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United States v. Meyer

United States District Court, D. Minnesota

July 14, 2017

United States of America, Plaintiff,
v.
Joseph D. Meyer, Defendant.

          Hilarie E. Snyder, Esq., United States Department of Justice, Washington, DC, on behalf of Plaintiff.

          Joseph D. Meyer, pro se.

          MEMORANDUM OPINION AND ORDER

          ANN D. MONTGOMERY U.S. DISTRICT JUDGE

         I. INTRODUCTION

         This matter is before the undersigned United States District Judge for a ruling on Plaintiff United States of America’s (the “Government”) Motion for Summary Judgment [Docket No. 47] and Defendant Joseph D. Meyer’s (“Meyer”) Motion for Summary Judgment [Docket No. 53]. For the reasons set forth below, the Government’s Motion is granted and Meyer’s Motion is denied.

         II. BACKGROUND

         On March 25, 2016, the Government commenced this civil tax collection action, asserting that Meyer owes $110,352.74 in outstanding federal income tax liabilities for tax years 2002 and 2009.[1] Compl. [Docket No. 1] ¶¶ 7, 8. On April 13, 2016, Meyer denied the substantive allegations in the Complaint and asserted a Counterclaim. See Answer Compl. Countercl. [Docket No. 6]. Meyer’s Counterclaim was dismissed on July 19, 2016. See Order [Docket No. 20].

         The Government and Meyer both move for summary judgment. The Government seeks a judgment to enforce Meyer’s unpaid federal income tax liabilities. Meyer seeks an order holding that the tax assessments levied for tax years 2002 and 2009 are invalid.

         A. Tax Year 2002

         Meyer did not timely file a federal income tax return for tax year 2002. First Kofoid Decl. [Docket No. 50] ¶ 8. As a result, the Internal Revenue Service (“IRS”) computed Meyer’s tax obligation through third parties such as employers and financial institutions. Id. On April 30, 2004, the IRS sent Meyer a letter explaining its tax computation. Id. Attach. 3. The IRS determined that Meyer owed $43,554.20 in tax, $14,086.17 in penalties, and $2,884.27 in interest, for a total of $60,524.64. Id.

         On May 2, 2008, Meyer filed a $40,000 offer in compromise with the IRS in an effort to resolve his tax liabilities. First Kofoid Decl. ¶ 9; Attach. 5. By letter of October 29, 2008, the IRS rejected Meyer’s offer because “[t]he amount offered is less than your reasonable collection potential. . . . Based on the financial information you submitted, we have determined you can pay the amount due in full.” Id. Attach. 6. Meyer administratively appealed the rejection, which was upheld on September 30, 2009. First Kofoid Decl. ¶ 10.

         B. Tax Year 2009

         Meyer did not file a federal income tax return for tax year 2009. Id. ¶ 8. As with the 2002 return, the IRS computed Meyer’s tax obligation. Id. Attach. 1. By letter of November 13, 2012, the IRS informed Meyer that for tax year 2009 he owed $23,469.30 in tax, $9,425.31 in penalties, and $2,773.91 in interest, for a total of $35,668.52. Id.

         C. The Present Motions

         The Government seeks entry of judgment to establish Meyer’s tax liabilities for tax years 2002 and 2009. Inclusive of interest, the Government contends that Meyer now owes $57,790.60 for tax year 2002 and $43,333.46 for tax year 2009, for a total of $101,124.06.[2] Meyer does not dispute the amount of tax the IRS claims he owes. Instead, Meyer argues that the Government failed to follow Internal Revenue Code (“I.R.C.”) §§ 6212(a) and 6213(a), which requires the IRS to mail a notice of deficiency (“NOD”) to a taxpayer prior to initiating proceedings to assess a tax deficiency. Meyer argues that the Government’s failure to mail a NOD for tax years 2002 and 2009 invalidates the tax assessments. Thus, the present Motions turn on whether the Government properly mailed a NOD for tax years 2002 and 2009.

         III. DISCUSSION

         A. Summary Judgment Standard

         Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be rendered if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. On a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party. Ludwig v. Anderson, 54 F.3d 465, 470 (8th Cir. 1995). However, the nonmoving party may not “rest on mere allegations or denials but must demonstrate on the record the existence of specific facts which create a genuine issue for trial.” Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995).

         B. Deficiency Notices

         Section 6203 of the I.R.C. provides that a tax 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.” The IRS must send a NOD to the taxpayer’s “last known address” by certified mail or registered mail before it assesses liability for unpaid taxes. I.R.C. §§ 6212(a), (b)(1); see also Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994) (“Under the provisions of the Internal Revenue Code, the IRS must mail a notice of deficiency by certified or registered mail before it can make an assessment for delinquent taxes, which in turn is a prerequisite to seizing and selling the taxpayer’s property.”) (quotations omitted). If the IRS fails to prove that it properly mailed a NOD, any tax assessment based upon that notice is invalid. I.R.C. § 6213(a); see also Hoyle v. Comm’r, 131 T.C. 197, 205 (2008).

         The Government has the burden of proving by “competent and persuasive” evidence that a NOD was sent to the taxpayer. Bobbs v. Comm’r, T.C. Memo., 2005–272, 2005 WL 3157919, at *2 (U.S. Tax Ct. Nov. 28, 2005) (citing Coleman v. Comm’r, 94 T.C. 82, 90, 1990 WL 16337 (1990)). “This notice of deficiency is often referred to as the ‘ninety day letter’ because after mailing this notice, the IRS must give the taxpayer ninety days to petition the Tax Court ...


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