Document: 535 U.S. 274 UNITED STATESv.CRAFT. No. 00-1831. Supreme Court of the United States. Argued January 14, 2002. Decided April 17, CERTIORARI TO THE STATES COURT OF APPEALS FOR SIXTH CIRCUIT When respondent's husband failed to pay federal income tax liabilities assessed against him, a lien attached "all [of his] property and rights property." 26 U. S. C. § 6321. After notice was filed, respondent her jointly executed quitclaim deed purporting transfer his interest in piece real Michigan that they owned as tenants by entirety. Subsequently, Internal Revenue Service (IRS) agreed release allow sell with half net proceeds be held escrow pending determination Government's property. She brought this action quiet title escrowed proceeds. The Government claimed, among other things, its had husband's tenancy District granted summary judgment, but Sixth Circuit no because separate entireties under law, remanded case for consideration an alternative claim not at issue here. In affirming Court's decision on remand, prior opinion whether law case. Held: interests constitute "property" or "rights property" which may attach. Pp. 278-289. (a) Because statute itself creates rights, States v. Bess, 357 51, 55, looks initially state determine what taxpayer has seeks reach then such state-delineated qualify 6321, Drye States, 528 49, 58. A common idiom describes "bundle sticks" — collection individual which, certain combinations, State determines sticks are person's bundle, those purposes. looking must consider substance labels gives them conclusions it draws from them. 278-279. (b) gave husband, right use property, exclude others it, survivorship, become tenant equal shares upon divorce, consent receive sale, encumber consent, block selling encumbering unilaterally. 279-282. (c) broad statutory language authorizing reveals Congress meant every might have. National Bank Commerce, 472 713, 719-720. use, exclusion, alone sufficient subject lien, him substantial degree control over See Drye, supra, 61. He also alienate consent. unilateral alienation stick is essential "property." Federal liens attach cannot unilaterally alienated, Rodgers, 461 677, excluding would exempt rather large amount commonly thought number bundle were presently existing, so necessary survivorship alone, claims expectancy, Were contrary conclusion, belong one 6321 purposes more than husband. Such result seems absurd spouses shield their taxation classifying facilitating abuse system. Legislative history does support position did intend interest. And common-law background statute's enactment enough overcome actually used. 283-288. (d) That makes different choice respect creditors dictate 6321's interpretation question, way bound courts' answers similar questions involving law. 288-289. 233 F. 3d 358, reversed remanded. O'CONNOR, J., delivered Court, REHNQUIST, KENNEDY, SOUTER, GINSBURG, BREYER, JJ., joined. SCALIA, filed dissenting opinion, THOMAS, joined, post, p. 289. STEVENS 290. Kent L. Jones argued cause With briefs Solicitor General Olson, Assistant Attorney O'Connor, Deputy Wallace, David English Carmack, Joan I. Oppenheimer. Jeffrey Sutton respondent. Chad A. Readler, Moyer, Michael Dubetz, Jr. JUSTICE O'CONNOR Court. 1 This raises question entirety possesses Relying fiction Appeals lien. We conclude that, despite fiction, each estate reverse judgment Appeals. 2 * 1988, $482,446 unpaid Don Craft, Sandra failure file returns years 1979 through 1986. App. Pet. Cert. 45a, 72a. he pay, personal, belonging to" him. 3 At time attached, Grand Rapids, Michigan, 45a. dollar. Ibid. attempted few later, search revealed IRS sale stipulation 4 Respondent claimed It further asserted invalid fraud creditors. Id., 46a-47a. motion holding moment respondent, terminated entitled one-half value 1:93-CV-306, 1994 WL 669680, *3 (WD Mich., Sept. 12, 1994). 5 Both parties appealed. 140 638, 643 (1998). conveyance should set aside fraudulent. 644. 6 On concluded where, here, creditors, fraudulent can occur. 65 Supp. 2d 651, 657-658 Mich. 1999). found, however, nonexempt funds mortgage placed beyond constituted act court awarded share amount. 659. 7 appealed decision, again claiming panel's issue. 363-369 (CA6 2000). affirmed payments 369-375. 8 certiorari attached. 533 976 (2001). II 9 Whether constitutes "property statute, ultimately answer largely depends "creates merely attaches consequences, federally defined, created law." 55 (1958); see 722 (1985). Accordingly, "[w]e look reach, taxpayer's `property' `rights property' within compass legislation." 58 (1999). 10 B. Cardozo, Paradoxes Legal Science 129 (1928) (reprint 2000); Dickman Commissioner, 465 330, 336 (1984). only bundle. 11 we careful provides, these irrelevant bundles considered situation where allowed heir disclaim estate. provided disclaimer "creat[e] legal fiction" predeceased decedent correspondingly deemed have 53. unanimously looked instead realities heir's State's characterization, possessed "right accept inheritance pass along another could 59-61. III 12 turn first virtue order understand some context. 13 three structures concurrent ownership survived into modern times: common, joint tenancy, G. Thompson, Real Property 4.06(g) (D. Thomas ed. 1994) (hereinafter Thompson). now most form ownership. R. Powell & P. Rohan, 51.01[3] (M. Wolf 2001) Powell). characterized owning fractional undivided 50.01[1]. Tenants gift place encumbrances shares. They power heirs death. many including third portion any produced it. §§ 50.03-50.06. 14 Joint tenancies predominant still persist today. Thompson 31.05. possessing entire estate, share: "[J]oint-tenants same ... possession." W. Blackstone, Commentaries Laws England 180 (1766). possess enjoyed common: exclude, enjoy property's income. main difference between automatic known "survivorship." Upon death tenant, tenant's will rules intestate succession; rather, remaining automatically inherit 183; 51.01[3]. tenants' somewhat different. severed is, converted share. 51.04[1]. Most allowing facilitate alienation, severance accompany overt indicating intent sever. 15 unique sort exist married persons. 33.02. wife person (that person, practically speaking, J. Cribbet et al., Cases Materials 329 (6th 1990)), Blackstone characterize all. Instead, single marital unity. Orth, Tenancy Entirety: Strange Career Common-Law Marital Estate, 1997 Y. Rev. 35, 38-39. Neither spouse own estate; belonged couple. 16 Like tenants, survivorship. Also like spouse's typically possible without severance. Unlike tenancies, easily 33.08(b). Typically, requires both spouses, id., 33.08(a), ending marriage 33.08(d). all associated husband: head household, exclusion 33.05. extensive eventually wife's 40-41. 17 passage Married Women's Acts late 19th century granting women distinct either abolished altered significantly. 52.01[2]. Michigan's version typical Following characterizes creating whatsoever: "It well settled separable .... Each vested title." Long Earle, 277 505, 517, 269 N. 577, 581 (1936). yet, Comp. Ann. 554.872(g) (West 1997), recodified 700.2901(2)(g) Pamphlet 2001). 557.71 1988). W., 581; Rogers Rogers, 136 125, 134, 356 288, 292 (1984), although accomplished mutual Eadus Hunter, 249 190, 228 782 (1930). Divorce ends entirety, generally giving unless divorce decree specifies otherwise. 552.102 18 determining meaning rules. According had, following property: encumbrance IV 19 "is face have." S., "Stronger hardly been selected reveal purpose assure taxes." Glass City 326 265, 267 (1945). fall language. 20 grants rights: Dolan Tigard, 512 374, 384 (1994) ("[T]he others" " `one (quoting Kaiser Aetna 444 164, 176 (1979))); Loretto Teleprompter Manhattan CATV Corp., 458 419, 435 (1982) (including "use" "[p]roperty physical thing"). These and, noted "in state-law property,' [t]he important breadth [taxpayer] exercise 61 (some internal quotation marks omitted). 21 went (or otherwise encumber) wife. Loretto, (the "dispose" item right). true, notes, lacked often rights. 296-297 (THOMAS, dissenting). There reason believe, category 22 already stated alienated. 677 (1983), foreclose homestead Texas `the owner claimant [may not], if married, abandon spouse.' 684-685 Tex. Const., Art. 16, 50). nonetheless "[i]n context ..., there doubt do (rather neither) independent least interests." 703, n. 31; cf. 60, (noting "an spendthrift trust ` 6321' even though beneficiary parties"). 23 Excluding simply would, moreover, type discussed community Community provide alienated spouses. See, e. g., Ariz. Stat. 25-214(C) (2000); Cal. Fam. Code 1102 1994); Idaho 32-912 (1996); La. Civ. Ann., 2347 2002); Nev. 123.230(3) (Supp. 2001); M. 40-3-13 (1999); Wash. 26.16.030(3) (1994). fact preclude 24 Respondent's whole predecease argues suggested ("[We mean suggest] expectancy pecuniary ripens present estate"). decide nor need As above, existing. therefore 25 "belonging underscored conclusion otherwise, husband; neither who did? absurd, Johnson, Drye: Likely Attachment Tax Lien Tenancy-by-the-Entireties Interests, 75 Ind. 1163, 1171 (2000). SCALIA's THOMAS' dissents conflict relating partnership 289 (opinion J.); 295-296, J.). so. authorities cited THOMAS reflect, partner's partnership, fair market assets. (citing Bittker McMahon, Income Taxation Individuals ¶ 44.5[4][a] (2d 1995 2000 Cum. Supp.)); Bromberg Ribstein, Partnership 3.05(d) (2002-1 Supp.) Ribstein) Uniform Act 28, 744 (1995)). holder "receive profits assigning partner entitled," predissolution distributions dissolution. 27(1), 736. 27 treatment compel assets (although interest, Ribstein 3.05(d)(3)(iv)). reflected assertion encumbered debts. disparity two forms ownership, arises our supra (holding coowners lack alienation), case, dissenters' theory departs hold all, whereas individual's 28 legislative indicates 1954, Senate rejected proposed amendment entirety)." Rep. 1622, 83d Cong., Sess., 575 (1954). elsewhere held, proposals "a particularly dangerous ground rest statute," Pension Benefit Guaranty Corporation LTV 496 633, 650 (1990), reasoning `[c]ongressional inaction lacks persuasive significance several equally tenable inferences drawn inaction, inference existing legislation incorporated offered change.' Central Denver, First Interstate A., 511 187 exemplifies risk relying history. 704, 31, surrounding 1954 House intended nothing "clarification" found "superfluous." H. 1337, A406 (1954) "clarif[y] term `property expressly therein delinquent entirety"); ("It clear change made parenthetical phrase. deletion phrase continue law"). 29 ambiguity plagues accompanies Congress' statute. alter accepted rule Astoria Fed. Sav. Loan Assn. Solimino, 501 104, 108 (1991) ("[W]here principle established courts take given legislated expectation apply except `when evident'"). application assume impact before us. much commonlaw liens, appeals cases dealing arise until 1950's. Hutcherson, 188 (CA8 1951); Raffaele Granger, 196 620 (CA3 1952). enact, 30 recognize creditors: "[L]and levy execution rendered alone." Sanford Bertrau, 204 244, 247, 169 880, 881 (1918). But means dictates choice. answering "`exempt status bind collector.'" 59. 701 (clarifying Supremacy Clause "provides underpinning sweep state-created exemptions"). V 31 express view proper valuation leaving remand. note, insofar dependent 1989 fraudulent, 290, dissenting), anomalous. sought review determination. Since based notion transferring attempt evade creditor, 2d, 657-659, future cases, answered differently. 32 accordingly reversed, proceedings consistent opinion. 33 ordered. 34 whom joins, dissenting. 35 I join THOMAS's dissent, points out (to relevant response Court) treat entity, whose debts members, novel "artificial" commercial members. 36 write separately observe nullifies (insofar taxes concerned, least) particular benefit stay-athome mother. overwhelmingly likely survivor obtains unencumbered property; she (as opposed business-world husband) unlikely source indebtedness protects. regrettable eliminated part traditional protection retained 37 SCALIA join, 38 today allows taxpayer, Craft,1 because, view, "possesse[d] [tenancy entirety] lien" Ante, 276. contest liability satisfy Mr. Craft's belongs individually. Nor suggest individually Craft. Rather, borrowing metaphor `bundle sticks' property," ante, 278, proposes long "sticks" "belong 285. 39 amorphous construct ignores primacy defining interests, eviscerates distinction conflicts unbroken line authority lower courts, IRS. Its unsupportable my highly limited recognized themselves affirm Craft 40 Title provides taxpayer. uncontested (1958) (construing 1939 statute). Consequently, "cannot extend taxpayer," 690-691 Before today, disputed IRS, operation "steps shoes," Bittker). expand nature interest' Aquilino 363 509, 513 (1960) Morgan 309 78, 82 (1940)). 41 If Rapids "belong[ed] termination recognizes, pursuant spouse, entity composed 280-282. "any estate." 249, 882 (1918); (1936) ("Each [spouse] attempts convey incumber absolute title"). An indivisible "sole tenancy." Budwit Herr, 339 272, 63 841, 844 (1954); Tyler 281 497, (1930) unit; dispose other; continues survivor"). spousal "belong" when liability. Thus, 42 dispute characterization attributes However, 59 (1999), relied Irvine, 224 (1994), Mitchell, 403 190 (1971), suggests definition overlooked controlled fictions concerning 279. misapprehends 43 Irvine Mitchell concerned place, laws after created. retroactively undo (recognizing restore quo ante "determines himself disclaim, does"). Similarly, force "struck blind" rights" due occurred; "state rules." 239-240 (emphasis added). renounce indicate renunciation). 44 Extending jurisprudence works sea role traditionally played "creating defining" interests. By erasing purport fact, respect, laws' follow new contravenes previously scope left Aquilino, 513, unsoundness nebulous body "because long-established places task attempting ascertain undefined B 45 end inquiry, since While concludes laundry list entirety,2 rights.3 gathers together opines "respondent's statute." 46 "sticks bundle" collapses precisely distinguishes refrains ever stating involves specifically imprecise "individual lien." 276.4 47 Rather adopt majority's approach, ask specifically, does, not.5 valuable "pecuniary," i. e., levied sold Government.6 58-60, 7. "ripen[ed] estate" mere 7, thus apparent "to channel [another]," 48 contrast, divisible encumbrance, ability devise other's indestructible 135-137, 293-294 latter significantly whole, devised spouse. 37.14(a) "consistent fundamental characteristic property": "community owns 50% asset").7 ("[I]n added, citation brackets omitted)). 49 primarily similarly susceptible For example, conjunction one's appears ill suited being transferred another, ibid., "exchangeable value," 56. 50 identified rise level attach, represent, most, contingent "expectancy" ("Nor transferable Cf. 55-56 life insurance policy "[i]t anomalous never insured's enjoy"). wholly outliving other, gains "substantial theretofore [the] survivor." Tyler, 503. explains "not 285, facts demonstrate not. Even assuming survivability continued demise right, lienable nonliable help here; 1998, 51 while escape limitations obtaining agreeing sever instance event certainty Finally, arguably "rents, products, income, profits" 1988), rents, to. 52 event, existence destroyed tenancy. 1, supra. itself, survive conveyance, falls squarely maxim "the collector steps shoes go barefoot wear out." terminating asset extinguishes thereto"). Elliott 9.09[3][d][i] (explaining option terminates, terminate well). 53 54 supported consensus courts. years, reviewing understanding liability.8 IRS' recognition, entirety.9 fails mention consensus, let address give overruling puzzling. positions hard pressed explain why combined weight judicial administrative sources instructions employees authority. 56 majority fiction," 276, precedents, state, federal, defines Ownership marriage" admittedly sorts, corporation. basis ignoring define remains tenants. 57 unsupported assumption "facilitat[e] system." straw man, Brief 30-32, suggesting somehow improper, 30-31, (characterizing "[t]he avoidance scheme sanctioned case"), chose appeal court's assessment. longstanding adduce evidence led wholesale individuals, rationale unsound. Just am unwilling overturn precedent create 3, redefine dismiss fictional favor respectfully dissent. Notes: Mrs. conveyed Crafts 1989. 557.101 1988); alsoUnited Certain Located 2525 Leroy Lane, 910 343, 351 1990). ruling undoubtedly received $1; point proceeds, cents, here 1992 party. fee simple, funds. disagree recognizes asindividual Without deciding better resolved assume, arguendo, how destruction although, intents purposes, acknowledges identifies Judge Ryan's concurrence Circuit's matter best read making execute factual finding transaction. 648-649 (1998) far-reaching consequences. illustration, setting elsewhere, belonged: "[F]or firm, firm's assets." 44.5[4][a]. Though currently attachment execution, partnership," Rul. 73-24, 1973-1 Bull. 602; cfUnited Kaufman, 408 (1925), logic partner. significant enjoy, partners. principled distinguish propriety attaching partner, contravention current practice, practice. liability, not, thereby, partnership. problem unlike kind bear resemblance Elliott, Collections, Liens, Levies ¶¶ 9.09[3][a]-[f] Elliott) (listing examples attaches, payment; withdraw money bank account, accounts receivable; wages earned paid; installment contract annuity payments; beneficiary's payment trust; liquor license; easement; timeshare; options; employee plan retirement account) 6331, 6335-6336 inUnited family home foreclosed 7403, 701-703, 31. SeeIRS Gaster, 787, 791 (concluding obligations spouse); Pitts 946 1569, 1571-1572 (CA4 1991) (same); American Nat. Jacksonville, 255 504, 507 (CA5), cert. denied, 358 835 620, 622-623 1952) 326, 331 1951) sense"); Nathanson, 60 193, 194 (ED 1945) (finding designation imposing alone); Shaw 94 245, 246 1939) precludes spouse). Benson 442 1221, 1223 (CADC 1971) concession subjected debt tenant); Cole Cardoza, 441 1343 valid entirety). See,e. Manual 5.8.4.2.3 (RIA 2002), available WESTLAW, RIA-IRM database (Mar. 29, 2002) entirety" lien); 5.6.1.2.3 consensual appropriate "when question. assessment exists Chief Counsel Advisory (Aug. mortgages, used "as securing collect to, added)); Litigation Bulletin 407 ("Traditionally, government taken debtor-spouse 388 (Jan. 1993) Department Justice chief counsel interpreted encumbers noting "do[es] believe argue broader Rodgers," entireties); Benson, 1223; 1343.

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