UNITED STATES OF AMERICA v. WILLIAMS
Filing
31
ORDER GRANTING 14 MOTION FOR SUMMARY JUDGMENT by Plaintiff. Signed by SENIOR JUDGE STEPHAN P MICKLE on 11/20/2012. (jws)
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF FLORIDA
GAINESVILLE DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
CASE NO.: 1:11-CV-00234-SPM-GRJ
JEFFREY D. WILLIAMS,
Defendant.
___________________________/
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
THIS CAUSE comes before the Court on Plaintiff’s Motion for Summary
Judgment. (Doc. 14). Plaintiff brought this action pursuant to Federal Rule of Civil
Procedure 56 on the ground that there is no genuine dispute as to any material fact
and judgment should be granted as a matter of law. The United States seeks
judgment for Defendant’s assessed federal income tax liabilities for the 2000 tax
year.
I.
UNDISPUTED1 BACKGROUND FACTS
Jeffrey D. Williams (“Defendant”), a taxpayer who is delinquent on his
1
Many of the facts set forth in this section are deemed to be admitted by
operation of Federal Rule of Civil Procedure 36, resulting from Defendant’s
failure to respond to Plaintiff’s First Requests for Admission to Williams dated
April 27, 2012. (Doc. 15 Ex. C).
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payment of taxes to the United States of America (“Plaintiff”), was an agricultural
produce salesperson who also traded stock in the pursuit of gain or investment for
his personal accounts. (Doc. 15 ¶ 9, 10).
As a result of Defendant’s failure to file a federal income tax return for the
2000 tax year, the IRS calculated a tax assessment for such tax year pursuant to
Certificate of Assessments, Payments, and Other Specified Matters. (Doc. 15 ¶ 1);
(Doc. 15 Ex. A). The IRS generated this assessment of Defendant’s tax liability by
virtue of information it received from brokerage firms with which Defendant traded
stock in the 2000 tax year. (Doc. 15 ¶ 5). A summary2 of this assessment is
reproduced as follows:
Assessment Date
Amount
Type of Assessment
3/15/2004
$ 2,192.40
Estimated tax penalty
3/15/2004
$ 9,235.00
Late filing penalty
3/15/2004
$ 41,045.00
Tax
3/15/2004
$ 8,593.75
Interest
3/15/2004
$ 7,007.87
Failure to pay tax penalty
11/1/2004
$ 40.00
Fees and collection costs
5/30/2005
$ 20.00
Fees and collection costs
10/24/2005
$ 3,003.38
Failure to pay tax penalty
Balance Due
$ 80,591.49
2
The Court is aware that the sum of the values in the “Amount” column
does not equal $ 80,591.49. The discrepancy was attributed to statutory interest
due as of 6/30/2012 in Plaintiff’s motion, which was calculated as an amount
equal to $ 9,454.09. (Doc. 15 ¶ 2).
Case No.: 1:11-CV-00234-SPM-GRJ
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(Doc. 15 ¶ 2). Subsequent to generating this assessment, the IRS issued a notice
and demand for the assessments described above to Defendant. Defendant failed
to pay the amounts assessed against him to the IRS. (Doc. 15 ¶ 3, 4).
In February 2007, Defendant filed his tax return for the 2000 tax year with the
IRS. This tax return showed that Defendant owed a tax liability of $ 88,220. (Doc.
15 Ex. B ¶ 10). This tax return revealed that, during calendar year 2000, Defendant
sold real property located in Chiefland, Florida for a sales price of $650,000.
Defendant acquired this Chiefland property in 1993 for $198,700. (Doc. 15 ¶ 17,
18). Therefore, as a result of the sale of this real property, Defendant realized a
long-term capital gain of $451,300 in the 2000 tax year. (Doc. 15 ¶ 17). However,
consistent with his failure to report income taxes due in 2000, Defendant did not
report to the IRS the receipt of the proceeds from this sale of real estate, as is
required by the IRS. (Doc. 15 Ex. B¶ 11).
II.
DISCUSSION
(a) Standard of Review
Summary judgment will be granted “if the movant shows that there is no
genuine issue as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). In determining whether the movant made this
showing, the Court must view the evidence and factual inferences arising from it in
the light most favorable to the non-moving party. Allen v. Tyson Foods, Inc., 121
F.3d 642, 646 (11th Cir. 1997) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144,
Case No.: 1:11-CV-00234-SPM-GRJ
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157 (1970)). Accordingly, “if reasonable minds could differ on the inferences arising
from undisputed facts, then a court should deny summary judgment.” Miranda v.
B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir. 1992) (citing
Mercantile Bank & Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir.
1985)).
(b) Defendant’s Income Tax Liability
Generally, an assessment of tax by the IRS is entitled to a presumption of
correctness, and the burden of proof is on the taxpayer to prove by a
preponderance of evidence that the determination made by the IRS was incorrect.
Bone v. Comm’r, 324 F.3d 1289, 1293 (11th Cir. 2003). This presumption and
accompanying burden is usually justified on the basis of the government’s strong
interest in maintaining the validity of its tax assessments. The court in Olster v.
Comm’r succinctly discussed the analysis of tax assessments as follows:
It is undisputed that the government has a strong interest in
maintaining the validity of its tax assessments. The compelling nature
of this interest, however, does not mean that the government is
entitled to “calculate its assessment in any manner its agents
choose.” Thomas v. U.S., 531 F.2d 746 (5th Cir. 1976). Absent a
finding that the computational methods used, and therefore the
assessment, was arbitrary and without foundation, the tax deficiency
is presumptively correct. Sailor v. U.S., 343 F.Supp. 1279, 1280
(W.D. Ky. 1971). The taxpayer has the burden of proving that the
computational method used is arbitrary and without foundation.
Mersel v. United States, 420 F.2d 517 (5th Cir. 1970).”
Olster v. Comm’r, 751 F.2d 1168, 1174 (11th Cir. 1985) (emphasis added).
The Court has before it two indicia from which to discern any challenge to the
Case No.: 1:11-CV-00234-SPM-GRJ
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presumptive correctness of the IRS assessment in the instant case. First, the Court
has Defendant’s Answer in which he argues that the IRS assessments are
improperly calculated primarily because the IRS failed to take into account
Defendant’s basis in stocks sold in the 2000 tax year. (Doc. 5 ¶ 7-10). However,
Defendant failed to admit any evidence to substantiate this allegation.
Second, the Court has Defendant’s tax return which includes information that
was unavailable to the IRS at the time of the assessment. This tax return shows
Defendant has a self-reported tax liability of $88,220. (Doc. 15 Ex. B Ex. 1). The
tax liability reported by Defendant was significantly greater than the tax liability of
approximately $80,591 assessed by the IRS. (Doc. 15 ¶ 2).
Taking into consideration the evidence available to the Court, it is evident
that Defendant has failed to adequately establish that the IRS assessment of taxes
was arbitrary and without foundation. Mere proof that the tax liability calculated for
the IRS assessment was different than the tax liability calculated in Defendant’s tax
return does not rise to the level of proving that the IRS’ computation of the
assessment was arbitrary and without foundation.
Given the paucity of evidence offered by Defendant, the Court is unable to
conclude based on the preponderance of evidence that the Plaintiff’s computational
methods are arbitrary and without foundation. Therefore, Defendant has failed to
overcome his burden of proof and the Plaintiff is entitled to summary judgment. The
Court finds Defendant liable for federal income taxes as alleged by Plaintiff.
Case No.: 1:11-CV-00234-SPM-GRJ
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Accordingly, it is ORDERED AND ADJUDGED that Plaintiff’s Motion for
Summary Judgment (Doc. 14) is granted.
DONE AND ORDERED this 20th day of November, 2012.
S/ Stephan P. Mickle
Stephan P. Mickle
Senior United States District Judge
Case No.: 1:11-CV-00234-SPM-GRJ
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