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United States v. Lovely

United States District Court, M.D. North Carolina

September 27, 2019

MARK A. LOVELY, Defendant.



         The United States of America (“Plaintiff” or the “United States”) brings this action to “reduce to judgment federal income tax assessments . . . and civil penalties” against Defendant Mark Lovely. (ECF No. 1 at 1.) Before the Court are: Plaintiff’s Motion for Summary Judgment, (ECF No. 24); Defendant’s Motion to Vacate a prior order of this Court, (ECF No. 38); and Defendant’s putative counterclaim seeking a tax refund, (ECF Nos. 4 at 7–11; 30 at 7–8). For the reasons below, each of Defendant’s motions will be denied and Plaintiff’s motion will be granted.[1]


         The Court will first address Defendant’s motion seeking to vacate this Court’s prior order dated March 18, 2019, in which the Court denied two motions to dismiss filed by Defendant. (See ECF No. 37 at 1, 12 (denying motions to dismiss); ECF No. 38, (requesting vacatur of prior order).) Defendant argues primarily that the Court lacks jurisdiction to hear this case. (See ECF No. 38.) Though Defendant-who appears before the Court pro se-did not initially bring his motion pursuant to any particular rule, id., he has since clarified that he seeks relief under Rule 60(b) of the Federal Rules of Civil Procedure. (ECF No. 41 at 1.) Rule 60 permits a district court to provide relief “from a final judgment, order, or proceeding.” Fed.R.Civ.P. 60(b) (emphasis added). An order denying a defendant’s motion to dismiss is not a final order, and thus Rule 60 offers no assistance to Defendant. See Nero v. Mosby, 890 F.3d 106, 121 (4th Cir. 2018) (explaining that “the denial of a motion to dismiss is generally not a ‘final’ judgment”). The Court, however, being mindful of its obligation to liberally construe the filings of pro se litigants, see Erickson v. Pardus, 551 U.S. 89, 94 (2007), will treat Defendant’s motion to vacate as a motion for reconsideration of the Court’s prior order under Rule 54(b) of the Federal Rules of Civil Procedure.

         Under Rule 54(b), “any order . . . that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties . . . may be revised at any time before the entry of a judgment.” Fed.R.Civ.P. 54(b). “Said power is committed to the discretion of the district court.” Am. Canoe Ass’n v. Murphy Farms, Inc., 326 F.3d 505, 514–15 (4th Cir. 2003). While Rule 54(b) motions “are not subject to the strict standards applicable to motions for reconsideration of a final judgment, ” under Rule 59(e), see Id . at 514, courts in this Circuit have frequently looked to the standards under Rule 59(e) for guidance in considering such motions.[2]Like Rule 59(e) motions, Rule 54(b) motions “should not be used to rehash arguments the court has already considered” or “to raise new arguments or evidence that could have been raised previously.” South Carolina, 232 F.Supp.3d at 793. Here, Defendant merely seeks to relitigate arguments previously raised and rejected. (See, e.g., ECF No. 38 at 1–2 (attempting to revive the contention that this Court lacks subject matter jurisdiction-an argument rejected by this Court in ECF No. 37 at 4.) Thus, Defendant’s motion is denied.


         A. Background

         Defendant, a self-described “nontaxpayer, ” (ECF No. 4 at 6), has filed federal tax returns, over a period of years which are outlined in Plaintiff’s Complaint, in which he reported an income of zero dollars even though his employers have reported, over the same period, paying him a salary. (ECF No. 24-1 ¶¶ 6–7.) The Internal Revenue Service (“IRS”) made a determination that these returns were frivolous and assessed penalties against Defendant pursuant to 26 U.S.C. § 6702(a). (Id. at ¶¶ 8–9.) A delegate of the Secretary of the Treasury then made assessments against Defendant for the unpaid taxes; and, in addition, assessed additional statutory penalties and interest for non-payment of taxes. (ECF No. 1 ¶¶ 6, 12.) The United States now moves for summary judgment against Defendant seeking a judgment (1) for the unpaid federal income tax, penalties, and interest assessed against the Defendant as of the date of the filing of its motion, September 17, 2018, plus interest and penalties accrued after that date until paid in full; (2) for the civil penalties assessed against the Defendant under 26 U.S.C. 6702 for frivolous tax submissions as of September 17, 2018, plus interest that has accrued after that date until paid in full; and (3) declaring that he is not entitled to a refund for any taxes paid in connection with the 1999 through 2017 tax years. (ECF No. 24 at 1.)

         B. Standard of Review

         Summary judgment is appropriate when “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). The court must view the evidence and “resolve all factual disputes and any competing, rational inferences in the light most favorable” to the nonmoving party. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (quoting Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)). The role of the court is not “to weigh the evidence and determine the truth of the matter” but rather “to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). A genuine issue for trial exists only when “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Id. at 249–50 (citations omitted).

         In opposing a properly supported motion for summary judgment, the nonmoving party cannot rest on “mere allegations or denials, ” id. at 248 (internal quotation omitted), and “must do more than simply show that there is some metaphysical doubt as to the material facts, ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The nonmoving party must support its assertions by citing to particular parts of the record or showing that materials cited do not establish the absence of a genuine dispute. Fed.R.Civ.P. 56(c)(1); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). “The summary judgment inquiry thus scrutinizes the plaintiff’s case to determine whether the plaintiff has proffered sufficient proof, in the form of admissible evidence, that could carry the burden of proof of his claim at trial.” Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993).

         C. Plaintiff’s Claim for Unpaid Taxes and Related Statutory Penalties and Interest

         A tax assessment “amounts to an IRS determination that a taxpayer owes the Federal Government a certain amount of unpaid taxes.” United States v. Fior D’Italia, Inc., 536 U.S. 238, 242 (2002). Such assessments are “entitled to a legal presumption of correctness-a presumption that can help the Government prove its case against a taxpayer in court.” Id; see also United States v. Pomponio, 635 F.2d 293, 296 (4th Cir. 1980) (“The [IRS] Commissioner’s determination of tax liability is presumptively correct.”). Because of this presumption of correctness, “taxpayers have the burden of proving that the IRS’s computations . . . were erroneous.” United States v. Lena, 370 Fed.App’x 65, 70 (11th Cir. 2010). The taxpayer must do so “by persuading the finder of fact, by a preponderance of the evidence, that the assessment is incorrect.” United States v. Brooks, No. 6:17-cv-2010-TMC, 2019 WL 642917, at *3 (D.S.C. Feb. 15, 2019) (citing United States v. Janis, 428 U.S. 433, 440 (1976)). To disprove his liability, a taxpayer “cannot merely rely upon his ‘tax returns, uncorroborated oral testimony, or self-serving statements.’” United States v. Short, No. 1:13-CV-899, 2015 WL 9592521, at *3 (M.D. N.C. Dec. 31, 2015) (quoting Lena, 370 Fed.App’x at 70). If the taxpayer cannot rebut his presumptive liability, “the trial court is justified, in fact required, to enter summary judgment for the amount of the taxes proved to be due.” Brooks, 2019 WL 642917, at *3 (quoting United States v. Dixon, 672 F.Supp. 503, 507 (M.D. Ala. 1987)).

         Here, Plaintiff has met its initial burden of production by providing evidence which exhaustively documents the assessments the IRS made against Defendant for unpaid taxes and associated statutory penalties and interest. Specifically, the United States seeks a judgment for unpaid taxes assessed against the Defendant for the tax years 2000, 2003 through 2006, 2010 through 2012, and 2014. (ECF No. 24 at 1.) In each of these years, Plaintiff reported no taxable income. (See ECF Nos. 24-3 at 6; 24-5 at 1, 3–5, 8–9, 11–12, 15.) During the same years Defendant’s employers reported paying him an income. (See ECF Nos. 24-4 at 1, 2, 4, 5; 24-6 at 1–2.)[3] Based on this evidence, a delegate of the Secretary of the Treasury made assessments against Mr. Lovely for unpaid federal income taxes. (See ECF No. 24-2 at 2 (tax year 2000), 11 (2003), 17 (2004), 23 (2005), 28 (2006), 34 (2010), 41 (2011), 47 (2012), 54 (2014).) Defendant received notice of these assessments when the IRS issued Statutory Notices of Balance Due for each tax year. (See Id . at 7–8 (tax year 2000), 13–14 (2003), 19–20 (2004), 25 (2005), 30–31 (2006), 37 (2010), 44 (2011), 50–51 (2012), and 56 (2014).) As an additional consequence of Defendant failing to pay taxes during these years, the United States assessed three statutory penalties against Defendant for (1) “failure to pre-pay his taxes, ” 26 U.S.C. § 6654, (2) “failing to timely file returns and pay the taxes due, ” 26 U.S.C. §6651, and (3) “for understating his income.” (ECF No. 24-1 ¶¶ 15–17 (declaration of revenue officer attesting to accrual of penalties); ECF No. 24-3 at 6–7 (tax year 2000), 11–13 (tax year 2003), 15–17 (2004), 19–21 (2005), 22–24 (2006), 30–31 (2011), 34–35 (2012), 38–39 (2014) (documenting penalties assessed).) The United States also now claims statutory interest that has accrued on the federal income tax liabilities of Defendant under 26 U.S.C. § 6601(a), which provides for interest to be charged on late tax payments as set out under 26 U.S.C. § 6621(a)(2). (See ECF Nos. 24-1 ¶ 14 (declaration of revenue officer attesting to accrual of interest due); 24-3 at 6 (tax year 2000), 11 (2003), 15 (2004), 19 (2005), 22 (2006), 25 (2010), 30 (2011), 34 (2012), 38 (2014) (documenting interest due).)

         To further satisfy its burden of producing evidence to support its tax assessments against Defendant, the United States offers the declaration of Revenue Officer Anita Bond-the officer in charge of collecting Defendant’s unpaid liability-who attests to the validity of Plaintiffs claim for unpaid taxes, statutory penalties, and interest. (Id. ¶¶ 1, 9, 18.) Bond’s declaration, in turn, is supported by:

1. a collection of Form 4340 Certified Transcripts of the income taxes and penalties assessed against Defendant, each of which an IRS employee has signed to certify that the exhibit contains all relevant “assessments, penalties, interest, abatements, credits, refunds, and advance or unidentified payments” related to Defendant’s tax ...

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