United States of America v. Ritland et al

Filing 31

ORDER granting 28 Motion for Summary Judgment. (cc: all counsel) (Griesbach, William)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No. 15-C-1062

JANE RITLAND,
SHAWANO COUNTY, and
WISCONSIN DEPARTMENT OF REVENUE,
Defendants.

DECISION AND ORDER GRANTING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT

The United States of America commenced this action seeking to secure Jane Ritland’s federal
income tax liability by foreclosing federal tax liens, pursuant to 26 U.S.C. § 6321, pertaining to
certain real property at W7104 Frailing Road, Shawano, Wisconsin (the Shawano property). The
matter is currently before the Court on the United States’ motion for summary judgment. The
United States seeks a judgment that, for the tax years 2004 through 2012, Ritland is liable for
$138,458.16 in unpaid federal income taxes, penalties, and interest through September 23, 2016 to
the present. It further argues that the Court should enforce the federal tax liens against the Shawano
property and order a sale of the property. For the following reasons, the United States’ motion for
summary judgment is granted.

SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when the moving party shows that there is no genuine
issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a). All reasonable inferences are construed in favor of the nonmoving party.
Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir. 2004). The party opposing the motion for
summary judgment must “submit evidentiary materials that set forth specific facts showing that there
is a genuine issue for trial.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010) (citations
omitted). “The nonmoving party must do more than simply show that there is some metaphysical
doubt as to the material facts.” Id. Summary judgment is properly entered against a party “who fails
to make a showing sufficient to establish the existence of an element essential to the party’s case, and
on which that party will bear the burden of proof at trial.” Parent v. Home Depot U.S.A., Inc., 694
F.3d 919, 922 (7th Cir. 2012) (internal quotations omitted).
In this district, Civil Local Rule 56 sets forth specific summary judgment procedures that
parties are required to follow. Under the rule, the party moving for summary judgment must submit
a statement of stipulated material facts, if any, and “a statement of proposed material facts as to
which the moving party contends there is no genuine issue and that entitle the moving party to a
judgment as a matter of law.” Civil L.R. 56(b)(1). The party opposing the motion must then file a
“concise response to the moving party’s statement of facts,” particularly “in the case of any
disagreement.” Civil L.R. 56(b)(2)(B)(i). If the opposing party does not contest the moving party’s
statement of facts, “[t]he Court will deem uncontroverted statements of material fact admitted solely
for the purpose of deciding summary judgment.” Civil L.R. 56(b)(4).

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Here, Ritland, through counsel, did not follow these rules. She did not respond to the United
States’ statement of facts, submit her own statement of facts, or provide any evidence tending to
show that a genuine factual dispute exists. Consequently, the United States’ facts are deemed
admitted. Fed. R. Civ. P. 56(e)(2); see also Apex Digital, Inc. v. Sears, Roebuck & Co., 735 F.3d
962, 965 (7th Cir. 2013).
UNCONTROVERTED FACTS
The following facts are taken from the parties’ stipulated material facts and the United States’
statement of undisputed material facts.

(Stipulated Material Facts (SMF), ECF No. 28-2;

Undisputed Material Facts (UMF), ECF No. 28-3.) For the taxable years 2004 through 2012,
Ritland filed self-prepared federal income tax returns. (SMF at ¶ 1.) For each of the tax years at
issue, a delegate of the Secretary of the Treasury assessed a tax penalty against Ritland for her
federal income taxes. Despite notices of the assessments and demands for payment, Ritland has
failed to pay the amounts she owes. (UMF at ¶ 50.)
On April 11, 2008, the United States filed a notice of a federal tax lien on the Shawano
property with the Shawano County Register of Deeds. The United States filed additional notices
of a federal tax lien on the Shawano property with Shawano County in 2010, 2011, 2013, and 2014.
Ritland is the sole owner of the Shawano property, and there are no mortgages on the property.
(SMF at ¶¶ 6–7.) As of September 23, 2016, the outstanding balance of Ritland’s federal income
tax liabilities, including all penalties and interest, is $138,458.16, computed as follows:
Tax Year

Balance Due

2004

$11,571.03

2005

$13,407.24
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2006

$18,063.49

2007

$16,101.05

2008

$16,301.68

2009

$18,958.57

2010

$17,768.07

2011

$12,674.98

2012

$13,612.11

(UMF at ¶ 51.) On September 1, 2015, the United States commenced the present action under 26
U.S.C. § 7403, which allows a district court to order the sale of property that is subject to a federal
tax lien.
ANALYSIS
A. Assessed Federal Tax Liabilities
The United States first seeks to reduce Ritland’s assessed federal tax liabilities for the tax
years 2004 through 2012 to judgment. In an action to collect taxes from a person, the United States
has the initial burden to show the amount of taxes due. See, e.g., Nakano v. United States, 742 F.3d
1208, 1211 (9th Cir. 2014) (citation omitted). A taxpayer’s liability to pay a tax is established by
an “assessment,” the IRS’s evaluation of the amount the taxpayer owes in unpaid taxes. United
States v. Fior D’Italia, Inc., 536 U.S. 238, 242 (2002). The IRS uses Form 4340, the certificate of
assessments, payments, and other specified matters, to assist in its calculation. Form 4340
establishes the presumption of a valid tax assessment of the amounts the taxpayer owes. See id. (“It
is well established in the tax law that an assessment is entitled to a legal presumption of correctness
. . . .”). This presumption of correctness shifts the burden of proof to the taxpayer to show that the
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assessment is incorrect. See United States v. Brown, 820 F.Supp. 374, 384 (N.D. Ill. 1993). To
meet her burden, the taxpayer must offer more than a general denial of liability. See Avco Delta
Corp. Canada Ltd. v. United States, 540 F.2d 258, 262 (7th Cir. 1976).
In this case, the United States introduced sufficient evidence to meet its initial burden by
submitting a Form 4340 for the tax years 2004 through 2012, which reflect the tax assessments made
against Ritland. (ECF Nos. 28-16 – 28-24.) Consequently, Ritland bears the burden of proving the
assessments are incorrect. Ritland agrees she owes a portion of the underlying tax but disputes the
amount she is liable for. Although she asserts that the amount of principal taxes owed is an amount
in question, she does not satisfy her burden. She has failed to rebut the presumption of correctness
because she has not offered any evidence to establish that the assessments are erroneous or presented
any alternative calculation suggesting the actual amount she owes. Again, a mere denial of liability
is insufficient to overcome the presumption of correctness. In short, based on the IRS’s assessments,
the United States is entitled to judgment in the amount of $138,458.16, plus interest from and after
September 23, 2016.
B. Enforcement of Federal Tax Liens
Once the amount of a tax liability has been established and recorded, the IRS may employ
administrative enforcement methods, such as tax liens, to collect the outstanding taxes. United
States v. Galletti, 541 U.S. 114, 122 (2004). If a person fails to pay her tax liabilities after a demand
has been made, a lien in favor of the United States arises on all property and rights to property
belonging to the person. 26 U.S.C. § 6321. The lien continues to exist until the taxpayer satisfies
her liability or the lien becomes unenforceable due to a lapse of time. 26 U.S.C. § 6322. If the
United States prevails on the merits of the suit to enforce a tax lien, the court “may decree a sale of
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such property, by the proper officer of the court, and a distribution of the proceeds of such sale
according to the findings of the court in respect to the interest of the parties and of the United
States.” 26 U.S.C. § 7403(c). A district court’s discretion in refusing to authorize a sale is to be
“exercised rigorously and sparingly, keeping in mind the Government’s paramount interest in prompt
and certain collection of delinquent taxes.” United States v. Rodgers, 461 U.S. 677, 711 (1983).
Here, the federal tax liens associated with Ritland’s income tax liabilities for the years 2004
through 2012 arose and attached to the Shawano property as of the dates of the assessments. See
26 U.S.C. § 6321. It is undisputed that Ritland has not satisfied her liability by paying the entire
portion of what she owes in taxes, penalties, and interest. Ritland has not presented any evidence
indicating that justice requires a modification to the sale procedure, such as a third-party interest.
See Rodgers, 461 U.S. at 709 (“We can think of virtually no circumstances, for example, in which
it would be permissible to refuse to authorize a sale simply to protect the interests of the delinquent
taxpayer himself or herself.”). Accordingly, the United States is entitled to enforce the federal tax
liens through a judicial sale of the Shawano property. The proceeds of the sale must be paid to the
United States to satisfy Ritland’s outstanding tax liabilities.
CONCLUSION
For the reasons stated herein, the United States’ motion for summary judgment (ECF No.
28) is GRANTED. Under Federal Rule of Civil Procedure 54(b), judgment is final for purposes of
appeal. There is no reason to delay entry of final judgment on this portion of the case pending the
sale of the Shawano property. The United States shall promptly file a motion and proposed order
setting forth with particularity the sale procedure and the distribution priorities for the Shawano
property.
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SO ORDERED this 3rd day of January, 2017.
s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court

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