Court Opinion

ID: 9639692
Source: CourtListenerOpinion
Date Created: 2023-08-22 16:45:13.216836+00
Date Added: 2024-06-11T18:10:21.052831
License: Public Domain

DENMAN, Circuit Judge
(dissenting).
Congress, for the protection of those dealing with delinquent taxpayers in transactions involving the securing of the taxpayer’s obligations, has enacted provisions for the recordation of the delinquency. 26 U.S.C.A. Int.Rev.Code, § 3672. It is further provided that the period during which the lien upon the property of the delinquent taxpayer shall exist is six years after assessment of the tax. 26 U.S.C.A. Int.Rev.Code, §§ 276, 3671.
Congress also provided for an extension of the period during which the delinquent tax claims may be asserted. 26 U.S.C.A. Int.Rev.Code, § 276(c). The majority opinion holds that the tax lien attaches to after-acquired property and, in effect, holds that the recordation advising those dealing with the taxpayer loses all its value and becomes a mere trap to the persons so engaged in such transactions, by the unrecorded agreement of the taxpayer with the Government to extend the time during which the tax obligation shall exist. I do not believe that this was the intent of Congress.
It is true that the party engaged in the transaction with the taxpayer has notice that the taxpayer may have made such an agreement with the Government and, it may be argued, is thereby required to inform himself by inquiry of the taxpayer or the Treasury Department as to the existence of such an extension agreement. There is no statute requiring any Treasury official to disclose the existence of such an agreement. Such an inquiry may produce an erroneous negative answer or no answer at all. It has none of the certitude which Congress seeks to establish in its recordation provision. An untruthful response by the taxpayer may give certain legal remedies, but the purpose of the required recordation of the tax lien is to relieve the party dealing with the taxpayer from just such risk of having a law suit substituted for his security.
It is not necessary to consider what would be the effect of the recordation by the Treasury of the taxpayer’s extension agreement or whether the taxing officials have the power to record it. Here it was not recorded and it is alleged, and not denied, that appellant had no notice of its existence. In my opinion Congress intended the recordation of the tax lien to enable third persons to take the property of the taxpayer free of the tax lien, as security for his obligations six years after the assessment, unless such third person has notice of the extension agreement. Since the appellant acquired its lien after the expiration of the six years, without notice of the extension, it should be held superior to that of the Government.