Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-13-02359/USCOURTS-ca7-13-02359-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 13-2359

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

DENNIS R. WILLIAMS and LESLIE ANN WILLIAMS,

Defendants-Appellants,

and

INDIANA DEPARTMENT OF REVENUE and CLARK COUNTY,

INDIANA,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, New Albany Division.

No. 4:11-cv-00084-RLY-DML — Richard L. Young, Chief Judge.

____________________

SUBMITTED JANUARY 17, 2014 — DECIDED AUGUST 10, 2015

____________________

Before CUDAHY, EASTERBROOK, and ROVNER, Circuit Judges.

EASTERBROOK, Circuit Judge. The first question in this appeal, as in HSBC Bank USA, N.A. v. Townsend, No. 13-1017 

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(7th Cir. July 16, 2015), is whether an order of foreclosure is a 

“final decision” for the purpose of appellate jurisdiction. We 

deferred consideration of this appeal until HSBC Bank had 

been issued. HSBC Bank holds that a mortgage foreclosure 

governed by Illinois law is not final, and thus not appealable 

under 28 U.S.C. §1291 or Fed. R. Civ. P. 54(b), because the 

amount of a deficiency judgment (if any) depends on the 

reasonableness of the price realized at the sale, and the validity of the sale itself is contestable under an open-ended 

state standard calling on the judge to determine whether the 

outcome is equitable. Moreover, HSBC Bank observes, Illinois provides debtors with multiple opportunities to redeem 

before a transfer takes effect.

Our case is governed by federal rather than state law. Between 2002 and 2008 the Internal Revenue Service assessed 

tax deficiencies against Dennis Williams in connection with 

his income tax for 1996 through 2005. These assessments, including interest and penalties, come to about $1.3 million. 

Dennis did not contest them, but neither did he pay, and the 

IRS filed tax liens with the County Recorder for Clark County, Indiana, where Dennis and his wife Leslie Ann Williams 

jointly own a parcel of land. The State of Indiana also filed 

liens (it wants to collect about $415,000 from the couple jointly and another $40,000 from Dennis individually), and the

County itself filed tax liens.

The district court entered an order that specifies how 

much Dennis owes to each of the three taxing bodies, orders 

the property to be sold and the net receipts applied to these

debts, and details how the money will be divided among the 

United States, the State, the County, and Leslie. 2013 U.S. 

Dist. LEXIS 185932 (S.D. Ind. May 3, 2013). The order states 

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No. 13-2359 3

that it is the district court’s final decision, resolving all issues, and the Williamses appealed.

The foreclosure sale is authorized by §7403(c) of the Internal Revenue Code, 26 U.S.C. §7403(c). Section 7403 does 

not provide for deficiency judgments, one of the post-sale 

steps that made the order non-final in HSBC Bank, because 

the debt is established independently by the judgment on 

the IRS’s assessment. Net proceeds of the sale are applied to 

the outstanding taxes; there is no separate judgment for a 

difference between the proceeds and the tax debt.

Nor does federal law contain anything similar to 735 

ILCS §5/15-1508(b)(iv), which permits a court to determine 

whether “justice was otherwise not done” in the auction; the 

foreclosure is self-executing, without any need for confirmation by a court (though the sale is subject to the usual federal 

doctrines that allow relief from a judgment). Section 7403(c) 

also does not give the taxpayer a right of redemption. See 

United States v. Heasley, 283 F.2d 422 (8th Cir. 1960). We conclude, therefore, that a judgment foreclosing a federal tax 

lien and specifying how the proceeds are to be applied is 

appealable because it ends the litigation and leaves nothing 

but execution of the court’s decision, the standard definition 

of “final” under §1291. See, e.g., Gelboim v. Bank of America 

Corp., 135 S. Ct. 897, 902 (2015); Catlin v. United States, 324 

U.S. 229, 233 (1945).

On the merits, the appeal is feeble. The Williamses’ lead 

argument is that the suit should have been dismissed, because 26 U.S.C. §7401 provides that “[n]o civil action for the 

collection or recovery of taxes ... shall be commenced unless 

the Secretary [of the Treasury] authorizes or sanctions the 

proceedings and the Attorney General or his delegate directs 

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that the action be commenced.” The attorney representing 

the United States filed a declaration, signed by an IRS official, stating that the Secretary’s delegate has authorized the 

suit—which is being prosecuted by the Department of Justice, demonstrating the approval of the Attorney General’s 

delegate. The Williamses did not offer any contrary evidence. Nor did they contend that there are logical or factual 

flaws in the assessments. The Williamses deny liability but 

sat on their hands in court. The district court rightly concluded that this will not do.

Instead of joining issue on the amount of taxes owed, the 

Williamses maintain that they did not receive adequate notice of the deficiencies. This led the United States to supply 

evidence about how notice was given; the record includes a 

log showing certified mail to the correct address. To this the 

Williamses replied by denying that their records contain any 

relevant notices. That’s evasive. Their records would be 

empty if they never picked up their mail or if, after receiving 

the notices, they threw them away. But people who receive 

formal notices cannot avoid liability by not opening the envelopes, or throwing the contents away after realizing that 

they bring unwelcome news. See Ho v. Donovan, 569 F.3d 

677, 680–81 (7th Cir. 2009). Mailing to the correct address 

suffices. See, e.g., O’Rourke v. United States, 587 F.3d 537, 541–

42 (2d Cir. 2009); United States v. Ahrens, 530 F.2d 781, 784–85 

(8th Cir. 1976).

The Williamses also contend that the state and county tax 

claims are not properly part of the suit because they were 

raised by the United States rather than by Indiana or Clark 

County. We don’t see how taxpayers have any legal interest 

in how state and municipal claims come before the court; 

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No. 13-2359 5

Indiana and Clark County themselves are not protesting. 

And the reason the United States put these items in its complaint is that §7403(c) gives the district court power to resolve all competing claims to a parcel of property. The state 

and county claims belong in the proceeding, because the 

State and the County assert liens on the same parcel as the 

United States does.

Leslie maintains, however, that selling the parcel to collect Dennis’s federal taxes impermissibly impinges on her

property interest. The Supreme Court held in United States v. 

Rodgers, 461 U.S. 677 (1983), that a district court is entitled to 

order an entire parcel sold even though an innocent person 

may have an ownership interest. Before doing this, Rodgers

states, the court must consider all equitable arguments the 

innocent owner offers. 461 U.S. at 709–11. The district judge 

did just that, observing that Leslie’s interest, saddled by 

three tax liens, probably would be worth less than the 

amount she is likely to receive after a sale. The judge added 

that neither Dennis nor Leslie lives on the parcel, so the sale 

will not disrupt their household. That decision is sensible 

and certainly not an abuse of discretion.

AFFIRMED

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