United States District Court, D. Minnesota
Michael R. Pahl, U.S. Department of Justice, Tax Division,
William J. Mooney and Joni T. Mooney, pro se.
MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND
RICHARD NELSON UNITED STATES DISTRICT JUDGE.
matter comes before the Court on the Answer and Objection
(“Objection”) [Doc. No. 147] filed by Defendants
William J. Mooney and Joni T. Mooney (collectively “the
Mooneys”) to Magistrate Judge Leo I. Brisbois's
Report and Recommendation dated April 19, 2018
(“R&R of April 19, 2018”) [Doc. No. 146]. In
the R&R, the magistrate judge recommended that the Motion
for Summary Judgment [Doc. No. 119] filed by the United
States of America (“Plaintiff”) be granted. For
the reasons set forth below, after a de novo review,
this Court overrules the Mooneys' Objection, adopts the
R&R in its entirety, and grants Plaintiff's Motion
for Summary Judgment.
facts and lengthy procedural history of this case have been
thoroughly and accurately stated in several Orders of this
Court and of the magistrate judge. (See, e.g., Order
of Nov. 7, 2016 [Doc. No. 36]; Mem. Op. & Order of May
31, 2017 [Doc. No. 78].) Therefore, this Court, like the
magistrate judge, recites the facts here only to the extent
necessary to contextualize and rule on the Mooneys'
briefly stated, on July 28, 2016, Plaintiff initiated this
action against the Mooneys “to reduce federal tax and
penalty assessments to judgment and enforce federal tax liens
on property located in this district.” (Compl. [Doc.
No. 1] at 1.) Before reciting the facts, however, this Court
notes that even at this stage of the litigation, only
Plaintiff has filed admissible evidence regarding the
Mooneys' tax liability and the Mooneys' history of
ownership of the property at issue. Among other documents,
Plaintiff has filed the sworn declarations of Internal
Revenue Service (“IRS”) Revenue Officers Richard
Wallin (“Wallin Decl.”) [Doc. No. 123] and Shawn
M. Kennedy (“Kennedy Decl.”) [Doc. No. 122].
Plaintiff has also filed Certifications of Assessments and
Payments that provide the transactional history of the
relevant tax years. (See Exs. 1-15 to Pl.'s
Opp'n to Defs.' Mot. Summ. J. [Doc. No.
108].) In the absence of any evidence offered by
the Mooneys to call into question the veracity of these
documents, combined with the presumption of correctness that
tax assessment documents enjoy, see, e.g., N.S.
State Univ. v. United States, 255 F.3d 599, 603 (8th
Cir. 2001), this Court considers the Mooneys' tax and
civil penalty liability as set forth in Sections I.A.1 and
I.A.2 to be undisputed.
The Mooneys' Tax Liability
Mooney owes federal income taxes for the 2002, 2003, 2004,
2013, and 2014 tax years, and Joni Mooney owes federal income
taxes for the 2002, 2003, 2013, and 2014 tax years.
(See Exs. 1-5.) In 2002 and 2003, the Mooneys filed
joint tax returns, which the IRS later audited. (Wallin Decl.
¶ 4.) This audit demonstrated that the Mooneys had
failed to report some taxable income and consequently owed
additional taxes, plus interest and penalties. (William
Mooney Test., Ex. 29 to Wallin Decl. [Doc. No. 123-1] at
44-45; Exs. 1-2.) As of June 9, 2016, the Mooneys' tax
liability, including income taxes, interest, and penalties
for those two years had an unpaid balance of $24, 065.46.
2004 tax year, William Mooney did not file a federal income
tax return, but the IRS recreated his net income for that
year, assessed taxes, and sent him notice of the tax
assessment and the penalties imposed. (Wallin Decl. ¶ 5;
Notice of Deficiency, Ex. 35 to Wallin Decl. [Doc. No.
123-3].) As of June 9, 2016, William Mooney's tax
liability for the 2004 tax year was $30, 546.41. (Ex. 3.)
2013 and 2014 tax years, the Mooneys again filed joint
federal income tax returns. (Wallin Decl. ¶ 7.) The IRS
assessed taxes for those years based on the Mooneys'
self-reported income. (Id.; see also Exs.
4-5.) The federal income tax, penalties, and interest for
those two tax years maintained an unpaid balance of $3,
138.66 as of June 9, 2016. (See Exs. 4-5.)
as of January 1, 2018, the assessments made against William
Mooney, including federal income taxes, interest, and
penalties for the tax years of 2002-2004 and 2013-2014
maintained a balance of $63, 355.21. (Kennedy Decl. ¶
5.) Likewise, as of that same date, the assessments made
against Joni Mooney, again including federal income taxes,
interest, and penalties for the 2002-2003 and 2013-2014 tax
years maintained an unpaid balance of $30, 240.11.
(Id. ¶ 7.) Additional interest continues to
accrue on these debts at a rate specified by federal law.
(Id. ¶¶ 5, 7.) Moreover, as shown in the
IRS transcripts of account, notices of the aforementioned
assessments and demands for payment were sent to the Mooneys.
(Id. ¶¶ 5, 7.) However, despite these
notices and demands for payment, the Mooneys have failed to
pay what they owe the IRS. (Id. ¶¶ 5, 9.)
The Mooneys' Civil Penalty Liability
2009, the Mooneys filed federal income tax returns for the
2004-2008 tax years. (Wallin Decl. ¶ 6.) A delegate of
the Secretary of the Treasury deemed all of these tax returns
to be frivolous, so a penalty was assessed for each of the
submitted tax returns. (Tax Returns & Penalty Approval
Forms, Exs. 30-34 to Wallin Decl. [Doc. No. 123-2].) As of
January 1, 2018, this penalty assessment against William
Mooney had an unpaid balance of $37, 907.70, and the penalty
assessment against Joni Mooney had an unpaid balance of $37,
630.81. (Kenney Decl. ¶¶ 9, 11.) The IRS again sent
the Mooneys notices of these assessments as well as demands
for payments. (Id. ¶¶ 10, 12; see
also Exs. 6-15.)
The Property at Issue
undisputed that in February of 1982, the Mooneys acquired by
deed a property located at 409 6th Avenue Northwest, Little
Falls, Minnesota. (William Mooney Dep. (“Mooney
Dep.”) [Doc. No. 124-2] at 13.) It is also undisputed that
the Mooneys officially owned this property until 2004.
(Id. at 21; Quit Claim Deed, Ex. 16 to Wallin Decl.
(“Deed”) [Doc. No. 123-1] at 1.) In 2004,
however, William Mooney purported to transfer the property to
the Harbor Holdings Trust, a “Pure Trust” that
was created in September of that year. (See Trust
Documents, Ex. 25 to Wallin Decl. [Doc. No. 123-1] at 10-20.)