United States of America v. Rulison

Filing 27

-CLERK TO FOLLOW UP- DECISION AND ORDER granting 14 Government's Motion for Summary Judgment consistent with this Decision and Order; finding as moot 15 Defendant's Motion for Discovery. (Clerk to close case.) Signed by Hon. Michael A. Telesca on 1/21/15. (JMC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
UNITED STATES OF AMERICA,
Plaintiff,
12-CV-6470T
DECISION
and ORDER

v.

JAMES W. RULISON,
Defendant.
_______________________________________
INTRODUCTION
Plaintiff

United

States

of

America

(“the

government”

or

“United States”) brings this action to recover alleged debts owed
by

defendant

James

Rulison

(“Rulison”).

According

to

the

plaintiff, at the time the Complaint was filed, Rulison owed income
taxes, penalties, and fees in the amount of $962,417.22 which
includes amounts of $895,493.46 for tax year 2000, and $66,923.76
for tax year 2001.

Plaintiff now moves for summary judgment

against Rulison in the amount of $1,013,781.27 plus interest and
fees, claiming that there are no issues of fact in dispute, and
that as a matter of law, it is entitled to judgment in its favor.
Specifically, the United States

contends that it has established

that Rulison owes the amounts sought, and that he has failed
controvert the plaintiff’s evidence, or establish any valid defense
to plaintiff’s claim.
Rulison, proceeding pro se, opposes plaintiff’s motion, and
contends that the United States is barred by the statute of

limitations from attempting to collect the taxes allegedly owed.
Specifically, he claims that more than 10 years has passed since
the debts were assessed, and as a result, the government is
prohibited

under

the

applicable

bringing this action against him.

statute

of

limitations

from

He further alleges that at a

minimum, there is a question of fact as to whether or not the
statute of limitations prohibits the government from attempting to
collect the alleged debt.
For the reasons set forth below, I find that the government is
not barred by the statute of limitations from attempting to collect
the debt owed by the defendant; that the government has established
that the debt is valid; and that the government is entitled to
summary judgment. I therefore grant plaintiff’s motion for summary
judgment.
BACKGROUND
The Complaint in this action alleges that on November 16,
2001, and June 10, 2002, a delegate of the Secretary of the
Treasury issued tax assessments against the defendant for tax years
2000 and 2001, respectively.

Although the initial amount of the

assessments is not disclosed in the Complaint, plaintiff alleges
that as of August 13, 2012, Rulison owed $895,493.46 in taxes,
penalties, and interest for tax year 2000, and $66,923.76 for tax
year 2001.

2

Plaintiff alleges that on August 15, 2002, Rulison offered to
compromise the debts at issue.

According to the government, the

offer of compromise remained pending until May 22, 2003, when the
government acknowledged in writing defendant’s withdrawal of his
offer. Rulison contends that he withdrew his offer in April, 2003,
and that the limitations period began to run once he withdrew his
offer, or in the alternative, when an agent of the government
informed him that his offer would be rejected if not withdrawn. He
contends that if the court determines that the offer was withdrawn
in April, 2003, then the pending action is untimely.
DISCUSSION
I.

Summary Judgment Standard

Rule 56(a) of the Federal Rules of Civil Procedure provides
that

summary

judgment

shall

be

granted

if

the

moving

party

demonstrates “that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law."
When considering a motion for summary judgment, all genuinely
disputed facts must be resolved in favor of the party against whom
summary judgment is sought. Tolan v. Cotton,
S. Ct. 1861, 1863 (2014) .

, U.S.,

134

If, after considering the evidence in

the light most favorable to the nonmoving party, the court finds
that no rational jury could find in favor of that party, a grant of
summary judgment is appropriate.

Scott v. Harris, 550 U.S. 372,

380 (2007)(citing Matsushita Elec. Industrial Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-587 (1986)).
3

II.

The Instant Action is Timely

Defendant contends that the instant action is untimely because
it was brought by the government more than ten years after the
alleged tax debts were originally assessed.

I find, however, that

because the limitations period for bringing the instant action was
stayed while defendant’s offer to compromise the debts was pending
before the government, the Complaint in this action is timely.
Pursuant to 26 U.S.C. § 6502(a)(1), a proceeding to collect a
delinquent tax debt must generally be brought “within 10 years
after the assessment of the tax.”

Where there is an offer of

compromise of the debt, however, the 10 year limitations period is
stayed

during

the

pendency

of

the

offer.

See

26

U.S.C.

§ 6503(a)(1)(staying limitations period during any period in which
the government is prohibited from making an assessment or levy
against a taxpayer); 26 U.S.C. § 6331(k)(1)(prohibiting government
from making assessment or levy against taxpayer while an offer of
compromise is pending, or within 30 day time period after offer is
rejected).
In the instant case, the debts at issue were assessed on
November 26, 2011 and June 10, 2012, respectively.

On August 15,

2002, the government received an offer of compromise from the
defendant, and as a result, the limitations period for bringing an
action to enforce the assessments was stayed while the government
considered defendant’s offer.

On April 24, 2003, the government

4

sent Rulison a form for withdrawing his offer of compromise, and
asked him to complete and return the form. See April 24, 2003
Letter from Daniel J. DeCoux to James Rulison, attached as Exhibit
“A” to the Defendant’s Opposition to Plaintiff’s Motion for Summary
Judgment. According to Rulison, he signed the form withdrawing his
offer, and returned it to the government shortly after receiving
the form. See July 7, 2014 Affidavit of James W. Rulison, attached
as Exhibit “B” to the Defendant’s Opposition to Plaintiff’s Motion
for Summary Judgment.

According to the records of the Internal

Revenue Service, the government acknowledged the withdrawal of
Rulison’s offer of compromise on May 22, 2003.

See May 3, 2014

Transcript of Official Taxpayer Record for James Rulison, attached
as

Exhibit

“B”

to

Plaintiff’s

Motion

for

Summary

Judgment.

Accordingly, because withdrawal of an offer of compromise is not
effective until the government has acknowledged the withdrawal, the
effective date of defendant’s withdrawal of his offers was May 22,
2003.

See United States v. Clinkscale, No. 4:12 CV 00080, 2014 WL

3749407, at *6 (N.D. Ohio July 30, 2014)(offer of compromise
“ceases to be pending for purposes of the statute of limitations
when an IRS officer, in writing, ‘accepts, rejects or acknowledges
withdrawal of the offer.’” (quoting United States v. Donovan, 348
F.3d 509, 512 (6th Cir.2003)); United States v. Bourger, No. CIV.
07

1447

(GEB),

2008)(discussing

2008
IRS

WL
form

4424810,
which

5

at

*3

indicates

(D.N.J.
that

an

Sept.
offer

24,
of

compromise

“remains

pending

until

an

authorized

IRS

official

accepts, rejects, returns or acknowledges the withdrawal of the
offer in writing.”)
Based on the dates that the defendant’s offer of compromise
was accepted and rejected, August 15, 2002 and May 22, 2003,
respectively, the 10 year limitations period was stayed for 280
days. Accordingly, the limitation period for the November 26, 2001
assessment was extended until September 1, 2012: 280 days after
November 26, 2011, the date on which the limitation period would
have expired absent a stay. With respect to the assessment made on
June 10, 2002, the limitation period for bringing an action to
enforce that

assessment

expired

on

March

16,

2013.

Because

plaintiff brought this case on August 31, 2012, prior to the
expiration of the limitation periods for both assessments, the
instant action is timely.
Rulison contends that the stay of the limitations period was
shorter than 280 days because he withdrew his offer in April, 2003,
or, alternatively, because he was informed in April, 2003 that his
offer would be rejected by the government if he did not withdraw
it. Rulison argues that the stay of the limitations period should
have ended when he signed the form withdrawing his offer, or, when
he was verbally informed that the offer would be rejected.

He

claims that if such a date were adopted, the instant action would
be untimely with respect to the assessment for tax year 2000.

6

As stated above, however, it is clear under statutory and case
law that any rejection by the government of an offer of compromise
must be in writing.
must

be

formally

Similarly, a withdrawn offer of compromise
acknowledged

by

the

government

before

the

withdrawal is legally operative for purposes of lifting the stay of
the limitations period.

Because the government did not formally

acknowledge the withdrawal of defendant’s offer of compromise until
May 22, 2003, the limitations period was properly stayed from
August 15, 2002 until May 22, 2003.
III. Plaintiff is Entitled to Summary Judgment.
Through the use of admissible evidence, including certified
government records, the government has established that Rulison is
liable for the tax debts assessed on November 26, 2001, and
June

10,

2002,

assessments.

as

well

as

interest

and

penalties

on

those

Defendant does not contest the assessments, and has

failed to controvert the government’s evidence establishing the
amounts owed.

Accordingly, I find that plaintiff is entitled to

summary judgment, and it is hereby:
ORDERED that a judgment in the amount of $1,013,781.27 plus
interest and any applicable statutory additions accruing after
May 7, 2014 be entered in favor of the government.
ALL OF THE ABOVE IS SO ORDERED.
S/ Michael A. Telesca
MICHAEL A. TELESCA
United States District Judge
Dated:

Rochester, New York
January 21, 2015
7