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United States v. Wesselman

November 28, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
HERMAN A. WESSELMAN, MILLIE WESSELMAN, KENNETH CAYO, AGENT OF THE TRUSTEE(S) OF THE BOUNTEOUS HARVEST TRUST AND THE SALVATION ROCK TRUST, DAVID WESSELMAN, AGENT OF THE TRUSTEE(S) OF THE BOUNTEOUS HARVEST TRUST AND THE SALVATION ROCK TRUST, WILLIAM BRIAN PATRICK DOWLING, TRUSTEE OF THE J.A.W. HOMESTEAD TRUST, FREDERICK V. WEDEMEIER, AGENT OF TRUSTEE(S) OF THE STEWARD OF THE LORD TRUST, VIRGIL STRAUCH, AGENT TRUSTEES OF THE STEWARD OF THE LORD TRUST, ILLINOIS DEPARTMENT OF REVENUE, JOHN DOE 1, TRUSTEE OF THE BOUNTEOUS HARVEST TRUST, JOHN DOE 2, TRUSTEE OF SALVATION ROCK TRUST, JOHN DOE 3, TRUSTEE OF J.A.W. HOMESTEAD TRUST, JOHN DOE 4, TRUSTEE OF STEWARD OF THE LORD TRUST, BOUNTEOUS HARVEST TRUST, SALVATION ROCK TRUST, J.A.W. HOMESTEAD TRUST AND STEWARD OF THE LORD TRUST, DEFENDANTS.



The opinion of the court was delivered by: J. Phil Gilbert District Judge

MEMORANDUM AND ORDER

This matter comes before the Court on the motion of the plaintiff United States of America for partial summary judgment on count 1 of the Amended Complaint (Doc. 92). Defendant Herman A. Wesselman ("Taxpayer") has responded to the motion (Doc. 108) and, pursuant to the Court's request, the United States has replied (Doc. 112).

The Court also considers:

* the Taxpayer's motion for judgment on the pleadings (Doc. 88), to which the United States has responded (Doc. 91); and

* the Taxpayer's motion to dismiss (Doc. 97) and motion for an order to show cause (Doc. 98).

I. Background

On August 18, 2005, the United States filed this suit under 26 U.S.C. § 7403 to collect allegedly unpaid federal taxes. Specifically, the complaint alleges that the Taxpayer failed to pay federal income taxes and that Wesselman Roofing, a business owned by the Taxpayer, failed to pay federal employment and unemployment taxes. The lawsuit seeks to reduce to judgment assessments made against the Taxpayer for these unpaid taxes, to foreclose federal tax liens upon certain real properties described in the complaint which were either fraudulently transferred by the Taxpayer or are still owned by the Taxpayer through nominee trusts, and to sell the properties and apply the proceeds to the Taxpayer's unpaid federal tax liabilities. Count 1, the subject of this motion, seeks to reduce tax assessments against the Taxpayer to a money judgment.

II. Summary Judgment Standard

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The moving party need not negate the portions of the nonmoving party's case on which the nonmoving party bears the burden of proof. Celotex, 477 U.S. at 323. The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Spath, 211 F.3d at 396.In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996).

III. Facts

The admissible evidence in support of the United States' motion for summary judgment establishes the following relevant facts.

The Taxpayer resides at 906 S. Cherry Street, Effingham, Illinois. During 1991, 1992, 1993, 1994, 1995, 1996, 1997, and 2000, the Taxpayer owned and operated a roofing business as a sole proprietorship. With respect to himself individually, the Taxpayer did not file a Form 1040, U.S. Individual Income Tax Return, for the 1991, 1992, 1993, 1994, 1995, 1996, 1997, and 2000 tax periods, and, with respect to his roofing business, did not file a Form 941, Employer's Quarterly Federal Tax Return, or a Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, for any tax period during 1991, 1992, and/or 1993.

A. Tax Liability for 1991, 1992 and 1993

In 1994, the Internal Revenue Service ("IRS") began an examination to determine whether taxes were due from the Taxpayer for 1991, 1992 and 1993, and requested Wesselman provide his books and records from those time ...


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