United States of America v. Boldin et al

Filing 37

DECISION AND ORDER signed by Judge Lynn Adelman on 9/6/16 granting 18 Plaintiff's Motion for Summary Judgment; denying 27 Defendant's Motion for Summary Judgment. Further ordering that plaintiff is entitled to judgment in the amount of $657,233.78 plus applicable statutory interest and penalties. Further ordering plaintiff to submit a proposed judgment and order of sale to enforce its liens on defendants property within 30 days of this order. (cc: all counsel) (dm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No. 15-CV-232

ANTHONY J BOLDIN, et al.,
Defendants.

DECISION AND ORDER

The Internal Revenue Service (IRS) brings this action to (1) reduce to judgment
defendant Anthony Boldin’s unpaid taxes for 2001 and 2002 and (2) enforce its federal
tax liens on his real property at 340 Manor Court, Brookfield, Wisconsin. Before me now
are parties’ cross-motions for summary judgment.
I. BACKGROUND
The IRS assessed Anthony and Jodie Boldin’s 2001 and 2002 taxes when the
Boldins jointly filed their tax returns for those years in October 2002 and November
2003. The Boldins did not pay the full amount assessed for either year, so the IRS filed
a notice of federal tax lien against their property. On their 2003 tax return, the Boldins
claimed farming losses from a horse-breeding program, ClassicStar’s Mare Lease
Program, in which they had participated. A taxpayer can carry back farming losses to
the prior five tax years, so the Boldins filed an application for a tentative carryback
adjustment seeking to adjust their taxes for 2001, 2002, and earlier tax years based on
these losses. The IRS allowed the tentative carryback adjustments, which abated the
Boldins’ outstanding taxes for 2001 and 2002, and filed a release of its tax lien.
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After the IRS determined that ClassicStar’s Mare Lease Program was an abusive
tax shelter, it disallowed the Boldins’ 2003 farming losses and the resulting tentative
carryback adjustments. On March 7, 2005, the IRS assessed tax deficiencies for 2001
and 2002 in the amounts the Boldins owed for those years without their loss carrybacks.
In April 2007, the IRS sent the Boldins a notice of deficiency that explained, among
other things, that it had disallowed their claimed 2003 farming losses and the resulting
tentative carryback adjustments.
In 2011, the Boldins divorced. The IRS relieved Jodie Boldin, as an “innocent
spouse,” from joint and several liability for the Boldins’ outstanding taxes. The IRS filed
a release of its tax lien against the Boldins’ property and filed a notice of tax lien against
Anthony Boldin’s individual property. Pursuant to the divorce judgment, Jodie
transferred her interest in the Brookfield property to Anthony. The IRS included Jodie as
a defendant in this action in case she could claim an interest in that property. She is
currently in default because she has failed to answer or otherwise defend.
II. DISCUSSION
The parties filed cross-motions for summary judgment and have stipulated as to
the material facts. The only dispute is whether the IRS brought this action before the
applicable statute of limitations had run. Section 6502(a) of the Tax Code (Title 26 of the
U.S. Code) gives the IRS ten years from the date it assesses a tax to bring an action in
court to collect it. The IRS brought this action on March 2, 2015 to collect on
deficiencies (i.e., taxes) that it assessed on March 7, 2005, so this action is not barred
by § 6502(a).

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Boldin argues that the IRS is actually trying to collect his original 2001 and 2002
taxes, which the IRS assessed more than ten years before bringing this action. The IRS
made its March 7, 2005 assessments under 26 U.S.C. § 6213(b)(3), which provides
that, if the IRS finds that it has credited a taxpayer excessively because of a tentative
carryback adjustment, it can assess the excess as a deficiency “as if it were due to a
mathematical or clerical error appearing on the return.” Boldin interprets this language
to mean that when the IRS made these assessments, it merely corrected the equivalent
of a clerical error and reinstated his original taxes for 2001 and 2002, which his tentative
carryback adjustments had abated. He argues that correcting a clerical error is not
sufficient to restart a statute of limitations.
Boldin misreads § 6213(b)(3). The language he cites refers to a provision in
§ 6213 that allows the IRS to assess a deficiency “on account of a mathematical or
clerical error appearing on the return” without first notifying the taxpayer or giving him an
opportunity to contest its determination of the deficiency in the Tax Court, which would
normally be required by § 6213(a). § 6213(b)(1). The IRS can assess a deficiency under
§ 6213(b)(3) the same way (i.e., “as if it were due to a mathematical or clerical error
appearing on the return”). See 26 C.F.R. § 301.6213-1(b)(2) (The IRS can assess a
deficiency under § 6213(b)(3) “as if such deficiency were due to a mathematical error
appearing on the return. That is . . . without regard to the restrictions on assessment
and collection imposed by section 6213(a).”). This language concerns the procedure the
IRS must follow when making assessments like the ones it made in this case. An
assessment under § 6213(b)(3) triggers its own statute of limitations on collection, just
like any other assessment would.
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Boldin makes a few other arguments, but none is convincing. First, he argues
that I should not interpret § 6213(b)(3) this way because to do so would prejudice him.
He argues that I should not “allow the IRS at its sole discretion, to restrict the remedies
available to [him] to challenge its March 7, 2005 . . . assessment.” Def.’s Br., ECF No.
28, at 9. To the extent that his remedies are restricted, Congress restricted them. It is
not within my authority to rewrite the Tax Code to make it more protective of taxpayers.
Next, Boldin argues that the IRS should not be allowed to assess deficiencies
under § 6213(b)(3) and then also send a notice of deficiency explaining those
assessments. Section 6212(a) says that the IRS can send a notice of deficiency.
Section 6213(b)(3) says that it does not have to send such a notice before making an
assessment as it did in this case. Neither forecloses the other. The IRS’s regulations
make this clear: “Any one or more of the . . . available methods may be used to recover
any amount which was improperly applied, credited, or refunded in respect of an
application for a tentative carryback adjustment.” 26 C.F.R. § 301.6213-1.
Finally, Boldin argues that § 6213(b)(3) was “meant to provide the IRS with a
quick remedy to recover erroneous refunds.” Def.’s Br., ECF No. 35, at 7–8 (citing
Pesch v. Comm’r, 78 T.C. 100, 116–18 (1982)). Since the IRS did not issue a refund
based on his tentative carryback adjustments, he argues, it cannot use a remedy
enacted to help it recover an erroneous refund. Again, Boldin misreads § 6213(b)(3),
under which the IRS can assess a deficiency if it finds that it has “applied, credited, or
refunded” a taxpayer too much because of a tentative carryback adjustment. The IRS
credited Boldin too much and assessed deficiencies to correct that, which § 6213(b)(3)
allows it to do regardless of whether it issued a refund.
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The IRS has established the validity, timeliness, and amounts of its March 7,
2005 assessments. It assessed these deficiencies within the time allowed by § 6501
and notified Boldin of its assessments, as required by § 6213(b)(3), in April 2007 in a
notice of deficiency. Per IRS records, Boldin owes $340,236.65 for 2001 and
$316,997.13 for 2002 plus applicable statutory interest and penalties. See 26 U.S.C.
§§ 6621–22, 6651. IRS assessments are presumed to be correct, see Kikalos v.
Comm’r, 434 F.3d 977, 982 (7th Cir. 2006), and Boldin does not contest these amounts,
so the IRS has shown that it is entitled to judgment in these amounts.
The IRS further requests that I enforce its tax liens against Boldin’s property.
These are clearly valid liens in the amounts owed, see 26 U.S.C. §§ 6321–22, and
Boldin has not contested their validity. The IRS says that it will submit a proposed
judgment and order of sale upon my order.
III. CONCLUSION
THEREFORE, IT IS ORDERED that plaintiff’s motion for summary judgment
(ECF No. 18) is GRANTED and defendant’s motion for summary judgment (ECF No.
27) is DENIED.
IT IS FURTHER ORDERED that plaintiff is entitled to judgment in the amount of
$657,233.78 plus applicable statutory interest and penalties.
IT IS FURTHER ORDERED that plaintiff will submit a proposed judgment and
order of sale to enforce its liens on defendant’s property within 30 days of this order.
Dated at Milwaukee, Wisconsin, this 6th day of September, 2016.
s/ Lynn Adelman
__________________________________
LYNN ADELMAN
District Judge
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