US v. Limanni

              UNITED STATES DISTRICT COURT FOR THE
                    DISTRICT OF NEW HAMPSHIRE



United States of America

     v.                              Civil No. 12-cv-114-JD
                                     Opinion No. 

Charles Limanni, et al.


                              O R D E R


     The United States of America brought suit to reduce to

judgment income tax assessments against Charles Limanni and to

foreclose the government’s tax lien on real property in which

Limanni holds an interest.    The government also named Linda

Limanni, the Town of Barrington, and Artella Chase as defendants.

The government and the Town of Barrington have entered a

stipulation, and default was entered against Artella Chase.

     Trial was scheduled for December 3, 2013.    Before trial

began, the parties agreed to a continuance to allow time for

Limanni to provide his records to the government for review and

to determine whether the matter could be resolved.    The parties

made progress toward a settlement, resolving several issues,

which left Limanni’s unpaid tax liability for 1999 as the only

remaining dispute.   Limanni did not respond to the government’s

proposed judgment on the unpaid tax liability, and the government

asked the court to set new scheduling dates for summary judgment

and trial if necessary.    The court set a date for filing a

stipulated judgment, and a date for the government to move for

summary judgment if the remaining issues were not resolved by

November 4, 2014.
     The government has moved for summary judgment on the

Limannis’ tax liability for 1999 and for an order of sale of the

Limannis’ property in Barrington, New Hampshire, to satisfy the

tax liens on the property.   Charles Limanni filed a response to

the motion for summary judgment in which he disputes the amount

that the government asserts is owed.1    The government filed a

reply in which it addressed the issues Limanni raised in his

objection.

     After reviewing the parties’s filings, the court directed

the government to file a supplemental memorandum to address the

calculation of the tax liability.     Specifically, the court noted

that the government had agreed to accept the income and deduction

figures on Limanni’s 1999 tax return but then did not accept the

amount of tax owed on the return, creating an ambiguity as to the

actual tax liability.   The government has filed a supplemental

memorandum, and Limanni filed a response.



                         Standard of Review

     Summary judgment is appropriate when “the movant shows 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).    In deciding a motion for summary judgment, the court

draws all reasonable inferences in favor of the nonmoving party.


     1
      To the extent Charles Limanni raises issues about his real
estate taxes, the size of the property he owns in Barrington, and
any dispute with the Town of Barrington, those matters are not
properly before the court and will not be considered here.

                                  2
Foodmark, Inc. v. Alasko Foods, Inc., 

 (1st Cir.

2014).   “A genuine issue of material fact must be built on a

solid foundation--a foundation constructed from materials of

evidentiary quality” so that “conclusory allegations, empty

rhetoric, unsupported speculation, or evidence which, in the

aggregate, is less than significantly probative will not suffice

to ward off a properly supported motion for summary judgment.”

Garcia-Gonzalez v. Puig-Morales, 

 (1st Cir. 2014).

In response to a properly supported motion for summary judgment,

opposing parties must provide competent record evidence that

shows there is a genuine issue for trial.   Anderson v. Liberty

Lobby, Inc., 

 (1986); Mosher v. Nelson, 

 (1st Cir. 2009).



                            Background

     Charles and Linda Limanni did not file income tax returns

for the years 1999 through 2003 when they were due.    After the

IRS investigated Charles Limanni’s income liability, the IRS made

assessments against him for 1999 through 2003.    When Limanni

failed to pay the amounts assessed, the government brought this

action to enforce the tax lien against property owned by Charles

and Linda Limanni.

     In response to the suit, the Limannis provided their joint

tax returns for the years of 1999 through 2003.    The government

examined the returns and agreed to accept the figures reported

for income and deductions and to adjust the previous tax

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assessments based on the returns.   Based on the returns and the

government’s examination, the government determined that the

Limannis have a remaining joint tax liability for 1999, which was

$48,970.77 as of November 10, 2014, with interest continuing to

accrue.

     Charles and Linda Limanni acknowledge that they filed joint

tax returns and are jointly liable for the 1999 tax liability.

Limanni calculated their remaining 1999 tax liability, after

subtracting claimed credits, refunds, and payments, at $4,096.00.

In response, the government contends that the Limannis are

mistaken about the applicable amount from the 1999 tax return and

disputes the additional refunds, interest, and credits that

Limanni claims.



                           Discussion

     The government moves for summary judgment that the Limannis’

tax liability for 1999, with interest and penalties, was

$48,970.77 as of November 10, 2014, and seeks an order of sale of

the Limannis’ property located in Barrington, New Hampshire.

Charles Limanni objects to the tax liability assessed by the

government, arguing that the government failed to accept his tax

records for 1999 as was agreed, that the government failed to

credit the full amount of refunds with interest, and that the

government’s calculation did not credit a penalty assessed in




                                4
2003 that has been paid.2      Limanni represents that the total

amount of tax liability remaining is $4,096.00.      In its reply,

the government addressed each issue raised by Limanni and

explained the calculation of the tax liability.

     Tax assessments by the IRS are presumed correct.      Hostar

Marine Transport Sys., Inc. v. United States, 

(1st Cir. 2010).   For that reason, taxpayers who challenge the

IRS’s assessment of a tax deficiency bear the burden of proving

that it is erroneous.    

    In addition, “[i]t is well-

established that tax assessments pursuant to [IRS] Form 4340 are

presumed correct and therefore obligates the taxpayer to provide

sufficient evidence to contradict the tax liability.”      United

States v. Hughes, --- F. Supp. 3d ---, 

 (D.

Mass. Sept. 15, 2014).



A.   Tax Records

     Limanni argues that the government improperly used

$20,613.00 as the amount owed for 1999 when the Limannis’ tax

records showed that he and Linda owed $19,014.00 for 1999.         He

argues that because the government agreed to accept his tax

records it is bound by that agreement and cannot provide a

different number to calculate his tax liability.      In response,

the government asserts that the $20,613.00 amount is correct.

     The Limannis’ tax return for 1999 shows a total tax amount


      2
      Charles Limanni is proceeding pro se.     Linda Limanni is not
represented and has not appeared pro se.

                                    5
of $20,613.00.   Following that entry, the Limannis deducted

$1,796.00 for taxes withheld, leaving a tax amount owed of

$19,014.00.

     As is shown on the certificate of assessments and payments,

IRS Form 4340, the government calculated the base amount of tax

liability for 1999 by starting with the amount of taxes assessed

by the IRS on February 13, 2006, which was $36,661.00.    The

government then granted the Limannis a tax abatement of

$16,048.00 on July 28, 2014, when the government agreed to accept

the income and deduction figures reported on the Limannis’ 1999

return.   The abatement made the assessed amount $20,613.00, which

is the “total tax” amount shown on the Limannis’ 1999 return at

line 56, before that amount was adjusted for withholding.    After

the federal tax withheld was deducted, the tax return shows at

line 68 that the Limannis owed taxes in the amount of $19,014.00.

      The government’s explanation for not accepting the

$19,014.00 figure as the amount of taxes owed is as follows.

During the examination process that resulted in the calculation

of the tax assessment of $36,661.00 for 1999, the government

deducted $1,796.00 for federal taxes withheld.    Therefore, the

government contends, the assessment of $36,661.00 included the

deduction of $1,796.00.    When the government agreed to accept

Limanni’s tax calculations, the government now explains, it meant

it would accept the gross calculation of tax liability,

$20,613.00, not the net amount due after the deduction for

withholding, $19,014.00.    The government argues that it could not

                                  6
credit the withholding deduction taken on the 1999 tax return

because that would result in the Limannis getting credit twice

for the amount of the withholding.

      At this stage, it appears the government’s position is that,

regardless of what it agreed to initially or how the agreement

might be interpreted, it will only accept the gross amount of

taxes as entered on line 56 of the Limannis’ 1999 tax return,

which is $20,613.00.   Based on the $20,613.00 gross tax liability

stated in the 1999 return, the government abated the tax

assessment from $36,661.00 to $20,613.00 and assessed the tax

liability with penalties and interest based on that amount.

Given the presumption in favor of the government’s tax assessment

and the circumstances of the abatement, $20,613.00 is the amount

of the tax liability accepted from the Limannis’ 1999 tax return.



B.   Credits for Overpayments Claimed for 2000, 2001, and 2002

      Limanni claims that the government owed him refunds for tax

overpayments in 2000, 2001, and 2002.   He contends that the

government erred in failing to give him credit for those amounts

against the total tax assessed for 1999.   In response, the

government explains that the Limannis were not entitled to credit

for any overpayment of taxes in those years because they did not

make a timely claim to have those amounts credited to them.

      “In the case of any overpayment, the Secretary, within the

applicable period of limitations, may credit the amount of such

overpayment including any interest allowed thereon, against any

                                 7
liability in respect of an internal revenue tax on the part of

the person who made the overpayment and shall, subject to

subsections (c), (d), (e), and (f) refund any balance to such

person.”   

(a).   The limitation period for filing

a refund claim is three years from the date of the tax return or

two years from the time the tax was paid.   

(a).

In addition, a taxpayer can claim a refund only for “the portion

of the tax paid within the three years immediately preceding the

refund claim . . . .”   Dickow v. United States, 

(1st Cir. 2011) (citing § 6511(b)(2)(A)).   For purposes of

§ 6511(b)(2)(A), taxes “are ‘paid’ on the due date of the

taxpayer’s income tax return.”    Baral v. United States, 

 (2000).

     In this case, the Limannis did not file timely returns for

2000, 2001, and 2002.   The government assumes that the tax

returns the Limannis filed in June of 2012 for 2000, 2001, and

2002, would qualify as refund claims for those years.   To the

extent the Limannis overpaid taxes for those years, those amounts

were deemed paid on due dates of their tax returns for those

years, that is April of 2001, 2002, and 2003.   The Limannis did

not make a claim for overpayment credit, however, until June of

2012.

     Applying § 6511(b)(2)(A), the Limannis could not recover

credit for taxes paid more than three years before June of 2012.

See Oropallo v. United States, 

 (1st Cir.

1993).   Because the claim was made in June of 2012 but the taxes

                                  8
were overpaid in 2001, 2002, and 2003, the Limannis waited too

long to claim credit for overpayment.        Therefore, § 6511(b)(2)(A)

bars the overpayment credit that Limanni claims.



C.   Interest on Refunds for 2008 through 2013

     Limanni contends that the government erred in failing to

include interest on the tax overpayments made in 2008 through

2013 in the credits allowed.   Generally, the government pays

interest on overpayments of taxes.        

(a).

Interest is not paid, however, when a credit for the overpayment

is applied to satisfy a prior tax deficiency.        

(b).

     The government shows that the tax overpayments in the years

2008 through 2013 were credited toward the Limannis’ tax

underpayments for prior years.   For that reason, the Limmanis

were not entitled to interest on their tax overpayments.



D.   Enforcement of the Lien

     “If any person liable to pay any tax neglects or refuses to

pay the same after demand, the amount (including any interest,

additional amount, addition to tax, or assessable penalty,

together with any costs that may accrue in addition thereto)

shall be a lien in favor of the United States upon all property

and rights to property, whether real or personal, belonging to

such person.”   

.       The tax lien arises on the



                                    9
state of the tax assessment and continues until the tax liability

is paid.   

.

     The transcript of the Limannis’ taxes for 1999, form 4340,

shows a balance of $39,569.24, and the account transcript, form

1040A, shows a balance with accrued interest as of November 10,

2014, of $48,970.77.   The transcript shows that the Limannis were

first notified of a balance due on March 20, 2006, and received

subsequent notices in 2008 and 2014.        The Limannis have not paid

the amount owed.   Therefore, the government has a valid lien on

the Limannis’ real property located at 674 Route 202, Barrington,

New Hampshire, for the Limannis’ tax liability of $48,970.77,

plus interest that has accrued after November 10, 2014.



                               Conclusion

     For the foregoing reasons, the government’s motion for

summary judgment (document no. 52) is granted.

     Charles and Linda Limanni have an unpaid tax debt of

$48,970.77, plus additional interest accruing after November 10,

2014.   A tax lien for that amount has attached to the Limannis’

real property located at 674 Route 202, Barrington, New

Hampshire.

     Judgment is entered in favor of the government and against

Charles Limanni in the amount of $48,970.77, plus additional

interest accruing after November 10, 2014.

     The government shall file a motion for an order of sale of

the property pursuant to 

 or 

, or

                                   10
both, to address the terms and conditions of the sale and the

distribution of the proceeds of the sale.

      SO ORDERED.



                                     ____________________________
                                     Joseph A. DiClerico, Jr.
                                     United States District Judge

March 23, 2015

cc:   Thomas P. Cole, Esq.
      Steven M. Witley, Esq.
      Charles Limanni, pro se
      Linda Limanni




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