Document: 528 U.S. 49120 S.Ct. 474145 L.Ed.2d 466 SUPREME COURT OF THE UNITED STATES No. 98 1101 ROHN F. DRYE, Jr., et al.v.UNITED ON WRIT CERTIORARI TO THEUNITED APPEALS FOR EIGHTH CIRCUIT December 7, 1999 Justice Ginsburg delivered the opinion of Court. 1 This case concerns respective provinces state and federal law in determining what is property for purposes tax lien legislation. At time his mother's death, petitioner Rohn Drye, was insolvent owed Federal Government some $325,000 on unpaid assessments which notices liens had been filed. His mother died intestate, leaving an estate with a total value approximately $233,000 to he sole heir. After passage several months, Drye disclaimed interest estate, then passed by operation daughter. presents question whether Drye's as heir constituted "property" or "righ[t] property" attached under 26 U.S.C. § 6321 despite exercise prerogative accorded him disclaim retroactively. 2 We hold that disclaimer did not defeat liens. The Internal Revenue Code's prescriptions are most sensibly read look delineation taxpayer's rights interests, but leave determination those interests constitute "rights within meaning §6321. "[O]nce it has determined creates sufficient [taxpayer] satisfy requirements [the provision], inoperative prevent attachment created statutes favor United States." States v. Bess, 357 51, 56 57 (1958). 3 * A 4 relevant facts dispute. On August 3, 1994, Irma Deliah worth $233,000, $158,000 personalty $75,000 realty located Pulaski County, Arkansas. Petitioner her son, Arkansas law. See Ark. Code Ann. §28 9 214 (1987) (intestate passes "[f]irst, children intestate"). date $325,000, representing deficiencies years 1988, 1989, 1990. Service (IRS Service) made against November 1990 May 1991 valid all "property pursuant 6321. 5 petitioned County Probate Court appointment administrator so appointed 17, 1994. Almost six months later, February 4, 1995, filed land records written estate. Two days resigned 6 Under law, may disavow inheritance filing no later than nine after death decedent. §§28 101,28 107 (1987). legal fiction disclaimant predeceased decedent; consequently, disclaimant's share person next line receive share. disavowing heir's creditors, provides, reach thus disclaimed. 108. In at hand, caused pass daughter, Theresa who succeeded father promptly established Family 1995 Trust (Trust). 7 March 10, declared accordingly ordered final distribution Drye. used estate's proceeds fund Trust, she and, during their lifetimes, parents beneficiaries. Trust's terms, distributions discretion trustee, counsel Daniel M. Traylor, be only health, maintenance, support spendthrift, its assets therefore shielded from creditors seeking debts 8 Also IRS began negotiations regarding liabilities. During course negotiations, revealed beneficial Trust. Thereafter, April 11, 1996, Circuit Clerk Recorder notice nominee. also served levy accounts held name investment bank notified levy. B 1, invoking 7426(a)(1), wrongful action District Eastern counterclaimed trust beneficiaries, reduce judgment confirm right seize collection debts, foreclose liens, sell property. cross-motions summary judgment, ruled Government's favor. 10 Appeals Eighth affirmed Court's judgment. States, 152 F.3d 892 (1998). understood our precedents convey "state determines given set circumstances interest; dictates constitutes 'property' 'right property' §6321." Id., 898. 11 granted certiorari, 526 __ (1999), resolve conflict between Circuit's holding decisions Fifth Ninth Circuits.1 now affirm. II 12 provisions Code, deficiency, impose any belonging taxpayer. Section provides: "If liable pay neglects refuses same demand, amount shall upon property, real personal, such person." complementary provision, §6331(a), states: 13 lawful Secretary collect (except exempt section 6334) there provided this chapter payment tax."2 14 language §§6321 6331(a), observed, "is broad reveals face Congress meant every taxpayer might have." National Bank Commerce, 472 713, 719 720 (1985) (citing B. Bittker, Taxation Income, Estates Gifts ¶111.5.4, p. 111 100 (1981)); see Glass City 326 265, 267 (1945) ("Stronger could hardly have selected reveala purpose assure taxes."). When broadly uses term "property," we recognize, context gift tax, Legislature aims " 'every species protected having exchangeable value.' Jewett Commissioner, 455 305, 309 (1982) (quoting S. Rep. 665, 72d Cong., 1st Sess., 39 [1932]; H. R. 708, 27 [1932]). 15 6334(a) corroborative. That provision lists list includes categories items; among enumerated exemptions certain items necessary clothe care one's family, unemployment compensation, workers' compensation benefits. §§6334(a)(1), (2), (4), (7). enumeration contained §6334(a), directed, exclusive: 16 "Notwithstanding other , specifically subsection (a)." §6334(c). Inheritances devises included §6334(a)'s catalog U.S., ("The fact specific distraint evidence intend recognize further would [federal tax] liens[.]"); Mitchell, 403 190, 205 (1971) ("Th[e] [of §6334] clear room automatic exemption happens law."). absence recognition disclaimers §§6321, 6322, (c), provisions, contrasts §2518(a) renders qualifying state-law "with respect effective wealth-transfer only.3 17 nevertheless refers cases indicating proper guide critical position draws two recent appellate opinions: Leggett 120 592, 597 (CA5 1997) ("Section adopts state's definition interest."); Mapes 138, 140 (CA9 1994) ("For answer th[e] [whether requisite property], must Although point phrased meticulously preclude argument,4 satisfied interpretive place federal, state, control ultimate issue subject taxes. III 18 As restated Commerce: "The 'rights matter law." 727. initially determine seeks reach, state-delineated qualify compass Cf. Morgan 78, 80 (1940) ("State rights. revenue acts designate rights, created, taxed."). 19 division competence, withdraw whole joint account taxes, although allow ordinary similarly deplete account. 723 And earlier life insurance policy compel insurer cash surrender qualifies creditors' 57.5 By contrast, concluded, again attach unavailable insured lifetime. 55 ("It anomalous view never insured's enjoy.").6 20 Just "exempt status does bind collector," 204, struck blind disclaimer," Irvine, 511 224, 240 (1994). Thus, that, wife's renunciation marital treated retroactive liability community income realized before renunciation. 204 (right renounce indicate property). IV 21 Circuit, fidelity first It beyond debate, had, valuable, transferable, legally issue. F.3d, 895 (although define property," courts terms encompass "state-law pecuniary transferable"). court noted, example, prospective effectively assign expectancy assignment will enforced when ripens into present id., 896 Supreme decisions, including: Clark Rutherford, 227 270, 270 271, 298 W. 2d 327, 330 (1957); Bradley Lumber Co. Burbridge, 213 165, 172, 210 284, 288 (1948); Martin, 203 88, 94, 156 71, 74 75 (1941)).7 22 emphasizes undoubted inheritance, 101 (1987), indeed personal marketable. Brief Petitioners transferable value). But primarily gave considerable either inherit channel close family member (the lineal descendant). simply cannot off mere "personal accept reject [a] gift." 13. 23 pressing analogy rejected gift, overlooks crucial distinction. donee declines inter vivos generally restores quo ante, donor do will. disclaiming devisee, incontrast, restore quo, decedent revived. Thus inevitably exercises dominion over He himself if disclaim, known does. Hirsch, Problem Insolvent Heir, Cornell L. Rev. 587, 607 608 (1989). power warrants conclusion 24 25 sum, "[t]he important consideration breadth property." Morgan, 83. unqualified entire (less administrative expenses), 725 (confirming "right itself right" collector's levy), rein hold, rendered §6321, hence sparked controversy. For reasons stated, Affirmed. Notes 1. courts, holds sway. approach, State adhering acceptance-rejection theory, vests beneficiary accepts devise, prevails attach. If, instead, transfer deemed vest immediately testator loses runs 594 1997); 1994); accord, Davidson, Supp. 1152, 1155 (Colo. 1999). maintains adheres theory. 28 2. "Unless another fixed imposed arise assessment continue until assessed (or arising out liability) becomes unenforceable reason lapse time." 6322. 29 3. Pennell, Recent Wealth Transfer Tax Developments, Sophisticated Estate Planning Techniques 69, 117 118 (ALI ABA Continuing Legal Ed. qualified relate back decedent's delinquent taxes attaching moment . [T]he §2518 applies Subtitle F."). 30 4. See, e.g., 722 ("[T]he statute 'creates merely attaches consequences, federally defined, law.' ") [1958]). 31 5. Accord, One Ohio 173, 176 (CA6 1996) ("Federal create taxpayer's] equitable [in spendthrift trust], applied 6321."); West Lancaster Corp. Main Line Restaurant, Inc., 790 F.2d 354, 358 (CA3 1986) liquor license reached lien); Plumb, Liens (3d ed. 1972) ("[I]t material economic benefit [taxpayer's local property] pertains characterized 32 6. Compatibly, Aquilino 363 509 (1960), should 'the nature interest' lien. 513 82 (1940)). reaffirmed 514. remanded contractor-taxpayer interest, opposed "bare title," funds 515 516; Note, Property Subject Lien, 77 Harv. 1485, 1491 (1964) ("Aquilino supports chosen apply test classification, contractor concededly title yet remanding indicated state-created incident ownership contract sense follows Bess requiring lien." [footnote omitted]). 33 7. recognizing fall mean suggest transferability essential existence section. here decide matter, note 6321" even though third parties. One, 176. Nor §6321 prior

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