United States v. Wolff

Background

The government previously sued George W. Wolff in 2011 for unpaid income taxes for 2000 through 2005 and unpaid employment taxes for 2001 through 2004; that case settled. In this action, the government sought unpaid taxes and late-filing and late-payment penalties for years 2007 through 2018.

The government moved for summary judgment, which is a ruling entered without a trial when the record shows no genuine dispute about an important fact and the moving party is entitled to judgment under the law. In support, it submitted a declaration from Jeanette Farmer, an Internal Revenue Service revenue officer, along with tax records and other documents concerning Wolff’s liabilities.

The opinion states that Wolff was 80 years old, worked as an attorney, owned his San Francisco condominium without a mortgage, and had experienced personal and financial hardships. Those hardships included the deaths of his sister and brother-in-law, responsibility for supporting their children, financial difficulties after the 2008 recession, a client’s failure to pay more than $250,000 in fees and expenses, and reduced income during the COVID-19 pandemic.

Arguments and Analysis

Wolff made three main arguments. First, he argued that Internal Revenue Service Forms 4340 did not establish the amount of taxes, penalties, and interest he owed or the payments he had made. The court explained that, under Ninth Circuit precedent, Form 4340 provides presumptive evidence that a tax was properly assessed and that notice and demand for payment were sent. The court found that Wolff offered no contrary evidence and had not overcome that presumption.

Second, Wolff argued that the government had not properly credited levies taken from his Social Security income. The court found that Farmer’s experience and declaration provided an adequate basis for explaining the government’s records. The records identified when income was levied, the amount levied, and the tax period to which each credit was applied. The court noted that some credits were applied to earlier tax years, including taxes dating to 1999, which explained why the remaining balance could still be substantial.

Third, Wolff argued that late-filing and late-payment penalties should be forgiven because of undue hardship. The court rejected that argument, finding that the circumstances he identified did not explain his failure to pay taxes over more than a decade. The court also rejected an argument based on a 2010 record stating that Wolff was then considered “currently not collectible/hardship status,” because the record did not show that this status was permanent or continued throughout the period at issue.

Wolff also submitted objections to evidence, including objections to Farmer’s discussion and attachment of the Forms 4340. The court overruled those objections.

Disposition

The court granted the government’s motion for summary judgment in full. It reduced to judgment Wolff’s unpaid federal income tax liabilities for tax years 2007 through 2017 in the amount of $430,359.24 as of June 4, 2021, plus interest and statutory additions under the cited federal statutes, less applicable credits and payments. The opinion’s conclusion does not separately state an amount for tax year 2018.