In re Wilson
| Decision Date | 30 July 2008 |
| Docket Number | Adversary No. 06-1425 MER.,Bankruptcy No. 06-10026 MER. |
| Citation | 394 B.R. 531 |
| Parties | In re Rickie Allen WILSON, Alicia Stephens Wilson, Debtors. Rickie Allen Wilson, Plaintiff, v. United States of America, Internal Revenue Service, Defendant. |
| Court | U.S. Bankruptcy Court — District of Colorado |
Rickie Allen Wilson, Pine, CO, pro se.
Philip E. Blondin, U.S. Department of Justice, Chad Nardiello, Washington, DC, for Defendant.
THIS MATTER comes before the Court on the Cross-Motions for Summary Judgment filed by the Plaintiff and the Defendant and the parties' Responses thereto. Although the Court had set the matter for oral argument, on further consideration, the Court finds no argument is necessary and the matter may be settled on the pleadings filed.1
The Court has jurisdiction over this matter under 28 U.S.C. §§ 1334(a) and (b) and 157(a) and (b). This is a core proceeding under 28 U.S.C. § 157(b)(2)(I), as it involves the determination of the dischargeability of a particular debt.
Debtors Rickie Allen Wilson and Alicia Stephens Wilson (the "Debtors" or the "Wilsons") filed their voluntary Chapter 7 petition on January 5, 2006. On March 5, 2006, Rickie Wilson ("Wilson" or the "Plaintiff") filed an adversary complaint (the "Complaint") against the United States of America, Internal Revenue Service, the Commissioner of Internal Revenue, and Revenue Officer Ginger Wray. On August 10, 2006, the Court entered an Order dismissing all claims except the second claim, which seeks a declaration that all sums allegedly owing to the Internal Revenue Service by Wilson are dischargeable, and dismissed all Defendants except the United States. See Docket No. 15. On October 27, 2006, the IRS2 filed an Answer to the remaining claim. On January 15, 2008, each party filed a motion for summary judgment (the "Wilson Motion" and the "IRS Motion," collectively, the "Motions"), and each party has subsequently responded to the opposing party's Motion.
Wilson asserts the "records of assessment" provided by the IRS and attached to the Wilson's Opening Brief in Support of Motion for Summary Judgment ("Wilson's Opening Brief) lack the signature of an "IRS Assessment Officer" under the Internal Revenue Code and pertinent regulations.3 According to Wilson, they therefore do not show a "legally sustainable" tax liability.
The IRS contends Form 4340 meets Treasury Regulations as long as it is "validly executed and certified." It goes on to argue the signing of the Certificates by Ms. Drake is sufficient to "validly execute and certify" the records.
The IRS concedes it did not provide "records of assessment" for 1988 and 1989, making moot the issue of dischargeability for those years. Similarly, the IRS admits the taxes, penalties, and interest for 1990, 1991, and 1993 were assessed May 13, 1996, beyond the statute of limitations, and are dischargeable. It therefore appears a judgment may be entered in favor of Wilson for tax years 1988, 1989, 1990, 1991 and 1993.
However, the IRS continues to assert the nondischargeability of its claims for tax years 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002 and 2003. The IRS also states Wilson filed defective returns for tax years 2004 and 2005, and its claims for those tax years are nondischargeable. According to the IRS, tax years 2004 and 2005 are "assessable," although not yet "assessed."
The IRS Motion states its claims for tax years 1994, 1995, and 1996 are exempt from discharge under 11 U.S.C. § 523(a)(1)(B)5 because Wilson did not file tax returns for those years. Further, it contends its claims for tax years 1997, 1998, 1999, 2000, and 2001 are exempt from discharge under § 523(a)(1)(B) and (C) because the Debtor did not file acceptable tax returns for those years, and willfully attempted to evade and defeat tax liability by filing fraudulent returns. In addition, the IRS alleges its claims for tax penalties for tax years 1997, 1998, and 1999 are nondischargeable.
The IRS also asserts its claims for tax years 2002, 2003, 2004, and 2005 are nondischargeable. See Cuin Declaration, Exhibit 1. As noted above, the IRS concedes it has not assessed liability for 2004 or 2005, but maintains such taxes are assessable and should be considered in the Court's determination of nondischargeability.
Wilson's response states no tax liability exists. Wilson contends he was not an "employee" and did not earn wages for purposes of filing a tax return or paying federal taxes. He alleges the major fact in this case, whether he has any "lawful and procedurally correctly imposed federal tax liabilities," is still at issue and prevents summary judgment.6
Wilson refers the Court to his discovery responses filed earlier in the case, in which he raises a number of additional arguments. In particular, he states the Sixteenth Amendment to the United States Constitution7 only applies to corporations and such "federally protected activities" as alcohol production, with the result he is not required to pay income taxes.
Although lengthy pleadings have been filed by both parties, the facts relevant to the pending Motions are straightforward. The parties do not dispute the IRS produced documents identified as Form 4340 "Records of Assessment," as well as the accompanying Certificates, for tax years 1990, 1991, 1993, 1994, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003. Wilson's Opening Brief, ¶ 2. Wilson's deposition8 reflects he worked, either as a sole proprietor or an employee of various entities, during 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003. Further, he earned wages from such employment. Wilson Deposition, p. 74, line 16-p. 75, line 12; p. 76, line 25-p. 77, line 12; p. 79, line 14-p. 81, line 25; p. 150, line 17-p. 151, line 2; p. 151, lines 13-20; p. 218, line 25p. 219, line 3; p. 226, lines 1-13; p. 231, line 22-p. 232, line 16; p. 234, lines 14-19; p. 236, lines 7-15; p. 284, lines 14-20; p. 286, lines 4-17; Neal Declaration, Osse Declaration, Cuin Declaration, Rodriguez Declaration, Gann Declaration. Wilson further indicated he did not file federal tax returns for tax years 1994, 1995, and 1996. Wilson Deposition, p. 100, line 24-p. 101, line 25. On three separate occasions (December 12, 2002, February 28, 2005, and September 26, 2005), Wilson filed a tax return for tax year 1997, each indicating no tax liability. Neal Declaration, Exhibits 6-8. On February 28, 2005, Wilson filed returns for tax years 1998 and 1999, indicating no tax liability. Neal Declaration, Exhibits 11 and 12. On June 6, 2005 and November 11, 2005, the IRS assessed penalties with respect to the 1997, 1998 and 1999 returns filed in 2005. Neal Declaration, Exhibit 2.
A court may grant summary judgment pursuant to FED.R.CIVP. 56(c), made applicable to bankruptcy proceedings under FED. R. BANKRP. 7056, where there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. All facts and inferences must be viewed in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Cross-motions for summary judgment are to be treated separately; the denial of one does not require the granting of another. See SEC v. American Commodity Exchange, Inc., 546 F.2d 1361, 1365 (10th Cir.1976). See also C. Wright & A. Miller, Federal Practice and Procedure, § 2720, at 464 (1973). The moving party has the initial burden of showing the absence of a genuine issue of material fact as to an essential element of the non-movant's case, identifying those portions of the pleadings, depositions, interrogatories, and admissions on file together with affidavits, if any, which it believes demonstrates the absence of genuine issues for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir.1992). However, not every disputed fact creates a genuine issue of material fact requiring the denial of summary judgment. "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., All U.S. 242, 247-248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Irrelevant and unnecessary facts should have no bearing on a trial court's determination on a motion for summary judgment. Id. at 248, 106 S.Ct. 2505.
As noted above, the parties agree Wilson failed to file returns for tax years 1994, 1995, and 1996. Further, they agree documents purporting to be tax returns were filed for the other tax years at issue, and that the IRS generated Form 4340, together with Certificates, for tax years 1990, 1991, 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002 and 2003. Evidence attached to the IRS's Motion shows Wilson was employed and earned income in 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002 and 2003. Although the parties dispute the legal effect of such facts, no additional facts are necessary for the Court to be able to determine the dischargeability of the IRS's claim. Therefore, no material issues of fact exist, and the Court may address whether the parties may be granted judgment as a matter of law.
The Court has examined the copies of Form 4340 and the Certificates of Assessments submitted by the IRS. The Court finds Wilson's argument that such documents do not meet statutory and regulatory requirements to be without merit.
The United States Tax Code, 26 U.S.C. § 6203 provides:
The assessment shall be made by...
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