Opinion ID: 527542
Heading Depth: 3
Heading Rank: 1

Heading: The IRS Liens With Respect to Levine

Text: 70 Preliminarily, we note that the Commission suggests that Levine had lost his property rights in the disgorged assets prior to the IRS's first assessment against him on May 23, 1986, by virtue of the freeze order that was entered by the court on May 12. We reject this contention. The May 12 order was a temporary restraining order prohibiting Levine and his codefendants from withdrawing, transferring, pledging, encumbering, assigning, dissipating, concealing or otherwise dealing with or disposing of any securities, funds or other assets of any of the defendants whatsoever and wherever situated or permitting any of the foregoing. Though the order required the defendants to deposit securities, funds, and other assets with the court immediately, in order to preclude dissipation, that relief was of a temporary character, as the order contemplated that after the deposits were made, the defendants would show cause why each of the defendants should not hold and retain [these assets] within his or its control. The freeze order plainly did not purport to adjudicate Levine's right eventually to regain possession or full use of the property. Cf. United States v. Safeco Insurance Co. of America, Inc., 870 F.2d 338, 341 (6th Cir.1989). Although the restrictions were sufficiently significant to implicate due process concerns, see United States v. Moya-Gomez, 860 F.2d 706, 725-26 (7th Cir.1988), they did not deprive Levine of ownership. 71 As noted above, Sec. 6322 provides that an IRS lien attaches to the taxpayer's property at the time the assessment is made. Levine transferred ownership of nearly all of his disgorged assets on June 19, 1986. The IRS made its first assessment against him, giving rise to a lien of some $8.5 million, on May 23, 1986. The assessment created a lien on all of the property owned by Levine at that time. That property included the assets that were later transferred to the receiver. Accordingly, the IRS has a lien in that amount on the disgorged assets. 72 In contrast, the IRS's subsequent assessment on Levine occurred after disgorgement. Though this assessment too created a government lien on all the property then owned by Levine, Levine did not then own the disgorged assets. Hence, the IRS does not have a lien on the disgorged assets resulting from the later assessment. 73 Under Sec. 6321, therefore, the IRS is entitled to priority payment from Levine's disgorged assets in the amount of approximately $8.5 million, and no more. On remand, the district court will determine the precise amount of the lien.