Opinion ID: 894332
Heading Depth: 3
Heading Rank: 2

Heading: Wren LLC’s Ability to Challenge the IRS Lien

Text: Wren LLC argues that the bankruptcy court and district court erred in concluding that it was not entitled to challenge the IRS lien because UCIG, not Wren LLC, was the taxpayer as to that claim. See Myers v. United States, 647 F.2d 591, 604 (5th Cir. 1981) (“We do not believe due process requires that Myers, a third person, be allowed to challenge the tax liability of the former 4 Case: 12-50376 Document: 00512261996 Page: 5 Date Filed: 06/04/2013 No. 12-50376 owner of the property.”). Wren LLC argues that Myers is inapplicable because the liens in that case were filed of record before Myers purchased the property in question. It also contends that 11 U.S.C. § 505(a)(1),1 which was not at issue in Myers, allows a debtor to challenge a lien asserted in bankruptcy even if the debtor is not the original taxpayer. We conclude that it is unnecessary to reach the question of whether Wren LLC has the right to challenge the lien because, even assuming arguendo that it has that right, it failed to offer any evidence to overcome the presumption of correctness of the IRS tax assessment. See In re Mirant Corp., 440 F.3d 238, 245 (5th Cir. 2006) (“‘This Court may affirm [the bankruptcy court] if there are any grounds in the record to support the judgment, even if those grounds were not relied upon by the courts below.’” (citation omitted)). Even where an original taxpayer is challenging an assessment, the IRS tax assessment is presumed correct. United States v. Lochamy, 724 F.2d 494, 497-98 (5th Cir. 1984); see also Bull v. United States, 295 U.S. 247, 260 (1935). Here, the IRS proved its assessment through a Form 4340 (“Certificate of Assessments, Payments, and Other Specified Matters”). See Stallard v. United States, 12 F.3d 489, 493 (5th Cir. 1994) (a Form 4340 assessment is “presumptively valid”). Wren LLC was then required to challenge the amount or validity of the assessment through competent evidence establishing the assessment is arbitrary and erroneous.2 See Yoon v. Comm’r, 135 F.3d 1007, 1012 (5th Cir.1998) (noting the taxpayer must make this showing by a preponderance of the evidence). If, as it contended at 1 That section states: “[T]he court may determine the amount or legality of any tax, any fine or penalty relating to a tax, or any addition to tax, whether or not previously assessed, whether or not paid, and whether or not contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction.” 11 U.S.C. § 505(a)(1). 2 Wren LLC contends that the IRS assessment is presumptively invalid because it is higher than the amount of wages UCIG reported paying. However, the IRS contends UCIG grossly understated the amount of wages it actually paid. Thus, Wren LLC’s speculation does not undermine the IRS’s evidence. 5 Case: 12-50376 Document: 00512261996 Page: 6 Date Filed: 06/04/2013 No. 12-50376 oral argument, it was not permitted to present evidence due to the bankruptcy court’s ruling that it was not allowed to challenge the validity or amount of the assessment, it was required to preserve any error by making an offer of proof or proffer. See FED. R. EVID. 103(a)(2). It failed to do so, accordingly, we conclude that the bankruptcy and district courts did not err in finding the IRS assessment valid as against the Property.