Idaho bill would require state court OK for fed tax liens

[cynicalflyer]

http://www.legislature.idaho.gov/legisl ... /H0666.htm

Statement of Purpose: This legislation requires the IRS to comply with normal due process of law (stipulated in the Fifth Amendment) for a court judgment and recording liens against property.

[Pottapaug1938]

I don't know about Idaho; but in Massachusetts we have a constitutional right of "free petition".

Let's say that I want to make Zooey Deschanel the Official Massachusetts State Goddess. I have the legal right to have my senator or representative file a bill on my behalf; but unless the filer believes that my bill is a good idea, the bill will carry a notation that it is filed "by request". Of course, that notation is a kiss of death in almost every instance.

I wonder if Idaho has the same right; or if there is one legislator out there who is in bad need of a basic course in Constitutional Law.

[cynicalflyer]

I don't know about Idaho; but in Massachusetts we have a constitutional right of "free petition".

Let's say that I want to make Zooey Deschanel the Official Massachusetts State Goddess. I have the legal right to have my senator or representative file a bill on my behalf; but unless the filer believes that my bill is a good idea, the bill will carry a notation that it is filed "by request". Of course, that notation is a kiss of death in almost every instance.

I wonder if Idaho has the same right; or if there is one legislator out there who is in bad need of a basic course in Constitutional Law.

No, there is no "by request" provision (I track legislation for a living and am familiar with the Massachusetts proviso) in Idaho.

[Judge Roy Bean]

The operant theory seems to be that the Federal government or agents thereof currently don't have to comply with the due process clause.

It fails because it requires the clerk of the court to make what amounts to be a judicial ruling that the government's procedure was compliant.

[notorial dissent]

Wouldn't it fail more in the realm of the Federal Supremacy clause in that Fed law trumps state law?

The Fed doesn't needs Idaho's permission to either file a lien or create one, and as long as the process complies with Federal law and jurisprudence all they are doing by filing in Idaho is giving the proper public notice, since the lien isn't subject to judicial review by Idaho to begin with.

I would say the filer of the bill needs a crash course in constitutional law, or maybe just a good slap up the side of the head, whichever might be the better.

[Montana Notasovrun]

Wouldn't it fail more in the realm of the Federal Supremacy clause in that Fed law trumps state law?

The Fed doesn't needs Idaho's permission to either file a lien or create one, and as long as the process complies with Federal law and jurisprudence all they are doing by filing in Idaho is giving the proper public notice, since the lien isn't subject to judicial review by Idaho to begin with.

I would say the filer of the bill needs a crash course in constitutional law, or maybe just a good slap up the side of the head, whichever might be the better.

I'm proud to say that Montana leads the league in wackadoodle legislation. We don't have all the wacksters, but we have the most. It is always entertaining.

[cynicalflyer]

It fails because it requires the clerk of the court to make what amounts to be a judicial ruling that the government's procedure was compliant.

Worse (better?): it would require a state court judge to make the call and conduct the review: magistrate judge if below $5,000, District Court judge if above.

[notorial dissent]

I'm proud to say that Montana leads the league in wackadoodle legislation. We don't have all the wacksters, but we have the most. It is always entertaining.

Well, aren't you just ever so lucky!!!! The comedy quotient has to be right up there with any of the best. I keep thinking our state legislature is in the running, but these days, they're rank amateurs by comparison, all our professional whack jobs either finally got unelected, retired, or died.

[Famspear]

Based on a quick read of the proposed legislation, it appears to be useless surplus. Essentially, the proposed text requires that due process of law (under both the 5th and 14th Amendments) be followed. Putting a statement like that in a statute does not add or subtract anything to the current state of the law.

I have noticed nothing in the text of the proposed statute that would purport to require state court approval, or any kind of court approval, for the filing of a notice of federal tax lien. If this proposed change was drafted by a wackadooster trying to pull one over the mean ol', bad ol' Internal Revenue Service, he or she failed miserably.

And, as my colleagues have pointed out, even if the proposed statute did include such a requirement, it would be legally invalid to that extent. It's hard for the wackadoosters to stomach, but state court judges are required to follow (and will follow) federal statutes where state constitutions or state statutes are "to the Contrary". U.S. Constit., art. VI, cl. 2.

[Famspear]

.....I wonder if Idaho has the same right; or if there is one legislator out there who is in bad need of a basic course in Constitutional Law.

Reading the proposed text, it's almost as though the author somehow thought that if he or she could just get that language (about requiring that constitutional protections be enforced) into a state statute, that this would somehow "fix" a "problem" that currently exists. It's as though he or she thinks that due process of law is not being afforded to Idaho residents under the current filing system for federal tax liens, and that somehow putting that language in a state statute would force someone in authority to change the procedure.



My guess is that the author wants a court hearing before a notice of federal tax lien can be filed, and that this proposed legislation is a futile attempt to get that.

[Famspear]

OK, I found this language in the proposal:

Due process of law shall occur in perfecting and attaching proceeds from a lien if the amount attached is five thousand dollars ($5,000) or more by a district court or if the amount attached is less than five thousand dollars ($5,000) by a magistrate court.

I guess that comes close to purporting to "require" court action in order for due process to be followed, but that is some inartful drafting if that's what the author was intending (aside from the probable constitutional defects).

[Famspear]

This is a pretty good place to reiterate, for readers who are not regular visitors to this forum, the reason why tax protesters/tax deniers and other scammers are so upset about the filing of a notice of federal tax lien (NFTL). These people suffer from the misconception that the filing of the NFTL creates the tax lien against their property, and that if they can just prevent the filing of the NFTL or somehow get the filing to be declared invalid, the tax lien will thereby disappear.

Here's the point that most of the scammers do not understand:

The filing of a notice of federal tax lien does not "create" the tax lien. The valid tax lien is already there. There is no requirement that an NFTL be issued or filed in order for the tax lien to be valid against the taxpayer. The Internal Revenue Service can seize the taxpayer's property covered by the tax lien without issuing or filing an NFTL.

The purpose of the filing of an NFTL is to perfect the lien as against the taxpayer's creditors. The filing of an NFTL serves a purpose similar to the purpose of a creditor who files a UCC-1 financing statement. The filing of NFTLs and UCC-1 forms do NOT "CREATE" LIENS. The liens are already there. And the absence of a filed NFTL (or Form UCC-1) DOES NOT INVALIDATE A LIEN as against the taxpayer (or debtor, in the case of a UCC-1).

Now, back to your regularly scheduled program.....

[LPC]

Based on a quick read of the proposed legislation, it appears to be useless surplus. Essentially, the proposed text requires that due process of law (under both the 5th and 14th Amendments) be followed. Putting a statement like that in a statute does not add or subtract anything to the current state of the law.

I agree.

It would be just meaningless grandstanding, except that some nuts will then try to enforce their due process rights "guaranteed" by the statute, and some judges will have to explain that the statute doesn't mean what they think it means.

[LPC]

OK, I found this language in the proposal:

Due process of law shall occur in perfecting and attaching proceeds from a lien if the amount attached is five thousand dollars ($5,000) or more by a district court or if the amount attached is less than five thousand dollars ($5,000) by a magistrate court.

I guess that comes close to purporting to "require" court action in order for due process to be followed, but that is some inartful drafting if that's what the author was intending (aside from the probable constitutional defects).

The quoted language only refers to "proceeds from a lien," and so seems to refer to the disposition of the proceeds from the enforcement of the lien, and not the filing of the notice of lien.

[Demosthenes]

House Bill 666.

Really?

[LPC]

This might also be a good time to re-explain why the IRS does not need a court order to seize property under an administrative levy.

A federal tax lien arises only after there has been an assessment, and an assessment must be based on either (a) the taxpayer's own tax return (meaning that the taxpayer has admitted the tax liability) or (b) a notice a deficiency that has been sent to the taxpayer, after which the taxpayer has an opportunity to contest the deficiency in Tax Court.

It is the opportunity to contest the proposed deficiency in Tax Court that satisfies due process. The notice of deficiency is the equivalent of a complaint in a civil proceeding, and if the taxpayer fails to respond to the notice of deficiency, the IRS is entitled to the equivalent of a default judgment, and can make an assessment based on the uncontested notice of deficiency.

The Supreme Court has therefore held that “The assessment is given the force of a judgment, and if the amount assessed is not paid when due, administrative officials may seize the debtor’s property to satisfy the debt.” Bull v. United States, 295 U.S. 247, 260 (1935).

[LPC]

House Bill 666.

Weird coincidence.

(Or is it?)

[The Observer]

This might also be a good time to re-explain why the IRS does not need a court order to seize property under an administrative levy.

The exception to this is if the IRS seeks to seize the personal residence of the taxpayer (if owned by the taxpayer). The law requires the IRS to get approval from a federal judge to seize the property. See IRC 6334 (e).

[Quixote]

This might also be a good time to re-explain why the IRS does not need a court order to seize property under an administrative levy.

A federal tax lien arises only after there has been an assessment, and an assessment must be based on either (a) the taxpayer's own tax return (meaning that the taxpayer has admitted the tax liability) or (b) a notice a deficiency that has been sent to the taxpayer, after which the taxpayer has an opportunity to contest the deficiency in Tax Court.

It is the opportunity to contest the proposed deficiency in Tax Court that satisfies due process. The notice of deficiency is the equivalent of a complaint in a civil proceeding, and if the taxpayer fails to respond to the notice of deficiency, the IRS is entitled to the equivalent of a default judgment, and can make an assessment based on the uncontested notice of deficiency.

The Supreme Court has therefore held that “The assessment is given the force of a judgment, and if the amount assessed is not paid when due, administrative officials may seize the debtor’s property to satisfy the debt.” Bull v. United States, 295 U.S. 247, 260 (1935).

An additional layer of due process was added by IRC §6320, with regard to liens, and §6330, with regard to seizures. Even if the assessment is valid, the taxpayer can contest the IRS's choice of enforcement action through an administrative appeals process. If not satisfied with the results, he can seek judicial review of the method the IRS is using to collect the tax.