Form of Notice

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[CCH Dec. 54,702(M)]
Emil P. Tolotti, Jr. v. Commissioner

Docket No. 3011-01L, TC Memo. 2002-86, 83 TCM 1436, Filed April 1, 2002

[Appealable, barring stipulation to the contrary, to CA-9.--CCH.]

[Code Sec. 1 ]

Individuals subject to tax: Summary judgment: Frivolous claims.--In the absence of a genuine issue of material fact, the IRS was entitled to summary judgment with respect to its determination to proceed with collection of a pro se individual's tax liabilities. The taxpayer's contentions that he was not liable for federal income taxes and that his income was not taxable were frivolous.

[Code Sec. 6323 ; Tax Court Rule 121 ]

Notice of federal tax lien: Individuals subject to tax: Collection due process: Verification requirements: Tax Court Rules: Summary judgment.--In the absence of a genuine issue of material fact, the IRS was entitled to summary judgment with respect to its determination to proceed with collection of a pro se individual's tax liabilities. Regardless of whether the IRS met state ( Nevada ) certification requirements, the form and content of the Notice of Federal Tax Lien sent to the taxpayer was controlled by federal law and was valid pursuant to Code Sec. 6323 .

[Code Sec. 6330 ]

Notice of federal tax lien: Collection due process: Verification requirements.--A pro se individual who received a notice of deficiency for the tax year at issue and failed to challenge the notice by filing a Tax Court petition, was barred from challenging the amount of his underlying tax liability in a collection review proceeding. Moreover, computer transcripts and a copy of Form 4340, Certificate of Assessments and Payments, was sufficient to meet the verification requirements of Code Sec. 6330(c)(1) .--CCH

Emil P. Tolotti, Jr., pro se. Sheara L. Gelman, for the respondent.

MEMORANDUM OPINION

ARMEN, Special Trial Judge: This matter is before the Court on respondent's Motion for Summary Judgment, as supplemented, filed pursuant to Rule 121(a). ¹ Respondent contends that there is no dispute as to any material fact with respect to this collection review matter and that respondent's determination (that the filing of the Notice of Federal Tax Lien for liabilities owing for the taxable year 1995 is appropriate) should be sustained as a matter of law.

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Fla. Peach Corp. v. Commissioner [Dec. 44,689 ], 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(a) and (b); Sundstrand Corp. v. Commissioner [Dec. 48,191 ], 98 T.C. 518, 520 (1992), affd. [94-1 USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner [Dec. 44,714 ], 90 T.C. 753, 754 (1988); Naftel v. Commissioner [Dec. 42,414 ], 85 T.C. 527, 529 (1985). The moving party bears the burden of proving that there is no genuine issue of material fact, and factual inferences will be read in a manner most favorable to the party opposing summary judgment. Dahlstrom v. Commissioner [Dec. 42,486 ], 85 T.C. 812, 821 (1985); Jacklin v. Commissioner [Dec. 39,278 ], 79 T.C. 340, 344 (1982).

As explained in detail below, there is no genuine issue as to any material fact, and a decision may be rendered as a matter of law. Accordingly, we shall grant respondent's Motion for Summary Judgment, as supplemented.

Background

On April 15, 1996 , petitioner filed a Form 1040, U.S. Individual Income Tax Return, for the taxable year 1995. Petitioner entered zero on virtually every line of the form and claimed a refund in the amount of $19,212. Petitioner attached a declaration to the form in which he stated that he is a "Union State (Nevada) citizen by birth who lives outside any federal enclave", not a citizen or resident of the United States as defined in the Internal Revenue Code, and that as a "non-taxpayer", he is not liable for Federal income tax. In the declaration, petitioner also stated that "No IRC section establishes 'liability' for an 'income' tax applicable to me or my activities" and that "No IRC section requires me to pay an 'income' tax".

On May 8, 1998 , respondent issued a notice of deficiency to petitioner. In the notice, respondent determined a deficiency of $2,299 in petitioner's Federal income tax for 1995, an addition to tax under section 6654(a) in the amount of $124.51, and an accuracy-related penalty under section 6662(a) in the amount of $459.80. The deficiency in income tax was based on respondent's determination that petitioner failed to report (1) a taxable pension distribution in the amount of $21,669 received from the U.S. Office of Personnel Management and (2) taxable dividends in the amount of $46 received from several payors.

On July 22, 1998 , John B. Kotmair, Jr. (Mr. Kotmair) of Westminster , Maryland , wrote a letter to respondent on behalf of petitioner. In the letter, Mr. Kotmair stated that petitioner had received the foregoing notice of deficiency, and that such notice was invalid because it was not signed under penalties of perjury and because it did not explain petitioner's appeal rights.

In August 1998, petitioner executed a document entitled "PRIVACY ACT RELEASE FORM AND POWER OF ATTORNEY", by which petitioner granted Mr. Kotmair the authority to "represent, inquire of and procure from the Internal Revenue Service any and all of the records, pertaining to income taxes, *** regarding the following years: 1980 through and including 1998." ² The record indicates that Mr. Kotmair wrote two additional letters to respondent on petitioner's behalf. Petitioner did not file a petition for redetermination with the Court challenging the notice of deficiency.

On April 27, 2000 , respondent filed with the Washoe County Recorder in Reno , Nevada , a Form 668(Y), Notice of Federal Tax Lien. The Notice of Federal Tax Lien states that petitioner has an outstanding Federal income tax liability of $1,688.79 for the taxable year 1995. The signature block on the Notice of Federal Tax Lien contains a facsimile signature.

On May 3, 2000 , respondent mailed to petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. On June 2, 2000 , petitioner filed with respondent a Request for a Collection Due Process Hearing that included allegations challenging the existence and amount of petitioner's tax liability for 1995 on the ground that petitioner was not informed of the statutory provisions imposing liability on him. Petitioner also argued that the Notice of Federal Tax Lien Filing was invalid because it did not include an original signature.

On July 10, 2000 , Appeals Officer Donna Fisher conducted an Appeals Office hearing in this matter that petitioner attended. Prior to the hearing, Appeals Officer Fisher reviewed an individual master file transcript dated April 4, 2000, and a computer transcript known as TXMODA dated June 30, 2000, regarding petitioner's account for the 1995 taxable year. The transcripts indicated that respondent made assessments against petitioner on October 19, 1998 , for the tax, addition to tax, and accuracy-related penalty set forth in the notice of deficiency dated May 8, 1998 , and for statutory interest. In addition, the transcripts indicated that on October 19 and November 9, 1998 , respondent issued to petitioner a notice and demand for payment of the assessed amounts.

During the Appeals Office hearing, petitioner requested that the Appeals officer identify the statutory provisions establishing petitioner's liability for Federal income tax. Petitioner was informed that although he would be permitted to raise any valid challenge he might have to the specific amounts of income that were reported to respondent by third-party payors, he would not be permitted to raise constitutional challenges to his underlying tax liability for 1995. The Appeals officer terminated the hearing after petitioner declined to discuss alternatives to collection.

On February 16, 2001, respondent issued to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 stating that respondent's determination (that the filing of the Notice of Federal Tax Lien for liabilities owing for the taxable year 1995 is appropriate) should be sustained. On March 2, 2001 , petitioner filed with the Court an imperfect Petition for Lien or Levy Action seeking review of respondent's notice of determination. ³ On April 6, 2001, petitioner filed an amended petition including the following allegations: (1) The Notice of Federal Tax Lien was not certified as required by the Uniform Federal Tax Lien Registration Act as adopted by the State of Nevada; (2) the Appeals officer conducted a sham hearing; (3) petitioner was denied a fair hearing by an impartial Appeals officer; (4) the Appeals officer failed to obtain verification from the Secretary that the requirements of any applicable law or admin istrative procedure were met as required under section 6330(c)(1); (5) the Appeals officer failed to identify the statutes (a) making petitioner liable for Federal income tax; (b) authorizing respondent's agents to enforce the Internal Revenue Code; and (c) permitting respondent to file a Notice of Federal Tax Lien; (6) respondent falsely claimed that petitioner earned foreign source income during 1995 and respondent failed to identify the specific source of such income; and (7) petitioner was denied the opportunity to challenge (a) the appropriateness of the collection action; and (b) the existence or amount of his underlying tax liability.

After filing an answer to the amended petition, respondent filed a Motion for Summary Judgment asserting that there is no dispute as to a material fact and that respondent is entitled to judgment as a matter of law. In particular, respondent contends that because petitioner received a notice of deficiency for 1995, petitioner is barred under section 6330(c)(2)(B) from challenging the existence or amount of his tax liability in this proceeding. Respondent further asserts that the Appeals officer's review of the individual master file transcript dated April 4, 2000, and the TXMODA computer transcript dated June 30, 2000, satisfied the verification requirement imposed under section 6330(c)(1). Petitioner filed an Objection to respondent's motion.

This matter was called for hearing at the Court's motions sessions held in Washington , D.C. , on November 21, 2001 , and January 23, 2002 . Counsel for respondent appeared at the hearings and presented argument in support of respondent's motion. Respondent filed a Supplement to Motion for Summary Judgment attaching thereto: (1) A copy of Form 4340, Certificate of Assessments, Payments and Other Specified Matters, with respect to petitioner's 1995 tax year; (2) a declaration by Appeals Officer Fisher; (3) a copy of the TXMODA computer transcript for petitioner's 1995 tax year; and (4) a transcript of the Appeals Office hearing. Respondent also filed a Second Supplement to Motion for Summary Judgment attaching thereto a certified copy of the Notice of Federal Tax Lien filed with the Washoe County Recorder in Reno , Nevada . Although no appearance was made by or on behalf of petitioner at either of the hearings, petitioner did file with the Court a written statement pursuant to Rule 50(c) and a response to respondent's motion, as supplemented.

Discussion

Section 6321 imposes a lien in favor of the United States on all property and rights to property of a person when a demand for the payment of taxes has been made and the person fails to pay those taxes. Such a lien arises when an assessment is made. Sec. 6322. Section 6323(a) requires the Secretary to file notice of Federal tax lien if such lien is to be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor. Lindsay v. Commissioner [Dec. 54,529(M) , T.C. Memo. 2001-285.

Section 6320 provides that the Secretary shall furnish the person described in section 6321 with written notice of the filing of a lien under section 6323. Such notice must be provided not more than 5 business days after the day of the filing of the notice of lien. Sec. 6320(a)(2). Section 6320 further provides that the person may request admin istrative review of the matter (in the form of an Appeals Office hearing) within 30 days beginning on the day after the 5-day period described above. Section 6320(c) provides that the Appeals Office hearing generally shall be conducted consistent with the procedures set forth in sections 6330(c), (d), and (e).

Section 6330(c) provides for review with respect to collection issues such as spousal defenses, the appropriateness of the Commissioner's intended collection action, and possible alternative means of collection. Section 6330(c)(2)(B) provides that neither the existence nor the amount of the underlying tax liability can be contested at an Appeals Office hearing unless the person did not receive a notice of deficiency or did not otherwise have an earlier opportunity to dispute such tax liability. Goza v. Commissioner [Dec. 53,803 ], 114 T.C. 176 (2000). Section 6330(d) provides for judicial review of the admin istrative determination in the Tax Court or Federal District Court .

Petitioner contends that respondent's Motion for Summary Judgment, as supplemented, should be denied on the ground that material issues of fact remain in dispute with regard to the statutory basis for his tax liability and the integrity of the Appeals Office hearing. As our summary of the amended petition reveals, petitioner's primary position is that the assessment made against him is invalid because respondent failed to demonstrate that he is liable for Federal income taxes.

Petitioner's argument is untenable for two reasons. First, there is no dispute in this case that petitioner received the notice of deficiency dated May 8, 1998 , and disregarded the opportunity to file a petition for redetermination with this Court. Under the circumstances, section 6330(c)(2)(B) bars petitioner from challenging the existence or the amount of his underlying tax liability for 1995 in this collection review proceeding.

In addition to the bar imposed by section 6330(c)(2)(B), petitioner's arguments that he is not liable for Federal income tax and that he did not receive amounts taxable as income during 1995 are frivolous and groundless. Goza v. Commissioner, supra. Petitioner asserts that respondent failed to identify the statutory provisions: (1) Making petitioner liable for Federal income tax; (2) authorizing respondent's agents to enforce the Internal Revenue Code; and (3) permitting respondent to file a Notice of Federal Tax Lien. Petitioner also maintains that respondent erroneously determined that petitioner earned "foreign source" income during 1995 and respondent failed to identify the specific source of such income. As the Court of Appeals for the Fifth Circuit has remarked: "We perceive no need to refute these arguments with somber reasoning and copious citation of precedent; to do so might suggest that these arguments have some colorable merit." Crain v. Commissioner [84-2 USTC ¶9721], 737 F.2d 1417, 1417 (5th Cir. 1984).

Petitioner next asserts that respondent cannot proceed with collection on the ground that the Notice of Federal Tax Lien filed with the Washoe County Recorder in Reno, Nevada, was not certified as required under Nev. Rev. Stat. Ann. sec. 108.829 (Michie 2001). ⁴ We note that the Notice of Federal Tax Lien in question was filed on Form 668(Y) and bears a facsimile signature.

Petitioner's reliance on Nevada State law in this matter is misplaced. It is well settled that the form and content of a Notice of Federal Tax Lien is controlled by Federal law. United States v. Union Cent. Life Ins. Co. [62-1 USTC ¶9103], 368 U.S. 291, 294 (1961). In this regard, section 6323(f)(3) provides:

(3) Form.--The form and content of the notice referred to in subsection (a) shall be prescribed by the Secretary. Such notice shall be valid notwithstanding any other provision of law regarding the form or content of a notice of lien.

Consistent with section 6323(f)(3), section 301.6323(f)-1(d)(1), Proced. & Admin. Regs., provides:

(d) Form--(1) In general. The notice referred to in §301.6323(a)-(1) shall be filed on Form 668, "Notice of Federal Tax Lien under Internal Revenue Laws". Such notice is valid notwithstanding any other provision of law regarding the form or content of a notice of lien. For example, omission from the notice of lien of a description of the property subject to the lien does not affect the validity thereof even though State law may require that the notice contain a description of the property subject to the lien.

Based upon the plain language of section 6323(f)(3) and the underlying regulation (quoted above), we hold that the Notice of Federal Tax Lien in question is valid notwithstanding any additional provision that may exist under Nevada State law.

We also reject petitioner's assertions that the Appeals officer was not impartial and/or conducted a sham hearing. Such assertions are belied by the record. See sec. 6330(b)(3).

Petitioner next contends that the Appeals officer failed to obtain verification from the Secretary that the requirements of all applicable laws and admin istrative procedures were met as required by section 6330(c)(1). We reject petitioner's contention inasmuch as the record establishes that the Appeals officer obtained and reviewed transcripts of account with regard to petitioner's taxable year 1995. The record also includes a Form 4340 that substantiates the information contained in the transcripts of account. See Davis v. Commissioner [Dec. 53,969 ], 115 T.C. 35, 40-41 (2000) (Form 4340 is presumptive evidence that an assessment was made against the taxpayer).

Federal tax assessments are formally recorded on a summary record of assessment. Sec. 6203. The summary must "provide identification of the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment." Sec. 301.6203-1, Proced. & Admin. Regs.

Section 6330(c)(1) does not require the Commissioner to rely on a particular document to satisfy the verification requirement imposed therein. Kuglin v. Commissioner [Dec. 54,661(M) ], T.C. Memo. 2002-51. In this regard, we note that the transcripts of account on which the Appeals officer relied in this case contained all the information prescribed in section 301.6203-1, Proced. & Admin. Regs. Id. Moreover, the Form 4340 substantiates the information contained in the transcripts of account.

Petitioner has not alleged any irregularity in the assessment procedure that would raise a question about the validity of the assessments or the information contained in the transcripts of account or the Form 4340. Id. ; Mann v. Commissioner [Dec. 54,658(M) ], T.C. Memo. 2002-48. Accordingly, we hold that the Appeals officer satisfied the verification requirement of section 6330(c)(1). Cf. Nicklaus v. Commissioner [Dec. 54,477 ], 117 T.C. 117, 120-121 (2001).

Petitioner has failed to raise a spousal defense, make a valid challenge to the appropriateness of respondent's intended collection action, or offer alternative means of collection. These issues are now deemed conceded. Rule 331(b)(4). In the absence of a valid issue for review, we conclude that respondent is entitled to judgment as a matter of law sustaining the notice of determination dated February 16, 2001 .

Finally, we mention section 6673(a)(1), which authorizes the Tax Court to require a taxpayer to pay to the United States a penalty not in excess of $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceeding is frivolous or groundless. The Court has indicated its willingness to impose such penalties in collection review cases. Pierson v. Commissioner [Dec. 54,152 ], 115 T.C. 576 (2000). Although we shall not impose a penalty on petitioner pursuant to section 6673(a)(1) in the present case, we admonish petitioner that the Court will consider imposing such a penalty should he return to the Court in the future and advance arguments similar to those that we have identified as frivolous.

To reflect the foregoing,

An order granting respondent's motion for summary judgment, as supplemented, and decision will be entered.

¹ All Rule references are to the Tax Court Rules of Practice and Procedure. Unless otherwise indicated, all section references are to the Internal Revenue Code, as amended.

² The above-described "power of attorney" identified John B. Kotmair, Jr., as a fiduciary for Save-A-Patriot Fellowship and stated that petitioner was a member of the group. Save-A-Patriot Fellowship has been identified as an organization that is opposed to the Federal income tax. See Save-A-Patriot Fellowship v. United States [97-1 USTC ¶50,229], 962 F. Supp. 695 (D. Md. 1996).

³ At the time that the petition was filed, petitioner resided in Reno , Nevada .

⁴ Nev. Rev. Stat. Ann. sec. 108.829 (Michie 2001) provides in pertinent part:

Certification of notices of liens, certificates or other notices affecting federal liens by the Secretary of the Treasury of the United States or his delegate *** entitles them to be filed and no other attestation, certification or acknowledgment is necessary.

 

 

[2001-2 USTC ¶50,647] Lorentz Opdahl, Plaintiff v. United States of America , Defendant

U.S. District Court, D.C., 98-0262 (TPJ), 8/16/2001 , 2001 U.S. Dist. LEXIS 14098.

[Code Sec. 6323 ]

Tax liens: Notice: Uncertified notice.--Notices of tax liens challenged by a pro se taxpayer that were in standard IRS form and filed in the taxpayer's state of residence, but which were not certified, were valid. The IRS was not required to certify the notices under applicable state ( South Dakota ) law to enforce them.

[Code Sec. 7122 ]

Compromise agreements: Writing requirement: Proper form.--A pro se taxpayer failed to prove that he had reached an enforceable settlement agreement with the IRS. He did not allege that he submitted an offer on the proper IRS forms, he could not produce a written offer or acceptance of an offer, and no written offer or acceptance existed in the IRS file.

[Code Secs. 6103 and 7431 ]

Disclosures: Necessary to collection activity exemption.--An allegation made by a pro se taxpayer, who was challenging notices of tax liens, that the IRS made unauthorized disclosures of his return information was rejected. Limited information concerning the taxpayer's tax deficiencies that was included in the notices of lien and levies was necessary to IRS collection activities.

[Code Sec. 7433 ]

Damages: Unauthorized collection: Statute of limitations.--A damage claim made by a pro se taxpayer for allegedly unauthorized collection was barred because it exceeded the two-year statute of limitations. The taxpayer had reasonable opportunities to discover the essential elements of a possible cause of action for the unauthorized collection as early as four years prior to filing his lawsuit.

[Code Sec. 7421 ]

Anti-Injunction Act: Application of statute.--Claims for declaratory and injunctive relief made by a pro se taxpayer to prevent the IRS from seizing his property were barred under the Anti-Injunction Act.

Lorentz Opdahl, Hudson, S.D., pro se. Samuel Alvin Mitchell, Pat S. Genis, Department of Justice, Washington, D.C. 20530, for defendant.

MEMORANDUM AND ORDER

JACKSON, District Judge:

Presently pending before the Court are the parties' cross motions for summary judgment and plaintiff's motion for partial summary judgment. Plaintiff, Lorentz Opdahl, challenges tax liens and levies filed against him by the Internal Revenue Service ("IRS"). He contends that the liens and levies are invalid because they were not properly "certified." He also contends that he reached an agreement with the IRS to settle all of his outstanding tax liabilities for $289,000, but that the IRS has failed to honor that compromise. ¹ His amended complaint seeks the return of property allegedly seized by the IRS, an injunction to prevent the IRS from seizing his property, a declaration that a settlement exists between him and the IRS, and a determination that the IRS made unauthorized disclosures and committed a wrongful collection pursuant to 26 U.S.C. §7431 & 7433.

The Court concludes that the notices of tax liens are valid under 26 U.S.C. §6323(f) and Rev. Rul. 71-466, 1971-s C.B. 409. The notices are in standard IRS form and were filed in Mr. Opdahl's state(s) of residence, as required by 26 U.S.C. §6323(f). Notices of tax lien need not be "certified" under state law, as plaintiff contends. See 26 U.S.C. §6323(f)(3) ("The form and content of the notice referred to in subsection (a) shall be prescribed by the Secretary. Such notice shall be valid notwithstanding any other provision of law regarding the form or content of a notice of lien.").

Mr. Opdahl has not proved that he had an enforceable settlement agreement with the United States . The parties agree that any alleged settlement between Mr. Opdahl and the United States was made orally, not in writing. 26 U.S.C. §7122 governs the settlement of tax liabilities and provides that "the Secretary [of Treasury] may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense. . . . " Section 7122 "is the exclusive method by which tax cases may be compromised." Brooks v. United States [87-2 USTC ¶9626], 833 F.2d 1136, 1145 (4th Cir. 1987) (citing Botany Worsted Mills v. United States [1 USTC ¶348], 278 U.S. 282, 288-89, 73 L.Ed. 379, 49 S.Ct. 129 (1929) (prior version of statute)). Although §7122 does not on its face require an agreement to be in writing, it is clear from the case law that all settlement offers must be in writing pursuant to Treas. Reg. §301.7122-1 and must otherwise comply with the requirements of 26 U.S.C. §7122. See Boulez v. Commissioner of Internal Revenue [87-1 USTC ¶9177], 258 U.S. App. D.C. 90, 810 F.2d 209, 212 (D.C. Cir. 1987) ("We agree with Boulez that the statute does not of its own accord forbid oral compromise agreements, but conclude that the regulation, which requires that all compromises be reduced to writing, has the force and effect of law, and that the Director [of International Operations of the IRS] lacked authority to waive it."). Treasury Regulation §301.7122-1 (1987), which was in effect at the time of the purported settlement in the instant case, provided:

Procedure with respect to offers in compromise--

(1) Submission of offers. Offers in compromise shall be submitted on forms prescribed by the Internal Revenue Service which may be obtained from district directors of internal revenue, and should generally be accompanied by a remittance representing the amount of the compromise offer or a deposit if the offer provides for future installment payments. . . .

[(2)] Acceptance. An offer in compromise shall be considered accepted only when the proponent thereof is so notified in writing.

Treas. Reg. §301.7122-1(d) (1987) (emphasis added); see also Boulez [87-1 USTC ¶9177], 810 F.2d at 213 n.33. Mr. Opdahl does not allege that he submitted any offer on proper IRS forms, he has not produced a written acceptance of the offer, and the IRS file contains no written offer or acceptance. See Def's Rule 108 Statement, P16 and Declaration of Crystal Foster, PP3-4. Plaintiff admits that the settlement was not written but contends that under the common law, "nothing was needed in writing, the moment the tender for payment was accepted," otherwise the property should have been returned. See Pl's Response at P16. Such an argument was addressed and dismissed in Brooks, which held that "the exclusivity of §7122 prevents the application of general contract rules to enforce apparent agreements between the IRS and taxpayers." Brooks [87-2 USTC ¶9626], 833 F.2d at 1147. Thus, the Court concludes that there was no valid settlement in this case.

Plaintiff's wrongful disclosure claims under 26 U.S.C. §7431 also fail. To bring a cause of action under 26 U.S.C. §7431, plaintiff must show that a U.S. employee disclosed taxpayer's tax return information in violation of 26 U.S.C. §6103, which forbids the disclosure of tax return information "except as authorized by this title." 26 U.S.C. §6103(a). One of the exceptions is 26 U.S.C. §6103(k)(6), which authorizes internal revenue officers in connection with their official duties relating to any collection activity to disclose return information "to the extent that such disclosure is necessary in obtaining information, which is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected or with respect to the enforcement of any other provision of this title." Federal courts have held that disclosure of return information in notices of levy is "necessary to the collection activity" and thus falls within the §6103(k)(6) exemption. Farr v. United States [93-1 USTC ¶50,229], 990 F.2d 451, 455 (9th Cir. 1993); see also Long v. United States [92-2 USTC ¶50,431], 972 F.2d 1174, 1180 (10th Cir. 1993) ("It is undisputed that §6103(k)(6) authorizes an IRS employee to disclose tax return information in the issuance of liens and levies. Thus, the general rule is that liens and levies do not constitute unauthorized disclosures under §6103."). The limited information concerning plaintiff's tax deficiencies included in the notices of lien and levies was "necessary to the collection activity" and did not violate 26 U.S.C. §7431.

Plaintiff's claim for unauthorized collection of $120,000 under 26 U.S.C. §7433 is barred by the statute of limitations, which provides that an action "may be brought only within two years after the date the right of action accrues." 26 U.S.C. §7433(d)(3). A right of action accrues when the taxpayer has had "reasonable opportunity to discover all essential elements of a possible cause of action." Treas. Reg. §301.7433-1(g)(2). Plaintiff had a reasonable opportunity through his criminal trial and other proceedings to discover that the IRS had not credited his tax account for the $120,000 he allegedly paid to an IRS agent. Moreover, as early as 1994, plaintiff filed civil suits to recover this money, indicating he knew that it had not been credited to his account. He did not file the instant case until February 2, 1998 , well over two years after he had reasonable opportunity to discover all elements of the potential claim. ²

Plaintiff's requests for declaratory and injunctive relief are barred by statute. See 26 U.S.C. §7421 & 28 U.S.C. §2201(a). ³

For the foregoing reasons and for substantially the reasons raised in defendant's opposition to plaintiff's motion for partial summary judgment, it is, this 16th day of August, 2001.

ORDERED, that defendant's motion for summary judgment [19] is granted; and it is

FURTHER ORDERED, that judgment is entered for the defendant; and it is

FURTHER ORDERED, that plaintiff's motion for summary judgment [18] is denied; and it is

FURTHER ORDERED, that plaintiff's motion for partial summary judgment [26] is denied.

¹ Some of the background facts of this alleged compromise are contained in the Eleventh Circuit's opinion in United States v. Opdahl, 930 F.2d 1530 (11th Cir. 1991), which overturned plaintiff's bribery conspiracy conviction.

² The Court observes that many of plaintiff's claims under 26 U.S.C. §7431, discussed supra, are also barred by the statute of limitations.

³ Plaintiff's amended complaint does not dispute the calculation of the tax assessment, so those claims are not before the Court. To the extent that plaintiff raises such claims in his briefing, the Court observes that the Secretary of the Treasury (or his designee) is authorized to make tax assessments pursuant to 26 U.S.C. §6201, and the assessments are presumed correct. See Welch v. Helvering [3 USTC ¶1164], 290 U.S. 111, 115, 78 L.Ed. 212, 54 S.Ct. 8 (1933). The burden is on the taxpayer to offer evidence to show that the Commissioner's determination is invalid, which plaintiff has not done. See Helvering v. Taylor [35-1 USTC ¶9044], 293 U.S. 507, 515, 79 L.Ed. 623, 55 S.Ct. 287 (1935). The only evidence plaintiff offers to rebut the assessments is a hand-written page of figures that plaintiff claims represents his accountant's calculation of plaintiff's tax liability for 1976 to 1985. This unidentified document is insufficient to rebut the IRS assessments. This same reasoning also applies to plaintiff's motion for partial summary judgment, which challenges the validity of an IRS assessment for tax year 1983 but offers no evidence in support thereof.

 

 

[2001-2 USTC ¶50,514] Stephen James Larrew, Plaintiff v. United States of America , Defendant

U.S. District Court, No. Dist. Tex. , Dallas Div., Civ. 3:01-CV-350-M, 6/11/2001

[Code Secs. 6065 and 6323 ]

Tax liens: Conflicts of law: Removal: Certification of lien: State law: Verification by IRS.--The removal of an individual's suit challenging a tax lien to federal court was proper. Code Sec. 6323 did not require that the IRS certify the tax lien under state ( Texas ) law, but merely that it file the lien according to state law. Because the form and content of the tax lien involved a federal question, removal was proper. Moreover, Code Sec. 6065 did not require the IRS to verify the lien; the statute applies to notices submitted by taxpayers, not to notices issued by IRS agents.

ORDER

LYNN, District Judge:

The Court has before it Plaintiff's Motion to Dismiss and Remand, filed on March 16, 2001 in the above-entitled case. Having considered the motion, the response, the reply thereto, and the applicable law, this Court is of the opinion that the motion should be DENIED. The Court also has before it a summary judgment motion, filed by the United States in its response to Plaintiff's Motion to Dismiss and Remand. No response was made by Plaintiff to that motion. Having considered the applicable authorities, the Court determines that the motion for summary judgment is meritorious and should be GRANTED, but only to the extent indicated below.

On October 19, 1998 , the Internal Revenue Service filed a Notice of Tax Lien in the Dallas County property records. The Notice is attached to the "Motion for Judicial Review of Documentation or Instrument Purporting to Create a Lien," which Plaintiff filed in the 116th Judicial District Court of Dallas County, Texas (and which is attached to the "United States' Notice of Supplement to the Record from State Court," filed herein on February 21, 2001). Plaintiff alleged that the County Clerk should not have filed the Notice of Federal Tax Lien because it did not contain the requisite certification required by state law, and therefore should not be accorded lien status. Although not originally named, the United States removed this case to this Court. Plaintiff asserts that this case was improperly removed and should be remanded to state court. He claims that removal is improper because his suit in state court required a determination exclusively under Texas law and the United States was not named in his suit as a party in interest.

The United States in its Notice of Removal purported to remove this case pursuant to 28 U.S.C. §§1441, 1442(a)(1) and 1444, "because said action in State Court: (a) involves a determination under 28 U.S.C. §2410 for quite [sic] title to property in which the United States asserts a lien; and (b) involves a determination under 28 U.S.C. §§1331 and 1346(e) of questions of federal tax law."

Plaintiff contends that 26 U.S.C. §6323(f), which sets out the place and form for filing a federal tax lien, provides that the notice of such tax lien shall be filed "under State laws," and that, therefore, no federal question is here presented. Having reviewed §6323(f)(1)(A), it is apparent that "under State laws," which appears in §6323(f)(1)(A), actually refers to the place for filing, not the form of filing. It is §6323(f)(3) which prescribes the form:

The form and content of the notice referred to in subsection (a) shall be prescribed by the Secretary. Such notice shall be valid notwithstanding any other provision of law regarding the form or content of a notice of lien.

The court in Bertelt v. United States (In re Bertelt), 206 B.R. 579 (Bankr. M.D. Fla. 1996) specifically dealt with the issue now before this Court. There, the debtor sought a determination that no liens existed on his property, alleging that the notices of liens were procedurally defective because, among other things, they were not certified as required by Florida law. Id. at 581. The court in Bertelt stated that ". . . the federal law supersedes any other law, including state law, relating to the content and form of . . . [the] notice." Id. at 583. See also In re O'Gorman-Sykes [2000-1 USTC ¶50,174], 245 B.R. 815, 818 (Bankr. E.D. Va. 1999). The court in Bertelt further stated that the federal law is "accurately stated" in Revenue Ruling 71-466:

(3)27 Acknowledgment of notices of tax liens . . . would, therefore, not appear to be essential, inasmuch as there are no Federal statutory provisions specifically requiring acknowledgment of such instruments.

Id. at 584. See also United States v. Letscher [99-2 USTC ¶50,947], 83 F.Supp.2d 367, 377-78 (S.D.N.Y. 1999). The court in Bertelt held that the notices were properly filed. Bertelt, 206 B.R. at 586.

Plaintiff correctly notes that the cases cited above rely on Revenue Ruling 71-466, but he is incorrect when he asserts that 26 U.S.C. §6065 invalidated Revenue Ruling 71-466 with respect to tax lien notice requirements. Section 6065 states:

Except as otherwise provided by the Secretary, any return, declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall contain or be verified by a written declaration that it is made under the penalties of perjury.

Section 6065 does not apply to notices issued by IRS agents. Morelli v. Alexander [96-1 USTC ¶50,292], 920 F.Supp. 556, 558 (S.D.N.Y. 1996). The Notice of Federal Tax Lien here is such a notice.

Because federal law clearly governs the validity of the Notice of Federal Tax Lien filed by the Internal Revenue Service on Mr. Larrew's property, and because this Court has original jurisdiction of cases involving a federal question, Plaintiff's Motion to Dismiss and Remand is DENIED. Further, because, as a matter of law, a Notice of Federal Tax Lien need not contain any state law certification or acknowledgment, and because that is the only issue presented in the Plaintiff's original filing, Defendant's summary judgment motion is GRANTED to that extent. All other relief sought by the Defendant is DENIED, without prejudice to being asserted in any other appropriate action.

This matter is now finally concluded. All costs of court are taxed against the Plaintiff.

SO ORDERED.

 

 

[98-1 USTC ¶50,350] Frank Krueger, Petitioner v. Sharon Kennedy, Chippewa County Register of Deeds, Michael Hayes Dettmer, United States Attorney, for the Western District of Michigan, and Oksana Xenos, District Counsel for the Internal Revenue Service, Respondents

U.S. District Court, West. Dist. Mich. , No. Div., 2:96-CV-109, 3/20/98, Adopting and remanding the Magistrate Judge's Report and Recommendation at 98-1 USTC ¶50,349

[Code Secs. 6321 and 6323 ]

Lien for taxes, validity of: Creation of lien: Priority: Conflicts of law.--An individual's claim that notices of federal tax liens recorded against his property were invalid under state (Michigan) law was dismissed because federal law governed the form and content of the notices. The notices were properly certified in accordance with federal law because they were filed on Form 668 and signed by facsimile signature of a revenue officer. Even if the notices had not been properly certified, the taxpayer lacked standing to challenge the certification because he did not qualify as a member of one of the classes protected under Code Sec. 6323(a) . Union Central Life Insurance Co., SCt (62-1 USTC ¶9103) , followed.

[Code Sec. 6323 ]

Lien for taxes, validity of: Notice of lien.--An individual's allegation that he did not receive a tax assessment or a notice and demand for payment was remanded to the Magistrate for further consideration of postdecision papers filed by the government. Those documents included an affidavit and exhibits demonstrating that notice and demand for payment had been sent to the taxpayer.

Frank Krueger, pro se.

OPINION ADOPTING IN PART MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

QUIST, District Judge:

The Court has before it Petitioner Frank Krueger's ("Krueger") Response To Magistrate's Decision and Respondent United States' Objection To Report And Recommendation, in which the parties each object to certain portions of Magistrate Judge Timothy P. Greeley's report and recommendation in this matter. In this case, Krueger, acting pro se, filed a petition for writ of mandamus asking that Respondent Sharon Kennedy ("Kennedy"), Register of Deeds for Chippewa County , be ordered to remove several federal tax liens recorded against Krueger's property. Krueger's asserted ground for removal of the liens was that they failed to comply with M.C.L. §211.664. The Magistrate Judge found that Krueger's claim regarding the invalidity of the notices of lien should be dismissed because the notices complied with federal law and Krueger did not have standing to challenge the form of notice. However, the Magistrate Judge found that the case should not be dismissed because an issue remained regarding whether Krueger receive a tax assessment or notice and demand for payment.

The Court has conducted a de novo review as required by 28 U.S.C. §636(b)(1) and concludes that the Magistrate Judge correctly found that Krueger's claim regarding the invalidity of the notices of lien under Michigan law should be dismissed because federal law governs the form and content of the notice. See United States v. Union Central Life Ins Co. [62-1 USTC ¶9103], 368 U.S. 291, 294, 82 S.Ct. 349, 351 (1961). With regard to the Magistrate Judge's conclusion that dismissal was not proper, the Court notes that the Government has addressed Krueger's allegation that he did not receive an assessment or notice and demand for payment in its objection to the Report and Recommendation. In addition, the Government has also submitted the affidavit of John Lindquist, which includes several exhibits that show notice and demand for payment was sent to Krueger. The Magistrate Judge did not have the benefit of these documents at the time he issued his Report and Recommendation. Therefore, the Court will remand this matter to the Magistrate Judge for consideration of the post-decision papers filed by the Government.

For the foregoing reasons, the Court will adopt the Magistrate Judge's Report and Recommendation in part on Krueger's claim that the notices of lien failed to comply with M.C.L. §211.664. The Court will remand the case to the Magistrate Judge for further consideration of whether Krueger's claim that he did not receive a tax assessment or notice and a demand for payment should be dismissed, in light the Government's post-decision filings.

An Order consistent with this Opinion will be entered.