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United States v. Bennett

United States District Court, W.D. Virginia, Roanoke Division

February 13, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
MATTHEW J. BENNETT, Defendant. Tax Type Tax Year Assessment Date Action Date Closed Date Days Tolled 30 Days

          REPORT AND RECOMMENDATION

          Hon. Robert S. Ballou United States Magistrate Judge.

         Plaintiff United States of America brings this action to collect $63, 093.17 in unpaid federal income taxes and civil penalties assessed against pro se Defendant Matthew J. Bennett for eleven different tax years between 1997 and 2012. Dkt. 1, at 2-3. The government also seeks interest accrued on the amounts due from September 15, 2017, until paid. Id. at 3. I held a hearing on the parties' cross-motions for summary judgment, and the matter is ripe for decision. I RECOMMEND GRANTING the government's partial motion for summary judgment (Dkt. 18) as to Defendant's statute of limitations defense and, accordingly, RECOMMEND DENYING Defendant's motion for partial summary judgment (Dkt. 16). I also RECOMMEND GRANTING the government's motion for summary judgment (Dkt. 28), and entering judgment against Defendant in the amount of $65, 026.13 plus interest accrued since July 23, 2018.

         STATEMENT OF FACTS

         The government assessed against Defendant federal income tax liabilities for unpaid taxes for seven tax years and civil penalties for frivolous tax submissions for six tax years. Dkt. 1, at 2. The government submitted an updated calculation, including all accrued interest through July 23, 2018, of the amounts it claims Defendant owes on each assessment. Dkt. 29, at 3.

Tax Type

Tax Year

Assessment Date

Assessed Amount

Amount Owed with Interest (through July 23, 2018)

§ 6702 Frivolous Tax Submission

1997

11/3/2008

$10, 000.00

$2, 155.651

§ 6702 Frivolous Tax Submission

1998

11/3/2008

$5, 000.00

$7, 095.04

§ 6702 Frivolous Tax Submission

1999

11/3/2008

$5, 000.00

$7, 095.04

Unpaid Income Tax (Form 1040)

2001

6/7/2004

$3, 624.00

$7, 266.01

Unpaid Income Tax (Form 1040)

2002

2/21/2005

$2, 996.00

$8, 737.24

§ 6702 Frivolous Tax Submission

2002

11/3/2008

$5, 000.00

$7, 095.04

Unpaid Income Tax (Form 1040)

2003

5/18/2009

$3, 846.00

$13, 890.53

Unpaid Income Tax (Form 1040)

2004

12/11/2006

$3, 006.00

$1, 854.48

§ 6702 Frivolous Tax Submission

2004

7/16/2007

$500.00

$837.56

§ 6702 Frivolous Tax Submission

2005

2/4/2008

$500.00

$741.24

Unpaid Income Tax (Form 1040)

2006

5/5/2008

$1, 324.00

$2, 527.46

Unpaid Income Tax (Form 1040)

2008

4/13/2009

$3, 942.00

$3, 180.17

Unpaid Income Tax (Form 1040)

2012

5/13/2013

$2, 156.00

$2, 610.89

         Several years prior to this collection action, Defendant filed for bankruptcy. In re Bennett, 7:13-bk-71688 (Bankr. W.D. Va. Oct. 18, 2013). As part of the bankruptcy action, Defendant initiated an adversary proceeding to challenge the validity and extent of the government's tax lien against his property. Dkt. 29, at 1-2; Dkt. 29-5. The lien arose out of the proof of claim filed by the IRS in the bankruptcy proceeding, showing that it had valid claims to Defendant's assets based upon the assessments. Defendant alleged that the government's assessments for all of the federal income tax liabilities and civil penalties at issue here, inter alia, were invalid. Dkt. 29-5. Defendant stipulated in the adversary proceeding that “he is liable for[1] any unpaid tax liabilities shown on the proof of claim for any year for which there is a timely valid assessment.” Dkt. 29-6, at 3. The bankruptcy court granted the government's motion for summary judgment and dismissed Defendant's adversary proceeding, thus rejecting the challenge to the assessments and allowing the government's proof of claim in the bankruptcy proceeding. Dkt. 29-9; Bennett v. IRS, 7:14-ap-7024, Dkt. 30 (Bankr. W.D. Va. Sep. 19, 2014). The entire bankruptcy case was dismissed on November 13, 2014. In re Bennett, 7:13-bk-71688, Dkt. 90. This action by the government to collect Defendant's unpaid federal income taxes and assessed civil penalties followed.

         LEGAL STANDARD

         Summary judgment is proper only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the suit under the governing law.” King v. Pulaski Cty. Sch. Bd., 195 F.Supp.3d 873, 882 (W.D. Va. 2016) (internal citations and quotations omitted) (citing Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013)). “The moving party must demonstrate the absence of an essential element of the nonmoving party's case and that it is entitled to judgment as a matter of law.” Honor v. Booz-Allen & Hamilton, Inc., 383 F.3d 180, 185 (4th Cir. 2004). Once the moving party satisfies this burden, “the nonmoving party then must come forward with specific facts showing that there is a genuine issue for trial.” Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)).

         In determining whether summary judgment is appropriate, the court views the facts and draws all reasonable inferences in the light most favorable to the non-moving party. Matsushita, 475 U.S. at 587-88. “In so doing, a court is not entitled to either weigh the evidence or make credibility determinations.” In re French, 499 F.3d 345, 352 (4th Cir. 2007)). Where the record taken as a whole “could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate.” Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir.1991) (citing Matsushita, 475 U.S. at 587).

         ANALYSIS

         The IRS is “authorized and required to make the inquiries, determinations, and assessments of all taxes (including interest, additional amounts, additions to the tax, and assessable penalties) . . . which have not been duly paid . . . at the time and in the manner provided by law.” 26 U.S.C. § 6201(a). “[A]n assessment is closely tied to the collection of a tax, i.e., the assessment is the official recording of liability that triggers levy and collection efforts.” Hibbs v. Winn, 542 U.S. 88, 101 (2004). The government has ten years after the assessment of the tax to initiate a collection action. 26 U.S.C. § 6502(a)(1); see Singleton v. United States, 128 F.3d 833, 836 (4th Cir. 1997); United States v. Wallis, CIVIL NO. 6:14-CV-00005, 2016 WL 411020, at *3 (W.D. Va. Feb. 1, 2016).

         A. Statute of Limitations Defense

         Construed liberally, Defendant argues in his motion for partial summary judgment that the statute of limitations bars the government's attempts to collect income tax liabilities and penalties for the 2001 and 2002 tax years. Dkt. 16, at 1. Defendant does not assert a statute of limitations defense as to the remaining assessments. The government argues that it timely filed this collection action as to all of its assessments, and regarding the tax assessments for 2001, 2002, and 2004, and the frivolous filing penalty for 2004, actions by Defendant tolled the running of the limitations periods. Dkt. 19, at 4-5.

         The government filed this action on August 31, 2017. Dkt. 1, at 3. Thus, the collection for an assessment is timely if the government assessed the liability or penalty after August 31, 2007. See 26 U.S.C. § 6502(a)(1). Defendant cannot, and does not, dispute that the government assessed nine of the thirteen liabilities at issue after August 31, 2007, shown below:

Tax Type

Tax Year

Assessment Date

§ 6702 Frivolous Tax Submission

1997

11/3/2008

§ 6702 Frivolous Tax Submission

1998

11/3/2008

§ 6702 Frivolous Tax Submission

1999

11/3/2008

§ 6702 Frivolous Tax Submission

2002

11/3/2008

Unpaid Income Tax (Form 1040)

2003

5/18/2009

§ 6702 Frivolous Tax Submission

2005

2/4/2008

Unpaid Income Tax (Form 1040)

2006

5/5/2008

Unpaid Income Tax (Form 1040)

2008

4/13/2009

Unpaid Income Tax (Form 1040)

2012

5/13/2013

         Accordingly, as to the 2003, 2006, 2008, and 2012 income tax liabilities, and the 1997, 1998, 1999, 2002, and 2005 penalties, the ...


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