United States v. Filson

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 16, 2009
No. 08-51141 Charles R. Fulbruge III
Summary Calendar Clerk
UNITED STATES OF AMERICA
Plaintiff-Appellee
v.
ROGER E. FILSON
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:07-CV-201
Before DAVIS, GARZA, and PRADO, Circuit Judges.
PER CURIAM:*
Roger Filson, pro se, appeals the district court’s order granting summary
judgment to the United States that allowed foreclosure of a tax lien against his
property. Filson argues that there is a genuine issue of material fact as to the
existence of tax liabilities giving rise to the lien. For the following reasons, we
AFFIRM.
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-51141
I. FACTUAL AND PROCEDURAL BACKGROUND
Despite earning a combined income greater than $60,000 per year, Roger
and Polly Filson filed returns with the Internal Revenue Service (“IRS”) stating
that they earned zero taxable income from 1994–98. To support this contention,
the Filsons included objections and arguments denying the legality of the federal
income tax in general. From 1999–2002, they filed no returns.
The IRS conducted tax examinations and issued notices of deficiency for
the years 1997–2002. The Filsons did not petition the tax court for a
redetermination of the deficiency within ninety days of the issuance of the
notices, as Internal Revenue Code (“I.R.C.”) § 6213(a) permits. The IRS assessed
taxes and penalties for late-filed or unfiled returns under I.R.C. § 6651(a)(1),
failing to pay tax due on the returns under I.R.C. § 6651(a)(2), and failing to pay
the estimated tax due under I.R.C. § 6654. The IRS also assessed penalties for
taking a frivolous position on their 1994–98 “zero returns” under I.R.C. § 6702.1
The United States recorded a “Notice of Federal Tax Lien” against the
Filsons and filed a civil complaint seeking a judgment for the unpaid balance of
the IRS’s tax assessment.2 The United States also sought to foreclose the lien
on the Filsons’ property. The Filsons responded with a counterclaim asserting
that they had no tax liability and owed no frivolous return penalties. They
sought relief in the form of an order nullifying the United States’ claims.
1
Filson previously challenged the assessment of the IRS’s frivolous return penalty for
the 1994–98 “zero returns” in a Collection Due Process proceeding under I.R.C. § 6330. In that
case, the district court granted the United States’ motion for summary judgment, holding that
Filson’s justifications for reporting no taxable income were “baseless, unsupportable, and
designed to obstruct the operations of the IRS.” Filson v. United States, No. SA-02-CA-285-EP
(W.D. Tex. Aug. 13, 2002). Filson never appealed this decision.
2
The United States named ABN AMRO, the purchase money mortgage holder on the
Filsons’ property, as a defendant. The district court granted ABN AMRO’s uncontested motion
for summary judgment declaring ABN AMRO’s lien superior to the federal tax liens, thereby
ending ABN AMRO’s interest in the litigation.
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The United States filed a motion for summary judgment as to all of its
claims. It requested that the district court dismiss the Filsons’ counterclaim,
reduce the unpaid balances to judgment, and foreclose on the liens. The United
States included “Account Transcripts,” bearing the official IRS seal, which a
designate of the Secretary of the Treasury certified as “true and complete”
transcripts of “all assessments, penalties, interest, abatements, credits, refunds,
and advanced or unidentified payments” relating to the amounts owed.
The Filsons attacked the reliability of the Account Transcripts, arguing
that they did not establish (1) the dates of assessment, (2) the sending of notices
of deficiency that I.R.C. § 6212 requires, or (3) the sending of notices and
demands for payment that I.R.C. § 6303 requires. In response, the United
States submitted “Certificates of Assessments, Payments, and Other Specified
Matters” (“Forms 4340”) and copies of the notices of deficiency sent to the
Filsons, which provided the missing information.
The Filsons filed a motion to strike the United States’ proffered evidence
under Federal Rule of Civil Procedure 37(c). Specifically, the Filsons argued
that the United States had not produced this evidence in its initial disclosure,
in violation of Federal Rule of Civil Procedure 26(a)(1). The Filsons also argued
that all of the additional documents constituted hearsay.
Noting that barring the United States from presenting any evidence not
initially disclosed would be “quite harsh” and that neither party had followed the
initial disclosure requirements of Rule 26(a)(1), the magistrate judge ordered
both parties to comply immediately. The Filsons did not object to the magistrate
judge’s order. Both parties filed notices of initial disclosures that documented
their compliance. The Filsons noted that they had nothing to provide.
The magistrate judge granted the Filsons’ motion to strike the United
States’ reply brief. The magistrate judge noted that the Declaration of
Department of Justice Tax Attorney Michelle C. Johns, which accompanied the
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additional documents, failed to satisfy the Federal Rule of Evidence 902
requirement for “self-authentication.” Specifically, the declaration provided no
certificate of the documents’ origins.
The magistrate judge advised the United States to refile with its exhibits
properly authenticated. The United States promptly complied, submitting the
declaration of Lolita Ellis, an IRS Technical Advisor/Revenue Officer, who had
custody of the Filsons’ IRS records. The magistrate judge admitted the exhibits.
The Filsons did not object, but instead submitted affidavits claiming that neither
could recall ever receiving any notices of deficiency. However, the United States
produced certified mail return receipts for the notices of deficiency that the IRS
had sent, each signed by either Polly or Roger Filson.
The magistrate judge issued a report and recommendation advising the
district court to grant summary judgment in favor of the United States. The
magistrate judge noted that the United States produced properly authenticated
IRS transcripts that listed the account balance, and Forms 4340 that “set forth
the name of the taxpayer, the date of assessment, the character of the liability
assessed, the taxable period . . . and the amounts assessed.” 26 C.F.R. §
301.6203-1. The district court adopted the magistrate judge’s report and
recommendation, granted the United States’ motion for summary judgment,
dismissed the Filsons’ counterclaim, and foreclosed on the Filsons’ property.
This appeal followed.
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction over the district court’s order granting summary
judgement under 28 U.S.C. § 1291. We review de novo the district court’s grant
of summary judgment and will affirm if “there is no genuine issue as to any
material fact and . . . the movant is entitled to judgment as a matter of law.”
F ED. R. C IV. P. 56(c).
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When a party fails to make a specific objection to an evidentiary ruling, we
review the district court’s findings for plain error. Douglass v. United Servs.
Auto. Ass’n, 79 F.3d 1415, 1428–29 (5th Cir. 1996) (en banc). To prevail, the
challenging party must show (1) there was an error, (2) the error was clear and
obvious, and (3) the error affected the party’s substantial rights. United States
v. Olano, 507 U.S. 725, 732–37 (1993). If all three conditions are met, we have
discretion to correct the error only if the error “seriously affects the fairness,
integrity, or public reputation of judicial proceedings.” Johnson v. United States,
520 U.S. 461, 467 (1997).
III. DISCUSSION
On appeal, Filson argues that (1) the magistrate judge erred when he
allowed the United States to comply with Rule 26(a)(1) after the Filsons’ original
objection; (2) the magistrate judge erred when he ruled that the United States
had properly authenticated its additional exhibits; (3) the frivolous return
penalties assessed for the years 1994–98 were defective; and (4) the foregoing
alleged deficiencies rendered summary judgment inappropriate. We address
each argument in turn.
A. Rule 26(a)(1) and Rule 37(c)
Rule 26(a)(1) mandates that a litigant disclose certain information
“without awaiting a discovery request,” F ED. R. C IV. P. 26(a)(1)(A), including “a
copy—or a description by category and location—of all documents, electronically
stored information, and tangible things that the disclosing party has in its
possession, custody, or control and may use to support its claims or defenses,
unless the use would be solely for impeachment.” F ED. R. C IV P. 26(a)(1)(A)(ii).
Rule 37(c) states that “[i]f a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is not allowed to use that
information or witness to supply evidence on a motion, at a hearing, or at a trial,
unless the failure was substantially justified or is harmless.”
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The magistrate judge decided that the United States was not substantially
justified in failing to comply with Rule 26(a). We agree, and therefore consider
whether the failure was harmless. In doing so, we weigh four factors: “(1) the
importance of the evidence; (2) the prejudice to the opposing party of including
the evidence; (3) the possibility of curing such prejudice by granting a
continuance; and (4) the explanation for the party’s failure to disclose.” Tex.
A&M Research Found. v. Magna Transp., Inc, 338 F.3d 394, 402 (5th Cir. 2003).
The first factor weighs heavily in favor of the United States. The Forms
4340 “constitute[] valid evidence of a taxpayer’s assessed liabilities and the IRS’s
notice thereof,” Perez v. United States, 312 F.3d 191, 195 (5th Cir. 2002), and
have “been held to be presumptive proof of a valid assessment where the
taxpayer has produced no evidence to counter that presumption.” United States
v. McCallum, 970 F.2d 66, 71 (5th Cir. 1992). Additionally, the magistrate judge
noted that if Rule 26(a) were “[r]ead strictly, the United States would be unable
to present any evidence in support of its claims.” To prove its case, the United
States’ proffered evidence was of paramount importance.
The second factor also favors the United States. The Filsons were not
unfairly prejudiced by inclusion of the evidence. In its complaint, the United
States alleged the amount the Filsons owed in unpaid IRS income taxes and
penalties for filing frivolous returns. Production of the Forms 4340 simply
verified—with a presumption of correctness, see McCallum, 970 F.2d at 71—that
the Filsons owed the amount alleged. Further, the United States produced
signed certified mail receipts for the notices of deficiency that memorialized the
Filsons’ receipt and demonstrated that the Filsons had knowledge of the
deficiency reflected in the Forms 4340. Finally, although the magistrate judge
rejected the United States’ explanation for failing to comply with Rule 26(a)(1)
as not substantially justified, the Filsons had the chance to respond to the
evidence that the United States refiled, and the district court granted the
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Filsons leave to amend their objections to the magistrate judge’s report and
recommendation before the court granted summary judgment.
We hold that the magistrate judge did not err when it allowed the United
States to refile its evidence in compliance with Rule 26(a)(1). Since we find no
error, Filson’s claim does not survive plain error review.
B. Federal Rules of Evidence 803(8) and 902
The Federal Rules of Evidence define hearsay as “a statement, other than
one made by the declarant while testifying at the trial or hearing, offered in
evidence to prove the truth of the matter asserted.” F ED. R. E VID. 801(c).
Hearsay is “not admissible except as provided by these rules.” F ED. R. E VID. 802.
One exception to the hearsay rule is Federal Rule of Evidence 803(8), which
permits introduction of “Public Records and Reports” that set forth “(A) the
activities of the office or agency, or (B) matters observed pursuant to duty
imposed by law as to which matters there was a duty to report . . . or (C) in civil
actions and proceedings . . . factual findings resulting from an investigation
made pursuant to authority granted by law.” Federal Rule of Evidence 902
enumerates certain methods for authenticating documents proffered under
several hearsay exceptions.
The magistrate judge granted the Filsons’ motion to strike the United
States’ reply brief, which included the Forms 4340 and the notices of deficiency.
The magistrate judge held that the affidavit of Michelle C. Johns, a Department
of Justice Tax Attorney, “merely identifies the records attached but wholly fails
to provide any certification of their origins. As such, the declaration fails to
satisfy the authentication requirements of Rule 902.” The magistrate judge
allowed the United States to refile, advising, “in light of this ruling, to consider
submitting with the reply all evidence, properly authenticated, which it wishes
the Court to consider in addressing its motion for summary judgment.”
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The magistrate judge was within his discretion to allow the United States
to refile. The district court approved and accepted the magistrate judge’s report
and recommendation, and “[a] district court has inherent power ‘to control the
disposition of the causes on its docket with economy of time and effort for itself,
for counsel, and for litigants.’” United States v. Colomb, 419 F.3d 292, 299 (5th
Cir. 2005) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)). Courts have
consistently allowed parties to refile or amend motions and supporting
documents as a valid exercise of their discretion in case management.3
The United States refiled the same Forms 4340 and notices of deficiency
that it had attempted to introduce earlier. To comport with the authentication
requirements of Federal Rule of Evidence 902, the United States included the
declaration of Lolita Ellis, an IRS Technical Advisor/Revenue Officer who had
custody of the IRS files relating to the Filson matter. Filson did not challenge
Ellis’s authentication, and the magistrate judge admitted the documents, citing
Federal Rules of Evidence 803(8) and 902.
We have long held that Forms 4340 are admissible and “constitute[] valid
evidence of a taxpayer’s assessed liabilities and the IRS’s notice thereof.” Perez,
312 F.3d at 195. Additionally, allowing the United States to refile in compliance
with Federal Rules of Evidence 803(8) and 902 was well within the magistrate
judge’s discretion. Filson has failed to demonstrate that the magistrate judge
erred. His claim does not survive plain error review.
3
See, e.g., George, 209 F.3d at 718 (holding that the contention that “the district court
abused its discretion by permitting Defendants to refile their summary judgment motion” was
“without merit”); Molina v. Equistar, 261 Fed. App’x 729, 731 (5th Cir. 2008) (noting that
“[t]he district court granted Equistar leave to refile its motion”); McLaughlin v. W & T
Offshore, Inc., 78 Fed. App’x 334, 336 n.1 (5th Cir. 2003) (“[T]he district court stated that W
& T could ‘refile’ this motion after McLaughlin conducted more discovery.”); Hickson v. Garner,
43 F.3d 670, 670 (5th Cir. 1994) (noting that the magistrate judge granted a motion to return
exhibits so that the party could “refile them in accord with the local rules”).
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C. Legitimacy of the Frivolous Return Penalties
Filson argues that the United States failed to prove that the IRS
legitimately assessed the Filsons’ frivolous return penalties for the years
1994–98. The United States argues that res judicata bars any challenge Filson
has regarding the frivolous return penalties. We agree.
For res judicata to prevent litigation of an issue, “(1) the parties must be
either ‘identical or in privity; (2) the judgment in the prior action [must have
been] rendered by a court of competent jurisdiction; (3) the prior action must
have been concluded to a final judgment on the merits; and (4) the same claim
or cause of action [must have been] involved in both actions.’” United States v.
Davenport, 484 F.3d 321, 326 (5th Cir. 2007) (quoting In re Southmark Corp.,
163 F.3d 925, 934 (5th Cir. 1999). When established, res judicata “‘bars further
claims by parties or their privies based on the same cause of action.’” Davenport,
484 F.3d at 326 (quoting Montana v. United States, 440 U.S. 147, 153 (1979)).
Previously, Filson filed a complaint against the United States to appeal
the result of a Collection Due Process hearing that the IRS conducted. The
complaint challenged the same frivolous return penalties at issue here. See
Filson v. United States, No. SA-01-CA-285-EP (W.D. Tex. Aug. 14, 2002). In the
prior case, the district court entered judgment in favor of the United States,
holding that the United States had validly assessed the frivolous return
penalties and that Filson’s arguments were “baseless, unsupportable, and
designed to obstruct the operations of the IRS.” Id. at *4. Filson never appealed.
Because (1) the parties in the preceding action are identical to those here,
(2) the court in the previous case had jurisdiction, (3) the prior action was
adjudicated to a final judgment on the merits, and (4) the same claim is involved
in both the prior action and the instant action, res judicata bars Filson’s
challenge to the legitimacy of his frivolous return penalties.
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D. Sufficiency of the United States’ Evidence
The Internal Revenue Code authorizes the Secretary of the Treasury to
make “inquiries, determinations, and assessments of all taxes imposed by [the
Code],” I.R.C. § 6201, and collect the taxes assessed. I.R.C. § 6301. If the
Secretary discovers a deficiency, he is authorized to notify the taxpayer of the
deficiency, I.R.C. § 6212, and assess the deficiency if the taxpayer fails to
petition the tax court for a redetermination within ninety days. I.R.C. § 6213(a).
Within sixty days of making an assessment, the Secretary must notify the
taxpayer of the assessment and demand payment. I.R.C. § 6303(a). If the
taxpayer fails to pay the assessed amount after notice and demand, a lien arises
on “all property and rights to property” of the taxpayer, I.R.C. § 6321, and will
continue until it has been “satisfied or becomes unenforceable by reason of lapse
of time.” I.R.C. § 6322. The statutory lien is not self-executing. The United
States has the option to enforce its lien through an action to reduce assessments
to judgment and to foreclose under I.R.C. §§ 7401–03.
The Internal Revenue Code states:
No assessment of a deficiency in respect of any tax imposed . . . and
no levy or proceeding in court for its collection shall be made, begun,
or prosecuted until such notice has been mailed to the taxpayer, nor
until the expiration of such 90-day or 150-day period, as the case
may be.
I.R.C. § 6213. Notably, “[t]he Code does not require that the taxpayer receive the
notice of deficiency.” Keado v. United States, 853 F.2d 1209, 1211–12 (5th Cir.
1988) (emphasis in original). Rather, “notice shall be sufficient if it is sent to the
taxpayer at his last known address.” Id. at 1211 (internal quotations omitted).
To have a valid assessment, the IRS must create a “summary record of
assessment” that “shall provide identification of the taxpayer, the character of
the liability assessed, the taxable period, if applicable, and the amount of the
assessment.” 26 C.F.R. § 301.6203-1. When Forms 4340 include this
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No. 08-51141
information, we have held that they create a presumption of a valid assessment
in the absence of any contrary evidence. McCallum, 970 F.2d at 71.
In this case, the United States introduced Forms 4340 that contained a
“Certificate of Official Record” under seal of an IRS official for the years at issue.
The Forms 4340 state the Filsons’ identity, the taxable period, the date and
amount assessed, and the character of the Filsons’ liability. Together, the Forms
4340 and notices of deficiency establish the Filsons’ income tax liability for the
years at issue and the notice the IRS sent regarding that liability.
In response, the Filsons produced two affidavits. One, signed by Roger
Filson, states, “I do not recall ever having received any Notice of Deficiency, nor
do I recall having received any notices or demands for payment of federal income
taxes, pertaining to tax years 1994–2002.” The second, signed by his wife Polly,
makes an identical statement. Filson argues that these affidavits create a
genuine issue of material fact as to whether the IRS followed the necessary
protocol for valid tax liens to arise on his property.
The Filsons’ statements will not defeat summary judgment. The United
States need only show that it mailed a notice of deficiency to the Filsons’ last
known address. See I.R.C. § 6212(b)(1); Keado, 853 F.2d at 1211–12. The United
States produced copies of the notices of deficiency that it had mailed and the
certified mail receipts signed by either Roger or Polly Filson that documented
their receipt. This evidence proves that the United States mailed the notices,
and discredits the Filsons’ affidavits claiming that they never received them.
The Filsons’ “self-serving allegations are not the type of significant probative
evidence required to defeat summary judgment.” United States v. Lawrence, 276
F.3d 193, 197 (5th Cir. 2001) (internal quotation omitted).4
4
See also BMG Music v. Martinez, 74 F.3d 87, 91 (5th Cir. 1996) (affirming summary
judgment where “the only evidence in support of the defendants’ theory is a conclusory,
self-serving statement by the defendant”).
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No. 08-51141
Filson has failed to demonstrate the existence of any genuine issue of
material fact. We hold that the district court properly granted the United
States’ motion for summary judgment.
IV. CONCLUSION
The magistrate judge did not err in allowing the government to refile its
evidence in compliance with Federal Rule of Civil Procedure 26(a), Federal Rule
of Evidence 803(8), and Federal Rule of Evidence 902. Additionally, res judicata
bars Filson’s claim that the IRS did not validly establish the frivolous return
penalties. Finally, Filson failed to demonstrate the existence of any genuine
issue of material fact as to his tax liability. Accordingly, we AFFIRM.
AFFIRMED.
12