United States of America v. Thompson et al
Filing
92
Opinion and Order. The Court GRANTS Plaintiff's Motion (# 70 ) for Partial Summary Judgment on William Thompson's Tax Liabilities. IT IS SO ORDERED. See attached order for details. Signed on 6/13/18 by Judge Anna J. Brown. (jy)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
UNITED STATES OF AMERICA,
Plaintiff,
3:17-cv-00794-BR
OPINION AND ORDER
v.
WILLIAM C. THOMPSON; MINHTAM
THOMPSON; LITECLAY, INC.;
MERDO, INC.; BRANCETON, INC.;
and DECORATIVE METAL
SERVICES, INC.,
Defendants.
BROWN, Senior Judge.
This matter comes before the Court on Plaintiff’s Motion
(#70) for Partial Summary Judgment on William Thompson’s Tax
Liabilities.
For the reasons that follow, the Court GRANTS
Plaintiff’s Motion.
1 - OPINION AND ORDER
BACKGROUND
The following facts are taken from Plaintiff’s Complaint and
the parties’ materials filed related to Plaintiff’s Motion for
Partial Summary Judgment.
On June 21, 1995, David Rogers1 “filed Articles of
Incorporation with the Oregon Secretary of State to create
[Defendant] Liteclay, Incorporated.”
Compl. at ¶ 30.
On June 27, 1995, Ronald Ford2 “filed Articles of
Incorporation with the Oregon Secretary of State to create
[Defendant] Merdo, Inc.”
Compl. at ¶ 32.
Rogers and Ronald Ford were, in fact, homeless men whom
William Thompson allegedly “caused to set up” Liteclay and Merdo
“on [William] Thompson’s behalf.”
Compl. at ¶¶ 31, 33.
On June 29, 1995, Lee Langan3 transferred property at 24000
S.W. Hillsboro Highway, Newberg, Oregon, 97132 (Newberg
Property), to Defendants Liteclay and Merdo, Inc., as tenants in
common.
The Warranty Deed was recorded in the Washington County
Clerk’s Office on July 31, 1995.
Liteclay and Merdo are the
present owners of the Newberg Property.
On December 29, 1995, Liteclay and Merdo “purportedly
granted a Trust Deed on the Newberg Property in favor of
1
Rogers is not a party to this action.
2
Ronald Ford is not a party to this action.
3
Langan is not a party to this action.
2 - OPINION AND ORDER
[Defendant] Branceton[, Inc.,] as the beneficiary.
The Trust
Deed purportedly secured repayment of a loan of $1,858,000.”
Compl. at ¶ 34.
Kelly Ford, an attorney “engaged” by William
Thompson, signed the Trust Deed on behalf of Liteclay and Merdo
as Vice President of each corporation.
Ex. B at 3.
Decl. of Dylan Cerling,
The Trust Deed was recorded in the Washington County
Clerk’s Office on December 29, 1995.
William Thompson concedes the transaction that occurred on
December 29, 1995, was a false mortgage created by him.
Specifically, William Thompson agrees “Kelly Ford was used to
pursue a sham cloud on the title of the property subject to this
litigation.
debt.
There was no legitimate basis for the underlying
This was done in the name of a sham corporation,
Branceton, Inc.”
William Thompson and Minhtam Thompson resided at the Newberg
Property from 1995 through 2003.
Their children “presently
reside” at the property.
On September 4, 2007, a duly authorized delegate of the
Secretary of the Treasury recorded in the Washington County
Clerk’s Office a Notice of Federal Tax Lien “concerning certain
unpaid [federal-tax] assessments” for tax years 1999-2004, 2006,
and 2013.
On September 7, 2007, a duly authorized delegate of the
Secretary of the Treasury recorded in the Washington County
3 - OPINION AND ORDER
Clerk’s Office a Notice of Federal Tax Lien concerning certain
unpaid [federal-tax] assessments” for tax years 1999-2004.
The
Notice of Federal Tax Lien “named Liteclay and Merdo as [William]
Thompson’s nominees with respect to the Newberg Property.”
Compl. at ¶ 47.
On June 24, 2011, a duly authorized delegate of the
Secretary of the Treasury recorded in the Washington County
Clerk’s Office a Notice of Federal Tax Lien “concerning certain
unpaid [federal-tax] assessments” for tax years 1996-2004.
On June 24, 2011, a duly authorized delegate of the
Secretary of the Treasury recorded in the Washington County
Clerk’s Office a Notice of Federal Tax Lien “concerning certain
unpaid [federal-tax] assessments” for tax years 1999-2004, 2006,
and 2013.
On February 14, 2013, a duly authorized delegate of the
Secretary of the Treasury recorded in the Washington County
Clerk’s Office a Notice of Federal Tax Lien concerning certain
unpaid [federal-tax] assessments” for tax years 1996-1998, 2006,
and 2013.
The Notice of Federal Tax Lien “named Liteclay and
Merdo as Thompson’s nominees with respect to the Newberg
Property.”
Compl. at ¶ 48.
On August 3, 2015, a duly authorized delegate of the
Secretary of the Treasury recorded in the Washington County
Clerk’s Office a Notice of Federal Tax Lien concerning certain
4 - OPINION AND ORDER
unpaid [federal-tax] assessments” for tax years 2006 and 2013.
On May 22, 2017, Plaintiff filed a Complaint in this Court
against William Thompson; Minhtam Thompson; Liteclay, Inc.;
Merdo, Inc.; Branceton, Inc.; Decorative Metal Services, Inc.;
and Washington County, Oregon, seeking a judgment against William
Thompson for his unpaid federal-tax liabilities “[i]ncluding
penalties and interest.”
Plaintiff also seeks a “determination”
that William Thompson is the true owner of the Newberg Property
or, in the alternative, that William Thompson is the co-owner of
the Newberg Property.
On July 17, 2017, the Court entered default against
Defendant Decorative Metal Services.
On July 21, 2017, the Court entered an Order Approving
Stipulation Between United States and Washington County in which
Washington County was “excused from any further participation in
this case.”
On July 24, 2017, the Court entered default against
Defendant Branceton, Inc.
On April 30, 2018, William Thompson filed an Amended Motion
to Compel the Production of Documents that superseded his initial
Motion to Compel.
On May 7, 2018, William Thompson filed a
Second Motion to Compel the Production of Documents.
On June 13, 2018, the Court issued an Opinion and Order in
which it denied William Thompson’s Motions to Compel on the
5 - OPINION AND ORDER
ground that he failed to establish that Plaintiff did not timely
file this action.
On April 16, 2018, Plaintiff filed a Motion (#70) for
Partial Summary Judgment seeking a judgment against William
Thompson for his unpaid federal tax liabilities.
The Court took
Plaintiff’s Motion under advisement on May 16, 2018.
STANDARDS
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”
Washington Mut. Ins. v. United
States, 636 F.3d 1207, 1216 (9th Cir. 2011).
Civ. P. 56(a).
See also Fed. R.
The moving party must show the absence of a
genuine dispute as to a material fact.
673 F.3d 1218, 1223 (9th Cir. 2012).
Emeldi v. Univ. of Or.,
In response to a properly
supported motion for summary judgment, the nonmoving party must
go beyond the pleadings and point to "specific facts
demonstrating the existence of genuine issues for trial."
In re
Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010)
"This burden is not a light one. . . .
The non-moving party must
do more than show there is some 'metaphysical doubt' as to the
material facts at issue."
Id. (citation omitted).
A dispute as to a material fact is genuine "if the evidence
is such that a reasonable jury could return a verdict for the
6 - OPINION AND ORDER
nonmoving party."
Villiarimo v. Aloha Island Air, Inc., 281 F.3d
1054, 1061 (9th Cir. 2002)(quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).
The court must draw all
reasonable inferences in favor of the nonmoving party.
v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010).
Sluimer
"Summary
judgment cannot be granted where contrary inferences may be drawn
from the evidence as to material issues."
Easter v. Am. W. Fin.,
381 F.3d 948, 957 (9th Cir. 2004)(citing Sherman Oaks Med. Arts
Ctr., Ltd. v. Carpenters Local Union No. 1936, 680 F.2d 594, 598
(9th Cir. 1982)).
"A non-movant's bald assertions or a mere scintilla of
evidence in his favor are both insufficient to withstand summary
judgment."
F.T.C. v. Stefanchik, 559 F.3d 924, 929 (9th Cir.
2009)(citation omitted).
When the nonmoving party's claims are
factually implausible, that party must "come forward with more
persuasive evidence than otherwise would be necessary."
LVRC
Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009)
(citing Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1149
(9th Cir. 1998)).
The substantive law governing a claim or a defense
determines whether a fact is material.
Miller v. Glenn Miller
Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).
If the
resolution of a factual dispute would not affect the outcome of
the claim, the court may grant summary judgment.
7 - OPINION AND ORDER
Id.
DISCUSSION
Plaintiff moves for partial summary judgment as to its First
Claim seeking a judgment against William Thompson for his unpaid
federal tax liabilities on the grounds that there is not any
dispute of material fact that William Thompson owes the tax
liabilities alleged by Plaintiff in the Complaint and that
Plaintiff timely filed this matter.
In his Response to Plaintiff’s Motion William Thompson
states he
does not contest that he previously had tax
liabilities for the years 1999, 2000, 2001, 2002,
2003, and 2004, or that he still has tax
liabilities for 1996, 1997, 1998, 2006, and 2013.
He likewise does not dispute the amount of the
taxes or penalties that were due prior to April 9,
2017. He does not contest the right of the IRS to
pursue collection of the taxes, penalties, and
interest for the years 1996, 1997, 1998, 2006, and
2013.
William Thompson’s Resp. at 5 (emphasis in original).
William
Thompson, however, asserts there is not any interest “due or
accrued after April 9, 2017 for the tax years 1999-2004.
the date the collection period expired.”
Id.
This is
Thus, according to
William Thompson, Plaintiff filed this action untimely.
I.
The Law
26 U.S.C. § 6502(a)(1) provides the United States must file
an action to collect federal income-tax liabilities “within 10
years after the assessment of the tax.”
William Thompson asserts
in his Amended Motion to Compel that he “filed federal income tax
8 - OPINION AND ORDER
returns for the years 1999-2004 on April 13, 2007[,]” and those
returns “constituted self-assessments as of the same date.”
Plaintiff filed this action to collect William Thompson’s federal
income-tax liabilities for those years on May 22, 2017, which is
more than ten years after April 13, 2007.
According to William
Thompson, therefore, this action to collect his federal incometax liabilities is untimely filed.
The Internal Revenue Code defines “assessment” within the
meaning of § 6502(a)(1) as the “recor[d] [of] the liability of
the taxpayer in the office of the Secretary in accordance with
rules or regulations prescribed by the Secretary.”
§ 6203.
26 U.S.C.
“The assessment shall be made by recording the liability
of the taxpayer in the office of the Secretary in accordance with
rules or regulations prescribed by the Secretary.”
§ 6203.
26 U.S.C.
An “assessment” as used in the Internal Revenue Code is
a “‘recording’ of the amount the taxpayer owes the Government.”
Hibbs v. Winn, 542 U.S. 88, 100 (2004)(quoting 26 U.S.C. § 6203).
The assessment is the official record of the amount of a
taxpayer's tax liability.
(3d Cir. 1963).
Cohen v. Gross, 316 F.2d 521, 522–23
The Supreme Court explained as early as 1976
that “[t]he ‘assessment,’ essentially a bookkeeping notation, is
made when the Secretary or his delegate establishes an account
against the taxpayer on the tax rolls.”
Laing v. United States,
423 U.S. 161, 170 n.13 (1976)(citing 26 U.S.C. § 6203).
9 - OPINION AND ORDER
The
assessment “consists of no more than the ascertainment of the
amount due and the formal entry of that amount on the books of
the Secretary.”
United States v. Dixieline Fin., Inc., 594 F.2d
1311, 1312 (9th Cir. 1979).
See also United States v. Hunter
Engineers & Constructors, Inc., 789 F.2d 1436, 1436 n.1 (9th Cir.
1986)(same).
Courts that have addressed the issue have held taxes are not
"assessed" for purposes of § 6502 when the taxpayer files his
return, but instead the assessment of federal tax liability by
the IRS “starts the running of” the ten-year limitations period.
Remington v. United States, 210 F.3d 281, 284 (5th Cir. 2000).
In Remington the plaintiff asserted the IRS did not initiate a
timely collection of his federal tax liability.
The plaintiff
asserted his taxes “were ‘assessed’ when the return was filed,”
which, according to the plaintiff, was more than ten years before
the United States initiated the action to collect the plaintiff’s
tax liability.
The Fifth Circuit rejected the plaintiff’s
assertion:
[I]t is true that the filing of a return starts
the running of the three-year period within which
the IRS can assess taxes, I.R.C. § 6502(a)(1)
makes clear that it is the “assessment” itself
that, once made, [that] starts the running of the
ten-year period within which the IRS can commence
efforts to collect an assessed tax. The law is
well established that the filing of a return does
not constitute the assessment of the tax: “The
‘assessment,’ essentially a bookkeeping notation,
is made when the Secretary or his delegate
establishes an account against the taxpayer on the
10 - OPINION AND ORDER
tax rolls.”
Id. (quoting Laing, 423 U.S. at 170 n.13).
Similarly, in United States v. Bishop the plaintiff asserted
the date on which the plaintiff filed his tax return “was the
‘assessment’ that triggered the ten-year statute of limitations.”
570 F. App’x 224, 226 (3d Cir. 2014).
The Third Circuit rejected
the plaintiff’s argument:
Bishop's final argument is that the
self-assessment on his filed return triggered the
ten-year statute of limitations. A “Self–
Assessment” is a term used for when a taxpayer
submits documentation of his or her own tax
liability, versus when the Secretary determines a
taxpayer's liability. See Kahn v. United States,
753 F.2d 1208, 1213 (3d Cir.1985)(stating that
a self-assessment is in reference to “the amount
of tax shown on the return”); 26 U.S.C.
§ 6201(a)(1)(distinguishing between the taxes
assessed by the IRS and the taxes listed on the
taxpayer's return). The ability for taxpayers to
indicate their own tax liability is “largely the
basis of our American scheme of income taxation.
The purpose is . . . to get [tax information] with
such uniformity, completeness, and arrangement
that the physical task of handling and verifying
returns may be readily accomplished.” Comm'r v.
Lane–Wells Co., 321 U.S. 219, 223 (1944). A
self-assessment is completed and submitted by the
taxpayer as part of the filing process. See
Jenney v. United States, 755 F.2d 1384, 1386 (5th
Cir. 1985)(referencing that the term “selfassessment” is the amount of tax liability
reported on the face of a taxpayer's return).
The filing of a tax return is not the same as the
assessment of the tax. Finally, “assessment” as
referred to in the Internal Revenue Code refers to
the Commissioner's final assessment, not the
taxpayer's self-assessment.
* * *
11 - OPINION AND ORDER
Bishop's claim that the self-assessment date
should control the statute of limitations is
unsupported by the Internal Revenue Code.
Id. at 227-28 (citations omitted).
The Court adopts the reasoning of Remington and Bishop and
concludes the taxpayer’s filing of a return does not constitute
an assessment of the tax within the meaning of § 6502 and,
therefore, does not begin the running of the ten-year limitations
period.
The IRS’s assessment of an individual’s federal tax
liability starts the running of the ten-year period within which
the IRS can commence efforts to collect an assessed tax.
II.
Plaintiff timely filed this action.
William Thompson asserts in his Response that the IRS’s
records indicate the IRS prepared Substitutes for Returns (SFRs)
for William Thompson for tax years 1999-2004 on April 9, 2007.
William Thompson asserts the SFRs began the running of the tenyear limitations period and, therefore, this matter was untimely
filed as to those tax years because this matter was not filed
until May 22, 2017.
IRS Revenue Officer Suzy Taylor testifies in her Declaration
that the IRS’s Integrated Data Retrieval System (IDRS) is the
method the IRS uses to track and to record taxpayers’ accounts.
Decl. of Suzy Taylor at ¶ 5.
The IDRS reflects William
Thompson’s account has an entry dated April 9, 2007, with
transaction code 150, a transaction amount of $0.00, and the
12 - OPINION AND ORDER
notation “SFR.”
Taylor explains entries with transaction code
150, a transaction amount of $0.00, and an SFR indicate a revenue
agent is examining a taxpayer’s liability for a tax period in
which the taxpayer has not filed a return.
When the revenue
agent completes the examination of the taxpayer’s liability, the
tax assessment is recorded with transaction code 300.
Here William Thompson’s account contains an entry on May 28,
2007, with transaction code 300, which indicates the revenue
agent made the assessment on May 28, 2007.
The record,
therefore, reflects the IRS did not make an assessment until
May 28, 2007, which was less than ten years before Plaintiff
filed this action on May 22, 2017.
Accordingly, the Court
concludes Plaintiff filed this action within the ten-year
limitations period.
Moreover, even if the April 9, 2007, $0.00 SFR entry
constituted an assessment, it began the running of the ten-year
limitations period only for that $0.00 assessment.
The record
reflects the IRS made additional substantial assessments related
to William Thompson’s tax liabilities on May 28, 2007, and later.
It is those later substantive assessments that Plaintiff seeks to
collect in this action.
Those assessments, therefore, are the
relevant assessments for evaluating the start of the ten-year
limitations period.
As noted, this action was filed on May 22,
2017, which was less than ten years after the May 28, 2007, and
13 - OPINION AND ORDER
any later assessments.
Thus, Plaintiff timely filed this action.
III. William Thompson’s Other Arguments
William Thompson also asserts the Court should not grant
Plaintiff’s Motion for Partial Summary Judgment because
(1) Suzy Taylor’s Declaration lacks adequate foundation,
(2) Plaintiff failed to introduce evidence of its assessments,
and (3) Plaintiff should be estopped from asserting any
assessment date other than April 9, 2007.
A.
Suzy Taylor’s Declaration
William Thompson asserts the Court should disregard the
Declaration of Revenue Officer Taylor because “she has no
personal knowledge of the facts of this case.”
Plaintiff,
however, introduced Taylor’s Declaration to explain the record
the IRS kept regarding William Thompson in the ordinary course of
business.
Taylor states in her Declaration that her “training
and experience as a Revenue Officer have made [her] familiar with
the IRS’s computer system for storing and tracking information on
taxpayer’s accounts.”
Taylor Decl. at ¶ 3.
Taylor’s Declaration
establishes the IRS’s records are made automatically at or near
the time of the transaction by a person with knowledge of the
transaction or at the direction of a person with knowledge of the
transaction.
Taylor testifies the IRS’s records are kept in the
regular course of its business and that the IRS makes and uses
the transaction records as part of its regular business
14 - OPINION AND ORDER
practices.
Federal Rule of Civil Procedure 54(c)(4) requires
only that the declarant have personal knowledge of the facts to
which she testifies.
Here Taylor’s Declaration reflects she has
sufficient personal knowledge of the practices, procedures, and
records of the IRS about which she testifies.
Thus, the Court concludes the record reflects Taylor
has sufficient personal knowledge to testify about the IRS’s
policies, procedures, and practices that she addresses in her
Declaration and to establish a foundation to admit the IRS’s
transcripts as business records.
B.
Evidence of IRS Assessments
William Thompson asserts in his Response that Plaintiff
did not introduce the IRS’s assessments into evidence and instead
merely explained the factual foundation for the assessments.
The
record, however, reflects the IRS made the assessments through
Certificates of Assessment and Payment.
Straight, Exs. G-L.
See Decl. of Adam D.
William Thompson does not point to any
evidence that establishes the assessments introduced by Plaintiff
were improperly made.
On this record the Court concludes Plaintiff has
produced sufficient evidence of the IRS’s assessments of William
Thompson’s tax liabilities.
C.
Estoppel
William Thompson asserts in his Response that the IRS
15 - OPINION AND ORDER
“filed Substitute for Returns [SFRs] apparently to prevent
[William Thompson] from exercising his rights” and that he
“relied on [the IRS’s] actions and changed the course of his
actions in response.”
Thus, William Thompson asserts Plaintiff
should be estopped from asserting any assessment date other than
April 9, 2007.
1.
The Law
“The doctrine of equitable estoppel . . . is based
on the principle that a party ‘should not be allowed to benefit
from its own wrongdoing.’”
Estate of Amaro v. City of Oakland,
653 F.3d 808, 813 (9th Cir. 2011)(quoting Collins v. Gee West
Seattle LLC, 631 F.3d 1001, 1004 (9th Cir. 2011).
A plaintiff
must plead and prove the following elements of equitable
estoppel:
“(1) knowledge of the true facts by the party to
be estopped, (2) intent to induce reliance or
actions giving rise to a belief in that intent,
(3) ignorance of the true facts by the relying
party, and (4) detrimental reliance.”
Id. (quoting Bolt v. United States, 944 F.2d 603, 609 (9th Cir.
1991)).
“[W]hen estoppel is sought against the government,
‘there must be affirmative misconduct (not mere negligence) and a
serious injustice outweighing the damage to the public interest
of estopping the government.’”
609).
16 - OPINION AND ORDER
Id. (quoting Bolt, 944 F.2d at
2.
Analysis
Even if the $0.00 SFR entries made on April 9,
2007, constituted the “true facts” (i.e., that the SFRs began the
running of the ten-year limitations period on April 9, 2007),
William Thompson does not allege or point to any evidence to
satisfy the other equitable-estoppel factors.
For example, he
does not allege or submit evidence that establishes the IRS
induced him to rely on the SFRs.
Although William Thompson
alleges he detrimentally relied on the SFRs, he does not indicate
the manner in which he detrimentally relied on them nor has he
submitted any evidence to establish that he detrimentally relied
on them.
In fact, he specifically agreed in the Closing
Agreement to the liabilities that are the basis for the IRS’s
assessments at issue in this action.
William Thompson also fails
to point to any affirmative misconduct by any government
employee.
William Thompson, therefore, fails to establish that
this Court should apply the doctrine of estoppel.
To the extent that William Thompson asserts this matter
is barred by the doctrine of laches, “it is well settled that the
United States is not . . . subject to the defense of laches in
enforcing its rights.”
416 (1940).
United States v. Summerlin, 310 U.S. 414,
See also United States v. Thornburg, 82 F.3d 886,
893 (9th Cir. 1996)(same); Hooks v. Int’l Longshore and Warehouse
Union, Local 8, 72 F. Supp. 3d 1168, 1181 (D. Or. 2014)(same).
17 - OPINION AND ORDER
In addition, the Supreme Court has made clear that laches is not
available when a matter at law is filed within a Congressionallyset deadline.
SCA Hygiene Prods. Aktiebolag v. First Quality
Baby Prods., LLC, 137 S. Ct. 954, 963 (2017)(“[L]aches cannot be
invoked to bar a claim for damages incurred within a limitations
period specified by Congress.”).
The Court, therefore, concludes this matter is not
barred by the doctrine of laches.
In summary, William Thompson has failed to establish that
this matter was untimely filed or that a genuine dispute of
material fact exists.
Accordingly, the Court GRANTS Plaintiff’s
Motion for Partial Summary Judgment.
CONCLUSION
For these reasons, the Court GRANTS Plaintiff’s Motion (#70)
for Partial Summary Judgment on William Thompson’s Tax
Liabilities.
IT IS SO ORDERED.
DATED this 13th day of June, 2018.
/s/ Anna J. Brown
ANNA J. BROWN
United States Senior District Judge
18 - OPINION AND ORDER
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