Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-05610/USCOURTS-cand-4_14-cv-05610-8/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 28:1346 Recovery of IRS Tax

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAMUEL KORNHAUSER,

Plaintiff,

v.

UNITED STATES OF AMERICA,

Defendant.

Case No. 14-cv-05610-HSG 

ORDER DENYING PLAINTIFF'S AND 

DEFENDANT'S CROSS MOTIONS FOR 

SUMMARY JUDGMENT

Re: Dkt. Nos. 35, 37

Plaintiff Samuel Kornhauser filed the current action against Defendant the United States of 

America to recover an alleged overpayment of his 1998 federal tax liability. Plaintiff and 

Defendant filed cross-motions for summary judgment. Dkt. Nos. 35, 37. For the reasons 

articulated below, and as ordered at the hearing on February 11, 2016, the Court hereby DENIES 

both motions for summary judgment.

I. BACKGROUND

The following facts are not genuinely in dispute.

In 1998, Plaintiff’s federal tax liability was $174,764. See Dkt. No. 47, Ex. 2 (“Form 

4340”) at 2. Official Internal Revenue Service (“IRS”) records contain no evidence of Plaintiff 

filing a 1998 income tax return prior to 2007 or making payments towards his 1998 income tax 

liability prior to 2009. Id.; Dkt. No. 38-3, Ex. 6; Dkt. No. 46, Petrovic Decl., ¶ 7.

On September 7, 2009, the IRS assessed Plaintiff $174,764 for his 1998 federal income tax 

liability. Dkt. No. 46, Petrovic Decl., ¶ 8. In response to repeated notices from the IRS, Plaintiff 

paid the IRS assessment of $174,764 in January of 2013. See Dkt. No. 36, Ex. 4 at 46-47; Dkt. 

No. 38-1, Ex. 2 at 4. On June 26, 2013, Plaintiff claimed a tax refund of $174,764 because he 

believed that he had paid his 1998 federal tax liability twice — once in July of 2000 and again in 

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January 2013. See Dkt. No. 36, Ex. 4 at 44-45. The IRS denied the claim.

As of July 2000, upon acceptance of a hand-delivered federal tax return, the IRS’s 

procedure was to stamp the return with a “Received Date Stamp” and to provide the taxpayer with 

either (1) a stamped copied of the tax return if the taxpayer had brought an extra copy or (2) a 

photocopy of the front page of the return reflecting the “Received Date Stamp.” See Dkt. No. 46, 

Holness Decl., ¶ 5. If a taxpayer hand-delivered his federal income tax payment with his tax 

return, the IRS would also provide a photocopy of the check. Id. ¶ 7. 

Although Plaintiff contends that he filed and paid his 1998 federal taxes in-person on July 

21, 2000, Plaintiff has neither a stamped copy of his tax return nor a photocopy of the stamped 

first page of his tax return. Dkt. No. 40, Ex. 7 at 19:5-16. Nor does Plaintiff possess a photocopy 

of the check allegedly used to pay his 1998 federal taxes, or other documentary evidence that such 

a check was issued. See id. at 25:2-21, 28:11-18. 

Also in July 2000, the California Franchise Tax Board required a taxpayer filing his 1998 

state tax return to attach a copy of his federal tax return. See Dkt. No. 36, Ex. 3 at 20:2-5. On July 

21, 2000, the California Franchise Tax Board received Plaintiff’s 1998 state tax return and 

associated payment, along with an unstamped copy of his 1998 federal tax return. See Dkt. No. 

36, Exs. 2, 11 at 22:18-23:2.

There are no third-party witnesses who corroborate Plaintiff’s testimony that he filed and 

paid his 1998 federal taxes on July 21, 2000. See Dkt. No. 49, Ex. 7 at 18:6-10.

II. LEGAL STANDARD

Summary judgment is proper where the pleadings and evidence demonstrate “there is no 

genuine issue as to any material fact and . . . the movant is entitled to judgment as a matter of 

law.” Fed. R. Civ. P. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A material 

issue of fact is a question a trier of fact must answer to determine the rights of the parties under the 

applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute 

is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving 

party.” Id.

The moving party bears “the initial responsibility of informing the district court of the 

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basis for its motion.” Celotex, 477 U.S. at 323. To satisfy this burden, the moving party must 

demonstrate that no genuine issue of material fact exists for trial. Id. at 322. To survive a motion 

for summary judgment, the non-moving party must then show that there are genuine factual issues 

that can only be resolved by the trier of fact. Reese v. Jefferson Sch. Dist., No. 14J, 208 F.3d 736, 

738 (9th Cir. 2000). To do so, the non-moving party must present specific facts creating a genuine 

issue of material fact. Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 324. “A conclusory, self-serving 

affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine 

issue of material fact.” F.T.C. v. Publ’g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 

1997), as amended (Apr. 11, 1997).

The court must review the record as a whole and draw all reasonable inferences in favor of 

the non-moving party. Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). 

However, unsupported conjecture or conclusory statements are insufficient to defeat summary 

judgment. Id. Moreover, the court is not required “to scour the record in search of a genuine issue 

of triable fact,” Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996) (citations omitted), but rather 

may limit its review to the documents submitted for purposes of summary judgment and those 

parts of the record specifically referenced therein.” Carmen v. San Francisco Unified Sch. Dist., 

237 F.3d 1026, 1030 (9th Cir. 2001).

A. Discussion

The Parties move for summary judgment with regard to two issues: (1) whether Plaintiff 

filed his 1998 federal tax return on or around July 21, 2000 and (2) whether Plaintiff paid his 1998 

federal tax liability on or around July 21, 2000. Plaintiff also moves for summary judgment as to 

(3) whether the IRS’s notice of deficiency and tax assessment is barred by the three-year statute of 

limitations under 26 U.S.C. § 6501 and (4) whether the IRS is equitably estopped from assessing 

Plaintiff’s 1998 tax liability because of evidence spoliation.

i. Plaintiff’s Motion for Summary Judgment

a. Whether Plaintiff Filed 1998 Return and Made His Payment in 2000

The crux of Plaintiff’s motion is that “there is no admissible evidence from the IRS records 

to refute that [Plaintiff] delivered his 1998 tax return and . . . tax payment . . . to the San Francisco 

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IRS officer on July 21, 2000.” See Dkt. No. 35, Pl.’s Mot. for Summ. J. (“Pl. MSJ”), at 8.

Plaintiff is incorrect. Defendant has submitted Plaintiff’s form 4340, which shows no 

record of Plaintiff filing his 1998 federal tax return prior to 2007 or making payments towards his 

1998 income tax liability prior to 2009. See Form 4340 at 2; Dkt. No. 38-3, Ex. 6; Dkt. No. 46, 

Petrovic Decl., ¶ 7. Certificates of Assessments and Payments, such as forms 4340, are “probative 

evidence in and of themselves and, in the absence of contrary evidence, are sufficient to establish 

that . . . assessments were properly made.” Koff v. United States, 3 F.3d 1297, 1298 (9th Cir. 

1993). Moreover, Certificates of Assessments and Payments are admissible in evidence as public 

records. Hughes v. United States, 953 F.2d 531, 539 (9th Cir. 1992).

Accordingly, the Court may consider Plaintiff’s form 4340, and the IRS has proffered 

sufficient evidence to raise a genuine dispute as to whether Plaintiff filed and paid his 1998 federal 

taxes on or around July 21, 2000.

b. Statute of Limitations

Plaintiff also contends that the IRS’s tax assessment is barred by the three-year statute of 

limitations under 26 U.S.C. § 6501(a). See Pl. MSJ at 11-12. 

26 U.S.C. § 6501(a) reads: “[T]he amount of any tax imposed by this title shall be assessed 

within 3 years after the return was filed.” 26 U.S.C. § 6501(a) (emphasis added). However, 26 

U.S.C. § 6501(c)(3) provides that “[i]n the case of failure to file a return, the tax may be 

assessed . . . at any time.” 26 U.S.C. § 6501(c)(3) (emphasis added).

Here, the applicable subsection of 26 U.S.C. § 6501 hinges on whether Plaintiff filed his 

1998 federal tax return on or about July 21, 2000. See 26 U.S.C. § 6501(a); 26 U.S.C. 

§ 6501(c)(3). As stated above, the Court has found that there is a genuine dispute of material fact 

as to whether, and when, Plaintiff filed his 1998 federal tax return, and thus, the Court cannot 

resolve the statute of limitations issue at this stage.

c. Equitable Estoppel Due to Spoliation of Evidence

Finally, Plaintiff asserts that the IRS should be equitably estopped from its tax assessment

because it engaged in spoliation of evidence. See Pl. MSJ at 9-11. The IRS strongly contests any 

allegation of affirmative misconduct. Dkt. No. 45 at 15-19; Dkt. No. 46, Doolittle Decl., ¶¶ 5, 7. 

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Equitable estoppel requires: “(1) knowledge of the true facts by the party to be estopped; 

(2) intent to induce reliance or actions giving rise to a belief in that intent; (3) ignorance of the true 

facts by the relying party; and (4) detrimental reliance.” Bolt v. United States, 944 F.2d 603, 609 

(9th Cir. 1991). “[F]or the government to be estopped there must be affirmative misconduct (not 

mere negligence) and a serious injustice outweighing the damage to the public interest of 

estopping the government.” Id.

This fact-intensive issue also is not appropriate for summary judgment, and the Court

accordingly DENIES Plaintiff’s motion for summary judgment.

ii. Defendant’s Motion for Summary Judgment

Defendant’s motion for summary judgment turns on its argument that Plaintiff’s 

uncorroborated, “self-serving” testimony as to when he filed and paid his 1998 federal taxes

cannot overcome the presumption of correctness given to IRS deficiency determinations. See Dkt. 

No. 37, Def.’s Mot. for Summ. J., at 5-6.

However, the presumption of correctness given to IRS deficiency determinations is just 

that — a presumption that can be overcome with sufficient evidence at trial, not a final 

determination of the merits. Furthermore, that Plaintiff’s declarations and testimony are selfserving is of no consequence. “[D]eclarations are often self-serving, and this is properly so 

because the party submitting it would use the declaration to support his or her position.” Nigro v. 

Sears, Roebuck & Co., 784 F.3d 495, 497 (9th Cir. 2015). The self-serving nature of Plaintiff’s 

evidence may bear on its credibility and weight at trial, but a “district court may not disregard a 

piece of evidence at the summary judgment stage solely based on its self-serving nature.” Id.

Plaintiff’s testimony contains sufficient facts about the filing and payment of his 1998 

taxes such that it cannot be categorized as unsupported conjecture or conclusory. See, e.g., Dkt. 

No. 36, Exhibit 10; see also Hernandez v. Spacelabs Med. Inc., 343 F.3d at 1112. Moreover, 

Plaintiff’s 1998 California state tax return received on July 21, 2000, with the attached copy of his 

completed federal tax return has been recognized as “strong circumstantial evidence” as to when 

he completed and filed his federal tax return. See Lewis v. United States, 144 F.3d 1220, 1223 

(9th Cir. 1998); see Dkt. No. 36, Exs. 2, 11 at 22:18-23:2. Plaintiff has submitted sufficient 

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evidence to create a genuine dispute of material fact as to when he filed and paid his 1998 federal 

taxes. 

Accordingly, the Court DENIES Defendant’s motion for summary judgment.

III. CONCLUSION

For the above reasons, Plaintiff’s and Defendant’s cross motions for summary judgment 

are DENIED. A jury’s resolution of the issues in this case will hinge almost entirely on their 

assessment of witness credibility. Having not seen any witness testify live, the Court has no basis 

for evaluating such credibility at this point, and will simply point out the obvious: a trial in a case 

this heavily reliant on the jury’s basic credibility assessments will involve substantial uncertainty 

and entail significant litigation risk for both sides.

The Parties shall engage in the previously ordered settlement conference as directed by 

Magistrate Judge James. See Dkt. No. 56. All other dates, including the April 12, 2016 pretrial 

conference and the May 2, 2016 trial date remain in effect.

IT IS SO ORDERED.

Dated:

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

2/19/2016

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