United States v. Chambers, Case No. 3:09-cv-961-J-34JRK
| Decision Date | 22 May 2014 |
| Docket Number | Case No. 3:09-cv-961-J-34JRK |
| Court | U.S. District Court — Middle District of Florida |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. JAMES P. CHAMBERS and JANETTE MATHERS, as Co-Personal Representatives of the Estate of Fred J. Chambers, et al., Defendants. |
UNITED STATES OF AMERICA, Plaintiff,
v.
JAMES P. CHAMBERS and JANETTE
MATHERS, as Co-Personal
Representatives of the Estate
of Fred J. Chambers, et al., Defendants.
Case No. 3:09-cv-961-J-34JRK
UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION
Dated: May 22, 2014
Fred J. Chambers ("Chambers") was a former tax protester who did not pay federal income taxes for seven years. The United States ("Government") brought this action against Chambers, on September 22, 2009, to reduce to judgment unpaid income taxes assessed against Chambers for the years 1996 through 2001 and 2003 (including penalties and interest), and to foreclose its tax liens for those years on Chambers' interest in four parcels of real property. In doing so, the Government seeks to have set aside Chambers' 2004 conveyance of two parcels of real property, to his son, James Patrick Chambers ("James Chambers"),1 as fraudulent transfers. (Doc. 6; Amended Complaint ("Am. Complaint")). During the course of this lengthy litigation, on January 7, 2013, Chambers passed away.
Page 2
(Doc. 92; Suggestion of Death). As such, James P. Chambers and Janette Mathers, as co-personal representatives of the Estate of Fred J. Chambers, have been substituted as Defendants. (Doc. 96; 10/21/13 Order). For ease of reference, the Court will refer to Defendant as "Chambers."
Prior to his death, Chambers came to regret his tax protest activity. (See Doc. 62-16; Chambers' Affidavit ¶¶ 3-6). And, while he acknowledged that he owed back income taxes, he maintained that he did not owe as much as the United States seeks to collect. That position remains unchanged. (See Doc. 101; Joint Status Report). Pending before the Court are the United States' Motion for Summary Judgment Against Defendants Fred J. Chambers and James Patrick Chambers (Doc. 60; United States' Motion), and Defendants' response (Doc. 65; Chambers' Response), as well as Chambers' Motion for Partial Summary Judgment (Doc. 62; Chambers' Motion), and the Government's response in opposition. (Doc. 64; United States' Response).2
I. Background
This case arises from Chambers' refusal to file federal tax returns for the tax years 1996 through 2001 and 2003. Despite earning income during this period, Chambers stopped filing federal income tax returns and paying federal income taxes in 1996. (Doc. 60-5 (Chambers Deposition (Chambers Dep.) at 18-19). In a deposition given as part of this action, Chambers acknowledged that he was buying and selling real estate and stock during this period, but was unresponsive to questions concerning his income from the real estate
Page 3
transactions, saying only that he did not remember, and had "no idea" how many real estate transactions he completed. Id. at 12. Additionally, Chambers acknowledged that he "dabbled in a little stock . . . on and off," but did not remember how much money he made when he would sell the stock. Id. at 13. Chambers testified that he had no records reflecting either the real estate or the stock transactions made during the tax years at issue. Id. at 14. He also testified that he earned $1,500 a month from the rental of commercial property and lots in a trailer park during this period. Id. at 15-16. Again, there are no records of the rent transactions, because, according to Chambers, the tenants "always paid cash." Id. at 18. Although Chambers acknowledged receiving tax documents in the mail "[n]ow and then;" his "historical method of dealing with [his] Federal tax situation was to ignore it." Id. at 19; (Doc. 62-16; Chambers' Affidavit ¶ 8). Chambers' wife Margaret Chambers passed away in 2006. Chambers Dep. at 23; Am. Complaint ¶ 14; (Doc. 8; Answer ¶ 14).3
The United States Internal Revenue Service ("IRS") first audited Chambers for tax year 1996 after receiving "informational items" concerning Chambers' income from stock brokerage houses. Chambers' Motion at 4; Chambers Affidavit ¶ 9 (adopting facts as stated in Chambers' Motion); United States' Response at 2 (adopting facts as stated in Chambers' Motion). As a result of the audit, the IRS issued a Statutory Notice of Deficiency dated October 14, 1998, under authority of 26 U.S.C. §§ 6212 and 6213, for the tax year ending December 1, 1996. Chambers' Motion at 4; Chambers Affidavit ¶ 9; United States' Response at 3; (Doc. 62-1 at 2 (10/14/98 Notice of Deficiency). When Chambers failed to file a Tax
Page 4
Court Petition challenging the Notice of Deficiency, the IRS assessed Chambers' 1996 tax liability along with penalty and interest to be $125,036.38 as of March 15, 1999. Chambers' Motion at 5-6; Chambers' Affidavit ¶ 9; United States' Response at 3. The United States pursued collection of the 1996 taxes, and since the date of the assessment on March 15, 1999, the IRS has collected $181,800.22, including accruing interest and penalties. Id.
The IRS subsequently audited Chambers for tax years 1997-2001, and 2003, resulting in additional tax assessments being made in 2004 and 2005. Chambers' Motion at 6; Chambers Affidavit ¶ 9; United States' Response at 3. The IRS records establish that the IRS issued Statutory Notices of Deficiency for tax years 1998-2001 and 2003 as follows:
| Year |
Date of Notice |
Amount Due (including Penalties and Interest) |
| 1997 |
Not Produced by IRS |
|
| 1998 |
11/28/03 |
$20,472.41 |
| 1999 |
11/28/03 |
$94,878.76 |
| 2000 |
11/28/03 |
$93,986.95 |
| 2001 |
11/28/03 |
$132,290.92 |
| 2003 |
5/24/05 |
$ 3,120.82 |
Chambers' Motion at 6; Chambers' Affidavit ¶ 9; United States' Response at 3; (Docs. 62-4 at 5, 62-5 at 5, 62-6 at 5, 62-7 at 5, 62-8 at 7; Notices of Tax Deficiency).4 The Notices identified Chambers' income sources as follows: income from Social Security benefits (1998-2001), capital gains from the sale of stock (1998-2000), retirement plan payments (1998-
Page 5
2001, 2003), stock dividends (1998-2001), a real estate sale (2001), interest income (19982001, 2003), and rent payments (2000, 2001, 2003). By far, the bulk of the listed income was from the sale of stock, followed by a one-time sale of real property (the "Craven Road Property") in 2001.
The Government has submitted a certified copy of the Form 4340 Certificates of Assessments to establish its assessment of Chambers' tax liability. (Doc. 60-1; Declaration of Revenue Officer Ellen Dixon (Dixon Decl.) ¶¶ 2-3; Doc. 60-3 (Certificates of Assessments)). According to the Certificates of Assessments, the IRS calculates Chambers' taxable income for the years 1997-2001 and 2003 as follows:
| Year |
Taxable Income |
| 1997 |
$353,117.00 |
| 1998 |
$ 51,111.00 |
| 1999 |
$179,998.00 |
| 2000 |
$191,823.00 |
| 2001 |
$278,515.00 |
| 2003 |
$ 17,885.00 |
Certificates of Assessments.5 According to the Government, as of October 19, 2011, Chambers owed a total of $1,071,458.60 in back taxes, interest and penalties:
Page 6
| Year |
Amount Due as of 10/19/2011 |
| 1996 |
$ 60,374.06 |
| 1997 |
$409,187.67 |
| 1998 |
$ 35,490.40 |
| 1999 |
$166,002.14 |
| 2000 |
$164,442.08 |
| 2001 |
$230,921.55 |
| 2003 |
$ 5,040.70 |
...
To continue reading
Request your trial