Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Silipigno v. United States

United States District Court, N.D. New York

July 12, 2017

DAVID B. SILIPIGNO, Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.

          MEMORANDUM-DECISION AND ORDER

          Lawrence E. Kahn U.S. District Judge

         I. INTRODUCTION

         Plaintiff David B. Silipigno commenced this action against the United States on January 7, 2015, to recover tax refunds for the 2004 and 2005 tax years. Dkt. No. 1 (“Complaint”) ¶ 1. Plaintiff seeks a refund for the 2004 tax year in the amount of $806, 586, plus statutory interest, due to a net operating loss (“NOL”) carryback from the 2009 tax year. Id. ¶ 13. He also seeks a refund for the 2005 tax year in the amount of $509, 752, plus statutory interest, due to a NOL carryback from the 2007 tax year. Id. ¶ 13.[1]

         On October 11, 2016, both parties moved for summary judgment. Dkt. No. 27 (“Plaintiff's Motion”); Dkt. No. 26 (“Defendant's Motion”); see also Dkt. No. 27-1 (“Plaintiff's Memorandum”); Dkt. No. 27-2 (“Plaintiff's Statement of Material Facts”); Dkt. No. 26-20 (“Defendant's Memorandum”); Dkt. No. 26-1 (“Defendant's Statement of Material Facts”). On November 29, 2016, the parties filed memoranda in opposition. Pl.'s Opp.; Dkt. No. 29-8 (“Plaintiff's Responsive Statement of Material Facts”); Dkt. No. 30 (“Defendant's Opposition”); Def.'s Opp., Ex. 1 (“Defendant's Responsive SMF”). The Government also filed a reply to Plaintiff's Opposition on December 8, 2016. Dkt. No. 34 (“Defendant's Reply”).[2] For the reasons stated below, Plaintiff's motion for summary judgment is denied, Defendant's motion for summary judgment is granted in part, and the Court dismisses Plaintiff's first claim for lack of subject matter jurisdiction.

         II. BACKGROUND

         Plaintiff is an individual taxpayer residing in Saratoga Springs, New York. Pl.'s SMF ¶ 1; Def.'s SMF ¶ 1. Since 1990, he has had a diverse business career, working for, owning, and investing in a number of businesses. Pl.'s SMF ¶ 2; Def.'s SMF ¶ 1; Pl.'s Responsive SMF ¶ 1. As relevant to the issues before the Court, Plaintiff was a consultant to First Guarantee Mortgage, LLC (“FGM”), a mortgage brokering company, from 2000 to 2008 or 2009. Pl.'s SMF ¶ 2; Def.'s SMF ¶ 1; Pl.'s Responsive SMF ¶ 1. He was the sole owner of Saratoga Venture Capital, LLC (“SVC”), a venture capital business, and Consumer Direct Marking (“CDM”), a telemarketing leads company. Pl.'s Responsive SMF ¶ 10; Def.'s Second Responsive SMF ¶ 10. He was also an investor, through contributions made by SVC and CDM, in Drug Risk Solutions, LLC (“DRS”), a drug testing company that filed for bankruptcy in 2006. Pl.'s Responsive SMF ¶ 11-12; Def.'s Second Responsive SMF ¶ 11-12.

         A. Tax Returns

         Plaintiff brought this action to recover tax refunds for the 2004 and 2005 tax years attributable to NOL carrybacks from the 2009 and 2007 tax years, respectively. Compl. ¶ 13. “Net operating loss carryback is a form of income averaging that permits a taxpayer to use current losses to reduce taxable income in prior years.” In re First Cent. Fin. Corp., 269 B.R. 481, 488-89 (Bankr. E.D.N.Y. 2001), aff'd, 377 F.3d 209 (2d Cir. 2004). NOLs are regulated by 26 U.S.C. § 172. A claim for refund attributable to an NOL puts at least two tax returns at issue: The return for the year in which the NOL occurred and the return for the year to which the NOL is being applied. Therefore, the tax returns directly relevant to Plaintiff's refunds are from the 2004, 2005, 2007, and 2009 tax years.

         Plaintiff timely filed (with extensions) his 2004 U.S. Individual Income Tax Return (Form 1040) on October 17, 2005. Pl.'s SMF ¶ 7; Def.'s Responsive SMF ¶ 7. Plaintiff reported $10, 659, 032 in total income and paid $2, 536, 431 in federal taxes. Dkt. No. 26-7, Ex. D2, at 2747-48.

         Plaintiff timely filed (with extensions) his 2005 U.S. Individual Income Tax Return (Form 1040) on October 16, 2006. Pl.'s SMF ¶ 8; Def.'s Responsive SMF ¶ 8. Plaintiff reported $8, 286, 060 in total income and paid $2, 630, 185 in federal taxes. Dkt. No. 26-8, Ex. D3, at 2-3.[3]He also filed an Amended U.S. Individual Income Tax Return (Form 1040X) for the 2005 tax year on November 29, 2007, seeking a refund of $9, 723. Def.'s SMF ¶ 6; Pl.'s Responsive SMF ¶ 6.

         Plaintiff did not timely file (with extensions) his 2007 U.S. Individual Income Tax Return (Form 1040) on or before October 15, 2008. Def.'s SMF ¶ 5; Pl.'s Responsive SMF ¶ 5. He filed his Form 1040 for his 2007 taxes on October 4, 2010, claiming an NOL of $1, 414, 014. Def.'s SMF ¶ 5; Pl.'s Responsive SMF ¶ 5. He also timely filed an Amended U.S. Individual Income Tax Return (Form 1040X) on October 15, 2010, seeking a refund of $509, 752 from his 2005 taxes attributable to his 2007 NOL. Id.

         Plaintiff timely filed (with extensions) his 2009 U.S. Individual Income Tax Return (Form 1040) on October 15, 2010, claiming an NOL of $2, 194, 793. Def.'s SMF ¶ 4; Pl.'s Responsive SMF ¶ 4. He also timely filed an Application for Tentative Refund (Form 1045) on October 15, 2010, seeking a refund of $806, 586 from his 2004 taxes attributable to his 2009 NOL. Def.'s SMF ¶ 4; Pl.'s Responsive SMF ¶ 4. This Form 1045 was the only document submitted by Plaintiff to the IRS that sought a refund of income taxes for the 2004 tax year. Def.'s SMF ¶ 4; Pl.'s Responsive SMF ¶ 4.

         B. IRS Audit

         On or about February 4, 2008, the Internal Revenue Service (“IRS” or “Service”) initiated an audit of Plaintiff's taxes, in particular his Amended U.S. Individual Income Tax Return (Form 1040X) for the 2005 tax year, filed on November 29, 2007. Dkt. No. 26-15, Ex. F (“Donnelly Declaration”), ¶ 2. The examining officer was Anne Donnelly, an IRS revenue agent. Id. ¶ 1. As part of the audit, Donnelly communicated with Plaintiff's power of attorney, John Gilooly. Id. ¶ 3. Gilooly, a certified public accountant, had prepared tax returns for Plaintiff and several of Plaintiff's business interests for approximately twenty years. Pl.'s SMF ¶ 5; Def.'s SMF ¶ 5. The audit continued until September 8, 2009, when Donnelly suspended her work. Donnelly Decl., Ex. 1, at 8;[4] see also Pl.'s SMF ¶ 31; Def.'s Responsive SMF ¶ 31.

         C. Criminal Investigation

         In 2009, the United States Attorney's Office for the Northern District of New York (“USAO”) initiated a criminal investigation into mortgage, bank, and tax fraud with respect to Plaintiff and FGM. Pl.'s SMF ¶ 19; Def.'s Responsive SMF ¶ 19. On June 9, 2009, the USAO, with the assistance of agents from the IRS and the Federal Bureau of Investigation, executed a search warrant on FGM's office in Saratoga Springs and Gilooly's offices. Def.'s SMF ¶ 9; Pl.'s SMF ¶ 9. The agents seized hundreds of boxes of documents, computers, servers, and other items from FGM. Pl.'s SMF ¶ 18; Def.'s Responsive SMF ¶ 18. The USAO also issued subpoenas to dozens of entities related to Plaintiff. Pl.'s SMF ¶ 19; Def.'s Responsive SMF ¶ 19. On September 8, 2009, the IRS suspended the audit to await the completion of the criminal investigation. Pl.'s SMF ¶ 31; Def.'s Responsive SMF ¶ 31.

         On or around January 13, 2011, the investigators served a subpoena on Gilooly, and he produced documents in or around March 2011. Pl.'s SMF ¶ 20; Def.'s Responsive SMF ¶ 20.[5]

         On multiple occasions between 2011 and 2014, Plaintiff's representatives contacted the IRS-both through phone calls and in-person visits to the IRS office in Glen Falls, New York-to discuss Plaintiff's outstanding refund requests. Pl.'s SMF ¶ 34; Def.'s Responsive SMF ¶ 34. The IRS informed Plaintiff's representatives that the refund requests were being “held.” Pl.'s SMF ¶ 34; Def.'s Responsive SMF ¶ 34.

         In or around August 2014, the USAO declined to prosecute Plaintiff. Pl.'s SMF ¶ 21; Def.'s Responsive SMF ¶ 21. On or around December 11, 2014, Plaintiff's tax file was removed from the IRS's fraud suspense, and Agent Donnelly resumed her review of the file. Pl.'s SMF ¶ 32; Def.'s Responsive SMF ¶ 32; Donnelly Decl., Ex. 1, at 8. Plaintiff commenced this action soon thereafter on January 7, 2015.

         III. LEGAL STANDARD

         Rule 56 of the Federal Rules of Civil Procedure instructs courts to grant summary judgment if “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). Although “[f]actual disputes that are irrelevant or unnecessary” will not preclude summary judgment, “summary judgment will not lie if . . . the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also Taggart v. Time, Inc., 92 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.