UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF
Plaintiff, ) Case No.: 8:08-CV-0000-xxx-xxx
)
v. )
MOTION TO GRANT PETITION FOR
JUDICIAL
)
APPROVAL OF LEVY UPON A PRINCIPAL
Jeanne
Patriot ) RESIDENCE OR, IN THE ALTERNATIVE,
Defendant ) TO CONTINUE OCTOBER
2, 2008 HEARING
_____________________________________________________________________________________________
The
MEMORANDUM
Facts
On July 2, 2008, the
Revenue Officer Bryan Morris. (D.E. 2.)
On July 10, 2008, the Court issued a Notice and Order to
Show Cause ordering defendant to file a written objection to the petition
within twenty-five (25) days of service of the order. (D.E.
4.) The order specified that the defendant’s objections should
demonstrate that (1) the tax liability has been satisfied, (2) that defendant
possesses other assets from which the unpaid liabilities can be satisfied, or
(3) that applicable laws and administrative procedures relevant to the levy
were not followed by the Internal Revenue Service.
Argument
In order to be granted a hearing, defendant must rebut the
United States’ prima facie case by raising a genuine issue of material
fact as to whether: (1) the tax liability has been satisfied, (2) defendant
possesses other assets from which the unpaid liabilities can be satisfied, or
(3) applicable laws and administrative procedures relevant to the levy were not
followed by the Internal Revenue Service. 26 C.F.R. § 301.6334-1(d)(2). This Court also expressly advised defendant of this
burden in its July 10 order.
Defendant’s objections do not create a genuine issue of
material fact on any of the above grounds. Defendant’s first objection - that
the tax has been wrongfully assessed – improperly challenges the merits of the
underlying taxes. Defendant’s second objection - that notices of federal tax
liens were improperly filed - is irrelevant to the issue of whether the IRS
followed applicable laws and administrative procedures relevant to the levy.
Defendant’s final objection - that other collection alternatives exist - is
without merit because defendant has failed to identify any other asset of value
with which to satisfy her outstanding tax liabilities. Accordingly, defendant
has not raised any genuine issue of material fact, and the Court should grant
the
I. Defendant improperly challenges the merits of the underlying tax liability.
Defendant improperly objects to the merits of the
underlying taxes assessed against her. (D.E. 7, pp. 1-2, ¶¶ 1-6, p 3, ¶ 1, and
p. 5, ¶ 1.) “The taxpayer is not permitted to challenge the merits underlying
the tax liability in the proceeding.” 26 C.F.R. § 301.6334-1(d)(2). The court in In re
In light of the considerable procedural protections
available to all taxpayers, the premise that a judge or magistrate of a
District Court should serve as purveyor of tax liability determinations at a
Section 6334(e)(1)(A) proceeding is misguided.
Allowing any taxpayer to ignore repeated attempts by the Government to claim
tax liabilities, in favor of contesting all disputes in District Court
potentially years down the road and only when a levy appears imminent, would be
burdensome on the Courts, would encourage individuals to ignore the assessments
and allow information to grow stale, and would allow interest, where
appropriate, to unnecessarily accrue. 2004
In her objection, defendant alleges that she was the
victim of identity theft and the IRS 2 While
not relevant here, and not mentioned in defendant’s objection, the IRS abated
the corresponding tax assessments and associated interest related to the
purported identity theft. See Complaint, Exhibit 2, p. 5 of the 1993
transcript, p. 4 of 1994 the transcript.
3 Defendant’s tax
liability for the years at issue is based upon substitute for returns because
she failed to file her federal income tax returns as required by law. See
Complaint, Exhibit 2, pg. 1 of the 1993 and 1994 certified transcripts. (D.E. 2.) The
II. Defendant’s objection that the IRS failed to follow applicable laws and administrative procedures relevant to the levy is without merit.
Defendant’s objection that the IRS (1) improperly filed
notices of federal tax liens against her and (2) provided improper notice to
her fails to address the issue of whether the IRS followed all applicable laws
and administrative procedures relevant to the levy under 26 C.F.R. 301.6334-1(d)(2).
Simply stated, a notice of federal tax lien is not a prerequisite for an IRS
levy. American Acceptance Corp. v. Glendora Better Builders, Inc., 550 F.2d
1220, 1223 (9th
The applicable laws and administrative procedures relevant
to the levy, as provided for by 26 C.F.R. § 301.6334-1(d)(2),
contemplate notices of deficiency and opportunities for payment and are
codified in 26 U.S.C. §§ 6303 and 6330-31. “Before a levy can be effective, the
IRS must take certain procedural steps including: a tax assessment, a ten day
notice and demand for payment under 26 U.S.C. Sections 6303 and 6331(a),
expiration of the ten day period without payment by the taxpayer, a final
notice before levy under 26 U.S.C. Section 6331(d), a notice of intention to
levy with notification of rights to a Collection Due Process hearing under 26 U.S.C.
Section 6330 and expiration of a thirty day period following the notice of
intention to levy.” In re
Defendant’s objection contends that the IRS failed to
follow administrative procedures related to notices of federal tax liens, but
the filing of a notice of federal tax lien has no relevance to the IRS levy at
issue. Defendant’s objection confuses the federal tax lien that arises
statutorily upon assessment under IRC § 6321 with the Notice of Federal Tax
Lien filed in accordance with IRC § 6323 in order to gain priority over certain
competing claimants. “Pursuant to 26 U.S.C. § 6321, once the IRS assesses a tax
and the taxpayer refuses to pay after a demand is made, a lien arises in favor
of the United States upon all property and rights to property, whether real or personal,
belonging to the taxpayer. This lien is perfected against the taxpayer even
without the recording of a Notice of Federal Tax Lien. Choate v. Tubbs,
2004
4 If defendant wants
to challenge the notices of federal tax lien, then her remedy is to request a
hearing under 26 U.S.C. § 6320(a)(3)(B). 1995). When
there are no competing interests, the general rule is that the tax collector
prevails even if he has not recorded at all.
Accordingly, defendant’s objection creates no genuine
issue of material fact whether the IRS followed all applicable laws and
administrative procedures relevant to the levy.
III. Defendant’s objection that reasonable alternatives
for collection exist lacks merit.
No other reasonable alternative for collection exists.
Defendant’s objection to the contrary lacks merit because it fails to identify
an asset other than her residence with which to satisfy her outstanding tax
liability. In In re
Similar to the
IV. Motion to reschedule the October 2, 2008 hearing
If the Court does not grant this motion, authorize the
levy on defendant’s residence, and adjourn the October 2, 2008 hearing, the
Conclusion
This Court should grant the
Rather than attempting to show that the tax liability has
been satisfied, defendant improperly objects to the underlying merits of the
tax. Similarly, defendant’s objection that the IRS improperly filed notices of
federal tax lien is irrelevant to the issue of whether the IRS followed all
applicable laws and procedures pertaining to the levy because a notice of
federal tax lien is not a prerequisite for an IRS levy. Finally, the IRS knows
of no other alternative means for collection. Defendant’s lack of assets of
substantial worth value leaves the IRS with no collection alternatives.
Since the defendant has not presented any objections
appropriate under the regulation, she is not entitled to a hearing under the
terms of the order and 26 C.F.R. § 301.6334-1. “Unless the taxpayer files a
timely and appropriate objection, the court would be expected to enter an order
approving the levy of the principal residence property.” 26 C.F.R. §
301.6334-1(d)(2) (emphasis added). Accordingly, the
Respectfully
submitted,
ROBERT
E. O’NEILL
/s/Stephen
C. Dowdell
Stephen
C. Dowdell
Trial
Attorney, Tax Division
Ben
Franklin Station
Telephone:
(202) 353-9175
Facsimile:
(202) 514-4963
stephen.c.dowdell@usdoj.gov
CERTIFICATE
OF SERVICE IT IS HEREBY CERTIFIED that a copy of the foregoing
Jeanne
Patriot
/s
Stephen C. Dowdell