Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_12-cv-08117/USCOURTS-azd-3_12-cv-08117-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7401 IRS: Tax Liability

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

United States of America, 

Plaintiff, 

v. 

Louis F. DeSerio; Susan DeSerio, 

Defendants.

No. CV-12-08117-PCT-GMS

ORDER 

 Pending before the Court is Plaintiff’s Motion for Summary Judgment. (Doc. 26.) 

For the following reasons, the Motion is granted. 

BACKGROUND 

 This case arises from Plaintiff United States’ effort to obtain payment for 

Defendant Louis DeSerio’s outstanding federal employment and unemployment tax 

liabilities for the years 1993–1996, his outstanding federal income tax liabilities and 

penalties for the years 1992–1994 and 2002–2003, and for Defendants’ Louis and Susan 

DeSerio’s outstanding federal income tax liabilities for the years 1997–2000 and 2007. 

(Doc. 26–1 at 1–2.) Plaintiff seeks a judgment in its favor against the DeSerios for these 

liabilities and to foreclose its federal tax liens on two properties in Cornville, Arizona, 

both titled in Louis DeSerio’s name. The United States asks that the Court foreclose these 

federal tax liens against the Cornville properties and apply the proceeds of those sales 

toward the Defendants’ outstanding tax liabilities. (Id.) 

 The United States moves for summary judgment on these claims. (Doc. 26.) 

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Defendants dispute neither the facts in this case nor the law cited by Plaintiff. (Doc. 32). 

Defendants instead request that the Court craft an order that recognizes that the DeSerios 

have made diligent attempts to reach a solution with the Internal Revenue Service 

regarding this matter. 

DISCUSSION 

I. Legal Standard 

 Summary judgment is appropriate if the evidence, viewed in the light most 

favorable to the nonmoving party, demonstrates “that 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). 

II. Analysis 

 Here, Defendants concede that “the United States is entitled to summary judgment 

as a matter of fact and of law.” (Doc. 32 at 3.) Defendants instead appeal to the Court’s 

sense of fairness and equity to “design an order that is reasonable in light of the 

DeSerios’ diligent efforts to resolve their issues with the IRS.” (Id.) 

 The DeSerios assert that they were the victim of their financial advisor who was 

later convicted for tax evasion. But, as the Government notes, Mr. DeSerio admits he 

knew that it was a mistake to follow the advisor’s guidance as early as 1995. (Doc. 32-1 

at 2.) 

 The DeSerios acknowledge that they have a tax liability to the government that 

exceeds one million dollars. Further, the parties apparently agree that the property on 

which the government seeks to foreclose has an actual appraised value of $455,000. The 

DeSerios nevertheless propose, without citing any authority that would permit it, that the 

Court oblige the government to take a reverse mortgage on the property, as opposed to 

what it might realize at a foreclosure sale. The DeSerios believe that, based on the value 

of the property, they can qualify for a reverse mortgage of around $225,000 (Doc. 32 at 

4). Nevertheless, the DeSerios argue that the real estate market is poor and that the 

forced foreclosure sale “will probably only net about the same as the amount obtained 

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through the reverse mortgage.” (Id. at 5.) 

 The Court, in very narrow circumstances has the discretion to decline to authorize 

a foreclosure sale. Section 7403(c) of the Internal Revenue code states that “the court . . . 

in all cases where a claim or interest of the United States therein is established, may 

decree a sale of such property, by the property officer of the court . . . .” 26 U.S.C. § 

7403(c). This language “affords district courts limited discretion in determining whether 

to order the sale of property to satisfy delinquent tax liabilities.” United States v. Gibson, 

817 F.2d 1406, 1407 (9th Cir. 1987) (citing United States v. Rodgers, 461 U.S. 677, 680 

(1983)). However, this limited discretion is not applicable in the present action. 

 “District courts may exercise this limited discretion in individual cases to take into 

account both the government's interest in prompt and certain collection of delinquent 

taxes and the possibility that innocent third parties will be unduly harmed by that effort.” 

Id. Here, no such third party interests are alleged. (SOF ¶¶ 62, 63.) The Supreme Court 

has stated that there are “virtually no circumstances . . . in which it would be permissible 

to refuse to authorize a sale simply to protect the interests of the delinquent taxpayer 

himself or herself.” United States v. Rodgers, 461 U.S. 677, 709-10 (1983). Defendants 

have cited no authority to suggest their circumstance nonetheless warrants the Court’s 

exercise of discretion. The Supreme Court has emphasized that “the limited discretion 

accorded by § 7403 should be exercised rigorously and sparingly, keeping in mind the 

Government's paramount interest in prompt and certain collection of delinquent taxes.” 

Id. at 711.Therefore, 

IT IS ORDERED that Plaintiff’s Motion for Summary Judgment (Doc. 26) is 

granted and the Clerk of Court is directed to enter judgment as follows:

 1. Judgment is entered in favor of the United States and against Louis DeSerio 

in the amount of $175,369.75 plus interest accruing after June 30, 2013, pursuant to 26 

U.S.C. § 6601, 6621, and 6622 and 28 U.S.C. § 1961(c) until paid, for the unpaid balance 

of federal employment tax liabilities for all four quarters for tax years 1993 through 1996, 

and for the unpaid balance of unemployment tax liabilities for the tax years 1993-1996. 

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 2. Judgment is entered in favor of the United States and against Louis 

DeSerio, in the amount of $853,260.54, plus interest accruing after June 30, 2013, 

pursuant to 26 U.S.C. § 6601, 6621, and 6622 and 28 U.S.C. § 1961(c) until paid, for the 

unpaid balance of federal income tax liabilities for 1992-1994 and 2002-2003. 

 3. Judgment is entered in favor of the United States and against Louis and 

Susan DeSerio, jointly and severally, in the amount of $202,425.11 plus interest accruing 

after June 30, 2013, pursuant to 26 U.S.C. § 6601, 6621, and 6622 and 28 U.S.C. 

§ 961(c) until paid, for the unpaid balance of federal employment tax liabilities for the 

tax years 1997-2000 and 2007. 

 4. The United States is entitled to foreclose its tax liens against the properties 

identified in the Complaint. The Court directs the United States to file a proposed form 

order setting forth the terms and conditions of sale. 

 Dated this 12th day of February, 2014. 

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