PATRIOT ATTORNEY, ESQ. (Pro Hac Vice) Attorneys for Plaintiff IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF WYOMING MARILYN PATRIOT, ) Plaintiff, ) ) v. ) Civil No. 2:08-CV-156-CAB ) UNITED STATES OF AMERICA, ) Defendant. ) ________________________________________________________)
Plaintiff, by undersigned counsel, provides the following response to Defendant’s First Set of Interrogatories.
Plaintiff respectfully reserves the right to supplement any or all of the discovery responses contained herein should additional, potentially responsive information or materials become available. In reserving this right, however, Plaintiff does not admit that any response herein is incomplete or will require supplementation.
INTERROGATORY NO. 1: Please identify all documents sent by plaintiff to the Internal Revenue Service (“IRS”) and all communications between Plaintiff and the IRS regarding the levies at issue in this case, including but not limited to the correspondence and communications referred to in Paragraph 11 of the Amended Complaint and any substantiated documentation o evidence provided to the IRS in compliance with 26 C.F.R. 301.7433-1(e)
Response:
Regarding the levies, Plaintiff had sent many letters to the IRS over a period of many years, but cannot find copies of all of them. Some documents are produced as Plaintiff’s response to the government’s POD request No. 1.
The IRS is responsible for keeping records and should have copies of everything Plaintiff had mailed to them.
There were few phone calls such as on August 8, 2004 with Ms. Gage (ID# 1605567), on Sept. 9, 2005 with Mr. Buck, and on October 7, 2005. Plaintiff does not remember or have a record of other phone calls.
INTERROGATORY NO. 2: Please describe what damages you are seeking in this action, including the amount of damages and how they are calculated.
Response:
According to 26 U.S.C. § 7433(b):
In any action brought under subsection (a) or petition filed under subsection (e), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000, in the case of negligence) or the sum of—
(1) actual, direct economic damages sustained by the plaintiff as a proximate result of the reckless or intentional or negligent actions of the officer or employee, and
(2) the costs of the action.
Plaintiff is seeking damages as outlined in section 7433 in an amount equal to the lesser of $1,000,000 or the sum of damages and costs. The Judge and/or the Jury will determine what that specific amount will be.
However, Plaintiff believes that section 7433 damages apply as per each violation. On that basis, plaintiff believes that the amount of damages should be multiplied by the number of facts found to be a violation by the jury.
Plaintiff also believes that, according to 26 USC 6343(b), property that has been wrongfully levied should be returned.
INTERROGATORY NO. 3: Identify each act of the IRS that you contend constituted “unlawful collection activity” and for each act alleged “unlawful collection activity” identified, state the date on the alleged unlawful collection activity occurred, the witnesses who have knowledge of the alleged unlawful collection activity, and identify the statute, rule or regulation that was alleged violated.
Response:
In his Memorandum Opinion, the Honorable Judge Urbina wrote: “The facts and circumstances ….. raise considerable questions about the propriety and duration of the levy placed on the plaintiff’s pension. The plaintiff alleges that the levy withdrew fifty-five percent of her pension each month, which if proved to be true, exceeds the statutory maximum of fifteen percent. See 26 U.S.C. § 6331(h). She provides documentation which corroborates her claims that the IRS continued to levy her pension after the $6,573.00 unpaid balance was satisfied, and she submits a letter from the Michigan Department of Management & Budget stating that it sent the IRS a total of $49,168.08 from her pension……”
In addition, other violations include, but not limited to, the followings:
IRS violation no. 1 – It is not clear if Plaintiff was paid interest on the money refunded late to her – since no explanation in this regard was given along with the checks that were sent to her.
IRS violation no. 2 --- Plaintiff filed and paid timely on her returns for years 1985 through 1993. However, the IRS, in 2001, penalized Plaintiff $500 per year (Exhibit D). Such a penalty was illegal for some of these years due to the statute of limitations.
Assessment is normally six weeks after filing, and the statute of limitations begins after the sixth week. It was more than ten years after the assessment, for some of these years, when the penalty was imposed. Regardless of whether the $500 penalty is right or wrong, the IRS penalties for some of these years were illegal since they were imposed after the statute of limitations had run.
IRS violation no. 3 --- The “Notice of Levy” was issued for $6,573.00 (Exhibit D). Can Defendant present copies of other notices of levy pursuant to which tens of thousands of dollars of Plaintiff’s money (Exhibits E & F) were levied? Inasmuch as Plaintiff does not have such copies, Plaintiff alleges deficiency in notice and Defendant’s violation of 26 USC §6303.
IRS violation no. 4 --- Did the IRS give notice and an opportunity for a hearing before the levy of any amount beyond what is listed in Exhibit D? Plaintiff’s records indicate that she received notice only for the amount listed in Exhibit D. Unless Defendant can show otherwise, Plaintiff alleges Defendant’s violation of 26 USC §6330 and §6320.
IRS violations nos. 5 to 16 --- For the year 1994, in the DOJ/IRS report, pp. 1 to 10, lists the last payment as October 31, 2005. The tax lien was not released until May 2007. 26 USC §6331(c) states that a levy continues “until the amount due … is fully paid” – but not after that period. The levy against Plaintiff was officially still on the record, despite the fact that her obligations – whether agreed with or not – had been fully met and paid for. Releasing the levy should have been done subsequent to the last payment, and not a year-and-a-half later – a clearly illegal omission by the IRS.
This violation – keeping the levy on record for an unreasonable period after the amount due was fully paid – is repeated for years 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1997, 1999, and 2000. Also, tax year 1998 does not show that the levy has been released yet, although the balance is zero. The total is twelve violations for failure to release levy on time.
IRS violation no. 17 --- On May 25, 2006, Mrs. Wallace met with IRS Agent Thomas Bentley in Billings, MT. After Plaintiff discussed her situation, the agent told Plaintiff that he was sending the pension payor a fax and was stopping the levy. The agent immediately ended the levy while Plaintiff was still in his office. In about a month, the second pension check after this meeting, Plaintiff began receiving her full pension payments without any IRS deductions. Agent Bentley’s action was an implicit IRS admission that the levy was already in excess of at least $1.00 and that the garnishment was illegal for at least one day. If the IRS did not illegally have a levy for a day more than what was necessary, then why did Agent Bentley stop the levy immediately on that day?
IRS violation no. 18 --- On March 16, 2007, the IRS sent Plaintiff two checks totaling $10,954.18 (Exhibit A). This is clearly an acknowledgment by the IRS that the levy was excessive or unauthorized in the amount which they levied. If the IRS had not levied $1.00 more than what was necessary, then why did they issue a refund?
As shown, IRS agent Bentley ended the levy in May 2006, but the refund was not received until March 2007. Normally, a refund is sent within six weeks. Plaintiff’s husband received his refund from an excess in Social Security levy in about six weeks. In Plaintiff’s case, it took almost a year. This delay is clearly reckless, negligent or illegal. As a result of this, the amount of interest and damages must be increased.
IRS violation no. 19 --- Reckless, intentional, or negligent discrepancies for years 1985 to 1993
For tax year periods 1985 through 1993, Plaintiff filed tax returns on time and jointly with her husband. Plaintiff’s husband, Mr. Fred Wallace, received a “Certificate of Release of Federal Tax Lien” (serial no. 849844493) showing March 2, 1998 as date of assessment for all of these years and an unpaid balance of $500 per year, totaling $4,500.
Defendant did not include on the Certificate the interest amount which was levied. While Plaintiff was under the impression that she was levied for $4,500 for years 1985 through 1993, the approximate total Plaintiff had actually paid was $6,438 – according to the IRS/DOJ 111-page report. Plaintiff was put in a situation where she was told an amount owed and paid on the Certificate less than what was actually levied.
IRS violation no. 20 --- Reckless, intentional, or negligent discrepancies for tax year 1994
For tax year 1994, Defendant offers the court two certificates of official records – both of which are certified as to accuracy but contradictory to each other as to amount owed.
According to the IRS report, if one adds all the amounts allegedly owed by Plaintiff (on pages 1 to 10), the sum total would be $28,108.65; this 1994 report showed Plaintiff still owing $457.13. However, according to pages 107 to 111, Plaintiff owed $745 (penalty plus interest) – and a balance equal to zero. Certainly, two different “certified” amounts “owed” for the same year cannot be accurate – especially since one report was issued only two months after the other.
The first $945.54 payment toward year 1994 was levied on February 3, 2003 prior to the IRS assessment date of February 17, 2003. A “credit” of $393.16 was applied on January 28, 2003. In other words, the IRS was levying Plaintiff and making payments for that particular year even prior to ascertaining whether or not Plaintiff owed money for that year. This is a clearly illegal action by the IRS.
In addition, a “Certificate of Release of Federal Tax Lien” (serial no. 148836803) shows a February 17, 2003 date of the year 1994 assessment for an amount of $16,529.46.
Another “Certificate of Release of Federal Tax Lien” (serial no. 849844493) issued to Plaintiff’s husband shows an unpaid balance of $500 for year 1994. Plaintiff and her husband filed jointly for that year.
In summary, and according to IRS records, Plaintiff had an unpaid balance of $16,529.46 (according to certificate no. 148836803), paid a balance of $28,108.65 (according to DOJ/IRS report on pages 1 to 10), but owed only $745 (according to pages 107 to 111 of report) or $500 (according to certificate no. 849844493).
IRS violation no. 21
There are potential violations of sections 7214(a)(2), 6751(b)(1), and 7491(c).
INTERROGATORY NO. 4: On what date do you contend that the IRS should have released its levies on your pension?
Response:
If the amount owed by Plaintiff is valid with regard to what was listed on the notice of levy imposing penalties for 1985-1994, then the levy should have ceased immediately after the IRS satisfied the amount of penalties that were listed. It did not. It should be noted that years 1985 to 1993 were filed and paid on time, and the penalties imposed in 2001 were outside the statute of limitations for some of these years.
In addition, the Levy grossly exceeded 15% throughout – and sometimes reaching over 60%. For this reason, Plaintiff sued due to the excessive levy. Congress did pass laws to award Plaintiff damages when such misconduct is pursued by the IRS.
The IRS has specific dates on when the levies took place, and what amount was satisfied on what date. At some point, there was also a simultaneous levy on Plaintiff’s social security checks.
INTERROGATORY NO. 5: State the basis for your contention that the levies should have been released on the date identified in Interrogatory No. 4?
Response:
First, the May 14, 2001 Notice of Levy does not specifically state under which statute it has been issued by the IRS.
Second, the April 27, 2002 Notice of Levy does not specifically state under which statute it has been issued by the IRS. It says: “These are levied to the extent they are not exempt as explained on the back of Part 5 of this form.” Based on the Notice copy that Plaintiff’s counsel has, there is no “Part 5” on the back of the form. There are only excerpts from the Internal Revenue Code listing Section 6331 and other related IRC sections.
INTERROGATORY NO. 6: On what date did you first contact the IRS to inform the IRS that you believed the levies on your pension to be wrongful?
Response:
Once her pension checks were levied upon, Plaintiff immediately initiated contacts with the pension office in Michigan to stop the levy believing that it is illegal. Plaintiff now knows that based on Michigan state constitution and laws, pension checks issued to retired Michigan state employees are not subject to garnishment.
Plaintiff does not remember the first date she contacted the IRS with regard to her pension. However, Plaintiff has been communicating with the IRS over a long period of time, and the IRS should have a copy of all letters sent to them by Plaintiff. In particular, The IRS should have copies of the administrative claims sent to them by Plaintiff.
INTERROGATORY NO. 7: Identify every person, other than the IRS, that you communicated with about the levies that are at issue in this case and identify each communication you had with such persons about the levies at issue in this case.
Response:
Plaintiff had communicated with the state pension office (and the Department of Justice had received a copy of pension’s office file).
Plaintiff communicated with her lawyers and SE Paralegal Services. These communications are privileged.
Plaintiff communicated with family members, friends, or neighbors. These communications are not an issue in this lawsuit.
INTERROGATORY NO. 8: Identify every person who has knowledge of the facts alleged in the complaint and for each person identified state his or her current address and telephone number and provide a brief description of his or her purported knowledge of the facts alleged in the complaint.
Response:
Patriot Attorney
Plaintiff’s attorney
SE Paralegal Services – assisted Plaintiff in explaining IRS procedures, in writing letters and administrative claims.
Michigan Public School Employees Retirement System
Patriot Attorney Date: October 23, 2008
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that a true and correct copy of the foregoing documents have been served upon the following via pre-paid postal mail on October 23, 2008:
Trial Attorney, Tax Division
U.S. Department of Justice
Patriot Attorney