Government of Guam v. Guerrero, No. 19-16793 (9th Cir. 2021)
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Guam’s Department of Revenue concluded that Guerrero owes approximately $3.7 million in unpaid taxes because he did not pay his full tax liability for the tax years 1999, 2000, 2001, and 2002 after belatedly filing his returns for these years. The parties dispute when the Department assessed Guerrero’s taxes because the official records are missing, likely due to water, mold, and termite damage at the storage facility. Guam filed tax liens on real property that Guerrero owns with his former spouse in joint tenancy, then filed suit to collect Guerrero’s tax deficiencies through foreclosure. Guerrero argued that the Department cannot prove that it timely assessed his taxes, timely levied the tax liens, nor timely commenced its action, 26 U.S.C. 6501(a), 6502(a)(1). Guam invoked the presumption of regularity based on the Department’s standard procedure and internal documents to establish that Guam acted within the statute of limitations.
The district court partially ruled in favor of Guam, on the issues of the presumption of regularity and the timeliness of the Department’s actions. The Ninth Circuit affirmed. The presumption of regularity applied and Guerrero failed to rebut it. Guam established the timeliness of its assessment of Guerrero’s unpaid taxes, its filing of the tax lien, and its commencement of this action through the internal documents and testimony from the Department’s employees.
Court Description: Tax. The panel affirmed the district court’s judgment partially ruling in favor of the Government of Guam, in Guam’s action to reduce unpaid income tax liabilities to judgment and foreclose on certain real property. Taxpayer contended that Guam could not prove that the Department of Revenue and Taxation (“the Department”) acted within the three-year limitations period set forth in 26 U.S.C. § 6501(a) and 48 U.S.C. § 1421i(d)(i) (applying federal income tax laws to Guam), because it could not provide the relevant certificates of assessment to prove the assessment date. The original certificates of assessment were damaged. Consequently, Guam’s evidence of timeliness consisted only of the Department’s internal documents and employee testimony. The panel held that the district court did not clearly err in determining that Guam is entitled to the presumption of regularity to establish the timeliness of the tax proceedings, which taxpayer failed to rebut with clear, affirmative GOV’T OF GUAM V. GUERRERO 3 evidence. The panel further held that Guam established by a preponderance of the evidence that the Department timely assessed taxpayer’s liability, filed the tax lien on his real property, and commenced this action. Judge Bennett dissented because the record does not clearly reveal any basis for invoking the presumption of regularity; the Department’s longstanding procedures are alone insufficient to raise the presumption; the district court either failed to shift the burden of proof to taxpayer or did not properly apply the presumption and determine whether it was rebutted; and, while it is unclear which error or errors were committed, all roads lead to reversal.
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