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United States v. Thill

United States District Court, D. Montana, Billings Division

April 8, 2015

THE UNITED STATES OF AMERICA, Plaintiff,
v.
KEITH THILL, GAYLE THILL, and MONTANA DEPT. OF REVENUE, Defendants.

FINDINGS AND RECOMMENDATIONS OF UNITED STATES MAGISTRATE JUDGE

CAROLYN S. OSTBY, Magistrate Judge.

Plaintiff ("United States") filed this civil action to reduce to judgment outstanding federal tax assessments against Defendants Keith Thill and Gayle Thill (collectively "the Thills"), and to foreclose federal tax liens against certain real property that the Thills own. Cmplt. (ECF 1) at 2. [1] The United States is proceeding under 26 U.S.C. §§ 7401, 7402, and 7403, and additionally invokes this Court's jurisdiction under 28 U.S.C. §§ 1331, 1340, and 1345. Id. [2]

The following interrelated motions are now pending and listed in the order that the parties filed them:

1. The Thills' "Motion for Court Intervention and or Dismissal Directed to the United States' [sic] of America[, ]" ECF 20 ;
2. The United States' summary judgment motion, ECF 21 ; and
3. The Thills' summary judgment motion, ECF 32.

Having considered the relevant law and the parties' submissions, the Court enters the Findings and Recommendations that follow.

I. The Thills' Motion for Court Intervention and/or to Dismiss

A. Background facts

Before summarizing the background facts, the Court notes that the Thills do not make entirely clear to the Court the precise bases they rely upon in seeking "court intervention" through their motion. They cite no authority beyond a reference to Local Rule 7[3] ( ECF 20 at 2 ), a general reference to "violation of [their] Constitutional rights[, ]" ( id. at 5 ), and a reference to the Montana "Homestead Act[, ]" ( id. at 6 ). In their motion's prayer for relief, the Thills request that the Court "either require that [the United States] accept our previous offer [of settlement], or be much, much more reasonable, in a counter offer or dismiss." Id . at 12. Finally, they also "request that the court[']s reply to this motion not only [be] worded as is typical of court decisions but explained so that we have a clear understanding what is being said." Id.

Affording the Thills' motion liberal construction, the Court will treat it as a motion to dismiss the United States' Complaint for failure to state a claim upon which relief can be granted under Rule 12(b)(6).[4] In addressing a Rule 12(b)(6) motion, the Court must accept the Complaint's factual allegations as true and must construe the pleadings in the light most favorable to the Plaintiff - here, the United States. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). Thus, the following allegations from the United States' Complaint are assumed to be true for purposes of addressing the Thills' motion to dismiss.

For the years 2003 through 2009, an authorized delegate of the Secretary of the Treasury made timely federal income tax assessments against the Thills, jointly. ECF 1 at 7. [5] Despite notice and demand for payment of the assessments, the Thills "have neglected, refused, or failed to pay the income tax assessments against them and there remains due and owing to the [United States] on those assessments the total sum of $96, 017.91 plus accrued interest, penalties and statutory additions as provided by law, from January 31, 2014." Id.

For the years 1997 through 2002, an authorized delegate of the Secretary of the Treasury made timely federal income tax assessments against Keith Thill. ECF 1 at 7-9. Despite notice and demand for payment of the assessments, Keith Thill "has neglected, refused, or failed to pay the income tax assessments against [him] and there remains due and owing to the [United States] on those assessments the total sum of $92, 979.71 plus accrued interest, penalties and statutory additions as provided by law, from January 31, 2014." Id . at 9-10.

For the years 1999 through 2002, an authorized delegate of the Secretary of the Treasury made timely federal income tax assessments against Gayle Thill. ECF 1 at 10-11. Despite notice and demand for payment of the assessments, Gayle Thill "has neglected, refused, or failed to pay the income tax assessments against her and there remains due and owing to the [United States] on those assessments the total sum of $19, 691.75 plus accrued interest, penalties and statutory additions as provided by law, from January 31, 2014." Id . at 11.

As a result of the foregoing unpaid federal income tax assessments, statutory liens arose in favor of the United States against all property or rights to property, whether real or personal, belonging to Keith Thill and Gayle Thill, as of the dates of the assessments. Id . at 12 ( citing 26 U.S.C. §§ 6321 and 6322). Also, the liens immediately attached to all after-acquired property or rights to such property. Id.

At issue in this action, there exists real property commonly referred to as 2318 Lyndale Lane, Billings, Montana 59102 ("real property at issue").[6] On August 4, 1986, the Thills acquired title to the real property at issue via Warranty Deed recorded with the Yellowstone County Clerk and Recorder's Office. Id . at 3.

Notices of Federal Tax Lien relating to the federal tax assessments described above were filed and recorded at the Yellowstone County Recorder's Office, as follows:

1. On April 21, 2003, the Internal Revenue Service ("IRS") filed a Notice of Federal Tax Lien in the Yellowstone County Recorder's Office naming Gayle Thill as the taxpayer for federal income tax liabilities (Form 1040) for the 1997, 1998, and 1999 tax periods, in the total amount of $6, 305.02. Serial #XXXXXXXXX.
2. On June 7, 2004, the IRS filed a Notice of Federal Tax Lien in the Yellowstone County Recorder's Office naming Gayle Thill as the taxpayer for federal income tax liabilities (Form 1040) for the 1997, 1998, 1999, 2000, and 2001 tax periods, in the total amount of $12, 471.86. Serial # XXXXXXXXX.
3. On December 9, 2004, the IRS filed a Notice of Federal Tax Lien in the Yellowstone County Recorder's Office naming Keith Thill as the taxpayer for federal income tax liabilities (Form 1040) for the 1997, 1998, and 1999 tax periods, in the total amount of $13, 029.98. Serial #XXXXXXXXX. (Refiled September 9, 2013).
4. On February 22, 2006, the IRS filed a Notice of Federal Tax Lien in the Yellowstone County Recorder's Office naming Keith Thill as the taxpayer for federal income tax liabilities (Form 1040) for the 2000, 2001, and 2002 tax periods, in the total amount of $40, 163.32. Serial #XXXXXXXXX.
5. On September 7, 2010, the IRS filed a Notice of Federal Tax Lien in the Yellowstone County Recorder's Office naming Keith Thill as the taxpayer for federal income tax liabilities (Form 1040) for the 2003, 2004, 2005, and 2006 tax periods, in the total amount of $59, 222.06. Serial #XXXXXXXXX.

Id . at 3-4, 12.

On May 29, 2007, the Montana Thirteenth Judicial District Court, Yellowstone County, issued a Warrant of Distraint as to Keith Thill's liabilities to the Montana Department of Revenue for the years 1997 through 2000. Id . at 4.

On June 13, 2011, the Montana Thirteenth Judicial District Court, Yellowstone County, issued a Warrant of Distraint as to Keith Thill's liabilities to the Montana Department of Revenue for the years 2003 through 2006. Id.

Between July 5, 2012, and December 12, 2013, the IRS recorded additional Notices of Federal Tax Lien in the Yellowstone County Recorder's Office for various liabilities of the Thills. Id . at 4-5.

The tax liens arising from the assessments described above continue to attach to the real property at issue. Id . at 12. The liens have priority over all interests in the real property at issue acquired after the attachment of the tax liens, subject to the provisions of 26 U.S.C. § 6323(a). Id. Also, under 26 U.S.C. § 7403(c), the United States is ...


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