ROBERT H. WHALEY, District Judge.
Before the Court are Plaintiff's Motion for Summary Judgment (Ct. Rec. 121); Defendant Hope Springs Corporation Sole's Motion for Summary Judgment (Ct. Rec. 129); and the Black Defendants' Motion for Summary Judgment (Ct. Rec. 133). The motions were heard without oral argument.
The United States commenced this action on November 2, 2007, in order to reduce to judgment federal income tax assessments against Defendants Daniel R. Black and Maire E. Black, and to foreclose federal tax liens against the following Subject Properties:
Parcel A is a 160-acre parcel identified by Chelan County Tax #272201-100000. The address for Parcel A is 56 Union Valley Loop Road, Chelan, Washington. The legal description of Parcel A is as follows:
Parcel B is a 27-acre parcel identified by Chelan County Tax #272201-230025. A mobile home permanently affixed to the land is located on this property. The legal description of Parcel B is as follows:
Parcel C is an 8-acre parcel identified by Chelan County Tax # 272201-200050. Parcel C is commonly known as both 56 Valley Loop Road, Chelan, Washington,
Parcel D is a 20-acre parcel identified by Chelan County Tax # 272201-42000 and referred to as orchard property. The legal description of Parcel D is as follows:
Defendants Daniel and Maire Black maintain that they are not taxpayers and have no obligation to pay income taxes. From 1981 to 2000, Daniel Black did not file any income tax returns. Sometime prior to 1981, the Blacks formed Summer Hill Freedom Trust. Maire Black served as trustee for Summer Hill Freedom Trust from the time of its creation throughout its existence. Bill Shoenmaker was also a Trustee during this entire time. Sometime prior to 1981, the Blacks also formed B.C. Trust. Maire Black served as a trustee for B.C. Trust from the time of its creation throughout its existence. Bill Shoenmaker was also a Trustee during this entire time.
In 1981, Summer Hill Freedom Trust entered into a contract to acquire Parcels A, C, and D. These parcels are contiguous parcels of land. The purchasing contract was signed by Daniel and Maire Black as Trustees. The Blacks reside in a home located on the real property purchased in the name of Summer Hill Freedom Trust. They have resided in this home, on this property, since 1981. The Blacks' daughter and son-in-law live on a mobile home situated on one of the parcels, for which they pay rent.
In 1989, Maire Black and Bill Shoenmaker, acting as Trustees for B.C. Trust, purchased Parcel B by warranty deed. The Blacks operate an engineering business on Parcel B. This business was originally known as Techni-Systems Trust, but is now operating under the name of Techni-Systems, LLC. Techni-Systems Trust was controlled by trustee Maire Black. A caretaker lives in a mobile home on Parcel B, next to the office building. The caretaker is not compensated for his caretaker duties and does not pay rent.
In March, 1999, the Internal Revenue Service filed Notices of Federal Tax Lien against the Blacks. On June 4, 1999, the Blacks created Hope Springs, Corporation Sole. At the time of Hope Springs' creation, Daniel Black was serving as overseer. He held this position until March, 2009. During this time, he had complete authority over all aspects of Hope Springs. Since its creation, Hope Springs has held office space in the Blacks' residence.
On June 9, 1999, Maire Black, as Trustee for Summer Hill Freedom Trust, transferred all its assets—Parcels A, C, and D—to Hope Springs, Corporation Sole by quit claim deed, for no consideration. Bill Shoenmaker did not sign the quit claim deed. On that same day, Maire
Summer Hill Freedom Trust made no payments toward the purchase price of Parcels A, C, and D since 1981, but had made payments toward interest.
In 2000, the Blacks created Summerhill Supply, LLC. Summerhill Supply, LLC began leasing Parcels A, B, C, and D from Hope Springs in 2001. Summerhill Supply is completely controlled by Daniel and Maire Black, who serve as managers. They receive $500 annually as compensation for the duties they perform as managers. Also in 2000, the Blacks created Techni-Systems, LLC to replace Techni-Systems Trust. Shortly after its formation, Techni-Systems, LLC began leasing property from Summerhill Supply, LLC. Techni-Systems, LLC is controlled by manager Daniel Black. He receives $500 annually as compensation for his role as manager. Techni-Systems, LLC is virtually identical to Technical-Systems Trust.
Date Action
1981 Summerhill Freedom Trust entered into contract to purchase
March, 1999 Notice of Federal Tax Lien filed
June 9, 1999 Summerhill Freedom Trust transferred parcels to Hope
Springs, Corporation Sole
2001 Summerhill Supply, LLC leased parcels from Hope Springs
Date Action
1999 B.C. Trust purchased parcel by warranty deed
March, 1999 Notice of Federal Tax Lien filed
June 9, 1999 B.C. Trust transferred parcels to Hope Springs, Corporation
Sole
2001 Summerhill Supply, LLC leased parcels from Hope Springs
2001 Techni-Systems leased parcels from Summerhill Supply, LLC
Throughout all these property transfers, leases, and sub-leases, the Blacks continue to live on the property. They run their engineering business out of the property and also operate an orchard on part of the land. They pay no rent.
In March 2009, Daniel Black transferred the title of overseer of Hope Springs to Greg Hanks. Mr. Hanks was given no ledger or bank records for Hope Springs when he assumed the title of overseer, and had no knowledge of Hope Springs' affairs prior to his appointment as overseer. There is no evidence that Hope Springs has ever interfered with the Blacks' use of the property. The Blacks own no assets whatsoever. They have not held property in their own names since 1981.
Beginning in 1998, a delegate of the Secretary of the Treasury made assessments of federal income taxes, penalties and interest, and other statutory additions against Defendant Daniel R. Black on the dates, in the amounts, and for the taxable periods set forth below:
Tax Year Assessment Amount Total, including assessed penalties
Date Assessed & interest, as of 6/1/2010
1987 1/12/98 $944.22 $1,137.58
1993 1/12/98 $23,946.40 $332,046.75
1994 1/12/98 $198,133.00 $611,126.50
1995 1/12/98 $153,623.00 $437,054.16
8/12/02
Total $1,381,364.99
Beginning in 1998, a delegate of the Secretary of the Treasury made assessments of federal income taxes, penalties and interest, and other statutory additions against Defendant Maire E. Black on the
Tax Year Assessment Amount Total, including assessed penalties
Date Assessed & interest, as of 6/1/2010
1989 1/5/98 $1,075.00 $1,502.31
1993 1/5/98 $81,331.15 $351,702.86
1994 1/5/98 $169,969.00 $522,796.42
1995 1/5/98 $129,770.50 $368,021.81
8/12/02
Total $1,244,023.40
Beginning in 2001, a delegate of the Secretary of the Treasury made assessments of federal income taxes, penalties and interest, and other statutory additions against Defendants Daniel R. Black and Maire E. Black on the dates, in the amounts, and for the taxable periods set forth below:
Tax Year Assessment Amount Total, including assessed penalties
Date Assessed & interest, as of 6/1/2010
1996 3/19/01 $392,402.17 $1,030,587.11
8/12/02
1997 3/26/01 $264,508.07 $639,274.67
8/12/02
1998 4/2/01 $407,488.77 $919,291.86
8/12/02
1999 3/05/01 $224,353.90 $459,004.15
8/12/02
Total $3,048,157.79
These assessments have resulted in the creation of federal tax liens upon all property and rights to property belonging to the Blacks. The Chelan County Auditor recorded a Notice of Federal Tax Lien with respect to the assessments in Chelan County, as follows:
Date Notice Filed Against Tax Years
3/17/1999 Daniel R. Black 1987, 1993, 1994, and 1995
3/17/1999 Maire E. Black 1989, 1993, 1994, and 1995
8/22/2002 Daniel R. Black and Maire E. 1996, 1997, 1998, and 1999
Black
10/24/2000 B.C. Trust, Summer Hill 1987, 1993, 1994, and 1995
Freedom Trust, and Hope
Springs Corporation Sole, as
nominees of Daniel R. Black
10/24/2000 B.C. Trust, Summer Hill 1989, 1993, 1994, and 1995
Freedom Trust, and Hope
Springs Corporation Sole, as
nominees of Maire E. Black
8/22/2002 Hope Springs Corporation 1996, 1997, 1998, and 1999
Sole, as nominee of Daniel R.
Black and Maire E. Black
On June 12, 2009, the Court entered an Order whereby it determined that by default B.C. Trust and Summer Hill Freedom Trust were the nominees and/or alter egos of Daniel and Maire Black (Ct. Rec. 63). It specifically ruled that to the extent that B.C. Trust and Summer Hill Freedom Trust purported to hold title to the subject property, it did so as the nominee and/or alter ego of Daniel and Maire Black. Id.
Plaintiff, Defendant Hope Springs, Corporation Sole, and the Black Defendants all move for summary judgment. Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). There is no genuine issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party has the initial burden of showing the absence of a genuine issue of fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets it initial burden, the non-moving party must go beyond the pleadings and
In addition to showing that there are no questions of material fact, the moving party must also show that it is entitled to judgment as a matter of law. Smith v. University of Washington Law School, 233 F.3d 1188, 1193 (9th Cir.2000). The moving party is entitled to judgment as a matter of law when the nonmoving party fails to make a sufficient showing on an essential element of a claim on which the nonmoving party has the burden of proof. Celotex, 477 U.S. at 323, 106 S.Ct. 2548.
When considering a motion for summary judgment, a court may neither weigh the evidence nor assess credibility; instead, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
Each party has filed a motion and has asserted various arguments in support of their positions. The positions are somewhat inter-related. At the crux of the issue is whether the Hope Springs Corporation Sole is the nominee or alter ego of the Black Defendants. Defendants also challenge the Court's jurisdiction to hear this matter. Below is a summary of the positions of the respective parties' with regard to their motions for summary judgment.
Plaintiff argues that it has satisfied its initial burden of proving the valid tax assessments. It also asserts that Hope Springs is merely the Blacks' nominee or alter ego and the Blacks are the true beneficial owners of the properties. As such, the tax liens can be enforced against the properties owned by Hope Springs just as though the Blacks were the record title holders. Plaintiff asks the Court to set aside the purported conveyances of the property between Summerhill Freedom Trust and Hope Springs Corporation based on the fact that those transfers were fraudulent. Finally, Plaintiff asks the Court to foreclose the federal tax liens as to Parcels A, B, C, and D (Subject Properties).
The Black Defendants assert that any Internal Revenue debts were discharged in their 2001 Chapter 7 bankruptcy proceedings, due to the fact that at no time during the proceedings did the Internal Revenue Service file an appearance as a creditor or make any appearance at any creditor's meetings, made no attempt to oppose their petition, and made no effort to set aside the final judgment.
Defendants maintain that at no time during the tax years alleged did they voluntarily elect to operate through any legal form of organization that would have vested the Internal Revenue Service with lawful jurisdiction to impose and assess any federal income tax. Specifically, Defendants maintain that the Internal Revenue Service reliance on 26 U.S.C. § 7401 is misplaced because the implementing regulation to that section relates to Alcohol, Tobacco, and Firearms related activities and they never were engaged in such activities.
Defendants assert that the Notice of Assessment and Demand were defective as they were not prepared on Form 17, as required by Treasury Decision 1995.
Defendants also assert that the tax assessments are merely "naked assessments" which are void as a matter of law and constitute only self-serving declarations.
Defendants maintain that they have never purchased an interest in or conveyed an interest in the parcels. Specifically, they argue that they have never appeared as owners in the chain-of-title to the parcels. Also, they assert that the court is without subject matter jurisdiction to attribute ownership to the Defendants when the public record, which is conclusive evidence, clearly establishes the Defendants have never enjoyed an ownership interest in the parcels.
Defendant Hope Springs Corporation Sole asserts that it acquired the parcels by purchase for value. It is the bona fide purchaser for value of Parcels A, C, and D, by assuming the debt of the previous property owner. It argues that the public record in Chelan County is conclusive evidence of title ownership and because the Black Defendants never appear in the chain-of-title, Plaintiff is without legal authority to lien the real property owned by Defendant Hope Springs. Defendant asserts that it is not a mere nominee of Daniel R. Black and Maire E. Black, and it is entitled to equitable subrogation and is the first-position lien holder for parcels A, C, and D. Defendant seeks attorneys' fees against Plaintiff, asserting that Plaintiff's claim against Defendant Hope Springs is unreasonable and without foundation. Additionally, Defendant Hope Springs challenges the failure of the Internal Revenue Service to prepare and serve written notice notifying Defendant Hope Springs Corporation Sole of the existence of any federal tax liens and notice of collections due process hearing.
Defendant Hope Springs also asserts that the tax lien against the parcels are void because it is a tax-exempt entity and asserts that Plaintiff's action is timebarred. Finally, Defendant argues that because Plaintiff has failed to adequately plead supplemental jurisdiction, allegations referencing Washington law is a nullity.
Defendants have asserted various challenges to the Court's jurisdiction over this action. Each of these arguments will be addressed.
The Black Defendants argue that the Court lacks jurisdiction because the taxes at issue are "direct taxes without apportionment." This argument is frivolous. See In re Becraft, 885 F.2d 547, 548 (9th Cir.1989) ("We hardly need comment on the patent absurdity and frivolity of such a proposition [that direct nonapportioned income taxes are unconstitutional]."). They argue that the Court lacks jurisdiction because the taxes at issue are "not indirect taxes in the nature of an excise." This argument is also frivolous. See Philips v. C.I.R., 1996 WL 593497 (9th Cir.1996). Their argument that they are immune from taxation because they did not engage in "alcohol, tobacco and firearms activities" during the years in question is frivolous. See Walter v. I.R.S., 1994 WL 760812 (E.D.Cal.1994).
It is not necessary that the notice of demand letters be sent on Form 17. See Hansen v. United States, 7 F.3d 137, 138 (9th Cir.1993) (per curiam). An IRS Form 5340 is admissible evidence and sufficient proof that notice of deficiency was properly served and assessment of deficiency properly made. Id. The Black Defendants allegation that the Internal Revenue Service knowingly prepared false entries on the Blacks' Individual
Defendants argue that the United States is relying upon "naked assessments" to support its claims. The Court disagrees. Rather, the Government has introduced substantive evidence that the Blacks received unreported income. According to the Declaration of Alfred Ramos, the IRS determined the Blacks' income for the 1987, 1993, 1994, and 1995 tax years by analyzing bank deposits for the various trusts Daniel Black controlled, as well as a evaluation of real estate transactions entered into by one of those trusts. The income determined by the IRS for the years 1993, 1994, and 1995 tax years was very similar to, or lower than, the income reported by the Blacks in joint tax returns they submitted for 1993, 1994, and 1995, in 2000. A Notice of Deficiency was prepared and issued to the Blacks, and no petition was filed with the Tax Court within the 90-day statutory period for challenging the IRS's determination prior to assessment. The Government has established that the Blacks' individual assessments were based on well-founded determinations, many of which were subsequently confirmed by tax returns submitted by the Blacks, and the Blacks' joint assessments were based on information provided in tax returns submitted by the Blacks.
The Black Defendants argue that their tax liabilities were discharged in their 2001 Chapter 7 bankruptcy. Pursuant to 11 U.S.C. § 523(a)(1) provides that taxes are non-dischargeable where a return, if required was either (i) not filed, or (ii) filed late and "after two years before the date of the filing of the bankruptcy petition." All of the taxes at issue in this case fall under one of these two exceptions.
Year Filed by Black Dischargeable 1987 no no § 523(a)(1)(B)(i) 1993 11/2000 no § 523(a)(1)(B)(ii) 1994 11/2000 no § 523(a)(1)(B)(ii) 1995 11/2000 no § 523(a)(1)(B)(ii)
Year Filed by Black Dischargeable 1989 no no § 523(a)(1)(B)(i) 1993 11/2000 no § 523(a)(1)(B)(ii) 1994 11/2000 no § 523(a)(1)(B)(ii) 1995 11/2000 no § 523(a)(1)(B)(ii)
Year Filed by Blacks Dischargeable 1996 2001 no § 523(a)(1)(B)(ii) 1997 2001 no § 523(a)(1)(B)(ii) 1998 2001 no § 523(a)(1)(B)(ii) 1999 2001 no § 523(a)(1)(B)(ii)
Pursuant to 11 U.S.C. § 523(a)(7)(B), penalties assessed with respect to a transaction or event that occurred three years before the date of the filing of the bankruptcy petition are dischargeable, even if the underlying tax is not. The United States concedes that the Estimated Tax Penalties, Late Filing Penalties, and Failure to Pay Tax Penalties assessed against the Blacks for each of the tax years at issue except 1998 and 1999 were discharged in their bankruptcy because there were triggered by events occurring prior to July 1998, three years before the date of the filing of the Blacks' bankruptcy petition in 2001.
This relief affects the personal liability of the Blacks only. A discharge in bankruptcy prevents the I.R.S. from taking any action to collect the debt as a personal liability of the debtor. In re Isom, 901 F.2d 744, 745 (9th Cir. 1990). The debtor's property, however, remains liable for a debt secured by a valid lien, including a tax lien. Id. The bottom line, then, is that while the bankruptcy discharge may have relieved the Blacks of personal liability for certain penalties, it does not invalidate the tax liens securing those penalties, and those liens can still be enforced against the Blacks' prepetition property, such as the Subject Property.
Defendant Hope Spring asserts that the United States has violated 26 U.S.C. § 6320 by failing to notify Hope Springs of the federal tax liens. Section 6320 requires only that notice of federal tax liens be given to the individual who is liable for the tax at issue. The United States is not required to provide notice to third parties, such as Hope Springs. See 26 U.S.C. §§ 6320(a)(1), 6321. Defendant's argument that the claim is timebarred because Hope Springs did not receive proper notice of the assessments fails as well because Hope Springs is not personally liable for the taxes at issue. Likewise, regardless of whether Hope Springs is a tax exempt entity, the United States is not seeking to impose any tax against Hope Springs.
Plaintiff is not asserting a state law claim, notwithstanding the fact that state law may be relevant to the ultimate determination of the United States' claim seeking to foreclose federal tax liens on certain real property. Even so, Plaintiffs are not required to explicitly plead and invoke supplemental jurisdiction.
The United States maintains that Hope Springs is the nominee of the Blacks. It also maintains that Hope Springs is the alter ego of the Blacks.
There is no direct statutory authority for nominee lien. Sections 6321 and 6322 support the creation of federal tax liens; however, they do not refer to nominee liens or the alter ego doctrines. Nevertheless, it is well-established that the United States may collect a taxpayer's unpaid taxes from the assets of its nominee, instrumentality, or alter ego. G.M. Leasing Corp. v. United States, 429 U.S. 338, 350-351, 97 S.Ct. 619, 50 L.Ed.2d 530 (1977). If the Court finds that Hope Springs is the Blacks' nominee or alter ego, the IRS can properly regard Hope Springs' assess as the Blacks' property subject to the lien under 26 U.S.C. § 6321 and the IRS would be empowered, under § 6331, to levy upon assets held by Hope Springs in satisfaction of the Blacks' income tax liability. Id.
Case law instructs that the court consider the following factors in determining whether a particular entity is a nominee of a taxpayer:
(2) Whether the property was placed in the name of the nominee in anticipation of litigation or liabilities;
(3) Whether there is a close relationship between the transferor and the nominee;
(4) Whether the parties to the transfer failed to record the conveyance;
(5) Whether the transferor retained possession; and
(6) Whether the transferor continues to enjoy the benefits of the transferred property.
See Towe Antique Ford Foundation v. I.R.S., 791 F.Supp. 1450, 1454, aff'd, 999 F.2d 1387 (9th Cir.1993); United States v. Secapure, 2008 WL 820719 (N.D.Cal.2008) (noting that courts throughout the Ninth Circuit rely on the Towe factors to determine nominee status).
Washington law determines whether an alter ego exists from whom the Government can satisfy the tax obligation of the tax payer. Aquilino v. United States, 363 U.S. 509, 512-13, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960); Wolfe v. United States, 806 F.2d 1410, 1411 (9th Cir.1986). Under this theory, a corporate entity is disregarded when the corporation has been intentionally used to violate or evade a duty owed to another. Morgan v. Burks, 93 Wn.2d 580, 585, 611 P.2d 751 (1980). This may occur where the liable party has been "gutted" and left without funds by those controlling it in order to avoid actual or potential liability. Id.
Under either theory, it is clear from the facts in this case that the Blacks used the artificial legal entity of the trust to insulate themselves from their tax liabilities.
The Court also notes that the Blacks are vocal advocates of tax avoidance. The transfer to the trusts, and ultimately to Hope Springs, occurred at a time when the Blacks evinced clear intent to stop paying their taxes and avoid IRS collection efforts.
The Court finds that there are no material questions of fact and that a reasonable jury could only come to one conclusion— that the Blacks are the true beneficial
The United States alleges that the transfers to Hope Springs were fraudulent.
Under Washington law, transfers of property made with actual intent to hinder, delay, or defraud any creditor is prohibited. Wash. Rev.Code § 19.40.041(a)(1). To establish fraud, the United States must show actual intent by clear and satisfactory evidence. Creditors can establish that a transfer was fraudulent if the transfer was made: (1) with actual intent to hinder, delay, or defraud, or (2) without receiving a reasonably equivalent value in exchange for the transfer and the debtor (i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (ii) intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due. A future creditor—creditors whose claims rose after the transfer—must show actual intent to defraud. § 19.40.051.
Actual intent may be established either by direct or circumstantial evidence. Circumstantial evidence can be used to establish the existence of "badges of fraud." Washington law sets forth the nonexclusive badges or factors the Court may consider in determining the existence of actual intent to hinder, delay, or defraud:
Wash. Rev.Code § 19.40.041(b).
Here, the facts reveal that Daniel Black stopped filing income tax returns in 1980. This coincided with the creation of the Summer Hill Freedom Trust, which was under the control of the Blacks and which took nominal title to much of the Subject Property.
The Court finds that the transfers of the subject properties were to an insider. Specifically, the transfers were from the Blacks' nominees/alter egos to another of the Blacks' nominee/alter ego. The Court finds that the Blacks transferred the Subject Property in anticipation of a collection action and future debts. In 1999, after the IRS filed Notices of Federal Tax Lien against the Subject Property, the Blacks created Hope Springs, and transferred all their property from their nominee/alter ego trusts (B.C. Trust and Summer Hill Freedom Trust) into its name. The only reasonable explanation is that each quit-claim transfer took place with the express purpose of shielding assets from tax collection.
According to the Blacks, they own no assets whatsoever. They have not held property in their own names since 1981. They received only nominal payments as compensation for the duties they performed for the entities they control. The record supports the inference that the Blacks attempted to strip any evidence of their ownership of anything of value—by acquiring the Subject Property in the name of nominee/alter ego trusts—at the same time they ceased filing tax returns and were incurring tax liabilities. When the IRS filed Notices of Federal Tax Lien as to the Subject Property, the Blacks took further efforts to avoid ownership and shield their assets from the IRS by transferring those assets to Hope Springs. Moreover, no consideration was ever provided for the transfers to Hope Springs.
The Court finds that there is sufficient evidence in the record for a reasonable jury to conclude that the Blacks actually intended to defraud and the transfers of substantially all of the Blacks' assets to Hope Springs in exchange for no consideration rendered the Blacks insolvent. As such, the Court finds that there are no genuine issues of material fact and a reasonable jury could find one conclusion—that is, the transfers of the Subject Property to Hope Springs was fraudulent. As such, the transfers are voidable pursuant to Wash. Rev.Code § 19.40.041(1) and § 19.40.051(a).
26 U.S.C. § 6321 provides:
This statute does not create a property right, "but merely attaches consequences, federally defined, to rights created under state law." United States v. Craft, 535 U.S. 274, 278, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002). Courts "look initially to state law to determine what rights the taxpayer has in the property the Government seeks to reach, then to federal law to determine whether the taxpayer's state-delineated rights qualify as `property' or `rights to property' within the compass of the federal tax lien legislation." Id., (quoting Drye v. United States, 528 U.S. 49, 58, 120 S.Ct. 474, 145 L.Ed.2d 466 (1999)).
As set forth above, the Court finds the Blacks hold a cognizable property right to the Subject Property, and therefore, the
26 U.S.C. § 7403 provides:
For the reasons set forth above, foreclosure on the Subject Property is proper.
Accordingly,
1. The United States' Motion for Summary Judgment (Ct. Rec. 121) is
2. The Black Defendants' Motion for Summary Judgment (Ct. Rec. 133) is
3. Hope Springs Motion for Summary Judgment (Ct. Rec. 129) is
4. Within ten days from the date of this Order, the United States is directed to file a Proposed Judgment that accurately reflects the amount of judgment that should be entered against Defendant Daniel R. Black and Maire E. Black consistent with this Order (less the Estimated Tax Penalties, Late Filing Penalties, and Failure to Pay Tax Penalties for each of the tax years at issue except 1998 and 1999 discharged in bankruptcy).
5. The United States has valid and subsisting liens in the amount of $4,429,522.78, plus interest accruing after June 1, 2010, pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c) until paid, on all property and rights to property belonging to Defendant Daniel R. Black including, without limitation, the Subject Property.
6. The United States has valid and subsisting liens in the amount of $4,292,181.19, plus interest accruing after June 1, 2010, pursuant to 26 U.S.C. §§ 6601, 6621 & 6622, and 28 U.S.C. § 1961(c) until paid, on all property and rights to property belonging to Defendant Maire E. Black including, without limitation, the Subject Property.
7. The federal tax liens against Defendant Daniel R. Black and Maire E. Black are foreclosed upon their interest in the Subject Property. The Subject Property is ordered to be sold and the proceeds from such sale be applied to the United States' liens on all property and rights to property belonging to Defendants Daniel R. Black and Maire E. Black.
