Opinion
C/A 3:19-3153-JFA-PJG
02-23-2021
United States of America, Plaintiff, v. Arthur J. Whisnant, Jr., Defendant.
REPORT AND RECOMMENDATION
PAIGE J. GOSSETT, UNITED STATES MAGISTRATE JUDGE.
The Government filed this action seeking a judgment against Arthur J. Whisnant, Jr., a self-represented defendant, for unpaid federal income taxes. This matter is before the court pursuant to 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2) (D.S.C.) for a Report and Recommendation on the Government's motion for summary judgment. (ECF No. 31.) Pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), the court advised Whisnant of the summary judgment and dismissal procedures and the possible consequences if he failed to respond adequately to the Government's motion. (ECF No. 32.) Whisnant filed a response in opposition to the motion (ECF No. 35), and the Government filed a reply (ECF No. 36). Having reviewed the record presented and the applicable law, the court concludes that the Government's motion for summary judgment should be granted.
BACKGROUND
The following facts are either undisputed or are taken in the light most favorable to Whisnant, to the extent they find support in the record. On November 6, 2019, the United States filed this action seeking judgment against Whisnant for his unpaid federal income tax liabilities for tax years 2006, 2007, and 2008. Whisnant reported $583 in tax due in 2006 and no tax due in 2007 or 2008. The Internal Revenue Service (“IRS”) conducted an examination of Whisnant's income tax returns for those years and proposed numerous changes to Whisnant's returns. Specifically, the proposed changes were based on whether Whisnant's claimed income and deductions were substantiated. The IRS concluded that Whisnant owed additional income tax, interest, and penalties for the tax years at issue and sent him a Notice of Deficiency on March 23, 2011. The Notice of Deficiency informed Whisnant that he could contest the IRS's conclusions in Tax Court, but Whisnant did not contest the conclusions. On August 15, 2011, the IRS assessed federal income tax, interest, and penalties against Whisnant. The IRS provided Whisnant notice of the assessments and demanded payment but, to date, Whisnant has not paid in full the assessments against him, and as of December 1, 2020, Whisnant owes $1,886,190.75.
DISCUSSION
A. Summary Judgment
Summary judgment is appropriate only if the moving party “shows that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A party may support or refute that a material fact is not disputed by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). Rule 56 mandates entry of summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
In deciding whether there is a genuine issue of material fact, the evidence of the nonmoving party is to be believed and all justifiable inferences must be drawn in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. at 248.
The moving party has the burden of proving that summary judgment is appropriate. Once the moving party makes this showing, however, the opposing party may not rest upon mere allegations or denials, but rather must, by affidavits or other means permitted by the Rule, set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(c), (e); Celotex Corp., 477 U.S. at 322. Further, while the federal court is charged with liberally construing a pleading filed by a pro se litigant to allow the development of a potentially meritorious case, see, e.g., Erickson v. Pardus, 551 U.S. 89 (2007), the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege facts which set forth a federal claim, nor can the court assume the existence of a genuine issue of material fact where none exists. Weller v. Dep't of Soc. Servs., 901 F.2d 387 (4th Cir. 1990).
B. The Government's Motion
The Government argues that it is entitled to summary judgment because the undisputed facts show that Whisnant owes $1,886,190.75 in unpaid income taxes, interest, and penalties for tax years 2006, 2007, and 2008. The court agrees.
In an action seeking judgment for unpaid taxes, the Government must first make a prima facie showing that the taxpayer has unpaid taxes. See United States v. White, 466 F.3d 1241, 1248 (11th Cir. 2006) (citing Palmer v. U.S. I.R.S., 116 F.3d 1309, 1312 (9th Cir. 1997)). The Government can meet this burden by introducing the IRS's assessment of the taxes due, which is entitled to a presumption of correctness. See United States v. Fior D'Italia, Inc., 536 U.S. 238, 242 (2002). The tax assessment is presumptively correct so long as it is supported by some evidence. Palmer v. U.S. I.R.S., 116 F.3d 1309, 1312 (9th Cir. 1997) (“The Commissioner's deficiency determinations and assessments for unpaid taxes are normally entitled to a presumption of correctness so long as they are supported by a minimal factual foundation.”); United States v. Walton, 909 F.2d 915, 919 (6th Cir. 1990); see also United States v. Janis, 428 U.S. 433, 443 (1976).
If the Government shows that the assessment was properly made, the burden shifts to the taxpayer to prove that the assessment is erroneous. United States v. Pomponio, 635 F.2d 293, 296 (4th Cir. 1980); United States v. Lovely, 420 F.Supp.3d 398, 404 (M.D. N.C. 2019). The taxpayer must do more than rely on their own conclusory, unsworn statements to rebut the presumption. United States v. Stein, 881 F.3d 853, 857 (11th Cir. 2018); Lovely, 420 F.Supp.3d at 404; United States v. Brooks, C/A No. 6:17-CV-2010-TMC, 2019 WL 642917, at *3 (D.S.C. Feb. 15, 2019)). The taxpayer's failure to rebut this presumption by a preponderance of the evidence requires the court to enter summary judgment in favor of the Government for the amount of taxes due. Lovely, at 404-05 (quoting Brooks, 2019 WL 642917, at *3).
Here, the Government relies on the sworn declaration of a revenue officer to meet its initial burden of proof. See, e.g., United States v. Goodman, 527 Fed.Appx. 697, 699 (10th Cir. 2013) (finding that a declaration by an IRS revenue officer and accompanying documentation created an adequate factual foundation to meet the Government's prima facie burden of showing that the taxpayer had unpaid taxes, triggering the presumption of correctness) (citing United States v. Hayes, 861 F.2d 1225, 1228 (10th Cir. 1988)); United States v. Kramer, C/A No. 2:14-cv-2651, 2017 WL 3600443, at *4 (S.D. Ohio Aug. 18, 2017) (collecting cases that rely on evidence other than Forms 23-C summary records or Forms 4340 Certificates of Assessments and Payments to support the Government's assertion of taxpayer liability), affd, No. 17-3900, 2018 WL 1954260 (6th Cir. Apr. 5, 2018). The Government provides a declaration from IRS Revenue Officer Sara Brutscher who declares that the IRS's computer system for storing and tracking information about taxpayer's accounts, the Integrated Data Retrieval System (“IDRS”), shows that the IRS made federal income tax assessments against Whisnant for tax years 2006, 2007, and 2008 that show he has outstanding liability of $1,886,190.75 as of December 1, 2020. (Brutscher Decl. ¶¶ 7, 10, ECF No. 31-3 at 2-3.) The Government also provides a declaration from United States Department of Justice attorney Thomas K. Vanaskie, who declares (and provides documentation showing) that the IRS sent Whisnant notices of assessment against him for tax years 2006, 2007, and 2008 and made demands for payment as required by law, but Whisnant has not paid in full the assessments against him for the years at issue. (Vanaskie Decl. Ex. 2 ¶¶ 11-13, 47-49, 70-72, ECF No. 31-2 at 30-31, 34, 36-37.) Thus, the Government has met its prima facie burden of showing that Whisnant has unpaid federal taxes for tax years 2006, 2007, and 2008, which the court presumes to be correct unless Whisnant can produce evidence to rebut the presumption.
Whisnant failed to respond to the Government's requests for admission. (Vanaskie Decl. ¶ 6, ECF No. 31-2 at 2.) Consequently, the facts in those requests are deemed admitted. See Fed.R.Civ.P. 36(a)(3).
In response, the only evidence cited by Whisnant to rebut the Government's assessment is a letter from a certified public accountant that is not sworn or declared under penalty of perjury. (Def.'s Resp. Opp'n Summ. J. Ex. A, ECF No. 35-2.) The letter indicates that the accountant “reviewed documentation” in this case and concludes that Whisnant has not been given due process in this matter and that the IRS ignored documentation in deciding that some transactions were taxable. The account does not explain to which transactions, documents, or events he refers. The letter is not admissible evidence because it is not sworn or declared. See Fed.R.Civ.P. 56(c)(4) (“An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.”); see also Whittaker v. Morgan State Univ., 524 Fed.Appx. 58, 60 (4th Cir. 2013) (providing that information in an unsworn letter submitted in support of summary judgment is inadmissible hearsay); Orsi v. Kirkwood, 999 F.2d 86, 92 (4th Cir. 1993) (“It is well established that unsworn, unauthenticated documents cannot be considered on a motion for summary judgment.”) Even if the letter were admissible, it would be of no evidentiary value because it is conclusory and fails to identify any specific errors in the IRS's assessment. See generally Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002) (stating the non-moving party has “the ultimate burden of demonstrating a genuine issue of material fact for trial” and that “[c]onclusory or speculative allegations do not suffice”) (citing Celotex, 477 U.S. at 322-23)). Therefore, Whisnant fails to provide any evidence to rebut the Government's assessment, and the Government is entitled to judgment as a matter of law.
RECOMMENDATION
Based on the foregoing, the court recommends the Government's motion for summary judgment be granted. (ECF No. 31.)
The parties' attention is directed to the important notice on the next page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.' ” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
901 Richland Street
Columbia, South Carolina 29201
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).