Free Answer - District Court of Federal Claims - federal

Case 1:07-cv-00887-LJB

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS No. 07-887 T (Judge Lynn J. Bush) ___________________________________ JAMES BOSTWICK and MARTI PHILLIPS, Plaintiffs, v. THE UNITED STATES, Defendant. ___________________________________ ANSWER AND COUNTERCLAIM ___________________________________

Defendant, the United States, through its attorneys, and after the inquiry required by 28 U.S.C. § 520, hereby answers the complaint in the above-captioned case. Defendant respectfully denies each and every allegation contained therein not specifically admitted below. In response to particular paragraphs of the complaint, defendant further: 1. Admits that James Bostwick and Marti Phillips filed their 2000, 2001, 2002, 2003, and 2004 tax returns as married individuals filing joint returns. Admits that plaintiffs' tax returns for 2000 through 2004 reflect that Four Embarcadero Center, Suite 750, San Francisco, California 94111 is their address and contain the referenced Social Security numbers. Admits that this is an action to recover penalties and interest for tax years 2000 through 2004, but denies that plaintiffs are entitled to any recovery. Admits that plaintiffs seek a refund of $534,544.88 but denies that plaintiffs are entitled to any recovery.

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2. To the extent the first two sentences of paragraph 2 contain conclusions of law, no response is necessary; defendant otherwise denies the allegations. Admits that this is an action for recovery of federal income tax founded upon the Internal Revenue Code; avers that jurisdiction, to the extent it exists, would be granted through 28 U.S.C. § 1491(a)(1). 3. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 3. 4. Repeats its responses to paragraphs 1 through 3. 5. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 5 and footnote 1. 6. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 6. 7. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first two sentences of paragraph 7. Denies that the San Francisco Office of the District Attorney has designated 2005-105 as an identifying number for investigation of this matter, avers that at the time of the complaint a person was in custody facing criminal charges related to certain allegations of the complaint, but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the last sentence of paragraph 7. 8. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 8, but avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages.

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9. To the extent that paragraph 9 contains conclusions of law, no response is necessary; states that it lacks knowledge or information sufficient to form a belief as to the truth of the factual allegations. 10. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 10. 11. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 11 except that it admits that the Internal Revenue Service assessed penalties and interest against plaintiffs and avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages. 12. Admits that plaintiffs seek to recover federal income tax penalties and interest but denies that plaintiffs are entitled to any recovery. Admits the allegations of the second sentence of paragraph 12. 13. Admits the allegations of the first sentence of paragraph 13. Avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages, but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 13. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the third sentence of paragraph 13. Admits that plaintiffs have fully paid all assessed penalties and interest for 2000. States that it lacks knowledge or information sufficient to form a belief as to whether Exhibit A is a true and correct copy of a document plaintiffs received from the

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Internal Revenue Service, but denies that Exhibit A is a current copy of the account transcript for plaintiffs for the tax year ended December 31, 2000. Admits the allegations of the sixth sentence of paragraph 13. Admits that the plaintiffs have paid all assessed taxes, penalties, and interest for 2000. 14. Denies the allegations of the first sentence of paragraph 14. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 14. Denies the allegations of the last sentence of paragraph 14. 15. To the extent paragraph 15 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 16. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first sentence of paragraph 16, but avers that some refund amounts relating to payroll quarters in 2002, 2003, and 2004 for James S. Bostwick, PC, do appear to have been granted for reasonable cause; further avers that any determination by the Internal Revenue Service is irrelevant in any event. Admits that, in April 2006, James S. Bostwick, PC, filed Forms 843 and Forms 941c relating to payroll quarters in 2002, 2003, and 2004, claiming refunds and/or abatements of penalties and interest due to the alleged embezzlement scheme; avers that these Forms 843 and Forms 941c also sought refund of the underlying tax. Admits that, in June 2006, tax, penalty, and interest amounts were abated for James S. Bostwick, PC, relating to various payroll tax quarters in 2002, 2003, and 2004, but avers that there was no abatement of employment taxes, or related interest and penalties, pertaining to payroll quarters within 2000. Denies the allegations of the last sentence of paragraph 16. 17. Admits the allegations of the first two sentences of paragraph 17. Admits that the complaint was filed more than six months after April 14, 2006, denies that the Internal Revenue

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Service has taken no action on the claim; avers that on September 4, 2006, the Internal Revenue Service abated failure-to-pay-tax penalties in the amount of $141,934.02 and interest in the amount of $3,339.00 relating to plaintiffs' 2000 tax year; further avers that a refund check in the amount of $168,903.97 was issued to plaintiffs in September 2006. 18. Admits that the Internal Revenue Service granted, at least in part, certain requests by James S. Bostwick, PC, for refund and/or abatement of penalties and interest but lacks knowledge as to the basis of the Internal Revenue Service's action; denies that the Internal Revenue Service has failed to respond at all plaintiffs' request for refund of penalties and interest assessed against them on their individual returns; avers that on September 4, 2006, the Internal Revenue Service abated failure-to-pay-tax penalties in the amount of $141,934.02 and interest in the amount of $3,339.00 relating to plaintiffs' 2000 tax year; further avers that a refund check in the amount of $168,903.97 was issued to plaintiffs in September 2006; denies that plaintiffs' refund requests and the refund requests of James S. Bostwick, PC, were factually identical. 19. To the extent paragraph 19 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 20. Repeats to its responses to paragraphs 1 through 19. 21. Admits that the Internal Revenue Service assessed penalties and interest related to the taxable year ended December 31, 2001, against plaintiffs. Admits the allegations of the second sentence of paragraph 21. 22. Admits the allegations of the first sentence of paragraph 22. Avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages, and otherwise states that it lacks knowledge or information sufficient

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to form a belief as to the truth of the allegations of the second sentence of paragraph 22. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the third sentence of paragraph 22. Admits that plaintiffs have fully paid all assessed penalties and interest for 2001. States that it lacks knowledge or information sufficient to form a belief as to whether Exhibit C is a true and correct copy of a document plaintiffs received from the Internal Revenue Service, but denies that Exhibit C is a current copy of the account transcript for plaintiffs for the tax year ended December 31, 2001. Admits the allegations of the sixth sentence of paragraph 22. Admits that plaintiffs have paid all assessed taxes, penalties, and interest for the tax period ended December 31, 2001. 23. To the extent the first sentence of paragraph 23 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 23. To the extent the last sentence of paragraph 23 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 24. To the extent paragraph 24 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 25. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first sentence of paragraph 25, but avers that some refund amounts relating to payroll quarters in 2002, 2003, and 2004 for James S. Bostwick, PC, do appear to have been granted for reasonable cause; further avers that any determination by the Internal Revenue Service is irrelevant in any event. Admits that, in April 2006, James S. Bostwick, PC, filed Forms 843 and Forms 941c relating to payroll quarters in 2002, 2003, and 2004, claiming refunds and/or abatements of penalties and interest due to the alleged embezzlement scheme;

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avers that these Forms 843 and Forms 941c also sought refund of the underlying tax. Admits that, in June 2006, tax, penalty, and interest amounts were abated for James S. Bostwick, PC, relating to various payroll tax quarters in 2002, 2003, and 2004, but avers that there was no abatement of employment taxes, or related interest and penalties, pertaining to payroll quarters within 2001. Denies the allegations of the last sentence of paragraph 25. 26. Admits the allegations of the first two sentences of paragraph 26. Admits that the complaint was filed more than six months after April 14, 2006, but otherwise denies the allegations of the last sentence of paragraph 26. 27. Admits that the Internal Revenue Service granted, at least in part, certain requests by James S. Bostwick, PC, for refund and/or abatement of penalties and interest but lacks knowledge as to the basis of the Internal Revenue Service's action; denies that the Internal Revenue Service has failed to respond at all plaintiffs' request for refund of penalties and interest assessed against them on their individual returns; denies that plaintiffs' refund requests and the refund requests of James S. Bostwick, PC, were factually identical. 28. To the extent paragraph 28 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 29. Repeats its responses to paragraphs 1 through 28. 30. Admits the allegations of paragraph 30. 31. Admits the allegations of the first sentence of paragraph 31. Avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages, but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 31. States

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that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the third sentence of paragraph 31. Admits that plaintiffs fully paid all assessed penalties and interest for 2002. States that it lacks knowledge or information sufficient to form a belief as to whether Exhibit D is a true and correct copy of a document plaintiffs received from the Internal Revenue Service, but denies that Exhibit D is a current copy of the account transcript for plaintiffs for the tax year ended December 31, 2002. Admits the allegations of the sixth sentence of paragraph 31. Admits that the plaintiffs have paid all assessed taxes, penalties, and interest for 2002. 32. To the extent the first sentence of paragraph 32 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 32. To the extent the last sentence of paragraph 32 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 33. To the extent paragraph 33 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 34. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first sentence of paragraph 34, but avers that some refund amounts relating to payroll quarters in 2002, 2003, and 2004 for James S. Bostwick, PC, do appear to have been granted for reasonable cause; further avers that any determination by the Internal Revenue Service is irrelevant in any event. Admits that, in April 2006, James S. Bostwick, PC, filed Forms 843 and Forms 941c relating to payroll quarters in 2002, 2003, and 2004, claiming refunds and/or abatements of penalties and interest due to the alleged embezzlement scheme; avers that these Forms 843 and Forms 941c also sought refund of the underlying tax. Admits

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that, in June 2006, tax, penalty, and interest amounts were abated for James S. Bostwick, PC, relating to various payroll tax quarters in 2002, 2003, and 2004. Denies the allegations of the last sentence of paragraph 34. 35. Admits the allegations of the first two sentences of paragraph 35. Admits that the complaint was filed more than six months after April 14, 2006, but otherwise denies the allegations of the last sentence of paragraph 35. 36. Admits that the Internal Revenue Service granted, at least in part, certain requests by James S. Bostwick, PC, for refund and/or abatement of penalties and interest but lacks knowledge as to the basis of the Internal Revenue Service's action; denies that the Internal Revenue Service has failed to respond at all plaintiffs' request for refund of penalties and interest assessed against them on their individual returns; denies that plaintiffs' refund requests and the refund requests of James S. Bostwick, PC, were factually identical. 37. Admits that tax in the amount of $263,493 was abated on or about May 15, 2006, but avers that this abatement was attributable to an application for tentative refund which the taxpayers submitted to request that a deduction for a carryback of a net operating loss from 2005 be applied to the 2002 tax year; further admits that penalties and interest were not recalculated or abated in connection with the application for tentative refund, but denies that this amounts to a "fail[ure]" by the Internal Revenue Service. 38. To the extent paragraph 38 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 39. Repeats its responses to paragraphs 1 through 38. 40. Admits the allegations of paragraph 40.

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41. Admits the allegations of the first sentence of paragraph 41. Avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages, but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 41. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the third sentence of paragraph 41. Admits that plaintiffs fully paid all assessed penalties and interest for 2003. States that it lacks knowledge or information sufficient to form a belief as to whether Exhibit E is a true and correct copy of a document plaintiffs received from the Internal Revenue Service but denies that Exhibit E is a current copy of the account transcript for plaintiffs for the tax year ended December 31, 2003. Admits the allegations of the sixth sentence of paragraph 41. Admits that the plaintiffs have paid all assessed taxes, penalties, and interest for 2003. 42. Denies the allegations of the first sentence of paragraph 42. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 42. Denies the allegations of the last sentence of paragraph 42. 43. To the extent paragraph 43 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 44. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first sentence of paragraph 44, but avers that some refund amounts relating to payroll quarters in 2002, 2003, and 2004 for James S. Bostwick, PC, do appear to have been granted for reasonable cause; further avers that any determination by the Internal Revenue Service is irrelevant in any event. Admits that, in April 2006, James S. Bostwick, PC,

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filed Forms 843 and Forms 941c relating to payroll quarters in 2002, 2003, and 2004, claiming refunds and/or abatements of penalties and interest due to the alleged embezzlement scheme; avers that these Forms 843 and Forms 941c also sought refund of the underlying tax. Admits that, in June 2006, tax, penalty, and interest amounts were abated for James S. Bostwick, PC, relating to various payroll tax quarters in 2002, 2003, and 2004. Denies the allegations of the last sentence of paragraph 44. 45. Admits the allegations of the first two sentences of paragraph 45. Admits that the complaint was filed more than six months after April 14, 2006, but otherwise denies the allegations of the last sentence of paragraph 45. 46. Admits that the Internal Revenue Service granted, at least in part, certain requests by James S. Bostwick, PC, for refund and/or abatement of penalties and interest but lacks knowledge as to the basis of the Internal Revenue Service's action; denies that the Internal Revenue Service has failed to respond at all plaintiffs' request for refund of penalties and interest assessed against them on their individual returns; denies that plaintiffs' refund requests and the refund requests of James S. Bostwick, PC, were factually identical. 47. Admits that tax in the amount of $440,431 was abated on or about May 15, 2006, but avers that this abatement was attributable to an application for tentative refund which the taxpayers submitted to request that a deduction for a carryback of a net operating loss from 2005 be applied to the 2003 tax year; further admits that penalties and interest were not recalculated or abated in connection with the application for tentative refund, but denies that this amounts to a "fail[ure]" by the Internal Revenue Service. 48. To the extent paragraph 48 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations.

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49. Repeats its responses to paragraphs 1 through 48. 50. Admits the allegations of paragraph 50. 51. Admits the allegations of the first sentence of paragraph 51. Avers that, to the extent plaintiffs' wages were overstated, plaintiffs' flow-through income from an S-corporation owned by plaintiffs would have been understated by the same amount if the S-corporation claimed deductions for those wages, but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 51. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the third sentence of paragraph 51. Admits that plaintiffs fully paid all assessed penalties and interest for 2004. States that it lacks knowledge or information sufficient to form a belief as to whether Exhibit F is a true and correct copy of a document plaintiffs received from the Internal Revenue Service but denies Exhibit F is a current copy of the account transcript for plaintiffs for the tax year ended December 31, 2004. Admits the allegations of the sixth sentence of paragraph 51, insofar as overpayment credits of $2,000 on April 10, 2006, $263,493 on April 15, 2006, and $115,995.75 on April 15, 2006, were applied to plaintiffs' income taxes for the tax year ended December 31, 2004. Admits the allegations of the seventh sentence of paragraph 51 insofar as the overpayment credits were applied from plaintiffs' 2005, 2002, and 2003 tax years. Admits the allegations of the eighth sentence of paragraph 51 insofar as the overpayment credits transferred from plaintiffs' 2002 and 2003 tax years resulted from abatements attributable to an application for tentative refund by which plaintiffs requested that deductions for a carryback of a net operating loss from 2005 be applied to the 2002, 2003, and 2004 tax years. Admits that the plaintiffs have paid all assessed taxes, penalties, and interest for 2004.

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52. Denies the allegations of the first sentence of paragraph 52. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the second sentence of paragraph 52. Denies the allegations of the last sentence of paragraph 52. 53. To the extent paragraph 53 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 54. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first sentence of paragraph 54, but avers that some refund amounts relating to payroll quarters in 2002, 2003, and 2004 for James S. Bostwick, PC, do appear to have been granted for reasonable cause; further avers that any determination by the Internal Revenue Service is irrelevant in any event. Admits that, in April 2006, James S. Bostwick, PC, filed Forms 843 and Forms 941c relating to payroll quarters in 2002, 2003, and 2004, claiming refunds and/or abatements of penalties and interest due to the alleged embezzlement scheme; avers that these Forms 843 and Forms 941c also sought refund of the underlying tax. Admits that, in June 2006, tax, penalty, and interest amounts were abated for James S. Bostwick, PC, relating to various payroll tax quarters in 2002, 2003, and 2004. Denies the allegations of the last sentence of paragraph 54. 55. Admits that on or about April 14, 2006, plaintiffs filed a Form 843 with the Internal Revenue Service Center in Fresno, California requesting a refund and/or abatement of penalties and interest assessed for the tax year ended December 31, 2004, in the amount of $140,715.21; but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the first sentence of paragraph 55. Admits the allegations of the second sentence of paragraph 55. Admits that the complaint was filed more than six months

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after April 14, 2006, but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of the last sentence of paragraph 55. 56. Admits that the Internal Revenue Service granted, at least in part, certain requests by James S. Bostwick, PC, for refund and/or abatement of penalties and interest; denies that the Internal Revenue Service has failed to respond at all plaintiffs' request for refund of penalties and interest assessed against them on their individual returns; denies that plaintiffs' refund requests and the refund requests of James S. Bostwick, PC, were factually identical; but otherwise states that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 56. 57. Admits that tax in the amount of $1,096,580 was abated on or about May 15, 2006, but avers that this abatement was attributable to an application for tentative refund which the taxpayers submitted to request that a deduction for a carryback of a net operating loss from 2005 be applied to the 2004 tax year; further admits that penalties and interest were not recalculated or abated in connection with the application for tentative refund, but denies that this amounts to a "fail[ure]" by the Internal Revenue Service. 58. Admits the allegations of paragraph 58, but avers this abatement is attributable to an amended individual income tax return by which plaintiffs represented that items were not properly reported on their 2004 income tax return as previously filed. 59. To the extent paragraph 59 contains conclusions of law, no response is necessary; defendant otherwise denies the allegations. 60. Denies the allegations of paragraph 60. 61. States that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations of paragraph 61.

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ADDITIONAL DEFENSES 62. The Court lacks jurisdiction over Count One of the complaint because plaintiffs did not file a timely administrative claim for refund for the 2000 tax year with the Internal Revenue Service. More than two years separate the dates of payment identified in the sixth sentence of paragraph 13 and the date of filing the administrative refund claim identified in the first sentence of paragraph 17 which in turn was more than three years after the date plaintiffs' 2000 tax return was filed, rendering the administrative claim untimely under 26 U.S.C. § 6511(a). 63. The Court lacks jurisdiction over Count Two of the complaint because plaintiffs did not file a timely administrative claim for refund for the 2001 tax year with the Internal Revenue Service. More than two years separate the dates of payment identified in the sixth sentence of paragraph 22 and the date of filing the administrative refund claim identified in the first sentence of paragraph 26 which in turn was more than three years after the date plaintiffs' 2001 tax return was filed, rendering the administrative refund claim untimely under 26 U.S.C. § 6511(a). 64. Plaintiffs, in order to show this Court that they are entitled to the refunds they seek, must prove that they have made overpayments of tax. To the extent plaintiffs' actual taxable income amounts for the years in issue were higher than the amounts plaintiffs reported on their tax returns, plaintiffs' tax liability would increase, accordingly reducing any potential overpayment attributable to the allegations of the complaint. Should defendant find evidence that plaintiffs' net operating loss carryback from 2005 to plaintiffs' 2002, 2003, and 2004 tax years was overstated, that plaintiffs' flow-through income was understated due to business deduction claimed that were actually attributable to personal expenses, or that plaintiffs' taxable income was otherwise understated, defendant may seek leave of the Court to amend this pleading in order to claim an appropriate offset.

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COUNTERCLAIM 65. Plaintiffs filed their individual income tax return for 2000 on or about October 17, 2001. 66. Plaintiffs made payments toward their 2000 individual income tax liability on or about December 31, 2000, September 3, 2002, January 28, 2003, and January 6, 2004. 67. On or about April 14, 2006, plaintiffs submitted a claim to the Internal Revenue Service seeking refund of amounts paid toward their 2000 individual income tax liability. 68. More than three years elapsed between the dates identified in paragraph 65 and paragraph 67. 69. More than two years elapsed between each of the dates identified in paragraph 66 and the date identified in paragraph 67. 70. On or about September 4, 2006, the Internal Revenue Service acted upon the claim described by paragraph 67, abating failure-to-pay-tax penalties in the amount of $141,934.02 and interest in the amount of $3,339.00, which had been assessed for plaintiffs' 2000 individual income tax year. 71. On or about September 1, 2006, the Internal Revenue Service issued plaintiffs a check in the amount of $168,903.97, corresponding to the amounts described in paragraph 70 plus $23,630.95 interest on those amounts. 72. Plaintiffs received and deposited the check described in paragraph 71. 73. The claim described in paragraph 67 was untimely filed with the Internal Revenue Service. 74. Pursuant to 26 U.S.C. § 6511(a), the Internal Revenue Service was without authority to issue the check described in paragraph 71.

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75. The payment described in paragraph 71 is an erroneous refund within the meaning of 26 U.S.C. §§ 6514 and 7405. 76. Defendant is entitled to a judgment against plaintiff for the 2000 tax year in the amount of $168,903.97, plus interest. 77. This counterclaim has been authorized by the Chief Counsel of the Internal Revenue Service, a delegate of the Secretary of the Treasury, and is brought at the discretion of the Chief of the Court of Federal Claims Section, Tax Division, Department of Justice, a delegate of the Attorney General of the United States, pursuant to 26 U.S.C. § 7401 and 28 U.S.C. § 1503. 78. The Court has jurisdiction of this permissive counterclaim pursuant to 28 U.S.C. §§ 1503, 2508.

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Wherefore, defendant requests that the complaint be dismissed, with costs assessed against plaintiff, and that judgment be entered in the amount $168,903.97, plus interest and costs allowed by law.

Respectfully submitted, s/ Richard H. Bowles Attorney of Record U.S. Department of Justice, Tax Division Court of Federal Claims Section P. O. Box 26, Ben Franklin Station Washington, D.C. 20044 (v) (202) 307-6500 (f) (202) 514-9440 NATHAN J. HOCHMAN Assistant Attorney General, Tax Division DAVID GUSTAFSON Chief, Court of Federal Claims Section G. ROBSON STEWART Reviewer s/ G. Robson Stewart Of Counsel May 9, 2008

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