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Taxpayer's Affidavit Can Preclude Summary Judgment

By William Vogeler, Esq. on February 09, 2018 | Last updated on March 21, 2019

A federal appeals court gave some good news to taxpayers, and to one taxpayer in particular.

Estelle Stein had been fighting the Internal Revenue Service over $220,000 in assessments, penalties and interest. She swore she paid her debt, but a judge didn't buy the affidavit and entered summary judgment for the government.

The U.S. Eleventh Circuit Court of Appeals, ruling en banc in United States of America v. Stein, sent the case back to a three-judge panel and overruled its own precedent. It's not about the weight of evidence; it's about disputed evidence.

FRCP Rule 56

The en banc panel said that an affidavit may create an issue of material fact, "even if it is self-serving and uncorroborated."

"We hold that an affidavit which satisfies Rule 56 of the Federal Rules of Civil Procedure may create an issue of material fact and preclude summary judgment even if it is self-serving and uncorroborated," the Eleventh Circuit said.

The principle applies in all civil cases, the judges said, including tax law matters. It was a significant decision for Stein, but more so for taxpayers -- especially those who have lost to the IRS for years in similar cases.

Since 1985, the agency has relied on Mays v. United States to object to taxpayers' "self-serving documents" in summary judgment proceedings. That part of the case is no longer good law.

"Strong Authority"

Tax attorneys Peter Anthony and Jeffry Erney said it is a "significant" development in the law. Writing for Mondaq, they said the IRS often relies on publicly available statements to win summary judgment motions even before discovery.

"Now, a taxpayer has strong authority with which to counter the IRS and force the litigation to move into discovery, thus, giving taxpayers the opportunity to more fully develop the record," they said.

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