United States of America v. Perez et al

Filing 49

OPINION AND ORDER by Judge Claire V Eagan that United States' Motion for Summary Judgment (Dkt. # 33) is granted. Plaintiff shall submit a proposed judgment to the Court's CM/ECF Intake Box no later than June 24, 2013. All othe r deadlines, including the June 24, 2013 pretrial conference and the July 8, 2013 nonjury trial, are hereby stricken. ; striking/terminating deadline(s)/Hearing(s); setting/resetting deadline(s)/hearing(s): ( Miscellaneous Deadline set for 6/24/2013); granting 33 Motion for Summary Judgment (Re: 2 Complaint, 25 Scheduling Order,, Setting/Resetting Scheduling Order Date(s), ) (RGG, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA

UNITED STATES OF AMERICA,
Plaintiff,
v.
BALTAZAR D. PEREZ et al.,
Defendants.

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Case No. 12-CV-0295-CVE-TLW

OPINION AND ORDER
Now before the Court is the United States’ Motion for Summary Judgment (Dkt. # 33).
Plaintiff argues that defendant Baltazar D. Perez failed to pay federal income tax assessments for
the tax years of 2003, 2006, 2007, and 2008, and he and his wife, Alicia Bernal Perez, jointly failed
to pay a federal income tax assessment for the 2005 tax year. Plaintiff asks the Court to reduce the
tax assessments to judgment, foreclose the federal tax liens against real property owned by Baltazar
and Alicia Perez, and order that the real property be sold to pay the tax liens according to the relative
priority of all liens on the subject real property. Baltazar and Alicia Perez have not responded to
plaintiff’s motion for summary judgment. Defendant The Sherwin Williams Company states that
it does not object to plaintiff’s motion as long as any judgment entered by the Court “accords the
proper priority to each parties’ claims . . . .” Dkt. # 39, at 1.
I.
Baltazar D. Perez is married to Alicia Bernal Perez, and he operates a painting business
known as Baltazar Perez Painting. Baltazar Perez regularly visits casinos in and near Tulsa,
Oklahoma, and the casinos filed Internal Revenue Service (IRS) 1099-G forms reporting his
gambling winnings. Dkt. # 34-1. However, the casinos were not required to report any gambling

losses incurred by Perez. Dkt. # 34-4, at 16. Baltazar Perez filed a tax return for the 2003 tax year
claiming head of household filing status, but he did not report his gambling winnings or losses on
the tax return. According to 1099-G forms, Perez had gambling winnings of $15,200 in the 2003
tax year. Dkt. # 34-1, at 2. Baltazar and Alicia Perez filed a joint tax return in 2005, but they failed
to report gambling winnings of Baltazar Perez and income from Baltazar Perez Painting. Neither
Baltazar nor Alicia Perez filed a tax return for the tax years of 2006, 2007, and 2008. 1099-G forms
established that Baltazar Perez had gambling winnings of $343,360 in 2006, $108,830 in 2007, and
$80,560 in 2008. The IRS also received 1099 forms from customers of Baltazar Perez Painting and
these forms established that Perez failed to report income from his painting business.
The IRS opened an investigation into Baltazar and Alicia Perez’s tax liability for the 2003,
2005, and 2006 to 2008 tax years. In 2009, IRS agent Lisa Lees was conducting an investigation
into Baltazar and Alicia Perez’s tax liability for the tax years of 2005 to 2008, and she requested that
the Perezes provide information concerning potential tax deduction for those tax years, including
business income and gambling winnings and losses.1 Dkt. # 34-1, at 3-4. Lees spoke to Baltazar
Perez on the phone and personally met with him one time, but he failed to appear for numerous
appointments and he refused to provide information or documents to substantiate deductions for the
tax years in question. Id. Based on 1099-G forms from casinos, 1009 forms from customers of
Baltazar Perez Painting, and a bank deposit analysis of the Perezes’ bank accounts, the IRS
determined that Baltazar and/or Alicia Perez failed to pay all federal income taxes owed for the
2003, 2005, 2006, 2007, and 2008 tax years, and the amount owed by the Perezes as of April 1, 2013

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Lees states that she was familiar with the IRS investigation into Baltazar Perez’s tax liability
for 2003, but that investigation was conducted by a different IRS revenue officer. Dkt. # 341, at 1.
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was $1,542,789.52.2 The IRS sent notices of the assessments and demands for payment to the
Perezes. Dkt. # 34-1, at 3.
On May 23, 2012, the United States filed this case seeking to reduce the tax assessments to
judgment and to foreclose on federal tax liens, and the United States requests an order of sale as to
real property owned by Baltazar and/or Alicia Perez. Dkt. # 2, at 5. One of the properties is located
at 1329 N. Irvington Avenue, Tulsa, Oklahoma, and it is jointly owned by the Perezes. The other
property is located at 4625 S. 28th West Ave, Tulsa, Oklahoma, and it is owned solely by Baltazar
Perez. Baltazar Perez filed a motion to dismiss alleging that the government seized documents as
part of a separate criminal investigation, and he claimed that he would be unable to prepare a
defense in this case without those documents. Dkt. # 27. Plaintiff responded that it provided a copy
of the documents to Perez, even though he did not submit a discovery request to plaintiff, and the
motion to dismiss was meritless. Dkt. # 28. The Court denied the motion to dismiss. Dkt. # 29.
Plaintiff submitted interrogatories, requests for production, and requests for admission to Baltazar
Perez, but he did not respond to the discovery requests. By failing to respond to requests for
admission, he admitted to the amounts of his gambling winnings and he admitted that he did not file
tax returns for the 2006, 2007, and 2008 tax years. Dkt. # 34-4, at 4-6. Plaintiff has filed a motion
for summary judgment (Dkt. # 33) and the Perezes have failed to file a response to the motion.

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This amount includes unpaid federal income taxes, interest, and penalties assessed by the
IRS.
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II.
Summary judgment pursuant to Fed. R. Civ. P. 56 is appropriate where there is no genuine
dispute as to any material fact and the moving party is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 250 (1986); Kendall v. Watkins, 998 F.2d 848, 850 (10th Cir. 1993). The plain language of
Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon
motion, against a party who fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the burden of proof at trial.
Celotex, 477 U.S. at 317. “Summary judgment procedure is properly regarded not as a disfavored
procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are
designed ‘to secure the just, speedy and inexpensive determination of every action.’” Id. at 327.
“When the moving party has carried its burden under Rule 56(c), its opponent must do more
than simply show that there is some metaphysical doubt as to the material facts. . . . Where the
record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there
is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586-87 (1986) (citations omitted). “The mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which the [trier of fact] could
reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. In essence, the inquiry for the Court
is “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 250. In its review,
the Court construes the record in the light most favorable to the party opposing summary judgment.
Garratt v. Walker, 164 F.3d 1249, 1251 (10th Cir. 1998).

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III.
Plaintiff argues that it has made valid tax assessments against Baltazar and Alicia Perez, and
it is authorized to have these assessments reduced to judgment in order to enforce the assessments
against the Perezes. Baltazar and Alicia Perez have not responded to plaintiff’s motion for summary
judgment. Even though defendants have failed to respond to plaintiff’s motion for summary
judgment, the Court must examine the record to determine if summary judgment is appropriate.
Reed v. Bennett, 312 F.3d 1190, 1195 (10th Cir. 2002) (“a party’s failure to file a response to a
summary judgment motion is not, by itself, a sufficient basis on which to enter judgment against the
party”). The mere fact that a party does not file a response to a motion for summary judgment is not
a sufficient basis to grant the motion, and the Court must examine the record to ensure that the
moving party has met its burden under Rule 56. Murray v. City of Tahlequah, Oklahoma, 312 F.3d
1196, 1200 (10th Cir. 2002).
The government has the initial burden to show that it has validly assessed a tax, and it can
meet this burden by producing by producing certificates of assessment and payment. Guthrie v.
Sawyer, 970 F.2d 733, 737 (10th Cir. 1992). A certificate of assessment of payment is “presumptive
proof of a valid assessment.” March v. IRS, 335 F.3d 1186, 1188 (10th Cir. 2003). This
presumption “can help the Government prove its case against a taxpayer in court.” United States
v. Fior D’Italia, Inc., 536 U.S. 238, 242-43 (2002). The presumption of correctness is rebuttable if
the taxpayer can produce evidence establishing that the IRS’ “deficiency assessment lacks a rational
foundation or is arbitrary and excessive.” Cole v. C.I.R., 637 F.3d 767, 773 (7th Cir. 2011) (quoting
Pittman v. C.I.R., 100 F.3d , 1308 1313 (7th Cir. 1996)); see also United States v. McMullin, 948
F.2d 1188 (10th Cir. 1991) (“This presumption will permit judgment in the Commissioner’s favor

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unless the opposing party produces substantial evidence overcoming it.”). The IRS is authorized
to file a civil suit to reduce the assessment to judgment. See United States v. Kim, 111 F.3d 1351,
1357 (7th Cir. 1997).
Plaintiff has attached certificates of assessment and payment for the relevant tax years and
this is sufficient to meet the government’s initial burden to prove that Baltazar and Alicia Perez have
failed to pay federal income taxes, interest, and penalties. Dkt. # 34-2 (certified copies of transcripts
of 2003, 2006, 2007, and 2008 tax years as to Baltazar Perez and certified copy of transcript for
2005 tax year as to Baltazar and Alicia Perez). The IRS gave the Perezes an opportunity to submit
documentation or information in support of any deductions for these tax years, but the Perezes
refused to cooperate with the revenue officer assessing their tax liability. Dkt. # 34-1, at 3-4. The
Perezes have also failed to respond to plaintiff’s motion for summary judgment, and they have
offered no evidence to rebut the presumption that the tax assessments accurately show their tax
liability for the 2003, 2005, 2006, 2007, and 2008 tax years. Based on the evidence submitted by
plaintiff, the Court finds that plaintiff has established that defendants Baltazar and Alicia Perez have
failed to pay federal income taxes and the tax assessments issued by the IRS should be reduced to
judgment.
Plaintiff also asks the Court to order foreclosure of the tax liens that have arisen as a result
of the assessments against Baltazar and Alicia for failing to pay federal income taxes. Dkt. # 34, at
8. Under 26 U.S.C. § 6321, “[i]f any person liable to pay any tax neglects or refuses to pay the same
after demand, the amount (including any interest, additional amount, addition to tax, or assessable
penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the
United States upon all property and rights to property, whether real or personal, belong to such

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person.” However, a lien is not self-executing and the IRS must either file a lien-foreclosure suit
or an administrative levy to enforce the lien. United States v. National Bank of Commerce, 472 U.S.
713, 720 (1985). In a lien-foreclosure suit, all parties with an interest in the taxpayer’s property or
that have an existing lien on such property must be joined as parties. Id. A court shall “proceed to
adjudicate all matters involved therein and finally determine the merits of all claims to and liens
upon the property, and, in all cases where a claim or interest of the United States therein is
established, may decree a sale of such property . . . .” 26 U.S.C. § 7403(c). In this case, plaintiff
joined as defendants all parties with an interest in the taxpayers’ property or that have an existing
lien on the property.
Federal tax liens arose against the Perezes when the IRS issued assessments for unpaid
federal income taxes, and the IRS filed notice of the tax liens with the Tulsa County Clerk’s Office
as to two parcels of real property owned by the Perezes. See Dkt. # 34-4, at 21-28 (notice of tax
liens filed with Tulsa County Clerk’s Office). Under § 7403, the government was authorized to file
a lien-foreclosure suit to execute on the delinquent taxpayers’ property. In this case, Baltazar and
Alicia Perez own real property located at 1329 N. Irvington Avenue in Tulsa, and Baltazar Perez
owns another residence located at 4625 S. 28th West Avenue in Tulsa. By operation of law, federal
tax liens arose against both properties and plaintiff is entitled to foreclose on those liens. The Court
will direct plaintiff to submit a proposed judgment according proper priority of any and all liens

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and/or claims. Upon entry of judgment, plaintiff may file a motion for order of sale for the real
properties located at 1329 N. Irvington Avenue and 4625 S. 28th West Avenue.3
IT IS THEREFORE ORDERED that United States’ Motion for Summary Judgment (Dkt.
# 33) is granted.
IT IS FURTHER ORDERED that plaintiff shall submit a proposed judgment as described
above to the Court’s CM/ECF Intake Box no later than June 24, 2013. All other deadlines,
including the June 24, 2013 pretrial conference and the July 8, 2013 nonjury trial, are hereby
stricken.
DATED this 17th day of June, 2013.

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Plaintiff will be directed to submit a proposed judgment, agreed to as to form, to Court’s
CM/ECF intake box. The proposed judgment should include the full amount of unpaid
taxes, interest, and penalties owed by the Perezes as of the date the judgment is submitted
for the Court’s review.
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