Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_03-cv-06854/USCOURTS-caed-1_03-cv-06854-6/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

AURELIO MARTIN SEPULVEDA, )

)

)

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Plaintiff, )

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vs. )

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UNITED STATES OF AMERICA, )

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Defendant. )

)

)

No. CV-F-03-6854 OWW/SMS

ORDER GRANTING DEFENDANT'S

RENEWED MOTION FOR SUMMARY

JUDGMENT (Doc. 47) AND

DIRECTING CLERK OF COURT TO

ENTER JUDGMENT FOR DEFENDANT

Aurelio Martin Sepulveda, a state prisoner incarcerated at

Corcoran State Prison and proceeding in pro per, is proceeding

pursuant to a Second Amended Complaint. The Second Amended

Complaint alleges in pertinent part:

10. Plaintiff ... was employed by the

California Substance Abuse Treatment Facility

and State Prison (herein after [sic] SATF)

and hired to weld cuffport tray slots onto

cell doors by the Inmate Day Labor (herein

after [sic] I.D.L.) while plaintiff was

housed in D-Facility from the period of March

21, 2002 through a portion of July, 2002, and

earning wages.

11. Plaintiff ... was then transferred to

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the D-Facility satelite [sic] dinning [sic]

room at the completion of the (SATF) cuffport

project in D-Facility.

12. Plaintiff ... was re-assigned as a Cook

in the D-Facility satelite [sic] kitchen

under job# DFCD.305 D-Fac.Cook.

13. ... [O]n September 07, 2002, he was again

re-assigned to the Institution’s Central

Kitchen as a Lunchroom (sack lunch preparer),

job#MKS-255, and earning wages.

14. ... [I]n November of 2002, he was once

again re-assigned to the D-Facility dinning

[sic] room (satelite [sic] kitchen) as a

Scullary [sic] Leadman job#DRSFD.302, and

earning wages until December 16, 2002 when

plaintiff was transferred to E-Facility.

15. ... [O]n January 1, 2003 [plaintiff] sent

a letter to the United States - Department of

the Treasury - Internal Revenue Service

addressed to Ogden, Utah ... requesting a set

of 1040EZ forms and any other information for

filing of an Income Tax Return for the year

2002.

16. ... [O]n ... February 25, 2003, he

received a letter and attached 1040EZ form

... responding to plaintiff’s request.

17. ... [O]n ... March 03, 2003, plaintiff

filed a timely Claim for Refund pursuant to

26 U.S.C.S. § 7422(a), in recovery of taxes

erroneously assessed and wrongfully collected

for wages earned and taxes paid while

employed at (SATF) .... 

18. ... [T]he tax in question was paid in

full by the California Department of

Corrections (CDC) - Cal. Substance Abuse

Treatment Facility and State Prison (SATF)

his employer and payment/credit applied to

his name and account/social security number

for the tax year 2002.

19. Plaintiff ... filed an Internal Revenue

Service Income Tax 1040EZ form for his wages

earned and taxes paid for the tax year 2002,

while employed at (SATF) in Corcoran ... on

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... March 03, 2003. He attached a cover

letter explaining his reason for not

submitting a W-2 form and that he was an

inmate employed with wages earned. In

substitution he attached a set of State of

California - Department of Corrections

(CDC1697) Inmate Work Supervisor’s Time Log

Sheets for the year 2002, as proof of hours

worked, wages earned, and attached them to

the 1040EZ form, and sent them addressed for

Internal Revenue Service, Fresno, California.

20. Plaintiff ... simultaneously filed Claim

State of California 540 form with the State

of California Franchise Tax Board ....

21. Plaintiff[‘s] ... State Claim was

accepted and processed through reflecting all

payments applied to the tax year 2002 and is

proof of employment.

...

23. ... [In] July of 2003, plaintiff re-filed

a 1040EZ Claim for refund for the year 2002,

and enclosed a formal Appeal signed under

penalty of perjury by way of

letter/Declaration, in regards to his initial

Claim filed in March of 2003.

24. ... [O]n ... August 21, 2003, he received

a Notice (see attached Exhibit - C) sent by

the Defendant United States, dated July 28,

2003, advising plaintiff that his refund in

the amount of $1,142.00 on his claim would

not be issued due to an investigation by

defendant United States. Defendant United

States claimed that Corcoran State Prison

informed them that plaintiff was never

employed at any time during the tax year.

The Second Amended Complaint also alleges that the IRS breached

statutory duties and denied Plaintiff due process in the

handling and investigation of Plaintiff’s claim for refund and

appeal of the denial of the claim for refund. The Second Amended

Complaint seeks a refund of taxes withheld and paid to the

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Internal Revenue Service in the amount of $1,142.00. 

The United States previously moved for summary judgment. In

a tax refund action, any deficiency as determined by the

Commissioner is presumptively correct. Foster v. Commissioner,

756 F.2d 1430, 1439 (9 Cir.1985), cert. denied, 474 U.S. 1055 th

(1986). The United States argued that summary judgment should be

granted because (1) the presumption of correctness requires

Plaintiff to come forward with enough evidence to support a

finding contrary to the Commissioner and (2) Plaintiff cannot

demonstrate that federal taxes were withheld. By Order filed on

August 23, 2006, Plaintiff’s request to postpone ruling on the

motion pursuant to Rule 56(f), Federal Rules of Civil Procedure,

was granted because “the proof of whether the IRS received the

withheld payments for federal income tax shown by the state

prison’s withholding and earning statement is in the possession

of the United States.” (Doc. 43). In addition, discovery was

limited to Plaintiff’s federal tax account transcript:

This document will clarify whether taxes have

been withheld and paid on Plaintiff’s behalf

during the 2002 tax year, and if so, how

much. Defendant shall provide a copy of this

document to Plaintiff ... Thereafter, the

court will entertain a renewed motion for

summary judgment and/or motions for further

discovery.

(Doc. 43).

The United States has filed a Renewed Motion for Summary

Judgment. Plaintiff has filed an opposition to the motion and

the United States has filed a reply.

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A. Governing Standards.

Summary judgment is warranted only “if the pleadings,

depositions, answers to interrogatories, and admissions on file

together with the affidavits, if any, show that there is no

genuine issue as to any material fact.” Rule 56(c), Federal

Rules of Civil Procedure; California v. Campbell, 138 F.3d 772,

780 (9 Cir.1988). Therefore, to defeat a motion for summary th

judgment, the non-moving party must show (i) that a genuine

factual issue exists and (ii) that this factual issue is

material. A genuine issue of material fact exists when the nonmoving party produces evidence on which a reasonable trier of

fact could find in its favor, viewing the record as a whole and

in light of the evidentiary burden the law places on that party. 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The non-moving party cannot simply rest on its allegations

without any significant probative evidence tending to support the

complaint. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th

Cir.2001). The plain language of Rule 56(c) mandates the entry

of summary judgment, after adequate time for discovery, against a

party who fails to make a showing sufficient to establish the

existence of an element essential to the party’s case and on

which that party will bear the burden of proof at trial. In such

a situation, there can be “no genuine issue as to any material

fact,” since a complete failure of proof concerning an essential

element of the nonmoving party’s case necessarily renders all

other facts immaterial. Celotex Corp. v. Catrell, 477 U.S. 317,

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A TXMODA transcript contains current account information 1

obtained from the IRS’s master file. “TXMODA” is the command code

that is entered into the IRS’s integrated data retrieval system

(IDRS) to obtain the transcript. IDRS is essentially the interface

between the IRS employees and IRS’s various computer systems.

Kaeckell v. C.I.R., 2002 WL 881932 (U.S.Tax Ct.2002).

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322-323 (1986).

B. Background.

Ronald R. Hansen, Custody Captain of the Investigative

Services Unit at the California Substance Abuse Treatment

Facility and State Prison - Corcoran (CSAFT/SP), avers in

pertinent part:

3. Every able-bodied inmate committed to the

custody of the Director of Corrections is

obligated to work as assigned by the staff of

the Department of Corrections and by

personnel of other agencies to whom the

inmate’s custody and supervision may be

delegated.

4. The amounts paid to inmates assigned to

appropriate work, education, vocation,

therapeutic, or other institution programs

are not subject to federal or state

withholding.

5. Wages paid to inmates who participate in

the Joint Venture Program, however, shall

have federal and state taxes withheld from

such wages. During 2002, CSATF/SP did not

have a Joint Venture Program. Nor does

CSAFT/SP have a Joint Venture Program at the

present time [November 2004].

The Declaration of Ronald Wergin, IRS Settlement Officer,

avers in pertinent part:1

3. As a Settlement Officer, I have been

trained to access and interpret the IRS’s

electronic information databases, otherwise

known as Integrated Data Retrieval System

(‘IDRS’), and I have twenty-four (24) years

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experience accessing and interpreting IDRS

records.

5. I reviewed the IDRS records with respect

pulveda, social security number

 for the taxable year 2002. In

particular, I reviewed TXMODA and IRPTR. A

TXMODA contains all tax module information

for a specific type of tax period. A tax

module is tax data for one type of tax

return, for one tax period, and for one

taxpayer. An IRPTR contains all W-2, Form

1098 and Form 1099 information for a specific

tax period for one taxpayer. ....

5. The TXMODA transcript for taxable year

2002 had the transaction codes 806 and 768

for the date April 15, 2003. Transaction

code 806 indicates that a taxpayer has

received a credit for withheld taxes or

excess FICA. On the same line, the

transcript contains the notation: ‘WTHLD TX

CR POSTED W/RETURN.’ Transaction code 768

indicates that a taxpayer received earned

income credit.

6. The same TXMODA transcript has the

transaction codes 807 and 765 for the same

date April 15, 2003. Transaction code 807

indicates that the IRS reversed the credit

for withheld taxes or excess FICA. 

Transaction code 765 indicates that the IRS

reversed the earned income credit.

7. Customarily, reversals made pursuant to

transaction codes 807 and 765 indicate that

the original postings were made in error. In

addition, the notation ‘WTHLD TX POSTED

W/RETURN’ indicates that the taxpayer entered

credit for withholding taxes on his return. 

However, this does not indicate that

withholding actually occurred.

8. IRPTR transcripts indicate if withholding

occurred. The IRPTR transcript for taxable

year 2002 contains the notations ‘TOTAL NO.

DOCS. 0' and ‘NO. SUMMARIZED 0.’ These

notations indicate that no employers reported

income or withholding for the taxpayer for

taxable year 2002.

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9. Based on the TXMODA and the IRPTR, I

conclude that no employer withheld income

taxes or FICA for the taxpayer for taxable

year 2002.

The only evidence presented by Plaintiff that any

withholding occurred is the “Return Information Notice” dated

April 2, 2003 issued by the California Franchise Tax Board to

Aurelio M. Sepulveda, 2978 Everdale Ct., San Jose CA 95148,

attached as Exhibit B to the Second Amended Complaint. Exhibit B

sets forth a “2002 Tax Year Summary”, which shows taxable income

of $2,102.00; tax of $21.00, total tax liability of -$80.00,

total tax liability of $0.00, and a revised balance of $0.00. 

The “2002 Tax Year Summary” states:

The balance for this tax year reflects all

payments or credits applied to your account

through 03/28/03. We did not include

balances for other tax years in this notice. 

If you have a balance on another tax year, we

will send a separate billing.

Exhibit B also sets forth an “Explanation of Benefits”:

We revised your California state income tax

return for the 2002 tax year. The

information below explains why we made the

revisions:

We disallowed the contribution you requested

because you have no credit available for the

tax year.

We revised your contribution to the

California Seniors Special Fund for one of

the following reasons: (1) the contribution

you designated was more than the amount

allowed for your senior exemption, or (b) the

amount of credit you had available was not

enough to allow the contribution.

We revised the amount of withholding claimed

on your return. The codes below explain why. 

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We based the amount of the withholding

allowed on your Forms W-2, Forms 1099, and

other withholding documents. We also may

have received information from other tax

agencies or your employers.

Please note, you cannot claim the following

Form W-2 items as California income tax

withholding:

- State Disability Insurance

(CASDI, SDI, VPDI).

- Local tax withheld.

- Any income tax withheld for

another state.

We revised the amount to match the total

amount shown on your withholding documents.

However, there is no evidence that any Form W-2 was issued

to Plaintiff for the tax year 2002. In fact, the Second Amended

Complaint alleges that none was issued. Nor does Plaintiff

present any evidence that Corcoran State Prison or the Department

of Corrections withheld any amounts from Plaintiff’s earnings at

the prison for the purpose of paying federal income tax for tax

year 2002. Plaintiff submits a copy of his Inmate Trust Account

Statement for the period January 1, 2002 through July 3, 2002. 

There is nothing on this statement from which it may be inferred

that federal income tax was withheld.

Plaintiff nonetheless argues that summary judgment should be

denied. He refers to the July 28, 2003 response from the IRS to

plaintiff’s inquiry regarding his claim for refund attached as

Exhibit C to the Second Amended Complaint:

Corcoran State Prison informed us they did

not employ you at any time during calendar

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year 2002. Therefore you will not be issued

the refund of $1,142.00 claimed on your 2002

tax year federal income tax return.

Notwithstanding Hanson’s declaration, Plaintiff argues that an

issue of fact exists because of the statements on the “Return

Information Notice” issued by the Franchise Tax Board. 

Plaintiff also argues that summary judgment should be denied

because there are issues of fact that he was in an employeremployee relationship with the prison during 2002, citing

Internal Revenue Code provisions, Revenue Rulings and cases

defining an employee of a subcontractor and provisions requiring

withholding by employers. In addition, if permitted discovery,

he argues that he can provide evidence that he was sub-contracted

to install the cuffport tray slots to demonstrate that federal

income taxes were in fact withheld. Plaintiff challenges the

IDRS transcripts submitted with the Declaration of Ronald Wergin,

contending that these transcripts contain many unexplained

deleted portions of notations and that no declarations were

submitted by the agents involved indicating the reasons for the

changes. Plaintiff further argues that the notation “TOTAL NO.

DOCS. 0" AND “NO. SUMMARIZED 0" do not indicate that no employers

reported income or withholding during the tax year as averred by

Wergin. Plaintiff contends that “Total No. Docs.” means total

number of documents and that “No. Summarized” means number

summarized. Plaintiff contends that he should be permitted to

conduct discovery so that a more complete record can be obtained

by way of documents from Corcoran State Prison and “their tax

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documents for the Year for all employees to test the reliability

of the submitted Transcripts.”

Rule 56(f), Federal Rules of Civil Procedure, provides in

pertinent part:

Should it appear from the affidavits of a

party opposing the motion that the party

cannot for reasons stated present by

affidavit facts essential to justify the

party’s opposition, the court may refuse the

application for judgment or may order a

continuance to permit affidavits to be

obtained or depositions to be taken or

discovery to be had or may make such other

order as is just.

As explained in Harris v. Duty Free Shoppers Limited Partnership,

940 F.2d 1272, 1276 (9 Cir. 1991): th

Ordinarily, summary judgment should not be

granted when there are relevant facts

remaining to be discovered, but the party

seeking discovery bears the burden of showing

what specific facts it hopes to discover that

will raise an issue of material fact.

 

None of Plaintiff’s contentions or the proposed discovery

are relevant or likely to lead to evidence creating a genuine

issue of material fact. The Second Amended Complaint seeks a

refund to federal income tax paid for the tax year 2002. 

Plaintiff did not pay any such tax. The evidence from Corcoran

State Prison and the IRS is that no such tax was paid as

withholding. No contention is made by Plaintiff that the IRS

claimed that Plaintiff owed federal income tax for the tax year

2002 and did not pay the tax. Plaintiff is not entitled to and

cannot receive a refund from the IRS of monies that were not paid

to the IRS and which the IRS does not contend Plaintiff owed. 

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Because of this conclusion, it is unnecessary to address 2

Plaintiff’s claims that the IRS violated statutory duties and due

process. Therefore, summary judgment for Defendant is granted on

these claims.

12

Plaintiff’s citation to Olson v. United States, 952 F.2d 236 (9th

Cir.1991)(“If an employer withholds the taxes but fails to pay

them over to the government, the employee is nevertheless

credited with payment”) is inapposite because there is no claim

that Plaintiff owed any federal income tax.2

ACCORDINGLY, as set forth above,

1. Defendant’s Renewed Motion for Summary Judgment is

GRANTED.

2. The Clerk of the Court is directed to enter judgment for

defendant.

IT IS SO ORDERED.

Dated: February 28, 2007 /s/ Oliver W. Wanger 

668554 UNITED STATES DISTRICT JUDGE

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