reasonable inference” that the United States is liable for Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 7 of 10 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 misconduct alleged under Section 7433. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Thus, the complaint should be dismissed for failure to state a claim. B. The Complaint Should be Dismissed under Federal Rule of Civil Procedure 12(b)(1). Section 7433(d)(1) states that “[a] judgment for damages shall not be awarded under [26 U.S.C. §7433(b)] unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.” To exhaust administrative remedies, a taxpayer must submit an administrative claim that complies with Treas. Reg. § 301.7433-1(e)(1) and (2), and wait the time required by Treas. Reg. § 301.7433-1(d) before filing a suit in district court. The administrative claim “shall be sent in writing to the Area Director, Attn: Compliance Technical Support Manager of the area in which the taxpayer currently resides.” Treas. Reg. § 301.7433-1(e)(1). A taxpayer cannot satisfy the exhaustion requirement through other communications with the IRS that do not comply with the regulations. See, e.g., Rae v. United States, 530 F.Supp.2d 127, 130 (D.D.C. 2008). If a plaintiff fails to satisfy the exhaustion requirement, the complaint should be dismissed for lack of subject matter jurisdiction since the United States has not waived its sovereign immunity. Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir. 1993); Gray v. United States, 723 F.3d 795, 798-802 (7th Cir. 2013). Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 8 of 10 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 In their complaint, the Wroblewskis made inconsistent allegations regarding the administrative claim issue. In paragraph 23 of the complaint they alleged that they “were given no appeal rights to contest the unlawful actions of the [IRS].” But in paragraph 24 of the complaint, the Wroblewskis allege in a general way, and without referencing Treasury Regulation § 301.7433-1, that they “have exhausted all administrative remedies.” Filed herewith is the Declaration of Advisor Julie A. Piazza from the IRS’s Laguna Niguel, California Office. In the declaration, Ms. Piazza sets forth that based on her research, the Wroblewskis have not filed any administrative claims under 26 U.S.C. § 7433 since January 1, 2013, which is prior to the dates of the purported wrongful actions alleged in the complaint. The fact that the Wroblewskis did not file a proper Section 7433 administrative is a separate ground to support the dismissal of the complaint. III. CONCLUSION The complaint should be dismissed. Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 9 of 10 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Dated: November 17, 2016 Respectfully submitted, CAROLINE D. CIRAOLO Acting Assistant Attorney General /s/ Charles M. Duffy CHARLES M. DUFFY Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 683 Ben Franklin Station Washington, D.C. 20044 Tel: (202) 307-6406 Fax: (202) 307-0054 Email: charles.m.duffy@usdoj.gov Attorneys for the United States of America LAURA E. DUFFY United States Attorney Southern District of California Of Counsel Case 3:16-cv-01705-L-DHB Document 8-1 Filed 11/17/16 Page 10 of 10 Case 3:16-cv-01705-L-DHB Document 8-2 Filed 11/17/16 Page 1 of 2 Case 3:16-cv-01705-L-DHB Document 8-2 Filed 11/17/16 Page 2 of 2 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 CAROLINE D. CIRAOLO Acting Assistant Attorney General CHARLES M. DUFFY Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683, Ben Franklin Station Washington, D.C. 20044-0683 Telephone: (202) 307-6406 Facsimile: (202) 307-0054 Email: charles.m.duffy@usdoj.gov LAURA E. DUFFY United States Attorney Southern District of California Of Counsel Attorneys for Plaintiff, United States of America UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA GERALD WROBLEWSKI and SHARON WROBLEWSKI Plaintiffs, v. UNITED STATES OF AMERICA and Does 1 to 10 Defendants. Case No. 16-CV-1705-L-DJB DECLARATION OF CHARLES M. DUFFY I, Charles M. Duffy, pursuant to 28 U.S.C. § 1746, hereby declare that: Case 3:16-cv-01705-L-DHB Document 8-3 Filed 11/17/16 Page 1 of 2 Case 3:16-cv-01705-L-DHB Document 8-3 Filed 11/17/16 Page 2 of 2 14661559.1 TABLE OF CONTENTS (EXHIBITS) Exhibit A 12 Pages Exhibit B 1 Page Exhibit C 9 Pages Exhibit D 14 Pages Case 3:16-cv-01705-L-DHB Document 8-4 Filed 11/17/16 Page 1 of 1 EXHIBIT A Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 1 of 13 1 KAREN P. HEWITT United States Attorney 2 THOMAS C. STAHL (CASB # 078291) Assistant United States Attorney 3 Chief, Civil Division So\lthern District of California 4 880 Front Street, Room 6293 San Diego, CA 92101-8893 5 JUSTIN S. KIM 6 MICHAEL G. PITMAN (Pro Hac Vice) Trial Attorneys, Tax Division 7 U.s. Department of Justice P.O. Box 683 8 Ben Franklin Station Washington, D.C. 20044-0683 9 Telephone (202) 305-7938 10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 11 United States of America, 12 Plaintiff, 13 v. 14 Civil No. 3:07-cv-81-BTM-WMC Gerald J. Wroblewski; Sharon M. 15 Wroblewski; Thomas J. Martinak, Jr.; Janet Martinak; & California Franchise 16 Tax Board, 17 Defendants. 18 FIRST AMENDED COMPLAINT 19 1. This is a civil action brought by the United States of America to reduce to 20 judgment individual and joint federal tax assessments against Gerald and Sharon 21 Wroblewski and to foreclose federal tax liens against the property described 22 UNITED STATES' FIRST AMENDED COMPLAINT 1 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 6 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 1 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 2 of 13 1 below. 2 2. This action is brought at the direction of the Attorney General of the 3 United States of America and at the request and with the authorization of the 4 Chief Counsel of the Internal Revenue Service, a delegate of the Secretary of the 5 Treasury, pursuant to 26 U.S.c. §§ 7401 and 7403. 6 JURISDICTION AND VENUE 7 3. The Court has jurisdiction over this action pursuant to 26 u.se. § 7402 8 and 28 U.S.e. §§ 1340 and 1345. 9 4. Venue is proper in the Southern District of California pursuant to 28 10 U.sc. §§ 1391(b) and 1396 because Gerald and Sharon Wroblewski reside in this 11 judicial district, and the real property subject to foreclosure in this action is 12 located in this judicial district. 13 DEFENDANTS 14 5. Gerald J. Wroblewski resides at 1269 Farmington Place, San Marcos, 15 California, 92069, within this judicial district. 16 6. Sharon M. Wroblewski resides at 1269 Farmington Place, San Marcos, 17 California, 92069, within this judicial district. 18 7. Thomas J. Martinak, Jr., Sharon M. Wroblewski's brother, resides at 412 19 Beethoven Street, Las Vegas, Nevada, 89128, and is named as a defendant 20 because he may claim an interest in the real property that is the subject of this 21 action. 22 UNITED STATES' FIRST AMENDED COMPLAINT 2 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 7 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 2 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 3 of 13 1 8. Janet Martinak resides at 412 Beethoven Street, Las Vegas, Nevada, 2 89128, and is named as a defendant because she may claim an interest in the real 3 property that is the subject of this action. 4 9. Defendant California Franchise Tax Board is named as a defendant 5 because it may claim an interest in the real property that is the subject of this 6 action. 7 SUBJECT PROPERTY 8 10. The real property located at 1269 Farmington Place, San Marcos, 9 California, 92069, which is the subject of this action is more particularly 10 described as follows: 11 Lot 171 of City of San Marcos Tract No. 26B, Unit 3, in the City of San Marcos, County of San Diego, State of California, according to Map 12 thereof No. 11293, fied in the Office of the County Recorder of San Diego, July 23, 1985. 13 A.P. # 222-523-36. 14 11. Gerald Wroblewski acquired the Subject Property as its sole owner on 15 November 20, 1997, by individual grant deed from Gene A. Ernst and Judith D. 16 Ernst, trustees of the 1997 Ernst Family Trust. Also on November 20, 1997, 17 Sharon Wroblewski quitclaimed any interest in the Subject Property to Gerald 18 Wroblewski. 19 12. Gerald Wroblewski purportedly transferred the Subject Property to 20 Thomas and Janet Martinak on February 29, 2000, by Grant Deed. 21 13. Thomas and Janet Martinak purportedly transferred the Subject Property 22 UNITED STATES' FIRST AMENDED COMPLAINT 3 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 8 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 3 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 4 of 13 1 to Gerald Wroblewski on June 9, 2003, by Quitclaim Deed. 2 Count I: Action to Reduce Assessments Against Gerald J. Wroblewski to Judgment 3 14. The United States of America realleges and incorporates the allegations 4 contained in paragraphs 1 through 13, above, as if fully set forth herein. 5 15. On the dates indicated below, a delegate of the Secretary of the Treasury 6 made assessments against Gerald J. Wroblewski individually for unpaid federal 7 income tax, penalties, interest, and other statutory additions in the amounts and 8 for the periods indicated: 9 10 TAX ASSESSMENT UNPAID PENALTIES FOR INTERET TOTAO YEAR DATE BALANCE FAILURE TO PAY TAX 1994 11/8/1999 $13,635.62 $1,434.50 $1,936.25 $17,006.37 1995 11/8/1999 $9,466.94 $1,414.25 $5,547.96 $16,429.15 1996 11/8/1999 $17,426.52 $2,843.25 $10,212.58 $30,482.35 $63,917.87 11 12 13 14 15 16 16. Proper notice and demand for payment of the assessments set forth in 17 paragraph 15 above, has been made on Gerald J. Wroblewski. 18 17. Despite timely notice and demand for payment of the assessments 19 described above, Gerald J. Wroblewski has neglected or refused to fully pay 20 these assessments which remain due and owing as of December 18,2006, an 21 22 1 As of 12/18/06. UNITED STATES' FIRST AMENDED COMPLAINT 4 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 9 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 4 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 5 of 13 1 unpaid balance of $63,917.87, plus statutory interest and other additions allowed 2 by law. 3 Count II: Action to Reduce Assessments Against Sharon M. Wroblewski to Judgment 4 18. The United States of America realleges and incorporates the allegations 5 contained in paragraphs 1 through 17, above, as if fully set forth herein. 6 19. On the dates indicated below, a delegate of the Secretary of the Treasury 7 made assessments against Sharon M. Wroblewski individually for unpaid federal 8 income tax, penalties, interest, and other statutory additions in the amounts and 9 for the periods indicated: 10 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 10 of 17 Case 3:07-cv-00081-BTM-WMC Document 22 Filed 05/07/ 7 Page 5 of 12Case 3:16-cv-01705 L-DHB 8-5 Filed 11/17/16 Page 6 of 3 1 21. Despite timely notice and demand for payment of the assessments 2 described above, Sharon M. Wroblewski has neglected or refused to fully pay 3 these assessments which remain due and owing as of December 18, 2006, an 4 unpaid balance of $323,079.58, plus statutory interest and other additions 5 allowed by law. 6 Count III: Action to Reduce Joint Assessments Against Gerald J. Wroblewski & Sharon M. Wroblewski to Judgment 7 22. The United States of America realleges and incorporates the allegations 8 contained in paragraphs 1 through 21, above, as if fully set forth herein. 9 23. On the dates indicated below, a delegate of the Secretary of the Treasury 10 made joint assessments against Gerald and Sharon Wroblewski, jointly and 11 severally, for unpaid federal income tax, penalties, interest, and other statutory 12 additions in the amounts and for the periods indicated: 13 TAX AsESMENT UNPAID PENALTIES FOR INTERE TOTAL 14 YEAR DATE BALANCE FAILURE TO PAY TAX 15 1997 10/7/2002 $42,421.94 $0.00 $12,665.25 $55,087.193 16 1998 10/14/2002 $86,792.94 $1,906.68 $25,782.85 $114,482.47 17 1999 9/23/2002 $65,055.75 $4,005.80 $19,617.33 $88,678.88 18 2000 9/30/2002 $10,240.88 $1,131.52 $3,072.74 $14,445.14 19 20 2001 9/9/2002 $5,768.35 $1,403.50 $1,756.38 $8,928.23 21 22 3 As of 3/31/07. UNITED STATES' FIRST AMENDED COMPLAINT 6 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 11 of 17 Case 3:07-cv-00081-BTM-WMC Document 22 Filed 05/07/ 7 Page 6 of 12Case 3:16-cv-01705 L-DHB 8-5 Filed 11/17/16 Page 7 of 3 1 2002 10/10/2005 $5,701.72$5,107.03 $0.00 $594.69 2 $287,323.63 3 4 24. Proper notice and demand for payment of the assessments set forth in 5 paragraph 23 above, has been made on Gerald and Sharon Wroblewski. 6 25. Despite timely notice and demand for payment of the assessments 7 described above, Gerald and Sharon Wroblewski have neglected or refused to 8 fully pay these assessments which remain due and owing as of December 18, 9 2006, an unpaid balance of $287,323.63, plus statutory interest and other 10 additions allowed by law. 11 Count IV: Action to Foreclose Federal Tax Liens 12 26. The United States of America realleges and incorporates the allegations 13 contained in paragraphs 1 through 25, above, as if fully set forth herein. 14 27. By virtue of such assessments and the failure of Gerald and Sharon 15 Wroblewski to pay such assessed liabilties, pursuant to 26 U.se. §§ 6321 and 16 6322, federal tax liens for unpaid tax liabilties have arisen against and attached 17 to all property and rights to property of Gerald and Sharon Wroblewski, held 18 jointly or severally, including without limitation the Subject Property. . 28. On July 21, 2000, a delegate of the Secretary of Treasury recorded in the 19 20 County Recorder's Office for San Diego County, California, a Notice of Federal 21 Tax Lien against Gerald J. Wroblewski. 22 UNITED ST A TFS' FiRS AMENDED COMPLAINT 7 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 12 of 17 Case 3:07-cv-00081-BTM-WMC Document 22 Filed 05/07/ 7 Page 7 of 12Case 3:16-cv-01705 L-DHB 8-5 Filed 11/17/16 Page 8 of 3 1 29. On October 17, 2000, a delegate of the Secretary of Treasury recorded in 2 the County Recorder's Office for San Diego County, California, a Notice of 3 Federal Tax Lien against Sharon Wroblewski. 4 30. On May 17, 2001, a delegate of the Secretary of Treasury recorded in the 5 County Recorder's Office for San Diego County, California, a Notice of Federal 6 Tax Lien against Sharon Wroblewski. 7 31. On November 12, 2002, a delegate of the Secretary of Treasury recorded 8 in the County Recorder's Office for San Diego County, California, a Notice of 9 Federal Tax Lien against Gerald and Sharon Wroblewski. 10 32. To the extent that Thomas and Janet Martinak maintain any apparent 11 property interest in the Subject Property, that interest is in actuality held by 12 Thomas and Janet Martinak solely for the benefit of Gerald and Sharon 13 Wroblewski, and Gerald and Sharon Wroblewski are the true owners of the 14 Subject Property. Accordingly, Thomas and Janet Martinak are the nominees of 15 Gerald and Sharon Wroblewski, and Thomas and Janet Martinak have no right, 16 title, or interest in the Subject Property, except as the nominees of Gerald and 17 Sharon Wroblewski. 18 33. In the alternative, Gerald and Sharon Wroblewski entered into the 19 purported transfer of the Subject Property to Thomas and Janet Martinak as 20 described above, with the actual intent to hinder, delay, or defraud their 21 legitimate creditors, including the United States of America, and without 22 UNITED STATES' FIRST AMENDED COMPLAINT 8 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 13 of 17 Case 3:07-cv-00081-BTM-WMC Document 22 Filed 05/07/ 7 Page 8 of 12Case 3:16-cv-01705 L-DHB 8-5 Filed 11/17/16 Page 9 of 1 receiving a reasonably equivalent value in exchange. Because such purported 2 transfer of property by Gerald and Sharon Wroblewski was fraudulent under 3 California's Uniform Fraudulent Transfer Act, Cal .Civ. Code §§ 3439 - 3439.12 4 ("CUFTA"), it should be set aside, and Gerald and Sharon Wroblewski should be 5 recognized as the true owners of the Subject Property. 6 34. The unpaid balances of the assessments described above are therefore 7 secured by federal tax liens on all the property and rights to property of Gerald 8 and Sharon Wroblewski, held jointly or severally, and all the property and rights 9 to property held in the name of any individuals or purportedly owned or 10 controlled by any individuals as nominees and/ or transferees of Gerald and 11 Sharon Wroblewski. 12 35. The United States is entitled to foreclose its federal tax liens upon the 13 property and rights described above and to receive the proceeds from the sale of 14 the property to be applied towards satisfaction of the outstanding and unpaid 15 tax assessments against Gerald and Sharon Wroblewski. 16 WHEREFORE, the United States of America requests entry of judgment 17 in its favor as follows: 18 (a) That the Court enter Judgment against Gerald J. Wroblewski and in favor 19 of the United States of America in the amount of $63,917.87, plus statutory 20 interest and other additions accruing according to law after the dates of 21 assessment; 22 UNITED STATES' FIRST AMENDED COMPLAINT 9 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 14 of 17 Case 3:07-cv-00081-BTM-WMC Document 22 Filed 05/07/ 7 Page 9 of 12Case 3:16-cv- 1705-L-DHB Document 8-5 Filed 11/17/16 Page 10 of 13 1 (b) That the Court enter Judgment against Sharon M. Wroblewski and in 2 favor of the United States of America in the amount of $323,079.58, plus statutory 3 interest and other additions accruing according to law after the dates of 4 assessment; 5 (c) That the Court enter Judgment against Gerald and Sharon Wroblewski, 6 jointly and severally, in favor of the United States of America in the amount of 7 $287,323.63, plus statutory interest and other additions accruing according to law 8 after the dates of assessment; 9 (d) That the Court order that the United States of America has valid and 10 subsisting liens by virtue of the assessments set forth above, on all property and 11 rights to property belonging to Gerald and Sharon Wroblewski, held jointly or 12 severally, including without limitation the Subject Property; 13 (e) That the Court order that Thomas and Janet Martinak hold no interest in 14 the Subject Property; 15 (f) In the alternative, that the Court order that Thomas and Janet Martinak 16 are nominees of Gerald and Sharon Wroblewski with regard to the Subject 17 Property and hold interest in the Subject Property solely for the benefit of Gerald 18 and Sharon Wroblewski, and that Gerald and Sharon Wroblewski are the true 19 owners of the Subject Property; 20 (g) In the alternative, that the Court order that the purported transfers of the 21 Subject Property as described above are void under CUFT A because they were 22 UNITED STATE' FIRST AMENDED COMPLAINT 10 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 15 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 10 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 11 of 13 1 made: with the actual intent to hinder, delay, or defraud the legitimate creditors 2 of Gerald and Sharon Wroblewski, including the United States of America; and 3 without an exchange of reasonably equivalent value at a time when Gerald and 4 Sharon Wroblewski anticipated becoming insolvent; 5 (h) That the Court order that the federal tax liens against the defendants be 6 foreclosed upon Gerald and Sharon Wroblewski's interest in the Subject 7 Property, that the Subject Property be ordered sold, and that the proceeds from 8 such sale be distributed in accordance with the Court's findings as to the validity 9 and priority of the liens and claims of all parties; and 10 (i) That the United States of America be awarded its costs and such other and 11 further relief as is just and proper. 12 13 KAREN P. HEWITT United States Attorney 14 THOMAS C. STAHL (CASB # 078291) Assistant United States Attorney 15 Chief, Civil Division Southern District of California 16 880 Front Street, Room 6293 San Diego, CA 92101-8893 17 Telephone (619) 557-5610 18 Dated: April 13, 2007 sf Michael G. Pitman MICHAEL G. PITMAN 19 JUSTIN S. KIM Trial Attorneys, Tax Division 20 u.s. Department of Justice P.O. Box 683 21 Ben Franklin Station Washington, D.C. 20044-0683 22 Telephone (202) 305-7938 UNITED STATES' FiRS 11 AMENDED COMPLAINT Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 16 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 11 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 12 of 13 1 CERTIFICATE OF SERVICE 2 IT is HEREBY CERTIFIED that service of the foregoing UNITED STATES' 3 UNOPPOSED MOTION FOR LEAVE TO AMEND COMPLAINT was made on the 4 17th day of April, 2007, by placing a copy thereof in the United States Mail, by 5 registered or certified mail, return receipt requested, in a postage-prepaid 6 envelope addressed to: 7 Gerald J. and Sharon M. Wroblewski 1269 Farmington Place 8 San Marcos, CA 92069 9 Thomas J. and Janet Martinak 412 Beethoven Street 10 Las Vegas, NV 89128 11 State of California, Franchise Tax Board P.O. Box 2952 12 Sacramento, CA 95812 13 I am employed at the United States Department of Justice, Tax Division, 555 4th 14 Street, N.W., Room 7216, Washington, D.e., the city where the mailng occurs. i 15 am over 18 years of age and I am not a party to the cause. The envelopes 16 addressed as set forth above were sealed and deposited in the mail with the 17 postage thereon fully prepaid. 18 i declare under penalty of perjury that the foregoing is true and correct. 19 20 f sf Michael G. Pitman MICHAEL G. PITMAN Trial Attorney, Tax Division U.s. Department of Justice21 22 Case 3:07-cv-00081-BTM-WMC Document 17 Filed 04/17/2007 Page 17 of 17 Case 3:07 cv-00081-BTM-WMC Document 22 Filed 05/07/07 Page 12 of 12Case 3:16-cv-01705-L-DHB Document 8-5 Filed 11/17/16 Page 13 of 13 EXHIBIT B Case 3:16-cv-01705-L-DHB Document 8-6 Filed 11/17/16 Page 1 of 2 AO 450 Judgment in a Civil Case United States District Court SOUTHERN DISTRICT OF CALIFORNIA United States of America V. AMENDED JUDGMENT IN A CIVIL CASE Gerald J. Wroblewski, et al. CASE NUMBER: 07cv0081-BTM(WMc) Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict. X Decision by Court. This action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered. IT IS ORDERED AND ADJUDGED that final judgment is entered in favor of the United States on Counts I, II, and III as follows: Judgment is entered in favor of the United States and against (1) Defendant Gerald J. Wroblewski in the amount of $36,035.03, plus interest accruing after September 5, 2008 pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c), until paid; (2) Defendant Sharon M. Wroblewski in the amount of $47,990.63, plus interest accruing after September 5, 2008 pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c), until paid; and (3) Defendants Gerald J. and Sharon M. Wroblewski, jointly and severally, in the amount of $225,779.29, plus interest accruing after September 5, 2008 pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c), until paid. February 19, 2009 W. Samuel Hamrick, Jr. Date Clerk s/V.Trujillo (By) Deputy Clerk ENTERED ON February 19, 2009 Case 3:07-cv-00081-BTM-WMC Document 72 Filed 02/19/09 Page 1 of 1Case 3:16-cv-01705-L-DHB Document 8-6 Filed 11/17/16 Page 2 of 2 EXHIBIT C Case 3:16-cv-01705-L-DHB Document 8-7 Filed 11/17/16 Page 1 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 07cv81 BTM(WMc) UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA UNITED STATES OF AMERICA, Plaintiff, CASE NO. 07cv81 BTM(WMc) ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR SUMMARY JUDGMENT vs. GERALD J. WROBLEWSKI, et al., Defendant. The United States of America (“United States”) has filed a motion for summary judgment against Defendants Gerald J. Wroblewski (“Mr. Wroblewski”) and Sharon M. Wroblewski (“Mrs. Wroblewski”) (collectively “the Wroblewskis”). For the reasons discussed below, the United States’ motion for summary judgment is GRANTED IN PART AND DENIED IN PART. I. FACTS The United States commenced this action to reduce to judgment federal income tax assessments against the Wroblewskis, individually and jointly, and to foreclose federal tax liens against property located at 1269 Farmington Place, San Marcos, California, 92078 (“Subject Property”). The United States does not seek to collect “protective assessments” that were made against the Wroblewskis in tax years 1994, 1995, and 1996. The United States also does not seek to reduce to judgment penalties and interest on penalties that were Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 1 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 2 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 07cv81 BTM(WMc) assessed against the Wroblewskis because these amounts were arguably discharged in bankruptcy in 2006. (The Wroblewskis filed a Chapter 7 bankruptcy petition in 2005.) Excluding the protective assessments, penalties, and interest on penalties, the United States seeks to reduce to judgment the following amounts: Individual Assessments Against Mr. Wroblewski Tax Year 1994: $ 6,758.90 Tax Year 1995: $ 7,264.72 Tax Year 1996 $22,011.41 Total: $36,035.03 plus interest accruing after 9/5/08 Individual Assessments Against Mrs. Wroblewski Tax Year 1994: $ 7,275.08 Tax Year 1995: $ 8,249.21 Tax Year 1996: $32,466.34 Total: $47,990.63 plus interest accruing after 9/5/08 Joint Assessments Against the Wroblewskis Tax Year 1997 $42,610.70 Tax Year 1998 $89,581.92 Tax Year 1999 $69,455.50 Tax Year 2000 $11,213.26 Tax Year 2001 $ 8,306.36 Tax Year 2002 $ 4,611.55 Total: $225,779.29 plus interest accruing after 9/5/08 Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 2 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 3 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 07cv81 BTM(WMc) II. DISCUSSION The Wroblewskis do not claim to have paid the amounts that the United States seeks to reduce to judgment. Instead, the Wroblewskis question the computation of their individual tax liabilities and contend that their individual and joint liabilities (with the exception of their joint liabilities for 2002) were discharged in bankruptcy. However, as discussed below, the Wroblewskis have failed to raise a triable issue of material fact with respect to either the amount or nondischargeability of their liabilities. A. Computation of Individual Liabilities As discussed above, the United States does not seek to collect the “protective assessments” that were assessed against Mr. and Mrs. Wroblewski, individually, for tax years 1994, 1995, and 1996. Nevertheless, the Wroblewskis argue that it is unclear how the protective assessments were made and how they were corrected. In response to this argument, the United States clarified that: (1) Mr. Wroblewski was assessed tax based on 100% of his community property income; (2) Mrs. Wroblewski was assessed tax on 50% of her community property income; (3) the following protective assessments were made against Mr. Wroblewski: 1994: $9,715; 1995: $10,810; 1996: $45,419; (4) the following protective assessments were made against Mrs. Wroblewski: 1994: $96,475; 1995: $9,318.50; 1996: $3,622.50; (5) these protective assessments are excluded from the total unpaid balances that the United States seeks to reduce to judgment. (Decl. of Rosanna Savala in Support of Reply, ¶¶ 7-9.) The United States has provided sufficient information regarding how the protective assessments were calculated and how they have been excluded from the amounts sought in this action. The individual assessments against Mr. and Mrs. Wroblewski are supported by Certificates of Assessments and Payments (Exs. A-G to Decl. of Rosanna Savala.) The introduction of Certificates of Assessments and Payments establishes a prima facie case for the United States. United States v. Jones, 33 F.3d 1137, 1139 (9th Cir. 1994). The burden then shifts to the taxpayer to show that he or she is not liable for the assessment. Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 3 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 4 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 In a declaration, Robert J. Gumser, the Wroblewskis’ attorney, complains that the United States did not submit detailed interest computations. However, IRS Officer Rosanna Savala explains that she determined the amount of interest due by using an IRS computer program. (Decl. of Rosanna Savala, ¶¶ 6-7.) Ms. Savala is familiar with the proper use of the IRS computer interest calculation functions. (Id.) Ms. Savala’s declaration is sufficient to establish a prima facie case regarding the amount of interest that is owed. The Wroblewskis have not submitted evidence shedding doubt on these interest calculations or the method that was used to derive them. 4 07cv81 BTM(WMc) The Wroblewskis generally argue that there is uncertainty regarding the computation of the assessments and complain that when they have asked the IRS for payoff numbers, they have been given different answers. However, the Wroblewskis do not point to any specific inaccuracies in the United States’ computations, nor do they provide calculations of their own. 1 Therefore, the Wroblewskis have failed to satisfy their burden of showing that the amounts of the assessments are incorrect. Furthermore, Mrs. Wroblewski is barred from challenging her individual assessments. Mrs. Wroblewski unsuccessfully challenged her individual assessments for tax years 1994 through 1996 in the United States Tax Court. (Ex. 4 to Decl. of Michael G. Pitman.) The Tax Court’s adjudication of Mrs. Wroblewski’s tax liabilities for tax years 1994 through 1996 is res judicata as to any subsequent proceedings involving the same liabilities. B. Bankruptcy Discharge Generally, a debtor who files a Chapter 7 bankruptcy petition is discharged from personal liability for all debts that arose before the filing of the petition, including those related to unpaid taxes. 11 U.S.C. § 727(b). However, 11 U.S.C. § 523 provides for the following exception: (a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt-- (1) for a tax or a customs duty-- (A) of the kind and for the periods specified in section 507(a)(3) or 507(a)(8) of this title, whether or not a claim for such tax was filed or allowed; (B) with respect to which a return, or equivalent report or notice, if required-- Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 4 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 5 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 07cv81 BTM(WMc) (i) was not filed or given; or (ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or (C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax . . . . In order for a document to qualify as a “return,” within the meaning of section 523(a)(2)(B), the document (1) must purport to be a return; (2) must be executed under penalty of perjury; (3) must contain sufficient data to allow calculation of tax; and (4) must represent an honest and reasonable attempt to satisfy the requirements of the tax law. In re Hatton, 220 F.3d 1057 (9th Cir. 2000). The United States has no record of Mr. Wroblewski ever filing a form 1040 for tax years 1994, 1995, or 1996. (Decl. of Rosanna Savala, ¶ 14.) The United States also has no record of Mrs. Wroblewski filing a Form 1040 for tax years 1994 or 1995. (Decl. or Rosanna Savala, ¶ 15.) Mrs. Wroblewski did file a Form 1040 for tax year 1996. However, in that Form 1040, Mrs. Wroblewski reported her income as “0" and made nonsensical arguments regarding why she was not liable for taxes. (Ex. R to Decl. of Rosanna Savala.) Therefore, the Form 1040 for tax year 1996 does not qualify as a “return.” Mr. and Mrs. Wroblewski both declare that they filed returns for tax years 1994, 1995, and 1996. (Decl. of Sharon M. Wroblewski, ¶ 11; Decl. of Gerald J. Wroblewski, ¶ 11.) However, they do not attach copies of the alleged returns, nor do they establish that these alleged returns satisfied the requirements set forth above. In 2003, the IRS received a purported joint tax return from the Wroblewskis for tax year 1995. (Decl. of Rosanna Savala in Support of Reply, ¶ 4.) This return was disallowed because it was not signed and omitted more than $8,000 worth of gambling winnings third parties reported paying to the Wroblewskis. (Id.) The Wroblewskis have failed to raise a triable issue of fact with respect Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 5 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 6 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 In their opposition, the Wroblewskis argue that certain abatements reflected in the Certificates of Assessments and Payments might be evidence that returns were actually filed. However, IRS Officer Rosanna Savala explains that the abatements identified by the Wroblewskis were due to the IRS’s conclusion that the underlying assessments, which were the result of forgiveness of debt income reported by a third party, were discharged in banrkuptcy. (Decl. of Rosanna Savala in Support of Reply, ¶ 10.) 6 07cv81 BTM(WMc) to whether they filed returns for tax years 1994, 1995, and 1996.2 As a result, the Court finds that the Wroblewskis’ tax liabilities for these years were not discharged in bankruptcy. With respect to the Wroblewskis’ joint liabilities for tax years 1997-2001, the United States contends that these liabilities were non-dischargeable under section 523(a)(1)(C) because the Wroblewskis willfully attempted to evade them. Specifically, the United States has submitted evidence that in 2000, the Wroblewskis transferred title to the Subject Property to Thomas J. Martiniak, Mrs. Wroblewski’s brother, for little to no consideration, while maintaining control of the property. At the time of the transfer, the Wroblewskis did not have substantial assets other than the Subject Property. (Depo. of Sharon M. Wroblewski (Ex. 2 to Pitman Decl.) at 128:13-16.) Mrs. Wroblewski, a realtor, orchestrated the transaction; she contacted the title company and lender and arranged for the paperwork to be drawn up. (Martiniak depo. (Ex. 1 to Pitman Decl.) at 20:6-8.) Martiniak and the Wroblewskis agreed that Martiniak would buy the house, and the Wroblewskis would pay him rent on the house in an amount equal to his monthly expenses. (Id. at 19:22-24.) Martiniak did not make a down payment in connection with the purchase, despite paperwork indicating otherwise. (Id. at 28:12-14.) The Wroblewskis covered all of Martiniak’s mortgage and property tax payments. (Id. at 43:7-44:4; Depo. of Gerald J. Wroblewski (Ex. 3 to Pitman Decl.) at 31:11- 12, 32:4-12.) The Wroblewskis retained control over the Subject Property during Martiniak’s ownership of the property. (Martiniak depo. at 20:1-2, 60:20-22.) In 2003, the Subject Property was transferred back to Mr. Wroblewski, with no money exchanged. (Depo. of Gerald J. Wroblewski at 26:21-25.) The Wroblewskis state that the reason they sold the Subject Property to Martiniak was because they wanted to move to the State of Washington but were having difficulty selling the house. (Decl. of Sharon M. Wroblewski, ¶ 20.) According to the Wroblewskis, they Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 6 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 7 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 07cv81 BTM(WMc) expected the property to eventually be resold to a third party at or around the price Martiniak bought the house for. (Id. at ¶ 21.) However, the Wroblewskis ended up not moving, and the property was not sold to a third-party. (Id. at ¶ 22.) The Wroblewskis also claim that the Subject Property was deeded back to Mr. Wroblewski at the urging of an IRS officer named Mr. Rude. (Id. at ¶ 28.) The Wroblewskis do not, however, refute the essential aspects of the transaction - i.e., the Subject Property was the Wroblewski’s only substantial asset; title was transferred to Martiniak; Martiniak did not have to pay any out-of-pocket expenses in connection with the purchase or subsequent ownership of the property; the Wroblewskis retained control over the property throughout Martiniak’s ownership of it; and the property was transferred back to Mr. Wroblewski without consideration. In addition, the transfer of the Subject Property occurred less than two weeks after the Tax Court issued an opinion entering judgment against Mrs. Wroblewski for tax years 1994, 1995, and 1996 in the amount of $96,868.75. (Ex. 4 to Pitman Decl.) These facts, when considered together with the Wroblewskis’ past failure to file individual returns, are sufficient to establish that the Wroblewskis willfully attempted to evade their joint liabilities for 1997 through 2001. See In re Griffith, 206 F.3d 1389, 1396 (11th Cir. 2000) (holding that an intra-family transfer of property for little to no consideration supported a finding that the debtor willfully attempted to evade payment of taxes); See also Dalton v. IRS, 77 F.3d 1297 (10th Cir. 1996) (affirming bankruptcy court’s finding that taxpayer willfully attempted to evade taxes by transferring property to betrothed where there was no documentation properly accounting for the transaction). Mrs. Wroblewski argues that since she was never on the title to the Subject Property, the transfer of the property to Martiniak cannot be held against her. This argument lacks merit. The proper inquiry is whether Mrs. Wroblewski engaged in actions designed to defeat the collection of taxes owed jointly by herself and her husband. As pointed out by the United States, the best avenue available to the IRS for the collection of the Wroblewskis’ joint tax liabilities was foreclosure upon the Subject Property. Mrs. Wroblewski actively participated in the plan to transfer the property to her brother so that the property would be shielded from Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 7 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 8 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 07cv81 BTM(WMc) tax collection proceedings. Therefore, the Wroblewskis’ joint liabilities for tax years 1997 through 2001 were rendered non-dischargeable in their entirety under section 523(a)(1)(C). C. Foreclosure The United States seeks to foreclose federal tax liens against the Wroblewskis’ interest in the Subject Property. However, according to the Wroblewskis, on August 20, 2008, the lender holding the First Deed of Trust foreclosed on the property. (Decl. of Sharon M. Wroblewski, ¶ 8.) The United States concedes that if this is true, the United States’ foreclosure claim would be impacted. Accordingly, the Court denies the United States’ motion for summary judgment as to this claim. Upon further investigation, the United States may either request that the foreclosure claim be dismissed or may file a new motion for summary judgment on the claim. III. CONCLUSION For the reasons discussed above, the United States’ Motion for Summary Judgment is GRANTED as to the first, second, and third claims for relief (to reduce assessments to judgment) and is DENIED as to the fourth claim for relief (to foreclose federal tax liens). The Clerk shall enter judgment in favor of the United States and against (1) Defendant Gerald J. Wroblewski in the amount of $36,035.03, plus interest accruing after September 5, 2008 pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c), until paid; (2) Defendant Sharon M. Wroblewski in the amount of $47,990.63, plus interest accruing after September 5, 2008 pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c), until paid; and (3) Defendants Gerald J. and Sharon M. Wroblewski, jointly and severally, in the amount of $225,779.29, plus interest accruing after September 5, 2008 pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c), until paid. The Judgment is not final because the foreclosure claim is still pending. In addition, it is unclear to the Court whether the United States requests that the Court declare the validity and amount of its liens independent of the foreclosure claim. If the United States Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 8 of 9Case 3:16-cv- 1705-L-DHB Document 8-7 Filed 11/17/16 Page 9 of 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 07cv81 BTM(WMc) requests such relief, the United States shall, within 30 days of this Order, file papers indicating as such and explaining why such relief is necessary. IT IS SO ORDERED. DATED: January 16, 2009 Honorable Barry Ted Moskowitz United States District Judge Case 3:07-cv-00081-BTM-WMC Document 65 Filed 01/16/09 Page 9 of 9Case 3:16-cv-01705-L-DHB Document 8-7 Filed 11/17 Page 10 of 10 EXHIBIT D Case 3:16-cv-01705-L-DHB Document 8-8 Filed 11/17/16 Page 1 of 15 DefJartrnont of the Treasury internal Rov;;mue Service FGiffi 433 .. A (OIC) I (Rev. May 2012) Coiiection information Statement for Wage Earners and Self-Employed Individuals Use this form if yov are • An individual who owes income tax on a Form 1040, U.S. Individual Income Tax Return = .1\n individual wi1h a persona! !!ability for Excise Tax e /\n individual responsible for a TrJst Fund Recover; Penalty • An individual who is personally responsible for a partnership liability = An indillidua! who is se!f-emp!oyed or has self-employment income. You are considered to be self-employed if you are in business for yourself, or carry on a trade or business. Wage earners Complete sections 1, 3, 4 (Box 1), 6, and 7 including signature line on page 7. Self-employed lndlvldu31s Complete all sections and signature line on page 7 Note: Include attachments if additional space is needed to respond completely to any question. Section 1 Personal and Household Information Last Name Wroblewski Marital status ~ Married D Unmarried First Name Gerald Date of Birth (mmldd/yyyy) Social Secuity Number County of Residence Clark County Mailing Address (Jf different from sbove or Post Office Box number) Primary Phone Secondary Phone 1 102 ) 629-3045 ~:~m-cc-pu,-1:-:-:..,:s-n-cNc-a_m_e-------------------1~("'-'-"' Not employed . (Street, City, Srate, ZIP Coc!e) Provide information about your spovse. Spouse's Last Name First Name Date of Birth (mmlddlyyyy) I Sh"]Yes D No ~Jame of Business GERALD WROBLEWSKI Business Telephone Number Employer Identification Number Business Website Trade Name or dba I 702 ) 629-3045 ELECTRICAL Description of Business Total Number of Employees Frequency of Tax Deposits 1 Average Gross Monthly ELECTRICAL MAINTAINANCE 1 Not Applicable Payroll S 0 Catalog Number 558960 'MNw.irs.gov Fmm 433-A (OIC) (Rev. 5-2012) IRS-000553 Case 3:16-cv-01705-L-DHB Document 8-8 Filed 11/17/16 Page 2 of 15 uo you or your spouse have any other business interests? Bus1ness Address (Street, Cit>;, State, ZIP code) D Yes (Percentage of ownership: r;zJ No Business Name Business Telephone Number Business Identification Number I O Partnership 0 LLC D Corporation D Other Section 3 Personal Asset Information Cash and Investments (domestic and foreign) Use !he most current statement for each type of acroun!, such as checking, savings, money market and online accounts. stored va!tle r::<'lrds (such as, a payroll card from an employer~ investment and retirement accounts (I HAs, Keogh, 401 (k) platls, stocks, bonds, mutual funds, cel1ifica!es of deposit), life insurance policies that have a cash value, and safe deposit boxes. Asset value is subject to adjustment by IRS based on individual circumstances. Enter the total amount available for each of the following (if additional space is needed includa attachments). If any line item is zero or less, enter "0". Do not enter negative numbers on this form. 0 Cash 0 Checking D Savings 0 Money Market 0 Online Account 0 Stored Value Card Bank Name 1 Account Number ' See Supplementary Schedule ("a)S D Checking D Savings D Money Market D Online Account D Stored Value Card Dank Name Account Number (1b) $ Total value of bank accounts from attachment 690 Add lines (1a) through (1c) = (1) $ 690 lnves1ment Account: D Stocks D Bonds D Other Name of Financial Institution I Account Number Current Market Vaiue Less Loan Baism_:e $ X 8 = $ -$ lnves1ment Account D Stocks D Bonds D Other Name of Financial Institution Account Number Current Market Value LHs::; Lo<:~n B<:~lanr..:tJ $ X 8 = $ -$ Total of investment accounts from attachment. [current market value X.8 less loan balance(s)] (2c)$ Add lines (2a) through (2c) = (2) $ Retirement Account: D 4otk D IRA D Other N~mP. of Fin8nci<'ll ln!'ltitution I Ac..count Number I Current Market Value Less Loan Balance $ X.7 = $ -$ (3a) $ Retirement Account: D 4Dtk D IRA D Other Name of Financial Institution I Account Number Current Market Value Less Loan Balance $ X .7 = $ -$ (3b) $ Total of investment accounts from attachment. [current market value X.7 less loan balance(s)] (3c) $ Add lines (3a) through (3c) = (3) $ Catalog Number 558960 www.irs.gov Form 433-A (OIC) (Rev. 5-2012) IRS-000554 Case 3:16-cv-01705-L-DHB Document 8-8 Filed 11/17/16 Page 3 of 15 Gerald Wroblewski Current Cash Value Less Loan Balance $ = (4a) $ Total of life insurance policies from attachment. Less Any Loan $ -$ Add lines $ Real Estate (Enter information about any house, condo, co-op, time share, etc. that you own or are buying) PropP.rty ArlrlrP.s~ (Street Address City State ZIP Code) 1 t Primary Residence 1\71 Yes 0 No LAS VEGAS, NV 89131 How is property tit!ed?(ioinl tenancy, etc.)? Current Markel Value $ N/A /\. .0- ~ Property Address (Stmel Address, Cily, Stat(), ZIP Code) Hmv is property tit!ed?(jo1nt tenancy, etc.)? Current Market Value $ X .8 = $ Property Address (Street Address, City, State, ZIP Code) How is property titled?(joint tenancy, etc.)? Current Market Value County and Country Clark County United States Description of Property Less Loan Balance (Morlgages, etc.) -$ N!A Total Value of Rea! Cstate =I (Sa)$ Primary Residence 0 Yes D No County and Country I Description of Property Less Loan Balance (Mortgages, etc.) -$ Total Vuluc of Reul Estate- (5b) $ Primary Residence D Yes D No 1 county and Country Description of Property Less Loan Balance (Mortgages, etc.) $ X 8 = $ -$ TnfRI VRIUR of Real Estate= 15c) $ Total value of property(s) from attachment [current market value X .Bless any loan balance(s)] I ;5d,) ~ Add lines (Sa) through (5b) = (5) $ Vehicles (Enter information about any cars, boats, motorcycles, etc. that you own or lease) Vehicle Make Model CHEVY Current Market Va!ue $ 4 525 X .8-$ 3 620 Vehicle Make CHEVY Current Market Value $ 1.2!10 X _8- $ 1.noo Vehicle Make Model Current Market Value $ X .8-$ Less Loan Ba!ance - $ Less Loan Balance -$ -$ Monthly Lease/Loan .A.mount $ Total value of vehicle (if /flu vel1idtl Is leased, entero as the rota/ value) - (6a) $ Monthly Lease/Loan Amount$ Monthiy LeaseJLoan Amount$ Total value of vehicle (if the 'Jehic/e is leased, enter 0 as the rota! value) - (6c) $ 3,620 1,000 Catalog Number 558960 WVIW.irs.gov Form 433-A (OIC) (Rev. 5,20121 IRS-000555 Case 3:16-cv-01705-L-DHB Document 8-8 Filed 11/17/16 Page 4 of 15 Total value of vehicles listed from attachment [current market value X .8 less any loan balance(s)] (6d) $ Add lines (6a) through (6d) = (6) $ 4,620 Other valuable items (artwork, collections, jewelry, items of value in safe deposit boxes, etc). Description of asset: Personal effects Current Market VEJIUe Less Lc;:m Balance $ 1 ?nn X.8- $ $ - (7a) $ 960 Description of asset Current Market Value Less Loan Balance $ X.8"" $ (7b) $ To;ai vaiue of vaiuabie items iisted from attachment [current market vaiue X .8 less any ioan baiance(s)j (7c) $ Add lines {7a) through {7c} = (7) $ 960 Section 4 Business Asset Information (for Self-Employed) List business assets such as bank accounts, tools, books, machinery, equipment, business vehicles and real property that is m..·.:ned!leased/rnnted. If additional space is needed, <1tl.ach a list of items. U Cash U Checking U Savings U Money Market U Online Account U Stored Value Card Bank Name I Account Number (Sa)$ D Checking D Savings D Money Market D Online Account D Stored Value Card Bank Name 1 Account Number I I (Bb)$ Total value of bank accounts from attachment (Be)$ Add lines (8a} through (Be) for total bank account(s) = (8) $ Description of asset: Tools Current Market Va!ue Less Loan 8a!ance $ 600 X.B =$ 480 -$ 0 I . = (9a):!) 480 Description of asset: Current Market Value Less Loan Balance $ X .8 o $ -$ (9b) $ T utai vide 1he number. 13ox 1 Aval!ab!€ Equity !n .ll..5sets Add lines (1) through (8), and line (11) and enter the amount in Box 1 = $ 0 Catalog Number 55896Q WIJo.'w.irs.anv Forrn 433-A (OIC) (Rev 5·2012) IRS-000557 Case 3:16-cv-01705-L-DHB Document 8-8 Filed 11/17/16 Page 6 of 15 NOte: If you provide a current profit and loss (P&l) statement for the Information below, enter the total gross monthly Income on line 18 and your monthly expenses on line 29 below. Do not complete lines (13)- (17) and (19) • (29). You may u"Se the amounts claimed for income and expenses on your most recent Schedule C; however, if the amount has changed significantly within the past year, a current P&L should be submitted to substantiate the claim. Business Income (You may average 6·12 months income/receipts to determine your Gross monthly income/receipts.) Gross receipts (13) $ 846 Gross rental income (14) $ 0 Interest income (15) $ 0 Dividends (16) $ 0 Other income (17) $ 0 Gross Monthly Business Income ·Add lines (13) through (17) = I {16) $ 846 Business Expenses (You may average 6·12 months expenses to determine your average e}{penses.) i I of a product or service} 182 Inventory purchased (e.g., goods bought for resale) (items used to conduct business end used up within one year, e.g .. bo::Jks, ofJico supplies, professional equipment, Vehicle costs (gas, 01/, repairs, maintenance) 327 0 Other secured debts (not credit cards) 0 Other business expenses (mclude a list) Enter your household's gross monthly Income_ The information below i.~ for yourself, your spouse, and anyone else who contributes to your household's income. The entire household includes spouse, significant other, children, and others who contribute to the household. This is necessary for the IRS to accurately evaluate your offer. Monthly household income Primary taxpayer Wages $ Spouse Wages $ Interest and dividends Social Security +$ Social Security +$ Pension(s) 1 820 Pension(s) 618 +$ Distributions (suc/1 as, income from pa1tner.silip.s, sub-S Corporations, etc.) Net rental income Net business income from Box 2 Chi!d support received Alimony received 0 0 - Total primary taxpayer income Total spouse Income Add lines (31) through {38) and enter the amount in Box 3;;;: Are there additional sources of income used to support the household, e.g. non·liable spouse, roommate, etc. Catalo~ Number 558960 www.irs qov (31) $ 1,820 1 (32) $ 618 (33) $ (34) $ (35) $ 136) $(see attch.) 374 {37) $ (38) $ Box 3 Total Household Income $ 2,812 D Yes [;,'] No Form 433-A (OIC) (Rev. 5·2012) IRS-000558 Case 3:16-cv-01705-L-DHB Document 8-8 Filed 11/17/16 Page 7 of 15 Note: If you provide a current profit anclloss (P&L) statement for the information below, enter the total gross monthly Income on line 16 and your monthly expenses on line 29 below. Do not complete lines (13)- (17) and (19)- (29). You may use the amounts claimed for income and expenses on your most recent Schedule C; however, if the amount has changed significantly within the past year, a current P&L should be submitted to substantiate the claim. Business Income (You may average 6-12 months income/receipts to determine your Gross monthly income/receipts.) Gross receipts (13} $ Gross rental income (14) $ Interest income (15) $ Dividends (16) $ Other income (17) $ Gross Monthly Business Income- Ada lines {13) through (17} = I {18) $ Business Expenses (You may average 6-12 months expenses to determine your average expenses.) Materials purchased (o.g., items directly related to the production of a product or service) Inventory purchased (e.g., goods bought for resale) Gross wages and salaries Rent Supplies (items used to conduct business