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Hudak v. United States

United States District Court, D. Maryland

June 25, 2018

TIMOTHY J. HUDAK, et ux. Plaintiffs
v.
THE UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE Defendant

          MEMORANDUM AND ORDER

          Marvin J. Garbis United States District Judge

         The Court has before it the United States' Motion for Installment Payment Order & Ancillary Relief [ECF No. 242] and the materials submitted relating thereto. The Court has held an evidentiary hearing. Factual findings contained herein are based on the evidence presented and the reasonable inferences drawn therefrom.

         I. BACKGROUND

         In this case, the Court entered the Judgment Order [ECF No. 166] on May 1, 2014 determining that Plaintiff Timothy Hudak (“Hudak”) had a liability to the Government for the taxable periods 3Q07 through 4Q09, 1Q10, and 4Q10 as of April 7, 2014, in the amount of $2, 358, 144.85. Hudak did not pay the amount owed the Government causing the I.R.S. to commence collection efforts.

         Hudak, regretfully, has engaged in actions to frustrate the collection efforts. On June 18, 2017, Hudak submittead an I.R.S. Collection Information Statement stating that he and his wife were both employed by Old Dominion Insulation, Inc. (“Old Dominion”). Hudak, a manager, was paid $12, 917.00 per month and Mrs. Hudak, a secretary, was paid $2, 917.00 per month. In December 2017, the I.R.S. levied on Hudak's wages, obtaining four payments of $1, 814.00 per week in December 2017 and January 2018, constituting part of his take home pay. Hudak purportedly resigned from Old Dominion employment effective January 5, 2018 stating in his resignation letter:

As you know in light of my tax issue I am losing about 95% of my pay check each week to this problem. It does not make financial sense for me to continue to work until this tax issue is resolved. . . . I am offering my resignation. I will contact you once my lawyers have reached a resolution in my case and I have a clear picture of what needs to be done to have my tax issue resolved. Only at this point does it make sense for me to resume working.

Ltr., Dec. 29, 2017, ECF No. 242-5 at 6.

         Hudak, however, continued working for Old Dominion, nominally as a “consultant” employed by a newly created company formed by Mrs. Hudak. Old Dominion, no longer paying wages to Hudak, ceased honoring the levy on Hudak's wages. Old Dominion continued to pay Mrs. Hudak's firm for Hudak's services a weekly amount of $3, 198.00, an amount equal to that which had been Hudak's wages plus Old Dominion's share of the Social Security FICA tax on that salary.

         II. DISCUSSION

         A. Requirement to Pay

         The Government seeks an Order based upon 28 U.S.C. § 3204(a) that provides that

if it is shown that the judgment debtor -
(1) is receiving or will receive substantial nonexempt disposable earnings from self employment that are not subject to garnishment; or
(2) is diverting or concealing substantial earnings from any source, or property received in lieu of earnings; then . . . the court may, if appropriate, order that the judgment debtor make ...

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