Wiley v. U.S.

Decision Date29 March 1994
Docket NumberNo. 93-3091,93-3091
Citation20 F.3d 222
Parties-1603, 94-1 USTC P 50,150 Vincent C. WILEY, Plaintiff-Appellant, v. UNITED STATES of America; Citizens Federal Mortgage Corporation; State of Ohio; Franklin County Treasurer; and Houng Thai, Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Charles E. McFarland (argued & briefed), Newton Falls, OH, for Vincent C. Wiley.

Gary R. Allen, Acting Chief (briefed), Charles E. Brookhart, Alice L. Ronk (argued), U.S. Dept. of Justice, Appellate Section Tax Div., Washington, DC, O. Charles Hosterman, Office of the U.S. Atty., Columbus, OH, for U.S.

Donald E. Miehls, Dayton, OH, for Citizens Federal Mortg. Corp.

Phillip Megahan Walther, Pros. Attorney's Office for the County of Franklin, Columbus, OH, for Franklin County Treasurer.

Richard Carl Graham, Eisnaugle, Gleaves & Graham, Columbus, OH, for Houng Thai.

Before: MERRITT, Chief Judge; and MILBURN and SILER, Circuit Judges.

MILBURN, Circuit Judge.

Plaintiff Wiley appeals the district court's denial of his motion for summary judgment and the grant of summary judgment to defendant United States of America. On appeal, the issue is whether there is a genuine issue of material fact as to whether the Internal Revenue Service mailed the statutorily required notice of deficiency to plaintiff. For the reasons that follow, we affirm the denial of summary judgment to the plaintiff and reverse the grant of summary judgment to the defendant.

I.

On August 14, 1991, plaintiff Vincent C. Wiley filed this action to quiet title to real property located at 1843 Case Road, Columbus, Ohio, which had been seized by defendant United States for the nonpayment of taxes and which was to be sold at public auction on August 16, 1991. The property was sold, and Wiley subsequently amended his complaint to add the purchaser, Houng Thai, as a defendant. The basis of Wiley's complaint was that the seizure and sale were invalid because the Government had failed to follow the procedures required by the Internal Revenue Code.

26 U.S.C. Sec. 6212(a) provides that upon determination that there is a deficiency, the Secretary is authorized to send notice of the deficiency to the taxpayer by certified or registered mail. This notice of deficiency is often referred to as the "ninety day letter" because after mailing this notice, the IRS must give the taxpayer ninety days to petition the Tax Court for a redetermination of the deficiency before making an assessment. 26 U.S.C. Sec. 6213(a). Within sixty days after the assessment of a tax, the Secretary must give notice to each person liable for the unpaid tax, stating the amount of the tax and demanding payment. 26 U.S.C. Sec. 6303(a). This notice is generally known as the "notice and demand letter." If a person fails to pay after receiving the notice and demand letter, the Secretary is authorized to seize the person's property and sell it to satisfy the debt. 26 U.S.C. Sec. 6331. However, before seizing the property, the Secretary must give notice of his intent to levy upon the property. 26 U.S.C. Sec. 6331(d).

Wiley alleged in his complaint that a notice of deficiency, notice of demand, and notice of intent to levy were never sent and asked the district court to order the seizure and sale void, to declare Wiley the sole owner of the subject property, and to issue a preliminary injunction enjoining defendants from possessing the property or executing a deed to the property. During discovery, Wiley was informed by the Government's attorney that the IRS routinely destroys records, and Wiley's file could not be located. However, the Government did produce computer records and a certified mailing list.

Wiley and the Government filed cross-motions for summary judgment. Wiley presented the IRS computer records, which did not contain the numeric code ("494") that would normally record that the notice of deficiency had been sent. 1 Wiley's expert's affidavit opined that this omission indicated that the notice was never sent. The Government did not explain the omission of the 494 code but presented a certified mailing list that indicated the notice of deficiency had been sent.

On November 24, 1992, the district court denied Wiley's motion for summary judgment and granted the Government's motion for summary judgment, holding that "[t]he unexplained absence of the Ninety-Day Letter code 494 from the computer generated list ... is not sufficient evidence to create an issue of fact as to whether the Ninety-Day Notice was mailed in light of the direct evidence of mailing." J.A. 31. This timely appeal followed.

II.

Wiley contests both the grant of summary judgment to the Government and the denial of summary judgment to him. This court reviews a district court's grant of summary judgment de novo, using the same test as the district court, Brooks v. American Broadcasting Cos., 932 F.2d 495, 500 (6th Cir.1991), but reviews a denial of summary judgment only for an abuse of discretion. Southward v. South Cent. Ready Mix Supply Corp., 7 F.3d 487, 492 (6th Cir.1993). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Federal Rule of Civil Procedure 56(c). When reviewing cross-motions for summary judgment, the court must evaluate each motion on its own merits and view all facts and inferences in the light most favorable to the nonmoving party. Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991).

Wiley does not dispute the merits of the underlying tax assessment but rather the procedural irregularities of the assessment and subsequent seizure and sale of his property. The only procedural irregularity claimed by Wiley is that the IRS did not send him a notice of deficiency by certified mail for the relevant tax year, 1982. The Government disputes this contention and argues that a notice of deficiency was sent by certified mail. A factual dispute between the parties will preclude summary judgment only if the disputed facts are material to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-11, 91 L.Ed.2d 202 (1986). Material facts are only those facts that might affect the outcome of the lawsuit under the governing substantive law. Id. Under the provisions of the Internal Revenue Code, the IRS must mail a notice of deficiency by certified or registered mail before it can make an assessment for delinquent taxes, which in turn is a prerequisite to seizing and selling the taxpayer's property. 26 U.S.C. Secs. 6212(a), 6213(a), 6303(a), and 6331; see also Tavano v. Commissioner, 986 F.2d 1389, 1390 (11th Cir.1993) (per curiam); Robinson v. United States, 920 F.2d 1157, 1158 (3d Cir.1990). The only requirement is that the IRS send the notice of deficiency by certified or registered mail to the taxpayer's last known address; actual receipt of the notice is not necessary. Guthrie v. Sawyer, 970 F.2d 733, 737 (10th Cir.1992); Williams v. Commissioner, 935 F.2d 1066, 1067 (9th Cir.1991). Therefore, whether or not the notice of deficiency for 1982 was mailed by certified mail to Wiley is an issue of material fact.

The party seeking summary judgment bears the initial burden of showing the district court that there is an absence of a genuine dispute over any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). This burden may be discharged either by producing evidence showing the absence of a genuine issue of material fact or by " 'showing'--that is, pointing out to the district court--that there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. at 2554. In order to defeat a motion for summary judgment after the movant has carried its initial burden, the nonmoving party cannot respond by merely resting on the pleadings, but rather the nonmoving party must present some "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. at 2553 (quoting Fed.R.Civ.P. 56(e)).

Wiley's motion for summary judgment was based on his assertion that the Government had not mailed him a notice of deficiency for the 1982 tax year. Wiley submitted a copy of an IRS computer-generated transcript of his account, known as an Individual Master File (IMF), which reflected by numeric codes the dates certain transactions occurred. Wiley submitted an affidavit of an expert witness that stated the IMF transcript did not contain a record of a notice of deficiency being issued. According to the expert, the IMF transcript was missing the transaction code ("494") that was required by IRS Publication 6209 to record the issuance of a notice of deficiency, and this omission indicated that a notice of deficiency was not sent. Wiley also submitted his own affidavit, which stated that he had not received the notice of deficiency.

The Government countered by asserting that the notice of deficiency had been mailed. The Government did not explain the fact that the notice of deficiency code was missing on the IMF transcript. Instead, the Government presented the affidavit (declaration) of William F. Wise, an employee in charge of reviewing notices of deficiency. Mr. Wise stated that during the course of his employment, he had become familiar with the normal procedure used by the IRS for mailing notices of deficiency. He summarized this procedure as follows:

Statutory notices of deficiency are separately prepared for each taxpayer. Each notice is reviewed carefully for the complete and most current taxpayer address. Each notice is then mailed via certified mail. A certified mailing list is generated by the IRS with respect to statutory notices of deficiency sent by certified mail to taxpayers pursuant to 26 U.S.C. Sec. 6212. A certified mailing list accompanies the certified mail to the U.S. Post Office. Upon delivery of the statutory...

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