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HYNARD v. I.R.S.

October 9, 2002

PAUL HYNARD, PLAINTIFF,
V.
INTERNAL REVENUE SERVICE AND UNITED STATES OF AMERICA, DEFENDANTS.



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

MEMORANDUM DECISION AND ORDER GRANTING GOVERNMENT'S CROSS-MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

Plaintiff also challenges the IRS's March 26, 1993 assessment of a deficiency for the 1988 and 1989 tax years on the ground that the IRS did not send the Notice of Deficiency to his current address. Defendant is entitled to summary judgment on this issue as well, because there is no dispute that the IRS sent plaintiff the Notice of Deficiency to plaintiffs last-known address and that plaintiff did indeed receive the Notice of Deficiency.

Finally, plaintiff challenges the IRS's levy of his personal checking account, again claiming that the IRS failed to send him notice to his current address. Plaintiff admits, however, that he did not submit notice of a change of address to the IRS and that he received actual notice of the levy from his bank prior to its execution. Thus, summary judgment should be granted in defendants' favor on this issue as well.

Statement of Facts

On April 17, 1989, plaintiff filed a federal income tax return for the tax year ending on December 31, 1988. See Declaration of Arnold B. Rifkin ("Rifkin Decl.") ¶ 5, Exhibit ("Ex.") A; Declaration of Megan L. Brackney ("Brackney Decl.") Exhibit A (Transcript of the May 22, 2002 deposition of Paul Hynard), at 7-9. On February 16, 1991 and December 14, 1991, plaintiff submitted amended individual income tax returns (Form 1040X) for the 1988 tax year. Rifkin Decl. Ex. B, C; Brackney Decl. Ex. A at 11-14. On March 26, 1990, plaintiff filed a federal income tax return for the tax year ending on December 31, 1989. Rifkin Decl. Ex. J; Brackney Decl. Ex. A at 31. On November 1, 1990 and on December 24, 1991, plaintiff filed amended individual tax returns for 1989. Rifkin Decl. Ex. K and L; Brackney Decl. Ex. A at 34-35.

Plaintiffs December 14, 1991 amended tax return for 1988 and plaintiffs December 24, 1991 amended tax return for 1989 list 10 Cherry Lane, Medford, New York, 11763-4084 as plaintiffs address. Rifkin Decl. Ex. J and L. On March 26, 1993, the IRS sent to plaintiff at 10 Cherry Lane, Medford, New York, 11763-4084 a Notice of Deficiency for the 1988 and 1989 tax years. Rifkin Decl. Ex. P. Plaintiff admits to having received the Notice of Deficiency in February 1994. Brackney Decl. Ex. B (Complaint) at ¶ 5(n).

On September 1, 1994, plaintiff filed additional amended tax returns for the 1988 and 1989 tax years. Rifkin Ex. D and M; Brackney Decl. Ex. A at 18-19, 21-24. With the September 1, 1994 amended tax returns, plaintiff submitted a Schedule D form for Capital Gains and Losses in which he claimed a $3,000 bad debt deduction for each year. Id. In his September 1, 1994 amended returns, plaintiff claimed that he was entitled to a $3000 bad debt deduction for 1988 and 1989 because his step-brother, Vicha Hynard, did not repay a $45,000 debt. Rifkin Decl. Ex. D, M. Plaintiff claims that Vicha Hynard shot plaintiff and then agreed to pay him $45,000 for having shot him. Brackney Decl. Ex. A at 25-29. On April 26, 1987, Vicha Hynard signed a document entitled "Assignment of Benefits" in which he agreed to assign the first $45,000 of the "third division I receive in connection with the Estate of my stepfather, Edward O. Hynard, to my stepbrother, Paul Hynard, as and for the recovery of a debt to Paul, which I hereby acknowledge." Rifkin Decl. Ex. E; Brackney Decl. Ex. A at 27-28.

On June 12, 1992, Edward O. Hynard died. Rifkin Decl. Ex. I; Brackney Decl. Ex. A at 28. Plaintiff testified that he learned that he would not receive any money from the estate of Edward O. Hynard sometime in 1994. Brackney Decl. Ex. A at 30. Plaintiff further claims that Edward O. Hynard's estate was probated in 1998-1999. Id. Plaintiff claims that he did not receive any distribution from Edward O. Hynard's estate and Vicha Hynard never paid him $45,000. Id. at 28-30.

In August of 1998, the IRS sent a notice of levy to Astoria Federal Savings & Loan and to plaintiff at P.O. Box 1102, Middle Island, New York, 11763. Rifkin Decl. Ex. N. The Notice of Levy notified plaintiff that a total of $9,504.48 representing due and owing tax liability for 1988 and 1989 would be levied from his bank account. Id. On August 27, 1998, plaintiffs bank, Astoria Federal Savings and Loan Association, sent plaintiff a copy of the Notice of Levy. Rifkin Decl. Ex. N and O; Brackney Decl. Ex. A at 43-44. In August of 1998, plaintiff was incarcerated at the Groveland Correctional Facility, but plaintiff failed to notify the IRS that he was at a different address. Brackney Decl. Ex. A at 45, 48-49.

On October 2, 1998, the IRS levied plaintiffs personal checking account at Astoria Federal Savings and Loan in the amount of $1,729.06 for unpaid taxes, interest, and penalties for the 1988 tax year and $7,7175.42 for unpaid taxes, interest, and penalties for the 1989 tax year. Rifkin Decl. at ¶¶ 15, 33.

Prior to filing this suit on November 7, 2001, plaintiff had paid his full tax liability for the 1988 and 1989 tax years. Rifkin Decl. ¶¶ 19, 37 (as of October 22, 2001, plaintiffs accounts for 1988 and 1989 had a zero balance).

STANDARD FOR SUMMARY JUDGMENT

A party is entitled to summary judgment when there is no "genuine issue of material fact" and the undisputed facts warrant judgment for the moving party as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In addressing a motion for summary judgment, "the court must view the evidence in the light most favorable to the party against whom summary, judgment is sought and must draw all reasonable inferences in [its] favor." Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Whether any disputed issue of fact exists is for the Court to determine. Balderman v. United States Veterans Admin., 870 F.2d 57, 60 (2d Cir. 1989). The moving party has the initial burden of demonstrating the absence of a disputed issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once such a showing has been made, the non-moving party must present "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The party opposing summary judgment "may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). Moreover, not every disputed factual issue is material in light of the substantive law that governs the case. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude summary judgment." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

Applying this standard, plaintiffs motion for summary judgment must be denied and defendants' cross-motion granted.

PLAINTIFF IS NOT ENTITLED TO A BAD DEBT DEDUCTION

Plaintiff appears to claim that he is entitled to a bad debt deduction of $3,000 for the 1988 tax year and $3,000 for the 1989 tax year.*fn1 Brackney Decl. Ex. A at ¶¶ 5(a)-(g), 5(k), 6(a)-(d), Ex. B at 23-24, 36-38, 50-52; Rifkin Decl. Ex. D, M. However, the undisputed facts show that plaintiff has failed to establish the elements of either a business or a nonbusiness bad debt under 26 U.S.C. § 166. Therefore, ...


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