Ambur v. U.S., Civ. 01-3015.
| Decision Date | 17 June 2002 |
| Docket Number | No. Civ. 01-3015.,Civ. 01-3015. |
| Citation | 206 F.Supp.2d 1021 |
| Parties | Michael AMBUR and Nola Ambur, Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — District of South Dakota |
Michael Mitchell Billion, Myers, Peters, Hoffman & Billion, Sioux Falls, South Dakota, for plaintiffs.
Bonnie P. Ulrich, Michelle G. Tapken, U.S. Attorney's Office, Sioux Falls, South Dakota, Donald N. Dowie, U.S. Department of Justice, Special Litigation/Tax Division, Washington, DC, for defendant.
ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
[¶ 1.] Plaintiffs instituted this action pursuant to 28 U.S.C. § 1346(a)(1), seeking to collect $16,062.00 in claimed overpaid federal income taxes, self-employment taxes and interest assessed and collected in 2000 for the tax years 1994, 1995, and 1996. Plaintiffs have filed a motion for partial summary judgment, contending that the assessments for self-employment taxes are time barred and a refund is due from defendant. The United States filed a cross-motion for partial summary judgment1, contesting plaintiffs' statute of limitations defense as to the self-employment taxes.
[¶ 2.] Summary judgment is proper 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(c) and Donaho v. FMC Corporation, 74 F.3d 894, 898 (8th Cir.1996). The United States Supreme Court has held that:
The plain language of Rule 56(c) mandates the entry of summary judgment ... against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact", since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). "A material fact dispute is genuine if the evidence is sufficient to allow a reasonable jury to return a verdict for the non-moving party." Landon v. Northwest Airlines, Inc., 72 F.3d 620, 624 (8th Cir. 1995). As already noted, the parties have, in effect, filed cross-motions for partial summary judgment as to the collection of self-employment taxes. Where the parties file such cross-motions, the standards by which the Court decides the motions do not change. Each motion must be evaluated independently, "taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Heublein Inc. v. United States, 996 F.2d 1455, 1461 (2nd Cir.1993). See also Bakery and Confectionery Union and Industry International Health Benefits and Pension Funds v. New Bakery Co. of Ohio, 133 F.3d 955, 958 (6th Cir. 1998).
[¶ 3.] Generally, any unpaid tax imposed by Title 26 must be assessed by the Internal Revenue Service ("IRS") within three years after the return has been filed. 26 U.S.C. § 6501(a). The three year limitations period may be extended by consent of the taxpayer and the Secretary of the Treasury. 26 U.S.C. § 6501(c)(4). That section provides, in part:
Where, before the expiration of the time prescribed in this section for the assessment of any tax imposed by this title ... both the Secretary and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon.
[¶ 4.] On February 2, 1998, plaintiffs executed IRS Form 872 (Rev. June 1996) wherein they agreed, in part:
The amount of any Federal income tax due on any return(s) made by or for the above taxpayer(s) for the period(s) ended December 31, 1994 may be assessed at any time on or before April 15, 1999. However, if a notice of deficiency in tax for any such period(s) is sent to the taxpayer(s) on or before that date, then the time for assessing the tax will be further extended by the number of days the assessment was previously prohibited, plus 60 days.
[¶ 5.] On November 25, 1998, the plaintiffs executed Internal Revenue Service Form 872-A (Rev. October 1987) wherein they agreed, in part:
(1) The amount(s) of any Federal Income tax due on any return(s) made by or for the above taxpayer(s) for the period(s) ended December 31, 1994 & December 31, 1995 may be assessed on or before the 90th (ninetieth) day after ... (2) This agreement ends on the earlier of the above expiration date or the assessment date of an increase in the above tax or the overassessment (sic) date of a decrease in the above tax that reflects the final determination of tax and the final administrative appeals consideration ...
[¶ 6.] On December 20, 1999, the plaintiffs executed a largely identical IRS Form 872A for the period ending December 31, 1996.
[¶ 7.] As to each of the consent forms, no employee of the IRS signed until after plaintiffs had signed and submitted the forms to the IRS.
[¶ 8.] The instructions for who must sign a particular form are substantially similar and are part of the forms, not a separate publication. The instructions provide, in part:
If this consent is for income tax, self-employment tax, or FICA tax on tips ...
If this consent is for gift tax ...
If this consent is for Chapter 41, 42, or 43 taxes ...
If this consent is for Chapter 42 taxes ...
[¶ 9.] In June of 2000, the IRS assessed plaintiffs additional income tax and selfemployment tax for the 1994, 1995, and 1996 tax years. Plaintiffs filed amended returns ( their disagreement with the assessments), paid the assessments and sought a refund. On March 19, 2001, the IRS rejected the request for a refund or credit, describing in the letter the "kind of tax" at issue as "income." Plaintiffs then filed the present action, seeking a refund of the additional income tax assessed and paid for those three tax years (Counts I, II and III) and of the additional self-employment tax assessed and paid for those three tax years (Counts IV, V, and VI).
[¶ 10.] Only the Counts concerning the self-employment taxes are at issue in the motions for partial summary judgment. All parties are seeking a determination whether the consents to extend the limitations period to assess federal income tax applied to also extend the time to assess federal self-employment taxes.
The bar of the statute of limitations is an affirmative defense, and the party raising it must specifically plead it and carry the burden of proof. Rule 142(a); Adler v. Commissioner, 85 T.C. 535, 540, 1985 WL 15397 (1985). A party pleading the statute of limitations as a bar to assessment establishes a prima facie case by showing that the statutory notice was mailed beyond the normally applicable period provided by the statute of limitations. The burden of going forward then shifts to the other side to show that the bar of the statute of limitations is not applicable. Adler v. Commissioner, supra at 540, 1985 WL 15397. See Concrete Engineering Co. v. Commissioner, 58 F.2d 566 (8th Cir.1932), affg. 19 B.T.A. 212, 1930 WL 505 (1930); Stern Bros. & Co. v. Burnet, 51 F.2d 1042 (8th Cir.1931), affg. 17 B.T.A. 848, 1929 WL 271 (1929).
Woods v. C.I.R., 92 T.C. 776, 779, 1989 WL 32907 (1989).
[¶ 11.] The respective statements of material facts submitted by the parties in support of or in resistance to the motions show that the assessments issued in June of 2000 for additional taxes were issued beyond three years from the date the 1994 and 1995 tax returns were filed. The defendant contends that the 1996 tax return was not filed until June 30, 1997, less than three years before the assessment for additional taxes for the 1996 tax year. However, the assessment clearly shows that the 1996 tax return was received on or before April 15, 1997. The assessment shows that the IRS did not process the return until June 30, 1997. The plaintiffs have met their burden of showing that the June 2000 assessments were issued in excess of three years after the 1994, 1995, and 1996 returns were filed. The burden shifts to the defendant to show that the bar of the statute of limitations is not applicable because the plaintiffs waived that bar. There is no dispute, of course, that waivers were timely executed and filed to "overcome" the statute of limitations. The dispute lies with what the waivers cover.
[¶ 12.] Plaintiffs contend that, applying principles of contract construction, the parties clearly only extended the time within which federal income taxes could be assessed and did not consent to extend the time within which federal self-employment taxes could be assessed. "A consent to extend the statute of limitations is essentially a unilateral waiver of the taxpayer's defense rather than a contract; contract principles are important, however, because section 6401(c)(4) requires an agreement between the parties." Camara v. C.I.R., 91 T.C. 957, 959, 1988 WL 123886 (1988) (citing Kovens v. Commissioner, 90 T.C. 452, 457, 1988 WL 21858 (1988)). See also Grunwald v. Commissioner, 86 T.C. 85, 88-90, 1986 WL 22077 (1986), and Woods v. C.I.R., 92 T.C. 776, 780, 1989 WL 32907 (1989).
[¶ 13.] "When the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals." Mobil Oil Exploration and Producing Southeast, Inc. v. United States, 530 U.S. 604, 607-08, 120 S.Ct. 2423, 2429, 147 L.Ed.2d 528 (2000) (quoting United States v. Winstar Corp., 518 U.S. 839, 895, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996)). ...
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