USA v. Nugent
MEMORANDUM OPINION & ORDER: IT IS ORDERED AS FOLLOWS: 1. Plaintiff's 13 MOTION for Summary Judgment as to the 2005-2007 tax years is GRANTED; 2. Plaintiff's 13 Motion for Summary Judgment as to the 2003-2004 tax years is DENIED; 3. Defendant's 12 MOTION for Summary Judgment or, in the alternative, Judgment on the Pleadings is DENIED. Signed by Judge Joseph M. Hood on 1/12/2018.(KM)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
UNITED STATES OF AMERICA,
Action No. 5:16-cv-380-JMH
This case is best summed up by two common expressions: (1)
nothing is certain except death and taxes, and (2) better late
These age-old sayings contain a wealth of wisdom.
But as with all well-known adages, exceptions exist to the general
Defendant presents a hodgepodge of arguments that he falls
within the exceptions.
If he does not, then Defendant will have
to fork over nearly half a million dollars in purported unpaid
He argues that the Government has put forward
inadmissible evidence, failed to produce the agreement at issue,
incorrectly determined the amounted owed, and simply filed this
lawsuit too late.
But the Government wants paid.
So the United States has come
to this Court seeking to reduce federal tax assessments against
Thomas Nugent to judgment. [DE 1]. Nugent agrees he owes the
government money. [DE 5, p. 1, ¶6; 17, p. 1 ¶4]. But the parties
disagree over how much Nugent should pay. The difference is
hundreds of thousands of dollars.
The United States has moved for
Nugent has also moved for Summary
Judgment or, in the alternative, Judgment on the Pleadings.
All Motions are now fully briefed and ripe for the Court’s
review. For the reasons stated herein, Nugent’s Motion for Summary
Judgment, or in the alternative, Judgment on the Pleadings is
The Government’s Motion for Summary Judgment is GRANTED
IN PART and DENIED IN PART.
FACTUAL AND PROCEDURAL BACKGROUND
The facts are straightforward.
A delegate of the Secretary
of the Treasury made an assessment of $109,367 and $61,489 against
Nugent on September 11, 2006 for unpaid federal income taxes for
2003 and 2004, respectively. [DE 1, p. 2, ¶5]. In 2008, a delegate
also assessed $18,535, $24,760, and $16,066 against Nugent for
unpaid taxes for 2005, 2006, and 2007, respectively.
Internal Revenue Service’s (“IRS”) account transcripts for Nugent
indicate that it established an installment agreement on February
[DE 13-3 at 3].
The transcripts further reflect that
Nugent made a series of monthly payments until November 19, 2010,
when payment was dishonored. [Id.]. By July 11, 2011, the account
transcripts stated that Nugent was “[n]o longer in installment
[Id. at 4].
The Government filed this lawsuit on October 5, 2016 to
collect the assessments for unpaid federal income taxes made
against Nugent for 2003, 2004, 2005, 2006, and 2007.
Nugent filed his Answer, admitting that he has tax liability for
2005, 2006, and 2007.
He asserts, however, that the
Government’s claim for unpaid taxes for 2003 and 2004 is timebarred.
Because those claims are time-barred, Nugent
$496,499, plus penalties and interest, on October 3, 2016 is
On January 17, 2017, the Court held a hearing
and set a truncated discovery period.
[DE 7, 8].
later filed the instant Motions.
As part of its Motion for Summary Judgment, the Government
attached a declaration from Revenue Officer Glenda Granville in
addition to Nugent’s account transcripts.
Motions to Strike the Granville declaration and the transcripts.
Specifically, Nugent argued the transcripts were not properly
authenticated and thus inadmissible.
Nugent also argued
the transcripts were inadmissible on two theories: (1) under Rule
56(d) because he did not have an opportunity to depose Granville
since the Government failed to turn over her information during
were not based on personal knowledge.
Court rejected Nugent’s arguments in a September 2017 Memorandum
Opinion and Order.
In that Opinion, however, the Court
reopened discovery to allow Nugent to depose Granville.
Nugent later waived his right to depose Granville stating there
“is no further need to take the deposition.”
Presently before the Court are the parties’ cross Motions for
Summary Judgment and Nugent’s Motion for Judgment on the Pleadings.
Nugent has asked for Summary Judgment only on the 2003-2004 years
because, he argues, the Government filed its lawsuit after the
ten-year statute of limitations.
The Government argues that an
limitations for thirty days, which gave the Government until
October 11, 2016 to file this lawsuit.
As to the 2005-2007 tax
years, the Government has filed a Motion for Summary Judgment to
which Nugent has responded, and the Government replied.
motions are now ripe for the Court’s review.
Standard of Review
(i) Judgment on the Pleadings
“After the pleadings are closed . . . a party may move for
judgment on the pleadings.” Fed. R. Civ. P. 12(c). Under such a
motion “all well-pleaded material allegations of the opposing
party must be taken as true, and the motion may be granted only if
the moving party is nevertheless clearly entitled to judgment.”
Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th Cir.
2008) (quoting JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577,
581 (6th Cir. 2007)). A Motion for Judgment on the Pleadings
requires the same “standard of review employed for a motion to
dismiss under Rule 12(b)(6).” Florida Power Corp. v. FirstEnergy
Corp., 810 F.3d 996, 999 (6th Cir. 2015) (quoting Tucker, 539 F.3d
at 549); EEOC v. J.H. Routh Packing Co., 246 F.3d 850, 851 (6th
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the
sufficiency of the plaintiff’s Complaint. A Complaint must contain
a “short and plain statement of the claim showing that the pleader
is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The Court views
the Complaint in the light most favorable to the plaintiff and
must accept as true all well-pleaded factual allegations contained
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’”
Id. (citing Twombly, 550 U.S. at 570).
A “formulaic recitation of the elements of a cause of action will
not do.” Twombly, 550 U.S. at 555.
(ii) Summary Judgment
Summary judgment is appropriate only when no genuine dispute
as to any material fact exists and the movant is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). To prevail on
summary judgment, the moving party must show “that there is an
absence of evidence to support the nonmoving party’s case.” Celotex
Corp. v. Catrett, 477 U.S. 317, 325 (1986). A genuine issue of
material fact exists 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). Thus, the Court
considers “whether the evidence presents a sufficient disagreement
to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law.” Id. at 251—52.
In considering a motion for summary judgment, the Court must
construe the facts in the light most favorable to the nonmoving
party. Anderson, 477 U.S. at 255. After the moving party meets its
burden of production, the nonmoving party must “go beyond the
pleadings” through the use of affidavits, depositions, answers to
interrogatories and admissions on file, and designate specific
facts showing that there is a genuine issue for trial. Celotex,
477 U.S. at 323-24. A mere scintilla of evidence is insufficient;
“there must be evidence on which the jury could reasonably find
for the [nonmovant].” Anderson, 477 U.S. at 252.
Procedures for Revenue Collection and the Presumption of
Under 26 U.S.C. § 7402, “[t]he district courts of the United
States at the instance of the United States shall have such
jurisdiction . . . to render such judgment and decrees as may be
necessary or appropriate for the enforcement of the internal
See also 28 U.S.C. § 1340 (“The district courts
shall have original jurisdiction of any civil action arising under
any Act of Congress providing for internal revenue.”).
general matter, “[w]here the assessment of any tax imposed by this
title has been made within the period of limitation properly
applicable thereto, such tax may be collected by levy or by a
proceeding in court, but only if the levy is made or the proceeding
begun . . . within 10 years after the assessment of the tax.”
U.S.C. § 6502(a)(1).
determination of the amount of taxes due.” See United States
v. Fior D'Italia, Inc., 536 U.S. 238, 242 (2002). The purpose of
an assessment is “to insure that a proper record is kept in order
to avoid slipshod tax accounting practices and to insure that
taxpayers may receive a summary of tax records pertaining to their
tax liability.” Gentry v. United States, 962 F.2d 555, 556 (6th
“It is well established in the tax law than an assessment is
entitled to a legal presumption of correctness.” Fior D’Italia,
536 U.S. at 242; see also United States v. Walton, 909 F.2d 915,
918 (6th Cir. 1990) (“The Commissioner’s determination of a tax
liability, if calculated according to an acceptable procedure . .
. is presumptively correct”); United States v. Rohner, 634 F.
App’x. 495, 499 (6th Cir. 2015) (“The IRS's tax assessments enjoy
a legal presumption of correctness in civil cases.”); United States
v. Hillman, 60 F. App’x. 563, 564 (6th Cir. 2003); United States
v. Noble, 3 F. App’x. 331, 334 (6th Cir. 2001). This presumption
“help[s] the Government prove its case against a tax payer in
court.” Fior D’Italia, 536 U.S. at 242.
Once the Government establishes presumptive tax liability,
the taxpayer challenging an assessment “carries the burden of
proving the assessment wrong.”
McDermitt v. United States, 954
F.2d 1245, 1251 (6th Cir. 1992). “If an assessment is supported by
a minimal evidentiary foundation, the burden of disproving it rests
on the taxpayer.” Rohner, 634 F. App’x. at 499; see also United
States v. Walton, 909 F.2d 915, 918 (6th Cir. 1990) (placing “the
burden of producing contrary evidence upon the taxpayer”); Noble,
3 F. App’x. at 334 (the “burden is on the taxpayer to produce
evidence to the contrary.”).
To meet this burden, “the taxpayer must show the determination
to be incorrect or arbitrary.” Rohner, 634 F. App’x. at 499. The
defendant must “point to affirmative evidence that contradicts the
Secretary’s assessment of his tax liability.” United States v.
Bogart, No. 3:12-cv-0179, 2013 WL 5655953 at *3 (M.D. Tenn. Oct.
17, 2013). “Vague and general denials of an assessment's accuracy
do not . . .
establish a reasonable denial sufficient to shift
the burden to the Government.” Rohner, 634 F. App’x. at 499; see
also Walton, 909 F.2d at 922; Hammon, 277 F. App’x. at 563.
C. 2005-2007 Tax Years
The Government has made tax assessments against Nugent, and
those assessments are presumptively valid.
Inc., 536 U.S. at 242.
See Fior D’Italia,
The account transcripts detail the amount
Nugent owes, the time period of the assessments, and identify
Nugent as the taxpayer.
officer explains those numbers.
A declaration from a revenue
admits he owes the government money, although he disputes the
[DE 18, p. 4].
The Government has met the minimal
Rohner, 634 F. App’x at 499.
Thus, Defendant bears
See id.; see also Hammon, 277 F. App’x at 563;
McDermitt, 954 F.2d at 1251.
Other than general and vague denials, Nugent presents nothing
to refute the Government’s assessments.
Nugent instead focuses on
excluding Granville’s declaration and the transcripts, but the
Court has already ruled that evidence is admissible.
Nugent also argues that the government’s own assessments show it
can recover only $230,217 rather than the full $496,499 in the
[DE 18, p. 2].
assessments amount to $230,217.
Nugent is correct that the
But Nugent fails to rebut–or even
address–the fact that the Government made the assessments between
nine and eleven years ago.
[DE 13-1, p. 1].
Over the last decade,
accrued as the account transcripts indicate.
That interest and
those penalties, when added to the original assessment amounts of
$230,217, total $496,499.
The general denial, without
more, does not rebut the assessments nor raise a genuine issue of
Nugent also argues that the IRS sometimes gets assessments
wrong, and thus his assessments might be wrong.
He attaches an
affidavit from a former IRS and PricewaterhouseCoopers (“PWC”)
employee who has experience in “verification of additions to tax
calculations as asserted by the Internal Revenue Service.”
The employee, Kathy Gale, states that during her time
working for the IRS and PWC she found “a substantial number of the
additions to tax calculations of the IRS are not accurate.”
¶3]. Gale does not claim to have knowledge about Defendant’s case–
Instead, Gale makes a blanket statement regarding her experience
in different cases while working in a different location.
presents only “vague and general denials” of the accuracy of IRS
Rohner, 634 F. App’x at 499.
Beyond his denials and the Gale affidavit, Nugent does nothing
to rebut or refute the Government’s assessment amounts. He has
presented no evidence that the amounts listed in the transcripts
Nugent engaged merely in the “vague and general
denials” of the accuracy of the Government’s assessment that does
not rebut the presumption of correctness. See Walton, 909 F.2d at
922; Rohner, 634 F. App’x at 499; Hammon, 277 F. App’x. at 563.
In short, Nugent has not rebutted the Government’s case with
a scintilla of evidence.
As to the 2005-2007 tax years, there is
no genuine dispute of material fact.
The government is entitled
to judgment as a matter of law, and the Motion for Summary Judgment
as to these years is GRANTED.
D. 2003-2004 Tax Years
Whether the Government may collect the assessed amounts for
the 2003-2004 tax years turns on one issue: did the Government
timely file its lawsuit? If it did, its assessments can be reduced
But if the Government filed late, then Nugent does
not have to pay.
And whether the Government timely filed its
lawsuit depends on the existence of an installment agreement.
Several key facts are not in dispute.
First, there is no
dispute that the Secretary assessed Nugent’s 2003-2004 tax years
on September 11, 2006.
[DE 13-1, p. 1].
Second, no dispute exists
that the statute of limitations gives the Government ten years to
Government until September 11, 2016 to file this lawsuit.
U.S.C. § 6502(a).
The parties also do not dispute that the
termination of an installment agreement extends the statute of
limitations for thirty days.
26 U.S.C. § 6331(k), (i).
parties agree that if a valid installment agreement existed, the
Government had until October 11, 2016 to file this lawsuit.
finally, there is no dispute that the Government filed this lawsuit
on October 5, 2016.
The dispute, then, is whether Nugent and the Government
entered into an installment agreement that the Government later
terminated, thereby extending the statute of limitations.
The Government may enter into written installment agreements
with any taxpayer when the Secretary determines that such an
taxpayer’s outstanding tax liability.
26 U.S.C. § 6159; 26 C.F.R.
An installment agreement must be in writing.
agreement must “take the form of a document signed by the taxpayer
and the Commissioner or a written confirmation of an agreement
entered into by the taxpayer and the Commissioner that is mailed
or personally delivered to the taxpayer.”
26 C.F.R. 301.6159-
The IRS determines the procedures, form, and manner of
installment agreement proposals.
26 C.F.R. § 301.6159-1(b)(1).
proposal may result from letters, phone calls, e-mails or other
communications; the proposal need not be in writing.
Revenue Manual § 22.214.171.124.
An acceptance occurs when the IRS
“notifies the taxpayer or the taxpayer’s representative of the
26 C.F.R. 301.6159-1(c)(1)(i).
If the Government
confirmation of the agreement to the taxpayer. 26 C.F.R. 301.61591(c)(2).
The Secretary may terminate an installment agreement when
collection of payments is in jeopardy.
26 U.S.C. § 6519(b)(2).
This suspends the ten-year statute of limitations for thirty days.
26 U.S.C. § 6331(k)(2)(D), (i)((5); 26 C.F.R. 301.6159-1(g).
Here, the Government argues that the account transcripts show
it entered into an installment agreement with Nugent on February
[DE 13-1, p. 6].
That agreement terminated, the
Government claims, on July 11, 2011, after Nugent stopped making
At that point, the Government argues,
the ten-year statute of limitations under 26 U.S.C. § 6502(a)
extended by thirty days, giving the Government until October 11,
2016 to file this lawsuit.
[DE 13-1, pp. 6-7].
Nugent denies ever signing an installment agreement.
sworn affidavit, Nugent claims that he did agree to pay the IRS,
but that he never signed an installment agreement and never
received confirmation of such an agreement.
accountant, William Farmer, also provided an affidavit in which he
states he discussed Nugent’s case with IRS agents and the parties
Nugent argues “no proof has been . . .
entered into the record to prove that an Installment Agreement was
in fact executed.”
[DE 12-1, p. 3].
Plaintiff has not produced the written installment agreement.
The Government has also not produced a copy of the agreement or
put forward testimony from anyone with knowledge of the agreement.
The Government cannot tell the Court the terms of the agreement,
how it was entered, who signed it, or when it was delivered to
longstanding “presumption of regularity” that allows the Court to
find the existence of the installment agreement by way of the
account transcripts. [DE 13-1, p. 5]. The Court will now consider
whether the presumption applies here.
Presumption of Regularity
“The presumption of regularity supports the official acts of
public officers, and, in the absence of clear evidence to the
contrary, courts presume that they have properly discharged their
United States v. Chem. Found. Inc., 272, U.S.
1, 14-15 (1926); see also United States v. Armstrong, 517 U.S.
456, 464 (1996).
The presumption is “less a rule of evidence than
a general working principle.”
Nat’l Archives & Records Admin. v.
Favish, 541 U.S. 157, 174 (2004).
Once the presumption applies,
“clear evidence is usually required to displace it.”
The presumption extends to IRS actions. See U.S. Postal Serv.
v. Gregory, 534 U.S. 1, 10 (2001) (ruling a “presumption of
regularity attaches to the action of Government agencies.”); see
also Randle v. United States, No. CV 99-7992-CBM, 2000 WL 1739314,
at *11 (C.D. Cal. Aug. 4, 2000); Holtvogt v. United States, 887 F.
Supp. 994, 997 (S.D. Ohio 1995)(“The Internal Revenue Service
enjoys a presumption of official regularity”).
When the IRS
conducts an official act pursuant to a particular policy, the court
presumes it was properly done.
United States v. Ahrens, 530 F.2d
761, 785 (8th Cir. 1976).
In Ahrens—a case the Government relies on here—the Eighth
Circuit used the presumption of regularity to find that the IRS
had sent a valid and proper notice of deficiency, even though the
Government did not produce copies of the notice.
found that because “[a]ll other steps in the notification process
were properly accomplished,” the presumption of regularity applied
to “presume the validity of the contents of the statutory notice
of deficiency.” Id. at 786-87.
Even though the Government failed
to produce copies of the notice, the IRS did produce otherwise
sufficient evidence that went “unrebutted by the taxpayer.”
This included deposition testimony from the taxpayer’s
lawyer who stated he “was certain that he had received a notice of
deficiency” about his client’s taxes.
Id. at 785.
the Government introduced a letter, written by the taxpayer’s
attorney, in which he “specifically referred” to the notice.
Thus, in Ahrens, the Court did not rule that the Government could
use the presumption for the existence of the document.
the presumption of regularity established the “validity of the
contents” of the document only after the Government introduced
sufficient evidence that the notice existed.
The Federal Circuit followed similar reasoning in Welch v.
United States, 678 F.3d 1371 (Fed. Cir. 2012). There, the taxpayer
argued that the IRS did not properly mail two notices of deficiency
required to extend the statute of limitations.
Id. at 1373.
Government could not produce the notices, but the Government had
other evidence corroborating the existence of the notices.
The Welch Court ruled that the IRS must first “establish
the existence of a notice of deficiency” before the Court applied
the presumption of regularity to the validity of the contents of
Id. at 1377.
But in “the absence of proof of a notice
of deficiency” the IRS can meet its burden only with otherwise
The Court approvingly cited Ahrens as
validity of the notice’s contents” were in question since the
Government had evidence proving “the existence of a deficiency
Id. at 1377-78.
In other words, the Government fist
must prove the existence of the document before the presumption
applies to the contents and validity of the document.
Id. at 1378.
deficiency itself, the government bears the burden of establishing
. . . the existence of the notice.”
Id. at 1379 (citing Ahrens,
530 F.2d at 784-86)(emphasis added). The presumption of regularity
“can be invoked to establish the validity of the notice’s contents”
but only where “the existence of a notice is not in dispute.”
“[T]he presumption does not extend to the existence of the notice.”
Using this framework, the Court ruled that the presumption of
regularity did not apply when the “government has failed to
demonstrate the existence” of the document in dispute.
The Federal Circuit rejected the District Court’s holding
that the IRS can invoke the presumption “’by establishing that it
District Court’s opinion, Welch v. United States, 98 Fed. Cl. 655,
In Ahrens, the presumption of official regularity was
invoked with respect to the validity of the notice’s contents, not
to the issue of . . . whether the notice existed.”
Similarly, the Eleventh Circuit recently questioned whether
a database entry gave rise to the presumption of regularity in
United States v. Hanks, 569 F. App’x 785 (11th Cir. 2014)(per
In Hanks, the taxpayer argued the IRS failed to properly
send a termination regarding an installment agreement. Id. at 786.
The IRS presented a database entry “purporting to memorialize the
termination of the 2002 installment agreement.”
argued that the database entry allowed the Court to invoke the
presumption of regularity that the IRS properly terminated the
Id. at 787.
Echoing the reasoning in Ahrens and Welch, the Eleventh
Circuit noted that the presumption of regularity applies “where
the existence of the notice is not in dispute.”
Id. at 788.
when the Government fails to prove the document’s existence, the
presumption does not apply.
The Court “question[ed] whether
a ‘presumption of regularity’” controlled the case where the
government relied merely on database entries “indicat[ing] . . .
that the 2002 installment agreement was terminated.”
In short, the presumption of regularity applies once the
Government satisfies its burden of proving the existence of the
document at issue.
Welch, 678 F.3d at 1379.
In those instances,
the Court may invoke the presumption of regularity as to the
validity of the contents of the document and the procedures
See Ahrens, 530 F.2d 785-87.
But the presumption does
not always apply, and the burden does not always shift to the
taxpayer, when the existence of the relevant document is in
Welch, 678 F.3d at 1379.
The principles that animated Ahrens, Welch, and Hanks are
similarly at play here.
The Government argues “the presumption
operates to allow this court to find that, absent evidence to the
showing that the taxpayer entered into an installment agreement is
sufficient to prove that the taxpayer entered into an agreement
with the Service.” [DE 13-1, p. 6]. In other words, the Government
contends that its own database entries trigger the presumption
that the installment agreement existed and shifts the burden to
But the presumption of regularity does not apply here to
establish the existence of the installment agreement.
678 F.3d at 1379.
The Government may invoke the presumption only
after bearing the burden of proving the existence of the agreements
since the presumption “does not extend to the existence” of the
The case on which the Government relies does not support its
See Holtvogt v. United States, 887 F. Supp. 994 (S.D.
At issue in Holtvogt was only whether the Government
had properly sent documents to the taxpayer.
Id. at 997.
presented evidence at trial indicating that the documents had been
In addition, the IRS outlined particular procedures it
regularly followed in sending the documents.
Holtvogt was a written after a full trial on the merits.
After weighing testimony and evidence, the Court found the IRS
established it had sent the document at issue.
Here, the issue is the existence of the installment agreement,
not whether the IRS properly sent documentation.
information into the account transcripts either before or after an
agreement is proposed, accepted, or finalized.
See, e.g., Godfrey
v. United States, 997 F.2d 335, 338 (7th Cir. 1993)(holding that
the presumption did not apply where the Government “failed to
submit . . . an authoritative explanation of IRS procedures which
could provide a presumption of regularity”).
And in any event,
this case sits at the summary judgment juncture where this Court
will not weigh the evidence.
Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986)(“at the summary judgment stage the judge’s
function is not himself to weigh the evidence and determine the
truth of the matter but to determine whether there is a genuine
issue for trial.”).
While data entries on account transcripts do not trigger the
presumption of regularity to prove the existence of the agreement,
the transcripts do present circumstantial evidence for the Court
If the transcripts do, in fact, establish the
presumption of regularity to the validity of the agreement.
the Court will now consider the transcripts as evidence in support
of the Government’s Motion.
(iii) Genuine Issue of Material Fact
To prevail in its Summary Judgment Motion on the 2003-2004
years, the Government must show there is no genuine dispute
regarding the installment contract.
To prove its case, the
Government depends on two items of evidence: (1) the account
transcripts, and (2) Revenue Officer Granville’s declaration.
Granville’s knowledge of Nugent’s case comes only
from the transcripts; she was not personally involved in the
creation of the agreement.
originally assigned to the case died.
The revenue officer
presents no witness to tell us anything about the agreement.
the Government does not produce the original agreement, a copy of
the agreement, or any evidence other than the transcripts.
Nugent, and Farmer, who represented Nugent before the IRS,
state they never signed, or received a copy of, an installment
[DE 12-6; 12-7].
Although the Government argues that
installment agreement, the affidavits from Nugent and Farmer,
taken together, amount to a denial of the agreement’s existence
since an agreement requires a proposal and acceptance, and it must
See 26 U.S.C. §6159; 26 C.F.R. § 301.6159-1.
Government’s only evidence that Nugent made a proposal comes from
the data entries in the transcripts.
The Government’s argument,
therefore, is that because the transcripts refer to the agreement,
there must have been a proposal, acceptance, and a writing.
confirmation, and deny making such a proposal.
In fact, Farmer
claims he proposed and negotiated a levy payment that would “be
within Mr. Nugent’s ability to live” and not an installment
Farmer states he “never discussed or
received an IRS Installment Agreement” with the IRS.
Nugent swears that although he agreed to pay money to the IRS, it
was not under an installment agreement.
[DE 12-6]. The Government
argues that Nugent’s affidavit “is not dispositive of whether or
not he entered into [an] installment agreement with the Service.”
[DE 13-1, p. 7].
True, but the Court must decide only whether the
affidavits create a genuine issue of material fact not whether
they are dispositive.
A District Court in the Southern District of New York recently
faced a similar question.
See McConnell v. United States, No. 15-
CV-10164, 2017 WL 167917 (S.D.N.Y., Jan. 17, 2017).
as here, the issue before the Court was whether an installment
limitations. Id. at *3. The Government moved for summary judgment
and used account records and a revenue officer’s declaration to
argue the agreement existed.
The taxpayer had no specific
evidence to refute the Government’s argument other than his own
sworn statement that he never entered the agreement.
agreement” was a genuine issue of material fact, the Court denied
Id. at *4.
The Court ruled that a factfinder
could determine that the taxpayer did not execute an installment
agreement despite the account records and officer’s declaration.
And the Court rejected the Government’s argument that the
taxpayer could not “rely on his ‘own self-serving statements’ to
defeat summary judgment.”
Id. at n.9.
As the Court noted, “it is
existence of the installment agreement.”
In the absence of sworn statements denying the existence of
an installment contract, courts have granted summary judgment for
For example, the Seventh Circuit found no genuine
issue of material fact where the taxpayer presented only an unsworn
response to the Government’s motion and “never denied under oath”
Seagrave v. United States, 221 F. App’x 457, 459 (7th Cir. 2007).
In fact, the taxpayer “never denied at all” the existence of an
Because the taxpayer never denied the
Government’s arguments, the Government won summary judgment.
But in McConnell, the Court found a genuine dispute of material
fact even though the taxpayer offered no “evidence other than his
own affirmations in support of his position that he never executed
an installment agreement.”
As there, so here.
McConnell, 2017 WL 167917, at *3.
Nugent and his accountant have denied,
under oath, the existence of the agreement.
The reasoning in
Seagrave does not apply since Nugent presents sworn statements.
Farmer, the Enrolled Agent practicing before the IRS, says that he
negotiated what he believed to be a “reduced levy payment” on
Nugent’s behalf. [DE 12-7, ¶3]. Farmer also states that he “never
discussed or received an IRS Installment Agreement” with the IRS.
Thus, in Farmer’s mind, he negotiated a payment, but
specifically not an installment agreement.
And Nugent claims in
his affidavit that Farmer never presented him with an installment
agreement to sign.
In short, the IRS argues that the data entries on Nugent’s
account transcripts create no genuine dispute that an installment
agreement was proposed, accepted, reduced to writing, and either
signed by Nugent or delivered to Nugent. 26 C.F.R. § 301.6159-1.
Nugent and Farmer have denied, under oath, that these steps
The United States presents a credible, even persuasive, case.
Indeed, the Government’s argument is compelling and it very well
could prevail at trial.
The Government has produced evidence
supporting its argument.
But so too has Nugent.
Nugent’s evidence consists solely of sworn affidavits denying the
agreement, the Court does not know what else Nugent could do to
prove a negative; that is, the non-existence of the agreement.
McConnell, 2017 WL 167917, n.9. The “existence vel non” of the
agreement is thus in dispute, and that fact is material.
And when both parties present evidence that amounts to a
resolution is trial, not summary judgment.
See Kennedy v. Silas
Mason, Co., 334 U.S. 249, 256 (1944) (“while we might be able, on
the present record to reach a conclusion that would decide the
thoroughness that should precede judgment of the importance and
which is the purpose of the judicial process to provide.”).
simply, resolving the dispute before the Court would require fact
finding and weighing of evidence, which the Court will not do here.
Anderson, 477 U.S. at 249 (holding Courts do not weigh evidence at
the summary judgment stage); see also Coate v. Montgomery Cty.,
Ky., No. 99-6123, 2000 WL 1648131, at *2 (6th Cir. 2000)(“if the
running or tolling of the statute [of limitations] requires the
adjudication of issues of fact, the motion [for summary judgment]
should be denied.”
Government’s Motion for Summary Judgment as to the 2003-2004 tax
years is DENIED.
(iv) Nugent’s Motion for Summary Judgment or Judgment on the
Nugent argues he is entitled to summary judgment because the
photograph is required in order to prove its contents unless these
rules or a federal statute provides otherwise.”
Fed. R. Evid.
Under Rule 1004, an original writing is not required and
secondary evidence may be used when “all the originals are lost or
destroyed, and not by the proponent acting in bad faith.”
satisfactory explained, secondary evidence is admissible.”
R. Evid. 1004, 1972 Advisory Committee Notes.
The physical case file related to Nugent’s taxes has
[DE 13-1, p. 8].
The revenue officer originally
assigned to Nugent’s case has died, and the IRS has been unable to
locate an electronic copy of the case history notes that the
officer kept in the normal course of business.
no evidence of bad faith on behalf of the Government, and the
originals appear destroyed.
The Government has also produced
reliable secondary evidence of the installment agreement.
Rule 1004(a) provides the exception to the general rule that the
original writing is required.
See Malkin v. United States, 243
F.3d 120, 122-23 (2d Cir. 2001).
Because the Government has introduced reliable secondary
evidence on which a reasonable factfinder could find in the
Government’s favor, Defendant’s Motion for Summary Judgment or, in
the alternative, Judgment on the Pleadings is DENIED.
Accordingly, for the reasons stated here, IT IS ORDERED AS
Plaintiff’s Motion for Summary Judgment as to the 20052007 tax years [DE 13] is GRANTED;
Plaintiff’s Motion for Summary Judgment as to the 20032004 tax years [DE 13] is DENIED;
This the 12th day of January, 2018.
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