United States District Court, D. New Hampshire
JOSEPH A. DICLERICO, Jr., District Judge.
The United States of America brought suit to reduce to judgment income tax assessments against Charles Limanni and to foreclose the government's tax lien on real property in which Limanni holds an interest. The government also named Linda Limanni, the Town of Barrington, and Artella Chase as defendants. The government and the Town of Barrington have entered a stipulation, and default was entered against Artella Chase.
Trial was scheduled for December 3, 2013. Before trial began, the parties agreed to a continuance to allow time for Limanni to provide his records to the government for review and to determine whether the matter could be resolved. The parties made progress toward a settlement, resolving several issues, which left Limanni's unpaid tax liability for 1999 as the only remaining dispute. Limanni did not respond to the government's proposed judgment on the unpaid tax liability, and the government asked the court to set new scheduling dates for summary judgment and trial if necessary. The court set a date for filing a stipulated judgment, and a date for the government to move for summary judgment if the remaining issues were not resolved by November 4, 2014.
The government has moved for summary judgment on the Limannis' tax liability for 1999 and for an order of sale of the Limannis' property in Barrington, New Hampshire, to satisfy the tax liens on the property. Charles Limanni filed a response to the motion for summary judgment in which he disputes the amount that the government asserts is owed. The government filed a reply in which it addressed the issues Limanni raised in his objection.
After reviewing the parties's filings, the court directed the government to file a supplemental memorandum to address the calculation of the tax liability. Specifically, the court noted that the government had agreed to accept the income and deduction figures on Limanni's 1999 tax return but then did not accept the amount of tax owed on the return, creating an ambiguity as to the actual tax liability. The government has filed a supplemental memorandum, and Limanni filed a response.
Standard of Review
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In deciding a motion for summary judgment, the court draws all reasonable inferences in favor of the nonmoving party. Foodmark, Inc. v. Alasko Foods, Inc., 768 F.3d 42, 47 (1st Cir. 2014). "A genuine issue of material fact must be built on a solid foundation-a foundation constructed from materials of evidentiary quality" so that "conclusory allegations, empty rhetoric, unsupported speculation, or evidence which, in the aggregate, is less than significantly probative will not suffice to ward off a properly supported motion for summary judgment." Garcia-Gonzalez v. Puig-Morales, 761 F.3d 81, 87 (1st Cir. 2014). In response to a properly supported motion for summary judgment, opposing parties must provide competent record evidence that shows there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Mosher v. Nelson, 589 F.3d 488, 492 (1st Cir. 2009).
Charles and Linda Limanni did not file income tax returns for the years 1999 through 2003 when they were due. After the IRS investigated Charles Limanni's income liability, the IRS made assessments against him for 1999 through 2003. When Limanni failed to pay the amounts assessed, the government brought this action to enforce the tax lien against property owned by Charles and Linda Limanni.
In response to the suit, the Limannis provided their joint tax returns for the years of 1999 through 2003. The government examined the returns and agreed to accept the figures reported for income and deductions and to adjust the previous tax assessments based on the returns. Based on the returns and the government's examination, the government determined that the Limannis have a remaining joint tax liability for 1999, which was $48, 970.77 as of November 10, 2014, with interest continuing to accrue.
Charles and Linda Limanni acknowledge that they filed joint tax returns and are jointly liable for the 1999 tax liability. Limanni calculated their remaining 1999 tax liability, after subtracting claimed credits, refunds, and payments, at $4, 096.00. In response, the government contends that the Limannis are mistaken about the applicable amount from the 1999 tax return and disputes the additional refunds, interest, and credits that Limanni claims.
The government moves for summary judgment that the Limannis' tax liability for 1999, with interest and penalties, was $48, 970.77 as of November 10, 2014, and seeks an order of sale of the Limannis' property located in Barrington, New Hampshire. Charles Limanni objects to the tax liability assessed by the government, arguing that the government failed to accept his tax records for 1999 as was agreed, that the government failed to credit the full amount of refunds with interest, and that the government's calculation did not credit a penalty assessed in 2003 that has been paid. Limanni represents that the total amount of tax liability remaining is $4, 096.00. In its reply, the government addressed each issue raised by Limanni and explained the calculation of the tax liability.
Tax assessments by the IRS are presumed correct. Hostar Marine Transport Sys., Inc. v. United States, 592 F.3d 202, 208 (1st Cir. 2010). For that reason, taxpayers who challenge the IRS's assessment of a tax deficiency bear the burden of proving that it is erroneous. Id . In addition, "[i]t is well-established that tax assessments pursuant to [IRS] Form 4340 are presumed correct and therefore obligates the taxpayer to provide sufficient evidence to ...