United States v. Rigler

• Citation: 885 F.Supp.2d 923
• Decision Date: 16 August 2012
• Docket Number: No. 4:11–cv–00204–JEG.,4:11–cv–00204–JEG.
• Parties: UNITED STATES of America, Plaintiff, v. Wilson F. RIGLER, and Iowa Department of Revenue, Defendants.
• Court: U.S. District Court — Southern District of Iowa

885 F.Supp.2d 923

UNITED STATES of America, Plaintiff,
v.
Wilson F. RIGLER, and Iowa Department of Revenue, Defendants.

No. 4:11–cv–00204–JEG.

United States District Court,
S.D. Iowa,
Central Division.

Aug. 16, 2012.

[885 F.Supp.2d 924]

Martin Morris Shoemaker, U.S. Dept. of Justice Civil Tax Division, Washington, DC for Plaintiff.

John M. Carter, Lead Attorney, Carter Law Firm, Carlsbad, CA, for Wilson F. Rigler.

Valencia V. McCown, AAG, Des Moines, IA, for Iowa Department of Revenue.

[885 F.Supp.2d 925]

ORDER
JAMES E. GRITZNER, Chief Judge.

This matter is before the Court on a Motion for Summary Judgment brought by Plaintiff United States of America (the Government), which Defendant Wilson F. Rigler (Rigler) resists. The parties have not requested a hearing, and the Court finds a hearing is not necessary in the resolution of this matter. The matter is fully submitted and ready for disposition.¹

I. BACKGROUNDA. Parties

In this action, the Government seeks to reduce to judgment certain federal income tax assessments made against Rigler and to foreclose on federal tax liens on Rigler's real property. Based upon potential claims of interest in the real property that is subject to the tax liens, the United States also named as defendants Rigler's wife, Linda Rigler; Mithril Management, Inc., Trustee, (Mithril) of the Hazelnut Trail Holdings (the Trust); and the Iowa Department of Revenue. The Iowa Department of Revenue answered the complaint and acknowledged holding liens that were junior to the federal liens. The Iowa Department of Revenue indicates that it does not challenge the entry of a decree and will take no further part in this action.² Neither Linda Rigler nor Mithril answered the Complaint or otherwise appeared in this action. Default and Default Judgment were entered against Linda Rigler and Mithril extinguishing any rights, claims, or interests that are senior to the federal tax liens on the real property.

B. Factual³and Procedural History1. Rigler's Sources Of Income

Rigler is a physician and has been practicing medicine since 1969. In 1999, Rigler moved from Mountain Home, Arkansas, to Centerville, Iowa, and began working for Chariton Valley Medical Center. In 2000, Rigler sold his Arkansas home for approximately $111,000. From 2000 to 2001, Rigler

[885 F.Supp.2d 926]

contracted with Daniel & Yeager to work in various hospitals. From 2002 until 2006, Rigler worked for Iowa Health Physicians in Osceola, Iowa. Since 2006, Rigler has worked for EmCare© and ACUTE CARE© as an emergency room physician. In 2004, Rigler also earned income through trading stocks.

In 1999, despite knowing that his employers reported Rigler's income to the Internal Revenue Service (IRS) through submission of Forms 1099 and/or W–2, Rigler stopped filing federal income tax returns because he had come to a “different understanding of what tax liability was all about.” Rigler Dep. 38:9–10, Pl.'s App. 52, 54, ECF No. 12–5. While Rigler acknowledged that the payments he received from his employers were for Rigler's services, he believed that those payments were “not due to any taxable activity or exercise, and so there's not a tax.” Rigler Dep. 41:17–19, 43:4–44:10, Pl.'s App. 49, ECF No. 12–5. Rigler did not file federal income tax returns for the years 2000, 2001, 2003, or 2004. Rigler admits that in 2009, he prepared and submitted to the IRS documents purporting to be his 2006 and 2007 tax returns; each document reported zero taxable income. Attached to those documents were Forms 1099, 4852, and W–2 for tax years 2006 and 2007 that had been altered to show Rigler's income as zero. At the bottom of those forms was a statement signed by Rigler disclosing that the “corrected Form” was “submitted to rebut a document known to have been submitted by the party identified above as ‘PAYER’ which erroneously alleges a payment or payments to the party identified above as the ‘RECIPIENT’ of ‘gains, profit or income’, within the meaning of relevant law.” Pl.'s App. 76, 77, 82, 83, 84, ECF No. 12–6. Rigler has not made a voluntary payment to IRS in ten years.

2. IRS Tax Assessments

Beginning on July 12, 2004, the IRS made assessments against Rigler for federal income taxes, interest, and penalties for the tax years 2000, 2001, 2003, 2004, 2006, and 2007 in the amounts of $3,609.20; $29,242.52; $79,947.78; $113,160.65; $5000; and $10,019.21, respectively. The IRS based the tax assessments on Forms 1099 and W–2 that had been submitted to the IRS by Rigler's employers, including Chariton Valley Medical Center, Daniel & Yeager, Mercy Medical Center, and Iowa Health Physicians. The assessments also included income in 2000 and 2004 from the sale of Rigler's Arkansas home and his stock trading activities and penalties assessed for filing frivolous tax returns in tax years 2006 and 2007. The total assessment was $240,979.36.

The IRS sent Rigler notices of the assessments and demands for payment. Rigler failed to pay over the amounts assessed against him; and as of January 31, 2012, including accruals, the amount Rigler owed was $315,713.49, with statutory interest continuing to accrue.

The IRS filed with the Recorder of Appanoose County, Iowa, the following tax liens:

+--------------------------------------------------------------+
                ¦TAXPAYER ¦TAX PERIOD ¦DATE OF FILING¦
                +--------------------------------------------------------------+
                

+-----------------------------------------------------------------------------+
                ¦Wilson F. Rigler ¦2000 & 2001 (1040) ¦02/02/06 ¦
                +------------------------------------+---------------------+------------------¦
                ¦Hazelnut Trail Holdings, Mithril ¦ ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Management Inc., Trustee, transferee¦2000 & 2001 (1040) ¦08/13/07 ¦
                +------------------------------------+---------------------+------------------¦
                ¦and/or nominee of Wilson F. Rigler ¦ ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Mithril Management, Inc., Trustee, ¦ ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Hazelnut Trail Holdings, transferee ¦2000 & 2001 (1040) ¦08/13/07 ¦
                +------------------------------------+---------------------+------------------¦
                ¦and/or nominee of Wilson F. Rigler ¦ ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Wilson F. Rigler ¦2003 & 2004 ¦(1040) ¦
                +------------------------------------+---------------------+------------------¦
                ¦Wilson F. Rigler ¦2006 & 2007 ¦11/02/09 ¦
                ¦ ¦(penalties) ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Hazelnut Trail Holdings, Mithril ¦2003 & 2004 (1040) ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Management, Inc., Trustee, ¦2006 & 2007 ¦11/06/09 ¦
                ¦transferee ¦(penalties) ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦and/or nominee of Wilson F. Rigler ¦ ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦Mithril Management, Inc., Trustee, ¦2003 & 2004 (1040) ¦11/06/09 ¦
                +------------------------------------+---------------------+------------------¦
                ¦Hazelnut Trail Holdings, transferee ¦2006 & 2007 ¦11/06/09 ¦
                ¦ ¦(penalties) ¦ ¦
                +------------------------------------+---------------------+------------------¦
                ¦and/or nominee of Wilson F. Rigler ¦ ¦ ¦
                +-----------------------------------------------------------------------------+
                

[885 F.Supp.2d 927]

Pl.'s App. 72–73, 115–127, ECF Nos. 12–5, 12–7.

The liens attached to real property, located at 14142 524th Street, Centerville, Iowa 52544 (the Centerville property). Defendant and Linda Rigler (collectively, the Riglers) have continuously lived on the Centerville property since 1999.

3. Conveyances of the Centerville Property

On April 1, 2004, Lila M. Frogge, Linda Rigler's mother, conveyed the Centerville property to the Riglers for consideration of approximately $65,000. The joint tenancy warranty deed was recorded with the Recorder of Appanoose County, Iowa, the same day.

On October 14, 2005, the Riglers transferred the property by warranty deed to “Mithril Management, Inc., Trustee, Hazelnut Trail Holdings.” Rigler Dep. 15:15–16, App. 26, ECF No. 12–4. The warranty deed was recorded on November 2, 2005. The Appanoose County Recorder does not show that any real estate transfer tax was paid or that a declaration of value was filed pertaining to the property transfer from the Riglers to the Trust. The Riglers received no consideration in conveyance of the property to the Trust; Rigler described the conveyance as “an exchange of certificates.” Rigler Dep. 22:22, Pl.'s App. 33, ECF No. 12–4; Pl.'s App. 33–34. The Trust was formed “shortly before” the Riglers conveyed the Centerville property to the Trust. Rigler Dep. 18:10, Pl.'s App. 29, ECF No. 12–4. However, the transfer from the Riglers to the Trust occurred after the IRS assessed Rigler's 2000 and 2001 federal income taxes and after Rigler's 2003 and 2004 taxes were due and owing.

At his deposition, Rigler described the Trust as a “pure trust that basically owns the [Centerville] property,” which, according to Rigler, does not and cannot have a tax payer identification number because it is “a pure trust, not a government-established trust.” Rigler Dep. 15:25–16:1, 20:22–23, Pl.'s App. 26–27, 31, ECF No. 12–4. Rigler denied any knowledge of Trust beneficiaries and could not recall how he learned about the trustee, Mithril. Rigler did acknowledge that he was the Trust's “managing director” and that as managing director of the Trust, he was entitled to all ownership benefits and obligations of the Centerville property. Rigler Dep. 23:24–24:3, Pl.'s App. 34–35, ECF No. 12–4. Rigler explained that he rents the property from the Trust for $1000 per month, which he pays in cash. Rigler further explained that he holds on to the rent cash on behalf of the Trust, which has no bank account....