TP Tries To Bogart The Internal Revenue Manual

[The Observer]

UNITED STATES OF AMERICA,
Plaintiff,
v.
DUSTIN BOGART, AND MARCY A. BOGART,
Defendants.

Release Date: OCTOBER 17, 2013

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE

District Judge Sharp/Magistrate Judge Brown

REVIEW AND RECOMMENDATION

To the Honorable District Judge Kevin H. Sharp

Presently pending before the Magistrate Judge are the plaintiff's, The United States of America, and the defendant's, Dustin Bogart, Cross-Motions for Partial Summary Judgment as to count I of the complaint. (Docket Entry ("DE") 91) As explained in detail below, the Magistrate Judge recommends that the plaintiff's Motion for Summary Judgment be GRANTED and the defendant's Motion for Summary Judgment be DENIED.

I. INTRODUCTION AND BACKGROUND

The defendant, Dustin Bogart ("Defendant"), failed to file tax returns or to pay federal income taxes from 2000 through 2003. (Complaint, DE 1, p. 1) Accordingly, the Internal Revenue Service ("IRS") determined Defendant's gross income and the resultant tax liability from "other" reporting sources. (Plaintiff's Statement of Material Fact ("Statement of Fact"), DE 91-2, p. 1) Plaintiff assessed the outstanding tax liability, penalties, and interest against Defendant, Certified those assessments, provided notice to Defendant of the outstanding liability, and made demand for payment. (Declaration of Kenny Odell Justice, DE 91-5, p. 2 paragraphs 5, 6) Plaintiff also filed liens against Pennsylvania and Tennessee property in which Defendant purportedly has an ownership interest. (Exhibits 14 & 15 to Defendant's Memorandum in Support of Cross-Motion for Summary Judgment, DE 119-1, 119-2) Plaintiff was unsuccessful in securing payment from Defendant and instituted this action on February 13, 2012 to reduce these assessed taxes and statutory penalties to final judgment. 1 (DE 1)

The initial case management order established April 30, 2012 as the deadline for conducting discovery and May 31, 2012 as the deadline for filing dispositive motions. (DE 55) However, those dates were extended by thirty days by Order dated January 31, 2012. (DE 86) Plaintiff timely filed the instant motion for partial summary judgment as to Count I of the complaint on July 1, 2013. (DE 91) Defendant filed a motion for leave to respond to Plaintiff's motion for partial summary judgment on August 12, 2013 (DE 104), and, once granted (DE 106), filed his reply and a cross-motion for partial summary judgment on September 3, 2013. (DE 118)

This matter is properly before the court.

II. ANALYSIS

A. Standard of Review

Summary judgment is appropriate where there is no "genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Miller v. City of Calhoun County, 408 F.3d 803, 812-13 (6th Cir. 2005) (quoting Fed. R. Civ. P. 56(c)). A "genuine issue of material fact" is one which, if proven, could adduce a reasonable jury to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The burden for establishing the absence of a genuine factual dispute rests with the moving party. Id. at 249-50.

In deciding whether summary judgment is appropriate, the District Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for a trial." Sowards v. Loudon County, 203 F.3d. 426 (6th Cir. 2000), cert. denied, 531 U.S. 875 (2000). In so doing, the district court must "draw all reasonable inferences in favor of the non-moving party" in its analysis of the pleadings, affidavits, and other submissions. Sadie v. City of Cleveland, 718 F.3d 596, 599 (6th Cir. 2013) (citing Matsushita Elec. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

"The moving party need not support its motion with evidence disproving the non-moving party's claim, but need only show that 'there is an absence of evidence to support the non-moving party's case.'" Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 566 (6th Cir. 2001) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). The non-moving party is not entitled to trial solely on the basis of the pleadings themselves, but must provide more than conclusory allegations, speculation, and unsubstantiated assertions. See Lujuan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990). Rather, at the summary judgment stage, the party opposing summary judgment "must present 'affirmative evidence' to support his/her position; a mere 'scintilla of evidence' is insufficient." Bell v. Ohio State University, 351 F.3d 240, 247 (6th Cir. 2003) (quoting Anderson, 477 U.S. at 252)

B. Defendant's Tax Liability

Plaintiff asserts that the Certificate of Assessment showing the IRS's calculation of Defendant's tax liability provides prima facie evidence of Defendant's tax burden. (Plaintiff's Memorandum in Support of Summary Judgment ("Plaintiff's Br."), DE 91-1, p. 3; DE 9-16, pp. 1-23) As such, the burden shifts to Defendant to prove by a preponderance of evidence that Plaintiff's assessment of his tax liability is other than the $ 295,194.00 reflected in the IRS' Certificate of Assessments. (Plaintiff's Memorandum in Support of Partial Summary Judgment, DE 91-1, pp. 3-4; Declaration of Kenny Odell Justice, DE 91-5, pp. 1-2)

In reply, Defendant provides no evidence that Plaintiff's assessment is erroneous. Rather, Defendant appears to defend against Plaintiff's claims by asserting that the federal tax law ("the Code"), 26 U.S.C. section 1 et seq., imposes a varying regime of taxation depending upon an individual's status. (Defendant's Memorandum in Support of Defendant's Cross-Motion for Summary Judgment ("Defendant's Br."), DE 119, pp. 3-10) According to Plaintiff's argument, only resident aliens and foreign corporations are subject to the mandatory withholding and reporting requirements of the Code. (Defendant's Br., DE 119, p. 22-25)

For U.S. Citizens like Defendant, the Code imposes only a voluntary system of taxation. (Defendant's Br., DE 119, pp. 3-10) Defendant argues that no provision in the Code compels him to file a tax return. (Defendant's Br., DE 119, p. 7) Further, Defendant asserts that the "substitute for return" and Certificate of Assessment prepared by the IRS are only speculative estimates of his tax liability based upon hearsay and untrustworthy third-party reports that may not be recognized by the court as sufficient to establish Defendant's legitimate tax liability. (Defendant's Br., DE 119, pp. 3-9)

Relying on the Internal Revenue Manual ("IRM") section 4.12.1.10.7, Defendant argues that he is not required to file a return and did not consent to pay the amount reflected by the IRS' determination and Certificate of Assessment. (Defendant's Br., DE 119, p. 5) Thus, the liens filed by the IRS and the Certificate of Assessment that Plaintiff desires to have reduced to judgment are "non-statutory legal nullit[ies]." (Defendant's Br., DE 119, p. 5) Accordingly, the IRS must close his case and forego collection of Defendant's portion of the nation's financial burden. (Defendant's Br., DE 119, p. 26) Defendant's argument is patently absurd and finds no support in the Constitution or laws of the United States.

In 1913, a majority of the States authorized and invited Congress to "lay and collect taxes on incomes, from whatever source derived." U.S. Const. Amend. XVI. Congress accepted the populace's invitation in the form of 26 U.S.C. section 1 et seq. The Code imposes upon "every individual who is a citizen or resident of the United States" the obligation to pay income taxes. Id. at section 1. The tax "every individual" is required to pay is determined by tables based upon the individual's "taxable income." Id. at section 1, 3. "Taxable income" is defined as "gross income minus the deductions allowed by this chapter," and is referred to in the Code as "adjusted gross income." Id. at section 63. "Gross income" is an expansive term encompassing "all income from whatever source derived." Id. at section 61; See also United States v. Burke, 504 U.S. 229 (1992). Thus, contrary to Defendant's argument, any individual whose gross income exceeds the deductions allowed by the Code is a "taxpayer."

Also contrary to Defendant's argument, the Code provides that "[r]eturns with respect to income taxes under subtitle A shall be made by . . . [e]very individual having for the taxable year gross income which equals or exceeds the exemption amount." 26 U.S.C. section 6012(a)(1)(A). This filing requirement is not "voluntary" as Defendant believes, but is a compulsion on every "citizen or resident of the United States." Id. at section 1; See Garner v. United States, 424 U.S. 648, 652 (1975). To ensure that each individual's income is reported, the Code also imposes reporting requirements on third party payors such as employers, banks, and investment companies to report to the IRS sums of money paid to individuals in the form of wages or earnings. 26 U.S.C. section 6051. The IRS provides form templates for use by entities with reporting requirements. See Form-W-2 available at http://www.irs.gov/pub/irs-pdf/fw2.pdf, Form-1099-MISC available at http://www.irs.gov/pub/irs-pdf/f1099msc.pdf.

When a taxpayer, such as Defendant, elects not to file a return as he is required to do, or reports an income that differs from third party reports, the Code permits the Secretary of the Treasury, or one of his designees, to assess that individual's tax liability as was done here. Id. at 6020. The Code affords the Secretary great latitude in preparing a "substitute return" for delinquent individuals "from such information as can be obtained through testimony or otherwise." Id. at section 6020(b)(1). Contrary to Defendant's claims here, such "substitute return" is not a legal nullity, but is prima facie evidence of what the delinquent taxpayer's tax liability actually is. Id. at section 6020(b)(2).

As Plaintiff aptly notes, under this framework, the Secretary's Certificate of Assessment carries with it a legal presumption of correctness and provides an adequate basis upon which to reduce the assessed tax liability to final judgment. See United States v. Hillman, 60 F.Appx 563, [91 AFTR.2d 2003-1344] 564 (6th Cir. 2003) (citing United States v. Walton, 909 F.2d 915, 919 [66 A.T.F.R. 2d 90-5379] (6th Cir. 1990)). Plaintiff's motion here places the burden on Defendant to point to "affirmative evidence" that contradicts the Secretary's assessment of his tax liability. See McDermitt v. United States, 954 F.2d 1245, 1251 [69 A.T.F.R.2d 665] (6th Cir. 1992) (noting that the "taxpayer has the burden of proving that the assessment is wrong."). Defendant has failed to meet that burden.

III. CONCLUSION

The Magistrate Judge finds that Defendant has failed to produce any evidence contrary to the Certificate of Assessment relied upon by Plaintiff, and, thus, has failed to rebut the presumption of correctness carried by Plaintiff's proof.

IV. RECOMMENDATION

For the reasons stated above, the undersigned recommends that the Plaintiff's motion for Partial Summary Judgment be GRANTED and the defendant's Motion for Partial Summary Judgment be DENIED.

The parties have fourteen (14) days of being served with a copy of this Review and Recommendation to serve and file written objections to the findings and recommendation proposed herein. A party shall respond to the objecting party's objections to this R&R within fourteen (14) days after being served with a copy thereof. Failure to file specific objections within fourteen (14) days of receipt of this Review and Recommendation may constitute a waiver of further appeal. Keeling v. Warden, Lebanon Corr. Inst., 673 F.3d 452, 458 (6th Cir. 2012) (citing Thomas v. Arn, 474 U.S. 140, reh'g denied, 474 U.S. 111 (1986)).

ENTERED this 17 day of October, 2013.

Joe B. Brown
Magistrate Judge

FOOTNOTES:

/1/ Plaintiff has also filed suit in the Middle District of Pennsylvania to pursue real property assets attributed to Defendant there. See United States of America v. Dustin B. Bogart, et al, Civil Case 4:12-cv-00347. The Pennsylvania property and any claim thereto is not considered as part of Plaintiff's claim or relief requested here.

[JamesVincent]

Further, Defendant asserts that the "substitute for return" and Certificate of Assessment prepared by the IRS are only speculative estimates of his tax liability based upon hearsay and untrustworthy third-party reports that may not be recognized by the court as sufficient to establish Defendant's legitimate tax liability. (Defendant's Br., DE 119, pp. 3-9)

Why would be technically true to my knowledge, which is why you file a return so the true information is there. When I went through this years ago and the IRS filed their substitute returns they had nothing on them but my reported earnings, no write-offs, deductions or anything else. Which, again, is why you file the return so that those things can be applied.

[operabuff]

In my humble opinion, the court got this one only partly right. Section 6020(b) certainly provides the IRS with the authority to prepare and execute a return when a taxpayer fails to file. But the legal basis for the assessment would not have been the substitute for return, because the Service is compelled to use deficiency procedures to assess income taxes in the absence of a return. A section 6020(b) return by itself cannot be the basis for an assessment of income tax. Moreover, the Service need not complete an SFR for the deficiency notice and the assessment resulting from it to be valid. Historically, the Service created SFRs mostly for bookkeeping purposes rather than because they were legally required to. Only with the advent of section 6651(g) did it become important for the Service to create an SFR that met the requirements of section 6020(b), and only then because it allowed the application of the section 6651(a)(2) penalty for failure to pay an amount shown on a return to an amount shown on a return prepared by the Service. See the Tax Court's 2003 Cabirac opinion for background.

Section 6020(b) returns are more important for the assessible taxes such as excise and employment taxes. No deficiency notices are required and the Service may assess the tax shown on a section 6020(b) return directly.

[The Observer]

Section 6020(b) returns are more important for the assessible taxes such as excise and employment taxes. No deficiency notices are required and the Service may assess the tax shown on a section 6020(b) return directly.

Which is, I believe, the reason that revenue officers are not allowed to prepare 6020(b) returns for income taxes.That function is restricted to revenue agents who have expertise in the requirements needed for deficiency assessments. My presumption is if the taxpayer had addressed whether the deficiency notice procedures were followed correctly, the court would have found it to be so.

[AndyK]

According to the recommendation posted above "Plaintiff (the IRS Commissioner) assessed the outstanding tax liability, penalties, and interest against Defendant, Certified those assessments, provided notice to Defendant of the outstanding liability, and made demand for payment."

Since there is no record in the on-line Tax Court files related to either Dustin or Marcy Bogart, it appears that they did not avail themselves of their opportunity to challenge the actions of the IRS there.

Thus, OperaBuff's challenge seems to fall by the wayside. Admittedly, the IRS can not proceed with the final stages of collection until the deficiency has been assessed, said assessment CAN take place as soon as the appropriate administrative and legal deadlilnes have passed.

Presumably, the Bogerts received a 90-day letter and failed to act on it. Once the 90 (150 in the case of a foreign resident) days have passed, the IRS is permitted to proceed based on a SFR or not.

[LPC]

Since there is no record in the on-line Tax Court files related to either Dustin or Marcy Bogart, it appears that they did not avail themselves of their opportunity to challenge the actions of the IRS there.

Thus, OperaBuff's challenge seems to fall by the wayside.

Actually, I think you're confirming OB's point.

As I understand it, his point was that the IRS is not required to prepare a SFR in order to issue a notice of deficiency. A notice of deficiency having been issued, and the taxpayer having failed to file a petition in the Tax Court, the question of whether of not an SFR was prepared becomes irrelevant.

So the court's discussion of section 6020(b) was not necessary to its decision in the case, which I think was OB's point.

[AndyK]

Procedurally, absent a SFR or some mathematical equivalent thereof, how can the IRS compute the tax deficiency AND document the computation?

In many cases, the computation could be done on the back of an envelope ($nnn income determined versus the tax tables yields $mmm tax due less $xxx withheld gives the bottom lin e prior to interest and penalties)

HOWEVER, everything must be done according to formal procedures lest some reviewing court determine that the un-dotted "i" undermines the entire case.

[operabuff]

As I understand it - and the Cabirac opinion bears this out, the SFR is just a dummy form with no computations. From the court's summary of its opinion:

"R’s substitutes for return consisted of the first two pages of a Form 1040 and contained zeros on the relevant lines for computing a tax liability, showed a tax liability of zero, and were not subscribed. R subsequently mailed to P a notice showing proposed tax adjustments. A revenue agent’s report was attached to the notice."

The stat notice itself shows the bottom line tax due (the deficiency) and has attachments showing how the tax was computed. The SFR would not be sent to the taxpayer and only appeared in evidence in Cabirac's case because the issue was whether the IRS had prepared a 6020(b) return that would support imposition of the section 6651(a)(2) penalty. (The court held that the Service had not created a 6020(b) return and disallowed the penalty.)

In response to Cabirac, the Service created a new form (13496) that shows a summary computation and the total tax due, and is subscribed by a revenue agent. The Service also amended the section 6020 regulations to reflect that the form with attachments will constitute a section 6020(b) return. The Service has successfully defended the imposition of the section 6651(a)(2) penalty based on the new form and attachments. But it still sometimes fails to establish the existence of such a return. See, e.g., Thurman v. Commissioner, T.C. Memo. 2013-46.

So the existence of a "6020(b) return" is important for penalty purposes, but completely irrelevant to whether an income tax assessment is valid. And it's also worth noting that the terms "SFR" and "section 6020(b) return" are not interchangeable.

[LPC]

According to Plaintiff's [sic] argument, only resident aliens and foreign corporations are subject to the mandatory withholding and reporting requirements of the Code.

That smells like CrackHead to me.

Further, Defendant [Dustin Bogart] asserts that the "substitute for return" and Certificate of Assessment prepared by the IRS are only speculative estimates of his tax liability based upon hearsay and untrustworthy third-party reports that may not be recognized by the court as sufficient to establish Defendant's legitimate tax liability.

Which also sounds like arguments made by Pete ("the Peter") Hendrickson.

And sure enough, Hendrickson reports correspondence with "Dusty Bogart."

Folks, I think we have a loser.

[AndyK]

OperaBuff has contacted me via PM. I hereby retract anything I posted in contradiction to him.

[The Observer]

UNITED STATES OF AMERICA,
Plaintiff,
v.
DUSTIN B. BOGART,
MARCY A. BOGART, AND
SOUTHERN COUNTRY RANCH,
Defendants.

Release Date: JULY 24, 2014

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION

Judge Sharp

ORDER

The United States filed this suit to reduce to judgment assessments against Defendant Dustin Bogart for unpaid federal income taxes, penalties, and interest (Count 1), and to foreclose federal tax liens and nominee liens against real property located at 5380 State Route 147 in Stewart, Tennessee to satisfy that judgment (Count 2). Pending before the Court are two Reports and Recommendations (R & Rs) Magistrate Judge Brown has issued in the matter.

The first R & R concerns cross-motions for partial summary judgment on Count 1. (Docket No. 127). In it, Magistrate Judge Brown set forth the basic facts underlying the case:

The defendant, Dustin Bogart ("Defendant"), failed
to file tax returns or to pay federal income taxes
from 2000 through 2003. Accordingly, the Internal
Revenue Service ("IRS") determined Defendant's gross
income and the resultant tax liability from "other"
reporting sources. Plaintiff assessed the outstanding
tax liability, penalties, and interest against Defendant,
[c]ertified those assessments, provided notice
to Defendant of the outstanding liability, and made
demand for payment. Plaintiff also filed liens against
Pennsylvania and Tennessee property in which Defendant
purportedly has an ownership interest. Plaintiff
was unsuccessful in securing payment from Defendant
and instituted this action on February 13, 2012 to
reduce these assessed taxes and statutory penalties
to final judgment.

(Id. at 1-2 (record citations omitted)).

A Certificate of Assessment the IRS uses to calculate a taxpayer's tax liability -- like the one used in this case -- is prima facie evidence of a taxpayer's tax burden. See United States v. Fior D'Italia, Inc., 536 U.S. 238, 242 (2002); United States v. Janis, 428 U.S. 433, 440 (1976). Such evidence carries with it a presumption of correctness and provides an adequate basis on which to reduce an assessed tax liability to final judgment. See United States v. Hillman, 60 F. App'x 563, 564 (6th Cir. 2003) (citing United States v. Walton, 909 F.2d 915, 919 (6th Cir. 1990)). When the government presents it, the burden shifts to the taxpayer to provide convincing evidence showing the government's assessment is erroneous. Id.

In this case, the United States offered up the Certificate of Assessment the IRS used to calculate Bogart's tax liability, which was $ 295,194 as of October 17, 2013. Bogart, however, provided no evidence to cast that figure into doubt. Instead, he presented a host of frivolous arguments. One is that the federal tax code subjects only resident aliens and foreign corporations to its mandatory withholding and reporting requirements, but makes those voluntary for U.S. citizens like Bogart. Another is that the tax code contains no provisions that compel Bogart to file tax returns. And yet another is that the Certificate of Assessment is just a speculative estimate that is insufficient to establish his tax liability.

Bogart misses the mark with well-worn, tax-protester arguments that the courts -- including this one -- have uniformly rejected. See generally Dillender v. Carpenters' Pension Trust Fund of St. Louis, 2014 WL 1289599, at *2 (M.D. Tenn. Mar. 31, 2014) (citing cases); U.S. v. Bowden, 2014 WL 1289596, at *3 (M.D. Tenn. Mar. 28, 2014) (same). Because Bogart failed to meet his burden, Magistrate Judge Brown recommended that the Court grant the United States's motion for summary judgment on Count 1 and deny Bogart's cross-motion.

The Court has conducted a de novo review of the R & R and wholly agrees with its findings and conclusions. Moreover, the Court has read and carefully considered Bogart's objections to the R & R (Docket No. 140). Unfortunately, a 23-page rehash of Bogart's summary-judgment filings does not get him any closer to convincing the Court his previously rejected views should win the day. His objections are overruled.

The second R & R pending before the Court pertains to the United States's summary-judgment motion against Defendant Southern Country Ranch on Count 2 of the complaint. 1 (Docket No. 163). The government's motion contends that Dustin Bogart is the equitable owner of the real property and that Southern Country Ranch merely holds title to the property as Bogart's nominee and/or alter ego. The United States seeks a declaration that the federal tax liens and nominee liens against the property, as well as its rights to property Dustin Bogart owns, are valid. And it asks that the liens filed against Southern Country Ranch be foreclosed so that the funds derived from its sale be used to satisfy the judgment rendered against Dustin Bogart under Count 1. As the R & R notes, Bogart and Southern Country Ranch failed to respond to these assertions. (Id. at 7).

Magistrate Judge Brown's R & R lays out in painstaking detail the web of entities and bank accounts through which the United States alleges that Dustin Bogart transferred the real property at issue. (Id. at 3-6). On that basis, the R & R concludes that Southern Country is the alter ego/nominee of Dustin Bogart. (Id. at 9).

But the R & R then goes a step further. Because the tax liability owed under Count 1 is that of Dustin Bogart individually -- and not the joint liability of Dustin and Marcy Bogart -- the R & R reasons that the United States's claims may extend only to the ownership interest of Dustin Bogart, the delinquent taxpayer. (Id.) Tennessee law presumes that couples who acquire property during a marriage hold it as a tenancy by the entirety, unless proven otherwise. See Simpson v. Fowler, 2014 WL 1601137, at *9 (Tenn. Ct. App. April 22, 2014). Because no evidence exists of how the Bogarts took title to the property, Magistrate Judge Brown determined that the presumption applies. As a result, the R & R concluded that the United States can only use half of the proceeds from the sale of the property to satisfy Dustin Bogarts's tax liabilities, since Marcy Bogart is entitled to the other half. (Docket No. 163 at 9-10).

The United States objects on various grounds to the R & R's conclusion that the Bogarts intended to create a tenancy by the entirety in the subject property, (Docket No. 166), and the Court agrees that Magistrate Judge Brown erred in concluding they did. Indeed, the Bogarts unequivocally state that Marcy Bogart does not claim an interest in the property. In its complaint, the United States joined Marcy Bogart as a defendant "because she may claim an interest in the Real Property located [at 5380 State Route 147, Stewart, Tennessee.]" (Docket No. 1 at 2). In their answer, the Bogarts plainly "den[y]" that "Marcy A. Bogart may claim an interest in the Real Property plaintiff wishes to put in issue." (Docket No. 85 at 3). Similarly, the Bogarts answer in one word the government's assertion that "Marcy Bogart is the spouse of the Taxpayer and may claim an interest in the Real Property," (Docket No. 1 at 6): "Denies," (Docket No. 85 at 6). If the Bogarts themselves deny that Marcy Bogart has an interest in the property at issue, the Court sees no reason to conclude to the contrary.

As the Court's conclusions respecting Magistrate Judge Brown's two R & Rs resolve the substantive merits of the case, the remainder of the pending motions are denied as moot.

Therefore, having considered all of the parties' arguments, the Court:

º ACCEPTS Magistrate Judge Brown's R & R concerning
Count 1 (Docket No. 127);

º GRANTS Plaintiff's partial-summary-judgment motion
on Count 1 (Docket No. 91);

º DENIES Defendants cross-motion for partial summary
judgment (Docket No. 118);

º ACCEPTS IN PART and REJECTS IN PART Magistrate Judge
Brown's R & R concerning Count 2 (Docket No. 163);

º GRANTS Plaintiff's motion for summary judgment on
Count 2 (Docket No. 150);

º ORDERS 1) that the United States has valid and subsisting
tax liens against the property at issue; 2) the foreclosure
of the federal tax liens attached to the property
at issue; 3) the sale of the property free and clear
of any right, title, lien, claim, or interest of
any of the parties herein; and 4) the distribution
of the sale proceeds first to pay the expenses of
the sale, second to the United States to satisfy
Dustin Bogart's federal income tax liabilities for
the taxable years 2000, 2001, 2002, and 2003, and
third to Defendants;

º DENIES AS MOOT Plaintiff's motion for default judgment
(Docket No. 92); Defendants' motion for partial summary
judgment (Docket No. 97); Defendants' motion to compel
(Docket No. 125); Defendants' motion to exclude (Docket
No. 135); Defendants' motion for stay (Docket No.
141); Defendants' motion to stay and for leave to
file additional evidence (Docket No. 155); Defendants'
motion for clarification (Docket No. 156); Defendants'
motion to stay and for leave to file additional evidence
(Docket No. 157); Defendants' motion for sanctions
(Docket No. 167); Defendants' motion to dismiss (Docket
No. 171); Defendants' motion to be notified by mail
(Docket No. 173); and Defendants' motion to compel
(Docket No. 174); and

º DIRECTS Plaintiff to submit within 14 days the revised
amount of unpaid federal income taxes, penalties,
and interest that Defendant Dustin Bogart owes Plaintiff
as of the date of the entry of this Order, along
with documentation supporting the revision. The Court
will then enter final judgment in this matter.

It is SO ORDERED.

Kevin H. Sharp
United States District Judge

FOOTNOTES:

/1/ While Count 1 concerns only Dustin Bogart's outstanding tax liability, the complaint also names Marcy Bogart and Southern Country Ranch as third parties who allegedly share ownership interests in real property located in Tennessee with Dustin Bogart. (Docket No. 1 at 2).

[Dr. Caligari]

The United States objects on various grounds to the R & R's conclusion that the Bogarts intended to create a tenancy by the entirety in the subject property, (Docket No. 166), and the Court agrees that Magistrate Judge Brown erred in concluding they did. Indeed, the Bogarts unequivocally state that Marcy Bogart does not claim an interest in the property. In its complaint, the United States joined Marcy Bogart as a defendant "because she may claim an interest in the Real Property located [at 5380 State Route 147, Stewart, Tennessee.]" (Docket No. 1 at 2). In their answer, the Bogarts plainly "den[y]" that "Marcy A. Bogart may claim an interest in the Real Property plaintiff wishes to put in issue." (Docket No. 85 at 3). Similarly, the Bogarts answer in one word the government's assertion that "Marcy Bogart is the spouse of the Taxpayer and may claim an interest in the Real Property," (Docket No. 1 at 6): "Denies," (Docket No. 85 at 6). If the Bogarts themselves deny that Marcy Bogart has an interest in the property at issue, the Court sees no reason to conclude to the contrary.

Can you say "hoist on their own petard," boys and girls?

[JamesVincent]

The United States objects on various grounds to the R & R's conclusion that the Bogarts intended to create a tenancy by the entirety in the subject property, (Docket No. 166), and the Court agrees that Magistrate Judge Brown erred in concluding they did. Indeed, the Bogarts unequivocally state that Marcy Bogart does not claim an interest in the property. In its complaint, the United States joined Marcy Bogart as a defendant "because she may claim an interest in the Real Property located [at 5380 State Route 147, Stewart, Tennessee.]" (Docket No. 1 at 2). In their answer, the Bogarts plainly "den[y]" that "Marcy A. Bogart may claim an interest in the Real Property plaintiff wishes to put in issue." (Docket No. 85 at 3). Similarly, the Bogarts answer in one word the government's assertion that "Marcy Bogart is the spouse of the Taxpayer and may claim an interest in the Real Property," (Docket No. 1 at 6): "Denies," (Docket No. 85 at 6). If the Bogarts themselves deny that Marcy Bogart has an interest in the property at issue, the Court sees no reason to conclude to the contrary.

Can you say "hoist on their own petard," boys and girls?

So if she did actually have an interest in that property, she no longer does? Literally?

[The Observer]

So if she did actually have an interest in that property, she no longer does? Literally?

The district court ruled she never had an interest in the property, based on the facts that (1) no evidence exists to show the intent of the spouses to hold the property in tenancy by the entirety and (2) both spouses denied in their filing that she had any interest in the property.

So the answer to your question is sort of a Schrodinger's Cat experiment. She might have had interest or she might have not. Once the court ruled, it erased any possibility that she had interest in the property at any time.

Until the court made a ruling as to what the evidence shows about the the interest the wife had, anyone could have truthfully stated she had interest or she didn't have interest. Local and state government, lenders, realtors and title insurance issuers could have all made different decisions about what interest she had and acted on that decision accordingly. They could have acted on the presumption (mentioned in the ruling) that she acquired an interest in the property by marriagte through operation of state law. I have seen lenders require a non-borrowing spouse to sign a quitclaim deed if they believe that spouse has no interest in the property of the borrowing spouse - even if there was never an original deed to show the non-borrowing spouse with legal interest.

But it is those kind of decisions that could later trigger a suit to remove the cloud on the title of the property. In a way, the judge did the future buyers a favor by making this ruling; otherwise I could have seen the Bogarts coming back later to allege that the wife had an interest and start filing paper junk to harass the new owners.

Now that I have gone out on a layman's limb, I fully expect the attorneys on this site to hand me my head.

[LPC]

Now that I have gone out on a layman's limb, I fully expect the attorneys on this site to hand me my head.

No, I think you correctly described the situation, and the consequence of the judge's ruling.

This case illustrates why notice is given to all persons who *might* have an interest in the property. If a person might have an interest in the property is served, and they fail to respond, then the decision of the court can eliminate any claim they might have to the property and provide a clear title to whoever purchases at the judicial sale.

And that's why the wife's response denying any interest in the property was so weird, because it was completely unnecessary. It makes me think the wife (and, by extension, the husband) didn't really understand what was going on, justifying the earlier hoist-petard comment.