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UNITED STATES v. CRAIG

August 13, 1996

UNITED STATES OF AMERICA, Plaintiff,
v.
DONALD V. CRAIG, et al., Defendants.



The opinion of the court was delivered by: JOYNER

 Joyner, J.

 August, 13 1996

 I

 When addressing a motion for summary judgment, a court considers whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The court must determine whether the evidence presented is sufficiently probative that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). All facts and reasonable inferences must be viewed in the light most favorable to the party opposing the motion. Id. at 255. Although the moving party must demonstrate the absence of a genuine issue of material fact, the non-movant "must establish the existence of each element on which it bears the burden of proof." J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3rd Cir. 1990) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)), cert. denied, 499 U.S. 921 (1991).

 II In 1990, 1991, and 1992, the United States made tax assessments against Defendant Donald V. Craig. The assessments were levied in the following amounts, exclusive of interest and penalties: Year Assessment 1987 $ 292,329.00 1988 $ 1,882.00 1989 $ 15,718.00 1990 $ 2,589.00 1991 $ 1,007.10

 In its complaint, the Government alleges that as of September 13, 1994, Mr. Craig was indebted to it in a total amount in excess of $ 830,000. In 1990, 1992, and 1993, the Government recorded federal tax liens against Mr. Craig with the Prothonotary for Philadelphia County, in the respective amounts of $ 16,080.16, $ 23,536.10, and $ 802,694.33.

 In 1987, Mr. Craig purchased real property at 1416-18 Golf Road, Philadelphia, Pennsylvania (the "property"). By deed dated December 2, 1988, Mr. Craig transferred all of his interest in the real property to himself and his common law wife, Sophia Hardy, as joint tenants, for the consideration of $ 1.00. The deed of conveyance was not recorded until September 5, 1989.

 The United States subsequently brought the instant action, seeking to bring to judgment the outstanding tax assessments, to set aside the December 2, 1988 conveyance, and to foreclose on the property. During the course of this litigation, Mr. Craig, and his tax advisor, William E. Young, reviewed the 1987 assessment with Internal Revenue Service ("IRS") personnel. The review resulted in a significant reduction of Mr. Craig's 1987 federal tax assessment; thus, the Government now seeks summary judgment for the corrected tax liability for 1987, as well as the unchallenged assessments for the tax years 1988 through 1991.

 III

 We now turn to address the merits of the Government's motion, viewing the facts presented in a light most favorable to Mr. Craig.

 A. The Tax Assessments

 The Government contends first that summary judgment should be entered against Mr. Craig for the unpaid tax assessments. It is presumed that tax assessments are valid and "establish a prima facie case of liability against a taxpayer." Freck v. Internal Revenue Service, 37 F.3d 986, 992 n.8 (3rd Cir. 1994) (citing United States v. Janis, 428 U.S. 433, 440-41, 49 L. Ed. 2d 1046, 96 S. Ct. 3021 (1976)); Sullivan v. United States, 618 F.2d 1001, 1008 (3rd Cir. 1980). The burden therefore rests with the taxpayer to show that an assessment is erroneous. Sullivan, 618 F.2d at 1008. Further, "proof that an assessment is incorrect does away with the government's presumption . . . but it does not wipe out the taxpayer's liability." United States v. Schroeder, 900 F.2d 1144, 1148 (7th Cir. 1990). Thus, even though a taxpayer demonstrates that an assessment is erroneous, it is not voidable because it is incorrect, but will be adjusted to reflect the proper liability. Id.

 In reply to Mr. Craig's response to its original motion, the Government concedes that the first assessment had been excessive, but asserts that it is entitled to summary judgment as to the corrected amount. In sworn affidavits, Mr. Craig and his tax advisor, Mr. Young, claim that there are additional deductions which should be allowed and which would further reduce the tax liability. However, during depositions, Mr. Craig and Mr. Young both admitted that they had agreed to the adjusted assessment made by the IRS and that Mr. Craig could not proffer documentation to support a further reduction of his tax liability. Dep. of William Young at 44-46, 60-61; Dep. of Donald Craig at 13-14.

 The factual evidence reveals that there is no dispute concerning Mr. Craig's outstanding tax liability. Mr. Craig does not dispute the assessments for the years 1988 through 1991; thus, there is no possible factual dispute as to those assessments. Further, with regard to the assessment for 1987, originally excessive and subsequently reduced, Mr. Craig can now only make the bald assertion that other deductions should be allowed, but is unable to produce documents to support these deductions. These assertions, without more, are insufficient to create a factual dispute. Accordingly, ...


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