Download Regular Type; Download Large Type; and after the jump. Due next Wednesday, April 9.
Two things in handling this case:
1) Math is required, as you must calculate time periods and number of dayss. You may use this site, which allows you to calculate the number of days between two dates.
2) You have pieces of deposition testimony and pieces of Affidavits. The Affidavit paragraphs are numbered. Each question and corresponding answer in the Dep is number (Q1 + A1; Q2 + A2; etc.). Be specific in what you cite to.
Pay attention to the role you are told to play.
Essay # 7: (Sec. A)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
UNITED STATES OF )
AMERICA, )
Plaintiff )
v. ) 24-cv-0404
ARTHUR STOVER and )
GIGI STOVER, ) FILED: Oct. 20, 2024
Defendants )
Complaint
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2. Defendants Arthur Stover and Gigi Stover are a married couple.
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5. In 2011, Defendants sold a family business for $ 1.4 million.
6. On November 24, 2012, the Internal Revenue Service (“IRS”) assessed a tax of $ 160,000 on Defendants for taxes on the sale of the family business.
7. Defendants have not paid this tax bill.
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Count I: 26 U.S.C. § 7401: Collection or Recovery of Taxes
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
UNITED STATES OF )
AMERICA, )
Plaintiff )
v. ) 24-cv-0404
ARTHUR STOVER and )
GIGI STOVER, )
Answer to the Complaint
Response to Allegations
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2. Admitted.
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5. Admitted.
6. Admitted.
7. Admitted.
Affirmative Defenses
First Affirmative Defense: Statute of Limitations
1. The United States imposed tax liability on November 24, 2012.
2. The United States filed this action on October 20, 2024.
3. The United States filed this action outside of the applicable 10-year limitations period of 26 U.S.C. § 6502(a)(1).
Substantive Law
26 U.S.C. § 7401: Authorization of Civil Action
A civil action for the collection or recovery of taxes shall be commenced when the Secretary authorizes or sanctions the proceedings and the Attorney General or his delegate directs that the action be commenced.
26 U.S.C. § 6502: Collection After Assessment
(a) Length of period
Where the assessment of any tax imposed by this title has been made within the period of limitation properly applicable thereto, such tax may be collected by a proceeding in court, but only if the proceeding is begun—
(1) within 10 years after the assessment of the tax.
26 U.S.C. § 6503: Suspension of Running of Period of Limitation
(a) Issuance of statutory notice of deficiency
(1) General rule: The running of the period of limitations provided in section 6502 on a proceeding in court shall be suspended for the period during which the Secretary is prohibited from making the assessment or from collecting by levy under § 6331.
26 U.S.C. § 6331: Levy and Distraint
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(k) The Secretary shall not make an assessment or collect a levy while certain offers of installment agreement are pending or in effect.
(2) Installment agreements
No levy may be made on the property or rights to property of any person with respect to any unpaid tax—
(A) during the period that an offer by such person for an installment agreement for payment of such unpaid tax is pending with the Secretary;
(B) if such offer for an installment agreement is rejected by the Secretary, during the 30 days thereafter;
United States v. Galletti (2004):
Sections 6503(a)(1) and 6331(k) toll or suspend the ten-year limitations period of § 6502(a)(1) for actions under § 7401. During the period of the identified statutory actions, the time period stops. In effect, these provisions add time to the limitations period. The period for the United States to bring a tax action is ten years (§ 6502(a)(1)) from the date of the assessment plus the number of days during which any offer of proposed installment agreement is pending plus 30 days (the period following rejection of that installment agreement). § 6331(k)(2). A tax action must be filed within that total number of days from the date of assessment.
Record Evidence
Undisputed Facts
1. This action was commenced on October 20, 2024.
2. Defendants submitted an offer for an installment agreement, but the United States rejected the proposed agreement.
Transaction Record of Athur Stover & Gigi Stover (Married Couple, Filing Jointly)
(Official Government Record, Maintained by Internal Revenue Service)
Entry # 1: November 24, 2012: Notification of tax liability sent and received by Taxpayers.
Amount of liability: $ 160,000.
Entry # 2: December 12, 2012: Proposed Installment Agreement received from Taxpayers.
Entry # 3: October 16, 2014: Proposed Installment Agreement rejected by Secretary.
Deposition of Arthur Stover (Excerpt—relevant provisions only)
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Q1: Okay. So you knew in 2008 that you had a $160,000 tax bill coming?
A2: Yes.
Q2: And you agree that you owe that amount?
A2: Yes.
Q3: When did you learn of the tax deficiency—when did you receive the tax bill?
A3: We received the notice in November 2012. November 24, 2012.
Q4: Okay. When you received notice of that tax liability, did you make any plans for it?
A5: Well, we made an appointment with my CPA, and somewhere through that process in the first three or six months of 2013, we ... brought them on board with the power of attorney in that middle of 2013.
Q6: What did you expect them to do .... What advice did you get?
A6: Well, what advice? In 2013, he rolled out what his plan was. He was going to reach out to the IRS and make contact and find out what our options are. Really at that point, we knew we couldn't pay it lump sum, you know, so we were depending on him. I'm not sure what I was expecting.
Q7: You said you knew you couldn't pay it lump sum?
A7: Yes. In 2013 with the way things were going, it wasn't going to happen, and that's when we went to our CPA and said, “Listen, we need some – we need to get you to help us and reach out.” It's very stressful, of course....
Q8: Did you ever discuss paying the taxes over a series of smaller payments?
A9: I don't believe so.
Q10: So you hired your CPA. What did you – so I'm just confused.... [D]id they tell you what they were going to do?
A10: Yeah. Yeah. They were going to reach out to the IRS, see if there's any sort of arrangements that can be made – a pay schedule. And that's kind of where we let them go and said, “Yes. See what you can do. See what our options are.”
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Q11: Earlier I asked whether you had discussed with your CPA a series of smaller payments over time to resolve your tax liability, correct?
A12: No. I was referring to when I said that we were talking about some sort of – whatever options. I don't even know at that time if I even knew a pay period or pay schedule or anything. Honestly I was just – what does a taxpayer do when he's like this? That's the advice I was looking for ... wise counsel.
Q13: Gotcha. And he ... advised you of some sort of payment plan over time?
A13: Yeah.
Q14: Okay. What date did that conversation happen?
A14: Well, it had to be in like, May, June, or July of 2013 because the power of attorney was signed in, like, I think June or July that year.
Q15: How do you figure that?
A15: How do I figure that that's – because that would have been the time that we were talking about the debt. That would have been 2013. The first three to six months of the year is when we had the realization, I guess would be a way to say it, that we weren't going to make this happen. It wasn't going to work. So we sat down with our CPA and told him our pickle, and then over a handful of meetings we came up with a plan.
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Q16: Why did you wait so long to talk to the CPA about it?
A17: I think at the time, you know, Christmas of 2012—right after we received the notice of deficiency—we were still thinking that we were going to be okay. We were just – and I'm going from memory here. We were just thinking the market was going to turn because it was pretty volatile and it was going up and down. And then right in the first three months of 2013 I think is when, if my memory is right, that everything tanked big time. I think that was the punch in the gut for us and when we reached out in earnest to the CPA to hire him within the months after that—May or June or July.
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
UNITED STATES OF )
AMERICA, )
Plaintiff )
v. ) 24-cv-0404
ARTHUR STOVER and )
GIGI STOVER, )
Plaintiff’s Motion for Summary Judgment on Defendant’s Affirmative Defense
There is no genuine dispute that this action, filed on October 20, 2024, is timely. The extensive periods during which the limitations period was tolled or suspended over attempts to establish an installment plan extended the limitations period to October 27, 2024; this action was timely filed one week prior to that deadline.
Defendant’s deposition testimony, which is blatantly contradicted by the government’s evidence, is self-serving and generous towards defendant’s case. It therefore cannot create a dispute of fact.
For Defendants, oppose the Motion for Summary Judgment.
