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United States v. Austin

United States District Court, D. New Mexico

August 9, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
MARK AUSTIN, and CATHERINE AUSTIN, Defendants.

          PROPOSED FINDINGS AND RECOMMENDED DISPOSITION

         Defendant Mark Austin failed to file income tax returns for multiple years, leading the Internal Revenue Service (IRS) to assess substantial tax liabilities. The United States filed this action to reduce to judgment the federal tax assessments against Mr. Austin plus civil penalty assessments against Mr. Austin and his wife, Catherine Austin, and to foreclose on real property Mr. and Mrs. Austin own in San Juan County, New Mexico.

         On December 27, 2017, the United States moved for partial[1] summary judgment against Mr. Austin. Doc. 46. Mr. Austin filed a response on February 9, 2018 (Doc. 57), and the United States replied on February 12, 2018 (Doc. 58). On March 27, 2018, United States District Judge Martha Vazquez referred the motion to the undersigned for entry of proposed findings and a recommended disposition. Doc. 64. As set forth more fully below, I recommend the Court GRANT the United States' motion for partial summary judgment against Mr. Austin as to tax years 1999-2002, 2004-2005, 2009-2010 and DENY the motion as to tax year 2008.

         I. Factual Background

         The following facts are undisputed. On August 30, 2000, Mr. and Mrs. Austin purchased real property by warranty deed in San Juan County, New Mexico. Doc. 47-14. The warranty deed indicates that Mr. and Mrs. Austin purchased the property “as husband and wife.” Id. The property (hereinafter “Anasazi Trail Property”) has the following legal description:

The Southwest Quarter of the Southeast Quarter of the Southeast Quarter of the Northeast Quarter (SW1/4SE1/4SE1/4NE1/4) of Section Twenty-Six (26) in Township Thirty (30) North of Range Thirteen (13) West, N.M.P.M., San Juan County, New Mexico.

Id. According to county tax records, Mr. and Mrs. Austin still own the Anasazi Trail Property. Doc. 47-15. Mr. and Mrs. Austin do not reside at or have a homestead interest in the Anasazi Trail Property. Doc. 29 (Answer) at ¶ 24.

         Mr. Austin failed to file federal income tax returns for nine years: specifically, tax years 1999, 2000, 2001, 2002, 2004, 2005, 2008, 2009, and 2010. Doc. 47-1 (Certifications of Lack of Record for Form 1040).[2] Pursuant to its authority under 26 U.S.C. § 6020(b), the IRS prepared substitute returns. See Doc. 47-2 (Form 4340 Certification of Assessments, Payments, and other Specified Matters); Doc. 47-3 (Declaration of Ignacio Perez de la Cruz). The IRS issued Statutory Notices of Deficiency, which the United States has produced for all tax years at issue except tax year 2008. See Docs. 47-4 to 47-11 (Letters number 3219(SC/CG) and Forms 5564 “Notice of Deficiency-Waiver”).

         The IRS assessed that, as of November 6, 2017, Mr. Austin owed a total of $1, 861, 642.62 in unpaid federal income taxes and statutory additions (penalties and interest). See Doc. 47-12 (Declaration of Sandra Davaz); Doc. 47-13 (IRS Account Transcripts). The IRS has filed notices of a federal tax lien with the San Juan County Clerk in connection with Mr. Austin's delinquent Form 1040 tax liabilities for the tax years at issue. Doc. 47-16. The following chart shows the IRS' assessment of Mr. Austin's Form 1040 liability for each year and the date it filed the notices of its federal tax liens.

Tax Year

Assessment Date[3]

Amount due as of November 6, 2017[4]

Notice of Federal Tax Lien filed[5]

1999

October 2, 2006

$369, 579.98

February 2, 2012

2000

May 1, 2006

$279, 176.96

February 2, 2012

2001

May 8, 2006

$159, 684.73

February 2, 2012

2002

May 8, 2006

$363, 060.29

February 2, 2012

2004

June 4, 2007

$172, 295.45

February 2, 2012

2005

February 25, 2008

$186, 277.67

February 2, 2012

2008

March 19, 2012

$118, 053.40

October 11, 2012

2009

February 11, 2013

$158, 065.74

March 8, 2013

2010

September 1, 2014

$55, 448.40

September 26, 2014

TOTAL:

$1, 861, 642.62

         On November 24, 2015, the United States filed this lawsuit pursuant to 26 U.S.C. § 7401 seeking 1) to reduce to judgment the federal tax assessments against Mr. and Mrs. Austin, 2) to foreclose federal tax liens on property Mr. and Mrs. Austin own in San Juan County, including the Anasazi Trail Property, 3) obtain a sale of the property, 4) obtain a judgment for any amount remaining unpaid after the distribution and application of the property sale proceeds, and 5) award a 10% surcharge if the United States must use the remedies under Subchapter B or C of the Federal Collections Procedure Act. See Doc. 1.

         In addition to Mr. and Mrs. Austin, the United States named Ocwen Loan Servicing LLC, Indymac F.S.B., OneWest Bank, and Discover Bank as defendants because they may claim an interest in the property at issue in this lawsuit. Id. On March 16, 2016, the Court entered default judgment against Discover Bank, IndyMac F.S.B., and OneWest Bank. Doc. 27. Thereafter, the parties agreed to dismiss Ocwen Loan Servicing, LLC with prejudice under Fed.R.Civ.P. 41(a)(1)(ii) (Doc. 56), leaving Mr. and Mrs. Austin as the only two remaining defendants in this action. As noted earlier, the United States is now seeking summary judgment solely as to Mr. Austin. See Doc. 46, at n.1 (“Granting of this motion for partial summary judgment allowing foreclosure of a property valued at under $50, 000 would make the judgments for the $5, 000 penalties (including the one against Mrs. Austin) largely irrelevant.”).

         II. Legal Standards

         Summary judgment is appropriate if the United States shows “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). Once the United States meets its initial burden of demonstrating the absence of a genuine issue of material fact, the burden shifts to Mr. Austin to set forth specific facts showing that there is a genuine issue for trial. See Schneider v. City of Grand Junction Police Dep't, 717 F.3d 760, 767 (10th Cir. 2013). The Court views the facts in the light most favorable to Mr. Austin as the non-moving party and draws all reasonable inferences in his favor. See Tabor v. Hilti, Inc., 703 F.3d 1206, 1215 (10th Cir. 2013). The Court also construes Mr. Austin's pro se pleadings liberally. See Childs v. Miller, 713 F.3d 1262, 1264 (10th Cir. 2013). Nonetheless, pro se parties must follow the same rules of procedure as other litigants. Kay v. Bemis, 500 F.3d 1214, 1218 (10th Cir. 2007). The Court will not supply additional factual allegations or construct a legal theory on Mr. Austin's behalf. See Smith v. United States, 561 F.3d 1090, 1096 (10th Cir. 2009).

         III. ...


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