IN THE UNITED STATES DISTRICT COURT FOR THE 
DISTRICT OF MASSACHUSETTS
 
UNITED STATES OF AMERICA,                  )
    Plaintiff,                             )
           v.                              )           Case No. ______________________
Steven A. Patriot, et al.,                 )                 (Jury Trial Demanded)
     Defendants                            )
     
DEFENDANTS' MEMORANDUM TO THE COURT IN RESPONSE TO THE PROCEEDINGS OF THE JULY 12, 2007 HEARING ON MOTION 30, MOTION FOR PARTIAL SUMMARY JUDGMENT WITH CERTIFICATE OF SERVICE, 25 MOTION TO DISMISS FOR LACK OF JURISDICTION COUNTERCLAIM, 33 MOTION FOR SUMMARY JUDGMENT, 27 MOTION FOR SUMMARY JUDGMENT. and DEFENDANTS MOTION FOR ORDER COMPELLING DISCLOSURE OR DISCOVERY UNDER F.R.Civ.P Rule 37(a)(2)(A).

The Patriot Defendants hereby submit their reply memorandum and their Motion for Order Compelling Disclosure or Discovery in response to the requests made by the Court at the Summary Judgment hearing conducted on July 12, 2007.

Factual Background

In the UNITED STATES REPLY MEMORANDUM TO THE PATRIOT DEFENDANTS' OPPOSITION TO ITS MOTION TO DISMISS COUNTERCLAIM, and in the UNITED STATES' ASSENTED-TO MOTION FOR LEAVE TO FILE REPLY MEMORANDUM TO THE PATRIOT DEFENDANTS, Plaintiff's Counsel asserts that “this Court lacks jurisdiction because the Patriot defendants belated administrative claim does not give this Court jurisdiction over their damages claim because such a claim must be denied by the Internal Revenue Service, or six months must elapse before a taxpayer may file a Federal Court action and that the Patriot defendants have presumptively, not exhausted their administrative remedies before filing the counterclaim,”

(I). A written request was made by the Defendants in a January 6, 2007 letter to the Internal Revenue Service to correct numerous errors and deficiencies in the filing and refiling of liens and to produce Notice(s) of Deficiency, Notice(s) of proposed assessments, Notice(s) and Demand Letters, form 7-a, Summary record of assessment, Form 23-C, the RACS Report and Form 4340, Certificate of Assessments and Payments. This letter also included a request for a face-to-face meeting (i.e. CDP hearing) so that the Defendants' tax liabilities could be established and verified as required in the Internal Revenue Service Collection Guidelines section 5.13.2.3, Item 21.

The Defendants also informed the Internal Revenue Service Compliance Technical Support Manager of their claim for civil damages for unauthorized collection actions under IRC §7433 and CFR §301.7433-1, in a letter dated January 11, 2007 and reported by Plaintiff's Counsel at the Partial Motion for Summary Judgment Hearing of July 12, 2007 as having been received by the Internal Revenue Service on January 19, 2007.

At the Partial Motion for Summary Judgment Hearing conducted by this Court on July 12, 2007, Plaintiff's Counsel informed the Court that a letter was mailed by the Internal Revenue Service to the Defendants and, for reasons that remain unclear, to their tax accountant, John Crosby, on March 22, 2007, informing the Defendants of the rejection and denial of their request for a CDP hearing and/or administrative claim for damages. At the conclusion of the hearing, Defendant Steven Patriot verbally requested Plaintiff's Counsel to provide him with a copy of the alleged letter from the Internal Revenue Service. Plaintiff's Counsel agreed to do so.

Argument

1. The Plaintiff's position that, "in order to file a counterclaim against the United States and for the District Court to establish jurisdiction, it must be established that the taxpayer has exhausted their administrative remedies and that the United States has explicitly waived sovereign immunity," is moot since the request for a CDP hearing and the claim for damages have been presumptively and allegedly denied by the Internal Revenue Service. If, indeed, the Internal Revenue Service has denied the Defendants' claim for civil damages for unauthorized collection actions under IRC §7433 and CFR §301.7433-1, as represented by Plaintiff's Counsel at the Partial Summary Judgment Hearing on July 12, 2007, then a sufficient condition for waiving sovereign immunity and allowing for the filing of a damages suit in federal court under Section §7433 has a been established.

2. The Taxpayers' Bill of Rights 2 also "eliminated the jurisdictional requirement that administrative remedies be exhausted before a Court may award damages." (See 26 CFR Part 301 {TD 9050}RIN 1545-AY08. Internal Revenue Service Final Regulations, David A. Mader, Assistant Deputy Commissioner of Internal Revenue, Approved March 5, 2003. FR Doc. 03-6597 Filed 3-24-03 8:45 a.m. by Pamela F. Olson, Assistant Secretary of the Treasury).

3. In the alternative, six months has passed since the Internal Revenue Service received the Defendants' request for a CDP hearing and their claim for damages on January 19, 2007. Consequently, a second sufficient condition has been met whereby the United States has effectively waived sovereign immunity and this Court now retains jurisdiction to consider the Defendants' counterclaim for damages under 26 C.F.R. §301-7432.1(f).

4. The failure of the Internal Revenue Service to respond to the Defendants' request for CDPH hearing constitutes frank violation of H.R. 2672 IRC §6330 (a). While the Defendants' request for a CDP hearing under IRC §6320 and IRC §6330 was not timely submitted, they were eligible for an equivalent hearing under IRC § 8.7.2.3.15.

5. Further, the exact nature and extent of the Defendants' tax liabilities and the legality and of numerous liens remains unverified. Consequently, granting of the United States' Motion for Partial Summary Judgment would be premature at this time. It remains our position that consideration of the United States' motion for summary judgment and attendant request that the Court grant a foreclosure action on our property must follow an accurate and detailed accounting of the existing liens and liabilities consistent with CQMS standards and guidelines. This accounting must take into account those liens and liabilities which might be released and/or modified in light regulatory of procedural violations. (See 5.13.2.2.3 (03-26-1999) Item 21: Verification of the Accuracy of the Tax Liability with respect to the CQMS Standard).

6. The Defendants maintain that they have not received ANY communication from the Internal Revenue Service in connection with their request for a CDP hearing and their administrative claim for damages. This constitutes flagrant and negligent violation of H.R. 2676

7. Attached Exhibit A contains the sworn and notarized Affidavit of John Crosby indicating he has not received ANY communication from the Internal Revenue Service relative to these matters.

8. The Defendants assert that the failure on the part of the Internal Revenue Service to respond to their request for a CDP hearing and the failure of the Internal Revenue Service to respond to the Defendants' administrative claim for civil damages constitutes negligent behavior under Section §7433(a).

9. The Defendants also assert that the representation by the Internal Revenue Service to Plaintiff's Counsel and subsequently to this Court through its Counsel, that a letter was sent to the Defendants and to John Crosby, responding to the Defendants' requests for a CDP hearing and/or the Defendants' administrative claim for civil damages constitutes reckless and intentional violation of the provisions of Section §7433(a) of the Internal Revenue Service Code.

10. The Defendants further assert that the failure on the part of Plaintiff's Counsel to provide them with a copy of the alleged letter reportedly sent to the Defendants and to John Crosby by the Internal Revenue Service, as assented to on July 12, 2007, constitutes disregard of F.R.Civ.P. Rule 26(a) as well as disregard of the explicit request issued by Justice Woodlock for clarification of this matter. We, therefore ask that the Court compel Plaintiff's Counsel to produce the alleged letter under F.R.Civ.P. Rule 37(a)(2)(A). As required by F.R.Civ.P Rule 37(a)(2)(A), a certification is attached indicating that Defendant Steven A. Patriot conferred with the party not making the disclosure in an effort to secure the disclosure without court action

We, therefore, ask the Court to:

1. Deny the Plaintiff's Motion for Partial Summary Judgment.

2. Declare and assert the jurisdiction of this Court with respect to the Defendants' Counterclaim for damages.

3. Order Plaintiff's Counsel to produce and disclose the alleged letters to the Defendants and to John Crosby as promised by Plaintiff's Counsel under Rule 37(a)(2)(A) and as required by F.R.Civ. P. Rule 26.

4. We also ask that the identity of the Internal Revenue Service employee(s) responsible for generating and/or mailing these letters as well as strict proof of mailing and delivery be provided to the Court.

5. Entertain the motion by the Defendants for a Counterclaim against the Internal Revenue Service for negligent actions ($100,000) for failing to respond to the Defendants' request for a CDP or equivalent hearing and append the claim to include damages for reckless and intentional actions ($1,000,000) for (mis)representing to this Court that a letter regarding the Defendants' CDP hearing and/or claim for damages was sent to the Defendants and/or to John Crosby, under U.S.C. § 1346(b) and 28 U.S.C. § 2671-2680 and IRC § 7433.

_______________________________________            ________________________________________
Pro se, for Defendant Steven A. Patriot            Pro se, for Defendant Deborah B. Patriot

__________________________________                             _______________________          
Steven A. Patriot                                   Deborah B. Patriot
 

DATED: July 27, 2007 > Certificate of Service: We hereby certify that on this date, we sent a copy of this memorandum to opposing party by e-mail.

Steven and Deborah Patriot Weston, MA 02493-2237