United States of America v. Krieg et al

Filing 31

ORDER DENYING DEFENDANTS' MOTION TO VOID SUMMARY JUDGMENT. Signed by Judge Charles R. Breyer on 11/4/2014. (crblc1, COURT STAFF) (Filed on 11/4/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
For the Northern District of California

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UNITED STATES OF AMERICA,
Plaintiff,

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No. C14-01265 CRB
ORDER DENYING DEFENDANTS’
MOTION TO VOID SUMMARY
JUDGMENT

v.
KEITH KENNETH KRIEG and LINDA
NUNES KRIEG,

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Defendants.
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On March 19, 2014, the government brought this action against Keith and Linda Krieg

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(“Defendants”) for neglecting, failing, or refusing to pay federal income taxes, penalties, and

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interest pursuant to Sections 7401 and 7402 of the Internal Revenue Code of 1986.

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Complaint (dkt. 1) ¶¶ 1-2, 7-9. In answer, Defendants maintained that they had “not seen or

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found any evidence of any Act of Congress to allow the IRS jurisdiction or authority over us,

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whom have live[ed] in the California Republic for the years in question[,]” and that they “did

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not have any profits or gains from any sources within or without of the Corporate United

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States . . . .” Answer (dkt. 9) at 2; Case Mgmt. Statement (dkt. 13-1) at 1. On July 3, 2014,

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the government filed a Motion for Summary Judgment. See MSJ (dkt. 17). When

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Defendants failed to timely oppose the government’s motion, the Court ordered Defendants

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to show cause why the government’s motion should not be granted. See OSC (dkt. 20). The

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Court advised Defendants that “[f]ailure to timely respond to this Order could result in

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summary judgment being entered for the government.” Id. Defendants failed to timely

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respond to the Court’s Order and the Court, finding the matter suitable for resolution without

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oral argument pursuant to Civil Local Rule 7-1(b), granted the government’s motion. See

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Order MSJ (dkt. 22).

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On August 12, 2014, Defendants filed the present motion, requesting that the Court

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void its Order granting the government’s motion for summary judgment. See Mot. Void

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(dkt. 26). Defendants maintain that they “were not home for the time of response” and argue

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that the government’s action to collect federal income tax is time-barred. Id. at 2-3. The

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Court ordered the government to respond, Response Order (dkt. 27), and the government did

United States District Court
For the Northern District of California

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so, Response (dkt. 29). For the reasons stated below, the Court DENIES Defendants’

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motion.

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In granting the government’s motion, the Court noted that it did not grant the motion

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because of Defendants’ failure to oppose it, but “because (1) Defendants failed to respond to

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the Court’s show cause order, and (2) the Court has not identified either a genuine issue of

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material fact or any other reason the government is not entitled to judgment as a matter of

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law.” See Fed. R. Civ. P. 56(a); see also Carmen v. San Francisco Sch. Dist., 237 F.3d 1026,

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1031 (9th Cir. 2001) (“[t]he district court need not examine the entire file for evidence

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establishing a genuine issue of fact, where the evidence is not set forth in the opposing papers

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with adequate references so that it could conveniently be found.”). Defendants now argue

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that (1) the government’s documents contain inconsistent assessment dates for the tax years

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at issue and (2) some of the assessment dates are more than ten years old and thus the

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government’s action to collect federal income tax is time-barred. Mot. Void at 2-3; see 26

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U.S.C.A. § 6502. Defendants argue that, at minimum, this is “enough to offset the prima

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facie evidence presented in the 4340s.” Id. at 3.

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“The government can usually carry its initial burden . . . merely by introducing its

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assessment of tax due. Normally, a presumption of correctness attaches to the assessment,

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and its introduction establishes a prima facie case. The presumption does not arise unless it

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is supported by a minimal evidentiary foundation.” United States v. Stonehill, 702 F.2d
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1288, 1293 (9th Cir. 1983) (internal citations omitted). If the government establishes a prima

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facie case, Defendants must show, by a preponderance of the evidence, that judgment should

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not be entered against them. See Hardy v. Comm’r, 181 F.3d 1002, 1004-05 (9th Cir. 1999)

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(explaining burden shift); United States v. Molitor, 337 F.2d 917, 922 (9th Cir. 1964) (“if

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[taxpayer] had adduced no evidence contesting the prima facie proof . . . the United States

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would have been entitled to judgment”).
In this case, the government has submitted Certificates of Assessments and Payments

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(Form 4340s) for Mr. Krieg for the 1998 and 2001 tax years, and for Ms. Krieg for the 1997

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and 1998 tax years. See Moore Decl. (dkt. 18) Exs. 1-4. The Form 4340s list the assessment

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United States District Court
For the Northern District of California

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dates for Mr. Krieg as March 22, 2004 and August 14, 2006 and, for Ms. Krieg, as April 26,

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2004 and May 3, 2004. Id. These Form 4340s “are admissible evidence that valid

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assessments have been made.” See Hughes v. United States, 953 F.2d 531, 540 (9th Cir.

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1992). The government has made a prima facie case because the complaint against

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Defendants was filed on March 19, 2014, within ten years of the earliest assessment date as

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listed on the Form 4340s. See Compl.; See also Moore Decl. Exs. 1-4; Oliver v. United

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States, 921 F.2d 916, 919 (9th Cir. 1990).

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Defendants argue that, due to conflicting dates on other IRS forms, the dates listed on

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the Form 4340s are incorrect, and that is sufficient to overcome the government’s prima facie

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case. Mot. Void at 3. Defendants point to several documents that list the assessment dates

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for Mr. Krieg as January 6, 2003 and March 24, 2003 and, for both of Ms. Krieg’s applicable

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tax years, as January 6, 2003, which would time-bar the government’s action. Id. at 2-3; see

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26 U.S.C.A. § 6502. Specifically, Defendants point to a “Revocation of Certificate of

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Release from Tax Lien,” a “Facsimile Federal Tax Lien Document,” and a “‘nominee’

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Notice of Federal Tax Lien,” that list the 2003 assessment dates. Id.

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In response, the government argues that the “error in the dates listed . . . is due to the

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Substitutes for Return (“SFRs”) that the IRS prepared in 2002 and 2003.” Response at 2;

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Norris Decl. (dkt. 30) ¶¶ 24-29. “The Form 4340 Certifications for 1997 and 1998 reflect

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that the IRS filed SFRs on 11/20/2002 and recorded $0 on 01/06/2003.” Response at 2;
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Norris Decl. ¶ 8. “Mr. Krieg did not file a tax return for 2001, which prompted another SFR

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to be filed on 02/06/2003 and $0 recorded on 03/24/2003.” Response at 2; Norris Decl. ¶¶

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25-26. The government notes that four of the eight documents listed by Defendants match

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the Form 4340s and thus concludes that “it is evident from a review of the documents that the

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IRS employee who prepared [the documents] mistakenly looked at 01/06/2003 and

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03/24/2003 . . . and erroneously included these dates as assessment dates on the

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document[s].” Response at 2; Norris Decl. ¶¶ 5-6, 24-29.

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Form 4340s are “official document[s] which establish[] that assessments were made. .
. .” Hughes, 953 F.2d at 535. The Form 4340s in this case demonstrate that the

United States District Court
For the Northern District of California

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government’s action to collect Defendants’ income tax is not time-barred. Although

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Defendants identify some inconsistencies in the government’s documentation subsequent to

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the assessments, they have failed to show by a preponderance of the evidence that the Form

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4340s are inaccurate.

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Accordingly, Defendants’ motion to void this Court’s prior judgment is DENIED.

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IT IS SO ORDERED.

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Dated: November 4, 2014

____________________________
CHARLES R. BREYER
UNITED STATES DISTRICT JUDGE

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