A person’s failure “to pay any tax” after the government’s demand for payment creates “a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.” But what happens if the property of such person is jointly owned with another who doesn’t owe tax? A district court asked this question said it was permissible for the government to proceed with a forced sale (David Scott Dase, DC-AL, 2/27/20).
The case involved a brother and sister who inherited property from their father. Each held a one-half interest, although only the brother and his spouse lived on the property. The sister hadn’t lived there since she was a child. The brother made all the mortgage payments and eventually paid off the mortgage in full. The government obtained a default judgment against the brother for more than $290,000 in federal employment taxes, unemployment taxes, a civil penalty, plus statutory fees and interest. As a result of the default judgment, the government has a lien on the property, which permits a decree of sale and a distribution of the proceeds.
In permitting the sale to proceed, the district court had to consider the impact on a third party…the sister. The court evaluated four established factors in determining that the impact on the sister did not overcome the government’s interest in a forced a sale:
Bottom line: All factors support a forced sale of the entire property by the government to recoup some of the taxes owned by one of the joint owners of the property.
Employees are not taxed on up to $50,000 of group-term coverage.