Opinion
14576-22L
06-27-2023
HARRY G. ZAVISCH, III AND ESTATE OF EDDY M. ZAVISCH, DECEASED, HARRY G. ZAVISCH, III, SURVIVING SPOUSE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
ADAM B. LANDY, SPECIAL TRIAL JUDGE
On January 5, 2023, the Court issued an Order of Dismissal for Lack of Jurisdiction and Order granting the Commissioner's Motion to Dismiss for Lack of Jurisdiction as to Petitioners' Income Tax Liabilities for Taxable Years 2014, 2015, 2017, 2018, and 2019, filed August 16, 2022, in part, insofar as this case was dismissed for lack of jurisdiction as to taxable years 2014, 2015, 2018, and 2019. The Court took the Commissioner's motion as to taxable year 2017 under advisement. On February 3, 2023, petitioners, by and through their counsel, filed a Motion to Vacate the Court's Order of Dismissal for Lack of Jurisdiction, pursuant to Rule 162.Petitioners argue that the Court erred in dismissing their case as to taxable years 2014, 2015, 2018, and 2019.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
On March 3, 2023, the Commissioner filed a response to petitioners' Motion to Vacate arguing that the Notice of Federal Tax Lien (NFTL) filed in Bexar County, Texas, on September 23, 2021, complied with section 6323 for property, real or personal, owned by petitioners in Bexar County or elsewhere. The Commissioner further argues that an NFTL arises upon assessment of the tax and notice and demand for payment attaches to all property and rights to property owned by petitioners, see sections 6321 and 6322, and the U.S. Supreme Court has held that Congress broadly defined "property" to reach every interest a taxpayer might have in property. See United States v. Nat'l Bank of Commerce, 472 U.S. 713 (1985). The Commissioner concludes his response by stating that he properly filed the NFTL, in accordance with section 6323(f), which attached to petitioners' rights in property owned in Bexar County and any other county at the time the lien was filed, and this lien also attached to any property acquired after the filing of the NFTL. See United States v. McDermott, 507 U.S. 447, 450-454 (1993).
Petitioners argue that the September 23, 2021, NFTL was not received by them, and thus, the NFTL is defective. The Commissioner is required to provide a copy of the NFTL to petitioners (A) in person; (B) left at their dwelling or usual place of business; or (C) sent by certified or registered mail to petitioners' last known address, not more than 5 business days after the day of the filing of the notice of lien. § 6320(a)(2). The record reflects that the Commissioner mailed the NFTL regarding taxable years 2014, 2015, 2018 and 2019 to petitioners, by certified mail, on September 23, 2021, to their last known address. Petitioners do not dispute that this NFTL was mailed to them at their last known address and by certified mail, as required by section 6320(a)(2)(C). See also Treas. Reg. § 301.6320-1(a)(2), Q&A-9. Since the Commissioner properly mailed the September 23, 2021, NFTL to petitioners, actual receipt by petitioners is not a prerequisite to the validity of the NFTL. Id. at Q&A-11. The NFTL becomes effective upon filing. Id. at Q&A-12. The validity and priority of a NFTL is not conditioned on notification to petitioners pursuant to section 6320. Id. Therefore, any failure to notify petitioners concerning the filing of the September 23, 2021, NFTL does not affect the validity or priority of the NFTL. Id.; see also Estate of Brandon v. Commissioner, 133 T.C. 83, 86 (2009).
Next, petitioners argue that the NFTL was filed in Bexar County, Texas, in a county they did not own property, and for this additional reason, the September 23, 2021, NFTL was not properly filed. The Commissioner may file a lien against "all property and rights to property, whether real or personal" of any person liable for taxes upon demand for payment and failure to pay. See § 6321; Wadleigh v. Commissioner, 134 T.C. 280, 290 (2010); Iannone v. Commissioner, 122 T.C. 287, 293 (2004). The lien arises automatically on the date of assessment and continues until the tax liability is satisfied or becomes unenforceable by reason of lapse of time. § 6322; Iannone v. Commissioner, supra at 293. Section 6321 "is broad and reveals on its face that Congress meant to reach every interest in property that a taxpayer might have." See Drye v. United States, 528 U.S. 49, 56 (1999) (quoting United States v. Nat'l Bank of Commerce, supra at 719-720); see also Jewell v. Commissioner, T.C. Memo. 2016-239, *6. The purpose of filing the notice of the tax lien, originating under section 6321, is simply to protect the Commissioner's interest in a taxpayers' property against the claims of a purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor. § 6323(a).
The NFTL filed by the Commissioner is valid and properly attached to all property and rights to property, whether real or personal, tangible or intangible, belonging to petitioners. Therefore, the September 23, 2021, NFTL properly protected the Commissioner's interest in petitioners' personal property and future acquired property even though petitioners allegedly owned no real property in Bexar County, Texas, the county in which the Commissioner filed the NFTL.
Petitioners failed to provide any new information or legal arguments to warrant the Court to vacate its Order of Dismissal for Lack of Jurisdiction and Order served January 5, 2023. For the Court to grant a Motion to Vacate, a party must show substantial error or unusual circumstances, such as mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, or fraud. See Knudsen v. Commissioner, 131 T.C. 185, 186 (2008); Brannon's of Shawnee, Inc. v. Commissioner, 69 T.C. 999 (1978). None of those factors appear present in this case, and petitioners' motion does not persuade us to vacate our Order of Dismissal for Lack of Jurisdiction and Order.
Upon due consideration of petitioners' motion, the Commissioner's response, and for cause, it is
ORDERED that petitioners' Motion to Vacate Order of Dismissal, filed February 3, 2023, is denied.