United States v. Barnes

• Decision Date: 13 December 2011
• Docket Number: Case No. 3:08–cv–966–J–34MCR.
• Citation: 883 F.Supp.2d 1156
• Parties: UNITED STATES of America, Plaintiff, v. Judith BARNES and Nathan Genrich, Defendants.
• Court: U.S. District Court — Middle District of Florida

883 F.Supp.2d 1156

UNITED STATES of America, Plaintiff,

v.Judith BARNES and Nathan Genrich, Defendants.

Case No. 3:08–cv–966–J–34MCR.

United States District Court,

M.D. Florida,

Jacksonville Division.

Dec. 13, 2011.

Michael W. May, Washington, DC, for Plaintiff.

Adam Louis Heiden, Keith Howard Johnson, Johnson & Johnson, PA, Jacksonville, FL, for Defendants.

ORDER

MARCIA MORALES HOWARD, District Judge.

THIS CAUSE is before the Court on Plaintiff's Motion for Summary Judgment, filed April 22, 2010. (Doc. 30; Motion). Plaintiff, the United States of America, filed this civil action, pursuant to 26 U.S.C. §§ 7401 and 7403, to reduce to judgment the federal income tax liability of Defendants, former spouses Judith Barnes and Nathan Genrich. Plaintiff (or “the Government”) seeks to foreclose its federal tax liens and to sell two pieces of real property Plaintiff alleges are owned by Defendant Barnes, located at 10 Riviera Place, Palm Coast, Florida 32137 (“Riviera Property”), ¹ and at 3 Anastasia Court, Palm Coast, Florida 32137 (“Anastasia Property”),² in partial satisfaction of the unpaid taxes. (Doc. 1; Complaint).³ Defendant Barnes answered the Complaint, and did not assert any affirmative defenses (Doc. 8; Answer), while Defendant Genrich failed to file an answer. On Plaintiff's motion, the Clerk entered a Clerk's Default against Genrich on December 17, 2008. (Docs. 6, 7).⁴ Defendant Barnes filed a response in opposition to Plaintiff's Motion for Summary Judgment on April 26, 2011 (Doc. 45; Response),⁵ and the Motion is ripe for review.

I. Facts⁶

During the 1997 tax year, Defendants Barnes and Genrich were a married couple. The following year, Defendant Genrich filed a joint tax return for tax year 1997 on behalf of himself and Defendant Barnes.⁷ (Doc. 30–1; 1997 Tax Return, or Return, at Line 2). On the Return, Barnes and Genrich reported a total taxable income of $3,302,760, and a total income tax liability of $927,359. Id. at Lines 38, 53. The Internal Revenue Service (IRS) processed the return on November 30, 1998. (Doc. 30–2; IRS Account Transcript; Return, Forms 4868 and 2688). At that time, the IRS made a tax assessment against Barnes and Genrich in the amount of $659,019 for 1997. IRS Account Transcript at 2; ( see also Doc. 30–4; Certificate of Assessments). ⁸ Plaintiff has submitted a sworn declaration of Revenue Agent Brenda M. Combs verifying the assessment. ( See Doc. 30–3; Combs Declaration). ⁹

Defendants did not make any tax payments for tax year 1997, see Return at Line 60, but the IRS collected some of the unpaid tax through credits applied from different tax years as well as levies. See IRS Account Transcript. As of March 1, 2010, Defendants had a tax liability for the 1997 tax year of $1,560,669.25, including statutory interest and penalties.¹⁰ IRS Account Transcript at 1.

II. Summary of Arguments

Plaintiff argues that the IRS assessment of Defendants' 1997 tax liability and account history, as set forth in the Certificate of Assessments, as well as the IRS Account Transcript, are presumed to be valid and correct. Motion at 5–6. Plaintiff contends that Barnes has failed to present evidence challenging that assessment sufficient to overcome the presumption of validity. Id. at 6–14. Accordingly, Plaintiff contends that the United States is entitled to place a tax lien on the Riviera and Anastasia Properties, and to foreclose these tax liens. Id. at 14–15.

Defendant Barnes asserts that her former husband, Defendant Genrich, prepared the 1997 Tax Return and submitted it without her reviewing or signing it. She argues that she did not authorize Genrich to sign her name to the 1997 Return, and that “she did not see the 1997 [R]eturn for the first time until June 10, 2000.” Response at 3. She cites to her verified response to Plaintiff's interrogatories in which she states that she disputes the propriety, amount, and validity of the IRS's November 30, 1998 assessment of $732,855.17 (which includes interest and penalties). Id. at 3–4. Barnes cites to her deposition testimony and to a letter she prepared and sent to Plaintiff, in which she contends that the 1997 IRS assessment does not take into account “losses” incurred in 1997 relating to the sale of property and a business. Id. at 4 (citing Doc. 30–7; Barnes Deposition; and Doc. 45–2; Barnes' 10/2/09 Letter). She argues that “the joint and several liability being imposed on her by the Internal Revenue Service is being done so unjustly and that she has no individual liability for tax year 1997.” Id. In conclusion, Barnes asserts she has demonstrated:

that she was not aware nor involved in the preparation of the 1997 federal income tax return filed by her ex-spouse Nathan Genrich, that she did not demonstrate an intent to enter into a joint 1997 federal tax return with her ex-spouse Nathan Genrich, that she does accept the fact that the 1997 liability assessed by the Plaintiff is valid, and that she did not willfully avoid paying her tax liability for the tax year 1997.

Id. at 5.

III. Standard of Review

Under Rule 56, Federal Rules of Civil Procedure, “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The record to be considered on a motion for summary judgment may include “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A).¹¹ An issue is genuine when the evidence is such that a reasonable jury could return a verdict in favor of the nonmovant. See Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir.1996) (quoting Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 913, 919 (11th Cir.1993)). “[A] mere scintilla of evidence in support of the non-moving party's position is insufficient to defeat a motion for summary judgment.” Kesinger ex rel. Estate of Kesinger v. Herrington, 381 F.3d 1243, 1247 (11th Cir.2004). The party seeking summary judgment bears the initial burden of demonstrating to the court, by reference to the record, that there are no genuine issues of material fact to be determined at trial. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991).

“When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593–94 (11th Cir.1995) (internal citations and quotation marks omitted). Unsworn statements do not meet the requirements of Rule 56, and cannot be considered on a motion for summary judgment.¹²Southern Grouts & Mortars, Inc. v. 3M Co., 575 F.3d 1235, 1248 n. 8 (11th Cir.2009); Gordon v. Watson, 622 F.2d 120, 123 (5th Cir.1980).¹³ Substantive law determines the materiality of facts, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether summary judgment is appropriate, a court “must view all evidence and make all reasonable inferences in favor of the party opposing summary judgment.” Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir.1995) (citing Dibrell Bros. Int'l, S.A. v. Banca Nazionale Del Lavoro, 38 F.3d 1571, 1578 (11th Cir.1994)).

IV. DiscussionA. Assessment

“ ‘In reducing [a tax] assessment to judgment, the Government must first prove that the assessment was properly made.’ ” United States v. Korman, 388 Fed.Appx. 914, 915 (11th Cir.2010)¹⁴ (quoting United States v. White, 466 F.3d 1241, 1248 (11th Cir.2006)). A tax assessment made by the IRS constitutes a “determination that a taxpayer owes the Federal Government a certain amount of unpaid taxes,” and such a determination “is entitled to a legal presumption of correctness.” United States v. Fior D'Italia, Inc., 536 U.S. 238, 242, 122 S.Ct. 2117, 153 L.Ed.2d 280 (2002); see also Bone v. Comm'r, 324 F.3d 1289, 1293 (11th Cir.2003) (citing Welch v. Helvering, 290 U.S. 111, 115, 54 S.Ct. 8, 78 L.Ed. 212 (1933)). A taxpayer challenging the IRS' assessment bears the burden of overcoming this presumption by proving by a preponderance of the evidence that the IRS' computations were erroneous. Bone, 324 F.3d at 1293;United States v. Lena, 370 Fed.Appx. 65, 69–70 (11th Cir.2010); Pollard v. Comm'r, 786 F.2d 1063, 1066 (11th Cir.1986)

In support of the Motion, Plaintiff has filed a certified Certificate of Assessments and Payments (Doc. 30–4), reflecting the amounts and dates of taxes owed, payments made by, and penalties assessed against Defendants. The Certificate of Assessments is presumptive and prima facie proof of a valid assessment of Defendants'tax debt. See United States v. Chila, 871 F.2d 1015, 1018 (11th Cir.1989) (the “ ‘Court accepts the document ‘Certificate of Assessments and Payments' submitted by the government as presumptive proof of a valid assessment’ ” (citation omitted)). Plaintiff has also filed the affidavit of IRS Agent Combs verifying the IRS's calculations in the Assessment. (Doc. 30–3). Upon this prima facie showing, the burden shifts to the taxpayer defendant to establish that the tax assessment is not correct. United States v. White, 466 F.3d 1241, 1248 (11th Cir.2006); see also Helvering v. Taylor, 293 U.S. 507, 514, 55 S.Ct. 287, 79 L.Ed. 623 (1935).

In her Response in opposition to Plaintiff's Motion, Barnes states that she “does not dispute the legal sufficiency of the assessment made for tax year 1997 based upon the information reported on the return filed with the Internal Revenue Service,” Response at 3, and that “she...