United States of America v. Bogart et al

Filing 127

REPORT AND RECOMMENDATION: The undersigned recommends that the Plaintiff's motion for Partial Summary Judgment be GRANTED and the defendant's Motion for Partial Summary Judgment be DENIED. Signed by Magistrate Judge Joe Brown on 10/17/2013. (xc:Pro se party by regular and certified mail.)(DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(eh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
UNITED STATES of AMERICA,
Plaintiff,
vs.
DUSTIN BOGART, and MARCY A.
BOGART,

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Cv. No.
3:12-cv-0179
District Judge Sharp/Magistrate Judge
Brown.

Defendants
To the Honorable District Judge Kevin H. Sharp
REVIEW AND RECOMMENDATION
Presently pending before the Magistrate Judge are the plaintiff’s, The United States of
America, and the defendant’s, Dustin Bogart, Cross-Motions for Partial Summary Judgment as
to count I of the complaint. (Docket Entry (“DE”) 91) As explained in detail below, the
Magistrate Judge recommends that the plaintiff’s Motion for Summary Judgment be GRANTED
and the defendant’s Motion for Summary Judgment be DENIED.
I.

INTRODUCTION AND BACKGROUND

The defendant, Dustin Bogart (“Defendant”), failed to file tax returns or to pay federal
income taxes from 2000 through 2003. (Complaint, DE 1, p. 1) Accordingly, the Internal
Revenue Service (“IRS”) determined Defendant’s gross income and the resultant tax liability
from “other” reporting sources. (Plaintiff’s Statement of Material Fact (“Statement of Fact”),
DE 91-2, p. 1) Plaintiff assessed the outstanding tax liability, penalties, and interest against
Defendant, Certified those assessments, provided notice to Defendant of the outstanding liability,
and made demand for payment. (Declaration of Kenny Odell Justice, DE 91-5, p. 2 ¶¶ 5, 6)
Plaintiff also filed liens against Pennsylvania and Tennessee property in which Defendant
purportedly has an ownership interest. (Exhibits 14 & 15 to Defendant’s Memorandum in

Support of Cross-Motion for Summary Judgment, DE 119-1, 119-2) Plaintiff was unsuccessful
in securing payment from Defendant and instituted this action on February 13, 2012 to reduce
these assessed taxes and statutory penalties to final judgment. 1 (DE 1)
The initial case management order established April 30, 2012 as the deadline for
conducting discovery and May 31, 2012 as the deadline for filing dispositive motions. (DE 55)
However, those dates were extended by thirty days by Order dated January 31, 2012. (DE 86)
Plaintiff timely filed the instant motion for partial summary judgment as to Count I of the
complaint on July 1, 2013. (DE 91) Defendant filed a motion for leave to respond to Plaintiff’s
motion for partial summary judgment on August 12, 2013 (DE 104), and, once granted (DE
106), filed his reply and a cross-motion for partial summary judgment on September 3, 2013.
(DE 118)
This matter is properly before the court.
II.

ANALYSIS

A. Standard of Review
Summary judgment is appropriate where there is no “genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Miller v. City of Calhoun
County, 408 F.3d 803, 812-13 (6th Cir. 2005) (quoting Fed. R. Civ. P. 56(c)). A “genuine issue
of material fact” is one which, if proven, could adduce a reasonable jury to return a verdict for
the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The burden
for establishing the absence of a genuine factual dispute rests with the moving party. Id. at 24950.

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Plaintiff has also filed suit in the Middle District of Pennsylvania to pursue real property assets attributed to
Defendant there. See United States of America v. Dustin B. Bogart, et al, Civil Case 4:12-cv-00347. The
Pennsylvania property and any claim thereto is not considered as part of Plaintiff’s claim or relief requested
here.

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In deciding whether summary judgment is appropriate, the District Court must look
beyond the pleadings and assess the proof to determine whether there is a genuine need for a
trial.” Sowards v. Loudon County, 203 F.3d. 426 (6th Cir. 2000), cert. denied, 531 U.S. 875
(2000). In so doing, the district court must “draw all reasonable inferences in favor of the nonmoving party” in its analysis of the pleadings, affidavits, and other submissions. Sadie v. City of
Cleveland, 718 F.3d 596, 599 (6th Cir. 2013) (citing Matsushita Elec. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)).
“The moving party need not support its motion with evidence disproving the non-moving
party’s claim, but need only show that ‘there is an absence of evidence to support the nonmoving party’s case.’” Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 566 (6th Cir. 2001)
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). The non-moving party is not
entitled to trial solely on the basis of the pleadings themselves, but must provide more than
conclusory allegations, speculation, and unsubstantiated assertions. See Lujuan v. Nat’l Wildlife
Fed’n, 497 U.S. 871, 888 (1990). Rather, at the summary judgment stage, the party opposing
summary judgment “must present ‘affirmative evidence’ to support his/her position; a mere
‘scintilla of evidence’ is insufficient.” Bell v. Ohio State University, 351 F.3d 240, 247 (6th Cir.
2003) (quoting Anderson, 477 U.S. at 252)
B. Defendant’s Tax Liability
Plaintiff asserts that the Certificate of Assessment showing the IRS’s calculation of
Defendant’s tax liability provides prima facie evidence of Defendant’s tax burden. (Plaintiff’s
Memorandum in Support of Summary Judgment (“Plaintiff’s Br.”), DE 91-1, p. 3; DE 9-16, pp.
1-23) As such, the burden shifts to Defendant to prove by a preponderance of evidence that
Plaintiff’s assessment of his tax liability is other than the $295,194.00 reflected in the IRS’

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Certificate of Assessments. (Plaintiff’s Memorandum in Support of Partial Summary Judgment,
DE 91-1, pp. 3-4; Declaration of Kenny Odell Justice, DE 91-5, pp. 1-2)
In reply, Defendant provides no evidence that Plaintiff’s assessment is erroneous.
Rather, Defendant appears to defend against Plaintiff’s claims by asserting that the federal tax
law (“the Code”), 26 U.S.C. § 1 et seq., imposes a varying regime of taxation depending upon an
individual’s status. (Defendant’s Memorandum in Support of Defendant’s Cross-Motion for
Summary Judgment (“Defendant’s Br.”), DE 119, pp. 3-10) According to Plaintiff’s argument,
only resident aliens and foreign corporations are subject to the mandatory withholding and
reporting requirements of the Code. (Defendant’s Br., DE 119, p. 22-25)
For U.S. Citizens like Defendant, the Code imposes only a voluntary system of taxation.
(Defendant’s Br., DE 119, pp. 3-10) Defendant argues that no provision in the Code compels
him to file a tax return. (Defendant’s Br., DE 119, p. 7) Further, Defendant asserts that the
“substitute for return” and Certificate of Assessment prepared by the IRS are only speculative
estimates of his tax liability based upon hearsay and untrustworthy third-party reports that may
not be recognized by the court as sufficient to establish Defendant’s legitimate tax liability.
(Defendant’s Br., DE 119, pp. 3-9)
Relying on the Internal Revenue Manual (“IRM”) section 4.12.1.10.7, Defendant argues
that he is not required to file a return and did not consent to pay the amount reflected by the IRS’
determination and Certificate of Assessment. (Defendant’s Br., DE 119, p. 5) Thus, the liens
filed by the IRS and the Certificate of Assessment that Plaintiff desires to have reduced to
judgment are “non-statutory legal nullit[ies].” (Defendant’s Br., DE 119, p. 5) Accordingly, the
IRS must close his case and forego collection of Defendant’s portion of the nation’s financial

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burden. (Defendant’s Br., DE 119, p. 26) Defendant’s argument is patently absurd and finds no
support in the Constitution or laws of the United States.
In 1913, a majority of the States authorized and invited Congress to “lay and collect taxes
on incomes, from whatever source derived.” U.S. Const. Amend. XVI. Congress accepted the
populace’s invitation in the form of 26 U.S.C. § 1 et seq. The Code imposes upon “every
individual who is a citizen or resident of the United States” the obligation to pay income taxes.
Id. at § 1. The tax “every individual” is required to pay is determined by tables based upon the
individual’s “taxable income.” Id. at § 1, 3. “Taxable income” is defined as “gross income
minus the deductions allowed by this chapter,” and is referred to in the Code as “adjusted gross
income.” Id. at § 63. “Gross income” is an expansive term encompassing “all income from
whatever source derived.” Id. at § 61; See also United States v. Burke, 504 U.S. 229 (1992).
Thus, contrary to Defendant’s argument, any individual whose gross income exceeds the
deductions allowed by the Code is a “taxpayer.”
Also contrary to Defendant’s argument, the Code provides that “[r]eturns with respect to
income taxes under subtitle A shall be made by . . . [e]very individual having for the taxable year
gross income which equals or exceeds the exemption amount.” 26 U.S.C. § 6012(a)(1)(A). This
filing requirement is not “voluntary” as Defendant believes, but is a compulsion on every
“citizen or resident of the United States.” Id. at § 1; See Garner v. United States, 424 U.S. 648,
652 (1975).

To ensure that each individual’s income is reported, the Code also imposes

reporting requirements on third party payors such as employers, banks, and investment
companies to report to the IRS sums of money paid to individuals in the form of wages or
earnings. 26 U.S.C. § 6051. The IRS provides form templates for use by entities with reporting

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requirements. See Form-W-2 available at http://www.irs.gov/pub/irs-pdf/fw2.pdf, Form-1099MISC available at http://www.irs.gov/pub/irs-pdf/f1099msc.pdf.
When a taxpayer, such as Defendant, elects not to file a return as he is required to do, or
reports an income that differs from third party reports, the Code permits the Secretary of the
Treasury, or one of his designees, to assess that individual’s tax liability as was done here. Id. at
6020.

The Code affords the Secretary great latitude in preparing a “substitute return” for

delinquent individuals “from such information as can be obtained through testimony or
otherwise.” Id. at § 6020(b)(1). Contrary to Defendant’s claims here, such “substitute return” is
not a legal nullity, but is prima facie evidence of what the delinquent taxpayer’s tax liability
actually is. Id. at § 6020(b)(2).
As Plaintiff aptly notes, under this framework, the Secretary’s Certificate of Assessment
carries with it a legal presumption of correctness and provides an adequate basis upon which to
reduce the assessed tax liability to final judgment. See United States v. Hillman, 60 F.Appx 563,
[91 AFTR.2d 2003-1344] 564 (6th Cir. 2003) (citing United States v. Walton, 909 F.2d 915, 919
[66 A.T.F.R. 2d 90-5379] (6th Cir. 1990)).

Plaintiff’s motion here places the burden on

Defendant to point to “affirmative evidence” that contradicts the Secretary’s assessment of his
tax liability. See McDermitt v. United States, 954 F.2d 1245, 1251 [69 A.T.F.R.2d 665] (6th Cir.
1992) (noting that the “taxpayer has the burden of proving that the assessment is wrong.”).
Defendant has failed to meet that burden.
III.

CONCLUSION

The Magistrate Judge finds that Defendant has failed to produce any evidence contrary to
the Certificate of Assessment relied upon by Plaintiff, and, thus, has failed to rebut the
presumption of correctness carried by Plaintiff’s proof.

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IV.

RECOMMENDATION

For the reasons stated above, the undersigned recommends that the Plaintiff’s motion
for Partial Summary Judgment be GRANTED and the defendant’s Motion for Partial Summary
Judgment be DENIED.
The parties have fourteen (14) days of being served with a copy of this Review and
Recommendation to serve and file written objections to the findings and recommendation
proposed herein. A party shall respond to the objecting party’s objections to this R&R within
fourteen (14) days after being served with a copy thereof. Failure to file specific objections
within fourteen (14) days of receipt of this Review and Recommendation may constitute a
waiver of further appeal. Keeling v. Warden, Lebanon Corr. Inst., 673 F.3d 452, 458 (6th Cir.
2012) (citing Thomas v. Arn, 474 U.S. 140, reh’g denied, 474 U.S. 111 (1986)).
ENTERED this 17th day of October, 2013.

/s/Joe B. Brown
Joe B. Brown
Magistrate Judge

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