28 F. Supp. 3d 256
S.D.N.Y.2014Background
- Government filed Oct. 4, 2011 to reduce IRS tax assessments against Rozbruchs and Ortho and to foreclose federal tax liens on property they own at 420 East 72nd Street.
- Ortho is a New York professional corporation; Rozbruchs hold stock in Tenants Corporation and leases for Units 7J, 1J, IK within the building.
- IRS assessed deficiencies for 1999-2011 income taxes and trust fund recovery penalties against the Rozbruchs and Ortho; amounts are disputed only as to timely collection periods by defendants.
- IRS issued notices of assessment; defendants did not pay the full amounts; the Government moved for summary judgment on both liability and lien foreclosure.
- Court granted Government’s summary judgment on tax liabilities and foreclosed liens; discussed timeliness, notice/demand dates, and collection periods, with residual lien-priority conference to be scheduled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TFRP assessments under § 6672 were validly made. | Rozbruchs were responsible persons; willfulness shown; §6751(b)(1) not applicable to TFRP. | §6751(b)(1) applies to penalties, so pre-approval needed for TFRP. | TFRP assessments treated as taxes; §6751(b)(1) not required. |
| Whether timeliness defenses defeat the TFRP assessments for 2nd/3rd quarters of 2003. | Assessment timely; §6501(a) waiver by failure to raise defense in answer. | These periods are time-barred under 3-year limit; not timely. | Defendants waived §6501 defenses; judgments entered on TFRP for these periods. |
| Whether interest calculations on TFRP assessments were proper. | Interest accrues from notice and demand dates; dates supported by IRS records. | Interest dates miscalculated; should be based on notice/demand dates claimed by defendants. | Interest dates upheld as calculated from notice and demand; objections rejected. |
| Whether the collection periods expired to bar the Government’s suit on certain assessments. | 3-year/10-year collection windows preserved; waiver due to lack of defense in pleadings. | Collections periods expired for certain assessments (1999, 4Q2000, etc.). | Waived defenses rejected; the Government’s suit timely; summary judgment for liability. |
| Whether the Government may foreclose its tax liens on Rozbruch/Ortho property. | Liens arise under 26 U.S.C. § 6321 and attach to property; foreclosure proper. | None contested; liens prioritized among parties unresolved. | Foreclosure granted; liens attach to units; priority to be determined if disputed. |
Key Cases Cited
- United States v. Sweeny, 418 F. Supp. 2d 492 (S.D.N.Y. 2006) (IRS calculations presumptively valid; government entitled to judgment unless invalidated)
- United States v. Chrein, 368 F. Supp. 2d 278 (S.D.N.Y. 2005) (presumption of liability for tax calculations; burden on taxpayer to prove invalidity)
- Chariot Plastics, Inc. v. United States, 28 F. Supp. 2d 874 (S.D.N.Y. 1998) (tax assessments and penalties treated as liabilities to be resolved on summary judgment)
- Pizzarello v. United States, 408 F.2d 579 (2d Cir. 1969) (burden on taxpayer to prove assessment invalidity; IRS presumptively correct)
- Hochstein v. United States, 900 F.2d 543 (2d Cir. 1990) (liability under § 6672 depends on whether individual was a responsible person and willfulness)
- Kelly v. Lethert, 362 F.2d 629 (8th Cir. 1966) (TFRP-like liability treated as tax liability for purposes of § 6751)
- United States v. Moskowitz, Passman & Edelman, 603 F.3d 162 (2d Cir. 2010) (reiterates lien and collection principles under federal tax law)
- United States v. Rodgers, 461 U.S. 677 (U.S. 1983) (§ 7403 authorizes foreclosure to enforce federal tax liens)
- National Bank of Commerce, 472 U.S. 713 (U.S. 1985) (broad scope of tax liens and property coverage under § 6321)
- Craft v. United States, 535 U.S. 274 (U.S. 2002) (state law controls interest in property for lien purposes)