UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
UNITED STATES OF AMERICA, ) Plaintiff, ) Civil No. 6:06-CV-1461-ORL-xxxxx ) v ) Amended Answer and Counterclaim ) (Jury Trial Demanded ) Ted Freeman; ) Seiko Patriot; ) Gail Patriot; ) Ivan Freeman and ) Dorothy Freeman, ) As Trustees of the Ivan Freeman Living ) Trust Dated April 21, 1970, as Amended ) And Restated January 26, 1998; and ) OPTION ONE MORTGAGE ) CORPORATION, a California ) Corporation ) ) Defendants. )
Defendants Ted Freeman and Seiko Patriot hereby file their Answer and Counterclaim to the complaint of the United States dated September 21, 2006, based on the following grounds:
1. Defendants above-named hereby denied each and every allegation and statement made against them and demanded strict proof thereof.
2. Pursuit to Rule 38 FRCivP, defendants request a jury trial of their peers.
3. The mortgagor Option One Mortgage is a innocent third-party lender who has no connection to this case except for a mortgage contract and monthly payment. Therefore it should be dismissed from this case.
4. The mortgagor Ivan Freeman and Dorothy Freeman, As Trustees of the Ivan Freeman Living Trust Dated April21, 1970, as Amended And Restated January 26, 1998 are innocent third-party lenders who have no connection to real defendants in this case (Ted Freeman and Seiko Patriot) or this case except serving as third party lenders and accepting monthly payments.
This mortgagor is no longer connected to real defendants or this case because the mortgage was paid off and the property transferred to new owner. Real defendants have no connection to this real property or this mortgage anymore at this time. Real defendants do not know or have any control about whether the satisfaction of mortgage was recorded.
5. Defendant Gail Patriot purchased said Condominium Unit from real defendants at fair market value without any reservation of rights to Freeman and family. Real defendants have no connection at this time whatsoever to Ms. Kendall and her condominium. Since she has no connection to this case, she should be dismissed.
6. All of the liens which are the subject of this case have expired by the statute of limitation and the re-filing of the liens was done two or three days late, except for one. All of the liens save one are unenforceable, invalid due to the expiration of the statue of limitations and the tardy re-filing. They should be removed by order of this court. Explained in detail below.
Federal Law requires that the IRS within five days of any filing or re-filing of any NFTL must send the taxpayer both (A) a copy of the NFTL, and (B) a CDPH notice. This law, part of the Taxpayer’s Bill of Rights, went into effect about January 1999 and clearly provided that liens which are filed or re-filed without these two notices are invalid. Explained in more detail below.
Therefore each and every lien which are the subject of this foreclosure action, are illegal and not subject to foreclosure. Therefore, the government’s case should be dismissed.
7. For the tax years in question Freeman did not receive his administrative due process and did not receive as the law requires his (lien) Notice of the right to a collection due process hearing (CDPH) under IRC 6320
Therefore, a judicial judgment against him is premature, unwarranted and unnecessary at this time. Judicial economy demands that DOJ exhaust administrative remedies and the IRS afford Freeman administrative due process.
8. The tax liens on the real estate which is sought to be foreclosed upon have numerous fatal errors, are procedurally incorrect and erroneous, do not meet the requirement of the Internal Revenue Code, have expired by the Statue of Limitations and therefore are invalid. Not only should they not be a basis of this lawsuit, but should not be allowed to remain in the courthouse. These liens should be ordered by this court to be removed.
Defendants do not owe the amount of taxes assessed against them and the complaint does not alledge that they do. The IRS made a grossly inflated assessment against the Freemans, which they were unable to contest. The tax liability is simply not owed and the IRS is well aware of it.
9. The complaint has a major arithmetic error because it added up the two liens, which were duplicates of each other and came to a final figure of twice of what the IRS says Freeman owes. The liens filed in Volusia County are the same as the liens filed in Alachua County. The IRS says that Freeman owes $91,894.24 but the complaint claims that he owes $183, 788.49, which is what the IRS claims but added twice.
10. Defendants incorporate by reference into this Answer all of the paragraphs below in the counterclaim. Defendants incorporate by reference herein all of the Answer of Ted Freeman filed on December 11, 2006 and the Answer of Seiko Patriot filed on the same day.
11. Defendants Freeman and Seiko Patriot complain for damages against the Plaintiff’s for
the wrongful acts as listed below. Defendants incorporate by reference all of the paragraphs
12. The Freemans complain of United States of America and Internal Revenue Service, seek damages for Illegal Tax Collections under IRC 7433, an injunction removing illegal placed federal tax lien under IRC 6331 (i)(4)(B) and damages for the illegal lien and failure to remove illegal tax lien under IRC 7432.
This is an action brought under 26 U.S.C. 7432, and 26 U.S.C. 7433 for minimum statutory damages of $100,000 plus fees and cost for illegal Internal Revenue Service liens on real property of the Freemans. Further, Freeman requests an order to remove the illegal liens.
11. This Court has jurisdiction pursuant to 28 U.S.C. Section 1331 as this action involves federal statutes and defendants are federal agencies; IRC 7432 & 7433, FRCivP 65, 28 U.S.C. Sections 451, 1331, 1357, 1361, and 1391 (e).
13. The Freeman’s have two valuable pieces of real estate and the IRS placed illegal NFTL’s and re-filed the illegal NFTL’s on the homes preventing them from selling or mortgaging the property in order to pay the IRS past taxes.
14. Over ten years ago, the IRS made an assessment against Ted Freeman for a number of old tax years. Even though defendant had no tax liability for those years, he did not know how to contest the assessments. Then IRS re-filed the Notice of Federal Tax Liens (NFTL) for the unpaid assessments of those ancient years. Seiko Patriot has no tax problem with the IRS or tax liens against her, but is a party to the lawsuit because her name is on the deeds.
15. Federal tax liens self extinguish after ten years. The liens are then gone, finished, over with and extinguished. The IRS NFTL Form (668)(Y)(c) very clearly includes this statement inside a box.
“IMPORTANT RELEASE INFORMATION: For each assessment listed below, unless notice of the lien is refilled by the date given in column (e), this notice shall, on the day following such date, operate as a certificate of release as defined in IRC 6325(a)”
Column (e) referred to in the box above is listed on the NFTL as “LAST DAY FOR REFILING.” That means if the Statue of Limitations is not re-filed by the last day for extension, the lien and the assessment that it protects are lost and gone forever.
16. The two sets of liens against Freeman are not supported by the facts and should be removed. The IRS filed notice of federal tax liens against him several years ago for thousands of dollars for tax years 1989, 1990, 1991, 1992, and 1993.Then the IRS later re-filed notices of NFTL.
17. These liens were re-filed against Freeman several years ago and are now in the records of the courthouse in the county where he lives. This creates immense embarrassment for Freeman and also prevents him from selling any real estate.
For the tax years in question, Freeman did not receive his notice of a right for collection hearing. When the liens were re-filed, Freeman was entitled to a Notice of a CDP hearing under IRC 6320. This was not sent.
18. IRC 6320 (a)(2) requires the IRS to notify the taxpayer in five business days of filing the notice of federal tax lien. The IRS did not send him a copy of the NFTL within five days. Further, the IRS did not send him a copy of the re-filed NFTL within five days, as the law requires. Therefore, the liens and the re-filed liens are invalid.
19. IRS placed Notices of Liens on Freeman’s home in the amount of almost $90,000 many years ago. Then the IRS re-filed these liens several years ago.
But Freeman received no notice from anyone. IRC 6320 (a)(2) requires the IRS to notify the taxpayer in five business days of filing the notice of federal tax lien and also the re-filing. . Further the IRS also failed to send Freeman a Notice of Collection Due Process Hearing for the numerous re-filing of NFTL. Since the IRS did not notify Freeman of the re-filing of the lien or send him a notice of CDPH; the re-file liens are invalid and therefore should be removed.
20. The Congress passed a law mandating a collection due process hearing and of course a notice of the hearing so the taxpayer can file for it. The IRS clearly and without doubt refused to sent Freeman his notice of hearing when they re-filed the NFTL’s
A re-filing of a tax lien is the same thing as the filing of the original tax lien. Congress did not provide that re-filings did not require the CDPH as the filing did. Obviously re-filing and filing is the same thing and if Congress wanted an exception to the CDPH, Congress would have so provided, not some low level tax collector. The Internal Revenue Code is extremely complicated and complex. but clearly a CDPH notice is required for a re-filing of NFTL.
21.Freeman made a Request for Release of Federal Tax Lien in accordance with 26 CFR 401.6325-1(f), as required by 26 CFR 301.7432-1 (f)(2)(iii) That request was for the release of the NFTL’s, which are invalid and unenforceable for the reasons listed below.
This counterclaim is a civil action in US District Court under IRC 7432 for the wrongful and illegal collections actions against him by failure to remove lien. He exhausted his administrative remedies.
22. The facts include:
Notices of federal tax lien against him were recorded in the clerk’s office in the counties of Volusia and Alachua, including the ones dated March 3, 2005 and September 20, 2005, especially the re-filed NFTL’s dated March 13, and 14, 2006. Copies of the Notice of Federal Tax liens which effect the property including, the re-filed NFTL’s will be filed in this court. The tax liens involved:
A. NFTL filed in Volusia county, dated September 20, 1996 for tax years 1988, 1989, 1990, 1992, and 1993 (hereafter Lien A).
B. Lien filed in Volusia County, dated March 3, 2005 for tax year 1991 (hereafter Lien B).
C. NFTL filed in Alachua County, dated March 3, 2005 for tax years 1989, 1990, 1991, 1992, and 1993 (hereafter Lien C).
D. Re-filed NFTL filed in Volusia County on March 14, 2006 for tax years 1989, 1990, 1992, and 1993 (hereafter Lien D). This is re-filing of Lien A
E. Re-file NFTL filed in Volusia County on March 14, 2006 for tax year 1991 (hereafter Lien E). This is re-filing of Lien B.
G. Re-file NFTL filed in Alachua County on March 13, 2006 for tax years 1989, 1990, 1991, 1992, and 1993(hereafter Lien E). This is re-filing of Lien C.
23. The grounds upon which the issuance of a release was sought, include:
A. IRS unlawfully re-filed invalid tax liens against Freeman for tax years 1989-1993 in the amount of almost $90,000. These had already expired due to the Statue of Limitations, which by law is ten years from the date of assessment. See IRC 6325(a)
The assessment date governs, not the date the tax lien was prepared and not the date of the original filing of the NFTL. The law requires that the re-filing of the liens be recorded in the courthouse prior to the expiration of the statue of limitations, which was not done in this case.
Tax liens were originally filed on the dates and at the county courthouses listed above. The re-filed NFTL’s are listed above, with date and location of recording.
B. The date of assessments for the below tax liens follows:
(1) The tax lien listed above as A (filed in Volusia County) for tax years 1989-1993 minus 1991, had assessment date of March 11, 1996. The last date for re-filing was March 11, 2006, but re-filing notice (D) was filed on March 14, 2006 -- two days late. Note: The lien had incorrect date for re-filing.
(2) The tax lien listed above as B (filed in Volusia County) for 1991 had an assessment date of July 1, 1996 and was invalid for many reasons including improper preparation and filing. The persons that signed the original lien (B), and the re-filed lien for that (E) were not revenue officers with the authority to sign an NFTL. It is also invalid for the reasons listed in this counterclaim.
(3) The tax lien listed above as C (filed in Alachua County) for tax years 1989-1993, had an assessment date of March 11, 1996 except for 1991 which had a date of July 7, 1996 the last date for re-filing was March 11, 2006, but the re-filing was not until March 13, 2006 which was two days late.
C. These tax liens were invalid because the re-filing was done after the ten-year statue of limitations had expired. The statue of limitations begins running on the date of assessment, not the filing date of the tax lien. Since these tax liens were re-filed after the expiration of the statue of Limitation, they are invalid and should be removed.
D. The tax liens were illegal or invalid because the IRS did not send Freeman a notice of collection due process hearing as required by IRC 6320. Federal law requires that Freeman receive his Notice of the right to a hearing within five days of the filing or re-filing of the NTFL. his did not receive a hearing notice or an opportunity to request a CDP hearing for the revocation forms listed.
E. For the above reasons, the liens are unenforceable. Under IRC 6322, the Secretary must remove the liens when they become unenforceable.
WHEREFORE, Ted Freeman request that This Honorable Court deny the relief sought by the government herein requested, grant relief sought by defendants, grant them fees, cost and out-of–pocket cost and other appropriate relief.
Certificate of Service: I hereby certify that on this date I properly sent a copy to opposing party.
1776 Patriot Way, Freetown, USA