Estate of Brandon v. Commissioner, 133 T.C. No. 4 (T.C. 2009).
Facts
On August 9, 2004, [the I.R.S.] issued Mr. Brandon a proposed assessment regarding section 6672 trust penalties. (3). On February 27, 2006, [the I.R.S.] assessed the . . . trust penalties. (3). Mr. Brandon died in a motorcycle accident on April 27, 2006. (3). On November 2, 2006, [after having been informed about Mr. Brandon's death] the revenue officer issued Mr. Brandon a Letter 3172, Notice of Federal Tax Lien . . . relating to the unpaid trust penalties. [On] November 3, 2006, the next day, the revenue office recorded, with the clerk of Denton County, Texas, Form 668(Y)(c), Notice of Federal Tax Lien, relating to Mr. Brandon's property.
Issue for the Court
[W]hether there was an abuse of discretion in sustaining the notice of Federal tax lien (NFTL) relating to the 2003 trust fund recovery penalties (trust penalties) assessed against Mark Brandon (Mr. Brandon). (2).
Although the court phrases the issue as an abuse of discretion, the court really answers the question of when a lien attaches and whether the lien remains attached when property transfers at death.
Arguments
The estate contends that as of April 27, 2006, Mr. Brandon's date of death, the title to all Mr. Brandon's property "passed to the devisees or legatees of the estate of Mark Brandon, the estate of Mark Brandon, or the executor of the estate of Mark Brandon [and] therefore, the NFTL is invalid." The estate further contends that Mr. Brandon "had no property interest when the NFTL was issued on November 2, 2006" to which any lien could attach. (5).
The [I.R.S.] contends that the lien attached to Mr. Brandon's property on February 27, 2006, the date of assessment . . . further . . . the attachment occurred before Mr. Brandon's death and . . . the lien remained attached even at his death. (5).
Holding
We agree with the [I.R.S.].
[A] lien arises at the time the assessment is made and continues until the liability is satisfied or becomes unenforceable by reason of lapse of time. (5).
After a lien attaches to property, it remains attached and is not invalidated by a transfer of property. See United States v. Bess, 357 U.S. 51, 57 (1958) (holding that the transfer of property after attachment of a lien does not invalidate the lien) . . . . (6). Therefore, Mr. Brandon's death, which occurred 2 months after the lien attached to his property, does not adversely affect the validity of the NFTL. (6).
Comments