Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_02-cv-05141/USCOURTS-caed-1_02-cv-05141-4/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7403 Suit to Enforce Federal Tax Lien

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

)

)

)

Plaintiff, )

)

vs. )

)

)

JAMES LITTLE, et al., )

)

)

Defendant. )

)

)

No. CV-F-02-CV-5141 REC/DLB

ORDER GRANTING PLAINTIFF'S

MOTION FOR PARTIAL SUMMARY

JUDGMENT (Doc. 100) 

On August 29, 2005, the court heard the United States’

motion for partial summary judgment. Upon due consideration of

the record and the arguments of the parties, the court grants

this motion for the reasons set forth herein.

The United States has filed this civil action pursuant to 26

U.S.C. §§ 7401 and 7403 to reduce to judgment certain federal

income tax assessments against defendants James and Lorna Marie

Little and to foreclose related federal tax liens against them on

certain real property located in Tulare County, referred to as

the Lemon Cove Property.

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The United States moves the court for partial summary

judgment against defendants James and Lorna Little on the ground

that there are no genuine issues of material fact with respect to

the Littles’ federal income tax liabilities for the years 1991

through 1994 and that the United States is entitled to partial

summary judgment that:

A. Defendant James Little is indebted to the United States

for the federal income tax assessments against him for the years

1991 through 1994 in the amount of $925,016.16, plus applicable

interest, penalties and other statutory additions from March 1,

2005, and 

B. Defendant Lorna Little is indebted to the United States

for the federal income tax assessments against her for the years

1991 through 1994 in the amount of $806,936.83, plus applicable

interest, penalties, and other statutory additions from March 1,

2005.

1. United States’ Statement of Facts in Support of Partial

Summary Judgment.

The court concludes that the facts set forth in this section

of the order are undisputed. The court addresses the Littles’

challenges to these facts and to the motion for partial summary

judgment in the following section.

James and Lorna Little have been married since at least

1981. The Littles filed joint federal income tax returns (Forms

1040) for the years 1989 and 1990. 

The Littles refused to file federal income tax returns

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(Forms 1040) for the years 1991 through 1994, asserting such

arguments as they are not citizens of the United States and that

their wages are not subject to payroll tax withholding. James

Little claimed sixty-six exemptions on his 1992 Form W-4 filed

with his employer, Montgomery Ward, Inc. 

The IRS sent a notice to the Littles, requesting that they

file income tax returns. The Littles refused to do so and

otherwise did not provide any information to the IRS regarding

their income for 1991 through 1993. The IRS audited the Littles

regarding their income in 1991 through 1993. Based on

information returns, e.g. Forms W-2 and Forms 1099, that third

parties filed with the IRS, as well as other documents submitted

by third parties in response to IRS requests, the IRS prepared

separate substitute returns for James and Lorna Little pursuant

to 26 U.S.C. § 6020(b). 

On October 20, 1994, the IRS sent James and Lorna Little

separate notices of deficiency for the years 1991 through 1993,

notifying them of the IRS’s determination that the Littles owed

additional taxes, interest and statutory additions, and that they

had ninety days to petition the United States Tax Court to

redetermine the deficiencies.

The Littles did not petition the United States Tax Court for

redetermination of the deficiencies nor did they pay the

deficiencies.

On June 12, 1995, the IRS assessed James Little federal

income taxes, interest, and penalties for 1991 through 1993 as

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follows:

Tax Period Type of Tax Assessment

Date

Amount

Assessed

1991 Income (Form

1040)

06-12-1995 $308.00 (UETP)

$15,518.00

(LFP)

$65,830.00 (T)

$20,406.68 (I)

1992 Income (Form

1040)

06-12-1995 $2,315.00

(UETP)

$13,262,00

(LFP)

$53,049.00 (T)

$12,256.13 (I)

1993 Income (Form

1040)

06-12-1995 $2,812.00

(UETP)

$17,018.00

(LFP)

$76,550.00 (T)

$8,911.60 (I)

$288,236.41

On June 12, 1995, the IRS assessed Lorna Little federal

income taxes, interest and penalties for 1991 through 1993 as

follows:

Tax Period Type of Tax Assessment

Date

Amount

Assessed

1991 Income (Form

1040)

06-12-1995 $149.00 (UETP)

$15,367.00

(LFP)

$63,348.00 (T)

$21,237.26 (I)

1992 Income (Form

1040)

06-12-1995 $2,188.00

(UETP)

$12,522.00

(LFP)

$50,088.00 (T)

$11,572.09 (I)

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1993 Income (Form

1040)

06-12-1995 $2,891.00

(UETP)

$17,255.00

(LFP)

$69,021.00 (T)

$9,036.03 (I)

$274,674,38

On June 12, 1995, the IRS sent James and Lorna Little demands for

payment of the assessments against them for the years 1991

through 1993.

The Littles did not file a federal income tax return or

otherwise provide any information regarding their income in 1994.

The IRS audited the Littles regarding their income in 1994. 

Based on information returns, e.g. Forms W-2 and Forms 1099, that

third parties filed with the IRS, the IRS prepared separate

substitute returns for James and Lorna Little for 1994 pursuant

to 26 U.S.C. § 6020(b). On November 2, 1998, the IRS sent James

and Lorna Little separate notices of deficiency for the year

1994, notifying them that they owed additional taxes, interest

and other statutory additions, and that they had ninety days to

petition the United States Tax Court to redetermine the

deficiencies.

The Littles did not petition the United States Tax Court nor

did they pay the deficiencies for 1994. 

On April 5, 1999, the IRS assessed James Little federal

income taxes and related interest and penalties as follows:

Tax Period Type of Tax Assessment

Date

Amount

Assessed

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1994 Income (Form

1040)

04-05-1999 $5,630.00

(UETP)

$27,598.00

(LFP)

$120,558.00

(T)

$56,749.59 (I)

$210,535.59

On April 5, 1999, the IRS assessed Lorna Little federal

income taxes and related interest and penalties as follows:

Tax Period Type of Tax Assessment

Date

Amount

Assessed

1994 Income (Form

1040)

04-05-1999 $3,620.00

(UETP)

$17,567.00

(LFP)

$70,268.00 (T)

$36,123.44 (I)

$127,578.44

On April 5, 1999, the IRS sent James and Lorna Little

demands for payment of the assessments against them for the year

1994.

As of March 1, 2005, the total outstanding balances on the

assessments against James Little is $925,016.61, and on the

assessments against Lorna Little is $806,936.83.

2. Littles’ Oppositions to Motion for Partial Summary

Judgment.

The Littles have filed three separate oppositions to this

motion for partial summary judgment, one on April 11, 2005 (Doc.

112), one of May 9, 2005 (Doc. 113), and one on August 17, 2005

(Doc. 122). The Littles’ August 17 filing also includes prayers

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The court concludes that there is no basis for the imposition 1

of sanctions on the United States and denies the Littles’ request.

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for sanctions against the United States.1

The Littles oppose this motion concerning the use by the

United States of the terms “substitute for return” and

“substitute return”. When the Littles did not file income tax

returns for the taxable years at issue, the IRS prepared

substitute returns for those taxable years pursuant to 26 U.S.C.

§ 6020(b). Section 6020(b)(1) provides in pertinent part:

If any person fails to make any return

required by any internal revenue law or

regulation made thereunder at the time

prescribed therefor ..., the Secretary shall

make such return from his own knowledge and

from such information as he can obtain

through testimony or otherwise.

Section 6020(b)(2) provides that “[a]ny return so made and

subscribed by the Secretary shall be prima facie good and

sufficient for all legal purposes.” The IRS is not required to

prepare a substitute return prior to issuing a notice of

deficiency or an assessment. See Roat v. C.I.R., 847 F.2d 1379,

1381-1382 (9 Cir. 1988); Pargett v. United States, 1991 WL 5168 th

(9 Cir. 1991); Pack v. United States, 1995 WL 783591 (E.D.Cal. th

1995). The Littles contend that the United States has improperly

used the terms “substitute return” for the term “substitute for

return” and that the IRS did not follow the procedures set forth

in the IRS manual in preparing the substitute returns. In

addition, the Littles argue that the IRS, in preparing substitute

returns under Section 6020 is limited to showing their status as

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“single” or “married filing separately”. None of the Littles’

objections to the substitute returns are relevant or material to

their opposition to the motion for partial summary judgment. In

Geiselman v. United States, 961 F.2d 1 (1 Cir.), cert. denied, st

506 U.S. 891 (1992), the First Circuit rejected the taxpayer’s

argument that the failure by the IRS to prepare adequate

substitute returns tainted the notice of deficiency, holding in

pertinent part:

The substitute returns thus may have been of

no practical or legal value to the IRS in

calculating Michael’s deficiency or preparing

the notice, but that fact (if it is a fact)

has no consequence in this case. The

Internal Revenue Code’s deficiency procedures

‘do not require the Commissioner to prepare a

return on a taxpayer’s behalf before

determining and issuing a notice of

deficiency.’ ... When a taxpayer fails to

file any return, ‘it is as if he filed a

return showing a zero amount for purposes of

a deficiency.’ ... The deficiency is simply

‘the amount of tax due’ ... and it can be

calculated, and the notice prepared, on that

basis.

961 F.2d at 5. See also Wos v. C.I.R., 110 Fed.Appx. 689 (7th

Cir. 2004):

... Wos argues that there has been no valid

determination of his tax liability because

the Commissioner filed for each year a

substitute return labeled as a ‘substitute

for return.’ The tax code authorizes the

Commissioner to make a ‘return’ from

available information in determining the tax

liability of those who do not file returns;

the code nowhere prescribes a form or name

for this return ... Moreover, a substitute

return is not a precondition for issuing a

notice of deficiency, so it makes no

difference here whether or not the two

returns made on behalf of Wos were valid.

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Consequently, the court rules that the Littles’ opposition to

the motion for partial summary judgment based on assertions

involving the substitute returns prepared by the IRS for the

taxable years at issue are without merit.

The Littles further argue that the presumption of

correctness accorded to a notice of deficiency applies only when

the issue is before the United States Tax Court. The Littles

contend:

No FRCP rule assigns such a presumption

because the Federal District Courts do not

have authority to hear challenges to the

Notice of Deficiency. The rules in the Tax

Court and Federal District Courts are

obviously not the same, therefore it is

difficult for the Defendants to grasp the

contention that a [sic] application of a

presumption of correctness in the Fresno

District Court is anything beyond a courtesy

to the tax court. 

The Littles’ argument is without merit. Palmer v. United

States Internal Revenue Service, 116 F.3d 1309 (9 Cir. 1997) is th

a case in which the taxpayers did not petition the United States

Tax Court after the notice of deficiency was issued but, rather,

ignored them and filed a wrongful levy action in the district

court. The United States counterclaimed to enforce the tax liens

and filed a third-party complaint to reduce the federal tax

assessments to judgment. The Ninth Circuit held in pertinent

part:

In an action to collect taxes, the government

bears the initial burden of proof ... The

Commissioner’s deficiency determinations and

assessments for unpaid taxes are normally

entitled to a presumption of correctness so

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long as they are supported by a minimal

factual foundation ... The presumption shifts

the burden of proof to the taxpayers to show

that the determination is incorrect ....

...

Congress has specified no particular methods

or evidentiary burdens on the Commissioner

when choosing a method for reconstructing a

taxpayer’s income under Section 446. The

Commissioner, therefore, has wide discretion

in choosing an income-reconstruction method

... Where the Commissioner’s method of

calculating income is rationally based,

courts afford a presumption of correctness to

the Commissioner’s determination ... The

taxpayer has the burden of proving the method

to be wrong ....

116 F.3d at 1312. 

In its brief, the United States, referring to 26 U.S.C. §

7491, contends:

[I]n court proceedings after July 22, 1998,

if a taxpayer introduces credible evidence as

to any factual issue relating to a tax

liability, then the burden of proof shifts

back to the United States as to that issue. 

This provision, however, applies only if the

taxpayer has (1) complied with the

substantiation requirements; (2) maintained

all required records; and (3) cooperated with

the IRS’s reasonable requests for

information.

The Littles argue that Section 7491 does not apply to this

court proceeding because the examinations of the taxable years at

issue commenced prior to the effective date of Section 7491,

i.e., July 22, 1998. 

The Littles are correct on the law. Section 7491 applies to

court proceedings arising in connection with examinations

beginning after July 22, 1998. See Seawright v. Commissioner,

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117 T.C. No. 24, 2001 WL 1631496 (U.S.Tax Ct. 2001); Sykes v.

Commissioner, 2001 WL 759903 (U.S.Tax Ct. 2001); United States v.

Isley, 356 F.Supp.2d 391, 396-397 (D.N.J. 2004). However,

because Section 7491 actually benefits the taxpayers in court

proceedings, the Littles’ contention does not negate the United

States entitlement to partial summary judgment.

The Littles further refer the court to 26 U.S.C. § 7403(c)

authorizes this court “to proceed in a de novo position” in

resolving this action. 

This position also is without merit. The Littles cite no

authority for this position and the court can find none. The

standard of proof is forth in Palmer.

The Littles, noting that the Form 4340 is extracted from the

Individual Master File (IMF), contend that “it is clear that

transactions exist on the Individual Master File ... which are

not included on the Form 4340 belying the certification as a true

and complete copy of the record.” In so contending, the Littles

refer the court to excerpts from the Internal Revenue Service

Manual apparently copied by the Littles from the Internal Revenue

Service website and attached to their opposition filed on April

11, 2005 (Doc. 112) as exhibit 10. 

The Littles do not describe the transaction(s) they believe

were listed on their IMFs which are not included in the Forms

4340. Forms 4340 are derived from coded information in the IRS’s

computer system. An IMF is the file maintained by the IRS that

includes transactions on an individual’s tax accounts, including

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The Littles pose similar objections to the court’s 2

consideration of the declaration of IRS collection group manager

Martha Rodriguez attached as Exhibit W to the first Statement of

Undisputed Facts, wherein Ms. Rodriguez sets forth the outstanding

balances of the Littles’ federal income tax assessments as of

January 1, 2003. 

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Forms 1040 and related documents. The IMF is written in coded

form, and a code book referred to as the “ADP” is used to

decipher the code. See United States v. Boyce, 148 F.Supp.2d

1069, 1076 n.3 (S.D.Cal. 2001). Absent any clearer description

by the Littles of the transactions they contend are not included

in the Forms 4340 

The Littles object to the court’s consideration of the

Declaration of IRS Technical Services Advisor, Alan Pobre, which

declaration is attached as exhibit 1 to the United States

memorandum in support of this motion for partial summary

judgment. Pobre avers in pertinent part that he is a duly 2

commissioned Technical Services advisor employed by the Small

Business/Self-Employed Division of the Internal Revenue Service,

that he has been so employed for over three years, and that he

was a revenue officer for over 14 years. Pobre further avers:

3. As a Technical Services advisor, among

other things, I am responsible for the

Litigation Desk and for responding to U.S.

Department of Justice requests for

information regarding taxpayers involved in

district and bankruptcy court cases.

4. As a Technical Services advisor, I have

access to the relevant IRS administrative

files, including computer records, regarding

those taxpayers. I am also generally

familiar with how those administrative files

are generated and kept by the Service.

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5. Trial Attorney Jeffrey S. Swyers from the

Tax Division, U.S. Department of Justice, has

requested that I provide the outstanding

balances of James and Lorna Little’s

respective federal income tax liabilities for

the years 1991 through 1994.

6. According the [sic] Service’s computer

records, the outstanding balances as of March

1, 2005 on James Little’s tax liabilities,

including interest, penalty, and other

statutory additions [total $925,016.61]

...

7. According the [sic] Service’s computer

records, the outstanding balances as of March

1, 2005 on Lorna Little’s tax liabilities,

including interest, penalty, and other

statutory additions [total $806,936.83}

The Littles present ten pages of objections to the court’s

consideration of Pobre’s declaration, contending that his

averments are hearsay, that his declaration does not lay a proper

foundation, fails to identify the records he is referring to,

where and when the records were created and by whom, and fails to

provide enough factual information to establish that there are

any such records in existence. The Littles argue that the

averments in Pobre’s declaration “amount to mere hearsay

statements about a third parties alleged records, created by an

unknown and nameless third party whom the plaintiff and Pobre

have failed and refused to disclose to defendants and to the

court in this case, in violation of the mandatory discovery and

disclosure provisions in the Federal Rules of Civil Procedure, &

in violation of the Federal Rules of Evidence Regarding Hearsay;

& the best evidence rule”. [Underling and capitalization

deleted]. In addition, the Littles argue that Pobre’s

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declaration cannot be considered by this court for any purpose

because it is made in violation of this

courts previous amended Scheduling Order of:

10/15/2004 in that: Pobre is a witness for

the plaintiff, and: He is an expert witness

for the plaintiff, who is testifying by

declaration concerning his own personal

technical knowledge and experience regarding

the specialized management, function,

operations of records, records creation,

generation, keeping of the ‘Internal Revenue

Service’ for which he has claimed he conducts

specialized work for, which requires expert

specialized technical knowledge and training

which would certify him and or qualify him as

an expert witness for the plaintiff in this

case; and said witness was never previously

disclosed by plaintiff to defendants in this

case as required by this court’s Amended

Scheduling Order, and the Federal Rules of

Civil Procedure.

The Littles’ hearsay and best evidence objections to Pobre’s

declaration do not preclude partial summary judgment. Rule 56

permits the use of affidavits in evaluating a motion for summary

judgment. While the facts underlying the affidavit must be of a

type that would be admissible as evidence, the affidavit itself

does not have to be in a form that would be admissible at trial. 

Hughes v. United States, 953 F.2d 531, 543 (9 Cir. 1991). th

Furthermore, the court concludes that Pobre’s declaration does

not make him an expert witness within the meaning of the Federal

Rules of Civil Procedure and Evidence. Pobre’s declaration

merely summarizes the information contained on the IRS computers.

The Littles also object to the Forms 4340, Certificates of

Assessment filed as exhibits I, J, R and S to the first Statement

of Undisputed Facts (Doc. 36). Each of these Forms 4340 has

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attached to it a “Certificate of Official Record” dated November

22, 2004 and executed by E.M. Washington, Chief,

Accounting/Control Services Operations, Internal Revenue Service,

which certificate asserts that the Form 4340 is “a true Form

4340" for either James or Lorna Little for the respective tax

year. 

The Littles object to the court’s consideration of the Forms

4340 because the “Certificates of Official Record” were prepared

by E.M. Washington in anticipation of this litigation and were

signed years after the “alleged transaction in question”, that

E.M. Washington has failed to lay a foundation that he has any

personal knowledge of the location of the records, the person or

persons who created the records, the person or persons who signed

the “original 23-C assessments”. The Littles further object the

Forms 4340 are “merely a hearsay representation of Vaguely

referred to ‘records,’ which records themselves have Not been

specifically identified or produced for the court or defendants,

and that the Forms 4340 are not admissible under any of the

exceptions to the hearsay rule “because they were not prepared in

the ordinary course of business, but were specially prepared and

signed by E.M. Washington FOR THIS LITIGATION MANY YEARS AFTER

THE TRANSACTIONS THEY CLAIM TO MEMORIALIZE.” The Littles further

argues that the Forms 4340 are inadmissible because, in the

absence of the actual substitute returns prepared by the IRS for

each taxable year, “the claim of the existence of any actual

‘Substitute for Returns’ for the years in question amounts to a

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Hearsay statement, and the statements of alleged ‘23C’

‘assessment dates in the Forms 4340's of the alleged ‘Substitutes

for Returns’ are also Hearsay statements by ‘E.M. Washington’ in

the absence of any statement or testimony by E.M. Washington

under oath that he is the one who created, signed, and executed

the alleged ‘Substitutes for Returns’”.

All of these objections to the admission of the Forms 4340

are without merit. Forms 4340 are admissible hearsay as public

records under Rule 803(8), Federal Rules of Evidence. Hughes v.

United States, 953 F.2d 531, 539-540 (9 Cir. 1991). Forms 4340 th

are admissible even though they are computer-generated documents

prepared exclusively for litigation. See United States v. Gabel,

2002 WL 1396782 (N.D.Cal. 2002); United States v. Sitka, 1994 WL

389473 (D.Conn. 1994). Furthermore, a certified Form 4340

produced by a witness who did not make the form and who had no

personal knowledge of its contents is admissible. Egbert v.

United States, 752 F.Supp. 1010, 1019 (D.Wy.1990), aff’d, 940

F.2d 1539 (10 Cir.), cert. denied, 502 U.S. 1016 (1991). th

The Littles further argue that the Forms 4340 are

inadmissible because they “were not previously provided the

defendants prior to this litigation when they requested the

record of assessment via Freedom of Information Act requests.” 

However, the FOIA requests attached to the Littles’ objections

requested the “Official Internal Revenue Service Non-Master

Transcript” for the years 1991 through 2001. A “non master file”

is a manual accounting system controlling certain types of

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returns that are not processed through the general IRS computer

system to the master file. See United States v. Burdine, 205

F.Supp.2d 1175, 1179 (W.D.Wash. 2002). Therefore, that the IRS

did not comply with these FOIA requests does not render the Forms

4340 inadmissible. See United States v. Gabel, supra, 2002 WL

1396782. 

Submitted as exhibits M and N in support of this motion for

partial summary judgment are copies of IRS Information Returns

Master File Transcripts regarding James Little for 1991 and 1992,

which Rex Lee, trial attorney for the Tax Division, United States

Department of Justice avers are as contained in the IRS’s

administrative files. These transcripts refer to numerous Forms

1099-B reported by Shearson Lehman Brothers, Inc. and the amounts

of income reported on those Forms 1099-B.

The Littles object to the Forms 1099 and 1099-B relied upon

by the IRS in calculating their income for the relevant years and

to the transcripts as inadmissible hearsay and a violation of the

best evidence rule. 

The United States argues that the IRS Information Returns

Master File Transcripts and the Forms 1099-B reported thereon are

admissible as records of regularly conducted activity pursuant to

Rule 803(6), Federal Rules of Evidence, contending that these are

official records regarding the Littles’ tax liabilities and their

assessment kept in the course of the IRS’s regularly conducted

business.

Rule 803(6) provides that the following is not excluded by

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the hearsay rule, even though the declarant is available as a

witness:

A memorandum, report, record, or data

compilation, in any form, of acts, events,

conditions, opinions, or diagnoses, made at

or near the time by, or from information

transmitted by, a person with knowledge, if

kept in the course of a regularly conducted

business activity, and if it was the regular

practice of that business activity to make

the memorandum, report, record, or data

compilation, all as shown by the testimony of

the custodian or other qualified witness, or

by certification that complies with Rule

902(11), Rule 902(12), or a statute

permitting certification, unless the source

of information or the method of circumstances

of preparation indicate a lack of

trustworthiness. The term ‘business’ as used

in this paragraph includes business,

institution, association, profession,

occupation, and calling of every kind,

whether or not conducted for profit.

Here, the Information Returns Master File Transcripts, which

detail the Forms 1099-B reported by Shearson, are admissible

under Rule 803(6). The declaration of Mr. Lee establishes that

these transcripts were in the administrative files of the IRS and

it is clear that these transcripts are prepared in the ordinary

course of the IRS’s business activities. Because these

transcripts are admissible under Rule 803(6), the Littles’

contention that the best evidence rule requires submission of the

original Forms 1099-B is without merit.

In their opposition filed on August 17, 2005 (Doc. 122), the

Littles make further objections to the Statement of Undisputed

Facts, calling this pleading an “amendment” to their previously

filed opposition. 

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The Littles object that Lorna Little was not employed by

Montgomery Ward, James Little was. Therefore, it is contended

that Lorna Little cannot have had income from Montgomery Ward. 

However, the Forms 886-A submitted by the United States as

Exhibit L establish that Lorna Little is assessed James Little’s

income from Montgomery Ward has community property. 

The Littles submit a declaration from Stephanie Reyes, the

personnel manager at Montgomery Ward who avers that Corporate

Human Resources advised James Little to claim 65 exemptions on

his W-4. However, this advice does not excuse the Littles’

failures to file income tax returns given the record before the

court demonstrating that the Littles had taxable, reportable

income during the years in question. 

The Littles also object that their W-2's cannot be deemed as

party admissions because they did not sign them. However, James

Little signed the W-4 upon which the W-2 was based. Therefore,

the court concludes that the W-2s are party admissions.

The Littles also object that the references in the Forms

4340 to “23C ‘RACS’” are insufficient to prove that proper

assessments were ever made. The Littles argue that the RACS

“does not contain detailed information by type of tax ... and the

‘master file’ cannot summarize the taxpayer information needed to

support the amounts in RACS.” 

However, as explained in March v. I.R.S., 335 F.3d 1186,

1188-1189 (10 Cir.), cert. denied, 541 U.S. 1186 (2003): th

The Commissioner ‘has for a number of years

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been engaged in making a transition from the

general use of a manually prepared Form 23C

[Summary Record of Assessments] to the

general use of RACS 006' ... Like Form 23C,

RACS Report 006 is a summary record of

assessment. However, RACS Report 006 is

generated on the computer and then signed by

an assessment officer on the date of

assessment in accordance with 26 C.F.R. §

301.6203-1 ... Form 23C is now only used when

the computer is unavailable ....

Therefore, as the IRS concedes in its brief,

Form 23C is not generally used. 

Nevertheless, since RACS Report 006 contains

the same information contained on Form 23C

and is certified and signed by an assessment

officer, RACS Report 006 satisfies the

signature and certification requirements of

26 C.F.R. § 301.6203-1. Furthermore ...,

production of a Form 4340 creates a

presumption that a Summary Record of

Assessments, whether on Form 23C or RACS

Report 006, was validly executed and

certified.

In Perez v. United States, 2001 WL 1836185 (W.D.Tex. 2001),

aff’d, 312 F.3d 191 (5 Cir. 2002): th

[W]hile the RACS Report-006 does not contain

the identification of the Plaintiff, the

character of the liability assessed against

the Plaintiff, the taxable period, or the

amount of the Plaintiff’s assessment, such

information need not be provided in such RACS

Report-006. Rather, as the Fifth Circuit has

held, pursuant to 26 C.F.R. § 301-6203-1,

such information need only be provided in a

supporting record. The Plaintiff’s IRS Form

4340 constitutes as such a supporting record,

and provides the identification of the

Plaintiff, the character of the liability

assessed against the Plaintiff, the tax

taxable period, and the amount of the

Plaintiff’s assessment. Thus, a valid

assessment took place.

Consequently, the Littles’ objections on this ground are without

merit.

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3. Conclusion.

The court concludes that the United States has demonstrated

that it is entitled to partial summary judgment. The Littles

have not demonstrated a genuine issue of material fact precluding

partial summary judgment and have not established that the IRS

did not comply with the law in issuing the notices of deficiency

and making the assessments at issue in this action.

ACCORDINGLY:

1. The United States’ motion for partial summary judgment

against James and Lorna Little is granted

2. Defendant James Little is indebted to the United States

for the federal income tax assessments against him for the years

1991 through 1994 in the amount of $925,016.16, plus applicable

interest, penalties and other statutory additions from March 1,

2005, and 

3. Defendant Lorna Little is indebted to the United States

for the federal income tax assessments against her for the years

1991 through 1994 in the amount of $806,936.83, plus applicable

interest, penalties, and other statutory additions from March 1,

2005.

IT IS SO ORDERED.

Dated: September 23, 2005 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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