dissenting: I believe the majority has misconstrued section 6867. The section is not an operative provision; it simply provides presumptions to be used under limited circumstances in applying the operative sections, viz, section 6851 (termination assessment) or section 6861 (jeopardy assessment). In this case, section 6851 is the operative statutory section.
In this case the limited circumstances under which respondent can invoke the presumptions of section 6867 were present: the true owner of the cash was (1) unknown and (2) not readily ascertainable at the time of the assessment or, if ascertainable, did not acknowledge ownership of the cash. Consequently, respondent properly proceeded to terminate the tax year and assess under section 6851. It is irrelevant that at some later date respondent knew or could have known who the true owner was. The assessment must stand or fall on the circumstances existing when it is made. The majority, however, would invalidate the statutory notice of deficiency and dismiss this case for lack of jurisdiction because the statutory notice of deficiency was issued after the District Court hearing at which “a sufficient acknowledgement” of ownership was made. This conclusion is erroneous for several reasons:
(1) The majority acknowledges that COINPA has never come forward in these proceedings. Certainly, Lignarolo has not proceeded either here or in the District Court as COINPA’s “agent-trustee.” Consequently, I am baffled by the majority’s willingness to pin respondent to the conclusion that any acknowledgement of ownership has been made by COINPA.
(2) Even if, through Lignarolo, somehow a “sufficient acknowledgement of ownership” has been made, it was not made at the time of the section 6851 assessment. The time for testing whether the true owner is readily ascertainable and acknowledges ownership is fixed by statute at the time of the assessment.1 Section 6867 is not a set of continuing conditions which respondent must eternally satisfy (or satisfy even on the day after assessment).
(3) I believe in this case, as in all other cases involving deficiency determinations after termination assessments, the tax liability of the true owner of the cash is at issue. It was the true owner whose tax year was terminated pursuant to section 6851(a). COINPA, as the majority finds, was the true owner of the cash at the time of assessment. It is, therefore, COINPA’s tax year that was terminated, and it is COINPA’s tax liability that is placed in issue by the assessment. Since it is COINPA’s tax liability that is at issue, the antiassignment statute forbids the sale of its tax claim to Lignarolo. 31 U.S.C. sec. 3727(b) (1982). Consequently, Lignarolo must never be regarded by this Court, or any other Federal court, as having any right to the cash.
In section 6867, Congress authorized respondent to assess under section 6851 because it believed that the true owner of the cash likely owed Federal income tax. Consequently, section 6867 in effect authorizes an in rem proceeding against the only real party in interest, i.e., the true owner of the cash. This is the position of the United States before the District Courts (see Robrish v. United States, 579 F. Supp. 477 (D. Mass. 1983), viz, the true owner of cash is the only one who has standing to challenge the reasonableness of the termination assessment. As argued by the United States in Robrish and accepted by the Robrish court, the assessment is really an assessment against the true owner.2 The presence of the possessor is a matter of satisfying due process notice requirements that otherwise would prevent the Government from seizing the cash. The possessor is the only one, despite his contrary protests, who may be able to locate (or be located by) the true owner. The true owner, after he misses his funds, is likely to inquire into what happened to them, and Congress reasonably believed that the likely target of this inquiry would be the possessor. Thus, seizure and assessment in the name of the possessor, qua possessor, is not the creation of a new category of taxpayer. Rather, section 6867 creates a new in rem notice procedure that is, in reality, a procedure against the true owner and involves only that owner’s tax liability. Therefore, when the statutory notice of deficiency is issued to the possessor pursuant to section 6851(b) to perfect the assessment, it is, in effect, a notice of deficiency to the true owner. By invalidating the statutory notice in this case as the majority does, the termination assessment may be no longer valid because the Government may thereby be deemed to have failed the requirements of section 6851(b). Laing v. United States, 423 U.S. 161 (1976).
In my view, respondent may not issue a statutory notice to anyone other than the possessor. The possessor is the focal point of satisfying due process requirements, and once having made the assessment, respondent is required to issue the statutory notice. Issuance of the notice to the possessor is the equivalent of issuing a notice to the true owner of the cash.
Section 6867(c), consistent with this interpretation, provides that respondent may change his bookkeeping entry against the possessor and substitute the true owner. This change has retroactive effect to acknowledge formally what has always been the substance of the proceeding. There is nothing in the statute, however, compelling the Government to change its assessment; yet this is the effect of the majority’s opinion. In this case the true owner, as found by the majority, is COINPA. COINPA has yet to appear and assert its right to the cash, despite the lengthy proceedings in this Court. Perhaps COINPA does not desire to have its tax liability determined. Perhaps COINPA is not the true owner. Whatever the reason, the Government’s assessment remains effective until after the Court (1) specifically decides who the true owner is, (2) permits the true owner to be substituted for the possessor as the real party petitioner, and (3) gives the Government a reasonable time to change the assessment on its books. If, upon a judicial determination of ownership, the Government changes its bookkeeping entry of assessment to substitute the true owner pursuant to section 6867(c), the substitution would relate back to the date of the assessment against the possessor, and we would proceed to the merits of the true owner’s tax liability. If the Government were to choose not to substitute, we should enter a decision of overpayment in favor of the true owner.
While the decision as to who is the true owner is a judicial one,3 the decision to assess belongs to the Government. In this case, it is clear that Lignarolo is not the true owner and his tax liability is not at issue. Given that the true owner has had sufficient time to ratify the petition in this case, I would dismiss the case without invalidating the notice of deficiency.
Parker and Hamblen, JJ., agree with this dissent.Because sec. 6867 is a set of presumptions that do not operate independently of sec. 6851, the conditions for applying the presumptions must exist at the time of the termination. The act of termination and assessment under sec. 6851 occurs on a particular date. That date is fixed; it does not move; the assessment stands or falls based on the circumstances existing on that date not some other.
Only the true owner can challenge the reasonableness of the assessment pursuant to sec. 7429(b) because the possessor is treated as “the taxpayer” only for receiving the notice required by sec. 7429(a)(1). See sec. 6867(b)(3).
I do not disagree with the majority that we had jurisdiction in this case to determine ownership. Moreover, the possessor of cash, qua possessor, certainly has a right to challenge respondent’s compliance with the statutory procedures of sec. 6867. Because respondent issued the statutory notice as required by sec. 6851(b), venue properly lies here for that challenge. There were, however, no procedural improprieties, and the possessor has no standing to put. at issue the substantive merits of the tax at issue. Only the true owner of the cash can put the merits at issue. Sec. 6867(b)(3).