District Where
Filed Page1

[CCH
Dec. 55,381(M)]
Louis Fusaro v. Commissioner.
Docket No. 13282-01L , TC Memo. 2003-345, 86 TCM 731, Filed
December 29, 2003
. [Appealable, barring stipulation to the contrary, to CA-9. --CCH.]
[Code
Secs 6323 and 6330]
Collection: Tax liens: Validity of lien: State of residence: Place of
filing: Collection due process: Issues raised at hearing. --
The IRS was
entitled to levy on an individual's pension in order to collect a tax
liability for five tax years. Based on the evidence, the Tax Court
concluded that the taxpayer was a
Florida
resident at the time the IRS filed its liens. The IRS properly filed its
liens in the circuit court in the county where the taxpayer resided. The
pension plan was the only asset identified as exempt from his bankruptcy
proceedings and as personal property with a situs at the taxpayer's
residence. The taxpayer was not entitled to a determination as to the
amount of his pension subject to the liens and, implicitly, a
determination that no other assets of the taxpayer were subject to the
IRS liens. The taxpayer failed to make such argument before the IRS
Appeals officer at his collection due process hearing because he raised
no alternatives to collection. The Tax Court noted that it would be
inappropriate to anticipate, determine and limit the scope of the liens
on the record in the case. The amount of liability was not disputed; the
taxpayer's arguments only addressed collectibility. --CCH.
Willard D.
Horwich, for the petitioner. Irene S. Carroll, for the respondent.
MEMORANDUM
FINDINGS OF FACT AND OPINION
COHEN, Judge:
The petition in this case was filed in response to a Notice of
Determination Concerning Collection Action(s) Under Section
6320 and/or 6330
(notice of determination). The issue for decision is whether respondent
may levy on petitioner's pension to collect a tax liability owed by
petitioner for 1990 through 1994.
Unless
otherwise indicated, all section references are to the Internal Revenue
Code in effect for the years in issue.
FINDINGS
OF FACT
Some of the
facts have been stipulated, and the stipulated facts are incorporated in
our findings by this reference. At the time the petition in this case
was filed, petitioner resided in
Los Angeles
,
California
.
Petitioner's
Residence(s)
On
January 12, 1995
, petitioner was divorced from his former wife, Kathleen Fusaro. During
all of 1996, petitioner maintained a residential address in
Hallandale
(
Hallandale
),
Broward County
,
Florida
. While residing in
Hallandale
, he lived with Kelli Jo Tackett (Tackett) and their child. Petitioner
and Tackett shared the expenses of the residence, but he paid the
majority of the expenses. Throughout 1996 and through the time of trial
in January 2003, petitioner continued to use his
Florida
driver's license with a
Florida
address. At the time of trial, petitioner did not have a permanent
California
driver's license.
From April 12
through
July 23, 1996
, and from August 22 through
December 20, 1996
, petitioner's statements from his personal checking account with First
Union Bank showed petitioner's address in
Hallandale
. The statements showed purchases and withdrawals in both
California
and
Florida
throughout the period covered by the statements, including many in
Florida
throughout October, November, and December 1996. From May 15 through
September 30, 1996
, petitioner had a personal savings account with First Union Bank. The
savings account statements showed petitioner's address in
Hallandale
. Petitioner conducted banking transactions in his savings account in
both
Florida
and
California
throughout the months covered by the statements, with the last
transaction in
Florida
occurring on
August 5, 1996
. At the time of trial, petitioner continued to use a
Florida
address on his checks.
Employment
with Warner Bros. Television Productions
In 1995 and
early 1996, petitioner was employed by Warner Bros. Television
Productions (Warner Bros.) filming a pilot television program in
Seattle
,
Washington
. A Warner Bros. employee suggested to petitioner that he move from
Florida
to
California
to facilitate his hiring by Warner Bros. in
California
because production companies are required to pay higher "distant
location" rates for an out-of-State director under the Director's
Guild of America contract. On
July 10, 1996
, petitioner executed documents with Warner Bros. concerning his work
for the television program "The Drew Carey Show". A "Film
DGA Deal Memo" (deal memo) listed petitioner's weekly salary with a
guaranty of work for 1 week as a unit production manager. Petitioner
also did business with Warner Bros. under the name Jigsaw Productions,
Inc. (Jigsaw). Petitioner's and Jigsaw's address as listed in the deal
memo was in
Marina
Del Ray
,
California
. An "On-Production Loan-Out" was also signed, showing Jigsaw
of Hallandale, Florida, as the lender and petitioner as the debtor, with
an address in Marina Del Ray. The "loan-out" corporation
(i.e., Jigsaw) was used by petitioner, in his own words, as "a
device for getting payroll, so that the money comes, flows into the
corporation, and then it flows back to me as pay, as salary, and it was
just a device for tax planning." Jigsaw did not register as a
corporation with the State of
California
.
In June 1996,
petitioner was living on a friend's boat in Marina Del Ray. He then
moved into a friend's mother's apartment in
California
. In October 1997, he moved to
Hillcrest Road
in
Los Angeles
.
Notice
of Federal Tax Lien
Assessments
were made against petitioner for Federal income tax for 1990, 1991,
1992, 1993, and 1994. The validity of the original assessment of tax for
those years is not an issue in this case. On
July 25, 1996
, the Internal Revenue Service (IRS) filed two Forms 668, Notice of
Federal Tax Lien, relating to petitioner's unpaid tax liability for 1990
in the amount of $61,864.24 and for 1992, 1993, and 1994 in the amounts
of $4,493.53, $25,115.01, and $22,374.19, respectively. On
September 25, 1996
, the IRS filed Form 668 relating to petitioner's liability for 1991 in
the amount of $62,039.42. All of the tax liens were filed with the
Broward County Circuit Court in
Fort Lauderdale
,
Florida
(
Broward
County
).
Federal
Tax Returns
Petitioner's
business affairs and his tax returns were handled by David Simon
(Simon), a certified public accountant, in
Florida
. Simon was petitioner's business manager beginning in the early 1990's.
Simon prepared
Forms 4868, Application for Automatic Extension of Time to File a U.S.
Individual Income Tax Return, for 1995 and 1996 showing petitioner's
address in
Hallandale
. On
September 19, 1997
, petitioner filed his Form 1040, U.S. Individual Income Tax Return, for
1995. Petitioner attached two Forms W-2, Wage and Tax Statement, to the
Form 1040. The Form 1040 and the two Forms W-2 showed petitioner's
address in
Hallandale
. On
November 3, 1997
, petitioner filed his Form 1040 for 1996, with attached Forms W-2. The
Form 1040 and the Forms W-2 all listed the same
Hallandale
address.
Petitioner did
not file a California Resident Income Tax Return for any year prior to
1999.
Pension
Plan
At the time of
trial, petitioner was a production manager in
California
. He had been employed in the film and television business for 30 years.
For all years relevant to this proceeding, petitioner participated in a
basic and a supplemental pension plan provided by the Director's Guild
of America - Producer Pension Plan (pension plan). The basic plan was a
defined benefit plan, and the supplemental plan was a defined
contribution plan.
On
July 19, 2000
, petitioner was fully vested in both the supplemental plan and the
basic plan. On
June 30, 2000
, his account balance in the supplemental plan was $249,053.10. As of
July 19, 2000
, under the basic plan, petitioner's payment that he would receive at
age 65 was $3,811.29 per month, payable as a single-life annuity. As of
July 19, 2000
, petitioner's early retirement benefit under the basic plan includes
the payment that he would receive at age 55. Petitioner's payment would
be $2,667.90 per month, payable as a single-life annuity.
Bankruptcy
Proceeding
On
July 19, 2000
, petitioner filed a voluntary petition under chapter 7 of the U.S.
Bankruptcy Code with the U.S. Bankruptcy Court for the Central District
of California in
Los Angeles
,
California
. Petitioner's address on the bankruptcy petition was in
Hollywood
,
California
. At the time he filed the bankruptcy petition, petitioner represented
that the market value of the pension plan was $241,928.69, of which
$64,068.58 was claimed by his former spouse. Petitioner claimed his
pension plan as exempt property in the bankruptcy proceedings. No
objection was made to petitioner's claim that the pension plan was
exempt property, and petitioner's interest in the pension plan was not
treated as an asset in the bankruptcy case. On
October 30, 2000
, petitioner received a discharge in bankruptcy.
Appeals
Office Hearing
On November
30, 2000, the Commissioner mailed to petitioner a Final Notice - Notice
of Intent to Levy and Notice of Your Right to a Hearing (notice of
levy). The notice of levy was mailed to petitioner at an address in
Los Angeles
,
California
. Petitioner timely filed a Form 12153, Request for a Collection Due
Process Hearing (hearing). In the request, petitioner challenged the
notice of levy stating:
The taxpayer
filed a chapter 7 bankruptcy petition on
July 19, 2000
* * * taxpayer received a discharge on
October 30, 2000
. The federal tax lien recorded in
Florida
in 1996 may not now be used to levy on Mr. Fusaro's property. * * *
Petitioner's
request for hearing was assigned to Appeals Officer William Hsieh
(Hsieh). Prior to the hearing, on
February 16, 2001
, petitioner's representative, who was also his bankruptcy attorney,
Wesley H. Avery (Avery), mailed a letter to Hsieh describing
petitioner's position as follows:
In order to
have a perfected security interest in the Pension Plan, prepetition the
IRS would have had to file a Notice of Tax Lien in the one office within
the state, as designated by the laws of such state, in which the
property subject to the lien is situated. * * * Under California law,
which is the situs of the Pension Plan, it was necessary for the IRS to
file prepetition a Notice of Federal Tax Lien with the California
Secretary of State. * * * However, the IRS failed to file prepetition a
federal tax lien against Mr. Fusaro with the Secretary of State in
California, or indeed anywhere in California.
Attached to
the letter was a copy of the bankruptcy petition and a printout of the
liens that Avery obtained from either Westlaw or Lexis.
Around
February 28, 2001
, Hsieh met with Avery. Hsieh understood that there was an issue
regarding the validity of the tax liens. Hsieh examined the tax liens
that had been filed in
Florida
and did not ask any questions about them. Hsieh also reviewed the cases
that Avery provided regarding petitioner's position and conducted his
own independent research. To verify assessments, Hsieh reviewed
petitioner's case file; the Forms 4340, Certificate of Assessments,
Payments, and Other Specified Matters; and the internal IRS transcripts.
During the hearing, Avery did not raise the issue of petitioner's
residence in 1996.
At the
conclusion of the hearing, Hsieh sustained the IRS's right to proceed to
levy on exempt assets that petitioner owned prior to his bankruptcy
discharge, and the Commissioner issued the notice of determination.
Hsieh found in pertinent part as follows:
In this case
the Collection employee has provided verification that all statutory,
regulatory and
admin
istrative requirements have been met before the levy action was
proposed. * * * The taxpayer's attorney claimed that the chapter 7
personal bankruptcy discharged all tax liabilities of the taxpayer on
October 30, 2000, and the Service did not perfect the NFTL [Notice of
Federal Tax Lien] in California. The Service's position is that the NFTL
filed prior to the bankruptcy is still enforceable against exempt assets
in a chapter 7 bankruptcy. * * * The taxpayer's attorney's primary
position is that the NFTL's filed by the Service have not been perfected
to be enforceable against the interest in the Pension Plan located in
California
. His understanding is that under
California
law, which is where the pension plan is located, it was necessary for
the service to file prepetition a Notice of Federal Tax Lien with the
California
[Secretary] of State.
Hsieh also
noted that there were unpaid assessments of tax liabilities, that the
assessments were made within the period of limitations, and that notice
and demand for payment were made and there was a neglect or refusal to
pay.
In the
petition in this case, filed
November 9, 2001
, petitioner alleged that he was a resident of
Florida
during 1991, 1992, 1993, 1994, and at the time petitioner's income tax
returns were filed for those years. The petition alleged that petitioner
resided in
California
at the time that the petition was filed, but was silent as to other time
periods. In support of the allegations that respondent's liens were not
valid because they had not been filed in
California
, the petition alleged:
(f) At all
times material herein, Petitioner has been, and now is, a member of a
pension plan set up by the Director's Guild of America - Producer. From
prior to 1996, to the present time, the
admin
istrative offices of said plan have been, and now are, located in
Los Angeles
,
California
. The plan is
admin
istered in
Los Angeles
,
California
. All of the activities of said plan are carried on in the City of
Los Angeles
, except to the extent that any members of the plan may be a resident
outside of the City of
Los Angeles
.
On
March 13, 2002
, the Court received from respondent a Motion for Judgment on the
Pleadings, which was recharacterized as a Motion for Summary Judgement
and filed on that date. In that motion, respondent pointed out that the
pension plan was personal property of the taxpayer and:
11. The situs
of personal property is where the person resides not where the bank
account, stock account or certificate, paintings or
admin
istrator of a pension fund is located. 26 U.S.C. sec.
6323(f)(2)(B) provides that personal property, whether tangible or
intangible, is situated at the residence of the taxpayer at the time the
notice of lien is filed.
In opposition
to respondent's motion, petitioner asserted:
Section
6323(f)(2) provides that in the
case of personal property, the residence of the taxpayer at the time the
notice is filed is deemed to be the location of the personal property.
These statutes
raise the issue of whether the Petitioner was a resident of
Broward
County
on
July 25, 1996
.
Thus, there
are two significant issues which need to be determined before summary
judgment can be granted to Respondent. The first is whether the filing
in Broward County Court was a proper filing and the second is whether
the Petitioner was a resident of that county on
July 25, 1996
.
There is, of
course, the issue as to what property would a properly filed Notice of
Federal Tax Lien attach. What would be the dollar amount of the Pension
Plan to which a lien would attach? For this, recourse must be had to
appropriate law, whether federal or state, which is non-bankruptcy law.
Attached to
petitioner's objection to respondent's motion was an affidavit of
petitioner dated April 10, 2002, in which he stated that he first rented
an apartment in California in August 1995, that he intended to become a
permanent resident in California when he was hired for a television show
to be produced in California, and that his permanent relationship
commenced with a contract dated July 10, 1996. He then asserted:
"On
July 25, 1996
I was a resident of the state of
California
, and not a resident in any location whatsoever in the state of
Florida
." Respondent's Motion for Summary Judgment was withdrawn without a
ruling by the Court.
OPINION
Section
6321 provides:
SEC.
6321. LIEN FOR TAXES.
If any person
liable to pay any tax neglects or refuses to pay the same after demand,
the amount (including any interest, additional amount, addition to tax,
or assessable penalty, together with any costs that may accrue in
addition thereto) shall be a lien in favor of the United States upon all
property and rights to property, whether real or personal, belonging to
such person.
The lien
generally arises at the time the assessment is made. Sec.
6322. Under section
6323, the lien is not valid against any purchaser, holder of a
security interest, mechanic's lienor, or judgment lien creditor until a
notice of Federal tax lien meeting the requirements of section
6323(f) has been filed.
Section
6323(f)(1) specifies that a
notice of Federal tax lien shall be filed as follows:
SEC.
6823(f).
(1) Place for
filing. --The notice referred to in subsection (a) shall be filed --
(A) Under
state laws. --
* * * * * * *
(ii) Personal
property. --In the case of personal property, whether tangible or
intangible, in one office within the State (or the county, or other
governmental subdivision), as designated by the laws of such State, in
which the property subject to the lien is situated, except that State
law merely conforming to or reenacting Federal law establishing a
national filing system does not constitute a second office for filing as
designated by the laws of such State;
(B) With clerk
of district court. --In the office of the clerk of the United States
district court for the judicial district in which the property subject
to the lien is situated, whenever the State has not by law designated
one office which meets the requirements of subparagraph (A); * * *
The situs of
personal property held by the taxpayer, whether tangible or intangible,
is the residence of the taxpayer at the time the notice of Federal tax
lien is filed. Sec.
6323(f)(2)(B). In this case, the pension plan is personal property.
Therefore, the situs of the pension plan is the State where the taxpayer
resides and not the State where the pension plan is
admin
istered.
Under the
Bankruptcy Code, 11 U.S.C. sec.
522(c)(2)(B) (2000), any property exempt from
admin
istration as part of the bankruptcy's estate is unavailable to the
creditors of the debtor, including the IRS, after a bankruptcy
discharge, unless the creditor filed a valid lien prior to the
commencement of the bankruptcy case.
Respondent
acknowledges:
The validity
of the lien filings depends upon whether
Florida
was petitioner's "residence" within the meaning of 26 U.S.C. sec.
6323(f)(2) on the date the liens were filed. While a person can have
more than one residence, the question is where creditors would believe
he resided. Urban Industries, Inc. of Kentucky v. Thevis [82-1
USTC ¶9268], 670 F.2d 981, 986 (11th Cir. 1982). * * *
The
determination of petitioner's residence for this purpose is a question
of fact. If we find as a fact that petitioner was not a resident of
Florida
on
July 25, 1996
, we need not deal with additional issues.
For reasons
discussed below, we conclude that petitioner was a resident of
Florida
at the time that the liens were filed. As a result, we address the legal
arguments concerning whether the liens were filed at the appropriate
place in
Florida
and whether we should determine the amount of petitioner's pension that
is subject to levy.
Petitioner's
Residence in 1996
Petitioner
argues that the burden of proof has shifted to respondent under section
7491 because petitioner produced credible evidence that he was a
resident of
California
in 1996. Respondent argues that petitioner bears the burden of proof and
that section
7491 refers only to "any factual issue relevant to ascertaining
the liability of the taxpayer for any tax imposed by subtitle A or
B" and does not apply to this proceeding, which is established
under subtitle F of the Internal Revenue Code. Our decision in this case
does not depend on which party has the burden of proof. We resolve the
factual issue on the preponderance of the evidence in the record.
In Corwin
Consultants, Inc. v. Interpublic Group of Cos. [75-1
USTC ¶9299], 512 F.2d 605 (2d Cir. 1975), the Court of Appeals
reviewed the legislative history of section
6323(f), which establishes the place of filing for Federal tax liens
such as those in dispute here. Noting that "residence" can
have many different meanings depending on the context in which it is
used, the Court of Appeals emphasized that the purpose of the statutory
provisions for filing in the State of a taxpayer's residence was
"to ease the burden for creditors in searching for federal tax
liens and for the IRS in filing notices of such liens."
Id.
at 610. The Court stated:
In light of
this purpose, the residence of a delinquent taxpayer is a question of
fact to be determined by various criteria: Among them are the taxpayer's
physical presence as an inhabitant and not a mere transient, Myers v.
Commissioner [50-1
USTC ¶9253], 180 F.2d 969, 971 (4th Cir. 1950); the permanence of
that presence, In re Watson, 99 F. Supp. 49, 54 (W.D. Ark. 1951);
the reason for his presence; and the existence of other residences. In
general, for this statute, where a taxpayer resides is where he dwells
for a significant amount of time and where creditors would be most
likely to look for him. What proportion of time is
"significant" is not capable of exact definition and must be
determined on a case by case basis, at all times keeping the purpose of
the filing requirement in mind. [
Id.
]
See also Urban
Indus., Inc. of Ky. v. Thevis [82-1
USTC ¶9268], 670 F.2d 981, 986 (11th Cir. 1982); In re Saunders,
240 Bankr. 636, 641 (S.D.
Fla.
1999).
In assessing
the credibility of petitioner's claim that he was strictly a resident of
California
and not a resident of
Florida
on
July 25, 1996
, we also observe that his claim was raised belatedly. During the
Appeals hearing, petitioner's representative argued that the
Florida
liens were invalid because the situs of the pension plan was in
California
. In the petition in this case, the same argument was made based on the
admin
istration and activities of the plan in
California
. Neither at the hearing nor in the petition did petitioner assert his
current position, which is that he became a resident of
California
before the liens were filed. This argument was first raised in an
affidavit dated
April 10, 2002
, in opposition to respondent's Motion for Summary Judgment.
Most
significantly, however, petitioner's contemporaneous conduct and the
objective evidence in the record contradict his belated claim that he
was not a resident of
Florida
in 1996. He claims that, when he began employment on "The Drew
Carey Show" on
July 10, 1996
, he permanently moved to
California
, first living on a friend's boat. He relies on his employment with
Warner Bros. as his evidence of
California
residence. His
July 10, 1996
, employment contract, however, guaranteed only 1 week of work.
Explaining his necessity of living in
California
, petitioner testified: "In other words, if I lived in
New York
or
Miami
, they wouldn't want to go to the additional expense to hire me, because
the contracts provide for additional compensation if you're working from
out of your residence." He did nothing, however, that would
indicate to other persons, particularly his creditors and the IRS, that
he had moved. To the contrary, the addresses used by petitioner were all
indicative of the residence in
Florida
.
Petitioner
used
Florida
addresses on his Federal tax returns, Forms W-2, and bank accounts. He
continued to use a
Florida
address on his checks and other banking records and on his
Florida
driver's license at least into 2003. His "loan-out"
corporation, through which he was paid his salary, was a
Florida
entity with a
Florida
address. He did not file
California
income tax returns prior to the due date of his 1999 return. We
conclude, therefore, that petitioner resided in
Florida
at the time that the liens were filed.
Place
of Filing Within
Florida
The liens in
question in this case were filed with the Broward County Circuit Court
in
Fort Lauderdale
,
Florida
.
Hallandale
,
Florida
, the address at which petitioner resided at the time the liens were
filed, is in
Broward
County
.
Petitioner
argues that Florida statutes provide two places for notices of Federal
tax liens to be filed, to wit, with the secretary of state, "by
analogy to a Uniform Commercial Code filing", and in the Circuit
Court for the county in which the taxpayer resides, pursuant to the
Uniform Federal Lien Registration Act (Registration Act). Because,
petitioner contends, there are two places in which the notices of
Federal tax lien could have been filed, "the only proper place was
in the clerk's office of the United States District Court."
Under
Florida
's version of the Uniform Commercial Code (UCC), the office designated
for filing is the Office of the Secretary of State. See Fla. Stat. ch.
679.401 (1996) (repealed effective
Jan. 1, 2002
, Fla. Stat. Ann. ch. 679.401 (West 2003)). Under the Registration Act,
the proper place for filing is in the office of the clerk of the circuit
court of the county where the person resides. See Fla. Stat. ch. 713.901
(1996); see also In re Wesche, 193 Bankr. 76, 77 (Bankr. M.D.
Fla. 1996). Petitioner argues that the two statutes together provide for
two separate places for the filing of a Federal tax lien. However,
petitioner's argument fails because the Florida UCC does not apply to
Federal tax liens. The policy and the subject matter of
Florida
's version of the UCC cover consensual security interests created by
contract or agreement. See Fla. Stat. ch. 679.102 (1996) (repealed
effective
Jan. 1, 2002
, Fla. Stat. Ann. ch. 679.102 (West 2003)); In re Bertelt, 206
Bankr. 579, 585 (Bankr. M.D. Fla. 1996). This statute does not affect
the filing of Federal tax liens within the State of
Florida
, which are instead governed by the Registration Act. See In re
Bertelt, supra at 584-585. Under the Registration Act, the
proper place for filing is the circuit court in the county where the
taxpayer resides. Thus, there is one office within
Florida
where the Federal tax lien should be filed, and the liens in issue were
filed in that place.
Value
of Pension Plan Subject to Lien
Petitioner
argues that, if the Court sustains the liens, which we have, we should
further determine the value of petitioner's interest in the pension plan
that is subject to the lien. Petitioner argues that the value of the
pension plan is limited to the value at the time the lien was filed and,
further, that the lien, and any levy that might occur to enforce it, is
subordinate to a claim by petitioner's former wife for 50 percent of the
value.
Respondent
contends that the Court does not have jurisdiction under section
6330 to determine the value of petitioner's asset at the time the
bankruptcy proceeding was commenced. Even if the Court concludes that it
does have jurisdiction, respondent contends, the Court should not
address the issue in this case because it was not raised before the
Appeals office. Additionally, respondent contends that, because the
value of the pension plan does not affect the question of the validity
of the lien, discussed above, but could only affect collection
alternatives, we should review the Appeals officer's determination that
collection should proceed only for abuse of discretion. Finally,
respondent argues that the Court should not address the issue because
the liens could potentially affect other assets owned by petitioner at
the time the bankruptcy proceeding was commenced, that the value may be
changed by the time of a levy that has not yet occurred, and that
petitioner's former wife is not a party to this proceeding.
Petitioner is
seeking a determination as to the amount of petitioner's pension subject
to the liens filed in 1996 and, implicitly, a determination that no
other assets of petitioner are subject to those liens. This argument was
not made before the Appeals officer during the hearing because no
alternatives to collection were raised. We agree with respondent that it
would be inappropriate to anticipate, determine, and limit the scope of
the liens on the record in this case. There may be circumstances under
which the amount that is subject to the lien is necessarily a part of
our determination of whether there was an abuse of discretion in
rejecting collection alternatives. This is not such a case. Petitioner
suggests that we should determine the value because: "The amount of
the tax may be determined under the authority of IRC
sec. 6330." The amount of the liability, however, is not
disputed in this case. Petitioner's arguments go only to
"collectibility".
Petitioner
also seeks a determination of the value of the pension plan subject to
respondent's liens as an advisory opinion for the plan
admin
istrator. Nothing in section
6330 would extend our reach that far.
Conclusion
We have
considered the other arguments made by the parties, including their
dispute with respect to the standard of review of the issues in this
case. We have concluded that petitioner was a resident of
Florida
at the time that the notices of lien were filed and that, therefore,
those liens were valid with respect to his pension plan, the only asset
identified as exempt from the bankruptcy proceedings and as personal
property with a situs at petitioner's residence. These conclusions would
be unaffected by resolution of the other disputes between the parties,
and we therefore decline to address them. We sustain the determination
of the Appeals office that it is appropriate for the IRS to pursue
collection by issuing a notice of levy pursuant to the liens recorded in
Florida
in 1996.
To reflect the
foregoing,
Decision
will be entered for respondent.
[97-2 USTC
¶50,958] Legacy Realty, Inc., Plaintiff v. Jerry T. Wilkie, Domestic
Mortgage, Inc., and the Internal Revenue Service, Defendants
U.S.
District Court, No. Dist. Ga., Atlanta Div.,
CIV. 96-CV-1461-RLV, 10/22/97
[Code Sec.
6323 ]
Lien for taxes: Priority of lien: Recording of lien: Taxpayer's
residence.--Issues of fact remained regarding the location of an
individual's residence and precluded summary judgment that a tax lien
had priority over a subsequently filed judgment lien. To be effective
against personal property, a tax lien must be filed in the county of the
taxpayer's residence. The holder of the judgment lien presented real
estate and telephone records to support its claim that the taxpayer
lived in the county where it recorded its judgment lien, rather than in
the county where the IRS recorded its tax lien.
ORDER
VINING, JR.,
Senior District Judge:
In this
interpleader action, the Internal Revenue Service ("IRS") has
moved for summary judgment [Doc. No. 21], asking this court to rule that
its federal tax lien on the property of Jerry T. Wilkie has priority
over the subsequent judgment lien obtained by Domestic Mortgage, Inc.
["Domestic"]
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On
August 22, 1994
, the IRS served a Notice of Levy on Wages, Salary, and Other Income
upon Legacy Realty to collect Jerry and Joyce Wilkie's unpaid federal
income taxes for the years 1985 through 1990. On
December 21, 1994
, the IRS filed a notice of federal tax lien, listing the federal income
tax liabilities of Jerry and Joyce Wilkie for the years 1980 through
1990, with the Clerk of the Superior Court of Cherokee County, Georgia.
During October
1995, Domestic filed a Complaint on Note against Jerry Wilkie in the
State Court of Forsyth County, Georgia seeking judgment against Mr.
Wilkie on a note in the amount of $33,000.00 plus attorneys fees.
Domestic filed an affidavit stating that Mr. Wilkie's last known address
was
2765 Bettis-Tribble Road
,
Cumming
,
Georgia
and that the Sheriff of Forysth County had been unable to serve Mr.
Wilkie at that address. On
February 13, 1996
Domestic filed a Certificate of Service by Publication in
State
Court
of
Forsyth
County
, and on
March 25, 1996
, the
State
Court
of
Forsyth
County
entered default judgment against Mr. Wilkie in favor of Domestic in the
amount of $47,506.98. On April 24, 1996, Domestic filed a continuing
garnishment proceeding in the State Court of Fulton County, Georgia
against Legacy Realty, Inc., seeking to collect the judgment against Mr.
Wilkie obtained in the State Court of Forsyth County. Legacy Realty,
Inc. then filed the instant interpleader action.
II.
LEGAL DISCUSSION
A.
The Legal Standard
Rule 56(c) of
the Federal Rules of Civil Procedure authorizes summary judgment when
all "pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show there is
no genuine issue as to any material fact and . . . the moving party is
entitled to judgment as a matter of law." The party seeking summary
judgment bears the burden of demonstrating that no dispute as to any
material fact exists. Adickes v. S.H. Kress & Co., 398
U.S.
144, 156, 90 S.Ct. 1598, 1608 (1970); Johnson v.
Clifton
, 74 F.3d 1087, 1090 (11th Cir. 1996). The moving party's burden is
discharged merely by " 'showing'--that is, pointing out to the
District Court--that there is an absence of evidence to support [an
essential element of] the nonmoving party's case." Celotex Corp.
v. Catrett, 477
U.S.
317, 325, 106 S.Ct. 2548, 2554 (1986). In determining whether the moving
party has met this burden, the district court must view the evidence and
all factual inferences in the light most favorable to the party opposing
the motion.
Clifton
, 74 F.3d at 1090. Once the moving party has adequately supported its
motion, the nonmovant then has the burden of showing that summary
judgment is improper by coming forward with specific facts showing a
genuine dispute. Matsushita Electric Industrial Co. v. Zenith Radio
Corp., 475
U.S.
574, 586, 106 S.Ct. 1348, 1356 (1986). 1
In deciding a
motion for summary judgment, it is not the court's function to decide
genuine issues of material fact but to decide only whether there is such
an issue to be tried.
Anderson
v. Liberty Lobby, Inc., 477
U.S.
242, 251, 106 S.Ct. 2505, 2511 (1986). The applicable substantive law
will identify those facts that are material. Anderson, 477
U.S.
at 247, 106 S.Ct. at 2510. Facts that in good faith are disputed, but
which do not resolve or affect the outcome of the case, will not
preclude the entry of summary judgment as those facts are not material.
Id.
Genuine
disputes are those by which the evidence is such that a reasonable jury
could return a verdict for the non-movant.
Id.
In order for factual issues to be "genuine" they must have a
real basis in the record. Matsushita, 475
U.S.
at 586, 106 S.Ct. at 1356. When the record as a whole could not lead a
rational trier of fact to find for the nonmoving party, there is no
"genuine issue for trial."
Id.
(citations omitted).
B.
The IRS's Claim
In determing
priorty of competing liens, "the first in time is the first in
right," and a non-federal lien must be perfected at the time the
federal tax lien arises in order to have priority. United States v.
McDermott [93-1 USTC ¶50,164], 507 U.S. 447, 449, 113 S.Ct. 1526,
1528 (1993). For the purpose of determing competing rights, "the
federal lien shall 'not be valid . . . until notice thereof . . . has
been filed.' "
Id.
, quoting
United States
v.
New Britain
[54-1 USTC ¶9191], 347 U.S. 81, 84, 74 S.Ct. 367, 369 (1954).
26 U.S.C. §6323(f)
governs perfection of a tax lien and states that for a tax lien to be
effective with respect to personal property, it must be filed at the
taxpayer's place of residence. Urban Industries, Inc. of KY v. Thevis
[82-1 USTC ¶9268], 670 F.2d 981 (11th Cir. 1982). Thus, a federal tax
lien filed in the wrong place at the time a subsequent non-federal lien
attaches to the property will not have prority.
Id.
Domestic
alleges that at the time the IRS filed its Notice of Lien in Cherokee
County Mr. Wilkie did not reside in such county. The IRS contends that
fifteen to eighteen months prior to November of 1996 Mr. Wilkie resided
at
1255 Holbrook Campground Road
, in
Cumming
,
Georgia
, which is in Cherokee County. The IRS contends that prior to that date
Mr. Wilkie resided at
17050 Hopewell Road
,
Alpharetta
,
Georgia
, which is
Cherokee
County
. The IRS also contends that Mr. Wilkie has never resided in
Forsyth
County
. Domestic cites the affidavit of Charles Clark, Real Estate
Commissioner at the Georgia Real Estate Commission, BellSouth Telephone
Records, and the real estate records of Legacy Reality, Inc. in support
of its contention that Mr. Wilkie's residence was in
Forsyth
County
at
2765 Bettis-Tribble Road
,
Cumming
,
Georgia
when the IRS filed its Notice of Lien.
Because there
is a genuine issue of material fact as to whether Mr. Wilkie resided in
Cherokee
County
or
Forsyth
County
at the time the IRS filed it Notice of Lien, it is unclear whether the
IRS's tax lien was perfected before Domestic obtained its judgment lien
and thus would have priority over Domestic's judgment lien. Therefore,
this court hereby DENIES the IRS's motion for summary judgment.
[Doc. No. 21]
SO ORDERED.
1
The Eleventh Circuit has held that the nonmoving party need not
necessarily " 'produce evidence in a form that would be admissible
at trial . . . to avoid summary judgment' "; instead, its evidence
must be " 'reduc[ible] to admissible evidence.' "
United States
v. Four Parcels of Real Property, 941 F.2d 1428, 1444 (11th Cir.
1991) (quoting Celotex, 477
U.S.
at 324-27, 106 S.Ct. 2553-55). When a party has given clear answers to
unambiguous deposition questions which negate the existence of any
genuine issue of material fact, however, that party cannot thereafter
create such issue and thereby defeat summary judgment with an affidavit
that merely contradicts, without explanation, the deposition testimony. Van
T. Junkins and Associates, Inc. v. U.S. Industries, Inc., 736 F.2d
656, 658 (11th Cir. 1984). Moreover, the mere verification by affidavit
of one's own conclusory allegations is insufficient to oppose a motion
for summary judgment. Fullman v. Graddick, 739 F.2d 553, 557
(11th Cir. 1984).
[93-1 USTC
¶50,353] SSG, Inc., Plaintiff v. Omni Medical Health & Welfare
Trust, et al., Defendants. Fleet Bank of
Massachusetts
, N.A. Trustee
U.S.
District Court, Dist. of Mass., 90-12397WF,
4/13/93
[Code Sec. 6323 ]
Federal liens: Priority: Notice: Electronic filing.--An insured
corporation could not claim priority over an IRS lien for its claims
against the insurer because the IRS obtained a valid federal tax lien
when it filed notice electronically with the Clerk of the appropriate
U.S. District Court. Because state law (
Massachusetts
) made no specific provisions for filing federal liens, the District
Court was the proper filing place. Also, because state law did not
address, let alone prohibit, electronic filing and because electronic
filing provides equally accessible notice to creditors, the method was
appropriate for filing federal liens.
MEMORANDUM AND ORDER
WOLF, District
Judge:
Plaintiff has
moved for a declaratory judgment, seeking to establish its right to
certain assets held by Fleet Bank of
Massachusetts
, N.A. ("Fleet"), as trustee to defendants Omni Medical Health
and Welfare Trust ("Omni Medical"), and Harbor Medical
Administrators, Inc. ("Harbor Medical"). Specifically,
plaintiff's motion for a declaratory judgment relates to approximately
$57,000 held by Fleet 1
in an account in the name of Harbor Medical. Plaintiff's motion is
opposed by the
United States of America
, which claims to hold a federal tax lien on the assets at issue as a
result of assessments made against Harbor Medical by the Secretary of
the Treasury (the "Secretary") for unpaid taxes.
The question
to be resolved is whether the United States properly obtained a federal
tax lien on the Harbor Medical assets, in accordance with 26 U.S.C. §6323
. Because the court finds that the
United States
did obtain a valid federal tax lien on the assets, placing all
subsequent creditors on constructive notice of the lien, plaintiff's
motion for a declaratory judgment must be denied.
I.
PROCEDURAL AND FACTUAL BACKGROUND
For purposes
of this motion, the relevant facts are not in dispute. Plaintiff SSG,
Inc. ("SSG") filed a breach of contract action on
April 9, 1990
in Middlesex Superior Court against defendants Omni Medical and Harbor
Medical. The complaint alleges that on
July 1, 1988
, plaintiff purchased medical and life insurance from defendant Omni
Medical, as part of an employee benefits package. Verified Complaint
("Complaint") ¶6. In late 1989 Omni Medical began to default
on its obligations to make proper reimbursements for medical claims
submitted by plaintiff's employees.
Id.
¶8, 11. Plaintiff claims that defendants owe to plaintiff and its
employees approximately $125,000 in medical claims.
Id.
On the date it
filed its complaint in state court, plaintiff obtained an attachment of
assets belonging to Omni Medical and Harbor Medical, in two separate
bank accounts now held by Fleet. On August 28, 1990 plaintiff was
awarded a default judgment in Middlesex Superior Court, with an
assessment of damages in the amount of $117,888.34 and interest in the
amount of $5,465.30.
The Internal
Revenue Service ("IRS") was made a party to this action in
October 1990, and subsequently removed the case to this United States
District Court. The IRS contends that it holds four federal tax liens
against Harbor Medical, which it obtained on December 14, 1989 pursuant
to 26 U.S.C. §§6321 -6323.
Notice of these federal tax liens was filed electronically with the
Clerk of this court.
II.
ANALYSIS
Under 26
U.S.C. §6321 , any
time a person fails to pay outstanding federal taxes, a lien is created
in favor of the United States, for the amount owed, upon all property
belonging to that person. 2
However, to protect certain classes of creditors and purchasers,
Congress enacted §6323 which
provides that federal tax liens shall not be valid against those
interests, unless notice of the lien is filed in the
statutorily-designated place and manner. Plaintiff claims to be a
"judgment lien creditor," one of the classes of creditors
against whom a federal tax lien will not take effect unless proper
notice is filed by the Secretary. 26 U.S.C. §6323(a)
. Proper notice will, however, establish the federal tax lien's
priority over all subsequent judgment lien creditors. See United
States v. Security Trust & Savings Bank [50-2
USTC ¶9492 ], 340 U.S. 47 (1950). Since the Secretary in this case
filed notice of federal tax liens on Harbor Medical's assets prior to
the time plaintiff even filed suit, there can be no question that the
United States
' lien takes priority, so long as notice was filed in accordance with
applicable law.
Notice of a
federal tax lien must be filed with the Clerk of the United States
District Court for the judicial district in which the property subject
to the lien is situated, whenever state law does not designate one
office for such filings to be made. 26 U.S.C. §6323(f)(1)(B)
. The
Commonwealth
of
Massachusetts
has not designated one office for the filing of federal tax liens. The
laws of
Massachusetts
do not establish provisions for federal tax lien filings, and the
analogous regulations dealing with state tax liens designate two
places for such notices to be filed. See
Mass.
Dept. of Revenue Reg. ch. 830 §62C.50.1(3)(a)(2). Therefore, it was
proper for the Secretary to file its tax liens on Harbor Medical's
assets with the Clerk of the United States District Court for the
District of Massachusetts.
Plaintiff
argues, however, that the Secretary's tax lien filing was improper, and
consequently ineffective, because it was filed electronically, instead
of by paper filing. Plaintiff's argument is grounded in the plain
language of the statute and Internal Revenue Service Regulations
governing the form of federal tax lien notices. 26 U.S.C. 6323(f)(3)
states that the form and content of the notice "shall be prescribed
by the Secretary." The pertinent regulation promulgated by the
Secretary provides that the notice of a federal tax lien "shall be
filed on Form 668." 26 C.F.R. §301.6323(f)-1
. In defining "Form 668