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BAASCH v. U.S.

August 10, 1990

THOMAS L. BAASCH, PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Wexler, District Judge.

MEMORANDUM AND ORDER

Thomas L. Baasch ("plaintiff") commenced this action to recover the interest and penalties he paid to the Commissioner of Internal Revenue for the 1981 and 1982 tax years. Named as defendant is the United States of America ("defendant"). Presently before the Court are the parties' cross-motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court grants the motion for summary judgment in favor of defendant.

I. BACKGROUND

In January 1984, the Internal Revenue Service ("IRS") informed plaintiff that he had not filed his federal income tax returns for the 1981 and 1982 tax years. Plaintiff responded by letter and stated that he had failed to file the tax returns due to a dispute with his employer, TII Corporation ("TII"), concerning whether TII should have classified him as an independent contractor or an employee. At that time, plaintiff claimed to have filed a "Form SS-8," (entitled "Information for Use in Determining Whether a Worker is an Employee for Federal Employment Tax & Income Tax Withholding").

In July of 1985, plaintiff filed his 1981 and 1982 tax returns. Although each return reflected income of $18,900 and $24,300, respectively, plaintiff claimed he owed no tax. In addition, plaintiff indicated on both forms that he "was really an employee" for purposes of the self-employment tax.

In 1985 the IRS assessed a deficiency in taxes of $1,375 for 1981 and $1,185 for 1982.*fn1 It is to be noted that these deficiency assessments correspond exactly with the total tax plaintiff himself reported due on both his 1981 and 1982 returns.*fn2

In addition to the deficiency, plaintiff was assessed interest and penalties for failing to timely file the tax return, or pay the income tax due. As a result plaintiff paid a total of $6,411.25 in taxes, penalties and interest for the 1981 and 1982 tax years.

On September 30, 1988, plaintiff commenced this action to recover the income taxes, penalties and interest he paid to the IRS for the tax years in question. He has since abandoned his claim for the refund of the actual taxes paid, and therefore seeks to recover only the interest and penalty payments in the amount of $2,976.25, plus interest.

As a basis for his action, plaintiff argues that TII had improperly classified him as an independent contractor rather than an employee for the tax years in question. He further claims that this misclassification caused the delay in the filing and paying of his tax returns. According to plaintiff, if TII had treated him as an employee then it would have withheld taxes from his salary, and plaintiff would not have delayed his tax payment. Even if TII did not withhold employee taxes, plaintiff argues that as his employer TII was responsible for those taxes. Thus, plaintiff argues that the IRS should not hold him accountable for the interest and penalties since TII is responsible for the delay.

Plaintiff additionally claims that he had postponed filing his returns and paying his income taxes until the IRS responded to his request for a determination of his employee status. However, it is to be noted that plaintiff offers no explanation as to why he failed to make this request until January 1984, or as to why he did not file his 1981 and 1982 returns until July of 1985.

Defendant argues that plaintiff's status as an employee or independent contractor has no relevance to the outcome of this case. More specifically, defendant contends that plaintiff still had an obligation to timely file his 1981 and 1982 tax returns and pay the taxes due — whether or not TII treated him as an employee. Thus, for purposes of its summary judgment motion, defendant concedes that TII improperly classified plaintiff as an independent contractor. Nevertheless, defendant asserts that plaintiff was still liable for failing to comply with the tax laws.

As noted above, both parties currently move for summary judgment. Inasmuch as the parties do not dispute the material facts of the case, the only issue before this Court is whether plaintiff, as a matter of law, is entitled to a refund of the interest and penalties imposed by the IRS for his failure to timely file his tax returns or pay the taxes owed.

II. SUMMARY JUDGMENT

The Court may grant a motion for summary judgment only when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Donahue v. Windsor Lock Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir. 1987). Furthermore, the moving party bears the burden of establishing the absence of a genuine issue as to any material fact. Donahue, 834 F.2d at 57. The Court classifies a fact as material when it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1985); Quarles v. General Motors Corp., 758 F.2d 839, 840 (2d Cir. 1985) (per curiam). In addition, ...


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