T.C. Memo. 2003-345

UNITED STATES TAX COURT

LOUIS FUSARO, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13282-01L. Filed December 29, 2003.

Willard D. Horwich, for petitioner.

Irene S. Carroll, for 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.
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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
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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
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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
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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
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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
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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
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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

administrative 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
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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 administrative

offices of said plan have been, and now are, located in

Los Angeles, California. The plan is administered 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.
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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 administrator 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,
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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:
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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 administered.

Under the Bankruptcy Code, 11 U.S.C. sec. 522(c)(2)(B)

(2000), any property exempt from administration as part of the
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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, 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
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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.,

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, 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
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“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, 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

administration 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
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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. 
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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
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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
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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
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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 administrator. 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.
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To reflect the foregoing,

Decision will be entered

for respondent.