Source: https://openjurist.org/419/f3d/242/popky-v-united-states
Timestamp: 2019-04-24 20:30:06+00:00

Document:
Submitted Under Third Circuit LAR 34.1(a) May 12, 2005.
John R. Crayton, Moorestown, NJ, for Appellants.
Joan I. Oppenheimer, Jonathan S. Cohen, United States Department of Justice, Tax Division, Washington, DC, for Appellee.
Before SLOVITER, FISHER and ALDISERT, Circuit Judges.
Appellants Howard and Sheila Popky, husband and wife, appeal from the District Court's grant of summary judgment in the government's favor in connection with their attempt to recover monies obtained by the government in satisfaction of a tax lien. Appellants contend that the federal tax lien could not attach to Sheila Popky's interest in property owned by her and her husband as tenants by the entireties. We disagree and will therefore affirm the judgment of the District Court.
Sheila Popky had failed to pay employment taxes that were required to be withheld from the wages of the employees of Sheila's EMS, Inc., a business which she owned. The Internal Revenue Service ("IRS") assessed taxes of $42,799.20 against Sheila Popky attributable to these unpaid taxes, and in September 2002, filed a notice of tax lien against her in Montgomery County, Pennsylvania, for the same amount plus accruals. Shortly after the filing of the lien notice, Mr. and Mrs. Popky sold real property located in Narbeth, Pennsylvania, which they owned as tenants by the entireties. The title insurance company held $48,000 of the sale proceeds in escrow due to the outstanding federal tax lien, and eventually issued a check to the government for $43,324.43 to satisfy the lien. The Popkys initiated this quiet title action to recover the proceeds paid to the IRS, and the government counterclaimed seeking unpaid employment taxes and unpaid income taxes. The District Court granted summary judgment to the government and entered an order awarding the government $43,324.43 on the Popkys' claim and $15,814.47 on the government's counterclaim. The Popkys filed this timely appeal.
The District Court had jurisdiction under 28 U.S.C. §§ 1331, 1340 and 1345. We have jurisdiction under 28 U.S.C. § 1291, and apply plenary review to the District Court's grant of summary judgment. Bonneville Int'l Corp. v. Peters, 347 F.3d 485, 490 (3d Cir.2003). The primary issue in this appeal is whether the District Court erred in concluding that the federal tax lien here could attach to Sheila Popky's interest in the Narbeth property owned by her and her husband as tenants by the entireties. The nature of Sheila Popky's interest in the Narbeth property is crucial because federal tax liens attach to "all property and rights to property" of any taxpayer who neglects or refuses to pay taxes after demand. 26 U.S.C. § 6321. The Supreme Court has made clear that whether a taxpayer's interest in property "held as a tenant by the entirety constitutes `property and rights to property' for the purposes of the federal tax lien statute, 26 U.S.C. § 6321, is ultimately a question of federal law." United States v. Craft, 535 U.S. 274, 278, 122 S.Ct. 1414, 152 L.Ed.2d 437 (2002). However, this federal question "largely depends upon state law." Id. See also United States v. Bess, 357 U.S. 51, 55, 78 S.Ct. 1054, 2 L.Ed.2d 1135 (1958) (stating that federal tax lien statute "creates no property rights but merely attaches consequences, federally defined, to rights created under state law.").
Appellants contend that even if the federal tax lien properly attached to Sheila Popky's interest in the proceeds from the sale of the Narbeth property, the District Court erred in valuing her interest at fifty percent of the property. In Craft, the Supreme Court left open the question of how to value the respective tenants' interests in entireties property in these circumstances. See Craft, 535 U.S. at 289, 122 S.Ct. 1414 ("We express no view as to the proper valuation of respondent's husband's interest in the entireties property"). The Popkys argue that the valuation should be based on some variation of their life expectancies. Some courts have adopted or endorsed the use of life expectancies derived from actuarial tables in determining the value of a tenant's interest in entireties property in this context. See e.g., In re Murray, 318 B.R. 211, 214 (Bankr.M.D.Fla.2004); In re Basher, 291 B.R. 357, 364 (Bankr.E.D.Pa.2003).
While Michigan law did not give each tenant the power to unilaterally alienate entireties property, the Court inCraft rejected the contention that such a power was essential to the category of "property" for purposes of § 6321. Craft, 535 U.S. at 284, 122 S.Ct. 1414 (noting that in prior cases it had "already stated that federal tax liens may attach to property that cannot be unilaterally alienated.") (discussing cases).
The Popkys emphasize that a tenant in Pennsylvania cannot alienate the entireties property without the other tenant's consent. This is true but unavailing given the Court's clear statement inCraft that the right of unilateral alienation is not "essential to the category of `property' [under § 6321]." Craft, 535 U.S. at 284, 122 S.Ct. 1414.

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