United States of America v. Law Offices of Forbush-Moss PSC et al

Filing 16

MEMORANDUM OPINION by Senior Judge Charles R. Simpson, III on 4/13/2018. The court will GRANT the United States Motion for Summary Judgment 15 . The court will enter a permanent injunction. An order will be entered in accordance with this opinion. cc: Counsel (MEJ)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
UNITED STATES OF AMERICA

PLAINTIFF

CIVIL ACTION NO. 3:16-CV-631-CRS

v.

LAW OFFICES OF FORBUSH-MOSS PSC
and BETHANNI FORBUSH-MOSS

DEFENDANTS

MEMORANDUM OPINION
This matter is before the court on motion of the Plaintiff, the United States of America,
for summary judgment pursuant to Fed.R.Civ.P. 56.

The Defendants, the Law Offices of

Forbush-Moss PSC (“Law Office”) and Bethanni Forbush-Moss, did not respond to the
Plaintiff’s Motion for Summary Judgement and the time for a response has expired. Therefore,
the motion is ripe for review. For the reasons stated, the Plaintiff’s motion will be GRANTED.
I.

BACKGROUND
Bethanni Forbush-Moss is the owner of and sole attorney at the Law Offices of Forbush-

Moss PSC in Jefferson County, Kentucky. (DN 1, ¶ 5.) In October of 2016, the Plaintiff filed a
Complaint in this court alleging that the Defendants repeatedly have failed to pay federal
employment, unemployment, and corporation taxes. (Id. at ¶ 6.) The Complaint alleges that, as
of September 12, 2016, the Defendants were indebted to the United States in the total amount of
$136,951.95, inclusive of interest and penalties accrued as of that date. (Id. at ¶ 10.) The United
States seeks an injunction compelling the Defendants’ compliance with the federal tax laws at
issue.

II.

STANDARD
A party moving for summary judgment must show that “there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).
The moving party bears the burden of demonstrating the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Additionally, the Court must draw all
factual inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986). A genuine issue for trial exists when “there is sufficient
evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v.
Liberty Lobby, 477 U.S. 242, 249 (1986). It is the burden of the nonmoving party to “direct the
court’s attention to those specific portions of the record upon which it seeks to rely to create a
genuine issue of material fact.” In re Morris, 260 F.3d 654, 655 (6th Cir. 2001).
III.

DISCUSSION
The Defendants are obligated to comply with certain federal tax laws. The Law Office

must file with the Internal Revenue Service (IRS) its Employer’s Quarterly Federal Tax Returns,
its annual Employer’s Federal Unemployment Tax Returns, and its annual United States
Corporation Tax Return. 26 U.S.C. § 6011; 26 C.F.R. § 31.6071(a)-1. The Law Office also
must withhold its employees’ federal income and Federal Insurance Contributions Act (“FICA”)
taxes, as well as withhold its own FICA, Federal Unemployment Tax Act (“FUTA”) taxes, and
corporation income taxes. 26 U.S.C. §§ 11, 3102, 3111, 3301, 3402. The Law Office must
make periodic deposits of its withheld taxes into a federal depository bank. 26 U.S.C. §§ 6302,
6157; 26 C.F.R. § 31.6302-1. The Defendants’ answers to the Complaint did not dispute that
they were subject to these federal tax laws. (DN 8, ¶ 3; DN 9, ¶ 3.)

-2-

The Plaintiff contends that the Defendants have violated these tax laws by failing to
withhold and pay employment and unemployment taxes since 2011, failing to make quarterly
payments of its corporate income taxes since 2009, and failing to file various required tax returns
since 2012. (DN 15-3, ¶¶ 16, 22, 25.) The United States claims that the IRS has attempted to
collect the Law Office’s tax debts on numerous occasions, including recording Notices of
Federal Tax Liens against the Defendants. (Id. at ¶ 30.) The Plaintiff also states that a Revenue
Officer hand-delivered a letter to the Law Office informing the Defendants that the IRS would
take additional enforcement actions, including seeking a civil injunction, if the Law Office did
not make its required federal tax deposits. (Id. at ¶ 32.) According to the United States, despite
the IRS’s efforts, the Defendants nonetheless failed to make required tax payments. (Id. at ¶ 34.)
The IRS contends that it has exhausted all of its administrative abilities to recover the tax debts.
(Id. at ¶ 35.)
In support of its motion for summary judgment, the United States has submitted the
Account Transcripts of the Defendants between the years of 2009 and 2015. The Account
Transcripts show the Defendants’ account balances, accrued interest, penalties, and transactions.
(DN 15-4 – 15-6.) The United States has also submitted the affidavit of Gregory W. Kamenish
(“Kamenish”), a Supervisory Revenue Officer for the IRS. (DN 15-3.) Kamenish testified to the
accuracy of the Account Transcripts. (Id. at ¶ 8.) He stated that a review of the Account
Transcripts shows that the Law Office owes employment taxes in the amount of $100,210.80,
unemployment taxes in the amount of $3,740.63, and corporation income taxes in the amount of
23,674.86. (Id. at ¶¶ 11, 17, 23.) These amounts do not include interest and penalties, which
Kamenish asserts are also owed by law. (Id.)

-3-

The Plaintiff additionally attached documents evidencing the IRS’ attempts at recovering
the Defendants’ tax debts. These include Notices of Federal Tax Liens and a letter addressed to
the Law Office dated May 5, 2015. (DN 15-7; DN 15-8.) This letter states that the IRS would
“consider stricter civil or criminal enforcement procedures” if federal taxes were not deposited
within thirty days. (DN 15-8.) As the Defendants did not file a response to the Plaintiff’s
motion for summary judgment, these facts are uncontested.
The United States claims that, in light of the above undisputed facts, the court should
enter a permanent injunction against the Defendants pursuant to Section 7402(a) of the Internal
Revenue Code. 26 U.S.C. § 7402(a). Section 7402(a) states, in relevant part:
The district courts of the United States at the instance of the United States shall
have such jurisdiction to make and issue in civil actions, writs and orders of
injunction. . . and to render such judgments and decrees as may be necessary or
appropriate for the enforcement of the internal revenue laws. The remedies hereby
provided are in addition to and not exclusive of any and all other remedies of the
United States in such courts or otherwise to enforce such laws.
Id. The Sixth Circuit has held that “because the statute expressly authorizes the issuance of an
injunction, the traditional requirements for equitable relief need not be satisfied.” U.S. v. ITS
Financial, LLC, 592 Fed. Appx. 387, 400 (6th Cir. 2014). Courts have noted the broad scope of
power granted by the statute. Id. at 394; See also United States v. Hinz, 126 F. Supp. 3d 921,
930 (N.D. Ohio 2015) (“The statute is essentially a catch-all provision that grants federal courts
the authority to issue any remedy that may be necessary and appropriate for the enforcement of
the internal revenue laws.”) (internal quotations omitted). Thus, an injunction may be issued if it
is “necessary and appropriate” for the enforcement of the internal revenue laws. 26 U.S.C. §
7402(a). See also ITS Financial, 592 Fed. Appx. at 394.
When determining whether an injunction is “necessary and appropriate” under the
circumstances, courts have considered whether defendants were “reasonably likely to violate the
-4-

federal tax laws again.” Id. at 400. See also United States v. Elsass, 978 F. Supp. 2d 901, 939
(S.D. Ohio 2013), aff'd, 769 F.3d 390 (6th Cir. 2014) (“The Court also concludes that injunctive
relief is necessary to prevent the recurrence of the conduct.”). Factors determining the likelihood
of future tax violations include: the gravity of harm caused by the offense; the extent of the
defendant’s participation and the defendant’s degree of scienter; the isolated or recurrent nature
of the infraction and the likelihood that the defendant’s customary business activities might again
involve the defendant in such transaction; the defendant’s recognition of his or her own
culpability; and the sincerity of the defendant’s assurances against future violations.

ITS

Financial, 592 Fed. Appx. at 400.
Given the undisputed evidence, the court finds that a permanent injunction is necessary
and appropriate under the circumstances. The record shows that the Defendants have been in
violation of federal tax laws since 2009, have repeatedly failed to withhold and deposit federal
taxes, and are indebted to the United States for a total amount of $127,626.30 as of January of
2018. (DN 15-3, ¶ 26.) The fact that the IRS has recorded Notices of Federal Tax Liens against
the Defendants and has even hand-delivered a letter to the Defendants concerning their violations
indicates that Defendants have knowledge of their failure to comply with federal tax laws.
Despite such knowledge, the Defendants have continued to fail to pay employment,
unemployment, and corporation taxes. The number of violations over the years, coupled with
the Defendants’ failure to come into compliance with federal tax laws despite the IRS’ continued
efforts, gives rise to an inference that the Defendants will continue violating tax laws in the
absence of an injunction. As such, the court will enter a permanent injunction to insure the
Defendants’ future compliance with federal tax laws.

-5-

IV.

CONCLUSION
For the reasons stated, the court will GRANT the United States’ motion for summary

judgment. Further, the court will enter a permanent injunction.
An order will be entered in accordance with this opinion.

April 13, 2018

C al R Smpo I , ei J d e
h r s . i sn I Sno u g
e
I
r
U i dSae Ds i C ut
nt tt ir t o r
e
s tc

-6-