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United States v. Novell

United States District Court, W.D. Missouri, Southern Division

October 28, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
RUSSELL NOVELL, JAN NOVELL, and MISSOURI DEPT. OF REVENUE, Defendants.

FINAL JUDGMENT ON COUNTS II AND III OF THE COMPLAINT

DOUGLAS HARPOOL, District Judge.

Before the Court is the United States' Motion for Summary Judgment on Counts II and III of the Complaint. (Doc. 57). Upon consideration of the motion and the record in this case, the Court GRANTS the motion and ENTERS FINAL JUDGMENT ON COUNTS II AND III OF THE COMPLAINT.

ANALYSIS

Plaintiff's complaint in this matter brings three counts: Count I seeks to reduce tax assessments against Jan Novell to judgment, Count II seeks to reduce tax assessments against Russell Novell to judgment, and Count III seeks to foreclose on federal tax liens on the property located at 544 Four Mile Road, Long Lane, Missouri 65590 ("Property"). The Court approved a stipulation between the United States and the Missouri Department of Revenue concerning the relative priority of their lien interests on the Property under Count III, which resolved all claims against that defendant (Doc. 49). The Court also approved a stipulation between the United States and Jan Novel concerning Counts I and III, resolving all claims against that defendant. (Doc.55). Pursuant to the stipulation with Ms. Novell, the Court entered final judgment on Count I of the Complaint pursuant to Fed.R.Civ.P. 54(b). (Doc. 55).

The claims against Russell Novell, Counts II and III, remain unresolved. On September 16, 2014, the United States filed a Motion for Summary Judgment against Mr. Novell, seeking judgment on the unresolved claims. (Doc. 57). Mr. Novell did not respond to the motion.[1] The motion is now ripe for review.

Standard of Review

Summary judgment is proper if, viewing the evidence in the light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Reich v. ConAgra, Inc., 987 F.2d 1357, 1359 (8th Cir. 1993). "Where there is no dispute of material fact and reasonable fact finders could not find in favor of the nonmoving party, summary judgment is appropriate." Quinn v. St. Louis County, 653 F.3d 745, 750 (8th Cir. 2011). Initially, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets the initial step, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To do so, the nonmoving party must "do more than simply show there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

Application

As an initial matter, the Court notes that there are no genuine issues of material fact in this case. The United States met its burden to prove a lack of disputed material facts by citing affidavits and providing documentary support in favor of its position. The United States also noted that Mr. Novell effectively admitted the facts of the complaint by failing to deny any allegation made against him within his response to the complaint.[2] "In responding to a pleading, a party must... admit or deny the allegations asserted against it by an opposing party." Fed.R.Civ.P. 8(b)(1)(B). "An allegation... is admitted if a responsive pleading is required and the allegation is not denied." Fed.R.Civ.P. 8(b)(6). Because the United States met its burden to prove the absence of a genuine issue of material fact, the burden shifted to Mr. Novell to set forth specific facts showing a genuine issue for trial. Mr. Novell failed to satisfy this burden.

1. Reducing the Tax Assessments to Judgment.

The United States requests that its tax assessments against Mr. Novell be reduced to judgment in the sum of $657, 299.11. "Tax assessments made by the IRS are presumed correct and the taxpayer bears the burden of proving, by a preponderance of the evidence, that the assessment is erroneous." N. Dakota State Univ. v. United States, 255 F.3d 599, 603 (8th Cir. 2001). Certificates of Assessments and Payments, or IRS Forms 4340, are sufficient to establish the validity of the assessments. United States v. Gerads, 999 F.2d 1255, 1256 (8th Cir. 1993). "[F]or the purposes of summary judgment, the introduction of the Certificates of Assessments and Payments by the United States satisfies its burden of making a prima facie case, and the burden is then shifted to the taxpayer to demonstrate that the United States' assessment is incorrect." United States v. Crockett, No. 10-CV-04247-NKL, 2012 WL 174652 (W.D. Mo. Jan. 23, 2012). The United States is entitled to summary judgment where the taxpayer fails to "present evidence of an arbitrary or erroneous determination of his or her tax burden." Id. at *2. To establish the validity of the assessments made against Mr. Novell, the United States submitted IRS Forms 4340 along with an affidavit from IRS officer, Cynthia Davenport. Pl.'s Exs. 1-2. Ms. Davenport reviewed Mr. Novell's file on September 15, 2014 and calculated the total balance of Mr. Novell's assessed liabilities based on the Certificates of Assessments and Payments (Forms 4340) from August 12, 2014, the accrued interest, and the accrued statutory penalties. Similarly situated courts have held that such assessments and affidavits represent a sufficient evidentiary showing to shift the burden to the taxpayer. Crockett, 2012 WL 174652, at *3. Here, Mr. Novell presented no evidence that the assessments were erroneous or that the IRS arbitrarily determined his tax liability.[3] Thus, the United States is entitled to Summary Judgment on Count I in the amount of $657, 299.11, plus interest accruing according to law from September 15, 2014. Such amount reflects the federal income tax assessments made against Mr. Novell for income taxes for 2001, 2002, 2007, and 2008, and civil penalties for 2007 and 2008.

2. Foreclosure of the Tax Liens on the Property.

The government next requests the Court to enforce the federal tax liens against the property at issue in Count III. The Court finds such action appropriate.

The Internal Revenue Code provides that if any person who is liable to pay taxes either neglects or refuses to pay the assessed tax after notice of demand, the amount of the assessed tax plus any interest and penalties, "shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person." 26 U.S.C. § 6321. The lien arises at the time the assessment is made and does not terminate until the assessed liability is satisfied or otherwise unenforceable due to lapse of time. Id. at § 6322. "If the taxpayer does not pay the amount assessed, then the amount automatically becomes a tax lien on all property ...


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