United States v. Stein

• Decision Date: 31 January 2018
• Docket Number: No. 16-10914,16-10914
• Citation: 881 F.3d 853
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Estelle STEIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

881 F.3d 853

UNITED STATES of America, Plaintiff-Appellee,

v.Estelle STEIN, Defendant-Appellant.

No. 16-10914

United States Court of Appeals, Eleventh Circuit.

January 31, 2018

Curtis Clarence Pett, Thomas J. Clark, Bridget Maria Rowan, U.S. Department of Justice, Chief Appellate Section Tax Division, Mary Apostolakos Hervey, U.S. Department of Justice, Tax Division, WASHINGTON, DC, for Plaintiff-Appellee.

Alex P. Rosenthal, Rosenthal Law Group, WESTON, FL, Clifford Marshall Stein, Clifford M. Stein, Attorney at Law, MIAMI BEACH, FL, for Defendant-Appellant.

Before ED CARNES, Chief Judge, TJOFLAT, MARCUS, WILSON, WILLIAM PRYOR, MARTIN, JORDAN, ROSENBAUM, JULIE CARNES, NEWSOM, and HULL, Circuit Judges.^*

JORDAN, Circuit Judge:

We hold that an affidavit which satisfies Rule 56 of the Federal Rules of Civil Procedure may create an issue of material fact and preclude summary judgment even if it is self-serving and uncorroborated. And because this principle applies in all civil cases, including those in the realm of tax law, we overrule that portion of Mays v. United States , 763 F.2d 1295, 1297 (11th Cir. 1985), which is (or may be interpreted to be) to the contrary.

I

This case concerns IRS assessments, so we begin with some basic tax concepts. An assessment "amounts to an IRS determination that a taxpayer owes the [f]ederal [g]overnment a certain amount of unpaid taxes," and is "entitled to a legal presumption of correctness—a presumption that can help the [g]overnment prove its case against a taxpayer in court." United States v. Fior D'Italia, Inc. , 536 U.S. 238, 242, 122 S.Ct. 2117, 153 L.Ed.2d 280 (2002). "In reducing an assessment to judgment, the [g]overnment must first prove that the assessment was properly made. ... [If it does so,] the taxpayer must then prove that the assessment is erroneous in order to prevail." United States v. White , 466 F.3d 1241, 1248 (11th Cir. 2006). As far as we can tell, there are no reported federal cases addressing what evidence a taxpayer needs to present to show that an IRS assessment has been paid or satisfied.

A

In 2015, the government sued Estelle Stein for outstanding tax assessments, late penalties, and interest owed for tax years 1996, 1999, 2000, 2001, and 2002. See 26 U.S.C. § 7402. Its complaint alleged that Ms. Stein owed approximately $220,000 plus fees and statutory additions.

When it moved for summary judgment, the government sought to demonstrate that Ms. Stein had outstanding tax assessments by submitting copies of her federal tax returns, transcripts of her accounts for the tax years in question, and an affidavit from an IRS officer. The government acknowledged that Ms. Stein had paid the taxes due for 1996, 1999, and 2000 (as well as some additional small amounts), but claimed she had not satisfied the accrued penalties and interest for those years. As for 2001 and 2002, the government asserted that Ms. Stein had not paid any taxes, penalties, or interest. The government did not depose Ms. Stein.

In response to the government's summary judgment motion, Ms. Stein submitted an affidavit of her own stating that, "to the best of [her] recollection," she had paid the taxes and penalties owed for the years in question. Her affidavit specified that she had retained an accounting firm to file the tax returns after the death of her husband, who had been solely responsible for filing the couple's tax returns and paying their taxes; that she recalled paying the taxes due, including penalties, for each of those tax returns; that she no longer had bank statements to establish her payments to the IRS; that she could not obtain statements from her bank to prove her payments; and that the IRS had acknowledged misapplying her tax payment for 1996 to tax year 1979. The relevant paragraphs of Ms. Stein's affidavit stated as follows:

8. For 1996, this tax return was filed on November 15, 2004. The IRS had no record of receiving any payment and is claiming the full amount of the tax is due, along with interest and penalties.

* * *

10. For the year 1999, I filed the return as surviving spouse on February 11, 2005. The return showed an amount due of $33,612. I paid $35,226, which included the late penalty. The IRS has a record of that payment.

11. For the year 2000, I filed my return as surviving spouse on January 11, 2005. The amount due on the return was $4,127. I paid $4,349.00, which amount included the late penalty. The IRS has a record of having received that payment.

12. For the year 2001, I filed my return, as surviving spouse, on March 10, 2005. The amount of the return shows $15,998 due. Although I recall paying the tax on that return, including a late penalty consistent with the other returns that I filed, the IRS does not have a record of receiving such payment.

13. For the year 2002, I filed my return on March 10, 2005, as surviving spouse. The amount of tax shown on the return was $52,342. Although I recall writing a check for this amount, plus, late penalties, the IRS has no record of receiving his amount.

* * *

21. ... [I]t is my unwavering contention that I paid the taxes due, including late filing penalties, at such time as I filed the returns for each of the tax years in question.

D.E. 32-1 at 2–3.

The district court entered summary judgment in favor of the government. See D.E. 40. It first concluded that the evidence submitted by the government created a presumption that its assessments were correct. Turning to Ms. Stein's affidavit, the district court ruled that "[a] number of the facts contained within [the] affidavit [were] not relevant facts for ... consideration." Id . at 6. Although Ms. Stein maintained that payments had been made, she "did not produce any evidence documenting said payments," id ., and therefore did not satisfy her burden to overcome the presumption of correctness given to the government's assessments. As a result, there was "no genuine dispute as to any material fact," id . at 7, and the government was entitled to judgment as a matter of law.

Ms. Stein appealed, and a panel of this court affirmed. The panel ruled that her "affidavit failed to create a genuine factual dispute about the validity of the [government's] assessments" because, under Mays , 763 F.2d at 1297, her "general and self-serving assertions ... failed to rebut the presumption established by the assessments." United States v. Stein , 840 F.3d 1355, 1357 (11th Cir. 2016). We vacated the panel's opinion and took the case en banc to determine whether Mays should be overruled.

II

Mays , a tax refund case, came to us in a summary judgment posture. We affirmed the district court's grant of summary judgment in favor of the government, holding that the taxpayer's submissions were insufficient to create an issue for trial. See 763 F.2d at 1297. We first noted that a taxpayer in a refund suit has the twin burdens of showing that the government's assessment is wrong, and of establishing the "correct amount of the refund due." Id . We then explained that a taxpayer's claim "must be substantiated by something other than tax returns, uncorroborated oral testimony, or self-serving statements." Id. (internal citations omitted). Turning to the record in the case, we concluded that the taxpayer's computer printout of business expenses (prepared after a tax audit) and net worth statements (which did not refer to any original records) "did not overcome the presumption of correctness due [to] determinations" of the Commissioner of the IRS: "[The taxpayer] has submitted only self-serving documents which do not substantiate his claims." Id.

We overrule Mays to the extent it holds or suggests that self-serving and uncorroborated statements in a taxpayer's affidavit cannot create an issue of material fact with respect to the correctness of the government's assessments. Nothing in Rule 56 prohibits an otherwise admissible affidavit from being self-serving. And if there is any corroboration requirement for an affidavit, it must come from a source other than Rule 56.

A

Rule 56(a) authorizes summary judgment only when "there is no genuine dispute as to any material fact" and the moving party is "entitled to judgment as a matter of law." Rule 56(c), in turn, allows a nonmoving party to dispute a material fact through an affidavit, which must be "made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." See generally Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof a trial.").

An affidavit cannot be conclusory, see, e.g., Lujan v. Nat'l Wildlife Fed'n , 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990), but nothing in Rule 56 (or, for that matter, in the Federal Rules of Civil Procedure) prohibits an affidavit from being self-serving. Indeed, as the Seventh Circuit observed, "most affidavits submitted [in response to a summary judgment motion] are self-serving." Payne v. Pauley , 337 F.3d 767, 772 (7th Cir. 2003). Not surprisingly, most of our cases correctly explain that a litigant's self-serving statements based on personal knowledge or observation can defeat summary judgment. See, e.g., Feliciano v. City of Miami Beach , 707 F.3d 1244, 1253 (11th Cir. 2013) ("To be sure, Feliciano's sworn statements are self-serving, but that alone does not permit us to disregard them at the summary judgment stage."); Price v. Time, Inc. , 416 F.3d 1327, 1345 (11th Cir.) ("Courts routinely and properly deny summary judgment on the basis of a party's sworn testimony even though it is self-serving."), modified on other grounds on denial of reh'g , 425 F.3d 1292 (11th Cir. 2005).

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