United States of America v. Martin et al

Filing 34

MEMORANDUM OPINION. Signed by Judge Annemarie Carney Axon on 3/13/2019. (TLM, )

FILED
2019 Mar-13 PM 12:40
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
EASTERN DIVISION

UNITED STATES OF AMERICA,

}
}
Plaintiff,
}
}
v.
}
}
HENRY J. MARTIN and LYDIA A. }
MARTIN,
}
}
Defendants.
}

Case No.: 1:17-cv-02166-ACA

MEMORANDUM OPINION
The United States of America filed this action against Defendants Henry J.
Martin and Lydia A. Martin pursuant to 26 U.S.C. § 7401 to collect federal income
taxes assessed against the couple. Before the court is the United States’ motion for
summary judgment. (Doc. 22). The court WILL GRANT the motion because the
United States has established that the tax assessments are valid and enforceable.
I.

BACKGROUND
In deciding a motion for summary judgment, the court “draw[s] all

inferences and review[s] all evidence in the light most favorable to the non-moving
party.” Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir.
2012) (quotation marks omitted).

1

A.

Mr. Martin’s Individual Income Tax Liabilities

Mr. Martin failed to file individual federal income tax returns (Forms
1040—United States Income Tax Return for Individuals) for tax years 2000
through 2006. (Doc. 1 at ¶ 5; Doc. 22-1 at ¶ 5; Doc. 22-2; Doc. 22-3; Doc. 22-4;
Doc. 22-5; Doc. 22-6; Doc. 22-7; Doc. 22-8). Therefore, the Internal Revenue
Service (“IRS”) calculated the tax due on the income Mr. Martin earned in those
years, proposed an assessment of his tax deficiencies, and issued a notice of
deficiency to Mr. Martin’s last known address. (Doc. 1 at ¶ 6; Doc. 22-1 at ¶ 5;
Doc. 22-2; Doc. 22-3; Doc. 22-4; Doc. 22-5; Doc. 22-6; Doc. 22-7; Doc. 22-8).
A delegate of the Secretary of the Treasury assessed against Mr. Martin
income tax, interest, penalties, and statutory additions for tax years 2000 to 2006,
on the dates and in the amounts reflected in the table below:
TAX
ASSESSMENT DATE
YEAR

2000

October 29, 2007

October 12, 2015

2001

October 29, 2007

TYPE OF ASSESSMENT

AMOUNT

Estimated Tax Penalty
Tax Assessed
Late Filing Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Interest Assessed
Estimated Tax Penalty
Tax Assessed
Late Filing Penalty
Interest Assessed

$2,096.20
$38,975.00
$8,769.37
$23,887.32

2

$9,743.75
$29,659.14
$103.29
$2,611.00
$587.47
$1,279.41

TAX
ASSESSMENT DATE
YEAR

October 12, 2015

2002

December 22, 2008

October 12, 2015

2003

December 22, 2008

October 12, 2015

December 22, 2008
2004

October 12, 2015

2005

December 22, 2008

October 12, 2015

TYPE OF ASSESSMENT
Failure to Pay Tax
Penalty
Interest Assessed
Tax Assessed
Late Filing Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Interest Assessed
Estimated Tax Penalty
Tax Assessed
Late Filing Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Interest Assessed
Estimated Tax Penalty
Tax Assessed
Late Filing Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Estimated Tax Penalty
Tax Assessed
Late Filing Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Interest Assessed
3

AMOUNT
$652.75
$1,864.18
$1,175.00
$264.37
$606.58
$293.75
$612.03
$280.39
$10,867.00
$2,445.07
$4,775.80
$2,716.75
$5,515.51
$178.46
$6,228.00
$1,401.30
$2,253.23
$1,401.30
$2,998.36
$155.70
$312.35
$7,787.00
$1,752.07
$2,035.12
$1,284.85
$3,445.45

TAX
ASSESSMENT DATE
YEAR

December 22, 2008
2006

October 12, 2015

TYPE OF ASSESSMENT
Failure to Pay Tax
Penalty
Estimated Tax Penalty
Tax Assessed
Late Filing Penalty
Interest Assessed
Failure to Pay Tax
Penalty
Interest Assessed
Failure to Pay Tax
Penalty

AMOUNT
$661.89
$1,434.80
$30,320.00
$6,822.00
$4,546.32
$3,183.60
$12,113.11
$4,396.40

(Doc. 22-1 at ¶ 5; Doc. 22-2; Doc. 22-3; Doc. 22-4; Doc. 22-5; Doc. 22-6; Doc. 227; Doc. 22-8). A delegate of the Secretary of Treasury gave Mr. Martin notice of
these liabilities and made demands for payment. (Doc. 22-1 at ¶ 6). Despite notice
and demands for payment, Mr. Martin failed to pay the balance due on the taxes,
interest, penalties, and other statutory additions assessed against him individually
for tax years 2000 through 2006. (Doc. 22-1 at ¶ 7). As of December 13, 2018,
Mr. Martin owes the United States $275,965.79 in income taxes, interest, penalties,
and other additions for tax years 2000 to 2006, plus statutory additions and interest
that accrue until payment in full. (Doc. 22-1 at ¶¶ 9-10; Doc. 22-13).
B.

The Martins’ Joint Income Tax Liabilities

The Martins jointly filed federal income tax returns (Forms 1040—United
States Income Tax Return for Individuals) for tax years 2007, 2008, 2011, and
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2012. (Doc. 1 at ¶ 14; Doc. 22-1 at ¶ 12; Doc. 22-9; Doc. 22-10; Doc. 22-11; Doc.
22-12). According to the returns, the Martins owed federal income taxes, but the
couple did not remit payment of their taxes with their returns. (Doc. 1 ¶ at 15;
Doc. 22-1 at 12; Doc. 22-9; Doc. 22-10; Doc. 22-11; Doc. 22-12).
A delegate of the Secretary of the Treasury assessed against the Martins the
joint income tax liabilities that they reported as due on their federal tax returns,
plus penalties, interest, and statutory additions for tax years 2007, 2008, 2011, and
2012, on the dates and in the amounts reflected in the chart below:
TAX
YEAR

ASSESSMENT DATE

August 24, 2009
2007

October 12, 2015

August 24, 2009
2008

October 12, 2015

TYPE OF ASSESSMENT

AMOUNT

Tax Assessed Per Return
Penalty for Failure to
Make Estimated Tax
Payments
Late Filing Penalty
Failure to Pay Tax Penalty
Interest Assessed
Interest Assessed
Failure to Pay Tax Penalty
Tax Assessed Per Return
Penalty for Failure to
Make Estimated Tax
Payments
Late Filing Penalty
Failure to Pay Tax Penalty
Interest Assessed
Interest Assessed
Failure to Pay Tax Penalty

$9,999.00

5

$455.00
$2,249.77
$849.91
$867.57
$3,249.50
$1,649.84
$8,254.00
$227.00
$1,269.72
$176.35
$120.35
$1,986.62
$1,587.15

TAX
YEAR

ASSESSMENT DATE

June 24, 2013
2011

October 12, 2015

May 13, 2013
2012
October 12, 2015

TYPE OF ASSESSMENT

AMOUNT

Tax Assessed Per Return $10,799.00
Penalty for Failure to
Make Estimated Tax
$214.00
Payments
Late Filing Penalty
$2,429.77
Failure to Pay Tax Penalty
$809.92
Interest Assessed
$443.23
Interest Assessed
$1,056.79
Failure to Pay Tax Penalty $1,889.82
Tax Assessed Per Return
$9,039.00
Failure to Pay Tax Penalty
$45.19
Interest Assessed
$20.83
Interest Assessed
$691.13
Failure to Pay Tax Penalty $2,214.56

(Doc. 1 at ¶ 16; Doc. 22-1 at ¶ 12; Doc. 22-9; Doc. 22-10; Doc. 22-11; Doc. 2212). A delegate of the Secretary of Treasury gave the Martins notice of these
liabilities and made demands for payment. (Doc. 22-1 at ¶ 13). Despite notice and
demands for payment, the Martins have failed to pay the balance due on the
income taxes, interest, penalties, and other additions assessed against them. (Doc.
22-1 at ¶ 14). As of December 13, 2018, the Martins, jointly, owe the United
States $70,256.25 in income taxes, interest, penalties, and other additions for tax
years 2007, 2008, 2011, and 2012, plus statutory additions and interest that
continue to accrue until payment in full. (Doc. 22-1 at ¶¶ 16-17; Doc. 22-14).

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C.

This Lawsuit

The United States filed this lawsuit on December 22, 2017. (Doc. 1) The
complaint asserts two counts. In Count One, the United States asks the court to
reduce to judgment Mr. Martin’s individual income tax liabilities. (Doc. 1 at 2-5).
In Count Two, the United States asks the court to reduce to judgment the Martins’
joint income tax liabilities. (Doc. 1 at 5-7).
On March 15, 2018, the Martins were personally served with their
respective summonses and copies of the complaint. (Doc. 5; Doc. 6). The Martins
failed to timely answer or otherwise respond to the complaint, and on April 9,
2018, the Clerk granted the United States’ motion for entry of default. (Doc. 7;
Doc. 8). On June 28, 2018, the Clerk docketed an answer and objections to the
complaint from Mr. Martin, and the United States moved for default judgment
against the Martins. (Doc. 12; Doc. 13)
The court conducted a status conference with the parties on August 7, 2018.
(Doc. 15). The court denied without prejudice the United States’ motion for
default judgment. (Doc. 17 at 1). The Court gave Mrs. Martin until August 21,
2018 to answer Count Two of the complaint and gave the Martins until October 9,
2018 to file a notice stating whether they contested liability for the taxes at issue.
(Doc. 17 at 1). The court also appointed pro bono counsel for the Martins. (Doc.
17 at 2). Pro bono counsel appeared on September 7, 2018. (Doc. 19).
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When the Martins did not file a notice regarding liability on or before
October 9, 2018, the United States requested a status conference to discuss how the
parties should proceed. (Doc. 20). On October 18, 2018, the court conducted a
telephone conference with counsel. (See October 18, 2018 minute entry). The
Martins’ pro bono counsel indicated that he would file an amended answer on
behalf of the Martins in three weeks.
The Martins’ pro bono counsel did not file an answer on their behalf until
several hours after the United States filed its motion for summary judgment on
December 14, 2018. (Doc. 22; Doc. 23). On December 21, 2018, the court set
aside the Clerk’s entry of default against the Martins and set a briefing schedule on
the motion for summary judgment. (Doc. 24).
On January 12, 2019, the Martins filed a response in opposition to the
motion for summary judgment. (Doc. 25). In the response, the Martins cited
Federal Rule of Civil Procedure 56(d), but the response was not accompanied by
an affidavit. Thus, the court construed the response as a deficient Rule 56(d)
motion and denied the motion without prejudice. (Doc. 27). On January 22, 2019,
the Martins filed an amended response in opposition to the motion for summary
judgment and attached an affidavit. (Doc. 28; Doc. 28-1). On February 14, 2019,
the court denied the Martins’ Rule 56(d) motion. (Doc. 32). On February 28,

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2019, the United States filed a reply in support of its motion for summary
judgment. (Doc. 33).
III.

ANALYSIS
The United States moves for summary judgment on both counts in the

complaint. In deciding a motion for summary judgment, the court must first
determine if the parties genuinely dispute any material facts, and if they do not,
whether the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a). A disputed fact is material if the fact “might affect the
outcome of the suit under the governing law,” and a dispute is genuine “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 (1986).
Relying on their answers to the complaint, the Martins’ renewed response in
opposition to summary judgment generally denies liability and asserts various
defenses. (Doc. 28 at 1-2) (citing Doc. 12; Doc. 18; Doc. 23). However, “a party
opposing a properly supported motion for summary judgment may not rest upon
mere allegation or denials of his pleading, but must set forth specific facts showing
that there is a genuine issue for trial.” Anderson, 477 U.S. at 252. In addition,
because the court cannot consider unverified statements at the summary judgment
stage, the unsworn statements contained in the Martins’ amended response cannot
create a genuine dispute of fact. See Dudley v. City of Monroeville, 446 F. App’x
9

2014, 2017 (11th Cir. 2011) (“Unsworn statements do not meet the requirements of
Rule 56, so the district court could not—and properly did not—rely on the contents
of the citizen’s [unsworn] statement.”) (citing Carr v. Tatangelo, 338 F.3d 1259,
1273 n.27 (11th Cir. 2003)).
Turning then to the merits of the United States’ claims, section 7402(a) of
the Internal Revenue Code grants to a district court jurisdiction “to render such
judgments and decrees as may be necessary or appropriate for the enforcement of
the internal revenue laws.” 26 U.S.C. § 7402(a). The Eleventh Circuit has noted
that “[t]he language of § 7402(a) encompasses a broad range of powers necessary
to compel compliance with the tax laws.” United States v. Ernst & Whinney, 735
F.2d 1296, 1300 (11th Cir. 1984). In addition, because the “Tax Court possesses
no statutory authority to issue orders in aid of IRS collection activities[,] . . . . the
Government must bring a suit for collection of tax in federal district court . . . if it
wants judicial assistance in recovering a tax deficiency.” Roberts v. Comm’r, 175
F.3d 889, 896 (11th Cir. 1999). As explained below, the undisputed evidence
establishes that the tax assessments against the Martins are valid and enforceable
and that the United States is entitled to recover the identified deficiencies.
“In reducing [a tax] assessment to judgment, the Government must first
prove that the assessment was properly made.” United States v. White, 466 F.3d
1241, 1248 (11th Cir. 2006). To establish a prima facie case of taxpayer liability,
10

the United States may submit a certified record of the underlying tax assessments
and payments. United States v. Chila, 871 F.2d 1015, 1017-18 (11th Cir. 1989);
United States v. Dixon, 672 F. Supp. 503, 506-07 (M.D. Ala. 1987), aff’d, 849 F.2d
1478 (11th Cir. 1988). If the United States does so, “the taxpayer must then prove
that the assessment is erroneous in order to prevail.” White, 466 F.3d at 1248.
In support of its motion for summary judgment, the United States submitted
certified copies of the Certificates of Payments, Assessments and Other Matters
(Forms 4340) for Mr. Martin’s individual income tax accounts for tax years 2000
through 2006 and the joint income tax accounts of Mr. and Mrs. Martin for tax
years 2007, 2008, 2011, and 2012. (Doc. 22-1 at ¶ 4; Doc. 22-2; Doc. 22-3; Doc.
22-4; Doc. 22-5; Doc. 22-6; Doc. 22-7; Doc. 22-8 Doc. 22-9; Doc. 22-10; Doc. 2211; Doc. 22-12). These certificates “establish[] the presumptive correctness of the
tax assessments and a prima facie case of liability.” Smelley v. United States, 806
F. Supp. 932, 934 (N.D. Ala. 1992) (citing Chila, 871 F.2d at 1017-18). The
Martins have offered no evidence to show that the tax assessments are incorrect in
the amount shown due. Therefore, the United States has established that the
claimed tax liability was properly assessed. See Chila, 871 F.2d at 1018.
The United States also has established that the claimed tax liability is
enforceable. Generally, the United States must file suit to collect unpaid taxes
within 10 years from the date of an assessment. 26 U.S.C. § 6502(a)(1). This 1011

year statute of limitations is tolled if a taxpayer requests an installment payment
agreement. 26 U.S.C. §§ 6503 (a)(1), 6331 (a), (k)(2).
The United States assessed tax liabilities against Mr. Martin for tax years
2002 to 2006 on December 22, 2008. (Doc. 22-1 at ¶ 5). The United States
assessed tax liabilities against the Martins jointly for tax years 2007 and 2008 on
August 24; for tax year 2011 on June 24, 2013; and for tax year 2012 on May 13,
2013. (Doc. 22-1 at ¶ 12). These assessments were made within 10 years of
December 22, 2017, the date the United States filed suit. Thus, the United States
timely filed suit as to these assessments, and they are enforceable.
The two remaining assessments—those against Mr. Martin for tax years
2000 and 2001—were made on October 29, 2007, which is more than 10 years
before the United States filed suit on December 22, 2017. (Doc. 1; Doc. 22-1 at ¶
5; Doc. 22-2; Doc. 22-3). The certified copies of Mr. Martin’s tax assessments for
tax years 2000 and 2001 show that an installment agreement became pending on
August 16, 2013. (Doc. 22-2 at 5; Doc. 22-3 at 4). The certified copies of Mr.
Martin’s tax assessments for tax years 2000 and 2001 also show that the pending
installment agreements were reversed on November 25, 2013, which is 101 days
after August 16, 2013. (Doc. 22-2 at 5; Doc. 22-3 at 5). The request for an
installment agreement suspends the running of the collection statute while the
request remains pending, plus an additional 30 days. 26 U.S.C. §§ 6503(a)(1),
12

6331(k)(2)(A)-(B). Thus, the United States was required to file suit to collect these
taxes on or before March 10, 2018 (131 days after October 29, 2017). Because the
United States filed suit before March 10, 2018, the United States timely filed suit
as to Mr. Martin’s 2000 and 2001 assessments, and they are enforceable.
III.

CONCLUSION
For the reasons stated above, the United States has established that there is

no genuine issue of material fact and that it is entitled to judgment as a matter of
law. Therefore, the court WILL GRANT the United States’ motion for summary
judgment. The court will enter a separate final judgment consistent with this
memorandum opinion.
DONE and ORDERED this March 13, 2019.

_________________________________
ANNEMARIE CARNEY AXON
UNITED STATES DISTRICT JUDGE

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