OCTOBER TERM, 2001
Syllabus
UNITED STATES
v. CRAFT
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH
CIRCUIT
No.00-1831. Argued January 14, 2002-Decided April 17, 2002
When respondent's husband failed to pay federal income tax
liabilities assessed against him, a federal tax lien attached to
"all [of his] property and rights to property." 26 U. S. C. § 6321.
After the notice of the lien was filed, respondent and her husband
jointly executed a quitclaim deed purporting to transfer to her his
interest in a piece of real property in Michigan that they owned as
tenants by the entirety. Subsequently, the Internal Revenue Service
(IRS) agreed to release the lien and allow respondent to sell the
property with half the net proceeds to be held in escrow pending
determination of the Government's interest in the property. She
brought this action to quiet title to the escrowed proceeds. The
Government claimed, among other things, that its lien had attached
to the husband's interest in the tenancy by the entirety. The
District Court granted the Government summary judgment, but the
Sixth Circuit held that no lien attached because the husband had no
separate interest in the entireties property under Michigan law,
and remanded the case for consideration of an alternative claim not
at issue here. In affirming the District Court's decision on
remand, the Sixth Circuit held that its prior opinion on the issue
whether the lien attached to the husband's entireties property was
the law of the case.
Held: The husband's interests in the entireties property
constitute "property" or "rights to property" to which a federal
tax lien may attach. Pp.278-289.
(a) Because the federal tax lien statute itself creates no
property rights,
United States v.
Bess, 357 U. S. 51, 55, this
Court looks initially to state law to determine what rights the
taxpayer has in the property the Government seeks to reach and then
to federal law to determine whether such state-delineated rights
qualify as property or rights to property under § 6321,
Drye
v.
United States, 528 U. S. 49, 58. A common
idiom describes property as a "bundle of sticks"-a collection of
individual rights which, in certain combinations, constitute
property. State law determines which sticks are in a person's
bundle, but federal law determines whether those sticks constitute
property for federal tax lien purposes. In looking to state law,
this Court must consider the substance of the state law rights, not
the labels the State gives them or the conclusions it draws from
them. Pp. 278-279.
275
(b) Michigan law gave respondent's husband, among other rights,
the right to use the entireties property, the right to exclude
others from it, the right of survivorship, the right to become a
tenant in common with equal shares upon divorce, the right to sell
the property with respondent's consent and to receive half the
proceeds from such a sale, the right to encumber the property with
respondent's consent, and the right to block respondent from
selling or encumbering the property unilaterally. Pp. 279-282.
(c) The rights Michigan law granted respondent's husband qualify
as "property" or "rights to property" under § 6321. The broad
statutory language authorizing the tax lien reveals that Congress
meant to reach every property interest that a taxpayer might have.
United States v.
National Bank of Commerce, 472 U. S. 713, 719-720.
The husband's rights of use, exclusion, and income alone may be
sufficient to subject his entireties interest to the lien, for they
gave him a substantial degree of control over the property. See
Drye, supra, at 61. He also had the right to alienate the
property with respondent's consent. The unilateral alienation stick
is not essential to "property." Federal tax liens may attach to
property that cannot be unilaterally alienated,
United
States v.
Rodgers, 461 U. S. 677, and
excluding such property would exempt a rather large amount of what
is commonly thought of as property. A number of the sticks in
respondent's husband's bundle were presently existing, so it is not
necessary to consider whether his survivorship right alone, which
respondent claims is an expectancy, would qualify as property or
rights to property. Were this Court to reach a contrary conclusion,
the entireties property would belong to no one for § 6321 purposes
because respondent had no more interest in the property than her
husband. Such a result seems absurd and would allow spouses to
shield their property from federal taxation by classifying it as
entireties property, facilitating abuse of the federal tax system.
Legislative history does not support respondent's position that
Congress did not intend that a federal tax lien attach to an
entireties property interest. And the common-law background of the
tax lien statute's enactment is not enough to overcome the broad
language Congress actually used. Pp. 283-288.
(d) That Michigan makes a different choice with respect to state
law creditors does not dictate the choice here. Because § 6321's
interpretation is a federal question, this Court is in no way bound
by state courts' answers to similar questions involving state law.
Pp. 288-289.
233 F.3d
358, reversed and remanded.
O'CONNOR, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and KENNEDY, SOUTER, GINSBURG, and BREYER, JJ.,
joined.
276
SCALIA, J., filed a dissenting opinion, in which THOMAS, J.,
joined,
post, p. 289. THOMAS, J., filed a dissenting
opinion, in which STEVENS and SCALIA, JJ., joined,
post, p.
290.
Kent L. Jones argued the cause for the United States.
With him on the briefs were Solicitor General Olson, Assistant
Attorney General O'Connor, Deputy Solicitor General Wallace, David
English Carmack, and Joan 1. Oppenheimer.
Jeffrey S. Sutton argued the cause for respondent. With him on
the briefs were Chad A. Readler, Jeffrey A. Moyer, and Michael
Dubetz, Jr.
JUSTICE O'CONNOR delivered the opinion of the Court. This case
raises the question whether a tenant by the entirety possesses
"property" or "rights to property" to which a federal tax lien may
attach. 26 U. S. C. § 6321. Relying on the state law fiction that a
tenant by the entirety has no separate interest in entireties
property, the United States Court of Appeals for the Sixth Circuit
held that such property is exempt from the tax lien. We conclude
that, despite the fiction, each tenant possesses individual rights
in the estate sufficient to constitute "property" or "rights to
property" for the purposes of the lien, and reverse the judgment of
the Court of Appeals.
I
In 1988, the Internal Revenue Service (IRS) assessed $482,446 in
unpaid income tax liabilities against Don Craft, the husband of
respondent Sandra L. Craft, for failure to file federal income tax
returns for the years 1979 through 1986. App. to Pet. for Cert.
45a, 72a. When he failed to pay, a federal tax lien attached to
"all property and rights to property, whether real or personal,
belonging to" him. 26 U. S. C. § 6321.
At the time the lien attached, respondent and her husband owned
a piece of real property in Grand Rapids, Michigan, as tenants by
the entirety. App. to Pet. for Cert. 45a. After notice of the lien
was filed, they jointly executed a
277
quitclaim deed purporting to transfer the husband's interest in
the property to respondent for one dollar.
Ibid. When
respondent attempted to sell the property a few years later, a
title search revealed the lien. The IRS agreed to release the lien
and allow the sale with the stipulation that half of the net
proceeds be held in escrow pending determination of the
Government's interest in the property.
Ibid.
Respondent brought this action to quiet title to the escrowed
proceeds. The Government claimed that its lien had attached to the
husband's interest in the tenancy by the entirety. It further
asserted that the transfer of the property to respondent was
invalid as a fraud on creditors.
Id., at 46a-47a. The
District Court granted the Government's motion for summary
judgment, holding that the federal tax lien attached at the moment
of the transfer to respondent, which terminated the tenancy by the
entirety and entitled the Government to one-half of the value of
the property. No. 1:93-CV-306, 1994 WL 669680, *3 (WD Mich., Sept.
12, 1994).
Both parties appealed. The Sixth Circuit held that the tax lien
did not attach to the property because under Michigan state law,
the husband had no separate interest in property held as a tenant
by the entirety.
140 F.3d
638, 643 (1998). It remanded to the District Court to consider
the Government's alternative claim that the conveyance should be
set aside as fraudulent.
Id., at 644.
On remand, the District Court concluded that where, as here,
state law makes property exempt from the claims of creditors, no
fraudulent conveyance can occur. 65 F. Supp. 2d 651, 657-658 (WD
Mich. 1999). It found, however, that respondent's husband's use of
nonexempt funds to pay the mortgage on the entireties property,
which placed them beyond the reach of creditors, constituted a
fraudulent act under state law, and the court awarded the IRS a
share of the proceeds of the sale of the property equal to that
amount.
Id., at 659.
278
Both parties appealed the District Court's decision, the
Government again claiming that its lien attached to the husband's
interest in the entireties property. The Court of Appeals held that
the prior panel's opinion was law of the case on that issue.
233 F.3d
358, 363-369
(CA6 2000). It also affirmed the District
Court's determination that the husband's mortgage payments were
fraudulent.
Id., at 369-375.
We granted certiorari to consider the Government's claim that
respondent's husband had a separate interest in the entireties
property to which the federal tax lien attached. 533 U. S. 976
(2001).
II
Whether the interests of respondent's husband in the property he
held as a tenant by the entirety constitutes "property and rights
to property" for the purposes of the federal tax lien statute, 26
U. S. C. § 6321, is ultimately a question of federal law. The
answer to this federal question, however, largely depends upon
state law. The federal tax lien statute itself "creates no property
rights but merely attaches consequences, federally defined, to
rights created under state law."
United States v.
Bess, 357 U. S.
51, 55 (1958); see also
United States v.
National
Bank of Commerce, 472 U. S. 713, 722
(1985). Accordingly, "[w]e look initially to state law to determine
what rights the taxpayer has in the property the Government seeks
to reach, then to federal law to determine whether the taxpayer's
state-delineated rights qualify as 'property' or 'rights to
property' within the compass of the federal tax lien legislation."
Drye v.
United States, 528 U. S. 49, 58 (1999).
A common idiom describes property as a "bundle of sticks"-a
collection of individual rights which, in certain combinations,
constitute property. See B. Cardozo, Paradoxes of Legal Science 129
(1928) (reprint 2000); see also
Dickman v.
Commissioner, 465 U. S. 330, 336
(1984). State law determines only which sticks are in a person's
bundle.
279
Whether those sticks qualify as "property" for purposes of the
federal tax lien statute is a question of federal law.
In looking to state law, we must be careful to consider the
substance of the rights state law provides, not merely the labels
the State gives these rights or the conclusions it draws from them.
Such state law labels are irrelevant to the federal question of
which bundles of rights constitute property that may be attached by
a federal tax lien. In
Drye v.
United States, supra,
we considered a situation where state law allowed an heir subject
to a federal tax lien to disclaim his interest in the estate. The
state law also provided that such a disclaimer would "creat[e] the
legal fiction" that the heir had predeceased the decedent and would
correspondingly be deemed to have had no property interest in the
estate.
Id., at 53. We unanimously held that this state law
fiction did not control the federal question and looked instead to
the realities of the heir's interest. We concluded that, despite
the State's characterization, the heir possessed a "right to
property" in the estate-the right to accept the inheritance or pass
it along to another-to which the federal lien could attach.
Id., at 59-61.
III
We turn first to the question of what rights respondent's
husband had in the entireties property by virtue of state law. In
order to understand these rights, the tenancy by the entirety must
first be placed in some context.
English common law provided three legal structures for the
concurrent ownership of property that have survived into modern
times: tenancy in common, joint tenancy, and tenancy by the
entirety. 1 G. Thompson, Real Property § 4.06(g) (D. Thomas ed.
1994) (hereinafter Thompson). The tenancy in common is now the most
common form of concurrent ownership. 7 R. Powell & P. Rohan,
Real Property § 51.01[3] (M. Wolf ed. 2001) (hereinafter Powell).
The common law characterized tenants in common as each owning
280
a separate fractional share in undivided property.
Id., §
50.01[1]. Tenants in common may each unilaterally alienate their
shares through sale or gift or place encumbrances upon these
shares. They also have the power to pass these shares to their
heirs upon death. Tenants in common have many other rights in the
property, including the right to use the property, to exclude third
parties from it, and to receive a portion of any income produced
from it.
Id., §§ 50.03-50.06.
Joint tenancies were the predominant form of concurrent
ownership at common law, and still persist in some States today. 4
Thompson § 31.05. The common law characterized each joint tenant as
possessing the entire estate, rather than a fractional share:
"[J]oint-tenants have one and the same interest ... held by one and
the same undivided possession." 2 W. Blackstone, Commentaries on
the Laws of England 180 (1766). Joint tenants possess many of the
rights enjoyed by tenants in common: the right to use, to exclude,
and to enjoy a share of the property's income. The main difference
between a joint tenancy and a tenancy in common is that a joint
tenant also has a right of automatic inheritance known as
"survivorship." Upon the death of one joint tenant, that tenant's
share in the property does not pass through will or the rules of
intestate succession; rather, the remaining tenant or tenants
automatically inherit it.
Id., at 183; 7 Powell § 51.01[3].
Joint tenants' right to alienate their individual shares is also
somewhat different. In order for one tenant to alienate his or her
individual interest in the tenancy, the estate must first be
severed-that is, converted to a tenancy in common with each tenant
possessing an equal fractional share.
Id., § 51.04[1]. Most
States allowing joint tenancies facilitate alienation, however, by
allowing severance to automatically accompany a conveyance of that
interest or any other overt act indicating an intent to sever.
Ibid.
A tenancy by the entirety is a unique sort of concurrent
ownership that can only exist between married persons. 4
281
Thompson § 33.02. Because of the common-law fiction that the
husband and wife were one person at law (that person, practically
speaking, was the husband, see J. Cribbet et al., Cases and
Materials on Property 329 (6th ed. 1990)), Blackstone did not
characterize the tenancy by the entirety as a form of concurrent
ownership at all. Instead, he thought that entireties property was
a form of single ownership by the marital unity. Orth, Tenancy by
the Entirety: The Strange Career of the Common-Law Marital Estate,
1997 B. Y. U. L. Rev. 35, 38-39. N either spouse was considered to
own any individual interest in the estate; rather, it belonged to
the couple.
Like joint tenants, tenants by the entirety enjoy the right of
survivorship. Also like a joint tenancy, unilateral alienation of a
spouse's interest in entireties property is typically not possible
without severance. Unlike joint tenancies, however, tenancies by
the entirety cannot easily be severed unilaterally. 4 Thompson §
33.08(b). Typically, severance requires the consent of both
spouses,
id., § 33.08(a), or the ending of the marriage in
divorce,
id., § 33.08(d). At common law, all of the other
rights associated with the entireties property belonged to the
husband: as the head of the household, he could control the use of
the property and the exclusion of others from it and enjoy all of
the income produced from it.
Id., § 33.05. The husband's
control of the property was so extensive that, despite the rules on
alienation, the common law eventually provided that he could
unilaterally alienate entireties property without severance subject
only to the wife's survivorship interest. Orth,
supra, at
40-41.
With the passage of the Married Women's Property Acts in the
late 19th century granting women distinct rights with respect to
marital property, most States either abolished the tenancy by the
entirety or altered it significantly. 7 Powell § 52.01[2].
Michigan's version of the estate is typical of the modern tenancy
by the entirety. Following Blackstone, Michigan characterizes its
tenancy by the entirety as creat-
282
ing no individual rights whatsoever: "It is well settled under
the law of this State that one tenant by the entirety has no
interest separable from that of the other .... Each is vested with
an entire title."
Long v.
Earle, 277 Mich. 505, 517,
269 N. W. 577, 581 (1936). And yet, in Michigan, each tenant by the
entirety possesses the right of survivorship. Mich. Compo Laws Ann.
§ 554.872(g) (West Supp. 1997), recodified at § 700.2901(2)(g)
(West Supp. Pamphlet 2001). Each spouse-the wife as well as the
husband-may also use the property, exclude third parties from it,
and receive an equal share of the income produced by it. See §
557.71 (West 1988). Neither spouse may unilaterally alienate or
encumber the property,
Long v.
Earle, supra, at 517,
269 N. W., at 581;
Rogers v.
Rogers, 136 Mich. App.
125, 134, 356 N. W. 2d 288, 292 (1984), although this may be
accomplished with mutual consent,
Eadus v.
Hunter,
249 Mich. 190, 228 N. W. 782 (1930). Divorce ends the tenancy by
the entirety, generally giving each spouse an equal interest in the
property as a tenant in common, unless the divorce decree specifies
otherwise. Mich. Compo Laws Ann. § 552.102 (West 1988).
In determining whether respondent's husband possessed "property"
or "rights to property" within the meaning of 26 U. S. C. § 6321,
we look to the individual rights created by these state law rules.
According to Michigan law, respondent's husband had, among other
rights, the following rights with respect to the entireties
property: the right to use the property, the right to exclude third
parties from it, the right to a share of income produced from it,
the right of survivorship, the right to become a tenant in common
with equal shares upon divorce, the right to sell the property with
the respondent's consent and to receive half the proceeds from such
a sale, the right to place an encumbrance on the property with the
respondent's consent, and the right to block respondent from
selling or encumbering the property unilaterally.
283
IV
We turn now to the federal question of whether the rights
Michigan law granted to respondent's husband as a tenant by the
entirety qualify as "property" or "rights to property" under §
6321. The statutory language authorizing the tax lien "is broad and
reveals on its face that Congress meant to reach every interest in
property that a taxpayer might have."
United States v.
National Bank of Commerce, 472 U. S., at 719-720. "Stronger
language could hardly have been selected to reveal a purpose to
assure the collection of taxes."
Glass City Bank v.
United States, 326 U. S. 265, 267
(1945). We conclude that the husband's rights in the entireties
property fall within this broad statutory language.
Michigan law grants a tenant by the entirety some of the most
essential property rights: the right to use the property, to
receive income produced by it, and to exclude others from it. See
Dolan v.
City of Tigard, 512 U. S. 374, 384 (1994)
("[T]he right to exclude others" is " 'one of the most essential
sticks in the bundle of rights that are commonly characterized as
property''' (quoting
Kaiser Aetna v.
United States,
444 U. S. 164,
176 (1979)));
Loretto v.
Teleprompter Manhattan CATV
Corp., 458 U. S.
419, 435 (1982) (including "use" as one of the "[p]roperty
rights in a physical thing"). These rights alone may be sufficient
to subject the husband's interest in the entireties property to the
federal tax lien. They gave him a substantial degree of control
over the entireties property, and, as we noted in
Drye, "in
determining whether a federal taxpayer's state-law rights
constitute 'property' or 'rights to property,' [t]he important
consideration is the breadth of the control the [taxpayer] could
exercise over the property." 528 U. S., at 61 (some internal
quotation marks omitted).
The husband's rights in the estate, however, went beyond use,
exclusion, and income. He also possessed the right to alienate (or
otherwise encumber) the property with the consent of respondent,
his wife.
Loretto, supra, at 435 (the
284
right to "dispose" of an item is a property right). It is true,
as respondent notes, that he lacked the right to unilaterally
alienate the property, a right that is often in the bundle of
property rights. See also
post, at 296-297 (THOMAS, J.,
dissenting). There is no reason to believe, however, that this one
stick-the right of unilateral alienation-is essential to the
category of "property."
This Court has already stated that federal tax liens may attach
to property that cannot be unilaterally alienated. In
United
States v.
Rodgers, 461 U. S. 677 (1983), we
considered the Federal Government's power to foreclose homestead
property attached by a federal tax lien. Texas law provided that
"'the owner or claimant of the property claimed as homestead [may
not], if married, sell or abandon the homestead without the consent
of the other spouse.'"
Id., at 684685 (quoting Tex. Const.,
Art. 16, § 50). We nonetheless stated that "[i]n the homestead
context ... , there is no doubt ... that not only do
both
spouses (rather than neither) have an independent interest in the
homestead property, but that a federal tax lien can at least
attach to each of those interests." 461 U. S., at 703, n.
31; cf.
Drye, supra, at 60, n. 7 (noting that "an interest
in a spendthrift trust has been held to constitute '''property''
for purposes of § 6321' even though the beneficiary may not
transfer that interest to third parties").
Excluding property from a federal tax lien simply because the
taxpayer does not have the power to unilaterally alienate it would,
moreover, exempt a rather large amount of what is commonly thought
of as property. It would exempt not only the type of property
discussed in
Rodgers, but also some community property.
Community property States often provide that real community
property cannot be alienated without the consent of both spouses.
See,
e. g., Ariz. Rev. Stat. Ann. §
25-214(C)
(2000); Cal. Fam. Code Ann. § 1102 (West 1994); Idaho Code § 32-912
(1996); La. Civ. Code Ann., Art. 2347 (West Supp. 2002); Nev. Rev.
Stat. Ann. § 123.230(3)
285
(Supp. 2001); N. M. Stat. Ann. §40-3-13 (1999); Wash. Rev. Code
§ 26.16.030(3) (1994). Accordingly, the fact that respondent's
husband could not unilaterally alienate the property does not
preclude him from possessing "property and rights to property" for
the purposes of § 6321.
Respondent's husband also possessed the right of
survivorship-the right to automatically inherit the whole of the
estate should his wife predecease him. Respondent argues that this
interest was merely an expectancy, which we suggested in
Drye would not constitute "property" for the purposes of a
federal tax lien. 528 U. S., at 60, n. 7 ("[We do not mean to
suggest] that an expectancy that has pecuniary value ... would fall
within § 6321 prior to the time it ripens into a present estate").
Drye did not decide this question, however, nor do we need
to do so here. As we have discussed above, a number of the sticks
in respondent's husband's bundle were presently existing. It is
therefore not necessary to decide whether the right to survivorship
alone would qualify as "property" or "rights to property" under §
6321.
That the rights of respondent's husband in the entireties
property constitute "property" or "rights to property" "belonging
to" him is further underscored by the fact that, if the conclusion
were otherwise, the entireties property would belong to no one for
the purposes of § 6321. Respondent had no more interest in the
property than her husband; if neither of them had a property
interest in the entireties property, who did? This result not only
seems absurd, but would also allow spouses to shield their property
from federal taxation by classifying it as entireties property,
facilitating abuse of the federal tax system. Johnson, After
Drye: The Likely Attachment of the Federal Tax Lien to
Tenancy-by-theEntireties Interests, 75 Ind. L. J. 1163, 1171
(2000).
JUSTICE SCALIA'S and JUSTICE THOMAS' dissents claim that the
conclusion that the husband possessed an interest in the entireties
property to which the federal tax lien could
286
attach is in conflict with the rules for tax liens relating to
partnership property. See
post, at 289 (opinion of SCALIA,
J.); see also
post, at 295-296, n. 4 (opinion of THOMAS,
J.). This is not so. As the authorities cited by JUSTICE THOMAS
reflect, the federal tax lien does attach to an individual
partner's interest in the partnership, that is, to the fair market
value of his or her share in the partnership assets.
Ibid.
(citing B. Bittker & M. McMahon, Federal Income Taxation of
Individuals ~ 44.5[4][a] (2d ed. 1995 and 2000 Cum. Supp.)); see
also 1 A. Bromberg & L. Ribstein, Partnership § 3.05(d) (2002-1
Supp.) (hereinafter Bromberg & Ribstein) (citing Uniform
Partnership Act § 28, 6 U. L. A. 744 (1995)). As a holder of this
lien, the Federal Government is entitled to "receive ... the
profits to which the assigning partner would otherwise be
entitled," including predissolution distributions and the proceeds
from dissolution. Uniform Partnership Act § 27(1),
id., at
736.
There is, however, a difference between the treatment of
entireties property and partnership assets. The Federal Government
may not compel the sale of partnership assets (although it may
foreclose on the partner's interest, 1 Bromberg & Ribstein §
3.05(d)(3)(iv)). It is this difference that is reflected in JUSTICE
SCALIA'S assertion that partnership property cannot be encumbered
by an individual partner's debts. See
post, at 289. This
disparity in treatment between the two forms of ownership, however,
arises from our decision in
United States v.
Rodgers,
supra (holding that the Government may foreclose on property
even where the coowners lack the right of unilateral alienation),
and not our holding today. In this case, it is instead the
dissenters' theory that departs from partnership law, as it would
hold that the Federal Government's lien does not attach to the
husband's interest in the entireties property at all, whereas the
lien may attach to an individual's interest in partnership
property.
287
Respondent argues that, whether or not we would conclude that
respondent's husband had an interest in the entireties property,
legislative history indicates that Congress did not intend that a
federal tax lien should attach to such an interest. In 1954, the
Senate rejected a proposed amendment to the tax lien statute that
would have provided that the lien attach to "property or rights to
property (including the interest of such person as tenant by the
entirety)." S. Rep. No. 1622, 83d Cong., 2d Sess., 575 (1954). We
have elsewhere held, however, that failed legislative proposals are
"a particularly dangerous ground on which to rest an interpretation
of a prior statute,"
Pension Benefit Guaranty Corporation v.
LTV Corp., 496
U. S. 633, 650 (1990), reasoning that "'[c]ongressional
inaction lacks persuasive significance because several equally
tenable inferences may be drawn from such inaction, including the
inference that the existing legislation already incorporated the
offered change.'"
Central Bank of Denver, N.
A. v.
First Interstate Bank of Denver, N.
A., 511 U. S. 164, 187
(1994). This case exemplifies the risk of relying on such
legislative history. As we noted in
United States v.
Rodgers, 461 U. S., at 704, n. 31, some legislative history
surrounding the 1954 amendment indicates that the House intended
the amendment to be nothing more than a "clarification" of existing
law, and that the Senate rejected the amendment only because it
found it "superfluous." See H. R. Rep. No. 1337, 83d Cong., 2d
Sess., A406 (1954) (noting that the amendment would "clarif[y] the
term 'property and rights to property' by expressly including
therein the interest of the delinquent taxpayer in an estate by the
entirety"); S. Rep. No. 1622, at 575 ("It is not clear what change
in existing law would be made by the parenthetical phrase. The
deletion of the phrase is intended to continue the existing
law").
The same ambiguity that plagues the legislative history
accompanies the common-law background of Congress' enactment of the
tax lien statute. Respondent argues that
288
Congress could not have intended the passage of the federal tax
lien statute to alter the generally accepted rule that liens could
not attach to entireties property. See
Astoria Fed. Sav.
&
Loan Assn. v.
Solimino, 501 U. S. 104, 108 (1991)
("[W]here a common-law principle is well established ... the courts
may take it as given that Congress has legislated with an
expectation that the principle will apply except 'when a statutory
purpose to the contrary is evident' "). The common-law rule was not
so well established with respect to the application of a federal
tax lien that we must assume that Congress considered the impact of
its enactment on the question now before us. There was not much of
a commonlaw background on the question of the application of
federal tax liens, as the first court of appeals cases dealing with
the application of such a lien did not arise until the 1950's.
United States v.
Hutcherson, 188
F.2d 326 (CA8 1951);
Raf-
faele v.
Granger, 196 F.2d
620 (CA3 1952). This background is not sufficient to
overcome the broad statutory language Congress did enact,
authorizing the lien to attach to "all property and rights to
property" a taxpayer might have.
We therefore conclude that respondent's husband's interest in
the entireties property constituted "property" or "rights to
property" for the purposes of the federal tax lien statute. We
recognize that Michigan makes a different choice with respect to
state law creditors: "[L]and held by husband and wife as tenants by
entirety is not subject to levy under execution on judgment
rendered against either husband or wife alone."
Sanford v.
Bertrau, 204 Mich. 244, 247, 169 N. W. 880, 881 (1918). But
that by no means dictates our choice. The interpretation of 26 U.
S. C. § 6321 is a federal question, and in answering that question
we are in no way bound by state courts' answers to similar
questions involving state law. As we elsewhere have held, "'exempt
status under state law does not bind the federal collector.'''
Drye v.
United States, 528 U. S., at 59. See also
Rodgers, supra, at 701 (clarifying that the Supremacy Clause
"provides the
289
underpinning for the Federal Government's right to sweep aside
state-created exemptions").
V
We express no view as to the proper valuation of respondent's
husband's interest in the entireties property, leaving this for the
Sixth Circuit to determine on remand. We note, however, that
insofar as the amount is dependent upon whether the 1989 conveyance
was fraudulent, see
post, at 290, n. 1 (THOMAS, J.,
dissenting), this case is somewhat anomalous. The Sixth Circuit
affirmed the District Court's judgment that this conveyance was not
fraudulent, and the Government has not sought certiorari review of
that determination. Since the District Court's judgment was based
on the notion that, because the federal tax lien could not attach
to the property, transferring it could not constitute an attempt to
evade the Government creditor, 65 F. Supp. 2d, at 657-659, in
future cases, the fraudulent conveyance question will no doubt be
answered differently.
The judgment of the United States Court of Appeals for the Sixth
Circuit is accordingly reversed, and the case is remanded for
proceedings consistent with this opinion.
It is so ordered.
JUSTICE SCALIA, with whom JUSTICE THOMAS joins, dissenting.
I join JUSTICE THOMAS'S dissent, which points out (to no
relevant response from the Court) that a State's decision to treat
the marital partnership as a separate legal entity, whose property
cannot be encumbered by the debts of its individual members, is no
more novel and no more "artificial" than a State's decision to
treat the commercial partnership as a separate legal entity, whose
property cannot be encumbered by the debts of its individual
members.
I write separately to observe that the Court nullifies (insofar
as federal taxes are concerned, at least) a form of prop-
290
erty ownership that was of particular benefit to the stay-athome
spouse or mother. She is overwhelmingly likely to be the survivor
that obtains title to the unencumbered property; and she (as
opposed to her business-world husband) is overwhelmingly unlikely
to be the source of the individual indebtedness against which a
tenancy by the entirety protects. It is regrettable that the Court
has eliminated a large part of this traditional protection retained
by many States.
JUSTICE THOMAS, with whom JUSTICE STEVENS and JUSTICE SCALIA
join, dissenting.
The Court today allows the Internal Revenue Service (IRS) to
reach proceeds from the sale of real property that did not belong
to the taxpayer, respondent's husband, Don Craft,l because, in the
Court's view, he "possesse[d] individual rights in the [tenancy by
the entirety] estate sufficient to constitute 'property' or 'rights
to property' for the purposes of the lien" created by 26 U. S. C. §
6321.
Ante, at 276. The Court does not contest that the tax
liability the IRS seeks to satisfy is Mr. Craft's alone, and does
not claim that, under Michigan law, real property held as a tenancy
by the entirety belongs to either spouse individually. Nor does the
Court
1 The Grand Rapids property was tenancy by the entirety property
owned by Mr. and Mrs. Craft when the tax lien attached, but was
conveyed by the Crafts to Mrs. Craft by quitclaim deed in 1989.
That conveyance terminated the entirety estate. Mich. Compo Laws
Ann. § 557.101 (West 1988); see also
United States V.
Certain Real Property Located at 2525 Leroy Lane, 910 F.2d
343, 351
(CA6 1990). The District Court and Court of
Appeals both held that the transfer did not constitute a fraudulent
conveyance, a ruling the Government has not appealed. The IRS is
undoubtedly entitled to any proceeds that Mr. Craft received or to
which he was entitled from
the 1989
conveyance of the
tenancy by the entirety property for $1; at that point the tenancy
by the entirety estate was destroyed and at least half of the
proceeds, or 50 cents, was "property" or "rights to property"
"belonging to" Mr. Craft. By contrast, the proceeds that the IRS
claims here are from
Mrs. Craft's 1992
sale of the
property to a third party. At the time of the sale, she owned the
property in fee simple, and accordingly Mr. Craft neither received
nor was entitled to these funds.
291
suggest that the federal tax lien attaches to particular "rights
to property" held individually by Mr. Craft. Rather, borrowing the
metaphor of "property as a 'bundle of sticks'a collection of
individual rights which, in certain combinations, constitute
property,"
ante, at 278, the Court proposes that so long as
sufficient "sticks" in the bundle of "rights to property" "belong
to" a delinquent taxpayer, the lien can attach as if the property
itself belonged to the taxpayer,
ante, at 285.
This amorphous construct ignores the primacy of state law in
defining property interests, eviscerates the statutory distinction
between "property" and "rights to property" drawn by § 6321, and
conflicts with an unbroken line of authority from this Court, the
lower courts, and the IRS. Its application is all the more
unsupportable in this case because, in my view, it is highly
unlikely that the limited individual "rights to property"
recognized in a tenancy by the entirety under Michigan law are
themselves subject to lien. I would affirm the Court of Appeals and
hold that Mr. Craft did not have "property" or "rights to property"
to which the federal tax lien could attach.
I
Title 26 U. S. C. § 6321 provides that a federal tax lien
attaches to "all property and rights to property, whether real or
personal, belonging to" a delinquent taxpayer. It is uncontested
that a federal tax lien itself "creates no property rights but
merely attaches consequences, federally defined, to rights created
under state law."
United States v.
Bess, 357 U. S. 51, 55 (1958)
(construing the 1939 version of the federal tax lien statute).
Consequently, the Government's lien under § 6321 "cannot extend
beyond the property interests held by the delinquent taxpayer,"
United States v.
Rodgers, 461 U. S. 677, 690-691
(1983), under state law. Before today, no one disputed that the
IRS, by operation of § 6321, "steps into the taxpayer's shoes," and
has the same rights as the taxpayer in property or rights to
property sub-
292
ject to the lien. B. Bittker & M. McMahon, Federal Income
Taxation of Individuals ~ 44.5[ 4] [a] (2d ed. 1995 and 2000 Cum.
Supp.) (hereinafter Bittker). I would not expand "'the nature of
the legal interest'" the taxpayer has in the property beyond those
interests recognized under state law.
Aquilino v.
United
States, 363 U. S.
509, 513 (1960) (citing
Morgan v.
Commissioner,
309 U. S. 78, 82
(1940)).
A
If the Grand Rapids property "belong[ed] to" Mr. Craft under
state law prior to the termination of the tenancy by the entirety,
the federal tax lien would have attached to the Grand Rapids
property. But that is not this case. As the Court recognizes,
pursuant to Michigan law, as under English common law, property
held as a tenancy by the entirety does not belong to either spouse,
but to a single entity composed of the married persons. See
ante, at 280-282. Neither spouse has "any separate interest
in such an estate."
Sanford v.
Bertrau, 204 Mich.
244, 249, 169 N. W. 880, 882 (1918); see also
Long v.
Earle, 277 Mich. 505, 517, 269 N. W. 577, 581 (1936) ("Each
[spouse] is vested with an entire title and as against the one who
attempts alone to conveyor incumber such real estate, the other has
an absolute title"). An entireties estate constitutes an
indivisible "sole tenancy." See
Budwit v.
Herr, 339
Mich. 265, 272, 63 N. W. 2d 841, 844 (1954); see also
Tyler
v.
United States, 281 U. S. 497, 501 (1930)
("[T]he tenants constitute a unit; neither can dispose of any part
of the estate without the consent of the other; and the whole
continues in the survivor"). Because Michigan does not recognize a
separate spousal interest in the Grand Rapids property, it did not
"belong" to either respondent or her husband individually when the
IRS asserted its lien for Mr. Craft's individual tax liability.
Thus, the property was not property to which the federal tax lien
could attach for Mr. Craft's tax liability.
293
The Court does not dispute this characterization of Michigan's
law with respect to the essential attributes of the tenancy by the
entirety estate. However, relying on
Drye v.
United
States, 528 U. S.
49, 59 (1999), which in turn relied upon
United States
v.
Irvine, 511
U. S. 224 (1994), and
United States v.
Mitchell,
403 U. S. 190
(1971), the Court suggests that Michigan's definition of the
tenancy by the entirety estate should be overlooked because federal
tax law is not controlled by state legal fictions concerning
property ownership.
Ante, at 279. But the Court
misapprehends the application of
Drye to this case.
Drye, like
Irvine and
Mitchell before it,
was concerned not with whether state law recognized "property" as
belonging to the taxpayer in the first place, but rather with
whether state laws could disclaim or exempt such property from
federal tax liability after the property interest was created.
Drye held only that a state-law disclaimer could not
retroactively undo a vested right in an estate that the taxpayer
already held, and that a federal lien therefore attached to the
taxpayer's interest in the estate. 528 U. S., at 61 (recognizing
that a disclaimer does not restore the
status quo ante
because the heir "determines who will receive the property-himself
if he does not disclaim, a known other if he does"). Similarly, in
Irvine, the Court held that a state law allowing an
individual to disclaim a gift could not force the Court to be
"struck blind" to the fact that the transfer of "property" or
"property rights" for which the gift tax was due had already
occurred;
"state property transfer rules do not transfer
into federal taxation rules." 511 U. S., at 239240 (emphasis
added). See also
Mitchell, supra, at 204 (holding that right
to renounce a marital interest under state law does not indicate
that the taxpayer had no right to property before the
renunciation).
Extending this Court's "state law fiction" jurisprudence to
determine whether property or rights to property
exist under
state law in the first place works a sea change in the
294
role States have traditionally played in "creating and defining"
property interests. By erasing the careful line between state laws
that purport to disclaim or exempt property interests after the
fact, which the federal tax lien does not respect, and state laws'
definition of property and property rights, which the federal tax
lien does respect, the Court does not follow
Drye, but
rather creates a new federal common law of property. This
contravenes the previously settled rule that the definition and
scope of property is left to the States. See
Aquilino,
supra, at 513, n. 3 (recognizing unsoundness of leaving the
definition of property interests to a nebulous body of federal law,
"because it ignores the long-established role that the States have
played in creating property interests and places upon the courts
the task of attempting to ascertain a taxpayer's property rights
under an undefined rule of federal law").
B
That the Grand Rapids property does not belong to Mr. Craft
under Michigan law does not end the inquiry, however, since the
federal tax lien attaches not only to "property" but also to any
"rights to property" belonging to the taxpayer. While the Court
concludes that a laundry list of "rights to property" belonged to
Mr. Craft as a tenant by the entirety,2 it does not suggest that
the tax lien attached to any of these particular rights.3 Instead,
the Court gathers
2 The parties disagree as to whether Michigan law recognizes the
"rights to property" identified by the Court as
individual
rights "belonging to" each tenant in entireties property. Without
deciding a question better resolved by the Michigan courts, for the
purposes of this case I will assume,
arguendo, that Michigan
law recognizes separate interests in these "rights to
property."
3 Nor does the Court explain how such "rights to property"
survived the destruction of the tenancy by the entirety, although,
for all intents and purposes, it acknowledges that such rights as
it identifies exist by virtue of the tenancy by the entirety
estate. Even Judge Ryan's concurrence in the Sixth Circuit's first
ruling in this matter is best read as making the
295
these rights together and opines that there were sufficient
sticks to form a bundle, so that "respondent's husband's interest
in the entireties property constituted 'property' or 'rights to
property' for the purposes of the federal tax lien statute."
Ante, at 288, 285.
But the Court's "sticks in a bundle" metaphor collapses
precisely because of the distinction expressly drawn by the
statute, which distinguishes between "property" and "rights to
property." The Court refrains from ever stating whether this case
involves "property" or "rights to property" even though § 6321
specifically provides that the federal tax lien attaches to
"property" and "rights to property" "belonging to" the delinquent
taxpayer, and not to an imprecise construct of "individual rights
in the estate sufficient to constitute 'property' or 'rights to
property' for the purposes of the lien."
Ante, at 276.4
Federal Government's right to execute its lien dependent upon
the factual finding that the conveyance was a fraudulent
transaction. See
140 F.3d
638, 648-649 (1998).
4 The Court's reasoning that because a taxpayer has rights to
property a federal tax lien can attach not only to those rights but
also to the property itself could have far-reaching consequences.
As illustration, in the partnership setting as elsewhere, the
Government's lien under § 6321 places the Government in no better
position than the taxpayer to whom the property belonged: "[F]or
example, the lien for a partner's unpaid income taxes attaches to
his interest in the firm, not to the firm's assets." Bittker ~
44.5[ 4][a]. Though partnership property currently is "not subject
to attachment or execution, except on a claim against the
partnership," Rev. Rul. 73-24, 1973-1 Cum. Bull. 602; CL
United
States v.
Kaufman, 267 U. S. 408 (1925),
under the logic of the Court's opinion partnership property could
be attached for the tax liability of an individual partner. Like a
tenant in a tenancy by the entirety, the partner has significant
rights to use, enjoy, and control the partnership property in
conjunction with his partners. I see no principled way to
distinguish between the propriety of attaching the federal tax lien
to partnership property to satisfy the tax liability of a partner,
in contravention of current practice, and the propriety of
attaching the federal tax lien to tenancy by the entirety property
in order to satisfy the tax liability of one spouse, also in
contravention of current practice. I do not doubt that a tax
lien
296
Rather than adopt the majority's approach, I would ask
specifically, as the statute does, whether Mr. Craft had any
particular "rights to property" to which the federal tax lien could
attach. He did not.5 Such "rights to property" that have been
subject to the § 6321 lien are valuable and "pecuniary," i.
e., they can be attached, and levied upon or sold by the
Government.6
Drye, 528 U. S., at 58-60, and n. 7. With such
rights subject to lien, the taxpayer's interest has "ripen[ed] into
a present estate" of some form and is more than a mere expectancy,
id., at 60, n. 7, and thus the taxpayer has an apparent
right "to channel that value to [another],"
id., at 61.
In contrast, a tenant in a tenancy by the entirety not only
lacks a present divisible vested interest in the property and
control with respect to the sale, encumbrance, and transfer of the
property, but also does not possess the ability to devise any
portion of the property because it is subject to the other's
indestructible right of survivorship.
Rogers v.
Rogers,
may attach to a partner's partnership interest to satisfy his
individual tax liability, but it is well settled that the lien does
not, thereby, attach to property belonging to the partnership. The
problem for the IRS in this case is that, unlike a partnership
interest, such limited rights that Mr. Craft had in the Grand
Rapids property are not the kind of rights to property to which a
lien can attach, and the Grand Rapids property itself never
"belong[ed] to" him under Michigan law.
5 Even such rights as Mr. Craft arguably had in the Grand Rapids
property bear no resemblance to those to which a federal tax lien
has ever attached. See W. Elliott, Federal Tax Collections, Liens,
and Levies n 9.09[3][a]-[f] (2d ed. 1995 and 2000 Cum. Supp.)
(hereinafter Elliott) (listing examples of rights to property to
which a federal tax lien attaches, such as the right to compel
payment; the right to withdraw money from a bank account, or to
receive money from accounts receivable; wages earned but not paid;
installment payments under a contract of sale of real estate;
annuity payments; a beneficiary's rights to payment under a
spendthrift trust; a liquor license; an easement; the taxpayer's
interest in a timeshare; options; the taxpayer's interest in an
employee benefit plan or individual retirement account).
6 See 26 U. S. C. §§ 6331, 6335-6336.
297
136 Mich. App. 125, 135-137, 356 N. W. 2d 288, 293-294 (1984).
This latter fact makes the property significantly different from
community property, where each spouse has a present one-half vested
interest in the whole, which may be devised by will or otherwise to
a person other than the spouse. See 4 G. Thompson, Real Property §
37.14(a) (D. Thomas ed. 1994) (noting that a married person's power
to devise one-half of the community property is "consistent with
the fundamental characteristic of community property": "community
ownership means that each spouse owns 50% of each community
asset").7 See also
Drye, 528 U. S., at 61 ("[I]n determining
whether a federal taxpayer's state-law rights constitute 'property'
or 'rights to property,' the
important consideration is the
breadth of the control the taxpayer could exercise over the
property" (emphasis added, citation and brackets omitted)).
It is clear that some of the individual rights of a tenant in
entireties property are primarily personal, dependent upon the
taxpayer's status as a spouse, and similarly not susceptible to a
tax lien. For example, the right to use the property in conjunction
with one's spouse and to exclude all others appears particularly
ill suited to being transferred to another, see
ibid., and
to lack "exchangeable value,"
id., at 56.
Nor do other identified rights rise to the level of "rights to
property" to which a § 6321 lien can attach, because they
represent, at most, a contingent future interest, or an
"expectancy" that has not "ripen[ed] into a present estate."
Id., at 60, n. 7 ("Nor do we mean to suggest that an
expec-
7 And it is similarly different from the situation in
United
States v.
Rodgers, 461 U. S. 677 (1983),
where the question was not whether a vested property interest in
the family home to which the federal tax lien could attach
"belong[ed] to" the taxpayer. Rather, in
Rodgers, the only
question was whether the federal tax lien for the husband's tax
liability could be
foreclosed against the property under 26
U. S. C. § 7403, despite his wife's homestead right under state
law. See 461 U. S., at 701-703, and n. 31.
298
tancy that has pecuniary value and is transferable under state
law would fall within § 6321 prior to the time it ripens into a
present estate"). Cf.
Bess, 357 U. S., at 55-56 (holding
that no federal tax lien could attach to proceeds of the taxpayer's
life insurance policy because "[i]t would be anomalous to view as
'property' subject to lien proceeds never within the insured's
reach to enjoy"). By way of example, the survivorship right wholly
depends upon one spouse outliving the other, at which time the
survivor gains "substantial rights, in respect of the property,
theretofore never enjoyed by [the] survivor."
Tyler, 281 U.
S., at 503. While the Court explains that it is "not necessary to
decide whether the right to survivorship alone would qualify as
'property' or 'rights to property''' under § 6321,
ante, at
285, the facts of this case demonstrate that it would not. Even
assuming both that the right of survivability continued after the
demise of the tenancy estate and that the tax lien could attach to
such a contingent future right, creating a lienable interest upon
the death of the nonliable spouse, it would not help the IRS here;
respondent's husband predeceased her in 1998, and there is no right
of survivorship at issue in this case.
Similarly, while one spouse might escape the absolute
limitations on individual action with respect to tenancy by the
entirety property by obtaining the right to one-half of the
property upon divorce, or by agreeing with the other spouse to
sever the tenancy by the entirety, neither instance is an event of
sufficient certainty to constitute a "right to property" for
purposes of § 6321. Finally, while the federal tax lien could
arguably have attached to a tenant's right to any "rents, products,
income, or profits" of real property held as tenants by the
entirety, Mich. Compo Laws Ann. § 557.71 (West 1988), the Grand
Rapids property created no rents, products, income, or profits for
the tax lien to attach to.
In any event, all such rights to property, dependent as they are
upon the existence of the tenancy by the entirety
299
estate, were likely destroyed by the quitclaim deed that severed
the tenancy. See n. 1,
supra. Unlike a lien attached to the
property itself, which would survive a conveyance, a lien attached
to a "right to property" falls squarely within the maxim that "the
tax collector not only steps into the taxpayer's shoes but must go
barefoot if the shoes wear out." Bittker ~ 44.5[ 4] [a] (noting
that "a state judgment terminating the taxpayer's rights to an
asset also extinguishes the federal tax lien attached thereto").
See also Elliott ~ 9.09[3][d][i] (explaining that while a tax lien
may attach to a taxpayer's option on property, if the option
terminates, the Government's lien rights would terminate as
well).
Accordingly, I conclude that Mr. Craft had neither "property"
nor "rights to property" to which the federal tax lien could
attach.
II
That the federal tax lien did not attach to the Grand Rapids
property is further supported by the consensus among the lower
courts. For more than 50 years, every federal court reviewing
tenancies by the entirety in States with a similar understanding of
tenancy by the entirety as Michigan has concluded that a federal
tax lien cannot attach to such property to satisfy an individual
spouse's tax liability.8 This
8 See
IRS v.
Gaster, 42 F.3d
787, 791
(CA3 1994) (concluding that the IRS is not
entitled to a lien on property owned as a tenancy by the entirety
to satisfy the tax obligations of one spouse);
Pitts v.
United States, 946 F. 2d 1569, 1571-1572
(CA4 1991)
(same);
United States v.
American Nat. Bank of
Jacksonville, 255 F.2d
504, 507
(CA5), cert. denied, 358 U. S. 835 (1958)
(same);
Raffaele v.
Granger, 196
F.2d 620, 622-623
(CA3 1952) (same);
United
States v.
Hutcherson, 188 F.2d
326, 331
(CA8 1951) (explaining that the interest of one
spouse in tenancy by the entirety property "is not a right to
property or property in any sense");
United States v.
Nathanson, 60 F. Supp. 193, 194 (ED Mich. 1945) (finding no
designation in the Federal Revenue Act for imposing tax upon
property held by the entirety for taxes due from one person alone);
Shaw v.
United States, 94 F. Supp. 245, 246 (WD Mich.
1939) (recognizing that the nature of the estate under Michigan law
precludes the tax lien from attaching to ten-
300
consensus is supported by the IRS' consistent recognition,
arguably against its own interest, that a federal tax lien against
one spouse cannot attach to property or rights to property held as
a tenancy by the entirety.9
That the Court fails to so much as mention this consensus, let
alone address it or give any reason for overruling it, is puzzling.
While the positions of the lower courts and the IRS do not bind
this Court, one would be hard pressed to explain why the combined
weight of these judicial and administrative sources-including the
IRS' instructions to its own employees-do not constitute relevant
authority.
ancy by the entirety property for the tax liability of one
spouse). See also
Benson v.
United States, 442 F.2d
1221, 1223 (CADC 1971) (recognizing the Government's concession
that property owned by the parties as tenants by the entirety
cannot be subjected to a tax lien for the debt of one tenant);
Cole v.
Cardoza, 441 F.2d
1337, 1343
(CA6 1971) (noting Government concession
that, under Michigan law, it had no valid claim against real
property held by tenancy by the entirety).
9 See,
e. g., Internal Revenue Manual § 5.8.4.2.3
(RIA 2002), available at WESTLAW, RIA-IRM database (Mar. 29, 2002)
(listing "property owned as tenants by the entirety" as among the
assets beyond the reach of the Government's tax lien);
id.,
§ 5.6.1.2.3 (recognizing that a
consensual lien may be
appropriate "when the federal tax lien does not attach to the
property in question. For example, an assessment exists against
only one spouse and the federal tax lien does not attach to real
property held as tenants by the entirety"); IRS Chief Counsel
Advisory (Aug. 17, 2001) (noting that consensual liens, or
mortgages, are to be used "as a means of securing the Government's
right to collect from property the assessment lien does not attach
to,
such as real property held as a tenancy by the entirety"
(emphasis added)); IRS Litigation Bulletin No. 407 (Aug. 1994)
("Traditionally, the government has taken the view that a federal
tax lien against a single debtor-spouse does not attach to property
or rights to property held by both spouses as tenants by the
entirety"); IRS Litigation Bulletin No. 388 (Jan. 1993) (explaining
that neither the Department of Justice nor IRS chief counsel
interpreted
United States v.
Rodgers, 461 U. S. 677
(1983), to mean that a federal tax lien against one spouse
encumbers his or her interest in entireties property, and noting
that it "do[es] not believe the Department will again argue the
broader interpretation of
Rodgers," which would extend the
reach of the federal tax lien to property held by the entireties);
Benson, supra, at 1223;
Cardoza, supra, at 1343.
301
III
Finally, while the majority characterizes Michigan's view that
the tenancy by the entirety property does not belong to the
individual spouses as a "state law fiction,"
ante, at 276,
our precedents, including
Drye, 528 U. S., at 58-60, hold
that state, not federal, law defines property interests. Ownership
by "the marriage" is admittedly a fiction of sorts, but so is a
partnership or corporation. There is no basis for ignoring this
fiction so long as federal law does not define property,
particularly since the tenancy by the entirety property remains
subject to lien for the tax liability of
both tenants.
Nor do I accept the Court's unsupported assumption that its
holding today is necessary because a contrary result would
"facilitat[e] abuse of the federal tax system."
Ante, at
285. The Government created this straw man, Brief for United States
30-32, suggesting that the property transfer from the tenancy by
the entirety to respondent was somehow improper, see
id., at
30-31, n. 20 (characterizing scope of "[t]he tax avoidance scheme
sanctioned by the court of appeals in this case"), even though it
chose
not to appeal the lower court's contrary assessment.
But the longstanding consensus in the lower courts that tenancy by
the entirety property is
not subject to lien for the tax
liability of one spouse, combined with the Government's failure to
adduce any evidence that this has led to wholesale tax fraud by
married individuals, suggests that the Court's policy rationale for
its holding is simply unsound.
Just as I am unwilling to overturn this Court's longstanding
precedent that States define and create property rights and forms
of ownership,
Aquilino, 363 U. S., at 513, n. 3, I am
equally unwilling to redefine or dismiss as fictional forms of
property ownership that the State has recognized in favor of an
amorphous federal common-law definition of property. I respectfully
dissent.
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