1994 U.S. Tax Ct. LEXIS 28">*28 An order will be entered denying petitioner's motion to restrain assessment and collection.
D failed to pay the Federal gift tax arising from transfers of property to her son (P) in 1983. R is attempting to collect the Federal gift tax from P based on the special gift tax lien imposed by
Held, P's Motion to Restrain Assessment and Collection will be denied on the ground that R's collection efforts under
OPINION
DAWSON, Judge: This case was assigned to Chief Special Trial Judge Peter J. Panuthos pursuant to the provisions of section 7443A(b)(4) and Rules 180, 181, and 183. 1 The Court agrees with and adopts the opinion of the Chief Special Trial Judge, which is set forth below.
1994 U.S. Tax Ct. LEXIS 28">*29 OPINION OF THE CHIEF SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: This matter is before the Court on petitioner's Motion to Restrain Assessment and Collection. The issue for decision is whether respondent's collection efforts under
Background
In 1983, Mildred M. Ripley (donor) transferred a house located at 22562 River Road, Jacksonville, Florida, and additional real estate located at Phillips Highway and University Boulevard in the same city, to her son, Joseph M. Ripley, Jr. (petitioner). The donor reported the transfers in a Federal gift tax return filed for the 1983 taxable year. Respondent later determined that the donor understated the value of the transferred property in her Federal gift tax return and issued the donor a notice of deficiency. The donor in turn filed a petition for redetermination with this Court at docket No. 8734-90.
On February 25, 1992, the Court entered a stipulated decision in docket No. 8734-90 reflecting the donor's liability for a1994 U.S. Tax Ct. LEXIS 28">*30 deficiency in Federal gift tax in the amount of $ 239,124. The decision document further provides that the donor consents to the immediate assessment and collection of the deficiency and related interest. Consistent with the foregoing, respondent assessed the deficiency against the donor on April 7, 1992.
Petitioner sold part of the property located at 22562 River Road in October 1984 for $ 240,000. The remainder of that particular parcel was sold in July 1990 for $ 931,000.
On August 20, 1993, respondent filed a notice of Federal tax lien with the clerk of the circuit court of Duval County in Jacksonville, Florida, reflecting tax due from petitioner in the amount of $ 553,368.81. 2 On September 2, 1993, respondent mailed petitioner, as donee of Mildred M. Ripley, a notice of intention to levy listing tax and interest due in the amount of $ 654,973.04 and requesting the immediate payment of the same.
On September 17, 1993, respondent1994 U.S. Tax Ct. LEXIS 28">*31 mailed petitioner a notice of transferee liability setting forth respondent's determination that petitioner, a transferee of property subject to Federal gift tax, is liable for such tax in the amount of $ 651,047.40. 3 On December 15, 1993, petitioner filed a petition for redetermination with this Court pursuant to
On December 17, 1993, respondent moved to enforce her lien by serving petitioner with notices of levy and notices of seizure covering two parcels of real estate (with improvements) located in Fernandina Beach, Florida, and various portions of the property located at Phillips Highway and University Boulevard in Jacksonville, Florida.
Petitioner reacted to respondent's collection activities by filing the Motion to Restrain Assessment and Collection1994 U.S. Tax Ct. LEXIS 28">*32 presently pending before the Court. Respondent filed an objection to petitioner's motion and the matter was set for hearing in Washington, D.C. However, rather than proceed with a hearing, the parties agreed to submit the matter to the Court through statements filed pursuant to
Discussion
The issue for decision is whether respondent's collection efforts should be enjoined under the circumstances presented. Petitioner maintains that respondent is precluded from assessing and attempting to collect the amounts listed in levies served on December 17, 1993, by virtue of the prohibitions set forth in
As indicated, respondent contends that
the Regulations and the case law establish that the respondent has independent and cumulative options in cases, like this, in which the donor failed to pay her federal gift tax liability: the respondent may effect collection from the donee under the special
In this case, there is good reason why the respondent has chosen * * * to proceed on both tracks simultaneously. As discussed * * * [in] Respondent's Objection, the special
(b) Lien For Gift Tax. -- 1994 U.S. Tax Ct. LEXIS 28">*36 Except as otherwise provided in subsection (c), unless the gift tax imposed by chapter 12 is sooner paid in full or becomes unenforceable by reason of lapse of time, such tax shall be a lien upon all gifts made during the period for which the return was filed, for 10 years from the date the gifts are made. If the tax is not paid when due, the donee of any gift shall be personally liable for such tax to the extent of the value of such gift. Any part of the property comprised in the gift transferred by the donee (or by a transferee of the donee) to a purchaser or holder of a security interest shall be divested of the lien imposed by this subsection and such lien, to the extent of the value of such gift, shall attach to all the property (including after-acquired property) of the donee (or the transferee) except any part transferred to a purchaser or holder of a security interest.
(The exceptions set forth inIn sum,
(d) Application of lien imposed by
Consistent with this regulation, the appellate courts considering the issue have ruled that respondent may 1994 U.S. Tax Ct. LEXIS 28">*38 collect estate tax from a transferee pursuant to the special estate tax lien set forth under
1994 U.S. Tax Ct. LEXIS 28">*39
The special estate and gift tax liens set forth in
Petitioner incorrectly asserts that he was improperly assessed on April 7, 1992, the assessment date appearing on the notice of levy dated December 17, 1993. In short, the record indicates that the April 7, 1992, assessment reflects the date that respondent entered an assessment against the donor (petitioner's mother). That assessment arose in due course from the agreed decision entered1994 U.S. Tax Ct. LEXIS 28">*40 by this Court on February 25, 1992, in docket No. 8734-90. Presumably that assessment date was listed in the notice of levy for the purpose of demonstrating the timeliness of the collection action. Because petitioner is not the subject of the assessment, he is in no position to contest the assessment in this proceeding brought under
Moreover, it is evident that the amounts that respondent seeks to collect through the levies and notices of seizures served on petitioner on December 17, 1993, arise from that same April 7, 1992, assessment. As indicated above, respondent is free to pursue collection against petitioner (as donee) in this manner pursuant to
To reflect the foregoing,
An order will be entered denying petitioner's motion to restrain assessment and collection.
Footnotes
1. All section references are to the Internal Revenue Code in effect for the year in issue, unless otherwise indicated. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. This amount includes the original gift tax assessed plus penalty and interest.↩
3. This amount is computed as follows:
↩Gift tax $ 239,011.16 Penalty 35,851.67 Interest to date of notice 376,184.57 Total $ 651,047.40 4. At the time the petition was filed, petitioner was residing in Jacksonville, Florida.↩
5. Accord
United States v. DeGroft, 539 F. Supp. 42 (D. Md. 1981) ;United States v. Warner, 56 AFTR 2d 85-6583, 85-2 USTC par. 13,641 (S.D.N.Y. 1985); Saltzman, IRS Practice and Procedure, par. 14.19[2], at 14-117 (2d ed. 1991). But cf.United States v. Schneider, 71A AFTR 2d 91↩-1224, 92-2 USTC par. 60,119 (D.N.D. 1992).