United States v. Nugent

• Citation: 300 F.Supp.3d 932
• Decision Date: 12 January 2018
• Docket Number: Action No. 5:16–cv–380–JMH
• Parties: UNITED STATES of America, Plaintiff, v. Thomas NUGENT, Defendant.
• Court: U.S. District Court — Eastern District of Kentucky

300 F.Supp.3d 932

UNITED STATES of America, Plaintiff,

v.Thomas NUGENT, Defendant.

Action No. 5:16–cv–380–JMH

United States District Court, E.D. Kentucky, Central Division. at Lexington.

Signed January 12, 2018

Kavitha Bondada, Richard Jeremy Hagerman, U.S. Department of Justice, Washington, DC, for Plaintiff.

David Brent Cox, Cox Attorney PLLC, Frederick G. Irtz, II, Lexington, KY, for Defendant.

MEMORANDUM OPINION & ORDER

Joseph M. Hood, Senior U.S. District Judge

I. INTRODUCTION

This case is best summed up by two common expressions: (1) nothing is certain except death and taxes, and (2) better late than never. These age-old sayings contain a wealth of wisdom. But as with all well-known adages, exceptions exist to the general rules.

Defendant presents a hodgepodge of arguments that he falls within the exceptions. If he does not, then Defendant will have to fork over nearly half a million dollars in purported unpaid income taxes. He argues that the Government has put forward inadmissible evidence, failed to produce the agreement at issue, incorrectly determined the amounted owed, and simply filed this lawsuit too late.

But the Government wants paid. So the United States has come to this Court seeking to reduce federal tax assessments against Thomas Nugent to judgment. [DE 1]. Nugent agrees he owes the government money. [DE 5, p. 1, ¶ 6; 17, p. 1 ¶ 4]. But the parties disagree over how much Nugent should pay. The difference is hundreds of thousands of dollars. The United States has moved for Summary Judgment. [DE 13]. Nugent has also moved for Summary Judgment or, in the alternative, Judgment on the Pleadings. [DE 12]

All Motions are now fully briefed and ripe for the Court's review. For the reasons stated herein, Nugent's Motion for Summary Judgment, or in the alternative, Judgment on the Pleadings is DENIED . The Government's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART .

II. FACTUAL AND PROCEDURAL BACKGROUND

The facts are straightforward. A delegate of the Secretary of the Treasury made an assessment of $109,367 and $61,489 against Nugent on September 11, 2006 for unpaid federal income taxes for 2003 and 2004, respectively. [DE 1, p. 2, ¶ 5]. In 2008, a delegate also assessed $18,535, $24,760, and $16,066 against Nugent for unpaid taxes for 2005, 2006, and 2007, respectively. [Id. ]. The Internal Revenue Service's ("IRS") account transcripts for Nugent indicate that it established an installment agreement on February 12, 2009. [DE 13–3 at 3]. The transcripts further reflect that Nugent made a series of monthly payments until November 19, 2010, when payment was dishonored. [Id. ]. By July 11, 2011, the account transcripts stated that Nugent was "[n]o longer in installment agreement status." [Id. at 4].

The Government filed this lawsuit on October 5, 2016 to collect the assessments for unpaid federal income taxes made against Nugent for 2003, 2004, 2005, 2006, and 2007. [DE 1]. Nugent filed his Answer, admitting that he has tax liability for 2005, 2006, and 2007. [DE 5]. He asserts, however, that the Government's claim for unpaid taxes for 2003 and 2004 is time-barred. [Id. ]. Because those claims are time-barred, Nugent further insists that the Government's total assessment of $496,499, plus penalties and interest, on October 3, 2016 is incorrect. [Id. ]. On January 17, 2017, the Court held a hearing and set a truncated discovery period. [DE 7, 8]. The parties later filed the instant Motions.

As part of its Motion for Summary Judgment, the Government attached a declaration from Revenue Officer Glenda Granville in addition to Nugent's account transcripts. [DE 13]. Nugent filed Motions to Strike the Granville declaration and the transcripts. Specifically, Nugent argued the transcripts were not properly authenticated and thus inadmissible. [DE 16]. Nugent also argued the transcripts were inadmissible on two theories: (1) under Rule 56(d) because he did not have an opportunity to depose Granville since the Government failed to turn over her information during discovery, and (2) under Rule 56(c)(4) because Granville's statements were not based on personal knowledge. [DE 15]. The Court rejected Nugent's arguments in a September 2017 Memorandum Opinion and Order. [DE 22]. In that Opinion, however, the Court reopened discovery to allow Nugent to depose Granville. [Id. ]. Nugent later waived his right to depose Granville stating there "is no further need to take the deposition." [DE 23].

Presently before the Court are the parties' cross Motions for Summary Judgment and Nugent's Motion for Judgment on the Pleadings. Nugent has asked for Summary Judgment only on the 2003–2004 years because, he argues, the Government filed its lawsuit after the ten-year statute of limitations. The Government argues that an installment agreement with Nugent suspended the statute of limitations for thirty days, which gave the Government until October 11, 2016 to file this lawsuit. As to the 2005–2007 tax years, the Government has filed a Motion for Summary Judgment to which Nugent has responded, and the Government replied. The motions are now ripe for the Court's review.

III. ANALYSIS

A. Standard of Review

(i) Judgment on the Pleadings

"After the pleadings are closed ... a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). Under such a motion "all well-pleaded material allegations of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment." Tucker v. Middleburg–Legacy Place , 539 F.3d 545, 549 (6th Cir. 2008) (quoting JPMorgan Chase Bank, N.A. v. Winget , 510 F.3d 577, 581 (6th Cir. 2007) ). A Motion for Judgment on the Pleadings requires the same "standard of review employed for a motion to dismiss under Rule 12(b)(6)." Florida Power Corp. v. FirstEnergy Corp. , 810 F.3d 996, 999 (6th Cir. 2015) (quoting Tucker , 539 F.3d at 549 ); EEOC v. J.H. Routh Packing Co. , 246 F.3d 850, 851 (6th Cir. 2001).

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the sufficiency of the plaintiff's Complaint. A Complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The Court views the Complaint in the light most favorable to the plaintiff and must accept as true all well-pleaded factual allegations contained within it. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Id. (citing Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). A "formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

(ii) Summary Judgment

Summary judgment is appropriate only when no genuine dispute as to any material fact exists and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). To prevail on summary judgment, the moving party must show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, the Court considers "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251–52, 106 S.Ct. 2505.

In considering a motion for summary judgment, the Court must construe the facts in the light most favorable to the nonmoving party. Anderson , 477 U.S. at 255, 106 S.Ct. 2505. After the moving party meets its burden of production, the nonmoving party must "go beyond the pleadings" through the use of affidavits, depositions, answers to interrogatories and admissions on file, and designate specific facts showing that there is a genuine issue for trial. Celotex , 477 U.S. at 323–24, 106 S.Ct. 2548. A mere scintilla of evidence is insufficient; "there must be evidence on which the jury could reasonably find for the [nonmovant]." Anderson , 477 U.S. at 252, 106 S.Ct. 2505.

B. Procedures for Revenue Collection and the Presumption of Correctness

Under 26 U.S.C. § 7402, "[t]he district courts of the United States at the instance of the United States shall have such jurisdiction ... to render such judgment and decrees as may be necessary or appropriate for the enforcement of the internal revenue laws." See also 28 U.S.C. § 1340 ("The district courts shall have original jurisdiction of any civil action arising under any Act of Congress providing for internal revenue."). As a general matter, "[w]here the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun ... within 10 years after the assessment of the tax." 26 U.S.C. § 6502(a)(1).

"A tax assessment is the Commissioner's administrative determination of the amount of taxes due." See United States v. Fior D'Italia, Inc. , 536 U.S. 238, 242, 122 S.Ct. 2117, 153 L.Ed.2d 280 (2002). The purpose of an assessment is "to insure that a proper record is kept in order to avoid slipshod tax accounting practices and to insure that taxpayers may receive a summary of tax records pertaining to their tax liability." Gentry v. United States , 962 F.2d 555, 556 (6th Cir. 1992).

"It is well established in the tax law than an assessment is entitled to a legal presumption of correctness." Fior D'Italia , 536 U.S. at 242, 122 S.Ct. 2117 ; see also United States v. Walton , 909 F.2d 915,...