Monday, March 21, 2016

Despite Not Owing Any Money, Innocent Wife Loses Her Share Of Co-Owned Marital Home Over Hubby's $1+ Million Unpaid Corporate Federal Tax Lien; Court: As Long As She's Compensated For Her Share As Required By Statute, She's Outta Luck

From a recent Justia US Law Opinion Summary:
  • Ronald Davis, the owner of a corporation, was liable for over $1 million in unpaid federal employment taxes and penalties.

    After demands for payment went unanswered, the government filed suit against Ronald to reduce its tax assessments to judgment and sought to enforce its tax liens through the sale of the primary residence of Ronald and his wife, Diane.

    The government named Diane, who did not owe any unpaid taxes, as a defendant in the action because she had an interest in the properties. The district court issued an order of sale authorizing the sale of the primary residence. Diane appealed, arguing (1) the district court should have allowed the government to sell only Ronald’s interest in the property; and (2) the order of sale violated 26 U.S.C. 7403 and the Fifth Amendment’s Just Compensation Clause.

    The Sixth Circuit affirmed the district court’s order of sale, holding (1) the district court did not err when it declined to limit the government to the sale of Ronald’s interest in the property; and (2) the order of sale did not violate section 7403 or the Just Compensation Clause.(1)

For the court ruling see United States v. Davis, No. 15-1696 (6th Cir. March 9, 2016).
(1) According to the court:
  • [S]o long as third-party interest holders are compensated as required by the statute, there is no Takings–Clause problem. United States v. Barczyk, 434 F. App’x 488, 491 n.1 (6th Cir. 2011). Without any other relevant support for her argument, Diane Davis cannot establish that the district court’s order violates the Fifth Amendment’s Just Compensation Clause.

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