Balice - MATA Promoter - FFTF Penalty & 25K 6673

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Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby jcolvin2 » Mon Mar 16, 2015 11:17 pm

T.C. Memo. 2015-46
UNITED STATES TAX COURT
MICHAEL BALICE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 22235-13. Filed March 16, 2015.
Michael Balice, pro se.
Kathleen K. Raup and Ina Susan Weiner, for respondent.
MEMORANDUM OPINION

LAUBER, Judge: With respect to petitioner’s Federal income tax for 2007
and 2008, the Internal Revenue Service (IRS or respondent) determined deficiencies
and additions to tax under section 66511 in the following amounts:

Additions to tax
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec. 6651(f)
2007 $35,947 $8,088 $8,987 $26,062
2008 3,810 857 953 ---

Petitioner marketed during these years products that purported to enable individuals
to avoid taxation of their income by use of sham “trusts.” Practicing what he
preached, petitioner employed these trusts himself. He reported no income from
sale of his tax evasion products to others, and he did not file a Federal income tax
return for either year. He was convicted of tax crimes and is currently incarcerated.
The IRS reconstructed petitioner’s income on the basis of his bank deposits,
prepared for each year a substitute for return (SFR) that met the requirements of
section 6020(b), and sent petitioner a notice of deficiency determining the deficiencies
and additions to tax set forth above. Respondent has moved for summary
judgment under Rule 121, contending that there are no disputed issues of fact and
that he is entitled to judgment as a matter of law. Petitioner has responded to this
motion by contending (among other things) that he is not subject to IRS deficiency procedures and that wages are not “income” because they result from the
exercise of his “irrefutable right to work.” We will grant the motion for summary
judgment and sustain the tax deficiencies and additions to tax determined by the
IRS. We will also require petitioner to pay under section 6673(a) a penalty to the
United States in the amount of $25,000 for asserting frivolous positions in this
Court.

Background

There is no dispute concerning the following facts. These facts are derived
from the parties’ pleadings and motion papers, from undenied allegations of respondent’s
amended answer that petitioner is deemed to have admitted, and from
the declaration and the attached exhibits that respondent filed in support of his
summary judgment motion. Petitioner resided in a Federal correctional facility in
Fort Dix, New Jersey, when he petitioned this Court.

During the tax years at issue petitioner was a principal of Mid-Atlantic
Trustees and Administrators (MATA). MATA sold products, including the “Pure
Trust Organization” (PTO), designed to assist individuals in evading their Federal
tax obligations. Income from the sale of MATA’s products was deposited into a
Bank of America account ending in 6819 titled to “MATA Irrevocable Trust” of
which petitioner was a trustee (MATA account).

Petitioner maintained and exercised control over two other bank accounts
during these years. One was a Bank of America account ending in 5571 titled to
“Maple Avenue Funding Irrevocable Trust” of which petitioner was a trustee
(Maple Avenue account). The second bank account was a Bank of America account
ending in 4916 titled to Michael Balice (Balice account). Petitioner was a
signatory to both of these accounts.

Between January 1, 2007, and December 31, 2007, $144,650 in cash was
transferred from the MATA account to the Maple Avenue account and the Balice
account. As shown in the relevant bank statements, this movement of funds into
the Maple Avenue account and the Balice account was effected in 40 separate
transactions by check or inter-account transfer.

Between January 1, 2008, and December 31, 2008, $37,000 in cash was
transferred from the MATA account to the Maple Avenue account and the Balice
account. As shown in the relevant bank statements, this movement of funds into
the Maple Avenue account and the Balice account was effected in 13 separate
transactions by check or inter-account transfer.

On the basis of these transfers into bank accounts over which petitioner
exercised control, the IRS determined that petitioner had received income of
$144,650 and $37,000 in 2007 and 2008, respectively. For the 2007 taxable year the IRS received from Chase Bank USA a Form 1099-C, Cancellation of
Debt, reporting that petitioner also had cancellation of indebtedness income of
$3,411 in 2007 from Chase Bank USA.

On June 10, 2011, a superseding indictment was filed against petitioner in
United States v. Balice, No. 2:10-CR-00485-02, in the U.S. District Court for the
District of New Jersey. Count 13 of this indictment described petitioner’s use of
the PTO tax evasion scheme and charged him with criminal tax evasion for 2007
in violation of section 7201. On June 20, 2011, a jury found petitioner guilty of
(among other things) violating section 7201 for the 2007 taxable year. On January
9, 2013, the District Court entered its amended judgment pursuant to the verdict.

On May 30, 2012, the IRS prepared SFRs for petitioner for 2007 and 2008
and executed for each year the certification required by section 6020(b). These
returns constituted valid Federal income tax returns of petitioner for 2007 and
2008. On July 2, 2013, the IRS timely mailed petitioner a notice of deficiency
based on these SFRs, determining tax deficiencies for each year and additions to
tax for fraudulent failure to file (for 2007), for failure to file timely (for 2008), and
for failure to pay timely (for both years).2

On September 23, 2013, petitioner timely petitioned this Court for review of
the notice of deficiency. As the basis for his disagreement with respondent’s determinations,
petitioner stated as follows:

Petitioner is not the person made liable by law under IRC §§1461 &
1463 for the payment of the tax, or the penalty. The deficiency
violates IRC §§ 6211 and 6212 because it has been based on Subtitle
C wages, not Subtitle A. Per IRC §§ 6001 and 6011, Petitioner is not
a person required by law to file a tax return because he has no statutory
liability for the payment of any tax. IRC § 6020(b) has been
violated as there is no subscribed SFR. IRM 5291 has been violated
as Form 1040 is not authorized for use as an SFR document under
IRC § 6020(b). Petitioner did not earn the wages defined under IRC
§ 1441(b) that are subject to the Subtitle A based deficiency
calculated under IRC § 6211. Petitioner disputes the application of
the deficiency authority, and the income tax law, as a direct tax
without apportionment, which is still controlled and prohibited by
Article I of the U.S. Constitution.

On July 16, 2014, the Court granted respondent’s motion for leave to file an
amendment to answer, which sets forth the details of petitioner’s tax evasion
scheme and criminal conviction and makes (among others) the following affirmative
allegation:

The prior criminal conviction of petitioner under I.R.C. § 7201 for the
taxable year 2007 is conclusive and binding on petitioner, and by
reason thereof petitioner is estopped in the instant case, under the
doctrine of collateral estoppel (estoppel by judgment), from denying
herein that he fraudulently failed to file an income tax return for the
taxable year 2007 under I.R.C. § 6651(f) and that, therefore, petitioner
is liable for the addition to tax imposed by I.R.C. § 6651(f).

Respondent’s amendment to answer also alleges affirmatively that
“[p]etitioner received income of $148,061 in 2007.” This represents the sum of
the income petitioner received from MATA ($144,650) and the income he realized
from cancellation of indebtedness ($3,411).

Our order granting respondent leave to amend his answer also ordered petitioner
to file, by August 29, 2014, a reply to the first amendment to answer. This
order warned petitioner that if he “fails to file a reply, every affirmative allegation
set out in the First Amendment to Answer may be deemed admitted under Tax
Court Rule 37(c).” Petitioner did not file a reply to the first amendment to answer;
instead, he filed a 129-page “Memorandum at Law on Federal Income Taxation
and the Personal Federal Income Tax.” This document contains the usual
gibberish embraced by tax protesters. On September 12, 2014, respondent moved
for entry of an order under Rule 37(c) that petitioner be deemed to have admitted
the undenied affirmative allegations of the first amendment to answer. We granted
that motion on September 17, 2014.

On October 9, 2014, respondent filed a motion for summary judgment, to
which petitioner responded on November 10, 2014. His response asserts that there
exist “many factual disputes” but makes no reference whatever to the actual facts
of this case. Rather, the “factual disputes” he alleges are said to concern (for example) whether “the original income tax legislation was enacted under a tariff
act, as a tariff, or not”; whether “section 1461 identifies the persons who are
actually made liable” for payment of income tax; whether sections 6001 and 6011
“require a liability for a tax to be determined to exist as a prerequisite to a person
being required to file returns or keep records”; whether “wages” constitute
“income”; and whether “the improper creation and unauthorized substitute for
return documents in this case by the IRS employees constitutes evidence of a
crime.”

Discussion

A. Summary Judgment Standard

The purpose of summary judgment is to expedite litigation and avoid costly,
time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90
T.C. 678, 681 (1988). Under Rule 121(b) the Court may grant summary judgment
when there is no genuine dispute as to any material fact and a decision may be
rendered as a matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), aff’d, 17 F.3d 965 (7th Cir. 1994). Rule 121(d) provides that where the
moving party properly makes and supports a motion for summary judgment, “an
adverse party may not rest upon the mere allegations or denials of such party’s
pleading” but rather must set forth specific facts, by affidavits or otherwise, “showing that there is a genuine dispute for trial.” In light of respondent’s
motion, his supporting declaration and exhibits, the deemed admission by
petitioner of the undenied affirmative allegations of the first amendment to
answer, and petitioner’s response to the summary judgment motion, which alleges
no colorable dispute as to any material fact, we conclude that this case may be
adjudicated summarily.

B. Unreported Income

The IRS’ determinations in a notice of deficiency are generally presumed
correct, and the taxpayer bears the burden of proving those determinations erroneous.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). For this presumption
to adhere in cases involving receipt of unreported income, respondent
must provide some predicate evidence connecting the taxpayer to the incomeproducing
activity. See, e.g., De Cavalcante v. Commissioner, 620 F.2d 23 (3d
Cir. 1980), aff’g T.C. Memo. 1978-432; Tucker v. Commissioner, T.C. Memo.
2014-51, at *12. Once respondent has produced evidence linking the taxpayer to
an income-producing activity, the burden of proof shifts to the taxpayer to prove
by a preponderance of the evidence that respondent’s determinations are arbitrary
or erroneous. Helvering v. Taylor, 293 U.S. 507, 515 (1935); Tokarski v.
Commissioner, 87 T.C. 74 (1986).

Respondent has supplied bank records demonstrating that cash of $144,650
for 2007 and $37,000 for 2008 was transferred from the MATA account into the
Maple Avenue account and the Balice account, over which petitioner had signatory
authority and exercised control. Respondent has supplied evidence that the
IRS received from Chase Bank USA a Form 1099-C for 2007 reporting that
petitioner realized cancellation of indebtedness income of $3,411 in 2007. These
records establish that petitioner received, but did not report, income of $148,061
for 2007 and $37,000 for 2008.

On the basis of this credible evidence, we are satisfied that the IRS’ determinations
set forth in the notice of deficiency are entitled to the general presumption
of correctness. See Hardy v. Commissioner, 181 F.3d 1002, 1004 (9th Cir.
1999), aff’g T.C. Memo. 1997-97; Powerstein v. Commissioner, T.C. Memo.
2011-271. Petitioner’s response to the motion for summary judgment does not
allege any dispute as to the correctness of the IRS’ determinations. Indeed, for
2007, petitioner is deemed to have admitted the allegation in the first amendment
to answer that he “received income of $148,061 in 2007,” representing the sum of
his cancellation of indebtedness income ($3,411) and the income he received from
MATA ($144,650). We will accordingly sustain respondent’s determination of
unreported income for each year.

C. Additions to Tax

1. Failure To File

Section 6651(a)(1) provides for an addition to tax when a taxpayer fails to
file a return timely, unless the taxpayer proves that the failure was due to reasonable
cause and not due to willful neglect. Late filing of a return is due to reasonable
cause “[i]f the taxpayer exercised ordinary business care and prudence and
was nevertheless unable to file the return within the prescribed time.” Sec.
301.6651-1(c)(1), Proced. & Admin. Regs. For each month or fraction thereof for
which such failure continues, section 6651(a)(1) adds 5% of the tax required to be
shown on such return, up to a maximum addition of 25%. “If any failure to file
any return is fraudulent,” however, the monthly addition to tax rises from 5% to
15%, and the maximum aggregate addition to tax is increased to 75%. Sec.
6651(f)(1) and (2). Respondent bears the burden of proving fraud by “clear and
convincing evidence.” Reedy v. Commissioner, T.C. Memo. 2008-100.

Respondent has shown, and petitioner does not dispute, that he failed to file
Federal income tax returns for 2007 and 2008. Petitioner does not contend, and he
could not plausibly contend, that he exercised “ordinary business care and prudence”
in the discharge of his Federal tax obligation for either year. For 2007
petitioner was convicted under section 7201 of willfully attempting to evade or defeat his Federal income tax obligation, and he is thus collaterally estopped
from denying that his failure to file for that year was fraudulent.
See DiLeo v.
Commissioner, 96 T.C. 858, 885 (1991), aff’d, 959 F.2d 16 (2d Cir.1992). In any
event, petitioner is bound by his deemed admission of the affirmative allegations
in respondent’s first amendment to answer that “petitioner is liable for the addition
to tax imposed by I.R.C. § 6651(f).” See Doncaster v. Commissioner, 77 T.C.
334, 336-340 (1981) (noting that deemed admissions under Rule 37(c) are
sufficient to satisfy respondent’s burden of proving fraud). We accordingly
sustain respondent’s determination that petitioner is liable for additions to tax of
$26,062 for 2007 under section 6651(f) and $857 for 2008 under section
6651(a)(1).

2. Failure To Pay

Section 6651(a)(2) provides for an addition to tax when a taxpayer fails to
pay timely the tax shown on a return, unless the taxpayer proves that the failure
was due to reasonable cause and not due to willful neglect. A substitute for return
prepared by the IRS pursuant to section 6020(b) is treated as the “return” filed by
the taxpayer for purposes of section 6651(a)(2). See sec. 6651(g). For each month
or fraction thereof for which a failure to pay continues, section 6651(a)(2) adds 0.5% of the tax required to be shown on such return, up to a maximum addition of 25%.

Respondent has shown, and petitioner does not dispute, that he failed to pay
his Federal income obligations for 2007 and 2008. Respondent has established
that the IRS prepared for each year an SFR that met the requirements of section
6020(b). Petitioner does not contend, and he could not plausibly contend, that his
failure was due to “reasonable cause.” We accordingly sustain the section
6651(a)(2) additions to tax.

D. Section 6673 Penalty

Section 6673(a)(1) authorizes this Court to require a taxpayer to pay to the
United States a penalty not in excess of $25,000 if it appears that he has instituted
or maintained proceedings primarily for delay or the taxpayer’s position “is frivolous
or groundless.” The purpose of section 6673 is to compel taxpayers to conform
their conduct to settled tax principles and to deter the waste of judicial resources.
See Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); Salzer v.
Commissioner, T.C. Memo. 2014-188.

Petitioner was previously before this Court in Balice v. Commissioner, T.C.
Memo. 2005-161, 90 T.C.M. (CCH) 1, where he challenged a notice of Federal tax
lien. In granting the Commissioner’s motion for summary judgment, the Court noted that petitioner advanced contentions “that the Court finds to be frivolous and/or groundless.” 90 T.C.M. (CCH) at 3. We then considered sua sponte whether to impose on petitioner a penalty under section 6673(a)(1). Although we decided not to impose a penalty in that case, we warned petitioner “that he may be subject to such a penalty if in the future he institutes or maintains a proceeding in this Court primarily for delay and/or his position in any such
proceeding is frivolous or groundless.” Ibid.

On July 9, 2014, respondent filed in the instant case a motion for protective
order. This motion represented that petitioner had served a request for answers to
interrogatories demanding that respondent admit or deny propositions that included
multiple variations on the following themes: (1) section 61 does not contain
the word “wages” or “liable”; (2) petitioner is not a “person” who is liable for tax;
(3) petitioner’s wages are not “wages” subject to tax under subtitle A; and (4)
petitioner’s wages are not subject to statutory deficiency procedures. Contentions
like these are a familiar refrain of the tax-protest movement. See, e.g., Bonaccorso
v. Commissioner, T.C. Memo. 2005-278; Copeland v. Commissioner, T.C. Memo.
2003-46; Guerrier v. Commissioner, T.C. Memo. 2002-3; Smith v. Commissioner,
T.C. Memo. 2000-290; Rev. Rul. 2007-20, 2007-1 C.B. 863. Respondent submitted that he should not be required to answer these interrogatories because
they were designed to burden the IRS and constituted abuse of the judicial system.

On July 16, 2014, we granted respondent’s motion for a protective order and
advised petitioner that “[t]he Court will also consider, as part of its ultimate decision
in this case, whether petitioner should be required to pay a penalty under section
6673(a)(1) for the frivolous positions he has maintained in this case to date.”
We warned petitioner that, “if he continues to maintain such frivolous positions,
the magnitude of the penalty considered by this Court will increase.”

Despite these warnings petitioner has continued to make submissions to this
Court--including the documents he filed on July 31, August 4, August 11, September
26, and November 11, 2014--that contain numerous arguments that are utterly
frivolous. We will accordingly require him to pay under section 6673(a)(1) a penalty
to the United States in the amount of $25,000.


To reflect the foregoing,
An appropriate order and decision
will be entered.

1 Unless otherwise indicated, all statutory references are to the Internal
Revenue Code in effect for the tax years at issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. We round all monetary amounts to
the nearest dollar.

2 Respondent asserted an a 2 ddition to tax under section 6651(a)(1) for 2007 in
the event we do not sustain the fraudulent failure-to-file penalty.

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grixit
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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby grixit » Tue Mar 17, 2015 6:08 am

I wish i were rich enough that i could just blow $25,000 doing something i'd already been warned would cost me.


Not that i'd actually do it, mind you. I just wish i had that kind of money.
I voted for Hillary, and i didn't even get a stupid tshirt!

10 . . . . . . . . . . . . . . . 2
. . . . . . Dr Pepper
. . . . . . . . . . . . . . .. . . 4

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby LPC » Tue Mar 17, 2015 10:58 am

Tax Court wrote:Petitioner did not file a reply to the first amendment to answer; instead, he filed a 129-page “Memorandum at Law on Federal Income Taxation and the Personal Federal Income Tax.” This document contains the usual gibberish embraced by tax protesters.

I wonder if we'll ever get a court to refer to it "the usual authentic frontier gibberish."
Dan Evans
Foreman of the Unified Citizens' Grand Jury for Pennsylvania
(And author of the Tax Protester FAQ: evans-legal.com/dan/tpfaq.html)
"Nothing is more terrible than ignorance in action." Johann Wolfgang von Goethe.

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby wserra » Tue Mar 17, 2015 1:00 pm

LPC wrote:I wonder if we'll ever get a court to refer to it "the usual authentic frontier gibberish."


Probably only if Jack Starrett files it.
"A wise man proportions belief to the evidence."
- David Hume

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby The Observer » Mon Feb 08, 2016 5:41 pm

MICHAEL BALICE,
Appellant
v.
COMMISSIONER OF INTERNAL REVENUE

Release Date: FEBRUARY 05, 2016


NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 15-2366

On Appeal from the United States Tax Court
(Tax Court No. 13-22235)
Tax Court Judge: Honorable Albert G. Lauber

Submitted for Possible Dismissal Pursuant to
28 U.S.C. section 1915(e)(2)(B) or Summary Action
Pursuant to Third Circuit LAR 27.4 and I.O.P. 10.6
January 28, 2016
Before: FISHER, JORDAN and VANASKIE, Circuit Judges

(Opinion filed: February 5, 2016)

OPINION/*/

PER CURIAM

Pro se appellant Michael Balice appeals the United States Tax Court's orders granting summary judgment to the Commissioner of Internal Revenue, denying his cross-motion for summary judgment, and denying his motion to vacate the adverse judgment. Because Balice has no arguable legal basis on which to appeal the Tax Court's judgment, we will dismiss the appeal pursuant to 28 U.S.C. section 1915(e)(2)(B)(i). See Neitzke v. Williams, 490 U.S. 319, 325 (1989).

In tax years 2007 and 2008, Balice did not file a tax return or pay income tax. In 2011, he was convicted of tax evasion in violation of 26 U.S.C. section 7201. See D.N.J. Cr. No. 2:10-cr-0485. In 2012, the Commissioner executed returns for Balice pursuant to 26 U.S.C. section 6020. Using Balice's bank statements, the Commissioner determined that he had earned taxable income of $ 148,061 in 2007 and $ 37,000 in 2008. The Commissioner calculated Balice's tax deficiency to be $ 35,947 for 2007 and $ 3,810 for 2008; moreover, the Commissioner concluded that Balice was liable for additional sums due to his failure to file, see 26 U.S.C. section 6651(a)(1), and his failure to pay, see section 6652(a)(2), and subject to a penalty for advancing frivolous positions, see 26 U.S.C. section 6673. The Commissioner thereafter served Balice with a notice of deficiency.

Balice filed a petition for redetermination in the Tax Court. Before the Tax Court, Balice did not challenge the Commissioner's calculation of his income, tax liability, additions to tax, or penalty. Instead, he raised numerous arguments typical of tax protesters, including that (1) the Constitution does not authorize an income tax; (2) the 16th Amendment lacks an enactment clause; (3) only residents of Washington, D.C., and other federal enclaves are subject to the federal tax laws; (4) Congress cannot delegate the enforcement of the tax laws to the executive; (5) the United States cannot tax the fruits of Balice's fundamental right to work; (6) the United States may tax only the profit Balice earns after subtracting the value of his labor; and (7) tax liabilities are assessed against only "withholding agents," not individuals. He also argued that only professional tax preparers, and not individuals, are subject to penalties under section 6673. The Commissioner moved for summary judgment, and the Tax Court granted the motion. The Tax Court sustained the Commissioner's determinations of Balice's deficiencies and additions to tax, required him to pay a penalty for asserting frivolous positions, and rejected his legal arguments. Balice filed a motion to vacate the order, which the Tax Court denied, and then filed a timely notice of appeal to this Court.

We have jurisdiction pursuant to 26 U.S.C. section 7482(a). We exercise plenary review over the Tax Court's entry of summary judgment, see Conn. Gen. Life Ins. Co. v. Comm'r, 177 F.3d 136, 143 (3d Cir. 1999), and review for abuse of discretion the Tax Court's imposition of a penalty under 26 U.S.C. section 6673, see Sauers v. Comm'r, 771 F.2d 64, 70 (3d Cir. 1985), and its denial of a motion to vacate, see Drobny v. Comm'r, 113 F.3d 670, 676 (7th Cir. 1997). We will consider only claims that Balice raised in the Tax Court. See Visco v. Comm'r, 281 F.3d 101, 104 (3d Cir. 2002).

The Tax Court did not err here. The Commissioner presented unrebutted evidence of Balice's tax deficiency and that he is subject to additions of tax due to his failure to file returns and pay his tax liability. Further, as the Tax Court explained, the type of tax-protester arguments that Balice raised have long been rejected as frivolous. See Sauers, 771 F.2d at 66 (concluding that appellant's arguments, "typical of those asserted by 'tax protesters,'" were "patently frivolous"); see also IRS Notice 2010-33, 2010-17 I.R.B. 609 (2010) (identifying common "frivolous positions"). 1 Moreover, because Balice insistently raised these legal challenges even after the Tax Court advised him of their frivolousness, the Tax Court did not abuse its discretion in imposing a penalty. See Sauers, 771 F.2d at 69. Contrary to Balice's contentions, section 6673 plainly authorizes the Tax Court to impose a penalty on the "taxpayer." 2 Finally, because Balice's motion to vacate was premised on the same meritless legal arguments, the Tax Court did not err in denying it.

Accordingly, we will dismiss this appeal pursuant to 28 U.S.C. section 1915(e)(2)(B).

//*//

This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent.

FOOTNOTES:

/1/ See also Skinner v. Mid-Am. Pipeline Co., 490 U.S. 212, 222 (1989) (rules and regulations concerning the Internal Revenue Code are "without doubt the result of entirely appropriate delegations of discretionary authority by Congress"); United States v. Cooper, 170 F.3d 691, 691 (7th Cir. 1999) (claims that only D.C. residents are subject to income tax and that wages are not income because they are compensation for working are "frivolous squared"); United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990) (argument that income tax is unconstitutional is "devoid of any arguable basis in law"); United States v. Ward, 833 F.2d 1538, 1539 (11th Cir. 1987) (per curiam) (stating that a taxpayer's argument that withholding agents are the only persons statutorily liable for the income tax was "utterly without merit"); Funk v. Comm'r, 687 F.2d 264, 265 (8th Cir. 1982) (per curiam) (argument that compensation for labor cannot be taxed is "without merit"); United States v. Heck, 499 F.2d 778, 787-88 (9th Cir. 1974) (rejecting argument concerning lack of enabling clause).

/2/ In a filing in this Court, Balice alleges in passing that the Tax Court abridged his constitutional right to a trial. That argument lacks merit. See Sauers, 771 F.2d at 66 & n.2.
"I could be dead wrong on this" - Irwin Schiff

"Do you realize I may even be delusional with respect to my income tax beliefs? " - Irwin Schiff

Famspear
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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby Famspear » Mon Feb 08, 2016 7:40 pm

The Court in the Balice case did not address the most important non-frivolous issue which, of course, is: Does Mr. Balice pronounce his name to rhyme with "malice," or does he pronounce it something like "buh-LEESE")?

It makes a big difference when you're trying to write limericks.

:Axe:
...why is anyone in this [losthorizons] community paying the least attention to...'Larry Williams' [Famspear], or other purveyors of disinformation from...quatloos? – Pete Hendrickson, former inmate 15406-039, Fed’l Bureau of Prisons

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby NYGman » Mon Feb 08, 2016 7:47 pm

Famspear wrote:The Court in the Balice case did not address the most important non-frivolous issue which, of course, is: Does Mr. Balice pronounce his name to rhyme with "malice," or does he pronounce it something like "buh-LEESE")?

It makes a big difference when you're trying to write limericks.

:Axe:


I thought it was Balice like "Bal (like Val) Ice"
The Hardest Thing in the World to Understand is Income Taxes -Albert Einstein

Freedom's just another word for nothing left to lose - As sung by Janis Joplin (and others) Written by Kris Kristofferson and Fred Foster.

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby The Observer » Mon Feb 08, 2016 8:49 pm

Famspear wrote:It makes a big difference when you're trying to write limericks.


That means I will have to launch a pre-emptive strike and head you off:

One guru says you're de-taxed
And one says your refund is in the mail
But all they can really show you
Is that they just simply fail

Go ask Balice
Why he is in jail.

And if you believe in unicorns
And you know you're going to fail
Tell the court gibberish-spouting con men
Has led you down the rail

Call Balice
When he got nailed.

When the bailiff in the courtroom
Hooks you up, it's time to go
And you ask why nothing worked
that you bought from your pro

Go ask Balice
I think he'll know

'Cuz logic and proportion
Have forsaken your pointed head
And your guru is nowhere to be found
He left you in the water dead
Remember what the Judge said

Guilty instead
Guilty instead
"I could be dead wrong on this" - Irwin Schiff

"Do you realize I may even be delusional with respect to my income tax beliefs? " - Irwin Schiff

Famspear
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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby Famspear » Mon Feb 08, 2016 9:53 pm

You know, most people younger than a certain age will have no idea where that comes from.......

:)
...why is anyone in this [losthorizons] community paying the least attention to...'Larry Williams' [Famspear], or other purveyors of disinformation from...quatloos? – Pete Hendrickson, former inmate 15406-039, Fed’l Bureau of Prisons

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NYGman
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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby NYGman » Mon Feb 08, 2016 10:13 pm

Famspear wrote:You know, most people younger than a certain age will have no idea where that comes from.......

:)

And that is quite sad... the original is such a great song.
The Hardest Thing in the World to Understand is Income Taxes -Albert Einstein

Freedom's just another word for nothing left to lose - As sung by Janis Joplin (and others) Written by Kris Kristofferson and Fred Foster.

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby The Observer » Fri Aug 11, 2017 3:40 pm

UNITED STATES OF AMERICA,
Plaintiff,
v.
MICHAEL BALICE, AMBOY BANK, et al.,
Defendants.

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

OPINION

The United States has filed this action to reduce to judgment defendant Michael Balice's tax liability for several years, and to foreclose on a property at 70 Maple Avenue in Metuchen, New Jersey, currently held in trust. Now pending before the Court are two interrelated motions:
a. ECF No. 187 (government's motion for summary judgment)

b. ECF No. 191 (Balice's motion to strike premature pleadings and objection to the United States's motion for summary judgment)


For the reasons stated below, the motion of the United States for summary judgment is granted.

I. BACKGROUND

Because I write for the parties, I assume familiarity with the numerous previous decisions in this matter. A brief overview of the pertinent facts is nevertheless helpful. 1

A. Transfer of the Maple Avenue Property

The Maple Avenue property was once owned by Michael Balice and his then-wife, Marion Balice (collectively, the "Balices"). 2 In August of 1994, the Balices, saddled with outstanding federal income tax and other liabilities, attended a seminar given by Ronald Ottaviano that instructed attendees on how to create trusts to obtain tax benefits. (Pl. Br. 3-4) Thereafter, on August 28, 1994, the Balices executed a quitclaim deed purporting to transfer title of the Maple Avenue property - their primary residence at the time - to the Rosewater Trust ("Rosewater"). (Id.) The Balices did not receive consideration for the transfer. (Id. 3)

On August 29, 1994, the Balices applied to the IRS for an Employer Identification Number for Rosewater, listing Marion Balice as Rosewater's executor or trustee. A "certification" document dated October 5, 1994, purportedly appointed Balice as Rosewater's "Exchanger". (Id. 4; Pl. Exs. I-J)

In its decision upholding the Balices' tax deficiencies for the 1997 and 1998 tax years, the United States Tax Court made the following findings concerning a checking account the Balices had opened in Rosewater's name:

i. The Balices exercised complete control over the checking account;

ii. All deposits into the account during 1997 and 1998 were from the Balices or "Statewide"; 3

iii. All statements for the Rosewater checking account went to the Balice's home address;

iv. Statewide had no economic substance and should be disregarded for tax purposes;

v. Following transfer to Rosewater, the Balices continued to live in and exercise control over the Maple Avenue property.


(Pl. Ex. B)

Marion Balice made signed declarations in 2011 and 2015, the substance of which echoed the Tax Court's findings. She admitted that Rosewater was fictitious and set up to hold title to and protect the Maple Avenue property from federal tax and other liabilities; that no consideration was exchanged for the transfer; and that the Balices lived in the property and used personal funds to pay its expenses, post-transfer. (Pl. Br. 5; Ex. L) In connection with this litigation, Balice himself signed a declaration stating that he resided at the Maple Avenue property from 1989 to the present day, excluding his incarceration, and has paid utility bills for the property. (Id.; ECF No. 176 ¶¶ 1-2)

B. Income Tax Obligations for 1998 (Count 1), 2007, and 2008 (Count VI)

The Balices filed a joint income tax return for the 1998 tax year that reported a total amount due of $ 7,779, which they paid in full. The Internal Revenue Service ("IRS"), however, subsequently determined that the Balices were liable for a deficiency of $ 32,449 as well as a penalty of $ 6,489.80, for the 1998 tax year, and sent the Balices a June 21, 2004 deficiency notice saying so. Balice challenged the deficiencies in Tax Court and the Tax Court upheld the deficiencies on December 10, 2009. (Pl. Ex. B, C; see ECF No. 208 p.2) Following the Tax Court decision on February 22, 2010, the IRS again assessed the Balices' 1998 taxes, concluding that they still owed $ 76,586. (See Am. Compl. ¶ 17; Pl. Reply 2) Those deficiencies remain largely unpaid (see Am. Compl. ¶ 19) and with penalties and interest, amount to $ 60,179.68 as of January 9, 2017. (Pl. Br. 2)

Balice did not file any tax return for the tax years 2007 and 2008, despite earning income by marketing products that purported to teach others how to avoid income tax by creating sham trusts. For marketing these products, a jury convicted Balice on December 21, 2011 of conspiracy to defraud the United States, wire and mail fraud, and attempt to evade income tax. (See Pl. Ex. D) Thereafter, the IRS determined Balice's tax deficiencies for 2007 and 2008, which Balice again challenged in the United States Tax Court. Again, the Tax Court upheld the deficiencies, holding that for 2007, Balice owed $ 35,497 in unpaid taxes and $ 35,049 in statutory penalties, and that for 2008, Balice owed $ 3,810 in unpaid tax and $ 1,180 in penalties. Additionally, the Tax Court imposed a $ 25,000 fine, under 26 U.S.C. § 6673(a), for maintaining frivolous positions during the Tax Court litigation. (Pl. Br. 3; see Pl. Ex. E-F) On Balice's appeal, the Third Circuit upheld the Tax Court's decision. (Pl. Br. 3 (citing Balice v. CIR, No. 15-2366 (3rd Cir. February 5, 2016)).

Accounting for liabilities, statutory additions, and the $ 25,000 penalty, Balice owes $ 117,337.27 for the 2007 tax year and $ 6,693.51 for the 2008 tax year, as of January 9, 2017. (Pl. Br. 3; MacGillivray Decl. ¶¶ 11-13)

C. The Parties' Motions and Relevant Procedural History

By opinion and order dated July 10, 2015, I previously denied Amboy's motion for summary judgment, which argued that Amboy's HELOC mortgage lien on the Maple Avenue property has full priority over the tax lien of the United States. (See ECF No. 71, United States v. Balice, No. CIV. 14-3937 KM JBC, 2015 WL 4251146, at *9 (D.N.J. July 10, 2015) (hereinafter, "Balice I"), reconsideration denied, No. 14-3937 (KM)(JBC), 2016 WL 1178860 (D.N.J. Jan. 15, 2016). There, in Balice I, I determined that Amboy's lien would take priority, but only "to the extent of the outstanding balance on the home equity line of credit as of July 12, 2005, plus any additional sums advanced thereafter, but before August 27, 2005." I explained that the amount of the lien could not be determined on summary judgment, however, because the priority dollar amount depends on the outstanding loan disbursements that occurred before August 27, 2005, any reduction of that balance by repayment, and interest and fees - all issues undeveloped in the record at the time.

The parties still have not submitted evidence sufficient to establish the dollar amount of Amboy's priority. The government's motion for summary judgment, which is directed at Balice, puts off the issue: it recognizes in principle, however, that the proceeds of a foreclosure sale on the Maple Avenue property would be distributed to Amboy Bank "to satisfy those portions of Amboy Bank's lien that the Court determines, pursuant to further briefing, hold priority over federal tax liens," prior to being distributed to the United States to satisfy "the outstanding balance of the federal tax liens that attach to the property, including interest and penalties arising from such liens. . . ." (Pl. Br. 13) Therefore, the dollar amount of any such priority is not at issue on this motion; indeed the parameters of the issue depend to some degree on the issues decided here, so the parties' failure to address it definitively is understandable.

In Balice I, I also denied Balice's motion to dismiss and rejected Balice's argument that under principles of res judicata, the prior judgments for Balice's tax debts for the years 1992, 1993, 1996, and 2001 bar the government from proceeding with this action. I explained that not only are different tax years at issue in this case (with respect to claims for judgment), but the government is also seeking foreclosure in this action - a type of relief it did not seek in prior actions. "Rather, those prior actions established the Balices' liability for tax assessments and entered money judgments, resulting in the attachment of tax liens to all property and rights that the Balices owned." Balice I at *9. There is no preclusion, I noted, even as to tax years for which debts were previously reduced to judgment, on which the United States seeks to foreclose in this action. Id. at *10.

Moreover, in Balice I, I rejected, inter alia, Balice's tax-protestor-style arguments that the U.S. Constitution does not give Congress the power to collect income taxes and that Congress may not delegate tax-collecting power to the IRS. Id. at *10-12. I rejected largely identical arguments in my opinion dated July 20, 2016. (See ECF No. 152, hereinafter "Balice II", pp. 1-2)

In that July 20, 2016 opinion, Balice II, I also rejected Balice's argument that the 2010 assessment of his 1998 taxes violated the three-year statute of limitations provided for in 26 U.S.C. § 6501. That statute establishes a six-year, rather than three-year, statute of limitations when a taxpayer has understated his income by more than 25%, as Balice did. 26 U.S.C. § 6501(e)(1). (Balice II at 3-4) Even setting aside this substantive reasoning, I held that Balice's timeliness argument was barred by res judicata, "having already been decided adversely to Balice in the Tax Court" in a decision that became final on February 8, 2010. (Id. 4)

In an opinion and order dated October 11, 2016, "Balice III", I rejected, inter alia, Balice's motion for summary judgment, and with it his argument that tax withholding in the amount of $ 10,162 satisfied his 1998 tax year deficiency. (See ECF No. 167, hereinafter "Balice III", at 4) I explained that Count I seeks to reduce to judgment additional amounts due for the 1998 tax year, over and above the $ 10,162, so Balice's argument was beside the point. (Id.) In Balice III, I also, for the second time, disposed of Balice's argument that the 2010 tax assessment on his 1998 tax year income taxes was barred by the applicable statute of limitations. (Id. at 4-5)

Seeking to resolve all counts remaining in this action, the United States brought the motion for summary judgment that is now before me. (ECF No. 187) Filed on January 27, 2017, this summary judgment motion asks the court to (a) reduce the Balices' 1998 joint income tax and Balice's 2007 and 2008 income tax assessments to judgment (Counts I and VI); (b) declare that Rosewater holds title to the Maple Avenue property as the Balices' nominee or alter ego (Count III); (c) in the alternative, to set aside the transfer of the Maple Avenue property from the Balices to Rosewater as a fraudulent conveyance (Count IV); and (d) hold that the United States may foreclose its federal tax liens against the Maple Avenue property (Count V).

Balice's motion (ECF No. 191), filed February 14, 2017, asks me to strike the motion for summary judgment as premature. He says he is entitled to, but has not received, further discovery in the form of "IMF data, files, records, and record-sets." (Def. Mot. 86 Opp. 3, ¶ 12) Balice's motion also serves as his opposition to the summary judgment motion of the United States. In broad strokes, Balice argues that disputed issues of material fact preclude summary judgment and he also seeks to attack the judgments of the Tax Court. Balice has also filed a second, tardy opposition to the United States's motion, dated June 29, 2017 (Def. 2nd Opp.). In light of his pro se status, I nevertheless consider it.

Defendant Amboy Bank ("Amboy"), which has a mortgage lien on the Maple Avenue property, also opposes the summary judgment motion, but only as to the status of Rosewater and the ability of the United States to foreclose on this trust-held asset (Counts III, IV, and V). (See ECF No. 190, filed February 7, 2017; see also ECF No. 119 (opposition to the United States's motion for summary judgment against Amboy)) Amboy Bank argues that the United States is time-barred from challenging the status of Rosewater and therefore cannot foreclose on the Maple Avenue property for the purpose of satisfying the Balices' personal tax liabilities.

Since the parties filed the motions that are the subject of this Opinion, Magistrate Judge Clark and I have ruled on several ancillary motions (See, e.g., ECF nos. 202, 208). Judge Clark's letter order dated May 8, 2017 (ECF no. 202) is relevant to Balice's motion to strike. By that order, Judge Clark denied three discovery motions Balice filed which sought orders to compel the United States to produce individual master file ("IMF") data and other documents. (ECF no. 202 at 1) Judge Clark held that Balice's request for IMF data was moot, as the United States represented that it had already provided all relevant data, and that, as to the other documents, Balice had failed to serve discovery requests on the United States. (Id. at 2)

Subsequently, during a May 16, 2017 telephone conference, Judge Clark announced that discovery had concluded. Balice conceded that his "master file" from the IRS "was the main thing that he really wanted" out of the discovery stage of this action. (ECF No. 204, p. 4) 4

My most recent memorandum opinion and order, dated July 5, 2017 (ECF No. 208, hereinafter "Balice IV"), is also relevant. In that memorandum opinion and order, Balice IV, I rejected (for the third time) Balice's argument that the 2010 assessment of his 1998 tax year liability was untimely. With the aid of a timeline of events, I explained that the IRS's February 22, 2010 assessment of the Balices' 1998 taxes was timely because the six-year statute of limitations, see 26 U.S.C. § 6501(e)(1), began running when the Balices filed their tax return on December 20, 1999. Although February 2010 is, as Balice points out, more than six years after December 1999, the six-year statute of limitations was tolled for over five years by the filing of the June 21, 2004 notice of deficiency and the intervening Tax Court proceeding. See 26 U.S.C. § 6503(a)(1). (Bailee IV at 1-2)

II. LEGAL STANDARD

Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if 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); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L.Ed.2d 202 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. County of Allegheny Pennsylvania, 139 F.3d 386, 393 (3d Cir. 1998). The moving party bears the burden of establishing that no genuine issue of material fact remains. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "With respect to an issue on which the nonmoving party bears the burden of proof . . . the burden on the moving party may be discharged by 'showing' - that is, pointing out to the district court - that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325.

Once the moving party has met that threshold burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The opposing party must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see also Fed. R. Civ. P. 56(c) (setting forth types of evidence on which nonmoving party must rely to support its assertion that genuine issues of material fact exist). "Unsupported allegations . . . and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial."). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, . . . there can be 'no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex, 477 U.S. at 322-23).

In deciding a motion for summary judgment, the court's role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S. Ct. 2505. Credibility determinations are the province of the fact finder. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). The summary judgment standard, however, does not operate in a vacuum. "Fin ruling on a motion for summary judgment, the judge must view the evidence presented through the prism of the substantive evidentiary burden." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986).

III. DISCUSSION

A. Balice's Motion and Opposition

1. Motion to strike

The only argument Balice makes in support of striking the United States's motion for summary judgment is that he is still entitled to discovery of IMF data. (Def. Mot. & Opp. 2-4, ¶¶ 4-16; Def 2nd Opp. 1) Balice accuses the United States of "improperly secreting and hiding" undisclosed IMF records, which Balice assumes must be exculpatory. But Balice offers no evidence or substantive argument to support his accusation or his assumption. The United States has represented, many times, that it has produced all relevant IMF data and that any further information would be irrelevant and burdensome to produce, in light of the needs of this case. (See Pl. Reply 2; ECF No. 189 at 1-2; ECF No. 196 at 2.) Cf. Fed. R. Civ. P. 26(b)(1) ("Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case. . . ."); Caver v. City of Trenton, 192 F.R.D. 154, 159 (D.N.J. 2000) ("The party seeking discovery has the burden of showing that the information sought is relevant to the subject matter of the action and may lead to admissible evidence.").

For these reasons, Judge Clark has already denied Balice's essentially identical requests (see ECF nos. 182, 185, 186) and has closed discovery in this action. (See ECF No. 202 (denying Balice's request to compel production of additional IMF data as moot where United States represented it had already produced all relevant IMF data); ECF No. 204 (announcing close of discovery and scheduling summary judgment briefing); discussion at p. 8, supra.)

In Goodman v. Burlington Coat Factory Warehouse Corp., 292 F.R.D. 230 (D.N.J. 2013), Judge Schneider summarized the relevant considerations in discovery disputes like this one:

It is well settled that the Federal Rules of Civil Procedure allow broad and liberal discovery. . . . Nonetheless, while the scope of discovery pursuant to Rule 26 is broad, it is not unlimited and may be circumscribed. . . . Even if discovery is relevant the Court has discretion to impose limits where the discovery sought is unreasonably cumulative or duplicative, or where the burden or expense of the proposed discovery outweighs its likely benefit. . . . The Court has broad discretion to tailor discovery narrowly to meet the needs of each case. . . . This rule of proportionality is intended to guard against redundant or disproportionate discovery by giving the court authority to reduce the amount of discovery that may be directed to matters that are otherwise proper subjects of inquiry. . . . See also Public Service Enterprise Group, Inc. v. Philadelphia Elec. Co., 130 F.R.D. 543, 551 (D.N.J. 1990) (employing the rule of proportionality to exclude marginally relevant evidence from the scope of discovery); Bowers v. N.C.A.A., C.A. No. 97-2600 (JBS), 2008 WL 1757929, at *6 (D.N.J. Feb. 27, 2008)(exercising discretion to bar marginally relevant evidence).

Id. at 232

A party's speculative need for additional evidence is not grounds for reopening discovery, especially where doing so would deprive the other parties of certainty and delay resolution of the action. This relatively straightforward matter has been pending for three years. Discovery has closed and the parties expressly agreed to a summary judgment briefing schedule before Judge Clark. Accordingly, Balice's motion to strike the United States's motion for summary judgment as premature is denied.

2. Balice's contentions in opposition to the motion for summary judgment

In advance of analyzing the summary judgment motion of the United States on the merits, I summarily dispose of six contentions made by Balice, all of which lack merit and fail to raise a material dispute.

(1) Balice argues that the 2010 assessment of 1998 tax year liabilities ran afoul of the statute of limitations, depriving this court of jurisdiction (Def. Mot. & Opp. 6-7, ¶¶ ii, vi & 18; Def. 2nd Opp. 4-5); As explained in detail, supra pp. 5-8, this Court has thrice rejected Balice's challenge to the timeliness of the 2010 assessment ((1), supra). (See Balice II at 3-4; Balice III at 4-5; Balice IV 1-2) This decision marks the fourth disposition of the same issue.

(2) Balice argues that the Tax Court's orders must be set aside because the Balices never received notices of deficiency (Def. Mot. & Opp. 8, ¶ vii) The government points out that this argument contradicts the Tax Court's finding that the IRS "mailed the Balices a notice of deficiency for years 1997 and 1998 on July 21, 2004," and that "thereafter, the Balices challenged the IRS's determinations by filing a petition" in Tax Court. (Pl. Br. Ex. 2 at 2 (ECF No. 187-2 at p.8); see Pl. Reply 4) The government argues that the findings of the Tax Court are binding on the parties to this action. (Pl. Reply 4) Tax Court determinations litigated on the merits are binding as a matter of res judicata. United States v. Bottenfield, 442 F.2d 1007, 1008 (3d Cir. 1971).

Without even wading into the applicability of preclusion doctrines, though, Balice's lack-of-service challenge is insufficient to defeat summary judgment. It is entirely implausible that Balice never received a notice of deficiency and yet challenged the IRS's assessment in Tax Court. "The notice of deficiency, sometimes called a 'ninety day' letter, is the taxpayers' 'ticket to the Tax Court' to litigate the merits of the deficiency determination, and is a jurisdictional prerequisite to a suit in that forum." Robinson v. United States, 920 F.2d 1157, 1158 (3d Cir. 1990) (citations omitted); 26 U.S.C. § 6213; see also Tax Ct. R. Prac. & Proc. 20(a) ("A case is commenced in the Court by filing a petition with the Court, inter alia, to redetermine a deficiency set forth in a notice of deficiency issued by the Commissioner. . . ."). Where the record makes clear that the Balices themselves initiated an action to challenge their 1998 tax deficiency, the only conclusion is that they initiated that action with the necessary "ticket" - their notice of deficiency.

It follows that there is no prejudice. Any procedural defect that may have existed in the IRS's service of the notice of deficiency did not deprive Balice of a full and fair opportunity to litigate the merits of his deficiency. Cf. Freeland v. C.I.R., 345 F. App'x 829, 830-31 (3d Cir. 2009) ("A taxpayer at a Collection Due Process hearing can challenge the 'existence or amount of the underlying tax liability for any tax period' if the taxpayer 'did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.'" (emphasis added) (quoting 26 U.S.C. § 6330(c)(2)(B))); Robinson v. United States, 920 F.2d 1157, 1161 (3d Cir. 1990) (determining that district court had jurisdiction to hear challenge to IRS lien where "the IRS's failure to send a notice of deficiency denied plaintiffs an opportunity to litigate the merits of the alleged deficiency in the Tax Court."). Accordingly, Balice's second challenge fails.

(3) Balice argues that the IRS incorrectly calculated the balance due on the Balices' tax deficiencies and has not accounted for "funds taken in multiple levy actions." (Def. Mot. & Opp. 8-11, ¶¶ ix, xi, xiii; Def. 2nd Opp. 3) Directing the Court to a line on an exhibited "Account Transcript" (see Def. 2nd Opp. 3 & Ex. A) listing "-$ 76,586.40" as the "write-off balance due", Balice contends that the United States has fraudulently concealed the fact that Balice's balance for the 1998 tax year is actually zero. (Def. 2nd Opp. 3) The transcript to which Balice refers is a printout of an electronic list of internal IRS accounting actions. The amount of $ 76,586.40, surely related to the IRS's February 22, 2010 assessment of additional income taxes due for 1998 (see Am. Compl. ¶ 17 (showing Feb. 22, 2010 assessment of $ 76,586 for the 1998 tax year)), appears to be subtracted as a "Transfer out" action, then added as a "Transfer-in" action, then subtracted again with the description "Write-off balance due". The subtraction-addition-subtraction sequence is admittedly confusing but the list appears to be incomplete and the "write-off balance due" entry appears to have been made in error, and has since been corrected. 5 At any rate, Balice offers no evidence to substantiate his interpretation that a negative "write-off balance due" absolves him of all liability.

This is not all a big misunderstanding. Weighing against Balice's unsupported interpretation is a nearly eight-year history of IRS records and Tax Court documents establishing and substantiating Balice's deficiencies for the 1998, 2007, and 2008 tax years. (Pl. Br. Exs. B-C, E-F, M; Pl. SUF ¶¶ 1-10; see generally MacGillivray Decl.) These records leave little room for doubt that Balice owes $ 60,179.68, not $ 0, in deficient income taxes, penalties, and interest for 1998 (Pl. SUF ¶¶ 2-5; Pl. Br. Exs. B-C (Tax Court Memorandum, Order and Decision granting Commissioner of IRS summary judgment on Balices' 1997 and 1998 tax deficiencies; MacGillivray Decl. ¶¶ 6-10 & Ex. 1; ECF No. 184-1); and $ 124,030.68 for the 2007 and 2008 tax years (as of January 27, 2017) (see MacGillivray Decl. ¶¶ 11-13 & Ex. 1). See Bottenfield, 442 F.2d 1007 (Tax Court's determinations of liabilities are final, binding, and res judicata in later actions); see also Freck v. I.R.S., 37 F.3d 986, 992 n.8 (3d Cir. 1994) ("Assessments are generally presumed valid and establish a prima facie case of liability against a taxpayer. . . ."); Psaty v. United States, 442 F.2d 1154, 1160 (3d Cir. 1971) ("Once the tax is assessed a rebuttable presumption arises based, in part, on the probability of its correctness . . . and upon considerations of public policy.").

(4) Balice argues that the balance due for tax years 2007 and 2008 is incorrect because the IRS impermissibly based the Balices' income on bank deposits, and that the United States has also failed to establish a prima facie case of the existence of Balice's tax liabilities (Def. Mot. 86 Opp. 9, ¶ x) The IRS, however, is authorized to estimate individuals' tax liability as long as the method used is reasonable. United States v. Fior D'Italia, Inc., 536 U.S. 238, 243, 122 S. Ct. 2117, 2122 (2002) (collecting cases upholding IRS's use of various means to extrapolate and estimate income taxes owed). "Deposits in a taxpayer's bank account are prima facie evidence of income, and the taxpayer bears the burden of showing that the deposits were not taxable income but were derived from a nontaxable source." Welch v. C.I.R., 204 F.3d 1228, 1230 (9th Cir. 2000); see also Reynoso v. Comm'r of Internal Revenue, 112 T.C.M. (CCH) 400 (T.C. 2016) ("The Commissioner often uses bank-deposits analyses to reconstruct taxpayers' income - and we have long approved their use."). Balice has made no showing that his bank deposits in this instance were not taxable income or that the IRS's use of them was not reasonable. See Dodge v. C.I.R., 981 F.2d 350, 354 (8th Cir. 1992) ("Once the deposits were shown to be in the nature of income and to exceed what the taxpayers had reported as income, it became the taxpayers' responsibility to persuade the trier of fact that the deposits were nontaxable.").

(5) Balice argues that the Balices transferred the Maple Avenue property to Rosewater for "fair and equitable value" and without the intent to evade liabilities (Def. Mot. & Opp. 11-12, ¶¶ xiii-xv) This argument goes to the question of whether Rosewater is an alter ego or nominee. It is, for reasons that will be explained infra. Balice offers absolutely no evidence that he received fair value, or any value, from Rosewater in exchange for title to the Maple Avenue property. He also offers no evidence, or even an alternative explanation, to support his claim that he did not transfer his property with the intent to evade liabilities. His wife, the other transferor party, says otherwise. Accordingly, this argument raises no disputed issues of fact and cannot overcome the United States's satisfactory evidence, discussed in Section LA., supra.

(6) Finally, Balice argues that, regardless of whether material facts remain in dispute, Balice has a constitutional right to a trial by jury (Def. Mot. & Opp. 16-25, ¶ 25; Def. 2nd Opp. 6-15). 6 This amounts to a constitutional attack on summary judgment itself, a matter settled over a century ago. "Summary judgment does not violate a party's Seventh Amendment jury trial rights so long as the person having the right to the jury trial is an actual participant in the summary judgment proceeding." In re TMI Litig., 193 F.3d 613, 725 (3d Cir. 1999), amended, 199 F.3d 158 (3d Cir. 2000); see also Fidelity & Deposit Co. v. United States ex rel. Smoot, 187 U.S. 315, 319-21, 23 S.Ct. 120 (1902) (rule authorizing judgment for a plaintiff who has filed and served affidavit setting out cause of action under contract and amount claimed due where defendant has not filed a sufficient affidavit in defense does not violate the right to a jury trial but rather "prescribes the means of making an issue").

Balice has therefore raised no issues of law or fact to defeat summary judgment. 7 To succeed on its motion, however, the government still must make its positive case. It must show that summary judgment is appropriate, and this includes overcoming Amboy's challenges as to Counts V and III and/or IV.

B. The Assessments on Balice's 1998, 2007, and 2008 Tax Liabilities Will Be Reduced to Judgment (Counts I and VI)

As I observed in Sections I.B. and III.A.2., supra, the Tax Court upheld the IRS's deficiency determinations concerning the Balice's income tax obligations for the 1998, 2007, and 2008 tax years. The amounts the Tax Court determined are res judicata in this action. Bottenfield, 442 F.2d at 1008. And according to the sworn declaration of IRS revenue officer Michael MacGillivray, the IRS's Integrated Data Retrieval System 8 shows that the unpaid portions of the IRS's assessments against Balice together with penalties and interest amount to $ 60,179.68 for the 1998 tax year and $ 124,030.68 for the 2007 and 2008 tax years. Amboy does not challenge these tax liabilities and, as discussed, Balice fails to introduce any contrary financial or other evidence that would raise a material dispute as to their correct calculation. Accordingly, summary judgment will be granted as to Counts I and VI.

C. The United States May Foreclose On the Maple Avenue Property Because Rosewater Is Balice's Nominee (Counts III and V)

I further rule that Rosewater is Balice's nominee, and that the United States may therefore foreclose on the property to satisfy Balice's personal tax obligations. I consider, and reject, Amboy's related arguments that foreclosure is barred by the statute of limitations and res judicata.

1. Rosewater's status as nominee

It is undisputed that the United States may foreclose on property subject to federal tax liens upon this court's adjudication and decree, 26 U.S.C. § 7403(a), (c), and that this foreclosure right extends to property held by a taxpayer's nominee, see G. M. Leasing Corp. v. United States, 429 U.S. 338, 351, 97 S. Ct. 619, 627 (1977). The United States has established many times over in this action that federal tax liens arose against the Balices upon timely assessments for the 1992, 1993, 1996, 1998, 2007, and 2008 tax years, and that these tax liens attached to the Balices' Maple Avenue property. See 26 U.S.C. § 6321. As discussed, the Balices received proper notice and demand for payment in accordance with 26 U.S.C. § 6303. Thereafter, they failed to satisfy the assessments and the government filed federal tax liens against the Balices and against Rosewater as nominee of Michael Balice. (See Pl. Br. Ex. M (Notices)). Accordingly, the United States is entitled to summary judgment on Count V and may enforce its federal tax liens through sale of the Maple Avenue property - if Rosewater is in fact a nominee of Balice.

In Count III, the United States asks for a finding that this is so. Because Rosewater is Balice's nominee, says the government, the Maple Avenue property, despite being held in trust, is subject to the federal government's liens for taxes owed by Balice. The government's premise is legally correct. "Where a property owner is acting as a nominee or alter ego for a taxpayer, the nominee's assets may be used to satisfy the taxpayer's outstanding tax liability." United States v. Patras, 909 F. Supp. 2d 400, 410 (D.N.J. 2012), aff'd, 544 F. App'x 137 (3d Cir. 2013). This "nominee theory is utilized to determine whether property should be construed as belonging to the taxpayer if he/she treated and viewed the property as his/her own, in spite of the legal machinations employed to distinguish legal title to the property." In re Richards, 231 B.R. 571, 578 (E.D. Pa. 1999). Therefore, as the Third Circuit Court of Appeals has explained,

when the "Government seeks to reach" real property, we must determine what rights the taxpayer has in such property to determine if it is subject to the lien. Drye v. United States, 528 U.S. 49, 58, 120 S. Ct. 474, 145 L.Ed.2d 466 (1999). If the property is under the control of a third party found to be the delinquent taxpayer's nominee or alter ego, it can be subject to a tax lien. G.M. Leasing Corp. v. United States, 429 U.S. 338, 350-51, 97 S. Ct. 619, 50 L.Ed.2d 530 (1977). A third party is a taxpayer's nominee where "the taxpayer has engaged in a legal fiction by placing legal title to property in the hands of that third party while actually retaining some or all of the benefits of true ownership." Holman v. United States, 505 F.3d 1060, 1065 (10th Cir.2007); see also Fourth Inv. LP v. United States, 720 F.3d 1058, 1066 & n. 3 (9th Cir.2013). We initially look to state law to determine the taxpayer's ownership interest in the property and whether the title holder is merely a nominee. See Drye, 528 U.S. at 58, 120 S. Ct. 474. If the taxpayer has a property interest under state law, then federal law determines whether that property interest is subject to a federal tax lien. Id.

United States v. Patras, 544 F. App'x 137, 140-41 (3d Cir. 2013) (footnotes omitted); 9 see also Balice I at *3 ("While state law governs the parties' underlying property rights, federal law governs the priority between a federal tax lien and a competing lien.").

Under New Jersey law, the following factors are relevant in determining whether a person or entity to whom property has been transferred is a taxpayer's nominee: (1) whether adequate consideration was paid for the transferred property; (2) whether the transfer occurred in anticipation of a lawsuit or other liabilities; (3) the relationship between the taxpayer and transferee; (4) whether the parties failed to record the conveyance; (5) whether the property remained in the taxpayer's possession; and (6) whether the taxpayer continued to enjoy the property's benefits. See Patras, 909 F. Supp. 2d at 410 (D.N.J. 2012) (listing these factors and noting that the standard is the same under federal and state law); Jugan v. Friedman, 275 N.J. Super. 556, 570, 646 A.2d 1112, 1119 (App. Div. 1994), abrogated on other grounds by Banco Popular N. Am. v. Gandi, 184 N.J. 161, 876 A.2d 253 (2005); Coles v. Osback, 22 N.J. Super. 358, 366, 92 A.2d 35, 39 (App. Div. 1952); see also Shades Ridge Holding Co. v. United States, 888 F.2d 725, 728 (11th Cir. 1989), as amended on denial of reh'g (Sept. 29, 1989).

Here, the government's evidence establishes that five out of six factors support the nominee theory. (See Section I.A., supra) The exception is factor four; failure to record a conveyance. The Balices did record a quitclaim deed conveying the Maple Avenue property to Rosewater. (Id.) Nevertheless, considering the substantial, undisputed evidence supporting the other five factors, factor four cannot be dispositive. The Third Circuit and its constituent courts have arrived at the same conclusion when faced with this balance of factors. See, e.g., United States v. Patras, 909 F. Supp. 2d at 411 ("Although the conveyance to the nominee was recorded, this factor is not dispositive given the substantial evidence supporting the other factors."), aff'd, 544 F. App'x 137, 142 (3d Cir. 2013) ("Although the transfer was recorded, this factor alone is not dispositive."); In re Richards, 231 B.R. 571, 579 (E.D. Pa. 1999) (explaining no one factor in the nominee theory is determinative and finding that transferee was taxpayer's nominee where the only non-supporting factor was recordation of a deed). Accordingly, I find the evidence overwhelming and rule that there is no genuine, material issue of fact that Rosewater is Balice's nominee.

2. Amboy's Statute of Limitations Argument

But wait, says Amboy; none of this matters, because the government waited too long to assert its nominee theory. Amboy contends that 28 U.S.C. § 2462 10 (which sets a five-year statute of limitations on enforcing "any civil fine, penalty or forfeiture"), rather than 26 U.S.C. § 6502 (which sets a ten-year statute of limitations on the collection of taxes from the time the taxes are assessed) applies here. That is so, says Amboy, because the government's nominee/alter ego claims "are not 'assessments.'" (Amboy Ltr. 2). The five-year period under 28 U.S.C. § 2462, says Amboy, began running when the United States's claim against the Maple Avenue property accrued, which (Amboy says) was when the government was put on notice that the Maple Avenue property had been transferred to Rosewater.

Because the Balices transferred the Maple Avenue property to Rosewater by a deed recorded on September 9, 1994, and because New Jersey operates under a "race-notice" regime, 11 Amboy concludes that the United States's claim accrued on September 9, 1994. Alternatively, says Amboy, the United States had actual notice of the transfer (and thus its claim may have accrued) when it filed a Notice of Federal Tax Lien against the Maple Avenue property on July 11, 2005. (Amboy Ltr. 1) Amboy maintains that whether the date of constructive notice (1994) or actual notice (2005) applies, the clock had run by the time the United States brought this action in 2014.

Amboy cites no case law to support its assertion that the government's nominee theory constitutes an independent claim against Rosewater, or that 28 U.S.C. § 2462 rather than 26 U.S.C. § 6502 applies here. What case law does exist overwhelmingly suggests that where a tax levy or collection of judgment would be timely as against a taxpayer, a tax levy or collection of judgment against the taxpayer's nominee is also timely; no separate claim need be asserted against the nominee. For these purposes, the taxpayer and his nominee are considered one and the same; this is not an independent cause of action, but simply an exercise in tracking the taxpayer's assets. See, e.g., United States v. Scherping, 187 F.3d 796, 800-801 (8th Cir. 1999) (where action to collect judgment against taxpayer is timely filed, statute of limitations does not reset with respect to later-joined alter egos of taxpayer against whom judgment is sought); Hall v. United States, 403 F.2d 344, 347 (5th Cir. 1968) (suit against transferees not to "collect taxes" but to "follow assets, fraudulently acquired, in order to collect a judgment against the taxpayer . . . is outside the ambit of 26 U.S.C.§ 6502."); In re Moore, 379 B.R. 284, 299 (Bankr. N.D. Tex. 2007) (applying statute of limitations for enforcing a judgment rather than statute of limitations for underlying cause of action in creditor's pursuit of debtor's alter ego to collect judgment). Cf. United States v. Perrina, 877 F. Supp. 215, 218 (D.N.J. 1994) (government's timely assessment against taxpayer for unpaid employment taxes enabled it to take advantage of ten-year statute of limitations for commencing litigation to collect on tax levy against property fraudulently conveyed to taxpayer's spouse; no separate assessment against spouse was necessary); Fellenz v. Lombard Inv. Corp., 400 F. Supp. 2d 681, 684 (D.N.J. 2005) ("The procedural safeguards in 26 U.S.C. § 6330 are inapplicable to a civil suit taken to enforce tax liens against properties that allegedly had been fraudulently conveyed to third parties or held by the taxpayers nominees or alter egos.").

Any distinction between Balice and Rosewater, as I have already found, is a fiction; the statute does not start running again, any more than it would because the taxpayer shifted his money among different bank accounts. The only question before me for statute of limitations purposes is whether the United States timely sought to foreclose on the Maple Avenue property. As the government correctly submits, 26 U.S.C. §§ 6321, 6322 and 6502, provisions of the Internal Revenue Code, set the timeline here. 12 Under these provisions:

º When a person fails to pay a federal tax, a federal tax lien arises "upon all property and rights to property, whether real or personal, belonging to such person." 26 U.S.C. § 6321;

º A lien imposed by Section 6321 "arises at the time the assessment is made" and "continues until the liability for the amount . . . (or a judgment against the taxpayer arising out of such liability) is satisfied or becomes unenforceable by reason of lapse of time." 26 U.S.C. § 6322; and

º A levy or court proceeding to collect taxes must commence within ten years after the assessment of a tax, but "if a timely proceeding in court for the collection of a tax is commenced, the period during which such tax may be collected by levy shall be extended and shall not expire until the liability for the tax (or a judgment against the taxpayer arising from such liability) is satisfied or becomes unenforceable." 26 U.S.C. § 6502.



In this case, the United States seeks to foreclose upon the Maple Avenue property to satisfy three groups of tax liens: (1) tax liens arising from 1994 through 2005 assessments of taxes owed for the 1992, 1993, 1996, and 2001 tax years that were reduced to judgment against Balice on June 18, 2008, (see ECF No. 1, Ex. B (United States v. Balice, No. 2:07-cv-5326 (D.N.J.))); (2) tax liens arising from 1994 through 2006 assessments of taxes owed for the 1992, 1993, 1996, and 2001 tax years that were reduced to judgment against Marion Balice on April 23, 2012, (see ECF No. 1, Ex. C (United States v. Balice, No. 2:11-cv-00130 (D.N.J.))); and (3) tax liens arising from the assessments for the 1998, 2007, and 2008 tax years that, by order accompanying this opinion, I now reduce to judgment against Balice, see supra Section III.B.

Because the United States has or will have (by the order accompanying this opinion) obtained judgment liens arising from the Balice's tax lien liability as to all tax liens, and because judgment liens are "effective, unless satisfied, for a period of 20 years," 28 U.S.C. § 3201(c), there is no issue as to the current enforceability of these three groups of liens. 13

As for the timeliness of the government's action to collect taxes - i.e., the foreclosure claim now before me - the ten-year statute of limitations under 26 U.S.C. § 6502 applies. Amboy argues that the IRS's assessments made in 1994 and 2003 (corresponding to taxes owed for 1992, 1993, and 1996) occurred over ten years ago, and that the United States is thus time-barred from asserting a foreclosure claim based on those liens. (Amboy Ltr. 3) Amboy fails to appreciate that the time to collect taxes is extended "if a timely proceeding in court for the collection of a tax is commenced. . . ." 26 U.S.C. § 6502(a). This foreclosure proceeding, it is true, commenced in 2014, more than ten years after 1994 and 2003. But this is not the only relevant proceeding. The courts have interpreted "proceeding in court" in § 6502(a) to include suits to reduce tax assessments to judgment. See Markham v. Fay, 74 F.3d 1347, 1353 (1st Cir. 1996) ("A lien becomes unenforceable by lapse of time upon expiration of the six-year statute of limitations for collection, but if the government brings suit within six years from assessment and receives a judgment in its favor, the life of the lien is extended indefinitely."); 14 Moyer v. Mathas, 458 F.2d 431, 434 (5th Cir. 1972) ("The limitation provisions of section 6502(a) are satisfied if the government institutes, within six years after the assessment of the tax, a suit for an in personam judgment against the taxpayer."); accord United States v. Mandel, 377 F. Supp. 1274, 1277 (S.D. Fla. 1974); see also United States v. Ettelson, 159 F.2d 193, 196 (7th Cir. 1947) (filing of claim in probate court was a proceeding in court sufficient to stop the running of the statute of limitations prescribed in the predecessor statute to § 6502); United States v. Mattox, No. 12-C-1291, 2014 WL 67325, at *3 (E.D. Wis. Jan. 8, 2014) (following the rule of Ettelson and finding no cases that cast doubt on its continued validity); cf. United States v. Silverman, 621 F.2d 961, 964 (9th Cir. 1980) (filing of claim against an estate subject to probate did not count as a "proceeding in court" for purposes of § 6502 in light of the nature, function, and effect of the filing under California probate law).

The 1994 and 2003 assessments were reduced to judgment, via "proceedings in court," in June 2008 and 2012. Those proceedings were timely brought within the ten-year statute of limitations. 15 It follows that this foreclosure action was not subject to the ten-year statute of limitations, which had already been satisfied. Accordingly, the government's Count V foreclosure claim is timely.

3. Amboy's Res Judicata Argument

Amboy also suggests in the alternative that the government is precluded from moving against Rosewater's property now because it failed to assert claims against Rosewater in the 2007 and 2011 actions against the Balices. (Amboy Ltr 2-3) As the United States observes (Pl. Reply 9), I have already rejected what amounts to the same argument. See Section I.C., supra.

To reiterate, in Balice I, I held that the 2008 and 2012 judgments arising out of the 2007 and 2011 actions against Michael and Marion Balice do not have preclusive effect because the issues and relief sought in the action sub judice are not the same; "If Balice's res judicata argument were correct, no creditor could ever sue for foreclosure based on a prior judgment. . . . To say that a prior judgment precludes foreclosure would in many cases defeat the very purpose of a foreclosure action." Balice I at *10. I see no appreciable difference for present purposes between Amboy's argument here - that the prior actions bar the United States from foreclosing on the Maple Avenue property under a nominee/alter ego theory - and Balice's rejected argument in Balice I - that the prior actions bar this action entirely.

The undisputed evidence shows that Rosewater is Balice - i.e., that it is Balice's nominee with respect to the Maple Avenue property. Amboy's timeliness and res judicata challenges to this finding lack merit. Accordingly, the government is entitled to judgment on Counts III and V and the Court will order the sale of the Maple Avenue property to satisfy the tax liens against Balice. 16

VI. CONCLUSION

For the foregoing reasons, Balice's motion to strike the motion of the United States for summary judgment as premature is DENIED; and the motion of the United States for summary judgment on Counts I, III, V, and VI is GRANTED.

The parameters of priority of liens were set by my opinion in Balice I. As noted above, the amount of the priority based on Amboy's HELOC has not been established. See p. 5, supra. I therefore authorize the filing of short summary judgment motions, with appropriate documentation, on the issue of the dollar amount of Amboy's priority. I note that by doing so, Amboy will not be deemed to have waived its position as to the issues of law decided in Balice I.

DATED: August 9, 2017.

KEVIN McNULTY
United States District Judge


FOOTNOTES:

/1/ For purposes of this opinion, citations to the record will be abbreviated as follows:
Amended Complaint (ECF No. 144) = Am. Compl.Memorandum of Law in Support of Plaintiff's Motion for Summary Judgment (ECF No. 187-1) = Pl. Br.Plaintiff's Statement of Undisputed Material Facts (ECF No. 187-3) = Pl. SUFAmended Exhibits to Plaintiff's Motion for Summary Judgment (ECF No. 188) = Pl. Ex.January 27, 2017 Declaration of Michael MacGillivray (ECF No. 188, Ex. A) = MacGillivray Decl.Defendant's Objection and Opposition to Plaintiff's Motion for Summary Judgment and Motion to Strike Plaintiff's Premature Pleadings and Motion for Jury Trial (ECF No. 191) = Def. Opp. & Mot.Exhibits to Defendant's Objection and Opposition to Plaintiff's Motion for Summary Judgment and Motion to Strike Plaintiff's Premature Pleadings and Motion for Jury Trial (ECF No. 191) = Def. Ex.Defendant Amboy Bank's Opposition to the Plaintiff's Motion for Summary Judgment (Letter Memorandum) (ECF No. 190) = Amboy Ltr.Plaintiff's Reply on Motion for Summary Judgment (ECF No. 195) = Pl. ReplyDefendant's 2nd Objection and Opposition to Plaintiff's Motion for Summary Judgment (ECF No. 207) = Def. 2nd Opp.

/2/ Today, Marion Balice is known as Marion Meyers. For simplicity, I will continue to refer to her as Marion Balice. Unless otherwise specified, however, "Balice" means Michael Balice.

/3/ According to the United States, Statewide was a second trust that the Balices established on the advice of Ottaviano. (Pl. Br. 4)

/4/ In the teleconference, the United States responded that it would produce "the individual master file." (Id. pp. 3-5) The United States represented in its briefing on its motion for summary judgment, however, that it had "already produced to Balice all data from the master file that has even an arguable connection to the claims or defenses in this matter," including "44 pages of information from Balice's individual master file showing the IRS's record of all assessments, payments, credits, interest, and other calculations" relevant to the tax years at interest in this action. (Reply 2) At any rate, the IMF data seems to have been produced. (See, e.g., Def. Opp. & Mot. Ex. A4 (IMF transcript); ECF No. 184, Ex. A (44 pages of IMF data))

/5/ Cf. ECF No. 137 Ex. A (2016 "Account Transcript" showing subtraction and addition of $ 76,586 but no second subtraction); MacGillivray Decl. Ex. 1 (same).

/6/ At certain points in Balice's brief, he characterizes this argument as a demand or motion for a jury trial. The claims are equivalent, and the result is the same.

/7/ Balice also disputes certain facts that the United States avers as background but which are immaterial to the grounds on which the United States moves for summary judgment. (See Def. Mot. & Opp. 6, ¶ i (claiming an assessment for tax year was performed in 2010, not in 2005); cf. Opp. 2 (agreeing an assessment occurred in 2010, not in 2005. See also Def. Mot. & Opp. 6, ¶ iii (alleging a typographical error without explaining its materiality); id. at ¶¶ iv, viii, 26 (disputing complete production of IMF data); id. ¶ v (concerning overpayments, which were credited and not related to the later assessments that the United States now seeks to reduce to judgment); id. ¶ xi (alleging a typographical error without explaining its materiality); id. ¶ xii (taking issue with a quote from the Third Circuit's denial of Balice's earlier appeal in this case, without explaining its materiality to this motion); id. ¶ xvi (alleging the legitimacy of Statewide Trust, which the Tax Court found to be a sham but is not at issue in this action)) As these challenges have no bearing on the substance of the United States's motion, I need not address them further.Balice also argues that this Court lacks subject matter jurisdiction as to any action concerning tax liability for pre-1998 tax years because a ten-year statute of limitations has run. (Id. ¶ 21) I address and dispose of this statute of limitations argument in response to Amboy's opposition at Section III.C.1., infra.

/8/ "IDRS" is a database "the IRS uses to maintain taxpayer accounts, including the balance due for tax liabilities, payoff amounts, penalty and interest calculations, notice issuance, and credit and debit transfers within an account." (MacGillivray Decl. ¶ 3)

/9/ In Griffiths v. Helvering, the U.S. Supreme Court described certain principles motivating this theory:We cannot too often reiterate that 'taxation is not so much concerned with the refinements of title as it is with actual command over the property taxed-the actual benefit for which the tax is paid.' Corliss v. Bowers, 281 U.S. 376, 378, 50 S.Ct. 336, 74 L.Ed. 916. And it makes no difference that such 'command' may be exercised through specific retention of legal title or the creation of a new equitable but controlled interest, . . . Taxes cannot be escaped 'by anticipatory arrangements and contracts however skillfully devised by which the fruits are attributed to a different tree from that on which they grew.' Lucas v. Earl, i81 U.S. 111, 115, 50 S.Ct. 241, 74 L.Ed. 731.308 U.S. 355, 357-58, 60 S. Ct. 277, 278-79 (1939).

/10/ Amboy's letter twice refers to "11 U.S.C.A. § 2462." Amboy surely meant to cite 28 U.S.C. § 2462, which provides in full:Except as otherwise provided by Act of Congress, an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued if, within the same period, the offender or the property is found within the United States in order that proper service may be made thereon.28 U.S.C. § 2462.

/11/ New Jersey is considered a 'race-notice' jurisdiction, which means that as between two competing parties the interest of the party who first records the instrument will prevail so long as that party had no actual knowledge of the other party's previously-acquired interest. Palamarg Realty Co. v. Rehac, 80 N.J. 446, 454, 404 A.2d 21 (1979). As a corollary to that rule, parties are generally charged with constructive notice of instruments that are properly recorded. Friendship Manor, Inc. v. Greiman, 244 N.J.Super. 104, 108, 581 A.2d 893 (App.Div.1990) ("In the context of the race notice statute, constructive notice arises from the obligation of a claimant of a property interest to make reasonable and diligent inquiry as to existing claims or rights in and to real estate."), certif. denied, 126 N.J. 321, 598 A.2d 881 (1991).Cox v. RICA Corp., 164 N.J. 487, 496, 753 A.2d 1112, 1117 (2000).

/12/ The five-year statute of limitations provided for in 28 U.S.C. § 2462 does not apply here. Section 2462, a catchall, applies only "except as otherwise provided by Act of Congress." The Internal Revenue Code constitutes such an act that sets a specific statute of limitations for collection of taxes after assessment. See 26 U.S.C. § 6502.

/13/ A judgment in a civil action shall create a lien on all real property of a judgment debtor on filing a certified copy of the abstract of the judgment in the manner in which a notice of tax lien would be filed under paragraphs (1) and (2) of section 6323(f) of the Internal Revenue Code of 1986. A lien created under this paragraph is for the amount necessary to satisfy the judgment, including costs and interest.28 U.S.C. § 3201(a). Amboy does not dispute that the United States has met the filing requirements necessary to create valid judgment liens. See Pl. Ex. M (notices of federal tax liens against the Balices and Rosewater).

/14/ Prior to 1990, 26 U.S.C. § 6502 provided for a six-year statute of limitations. The statute was amended to extend to ten years in 1990. 26 U.S.C. § 6502(a); Omnibus Budget Reconciliation Act of 1990, Pub.L. 101-508, sec. 11317(a), 104 Stat. 1388-458. The pre-1990 version of the statute applied in Markham.
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Burnaby49
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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby Burnaby49 » Fri Aug 11, 2017 7:11 pm

One interesting point is that Balice's wife, whom he involved in his scam, is now his ex-wife and provided evidence against him at this hearing.
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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby The Observer » Fri Aug 11, 2017 9:21 pm

Burnaby49 wrote:One interesting point is that Balice's wife, whom he involved in his scam, is now his ex-wife and provided evidence against him at this hearing.


:sarcasmon: Well, that's gratitude, after all he did for her!
"I could be dead wrong on this" - Irwin Schiff

"Do you realize I may even be delusional with respect to my income tax beliefs? " - Irwin Schiff

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Re: Balice - MATA Promoter - FFTF Penalty & 25K 6673

Postby Famspear » Fri Aug 11, 2017 9:40 pm

The Observer wrote:
Burnaby49 wrote:One interesting point is that Balice's wife, whom he involved in his scam, is now his ex-wife and provided evidence against him at this hearing.


:sarcasmon: Well, that's gratitude, after all he did for her!


It's always the woman's fault........

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