Opinion ID: 4586199
Heading Depth: 3
Heading Rank: 2

Heading: Money or Money’s Worth

Text: The district court concluded that Shaun failed to satisfy the money-or-money’s-worth prong of § 6323(h)(1) because there was no contemporaneous exchange. Although the term action that began in the past and extends into the present, or until the United States files notice of its tax lien. See, e.g., In re Restivo Auto Body, Inc., 772 F.3d 168, 174–75 (4th Cir. 2014). 6 We note that Washington state law allows a potential judgment lien creditor to file a lis pendens, which provides notice in much the same way as recording notice of a federal tax lien does. See Wash. Rev. Code. § 4.28.320. We also note that sister circuits have interpreted the phrase “protected under local law against a subsequent judgment lien” to be equivalent to being protected against a “lien creditor” as defined by the Uniform Commercial Code, see In re Haas, 31 F. 3d at 1087; Dragstrem v. Obermeyer, 549 F.2d 20, 25 (7th Cir. 1977), which Washington state law mirrors, compare U.C.C. § 9-317(a)(2) (formerly § 9-301), with Wash. Rev. Code § 62A.9A-317(a)(2). Moreover, the U.C.C. considers knowledge, actual or otherwise, to be irrelevant when determining the priority between competing security interests. See, e.g., U.C.C. § 9-322 cmt. n.4. UNITED STATES V. ALLAHYARI 15 is not defined in § 6323, the regulation interpreting the statute defines “money or money’s worth” as: tangible or intangible property, services, and other consideration reducible to a money value. Money or money’s worth also includes any consideration which otherwise would constitute money or money’s worth under the preceding sentence which was parted with before the security interest would otherwise exist if, under local law, past consideration is sufficient to support an agreement giving rise to a security interest . . . . Treas. Reg. § 301.6323(h)-1(a)(3) (as amended in 2011). 7 The Treasury Regulation does not itself require a “contemporaneous” exchange. Instead, it requires determination of whether state law allows past consideration to give rise to a security interest. The district court did not address this question under Washington law—instead citing to a Fourth Circuit case, the facts of which did not necessitate a past-consideration analysis—and erred by assuming contemporaneous exchange was necessary. On remand, to determine whether Shaun “parted with money or money’s worth,” the district court must determine “whether past consideration is sufficient to support an agreement giving rise to the security interest” under Washington law. 7 The 2011 amendment added the requirement that, even if past consideration was allowable under local law, “the grant of the security interest is not a fraudulent transfer under local law or 28 U.S.C. § 3304(a)(2).” 76 Fed. Reg. 18384, 18388 (Apr. 4, 2011). However, this amendment only applies after April 4, 2011 and therefore is immaterial here. 16 UNITED STATES V. ALLAHYARI