U.S. v. Templeton
| Decision Date | 22 July 1992 |
| Docket Number | 91-2327,Nos. 91-2032,s. 91-2032 |
| Citation | 972 F.2d 352 |
| Parties | NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit. UNITED STATES of America, Plaintiff-Appellee, v. David J. TEMPLETON and Rachel Templeton, Michael Venegoni, Trustee, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Before EASTERBROOK, and KANNE, Circuit Judges, and WOOD, Jr., Senior Circuit Judge.
The district court granted the United States' motion for summary judgment, ordering that the Government may foreclose on a piece of property fraudulently placed in a trust to defraud creditors while still equitably held by the Templetons. On this consolidated appeal, the Templetons and the trustee, Michael Venegoni, raise several challenges to the district court's decision. Our review of the briefs and the record leads us to conclude that the district court carefully considered all challenges when granting judgment to the United States. We affirm for the reasons stated in the district court's thorough opinion, which is attached.
DAVID JAMES TEMPLETON, et al., Defendants.
MEMORANDUM AND ORDERThis action concerns the ownership of certain real property located at 718 Pontiac Street, Rochester, Indiana ("the Rochester property"). The United States contends that the Rochester property is owned by two individuals, defendants Rachel and David Templeton, who owe taxes, penalties, and interest to the United States and that the Internal Revenue Service should be permitted to foreclose on the Rochester property to satisfy those tax debts. All defendants challenge the government's ability to make the tax assessment against the Templetons and to use the Rochester property to satisfy any judgment against those defendants.
This cause is now before the court on both dispositive and procedural motions. These matters have been fully briefed and are ripe for ruling by this court.
David and Rachel Templeton received title to the Rochester property in November, 1967. In November, 1982, the Templetons executed a trust agreement for the transfer of the Rochester property to the Seven Eighteen Trust ("the Trust"). Following the Templetons' alleged transfer of the Rochester property, they continued to reside at that property and remained liable for utility bills of that property. In fact, the Rochester property's address is the Templetons' address of record in this action. The record does not reveal that the Templetons owned any other real estate for either business or personal use at the time of the execution of the trust agreement or the IRS's tax assessment. 1
The trust agreement for transfer of the Rochester property denotes consideration in the amount of one dollar and "other valuable consideration". As it appears in this court's record, the trust agreement is two pages in length and names no beneficiaries to the Trust. 2 The original named trustees of the Trust were Peter W. Terpstra, Sr., Victor D. McMahan, and Max E. Beer, all named defendants in this action. Mr. Terpstra, Mr. Beer, and Mr. McMahan are all members of an organization known as the Patriots for Liberty 3, of which Rachel Templeton is also a member. Defendant Michael Venegoni 4 has replaced Mr. Beer as a trustee of the Trust.
On April 15, 1980, David and Rachel Templeton timely filed their 1979 federal income tax return with the Internal Revenue Service. Four years later, the IRS made an assessment against the Templetons for the 1979 tax year in the amount of $43,792.72 in taxes, $2,189.64 in negligence penalties, and $28,789.69 in interest. The Templetons have refused to pay this assessment. As of March 3, 1989, the unpaid balance of the IRS's tax assessment against the Templetons on their 1979 return was $73,034.10.
The United States has moved for summary judgment against all defendants. The government seeks to reduce those tax assessments against defendants David and Rachel Templeton to judgment and to foreclose on the Rochester property. The United States also asks this court to determine that the Templetons are the legal owners of the Rochester property because their transfer of that real estate to the Trust was void, either because no valid trust was created or because the transfer was a fraudulent conveyance.
In support of its summary judgment motion, the United States has submitted the declaration of IRS Revenue Officer Thomas Forsgren; a Form 4340 certificate of assessments and payments for David and Rachel Templeton; a copy of the warranty deed transferring the Rochester property to the Templetons in November, 1967; a copy of the warranty deed (allegedly) transferring the Rochester property to the Trust in November, 1982; a copy of the trust agreement for the Trust; and a copy of a billing record for utilities provided to the Rochester property.
The Templetons have several responses to the government's summary judgment motion. First, they contend that the IRS has failed to prove sufficiently that an assessment was made against them for the 1979 tax year and, therefore, the tax liens attached to the Rochester property should be voided. Specifically, the Templetons argue that the Form 4340 submitted as evidence of the April, 1984 assessment is a computer-generated document that is insufficient proof of an assessment.
Relying on this same position, the Templetons seek to dismiss the government's complaint for failure to make an assessment against them. The Templetons also move to strike the Form 4340 from the record, to strike the affidavit of IRS Officer Forsgren, and for a more definite statement and/or a motion to strike portions of the government's brief in support of its motion for summary judgment.
In further response, the Templetons allege that the Trust was a valid trust under Indiana law. In support of their responses, the Templetons submitted their own affidavits 5 and various documents outlining the IRS's procedures in making assessments for delinquent taxes.
Trustee Michael Venegoni has responded to the government's motion with essentially the same positions asserted by the Templetons and also makes two additional responses: (1) this court has no jurisdiction to void a contract made in Indiana, and (2) this action was commenced more than six years after execution of the Trust and, therefore, is barred by Indiana's statute of limitations for challenging a transfer of real property. Mr. Venegoni submits the affidavits of Max Beer, Peter Terpstra, Sr., and Victor McMahan in response to the government's motion. 6
Mr. Venegoni also seeks dismissal of the complaint for want of jurisdiction and on statute of limitations grounds. The court has stayed briefing of these motions pending ruling on the government's motion for summary judgment. The determinations in this memorandum and order, however, indicate that Mr. Venegoni's motions should be denied.
The Templetons have filed three procedural motions and a motion to dismiss the complaint based on theories discussed in those procedural motions. The Templetons initially moved to strike the Form 4340 certificate of assessments and to dismiss the complaint for failure of the IRS to validate the alleged assessment. Neither motion is well-taken.
The Templetons suggest that the government must produce the original Form 23C assessment to prove that the IRS assessed tax penalties against them in April, 1984. They contend that the IRS never made such an assessment and that they never received notice of that action.
Several courts have held that a Form 4340 submission is sufficient evidence of the making of an assessment to establish the government's prima facie case of tax liability. United States v. Chila, 871 F.2d 1015 (11th Cir.), cert. denied, 110 S.Ct. 498 (1989); United States v. Dixon, 672 F.Supp. 503, 506 (M.D.Ala.1987); G.M. Leasing Corp. v. United States, 514 F.2d 935, 941 (10th Cir.1975), rev'd on other grounds, 429 U.S. 338 (1977). Once the IRS has shown evidence of an assessment, the burden shifts to the taxpayer to refute the validity of the tax liability. Helvering v. Taylor, 293 U.S. 507, 515 (1935); Calderone v. United States, 799 F.2d 254, 258 (6th Cir.1986); Anastasato v. Commissioner, 794 F.2d 884, 886 (3rd Cir.1986); Avco Delta Corp. v. United States, 540 F.2d 258 (7th Cir.1976), cert. denied, 429 U.S. 1040 (1977).
Apart from their own conclusions, the Templetons have come forward with neither evidence nor legal authority to challenge the validity of the Form 4340 certificate. Moreover, in response to the Templetons' motions, the government submitted further documentation of the assessment in question, including the Form 23C, which the Templetons admit is the proper documentation of an assessment, and a copy of the notice of tax assessment mailed to the Templetons at the Rochester property on April 25, 1984. The Templetons have not responded to this additional documentation.
Based on sufficient evidence in the record demonstrating that a tax assessment was issued against the Templetons on April 25, 1984, the court must deny the Templetons' motion to dismiss and motion to strike Form 4340.
The Templetons move to strike Officer Forsgren's declaration in support of the government's summary judgment motion on the grounds that the document is "insufficient", "immaterial, impertinent and scandalous". Quite generally, the Templetons' motion to strike the declaration of Officer Forsgren is based on the assertion that the...
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...evidence of the making of an assessment to establish the government's prima facie case of tax liability." United States v. Templeton, 972 F.2d 352 (7th Cir. 1992) (unpublished); see also Hefti v. IRS, 8 F.3d 1169, 1172-1173 (7th Cir. 1993) (holding that "Certificates of Assessments and Paym......