Government Files Suit to Reduce $10M Tax Assessment to Judgment

UNITED STATES OF AMERICA,
Plaintiff,
v.
ELIZABETH C. BENSON,
ELIZABETH C. BENSON AS THE PERSONAL REPRESENTATIVE,
DISTRIBUTEE, OR SUCCESSOR IN INTEREST OF THE ESTATE OF
BURTON O. BENSON, USAA FEDERAL SAVINGS BANK, BELARUS
INVESTMENTS LIMITED, CONTRA COSTA COUNTY TREASURER and
CALIFORNIA FRANCHISE TAX BOARD.
Defendants.

UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

AMY MATCHISON (CABN 217022)
Trial Attorney
United States Department of Justice, Tax Division
P.O. Box 683, Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 307-6422
Fax: (202) 307-0054
E-mail: Amy.T.Matchison@usdoj.gov
Western.Taxcivil@usdoj.gov

DAVID L. ANDERSON
United States Attorney
450 Golden Gate Avenue, 11th Floor
San Francisco, California 94102

Attorneys for United States of America

COMPLAINT

The plaintiff, the United States of America, through its undersigned counsel, alleges the following:

INTRODUCTION

1. This is a civil action to reduce to judgment federal income tax assessments against Defendants Elizabeth C. Benson and Elizabeth C. Benson as the Personal Representative, Distributee, or Successor in Interest of the Estate of Burton O. Benson and to foreclose the United States' Federal Tax Liens against real property held by Elizabeth C. and Burton O. Benson.

AUTHORIZATION FOR SUIT

2. This action is brought pursuant to 26 U.S.C. §§ 7401, 7403 at the direction of the Attorney General of the United States and with the authorization of the Secretary of the Treasury of the United States.

JURISDICTION AND VENUE

3. The Court has jurisdiction over this proceeding pursuant to Section 7402(a) of the Internal Revenue Code and 28 U.S.C. §§ 1340 and 1345.

4. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(b) and 1396 because the tax liabilities at issue accrued in this judicial district and because the real property the United States seeks to foreclose its federal tax liens against is located in this judicial district.

INTRADISTRICT ASSIGNMENT

5. A substantial part of the events that gave rise to this action occurred in Contra Costa County; accordingly, this action can be assigned to the San Francisco or Oakland Divisions.

DEFENDANTS

6. Defendants Elizabeth C. and Burton O. Benson, at all times relevant to this action, resided within the jurisdiction of the Court. The Bensons hold legal title to the subject real property.

7. At the time of the federal income tax assessments described below, Elizabeth C. and Burton O. Benson were married. Burton O. Benson died on April 21, 2017.

8. No probate case has been filed with respect to Burton O. Benson, and thus identifying the estate's personal representative is not possible at this time. Since Elizabeth C. Benson will likely be the primary distributee of any estate under state law, she should be deemed the personal representative, distribute, or successor in interest of the estate.

9. Defendant USAA Federal Savings Bank is made a party to this action because it may claim some right, title, or interest in the real property which is the subject of this Complaint.

10. Defendant Belarus Investments Limited is made a party to this action because it may claim some right, title, or interest in the real property which is the subject of this Complaint.

11. Defendant Contra Costa County Treasurer is made a party to this action because it may claim some right, title, or interest in the real property which is the subject of this Complaint.

12. Defendant California Franchise Tax Board is made a party to this action because it may claim some right, title, or interest in the real property which is the subject of this Complaint.

THE SUBJECT PROPERTY

13. The subject property of this action is located in Contra Costa County, at 5 Evans Place, Orinda, California 94563.

14. The real property is legally described as follows:

PARCEL ONE:

LOT 14, MAP OF RHEEM VALLEY ACRES, FILED AUGUST 19, 1953, MAP BOOK 51, PAGE 39, CONTRA COSTA COUNTY RECORDS.

PARCEL TWO:

PORTION OF LOT 13, MAP OF RHEEM VALLEY ACRES, FILED AUGUST 19, 1953, MAP BOOK 51, PAGE 39, CONTRA COSTA COUNTY RECORDS, AS DESCRIBED AS FOLLOWS:

BEGINNING AT THE INTERSECTION OF THE NORTHERN LINE OF EVANS PLACE, AS SHOWN ON SAID MAP WITH THE SOUTHEASTERN LINE OF SAID LOT 13; THENCE ALONG WITH THE LAST NAMED LINE NORTH. 60°14'14' EAST 21 FEET, 10 INCHES; THENCE SOUTHWESTERLY TO A POINT ON THE NORTHERN LINE OF SAID EVANS PLACE, DISTANT THEREON WESTERLY 10 FEET FROM THE POINT OF BEGINNING; THENCE EASTERLY ALONG SAID NORTHERN LINE OF EVANS PLACE, ON THE ARC OF A CURVE TO THE RIGHT WITH A RADIUS OF 40 FEET, AN ARC DISTANCE OF 10 FEET TO THE POINT OF BEGINNING.

15. By Grant Deed, recorded May 23, 1991, Elizabeth C. and Burton O. Benson acquired the Subject Property as husband and wife as Joint Tenants.

16. On March 10, 2008, the IRS recorded with the Contra Costa County Recorder a Notice of Federal Tax Lien with respect to the Benson's 1989, 1993, and 1994 income tax liabilities.

17. On December 23, 2011, the IRS recorded with the Contra Costa County Recorder a Notice of Federal Tax Lien with respect to the Benson's 2010 income tax liability.

18. On October 17, 2016, the IRS refiled with the Contra Costa County Recorder a Notice of Federal Tax Lien with respect to the Benson's 1989, 1993, and 1994 income tax liabilities.

CLAIM FOR RELIEF:
REDUCE FEDERAL TAX ASSESSMENTS TO JUDGMENT

19. The United States incorporates by reference the allegations contained in paragraphs 1-18 above, as if fully set forth here.

20. On the dates and in the amounts set forth below, a duly authorized delegate of the Secretary of the Treasury made timely federal tax assessments against Defendants Elizabeth C. and Burton O. Benson for joint unpaid individual income taxes (Form 1040), penalties, and other statutory additions for the below-listed tax periods:

Tax Year	Assessment Date	Amount Assessed		Unpaid Balance Plus Accruals as of May 6, 2019
1989	07/16/2007	$139,889.00	(Tax)
	07/16/2007	27,978.00	(26 U.S.C. §6662 Accuracy Penalty)
	07/16/2007	34,972.00	(Late Filing Penalty)
	07/16/2007	563,639.15	(Interest Assessed)
	11/25/2013	20,397.03	(Failure to Pay Tax Penalty)
	11/25/2013	204,944.15	(Interest Assessed)
	01/11/2016	65,263.76	(Interest Assessed)
	03/26/2018	14,575.22	(Failure to Pay Tax Penalty)
	03/26/2018	92,368.01	(Interest Assessed)
	09/17/2018	28,533.86	(Interest Assessed)	$1,159,875.06
1990	07/16/2007	$104,701.00	(Tax)
	07/16/2007	20,940.00	(26 U.S.C.§ 6662 Accuracy Penalty)
	07/16/2007	26,175.00	(Late Filing Penalty)
	07/16/2007	364,167.00	(Interest Assessed)
	11/14/2011	115,969.34	(Interest Assessed)
	11/25/2013	58,398.30	(Failure to Pay Tax Penalty)
	11/25/2011	40,040.52	(Interest Assessed)
	01/11/2016	47,746.93	(Interest Assessed)
	09/17/2018	89,957.07	(Interest Assessed)	$884,000.25
1993	07/16/2007	$1,496,254.00	(Tax)
	07/16/2007	299,251.00	(26 U.S.C.§ 6662 Accuracy Penalty)
	07/16/2007	2,968,291.29	(Interest)
	11/14/2011	1,120,515.63	(Interest)
	11/14/2011	374,063.50	(Failure to Pay Tax Penalty)
	11/25/2013	385,927.72	(Interest)
	11/24/2014	190,653.06	(Interest)
	11/30/2015	193,833.83	(Interest)
	11/28/2016	235,897.91	(Interest)	$7,308,429.54
1994	07/16/2007	$140,714.00	(Tax)
	07/16/2007	28,143.00	(26 U.S.C.§ 6662 Accuracy Penalty)
	07/16/2007	245,746.73	(Interest)
	10/11/2010	33,939.36	(Failure to Pay Tax Penalty)
	11/25/2013	8,286.80	(Failure to Pay Tax Penalty)
	11/25/2013	129,902.48	(Interest)
	01/11/2016	38,160.73	(Interest)
	09/17/2018	73,101.10	(Interest)	$722,569.73
2010	11/21/2011	$53.00	(Estimated Tax Penalty)
	11/21/2011	186.44	(Failure to Pay Tax Penalty)
	11/21/2011	106.93	(Interest Assessed)
	11/25/2013	312.93	(Interest Assessed)
	11/25/2013	559.32	(Failure to Pay Tax Penalty)
	11/24/2014	179.41	(Interest)
	11/24/2014	279.66	(Failure to Pay Tax Penalty)
	11/30/2015	197.12	(Interest)
	11/30/2015	139.83	(Failure to Pay Tax Penalty)
	11/28/2016	248.88	(Interest)	$7,775.28
		Total		$10,082,649.86

 21. Timely notice of the assessments set forth in paragraph 20 has been given to Defendants Elizabeth C. and Burton O. Benson and demand for payment has been made, as required 26 U.S.C. § 6303.

22. Despite notice and demand for payment of the assessments set forth in paragraph 20, Defendants Elizabeth C. and Burton O. Benson have neglected, refused, or failed to pay the tax assessments against them and, calculated to May 6, 2019, there remains due and owing to the United States on those assessments the total sum of $10,082,649.86, plus statutory interest and other statutory additions that continue to accrue as provided by law.

SECOND CLAIM FOR RELIEF:
TO FORECLOSE FEDERAL TAX LIENS AGAINST THE SUBJECT PROPERTY AND TO OBTAIN AN ORDER FOR JUDICIAL SALE

23. The United States incorporates by reference the allegations contained in Paragraphs 1-22 above, as if fully set forth here.

24. The IRS recorded Notices of Federal Tax Lien with the Recorder for Contra Costa County, California against the Bensons for federal income tax assessments and penalties for tax years 1989, 1990, 1993, 1994, and 2010.

25. Pursuant to 26 U.S.C. § 6321, 6322 and § 6323, liens for unpaid taxes, penalties, and interest as described in paragraph 20, arose on the dates of the assessments and attach to all property and rights to property of the Bensons.

26. The tax liens arising from the assessments described in paragraph 20 continue to attach to the Subject Property.

27. The tax liens arising from the assessments described in paragraph 20 have priority over all interests in the Subject Property after the attachment of the tax liens, subject to 26 U.S.C. § 6323(a).

28. Pursuant to 28 U.S.C. § 7403(c), the United States is entitled to a decree of sale of the Subject Property to enforce its tax liens.

WHEREFORE, plaintiff, the United States of America, respectfully requests the Court to adjudge and decree as follows:

A. That Defendants Elizabeth C. Benson and Burton O. Benson are indebted to the United States in the amount of $10,082,649.86, for unpaid joint federal income tax liabilities, penalties, and interest owed for the tax years 1989, 1990, 1993, 1994, and 2010, less any additional credits according to proof, plus interest and other statutory additions as provided by law that have accrued since May 6, 2019, and that judgment in that amount should be entered against Defendants Elizabeth C. Benson and Elizabeth C. Benson as the Personal Representative, Distributee, or Successor in Interest of the Estate of Burton O. Benson and in favor of the United States of America;

B. That the United States possesses valid and undisturbed federal tax liens, by virtue of the assessments set forth herein, on the property of Defendants Elizabeth C. Benson and Burton O. Benson;

C. That the federal tax liens encumbering the Subject Property be foreclosed and that the Subject Property be ordered sold to satisfy the outstanding and delinquent federal tax liabilities of Defendants Elizabeth C. Benson and Burton O. Benson;

D. That the Court determine that the United States' federal tax liens recorded against the Subject Property have first priority, subject to 26 U.S.C. §§ 6321 and 6323(a) and (b);

E. That the Court determine the validity and priority of all other liens and interests in the Subject Property and order that the proceeds from any judicial sale of such property be distributed accordingly;

F. That the Court grant the United States a deficiency judgment in the amount of any tax indebtedness not satisfied by the sale of the Subject Property;

G. That the Court grant the United States its costs incurred in bringing this action; and

H. For such other relief as the Court deems just and proper.

Dated this 30th day of August, 2019.

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

AMY MATCHISON (CA SBN 217022)
Trial Attorney, Tax Division
United States Department of Justice
P.O. Box 683, Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 305-4929
Email: Amy.T.Matchison@usdoj.gov