Appendix — Silverman v. United States

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89-854 ©

No.

IN THE

Suprema Court, U.S.

FILED

OCT 30 2989

JOSEPH F. SPANIOL, UR.

CLERK

SUPREME COURT OF THE UNITED STATES

October Term, 1989

DOROTHY SILVERMAN, Administratrix, Estate of

FRED R. SILVERMAN, Deceased,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

Separate Appendix to

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit.

A.V. Falcone

Counsel of Record

727 West Seventh Street

Suite 730

Los Angeles, California 90017

Counsel for Petitioner

(213) 627-7104

TABLE OF CONTENTS

PAGE

Cover Page

1. Findings of Fact and

Conclusions of Law, filed

February 9, 1978....eeeeeeeeeee Appendix 1

2 Summary Judgment for

Petitioner, filed and

entered February 9, 1978....... Appendix 2

Ze Opinion in 621 F.2d 961,

dated June 16, 1980............ Appendix 3

4. Findings of Fact and

Conclusions of Law, filed

October 14, 1982...cccccccceeee Appendix 4

Se Judgment filed October 14,

1982, entered October 18,

po re a er ee Appendix 5

6. Notice of Entry of Judgment :

dated October 18, 1982......... Appendix 6

Te Order of Limited Remand

(Judges Kennedy, Poole and

Schwarzer) filed September

Ble We ccecceesececes eeccecces Appendix 7

8. Order filed December 1,

1987 (Judges Kennedy, Poole

and Schwarzer) denying

Petitioner's (as Appellant)

Motion to Augment the

ROMOMGcccscccsececncccsccececes Appendix 8

9. Order (Judges Poole and

Schwarzer) filed

September 15, 1988, purporting

10.

11.

12.

13.

14.

iii

to deny Petitioner's (as

Appellant) Motion to Recuse

Judge Alarcon, further

ordering the Appeal “stands

as submitted on January 7,

1987; no further argument...

BALGWOE cccccccccccccccceccccess Appendix 9

Order (Judges Alarcon,

Poole and Schwarzer) filed

September 19, 1988,

resubmitting the case

“effective September 9,

DE GEbSERSESSESSeeSecccecces Appendix 10

Order filed April 11, 1989

(Judges Alarcon, Poole and

Schwarzer) denying "in its

[sic] entirety Petitioner's

(as Appellant) 7 Emergency

Motions to Reconsider,

Vacate, and other Relief...... Appendix 11

Opinion, dated and filed

October 13, tat ene ng e568 Appendix 12

Order (Judges Alarcon,

Poole and Schwarzer) filed

June 2, 1989, denying

Petitioner's (as Appellant)

Petition for Rehearing........ Appendix 13

Letter by Petitioner's

attorney, A.V. Falcone,

to Respondent's attorney,

William J. James, objecting

to the latter meeting, in

his law office, with

Petitioner and her brother

and discussing with them

this case and her said

attorney and whether or

not he would represent

her in this case, all

16.

without his prior knowledge

OF CONSENC. .ccccccsecceeccesese Appendix 14

Letter from Respondent's

said attorney to

Petitioner's said attorney

replying to the latter's

said letter (Appendix 14),

admitting the meeting with

Petitioner. .ccccccscccececeeee Appendix 15

Memorandum by Deputy

Clerk of the Ninth Circuit

Court of Appeals dated

September 22, 1989 that

Petitioner's Motion to

Reconsider and Modify

Order of March 11, 1986

filed on March 28, 1986

was not in the case file.

Petitioner also requested

a copy of the Order, if

any, on said Motion. She

never received it............. Appendix 16

Verbatim copies of

sections in 26 U.S.C.,

28 U.S.C. and 31 U.S.C.

and California Probate

Code §§ 950 and 974........... Appendix 17

ng a 7 Pr,

te, Tn

Appendix

No. 1

FILED

FEB 9 1978

CLERK, U.S. DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

BY DEPUTY

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

) CV No. 76-3763-LEW

Plaintiff, )

) FINDINGS OF FACT

Vv. ) AND

) CONCLUSIONS OF LAW

DOROTHY SILVERMAN, )

ADMINISTRATRIX, ESTATE )

OF FRED R. SILVERMAN, )

)

Deceased,

Defendant.

Defendant's motion for summary judgment

came on regularly for hearing on January 23,

1978, in Courtroom No. 4, the Honorable

Laughlin E. Waters, Judge presiding. Plaintiff

appeared by its attorney, William J. James,

Assistant United States Attorney. Defendant

appeared by her attorney, A. V. Falcone, Esq.

The court reviewed and considered defendant's

motion for summary judgement, its supporting

documents, plaintiff's opposition thereto, and

the entire record of this case. The court,

having heard and considered the arguments of

counsel, hereby makes its findings of fact and

conclusions of law as follows:

FINDINGS OF FACT

1» This is a civil action brought by the

United States of America for the purpose of

reducing to judgment an assessment for federal

estate tax and interest against the Estate of

Fred R. Silverman.

Ze Fred R. Silverman died on August 18,

1963.

36 The Will of Fred R. Silverman was

admitted to probate on September 27, 1963 in

the Superior Court of the State of California

for the County of Los Angeles.

4. The Federal Estate Tax Return, Form

706, was filed on November 4, 1964.

5. Plaintiff made its assessment for the

taxes claimed in this action on November 27,

1964,

6. "Proofs of Claim" were filed by

plaintiff in the Los Angeles Superior Court

probate proceeding on October 20, 1965 and

October 18, 1966. Said claims were not

approved or ordered allowed in the probate

proceedings. See Cai. Prob. Code §§710, 711.

Te Plaintiff has-never proceeded by Levy

and Distraint, see 26 U.S.C. §6331 et seq.; see

also 26 U.S.C. §6502(a), for the collection of

the estate taxes at issue here.

8. Plaintiff filed no action to collect

said taxes prior to the instant action. This

action was commenced on December 6, 1976.

9. No extension or waiver of any statute

of limitations regarding estate taxes was ever

given by the estate.

CONCLUSIONS OF LAW

From the foregoing Findings of Fact, the

court concludes:

te This court has jurisdiction of this

controversy pursuant to 26 U.S.C. §7402 and 28

U.S.C. §§1340, 1345.

Ye There is no triable issue of material

fact outstanding.

3 Plaintiff's assessment of the estate

tax was timely made on November 27, 1964. See

26 U.S.C. §6501(a).

4. By filing its "Proofs of Claim" in

the Los Angeles Superior Court probate

proceeding, the United States did not commence

a proceeding in court as contemplated by 26

U.S.C. §6502(a). See United States v. Saxe,

261 F.2d 316 (1st Cir. 1958); Berger v.

O'Hearn, 41 Cal. 2d 729, 734 (1953).

5. The assets of the Estate of Silverman

have not been in the control or custody of the

Los Angeles Superior Court during the pending

probate proceeding, see 26 U.S.C. §6503(b), so

as to toll the operation of 26 U.S.C. §6502(a).

Cf. McAuley v. United States, 525 F.2d 1108

(9th Cir. 1975) (statute of limitations set out

in 26 U.S.C. §6502(a) is not tolled from the

time a bankruptcy estate is opened until it is

closed). To allow §6502(a) to be suspended

during the pendency of a state probate

proceeding could allow the United States an

unreasonably long time in which to collect its

taxes - in this case, for example, perhaps over

20 years. Moreover, the collection efforts of

the United States are not hindered by a pending

probate proceeding in California since a

federal estate tax claim has priority in such a

proceeding, see Cal. Prob. Code §950(1); Witkin

Summary of California Law, Wills and Probate

§444 at 5886, and since the United States may

always proceed by levy pursuant to 26 U.S.C.

§6331 et seq. A proceeding by levy would

supersede any state probate proceeding. See

Hoye v. United States, 277 F.2d 116, 119 (9th

Cir. 1960).

6. The statute of limitations set forth

in 26 U.S.C. §6502(a) expired on November 27,

1970. The United States, by failing to collect

the estate tax by levy or a proceeding in court

prior to November 27, 1970, is now barred from

collecting on its assessment against the estate

in this action.

7. Summary judgment is ordered in favor

of defendant and against plaintiff. Plaintiff

shall take nothing by this action.

DATED: February 7, 1978.

(sqd) Laughlin E. Waters

Laughlin E. Waters

United States District Judge

Appendix 2

No. 2

LOGGED

JAN 24 2:16 PM '78

CLERK U.S. DISTRICT COURT

CENTRAL DIST. OF CALIF

FILED

FEB 9 1978

CLERK, U.S. DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

BY DEPUTY

ENTERED

FEB 9 1978

CLERK, U.S. DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

DEPUTY

FALCONE AND FALCONE

By A. V. FALCONE

416 West Eighth Street

Suite 910

Los Angeles, California

90014

(213) 627-7104

Attorney for Defendant

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

JNITED STATES OF AMERICA, ) CASE NO,

) CV

Plaintiff, ) 76 3763 LEW

)

vs. ) SUMMARY JUDGMENT

OROTHY SILVERMAN,

idministratrix, Estate of

‘RED R. SILVERMAN,

eceased,

Defendant.

— ee ee ee ee ee ee

ih ees

a a

; OV a St ee

SO me a

Defendant's motion for summary judgment

came on regularly for hearing on January 23,

1978, in Courtroom No. 4, the Honorable

Laughlin E. Waters, Judge presiding, plaintiff

appearing by its attorney, William J. James,

and defendant appearing by her attorney, A. V.

Falcone; the Court heard the argument of

counsel, considered it and the record; the

Court orally announced in open court on January

23, 1978 that it granted defendant's said

motion; the Court made its Order,- dated Feb 8,

1978, granting said motion; the Court made and

filed its findings of fact and conclusions of

law, finding and concluding that there is no

genuine issue as to any material fact and that

defendant is entitled to a judgment as a matter

of law.

It is therefore ORDERED, ADJUDGED AND

DECREED that plaintiff take nothing by its

complaint in this action, that defendant have

judgment against plaintiff thereon, and that

this action be dismissed.

DATED: Feb 8, 1978.

(sqd) Laughlin E. Waters

United States District Judge

Appendix 3

No. 3 621 F.2d 961

UNITED STATES of America,

Plaintiff-Appellant,

Vv.

Dorothy SILVERMAN, Administratrix,

Estate of Fred R. Silverman, De-

ceased, Defendant-Appellee.

No. 78-2169.

United States Court of Appeals,

Ninth Circuit.

June 16, 1980.

Rehearing Denied Aug. 21, 1980.

The United States sought to reduce an

estate tax assessment to judgment, but the

United States District Court for the Central

District of California, Laughlin E. Waters, J.,

granted summary judgment against the Government

and in favor of the administratrix of the

estate of the decedent. The Court of Appeals,

Sneed, Circuit Judge, held that: (1) what

constitutes "a proceeding in court" within

internal revenue statute allowing collection of

tax by "a proceeding in court" if begun within

six years after assessment presents question of

federal law, but answer turns on nature,

function and effect of filing claim under

relevant local law; (2) in view of manner in

yhich California Probate Code treats filing of

claim against probate estate for purposes of

applying California's own statutes of

limitation, United States did not by filing

claim against probate estate in California

oegin “a proceeding in court" within the

federal statute; (3) United States could have

initiated suit to obtain judgment against

administratrix immediately after assessment of

estate taxes, but such ability did not render

inapplicable suspension provided by the

federal statute; and (4) both commencement of

Suit and levying on property ought to be

available before it can be said that collection

procedures are unhindered, for purposes of

suspension of limitation, but suspension should

not exist when bar to levy is insubstantial,

and presence of assets of decedent, substantial

in value in relation to total value of

decedent's estate, not subject to custody and

control of probate court will preclude

Suspension of running of federal limitation

period.

Reversed and remanded.

1. Internal Revenue -- 1813

What constitutes “a proceeding in court"

within internal revenue statute allowing

collection of tax by “a proceeding in court" if

begun within six years after assessment

presents question of federal law, but answer

turns on nature, function and effect of filing

claim under relevant local law. 26 U.S.C.A.

(I.R.C.1954) §§ 6502(a), 6503(b).

See publication Words and Phrases for

other judicial constructions and

definitions.

2. Internal Revenue -- 1811

In view of manner in which California

Probate Code treats filing of claim against

probate estate for purposes of applying

California's own statutes of limitation, United

States did not by filing claim against probate

estate in California State court begin "a

proceeding in court" within internal revenue

Statute allowing collection of tax by “a

——————————————————

proceeding in court" if begun within six years

after assessment. 26 U.S.C.A. (I1.R.C.1954) §§

6502(a), 6503(b).

3. Internal Revenue -- 1815

Presumed purpose of internal revenue

statute providing for suspension of running of

period of limitations for period while assets

of taxpayer are in control and custody of court

was to eliminate any necessity on part of

Treasury to attempt to seize property in

“control or custody" of court in order to

protect tax claim. 26 U.S.C.A. (1I.R.C.1954) §

6503(b).

4. Internal Revenue -- 1815

United States could have initiated suit to

obtain judgment against administratrix of

decedent's estate in California immediately

after assessment of estate taxes, but such

ability did not render inapplicable suspension

of running of limitations provided by Internal

Revenue Code. West's Ann.Cal.Prob.Code, §§

700, 712, 714; 26 U.S.C.A. (1.R.C.1954) §§

6331, 6332, 6502(a), 6503(a)(1), (b).

5. Internal Revenue -- 1815

Under Internal Revenue Code provisions

dealing with limitation applicable to

collection of taxes, both commencement of suit

and levying on property ought to be available

before it can be said that collection

procedures are unhindered, for purposes of

suspension of limitation provided by Internal

Revenue Code, but suspension should not exist

when bar to levy is insubstantial, and presence

of assets of decedent, substantial in value in

relation to total value of decedent's estate,

not subject to custody and control of probate

court will preclude suspension of running of

federal limitation period. West's

Ann.Cal.Prob. Code, §§ 700, 712, 714; 26

U.S.C.A. (1.R.C.1954) §§ 6331, 6332, 6502(a),

6503(a)(1), (bd).

Libero Marinelli, Jr., Dept. of Justice,

Washington, D.C., for plaintiff-appellant.

A. V. Falcone, Los Angeles, Cal., for

jefendant-appellee.

Appeal from the United States District

Court for the Central District of California.

Before CHAMBERS, SNEED and ALARCON,

circuit Judges.

SNEED, Circuit Judge:

This case involves a somewhat obscure, but

nonetheless important, area lying at a junction

of the federal law fixing the manner in which

the United States collects estate taxes and the

state lew governing the probate of decedents'

estates. While our resolution of the issues

presented by this case does not elate us, we

derive some satisfaction from our belief that

it is required by Congress.

The United States seeks to reduce its

estate tax assessment to judgment. It failed

in the district court, which granted summary

judgment against it and in favor of the

appellee, administratrix of the estate of Fred

R. Silverman. The district court concluded

that collection by the United States of its

properly assessed tax was barred by the lapse

of more than six years between the assessment

and this suit. In reaching this result the

district court applied section 6502(a) of the

Internal Revenue Code,’ and found that under

the facts, the United States had not within six

years after the assessment either levied on the

property of the Estate or "commenced a

proceeding in court." It also concluded that

the running of the six year limitation period

was not suspended while the assets of the

1 Section 6502(a) provides:

Collection after assessment

(a) Length of period. - Where the

assessment of any tax imposed by

this title has been made within the

period of limitation properly

applicable thereto, such tax may be

collected by levy or by a proceeding

in court, but only if the levy is

made or the proceeding begun -

(1) within 6 years after the

assessment of the tax, or

(2) prior to the expiration of any

period for collection agreed upon in

writing by the Secretary or his

delegate and the taxpayer before the

expiration of such 6-year period (or,

-— if there is a release of levy under

section 6343 after such 6-year

period, then before such release).

The period so agreed upon may be

extended by subsequent agreements in

writing made before the expiration of

the period previously agreed upon.

The period provided by levy shall not

be extended or curtailed by reason of

a judgment against the taxpayer.

I.R.C. § 6502(a).

—

decedent were subject to probate. As a

consequence, in its view the United States

obtained no benefit from section 6503(b) of

the Code. I.R.C. § 6503(b).2

While we agree that the United States had

not within the six year period "commenced a

proceeding in court," we disagree with the

view that section 6503(b) provides no benefit.

As we see it, section 6503(b) suspends the

running of the six year period so long as all

or substantially all of the assets of the

decedent are subject to the control or custody

of the probate court.

Therefore, we reverse the judgment of the

district court and remand this case to it to

2 Section 6503(b) provides:

Suspension of running of period of

limitation

(b) Assets of the taxpayer in

control or custody of court. -- The

period of limitations on collection

after assessment prescribed in

section 6502 shall be suspended for

the period the assets of the taxpayer

are in the control or custody of the

court in any proceeding before any

court of the United States or of any

State or of the District of Columbia,

and for 6 months thereafter. I.R.C.

§ 6503(b).

—"

determine whether under the principles this

opinion enunciates the United States is

entitled to prevail in its effort to reduce its

assessments to judgment.

Our jurisdiction rests on 28 U.S.C. § 1291

(1976).

FACTS

The relevant facts, as revealed by the

record, are quite simple. Fred R. Silverman

died on August 18, 1963, and his will was

admitted to probate in the Superior Court of

the State of California for the County of Los

Angeles on September 27, 1963. On November 4,

1964, the executor filed a federal estate tax

return, and on November 27, 1964, an estate tax

assessment was made. On October 20, 1965 and

October 18, 1966, the government filed proofs

of claim in the Superior Court for unpaid taxes

in the amount of $50,026.30, plus unassessed

interest and other statutory additions.3 This

claim was not approved by either the

administratrix or probate judge and has not

been paid. The United States commenced the

present action to reduce its claim to judgment

on December 6, 1976. The administratrix, on

instructions by the probate court, resisted on

the basis of section 6502(a). Probate

proceedings have not been concluded.

EFFECTS OF FILING CLAIM

The United States insists that by filing

its claim in 1965 and 1966 it began "a

proceeding in court" well within six years

after its assessment. If this is correct,

section 6502(a) provides no bar to its

collection of the tax.

[1,2] This is an issue that has been

before a number of courts, state as well as

3 The estate tax assessment was made in

the amount of $89,547.11. Partial payments by

the estate have since reduced that liability to

$50,026.30, plus unassessed interest and other

statutory additions.

4/4

4/7

WiJiU Oi

deral, with conflicting results.4 We agree

th the court in United States v. Saxe, 261

2d 316, 319 (1st Cir. 1958), when it pointed

t that, while what constitutes "a proceeding

court" presents a question of federal law,

1€ proper answer turns on the "nature,

nection and effect" of filing a claim under

e relevant local law which in the case before

is that of California. We believe

lifornia law quite clearly indicates that it

uld be improper to characterize for purposes

federal tax law the filing of a claim

ainst an estate subject to probate as the

mmencement of a “proceeding in court."

We reach this conclusion on the basis of

e manner in which the Probate Code of

lifornia treats the filing of a claim against

e probate estate for purposes of applying its

m statutes of limitation. Generally

4 See, e.g., In re Estate of Feinber , 18

Y.2d 499, N.Y.S. ; ; N.E.2d

0, 783 (1966); United States v. American

sualty Co., 238 F.Supp. 36 (W.D.Ky.1964);

ited States v. Ettelson, 159 F.2d 193 (7th

r. 1947); United States v. First National

nk, 54 F.Supp. 351 (N.D.Ohio 1943).

peaking, under California law the statute of

imitation applicable to the type of claim

eing made is not tolled by filing a claim.

hus, section 714, Cal.Probate Code (West

956), provides, inter alia, that upon

ejection of a claim by the executor or

dministrator “the holder must bring suit in

he proper court against the executor or

administrator, within three months after the

ate of service of such notice if the claim is

hen due, or, if not, within two months after

t becomes due; otherwise the claim shall be

orever barred." This section, a so-called

nonclaim™” statute, limits the otherwise

enerally applicable statute of limitation but

loes not extend it. See Barclay v. Blackinton,

27 Cal. 189, 193, 59 P. 834 (1899); Berger v.

"Hearn, 41 Cal.2d 729, 733, 264 P.2d 10

1953); Zapata v. Meyers, 41 Cal.App.3d 268,

71, 115 Cal.Rptr. 854 (1974). The short

eeriod of this “nonclaim™ statute operates

ndependently of the statute generally

ipplicable to the type claim involved.

loreover, it is filing the suit on the claim in

he proper court, not the filing of the claim

n probate proceedings, that marks the terminal

ate of the period, the duration of which will

etermine whether the claim is barred either

y the “nonclaims"™ statute or the statute

therwise generally applicable.

Whatever doubt there may be about the

mability of filing a claim in probate

roceedings to suspend the running of

alifornia's generally applicable statutes of

imitation was put to rest by the decision of

the Supreme Court of California in Berger v.

"Hearn, 41 Cal.2d 729, 264 P.2d 10 (1952). In

hat case, as in the case before us, a claim

gainst the estate was filed within the period

rovided by the generally applicable statute

ut no action was taken by the administratrix

xr the probate court with respect to the

slaim. Subsequent to the expiration of the

reriod of time provided by the generally

ipplicable statute of limitation the claimant

yrrought suit on the claim against the estate.

‘fhe suit was barred, the California Supreme

fourt held, notwithstanding the fact that the

pe OE eEoOU

claim was filed within the applicable period

and that the claim was not rejected until

approximately two months before the suit was

prought.> Filing the claim, even when joined

vith a failure to act on the claim until

shortly before suit was filed, did not suspend

the running of the generally applicable

statute.

Given this structure of the California

probate law we see no reason why filing a claim

in a California probate proceeding should be

S Though the generally applicable

statute of limitation has a long time to run on

actions, probate statutes generally require

that claims be filed within a short time known

as the nonclaim period. The representative is

thus given an opportunity to quickly determine

the obligations against the estate and the

method of satisfying those obligations. See

generally Satterfield v. Garmire, 65 Cal.2d

638, 641, 56 Cal.Rptr. 102, 422 P.2d 990

(1967); Rupp v. Kahn, 246 Cal.App.2d 188, 193,

55 Cal.Rptr. 108 (1966). In California, the

period within which claims must be filed is

four months after the first publication notice

to creditors. Cal.Prob.Code § 700. A claim

timely filed may be acted upon after the

period expires. Cal.Prob.Code § 712. With

respect to a claim presented to the

representative but not acted on formally, the

claimant at his option may, after 10 days,

treat the inaction as a rejection and commence

an action on the claim. Id. The absence of an

election to treat inaction as a rejection

prevents the operation of section 714.

chi

racterized as "a proceeding in court" for

‘poses of section 6502(a). To so

racterize the filing of a claim would impart

it a significance not accorded it by local

bate law. Our conclusion, therefore, is

Same as that reached in United States v.

Ke, Supra, after its analysis of

sachusetts probate law.

Iit

SUSPENSION OF THE LIMITATION

PERIOD

The second issue we confront is more

ficult. The district court, in holding that

United States could derive no benefit from

tion 6503(b) of the Internal Revenue Code,

"To allow § 6502(a) to be suspended during

the pendency of a state probate proceeding

could allow the United States an

unreasonably long time in which to collect

its taxes - in this case, for example,

perhaps over 20 years. Moreover, the

collection efforts of the United States

are not hindered by a pending probate

proceeding in Caiifornia since a federal

estate tax claim has priority in such a

proceeding, see Cal.Prob.Code § 950(1);

Witkin Summary of California law, Wills

and Probate § 444 at 5886, and since the

United States may always proceed by levy

pursuant to 26 U.S.C. § 6331 et seq., a

proceeding by levy would supercede any

state probate proceeding. See Hoye v.

United States, 277 F.2d 116, 119 (9th

Cir. 1960).

Were we to agree entirely with the thrust

of these observations, we also would hold the

claim of the United States barred by the

limitation provisions of section 6502(a). We

do not so agree, however.

[3] To begin with, we must accord

Significance to the amendment of section

6503(b) of the Internal Revenue Code by the

Federal Tax Lien Act of 1966 which deleted the

preexisting exceptions to the suspension of the

running of limitations applicable to an estate

of a decedent or an incompetent. See

R.Rep.No. 1884, 89th Cong., 2d Sess. 22-23

966), U.S.Code Cong. & Admin.News 1966, p.

22; S.Rep.No. 1708, 89th Cong., 2d Sess. 24,

S.Code Cong. & Admin.News 1966, p. 3722

966). Presumably the general purpose of

ction 6503(b) is to eliminate any necessity

the part of the Treasury to attempt to seize

operty in the "control or custody" of a court

order to protect its tax claims. See

R.Rep.No. 1337, 83d Cong., 2d Sess. 107, A415

954), U.S.Code Cong. & Admin.News 1954, p.

25;—S.Rep.No. 1622, 83d Cong., 2d Sess. 585,

S.Code Cong. & Admin.News 1954, p. 4025

954). By providing originally for an

ception applicable to the estate of a

cedent or incompetent Congress perhaps then

lieved that the "custody and control" of

urts in those instances was sufficiently

fferent to make unnecessary the suspension.

explanation for the exception was given,

wever. In any event, it was removed in 1966.

doing so the Committee Reports of both the

Duse and Senate recognized that

administrative collection procedures" were not

vailable in the case of an estate of a

scedent or incompetent and that the running of

he period of limitations should be suspended

n those instances as in all other cases in

nich the assets of the taxpayer are in the

control and custody of the court."

This recognition by Congress of the

navailability of administrative collection

rocedures in the case of an estate of a

ecedent is consistent with the longstanding

osition of the Treasury that it may not levy

n assets of a decedent's estate while in the

ustody of the probate court. See G.C.M. 9991,

1-1 C.B. 135, 137 (1932). It is also

onsistent with the decision of the Supreme

court of the United States in Markham v. Allen,

26 U.S. 490, 66 S.Ct. 296, 90 L.Ed. 256

1946). In holding that the Alien Property

ustodian could bring suit in federal district

ourt to obtain his share of a decedent's

state then in the course of probate

dministration, the Supreme Court carefully

ointed out that the judgment of the district

oOurt left "undisturbed the orderly

diministration of decedent's estate in the

tate probate court." Id. at 495, 66 S.Ct. at

95. The Court concluded that to entertain the

istodian's suit did not mean that the district

surt was exercising probate jurisdiction nor

ould it amount to “an interference with

roperty in the possession or custody of a

tate court." Id. Any judgment obtained by

ne Custodian, of course, would have to be

scorded full faith and credit by the probate

ourt.

It follows that each of the three branches

f the federal government has evidenced concern

yout the need to avoid undue interference with

he probate of decedents' estates by state

ourts. The elimination of the exception

pplicable to estates of decedents and

acompetents by the 1966 Act further reduces

he necessity of interference. We cannot

jnore this action by Congress.

It follows that in this case the district

ourt erred in stating that a levy by the

nited States pursuant to section 6331 “would

upercede state probate proceedings." Nor does

ye_v. United States, supra, so hold. It

rely held that the Controller of the City of

s Angeles was a “person” within the meaning

section 6332 of the Code of whom the

cretary could demand the surrender of

»perty subject to levy. We know of no

>ision that has held a state probate court

be such a “person" nor are we prepared to so

da.

[4,5] Therefore, while we recognize that

2 United States could have initiated this

it to obtain a judgment against the

ministratrix of Silverman's estate

mediately after the assessment of estate

ces, we nonetheless hold that this ability

=s not render the suspension of the running

limitations provided by section 6503(b)

applicable. The Internal Revenue Code

ovisions dealing with the limitations

visions applicable to collection of taxes do

t distinguish in a relevant manner between

bringing suit and levying on property. Both

must be available before it can be said that

collection procedures are unhindered.

The suspension should not exist when the

bar to levy is insubstantial, however. This is

recognized by applicable regulations which

provide that the section 6503(b) suspension is

applicable only when "all or substantially all

6 Section 6502(a2) provides that a tax

“may be collected by levy or by a proceeding in

court, but only if the levy is made or the

proceeding begun (1) within 6 years after the

assessment of the tax." The commencement of a

proceeding in court or a levy within the period

satisfies the statute. Either method may be

employed. Section 6503(a)(1) suspends the

limitation period "for the period during which

the Secretary or his delegate is

prohibited...from collecting by levy or a

proceeding in court." I.R.C. § 6503(a)(1).

The suspension occurs when either levy or

proceeding in court is prohibited. Had section

6503(a)(1) been stated conjunctively, rather

than alternatively, a strong argument could be

made that a prohibition against a levy would

not suspend limitations so long as a proceeding

in court could be brought. However, no such

argument properly lies under the present

language of section 6503(a)(1). This being the

case, the phrase "the period of limitations on

collection after assessment" (italics added),

employed in section 6503(b), should be

interpreted to embrace collection by either

levy or court proceeding. Should either be

barred by the fact that the assets are in

control or custody of the court the suspension

should operate. In this manner sections

6503(a)(1) and (b) are made consistent.

yf the assets of a taxpayer are in the control

yr custody of the court." Treas.Reg.

9301.6503(b)-1, T.D. 7121, 1972-2 C.B. 411,

112 (italics added). The presence of assets of

‘he decedent, substantial in value in relation

Oo the total value of the decedent's estate,

iot subject to the custody and control of the

rrobate court precludes suspension of the

‘unning of the section 6502(a) period. The

wresence of substantial assets may be

ittributable to their passage from the decedent

yy means other than his last will or partial

listributions by executor or administrator.

Our holding is not inconsistent with what

je believe is the spirit of McAuley v. United

tates, 525 F.2d 1108 (9th Cir. 1975). In

icAuley we refused to read section 6503(b) to

‘egquire a suspension of the running of the

statute of limitations during the entire period

ff the bankruptcy proceeding because of the

nevitable presence of property exempt from

dankruptcy long before the termination of

JMankruptcy proceedings. Under these

sircumstances it could not be said that the

reasury's efforts to collect the taxes was

indered from the beginning to end of

ankruptcy proceedings. By resognizing that

he suspension is either initially precluded or

ifted, as the case may be, by the presence of

ubstantial assets not subject to probate, we

lso utilize the existence of hindrance or no

n interpreting section 6503(b). This we

elieve reflects the spirit of McAuley.

We acknowledge that McAuley rejected, as

e do not, the principle of having section

503(b) suspension turn on whether all or

ubstantially all the taxpayer's assets were

ubject to control and custody of a court.

pecial circumstances unique to bankruptcy

roceedings justified this rejection in

cAuley. We held that suspension "until six

onths after the date of the first creditors

eeting, and for an additional six months

hereafter as provided by section 6503(b)"

ccomplished the purpose of the section and

voided the necessity of making suspension turn

na difficult question of fact. Id. at 1114.

We cannot avoid this necessity in the case

f a decedent's estate. There exists no

roperty owned by the decedent at the date of

is death exempt from death duties. Whether

he property passed by will or otherwise only

ertains to the extent to which his estate is

ubject to the control and custody of the

robate court. Also a bankrupt survives

ankruptcy; a decedent never endures the

robate of his own estate. The bankrupt, as

cAuley pointed out, thus can acquire assets

ubsequent to bankruptcy from which the

reasury may be able to recover its taxes. A

ecedent, of course, cannot acquire post-death

ssets.

In McAuley we were concerned with the

bility of the section 6503(b) suspension to

xtend the period of limitations applicable to

ollection of taxes for an unreasonable length

f time. We are also concerned in this case.

Owever, the features that distinguish the

robate estate from that of bankruptcy and the

lear mandate of Congress require our holding.

hat is needed is a means fair to the United

tates by which the executor or administrator

1ilaterally could lift the suspension prior to

istribution of a substantial portion of the

ssets. It is the task of Congress, rather

1an the courts, to devise the technique,

»wever.

Reversed and Remanded,.

Appendix 4

No. 4

ILED

“T 14 1982

LERK, U.S. DISTRICT COURT

ENTRAL DISTRICT OF CALIFORNIA

y DEPUTY

TEPHEN S. TROTT

nited States Attorney

HARLES H. MAGNUSON

ssistant United States Attorney

hief, Tax Division

ILLIAM J. JAMES

ssistant United States Attorney

1448 United States Courthouse

312 North Spring Street

Los Angeles, California 90012

Telephone: (213) 688-2729 or -2410

ttorneys for United States of America

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

NITED STATES OF AMERICA, ) CV 76-3763-LEW

)

Plaintiff, ) FINDINGS OF FACT

) AND

Vv. ) CONCLUSIONS OF LAW

)

OROTHY SILVERMAN, Adminis-)

ratrix, Estate of FRED R.

ILVERMAN, Deceased,

)

Defendant. )

)

This action came on for trial before the

‘ourt, the Honorable Laughlin E. Waters,

Jistrict Judge, presiding on September 14,

982. The defendant was represented by A.V.

‘"alcone, Esq. The plaintiff was represented by

itephen S. Trott, United States Attorney,

fentral- District of California, Charles H.

flagnuson, Assistant United States Attorney,

vyhief, Tax Division, with an appearance by

jlilliam J. James, Assistant United States

ittorney. The issues having been duly tried

ind a decision having been rendered, the Court

lakes Findings of Fact and Conclusions of Law

is follows:

FINDINGS OF FACT

Ve This is a civil action arising under

che Internal Revenue laws of the United States

mrrought by the United States of America for the

surpose of reducing to judgement an assessment

‘or Federal Estate Tax and interest against the

tstate of Fred R. Silverman.

y The action was authorized and

requested by the Chief Counsel of the Internal

Revenue Service, a delegate of the Secretary of

the Treasury of the United States, and was

osrought at the direction of the Attorney

seneral of the United States pursuant to 26

J.S.C. § 7401.

de The decedent died on August 18, 1963,

and the defendant, Dorothy Silverman, was

subsequently appointed administratrix of his

estate in probate proceedings in the Superior

court of the State of California for the County

of Los Angeles (Case No. P 472745).

4. Defendant, Dorothy Silverman, has at

all times pertinent to this action been a

citizen of the United States and of the State

of California, and a resident within the

Central District of California.

~ The Estate filed its Federal Estate

Tax Return, Form 706, on November 4, 1964, but

did not pay the taxes shown thereon.

6. On November 27, 1964, a delegate of

the Secretary of the Treasury made an

assessment in the amount of $89,547.11 against

the Estate of Fred R. Silverman, Dorothy

Silverman, administratrix, for unpaid federal

estate tax, and interest, and gave notice and

demand therefor.

——————eE=~—_—_EO OO

7. Although Proofs of Claims were filed

in the probate proceedings on October 20, 1965,

and on October 18, 1966, the administratrix

failed to approve or reject the claims and to

pay the taxes which it owes.

8. The above estate remains open and the

assets thereof remain subject to the control of

the state court.

CONCLUSIONS OF LAW

1. Jurisdiction is conferred on this

Court by the provisions of 26 U.S.C. §§

7402(a), 7404 and 28 U.S.C. §§ 1340, 1345.

2. While a probate case remains open,

assets of such estate remain subject to the

control of such court. In order to further the

federal policy against interference with

property subject to state court jurisdiction,

section 6503(b) of the Internal Revenue Code

provides that, "The period of limitations on

collection after assessment ..... shall be

suspended for the period the assets of the

taxpayer are in the custody or control of the

court in any proceeding . .. of any State. .

." 26 U.S.C. § 6503(b); United States v.

Silverman, 621 F.2d 961 (9th Cir. 1980).

3s The term "taxpayer" as employed in

the above statute has been defined by Congress

to mean the person subject to the tax in

question. 26 U.S.C. § 7701(a)(14). In the

case of the Federal Estate Tax, that person is

the executor or administrator of the estate.

26 U.S.C. §§ 2002, 2203. The "assets of the

taxpayer" in a probate case, therefor, are

necessarily those assets which remain a part of

the estate and subject to the probate court's

control. |

4. The conclusion that the Government

must look to the estate in a inelinte case as

opposed to a case where the taxpayer and the

estate have different assets -- see e.g.

McAuley v. United States, 525 F.2d 1108 (9th

Cir. 1975) -- is cons:.stent with the purpose

and intent expressed by Congress that, "...the

tax shall be paid out of the estate before its

distribution." 26 U.S.C. §2205.

ae Defendant is liable for the unpaid

balance of the assessment entered by the

Internal Revenue Service with respect to the

Estate of Fred R. Silverman, together with

accrued interest according to law, and the

United States of America is entitled to

judgment on its complaint herein.

Let judgment be entered accordingly.

DATED: 14 Oct 82

(sgqd) Laughlin. E. Waters

UNITED STATES DISTRICT JUDGE

PRESENTED BY:

STEPHEN S. TROTT

United States Attorney

CHARLES H. MAGNUSON

Assistant United States Attorney

Chief, Tax Division

(sqd) William J. James

WILLIAM J. JAMES

Assistant United States Attorney

Attorneys for United States of America

No. 5

LOGGED

SEP 27 3:49 PM ‘82

CLERK, U.S. DISTRICT COURT

CENTRAL DISTRICT OF CALIF.

FILED

ocT 14 1982

CLERK, U.S. DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

BY DEPUTY

ENTERED

OCT 18 1982

CLERK, U.S. DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

DEPUTY

STEPHEN S. TROTT United States Attorney

CHARLES H. MAGNUSON

Assistant United States Attorney

Chief, Tax Division

WILLIAM J. JAMES

Assistant United States Attorney

1448 United States Courthouse

312 North Spring Street

Los Angeles, California 90012

Telephone: (213) 688-2729 or -2410

Attorneys for the United States of America

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, CV 76-3763-LEW

Plaintiff, JUDGMENT

fw eee ee ee ee ee”

DOROTHY SILVERMAN, Adminis-)

tratrix, Estate of FRED R. )

,ILVERMAN, Deceased,

Defendant.

This action came on for trial before the

-ourt, the Honorable Laughlin E. Waters

residing, on September 14, 1982. The issues

laving been duly heard, and a decision having

een rendered, in accordance with the Findings

ff Fact and Conclusions of Law filed herein,

IT IS HEREBY ORDERED AND ADJUDGED:

V6 That plaintiff, United States of

merica, on its Complaint have judgment against

she defendant Dorothy Silverman, Administratrix

if the Estate of Fred R. Silverman in the

imount of $116,992.30, plus interest thereon

ifter September 14, 1982, at the rate of

327.40 (per day).

be That plaintiff have its costs

ncurred in this action.

DATED: This 14 day of Oct. , 1982.

(sgqd) Laughlin E. Waters

UNITED STATES DISTRICT JUDGE

resented by:

TEPHEN S. TROTT

nited States Attorney

HARLES H.MAGNUSON

ssistant United States Attorney

sgd) William J. James

ILLIAM J. JAMES

ssistant United States Attorney

Appendix 6

No. 6

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CASE NUMBER

PLAINTIFF(S) CV 76 3763 LEW

INITED STATES OF AMERICA

OROTHY SILVERMAN, ADMINIS-

RATRIX OF THE ESTATE OF NOTICE OF ENTRY

RED R SILVERMAN

DEFENDANT (S )

—_—-

TO THE ABOVE NAMED PARTIES AND TO THEIR

TTORNEY(S) OF RECORD:

You are hereby notified that

that plaintiff have judgment against the

defendant

in the above entitled case was

entered in the docket on 10-18-82 °

You are also notified that if this

case was tried and you introduced exhibits

into evidence, they must be claimed at

this office after the expiration of thirty

days from the receipt of this notice.

(After sixty days in cases in which the

United States, its officers or agencies

were parties) Unless they are claimed

within thirty days after the expiration of

the above period, they will be destroyed

pursuant to Local Rule 20(a). If an

appeal is taken they will, of course, be

held until the Appellate Court finally

determines the matter. Exhibits which are

attached to a pleading will not be

destroyed but will remain as a permanent

record in the case file.

(over)

“iv 26 (10778) NOTICE OF ENTRY

CERTIFICATE OF MAILING

I, Edward M. Kritzman, Clerk, United

states District Court, Central District of

falifornia, and not a party to the within

iction, hereby certify that on 10-18-82, I

served a true copy of this notice of entry on

-he parties in the within action by depositing

-rue copies thereof, enclosed in sealed

invelopes, in the United States Mail in the

Inited States Post Office mail box at Los

ingeles, California, addressed as follows:

YILLIAM J JAMES

SUA ext 2410

EDWARD M. KRITZMAN, CLERK

By (sgd) Lynn Moore

Deputy Clerk

YOTICE

[(N ACTIONS ARISING UNDER THE ECONOMIC

STABILIZATION ACT, THE EMERGENCY

-9ETROLEUM ALLOCATION ACT, AND THE

SNERGY POLICY AND CONSERVATION ACT,

YOTICES OF APPEAL TAKEN FROM THIS

JUDGMENT MUST BE FILED IN THE

TEMPORARY EMERGENCY COURT OF APPEALS

[N ACCORDANCE WITH THE RULES OF

>ROCEDURE OF THAT COURT.

civ 26 (10/78)

Appendix 7

No. 7

FILED

SEP 21 1987

CATHY A. CATTERSON, CLERK

U.S. COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 82-6106

Plaintiff-Appellee, D.C. No.

CV-76-3763-LEW

vs.

ORDER

DOROTHY SILVERMAN,

Administratrix, Estate of

Fred R. Silverman,

Deceased,

Defendant-Appellant.

Appeal from the United States District

Court for the Central District of

California

Before: KENNEDY and POOLE, Circuit Judges, and

SCHWARZER,* District Judge.

At oral argument before this panel

counsel for both parties appeared to concede

that approximately half the estate was

transferred to Mrs. Silverman shortly after the

*Honorable William W. Schwarzer, U.S. District

Judge for the Northern District of California,

sitting by designation.

state was opened, and thus would have been

ubject to levy. However, the only district

ourt finding of fact on the subject states

hat the "estate remains open and the assets

hereof remain subject to the control of the

tate court." We are left in doubt on the

entral factual issue in the case, i.e. whether

here were substantial assets against which the

overnment could have levied within the period

f limitations. We remand to the district

ourt for further findings as to whether there

ere substantial assets against which the

overnment could have levied, and, if so, when

he assets became available for levy. If there

s sufficient evidence in the record for the

istrict court to make this determination, the

ourt need not conduct an evidentiary hearing.

n reaching its conclusion, the court should

onsider the following matters, among others.

(1) What, if any, assets were

utside the control of the Los Angeles County

uperior Court on the date that the United

tates commenced the action to reduce the tax

ssessment to judgment;

(2) when any such assets ceased to

xe within the control of the Los Angeles County

Superior Court;

(3) the value of the assets, if any,

that were outside the control of the Los

Angeles County Superior Court, and whether

value was substantial in relation to the value

of the estate.

It would assist the court if such

findings were made within sixty days of the

date of filing of this order, but it is

recognized that the district court has other

responsibilities that may make this suggested

date impracticable. This panel retains

jurisdiction over the case subject to its

limited remand.

The case is REMANDED.

Appendix 8

No. 8

FILED

DEC 1 1987

CATHY A. CATTERSON, CLERK

J.S. COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH COURT

JNITED STATES OF AMERICA, No. 82-6106

Plaintiff-Appellee, D.C. No.

CV 76-3763-LEW

ORDER

DOROTHY SILVERMAN,

Administratrix, Estate of

Fred R. Silverman,

Deceased,

Defendant-Appellant.

me me ee ee ee ee ee ee ee ee ee

Before: KENNEDY and POOLE, Circuit Judges, and

SCHWARZER,* District Judge

The motion to augment the remand is

denied.

* The Honorable William W. Schwarzer, United

States District Judge for the Northern District

of California, sitting be designation.

Appendix 9

No. 9

FILED

SEP 15 1988

CATHY A, CATTERSON, CLERK

U.S. COURT OF APPEALS

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, ) No. 82-6106

)

Plaintiff-Appellee ) D.C. No.

) 76-3763-LEW

Vv. )

)

DOROTHY SILVERMAN, ) ORDER

Administratrix, Estate of )

FRED R. SILVERMAN, )

Deceased, )

)

Defendant-Appellant. )

)

Before: POOLE, Circuit Judge, and SCHWARZER,

District Judge.*

Appellant's emergency motion to recuse

Judge Alarcon is denied as frivolous.

Construing the motion as a request to have the

record transmitted (see Fed. R. App. P. 11(e)),

the request is denied. The record shall be

retained in the district court unless and until

* Honorable William W. Schwarzer, United States

District Judge for the Northern District of

California, sitting by designation.

quested by this court. 9th Cir. R. 11-4.1;

e also Advisory Committee Note to 9th Cir. R.

-1.

The appeal stands as submitted on January

1987; no further argument will be allowed.**

——

Because of temporary absence from the

untry, Judge Alarcon did not participate with

e panel on this motion.

Appendix 10

19 1988

HY A. CATTERSON, CLERK

« COURT OF APPEALS

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TED STATES OF AMERICA, No. 82-6106

Plaintiff-Appellee D.C. No.

76-3763-LEW

OTHY SILVERMAN,

inistratrix, Estate of

D R. SILVERMAN,

eased,

ORDER

Defendant-Appellant.

ee ee ee

ore: ALARCON* and POOLE, Circuit Judges, and

WARZER, District Judge.**

This case is resubmitted effective

tember 9, 1988.

Judge Alarcon was drawn to replace Judge

nedy. He has read the briefs, reviewed the

‘ord and listened to the tape of oral

ument held on January 7, 1987.

Honorable William W. Schwarzer, United

tes District Judge for the Northern District

California, sitting be designation.

Appendix 11

UN.

Be:

No. 11

11 1989

iY A. CATTERSON, CLERK

, COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH COURT

TED STATES OF AMERICA, No. 82-6106

Plaintiff-Appellee, D.C. No.

76-3763 LEW

ORDER

ITHY SILVERMAN,

inistratrix, Estate of

i R. Silverman,

2ased.

Defendant-Appellant.

ore: ALARCON, POOLE, Circuit Judges, and

SCHWARZER, District Judge*

Appellant's emergency motions to

onsider, to vacate, etc., are denied in its

>) entirety.

he Honorable William W. Schwarzer, United

tes District Judge for the Northern District

california, sitting by designation.

“

Appendix 12

Od & O | m9 ix Gh w * WO

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ITED STATES OF AMERICA,

Plaintiff-Appellee,

Vv.

ROTHY SILVERMAN,

ministratrix, Estate of

ed R. Silverman,

ceased,

JPINION

Defendant-Appellant

ippeal from the United States District Court

for the Central District of California

Laughlin E. Waters, Senior District

Judge, Presiding

Argued and Submitted

January 7, 1987 - Pasadena, California

Filed October 13, 1988

fore: Arthur L. Alarcon* and Cecil F. Poole,

Circuit Judges, and William W.

Schwarzer, District Judge.**

Per Curiam

Judge Alarcon was drawn to replace Judge

nnedy. He has read the briefs, reviewed the

cord and listened to the tape of oral

gument held on January 7, 1987.

Honorable William W. Schwarzer, United

ates District Judge for the Northern

strict of California, sitting by designation.

SUMMARY

TAXATION

Affirming a judgment, the court held that

cause decedent's assets remained subject to

e probate court's control, the statute of

mitations is suspended.

This is the second appeal arising out of

e appellee government's efforts to collect

e unpaid balance of an assessment of federal

tate taxes against the estate of Fred R.

lverman, who died in 1963. In the prior

peal, this court held that 26 U.S.C. §6303(b)

‘spended the running of the statute of

mitations so long as all or substantially all

the assets of the decedent were subject to

e control or custody of the probate court.

remand, the district court found that the

sets of the decedent remained subject to the

ntrol of the probate court and entered

dgement in favor of the government.

[1] The court previously ordered a limited

mand for further findings as to whether

bstantial assets became available for levy

‘e than six years prior to the commencement

this action. [2] Since Mrs. Silverman's

ire was not part of the taxable estate, it

, not liable for any portion of the estate

-, and it could not be levied against to

tisfy the estate tax assessment.

cordingly, this court affirms the district

rt's finding that substantially all of the

sets of the decedent were subject to the

trol or custody of the probate court during

. relevant time period.

COUNSEL

V. Falcone, Los Angeles, California, for the

endant-appellant.

jer M. Olsen, Acting Assistant Attorney

ieral, Department of Justice, Washington,

*», for the plaintiff-appellee.

shael L. Paup, Attorney, Tax Division,

Martment of Justice, Washington, D.C., for

> plaintiff-appellee.

Lliam S. Estabrook, Attorney, Tax DIvision,

artment of Justice, Washington, D.C., for

> plaintiff-appellee.

PP ba ~ ' Wa 4/4 Ad ~ = + U vi - — £«- — = wow Vrs VM eS Oo! lL

irtha Brissette, Attorney, Tax Division,

partment of Justice, Washington, D.C., for

e plaintiff-appellee.

OPINION

R CURIAM:

This is the second appeal arising out of

e government's efforts to collect the unpaid

lance of an assessment of federal estate

xes against the estate of Fred R. Silverman,

o died in 1963. In the prior appeal, we held

at 26 U.S.C. § 6303(b) suspended the running

the statute of limitations so long as all or

bstantially all of the assets of the decedent

re subject to the control or custody of the

obate court. United States v. Silverman, 621

2d 961, 963 (9th Cir. 1980), cert. denied,

0 U.S. 913 (1981) (Silverman I1).1 On

—_

1 Counsel for the estate seems unwilling

/ concede that our earlier decision in this

‘se is governing, but it is undisputably the

w of the case. Under the "law of the case"

ctrine, a court is generally precluded from

examining an issue previously decided by the

me court, or a higher court, in the same

se. Richardson v. United States, 841 F.2d

3, 996 (9th Cir. 1988); Kimball v. Callahan,

OQ F.2d 768, 771 (9th Cir.), cert. denied, 444

emand, the district court found that the

ssets of the decedent remained subject to the

ontrol of the probate court and entered

udgment in favor of the government. We

ffirm.

DISCUSSION

The district court's finding that the

ssets of the esate were subject to the control

f the probate court, in this case the Los

ngeles County Suprior Court, is amply

upported by the record. The record shows that

he estate was admitted to probate on Sept. 26,

963. Since that time, the Superior Court has

ssued numerous orders disbursing funds for

arious expenses, including funeral expenses,

xecutor commissions and a family allowance.

urther evidence of the court's control is the

act that the cash and bank securities

omprising the estate were deposited in a bank

ccount pursuant to seciton 541.1 of the

alifornia Probate Code, in order to permit

—

~S. 826 (1979). This case does not fall

ithin any of the established exceptions to the

octrine. See Kimball 590 F.2d at 771-72. We

herefore adhere to our prior ruling.

-s. Silverman to qualify as administratrix

\thout bond. Assets deposited under this

sciton are subject to the express condition

iat “such money or securities will not be

tthdrawn exept on authoraiztion of the court."

il. Prob. Code §541.1 (West. Supp. 1988)

superceded July 1, 1988). Finally, the

iperior Court's records show that it retains

irisdiction over the estate and its assets.

[1] However, we recognized in Silverman I

iat the statute of limitations should not be

ispended if there were substantial assets

jainst which the government could have levied

iring the period of limitations:

Ths suspension should not exist when the

bar to levy is insubstantial,

however...The presence of assets of the

decedent, substantial in value in relation

to the total value of the decedent's

estate, not subject to the custody and

control of the probate court precluces

suspension of the running of the

[limitations] period.

21 F.2d at 967. Accordingly, after argument

cr?

this appeal we ordered a limited remand for

irther findings as to whether substantial

sets became available for levy more than six

ars prior to the commencement of this action.

[2] Pursuant to our limited remand, the

strict court found that approximately $32,250

is disbursed between 1963 and 1969, and that

is value was insubstantial in relation to the

»9tal value of the decedent's estate

pproximately $450,000). This finding is

ipported by the record and is not clearly

roneous. The district court also found that

1 1969 the Superior Court distributed to

rothy Silverman one-half of the cash and

securities in the estate account, which

mstituted her share of the Silverman's

mnunity property. These assets, however,

ire not subject to levy. Although the entire

2mmunity property was subject to

ministration by the probate court, see Cal.

‘ob. Code §202 (West 1956) (repealed 1974),

le surving spouse's share of community

‘operty is excluded from the gross estate and

lereby from the taxable estate. Ahmanson

fxs!

undation v. United States, 674 F.2d 761, 773

th Cir. 1981). Since Mrs. Silverman's share

s not part of the taxable estate, it was not

able for any portion of the estate tax,2 and

could not be levied against to satisfy the

tate tax assessment.3 Accordingly, we affirm

e district court's finding that substantially

l of the assets of the decedent were subject

the control or custody of the probate court

ring the relevent time period.

2See Estate of Cushing, 113 Cal. App. 2d

9, 328-32, 334, 248 P.2d 482 (1952) (widow's

are of post-1927 community property may not

charged with any portion of the federal

tate tax); see also Estate of Resler, 43

1.2d 726, 737, 278 P.2d 1 (1954) (same).

3In determining what property may be

vied upon under federal law, state law

ntrols the nature of the legal interest which

ie taxpayer has in the property. United

ates v. National Bank of Commerce, 472 U.S.

3, 722 (1984). Under California law, when

e marital community is dissolved by death the

mmunity status of the property disappears,

dad the surviving spouse takes his or her share

the property as separate property. Estate

_Hudson, 158 Cal. App. 2d 385, 389, 322 P.2d

7 (1958). Thus, upon death the deceased's

tate no longer has a sufficient interest in

ie surviving spouse's share to support a

deral levy. Compare Babb v. Schmidt, 496

2d 957 (9th Cir. 1974) (in California, wife's

lare of community property is subject to

deral levy to satisfy husband's prenuptial

come tax liabilities).

Appellant also contends that the district

ourt abused its discretion in excluding

arious pieces of evidence and in its denial of

ppellant's post-trial motions, but counsel for

he estate does not present a cogent or clear

rgument in this regard. We have reviewed the

ecord and find no error. We also reject

ppellant's contention that the district court

as unfair in the gereral conduct of the trial.

The judgment of the district court is

FFIRMED.

Appendix 13

No. 13

[LED

IN 2 1989

\1THY A. CATTERSON, CLERK

.S. COURT OF APPEALS

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

YITED STATES OF AMERICA, No. 82-6106

Plaintiff-Appellee D.C. No.

76-3763-LEW

YROTHY SILVERMAN, ORDER

iministratrix, Estate of

-9ED R. SILVERMAN,

ceased,

Defendant-Appellant.

me ee eee ee eee ee ee ee

2fore: ALARCON and POOLE, Circuit Judges, and

SCHWARZER, District Judge.*

The petition for rehearing is denied.

—

Honorable William W. Schwarzer, United

“ates District Judge for the Northern District

. California, sitting by designation.

_ . A

Appena LA =

No. 14

LAW OFFICES

FALCONE AND FALCONE

Suite 910 Commercial Exchange Building

416 West Eighth Street

LOS ANGELES, CALIFORNIA 90014

Telephone (213) 627-7104

Cable Address: FALCALLAW

». V. Falcone

awey Lawes Falcone

January 25, 1978

illiam J. James, Esquire

ssistant United States Attorney

142 United States Courthouse

12 North Spring Street

os Angeles, California 90012

Re: U.S.A. vs. Silverman, etc.

U.S. Dist. Ct. CD

No. CV 76 3763 LEW

Par Mr. James:

illiam J. James, Esquire

anuary 25, 1978

age 2

This supplements our conversation of

anuary 23, after the hearing in Courtroom No.

in the above action, including my statements

y client, Mrs. Dorothy K. Silverman, defendant

n the above action and administratrix of the

state of Fred R. Silverman, deceased, in both

f which matters I represent her, directly and

hrough her brother and advisor, Edward

apstein. =

My statements included that after the

aid hearing, I observed you talking with Mr.

apstein, that I had also noted your talking to

im after the hearing on plaintiff's motion for

ummary judgment in said action on November 7,

977, and that coupled with the conference you

ad with Mrs. Silverman and Mr. Kapstein, in my

bsence, in your office, some time ago, I

Onsidered such conduct questionable,

articularly in view of the Rules of

rofessional Conduct. You stated that he was

William J. James, Esquire

January 25, 1978

Page 3

not my client, that he telephoned you about

once a month or so and inquired about the said

action and its status. I stated that any such

inguiry was obviously on behalf of Mrs.

Silverman, that you knew his relationship to

her and recalled the improper statements she

and he made regarding me in your said

conference with them in my absence, some of

which you repeated but when I asked you to make

an affidavit you indicated your reluctance to

do so. In view of such background and the

obvious fact that she or he could and should

inguire of me and were advised of all

proceedings since I wrote them advising of

them, such conduct should not be continued.

Instead of accepting this statement

as a request for observance of professional

Standards in a sensitive area, you justified it

by protest.

The fact is that you represent

plaintiff against defendant and any inquiries

illiam J. James, Esquire

anuary 25, 1978

age 4

y or for Mrs. Silverman could not be for

laintiff's benefit but for her benefit and, of

ourse, you have a distinct conflict of

nterest.

It should not be necessary to write

his letter or to point out the adverse effect

f such conduct upon me in my representation of

rs. Silverman.

As I recall your closing statement,

Ou were not to discuss the case with or for

rs. Silverman but refer all such inquiries to

e as her attorney. Whether or not that was

our closing statement, I so request that you

o conduct yourself.

Our relations in the said action,

nsofar as I am concerned, have been maintained

na pleasant professional level and they

hould continue to be.

Yours truly,

(sgqd) A.V. Falcone

VF ivr

Appendix 15

United States Department of Justice

UNITED STATES ATTORNEY

CENTRAL DISTRICT OF CALIFORNIA

UNITED STATES COURT HOUSE

312 NORTH SPRING STREET

LOS ANGELES, CALIFORNIA 90012

Address Reply To

Inited States Attorney

Tax Division

And Refer To

Initials

\SO: CHM: WJJ: amm

fel: (213) 688-2729

February 1, 1978

1. V. Falcone, Esq.

“ALCONE and FALCONE

Suite 910 Commercial Exchange Building

416 West Eighth Street

Os Angeles, California 90014

- V. Falcone, Esq. February 1, 1978

Re: United States v. Dorothy Silverman,

Administratrix, Estate of Fred R.

Silverman, Deceased

No. CV76-3763-LEW

ear Mr. Falcone:

I am writing this letter in response to

our letter of January 25, 1978 and in order to

larify the record in case there has been some

isunderstanding.

The only contacts which I have ever had

ith your client, Dorothy K. Silverman,

ccurred as follows: She called me after the

nitial complaint in the above-captioned matter

as served upon her and requested a conference.

he and her brother, Edward Kapstein, arrived

t my office and Mrs. Silverman proceeded to

elate to me her view of her difficulties with

he Internal Revenue Service, the former

xecutors of the estate, and with her attorney,

ourself. I asked Mrs. Silverman if you were

A. V. Falcone, Esq. February 1, 1978

yoing to represent her in this matter, at which

point she and her brother discussed the

question and finally determined that you would.

I then informed Mrs. Silverman that I could not

jiscuss the case with her. I have not spoken

to her or written to her since that date. As

you know, I immediately called you at that

point and stated substantially what I have set

forth above.

During the past thirteen months, Mr.

Kapstein has called me two or three times to

ask what the status of the case was and if a

hearing was scheduled. We did not discuss the

case at any time nor did I make any inquiry of

Mr. Kapstein relative to or to be relayed to

Dorothy K. Silverman. Mr. Kapstein stated that

he was inquiring on his own behalf because he

wished to attend any hearing in this matter.

In responding to Mr. Kapstein's

questions concerning the dates of any

proceedings to be held in open court, my only

A. V. Falcone, Esq. February 1, 1978

intention was to courteously provide him with

information which is a matter of public record.

Both to confirm the above for yourself

and to avoid any possible future

misunderstanding, please contact both your

client and Mr. Kapstein and show them copies of

your letter of January 25, 1978 and this

letter.

Very truly yours,

ANDREA SEERIDAN ORDIN

United States Attorney

(sqd) William J. James

WILLIAM J. JAMES

Assistant United States Attorney

OFFICE OF THE CLERK

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SMORANDUM

9 : Howard Goss

ROM: Diana Telucci

ATE: September 22, 1989

E : U.S. v. Silverman, 82-6106

The motion for Reconsideration and

odification of Order Filed March 11, 1986

as filed as of March 28, 1986, but is

sic) was inadvertently omitted from the

ase file.

eS re

ay ~

Appendix 17

No. 17

STATUTES

All Sections are in 26 U.S.C.

§2001. Imposition and rate of tax.

(a) Imposition. A tax is hereby imposed

on the transfer of the taxable estate of every

decedent who is a citizen or resident of the

United States.

§2002. Liability for payment.

The tax imposed by this chapter shall be

paid by the executor.

§2031. Definition of gross estate.

(a) General. The value of the gross

estate of the decedent shall be determined by

including to the extent provided for in this

part, the value at the time of his death of all

property, real or personal, tangible or

intangible, wherever situated.

§2033. Property in which the decedent had an

interest.

The value of the gross estate shall

include the value of all property to the extent

of the interest therein of the decedent at the

time of his death.

§2203. Definition of executor.

The term “executor"™ wherever it is used in

this title in connection with the estate tax

imposed by this chapter means the executor or

administrator of the decedent, or, if there is

no executor or administrator appointed,

qualified, and acting within the United States,

then any person in actual or constructive

possession of any property of the decedent.

§2204. Discharge of fiduciary from personal

liability.

(a) General rule. If the executor makes

written application to the Secretary

determination of the amount of the tax and

discharge from personal liability therefor, the

Secretary (as soon as possible, and in any

event within 9 months after the making of such

application, or, if the application is made

before the return is filed, then within 9

nonths after the return is filed, but not after

the expiration of the period prescribed for the

assessment of the tax in section 6501) shall

notify the executor of the amount of the tax.

The executor, on payment of the amount of which

he is notified (other than any amount the time

for payment of which is extended under section

5161, 6163, 6166 or 6166A), and on furnishing

any bond which may be required for any amount

for which the time for payment is extended,

shall be discharged from personal liability for

any deficiency in tax thereafter found to be

jue and shall be entitled to a receipt or

writing showing such discharge.

(b) Fiduciary other than the executor.

[If a fiduciary (not including a fiduciary in

respect of the estate of a nonresident

jecedent) other than the executor makes written

application to the Secretary for determination

of the amount of any estate tax for which the

fiduciary may be personally liable, and for

jischarge from personal liability therefor, the

secretary upon the discharge of the executor

from personal liability under subsection (a),

or upon the expiration of 6 months after the

making of such application by the fiduciary, if

later, shall notify the fiduciary (1) of the

amount of such tax for which it has been

determined the fiduciary is liable, or (2) that

it has been determined that the fiduciary is

not liable for any such tax. Such application

Shall be accompanied by a copy of the

instrument, if any, under which such fiduciary

is acting, a description of the property held

by the fiduciary, and such other information

for purposes of carrying out the provisions of

this section as the Secretary may require by

regulations. On payment of the amount of such

tax for which it has been determined the

fiduciary is liable (other than any amount the

time for payment of which has been extended

under section 6161, 6163, or 6166 or 6166A),

and on furnishing any bond which may be

required for any amount for which the time for

payment has been extended, or on receipt by him

of notification of a determination that he is

not liable for any such tax, the fiduciary

shall be discharged from personal liability for

any deficiency in such tax thereafter found to

be due and shall be entitled to a receipt or

writing evidencing such discharge.

For purposes of the second sentence of

subsection (a) and the last sentence of

subsection (b), an agreement which meets the

requirements of section 6324A (relating to

special lien for estate tax deferred under

section 6166 or 6166A) shall be treated as the

furnishing of bond with respect to the amount

for which the time for payment has been

extended under section 6166 or 6166A.

92205. Reimbursement out of estate.

If the tax or any part thereof is paid by,

or collected out of, that part of the estate

passing to or in the possession of any person

other than the executor in his capacity as

such, such person shall be entitled to

reimbursement out of any part of the estate

still undistributed or by a just and equitable

contribution by the persons whose interest in

the estate of the decedent would have been

reduced if the tax had been paid before the

distribution of the estate or whose interest is

subject to equal or prior liability for the

payment of taxes, debts, or other charges

against the estate, it being the purpose and

intent of this chapter that so far as is

practicable and unless otherwise directed by

the will of the decedent the tax shall be paid

out of the estate before its distribution.

$6301. Collection authority.

The Secretary shall collect the taxes

imposed by the internal revenue laws.

§6303. Notice and demand for tax.

(a) General Rule. Where it is not

otherwise provided by this title, the Secretary

shall, as soon as practicable, and within 60

days, after the making of an assessment of a

tax pursuant to section 6203, give notice to

each person liable for the unpaid tax, stating

the amount and demanding payment thereof. Such

notice shall be left at the dwelling or usual

place of business of such person, or shall be

sent by mail to such person's last known

address.

§6321. Lien for taxes.

If any person liable to pay any tax

neglects or refuses to pay the same after

demand, the amount (including any interest,

additional amount, addition to tax, or

assessable penalty, together with any costs

that may accrue in addition thereto) shall be a

lien in favor of the United States upon all

property and rights to property, whether real

or personal, belonging to such person.

§6322. Period of lien.

Unless another date is specifically fixed

by law, the lien imposed by section 6321 shall

arise at the time the assessment is made and

shall continue until the liability for the

amount so assessed (or a judgment against the

taxpayer arising out of such liability) is

satisfied or becomes unenforceable by reason of

lapse of time.

§6324. Speciai liens for estate and gift

taxes.

(a) Liens for estate tax. Except as

otherwise provided in subsection (c)--

(1) Upon gross estate. Unless the

estate tax imposed by chapter 11 is sooner

paid in full, or becomes unenforceable by

reason of lapse of time, it shall be a

lien upon the gross estate of the decedent

for 10 years from the date of death;

except that such part of the gross estate

as is used for the payment of charges

against the estate and expenses of its

administration, allowed by any court

having jurisdiction thereof, shall be

divested of such lien.

(2) Liability of transferees and

eaten i aca ea aia i i

others. If the estate tax imposed by

chapter 11 is not paid when due, then the

spouse, transferee, trustee (except the

trustee of an employees’ trust which meets

the requirements of section 401(a)),

surviving tenant, person in possession of

the property by reason of the exercise,

nonexercise, or release of a power of

appointment, or beneficiary, who receives,

or has on the date of the decedent's

death, property included in the gross

estate under sections 2034 to 2042,

inclusive, to the extent of the value, at

the time of the decedent's death, of such

property, shall be personally liable for

such tax. Any part of such property

transferred by (or transferred by a

transferee of) such spouse, transferee,

trustee, surviving tenant, person in

possession or beneficiary, to a purchaser

or holder of a security interest shall be

divested of the lien provided in paragraph

(1) and a like lien shall then attach to

all the property of such spouse,

transferee, trustee, surviving tenant,

person in possession, or beneficiary, or

transferee of any such person, except any

part transferred to a purchaser or a

holder of a security interest.

(3) Continuance after discharge of

fiduciary. The provisions of section 2204

(relating to discharge of fiduciary from

personal liability) shall not operate as a

release of any part of the gross estate

from the lien for any deficiency that may

thereafter be determined to be due, unless

Such part of the gross estate (or any

interest therein) has been transferred to

a purchaser or a holder of a security

interest, in which case such part (or such

interest) shall not be subject to a lien

or to any claim or demand for any such

deficiency, but the lien shall attach to

the consideration received from such

purchaser or holder of a security

interest, by the heirs, legatees,

devisees, or distributees.

36331. Levy and distraint.

(a) Authority of Secretary. If any

person liable to pay any tax neglects or

refuses to pay the same within 10 days after

notice and demand, it shall be lawful for the

secretary to collect such tax (and such further

sum as shall be sufficient to cover the

=xpenses of the levy) by levy upon all property

and rights to property (except such property as

is exempt under section 6334) belonging to such

person or on which there is a lien provided in

this chapter for the payment of such tax. Levy

nay be made upon the accrued salary or wages of

any officer, employee, or elected official, of

the United States, the District of Columbia, or

any agency or instrumentality of the United

states or the District of Columbia, by serving

2 notice of levy on the employer (as defined in

section 3401(d)) of such officer, employee, or

2lected official. If the Secretary makes a

finding that the collection of such tax is in

jeopardy, notice and demand for immediate

Dayment of such tax may be made by the

secretary and, upon failure or refusal to pay

such tax, collection thereof by levy shall be

lawful without regard to the 10-day period in

this section.

(b) Seizure and sale of property. The

term “levy" as used in this title includes the

power of distraint and seizure by any means.

Except as otherwise provided in subsection

(d)(3), a levy shall extend only to property

possessed and obligations existing at the time

thereof. In any case in which the Secretary

may levy upon property or rights to property,

he may seize and sell such property or rights

to property (whether real or personal, tangible

or intangible).

(d) Salary and wages.

$6332. Surrender of property subject to

levy.

(a) Requirement. Except as otherwise

provided in subsection (b), any person in

possession of (or obligated with respect to)

SS OS Oe SO ee

—_ =

SC —

“5 «

roperty or rights to property subject to levy

20n which a levy has been made shall, upon

emand of the Secretary, surrender such

roperty or rights (or discharge such

Sligation) to the Secretary, except such part

fF the property or rights as is, at the time of

uch demand, subject to an attachment or

cecution under any judicial process.

5334. Property exempt from levy.

(a) Enumeration. There shall be exempt

rom levy--

(1) Wearing apparel and school

books.

(2) Fuel, provisions, furniture, and

personal effects.

(3) Books and tools of a trade,

business, or profession.

(4) Unemployment benefits.

(5) Undelivered mail.

(6) Certain annuity and pension

payments.

(7) Workmen's compensation.

(8) Judgments for support of minor

children.

(9) Minimum exemption for wages

Salary and other income.

(b) Appraisal.

2Stwithstanding any other law of the United

tates, no property or rights to property shall

2 exempt from levy other than the property

pecifically made exempt by subsection (a).

(d) Exempt amount of wages, salary, or

ther income.

6501. Limitations on assessment and

collection.

(a) General rule. Except as otherwise

rovided in this section, the amount of any tax

mposed by this title shall be assessed within

years after the return was filed (whether or

ot such return was filed on or after the date

rescribed) or, if the tax is payable by stamp,

t any time after such tax became due and

efore the expiration of 3 years after the date

n which any part of such tax was paid, and no

proceeding in court without assessment for the

collection of such tax shall be begun after the

expiration of such period.

§6502. Collection after assessment.

(a) Length of period. Where the

assessment of any tax imposed by this title has

been made within the period of limitation

properly applicable thereto, such tax may be

collected by levy or by a proceeding in court,

but only if the levy is made or the proceeding

begun.

(1) Within 6 years after the

assessment of the tax, or

(2) Prior to the expiration of any

period for collection agreed upon in

writing by the Secretary or his

delegate and the taxpayer before the

expiration of such 6-year period (or,

if there is a release of levy under

section 6343 after such 6-year

period, then before such release).

The period so agreed upon may be extended by

subsequent agreements in writing made before

the expiration of the period previously agreed

upon. The period provided by this subsection

during which a tax may be collected by levy

shall not be extended or curtailed by reason of

a judgment against the taxpayer.

(b) Date when levy is considered made.

The date on which a levy on property or rights

to property is made shall be the date on which

the notice of seizure provided in section 6335

(a) is given.

$6503. Suspension of running of period of

limitation.

(a) Issuance of statutory notice of

deficiency.

(1) General rule. The running of

the period of limitations provided in

section 6501 and 6502 on the making

of assessments or the collection by

levy or a proceeding in court, in

respect of any deficiency as defined

in section 6211 (relating to income,

estate, and gift and certain excise

taxes), shall (after the mailing of a

notice under section 6212(a)) be

suspended for the period during which

the Secretary is prohibited from

making the assessment or from

collecting by levy or a proceeding in

court (and in any event, if a

proceeding in respect of the

deficiency is placed on the docket of

the Tax Court, until the decision of

the Tax Court becomes final), and for

60-days thereafter.

(b) Assets of taxpayer in control or

custody of court. The period of limitations on

collection after assessment prescribed in

section 6502 shall be suspended for the period

the assets of the taxpayer are in the control

or custody of the court in any proceeding

before any court of the United States or of

any State or of the District of Columbia, and

for 6 months thereafter.

(ad) Extensions of time for payment of

estate tax. The running of the period of

limitation for collection of any tax imposed by

chapter 11 shall be suspended for the period of

any extension of time for payment granted under

the provisions of section 6161(a)(2) or (b)(2)

or under the provisions of section 6163, 6166,

or 6166A.

(e) Extensions of time for payment of tax

attributable to recoveries of foreign

expropriation losses.

(f£) Wrongful seizure of property of third

party.

(g) Suspension pending correction.

(i) ((h)] Extension of time for

collecting tax attributable to divestitures

pursuant to Bank Holding Company Act Amendments

of 1970.

(h) Cross references. For suspension in

case of--

(1) Deficiency dividends of a

personal holding company, see section

547(f).

(2) Bankruptcy and receiverships,

see subchapter B of chapter 70.

ena

(3) Claims against transferees and

fiduciaries, see chapter 71.

(4) Income tax return preparers, see

section 6694(c)(3).

(5) Deficiency dividends in the case

of a regulated investment company or

a real estate investment trust, see

section 860(h).

§7403. Action to enforce lien or to subject

property to payment of tax.

(a) Filing. In any case where there has

been a refusal or neglect to pay any tax, or to

discharge any liability in respect thereof,

whether or not levy has been made, the Attorney

General or his delegate, at the request of the

Secretary, may direct a civil action to be

filed in a district court of the United States

to enforce the lien of the United States under

this title with respect to such tax or

liability or to subject any property, of

whatever nature, of the delinquent, or in which

he has any right, title, or interest, to the

payment of such tax or liability. For purposes

of the preceding sentence, any acceleration of

payment under section 6166(g) shall be treated

as a neglect to pay tax.

(b) Parties. All persons having liens

upon or claiming any interest in the property

involved in such action shall be made parties

thereto.

shall, after the parties have been duly

notified of the action, proceed to adjudicate

all matters involved therein and finally

determine the merits of all claims to and liens

upon the property, and, in all cases where a

claim or interest of the United States therein

is established, may decree a sale of such

property, by the proper officer of the court,

and a distribution of the proceeds of such

sales according to the findings of the court in

respect to the interests of the parties and of

the United States. If the property is sold to

satisfy a first lien held by the United States,

the United States may bid at the sale such sun,

not exceeding the amount of such lien with .

anata aren ia aaa la

expenses of sale, as the Secretary directs.

(dq) Receivership. In any such

proceeding, at the instance of the United

States, the court may appoint a receiver to

enforce the lien, or, upon certification by the

Secretary during the pendency of such

proceedings that it is in the public interest,

may appoint a receiver with all the powers of a

receiver in equity.

§7701. Definitions.

(a) When used in this title, where not

otherwise distinctly expressed or manifestly

incompatible with the intent thereof--

(1) Person. The term "person" shall

be construed to mean and include an

individual, a trust, estate,

partnership, association, company or

corporation.

(6) Fiduciary. The term "fiduciary"

means a guardian, trustee, executor,

administrator, receiver, conservator,

or any person acting in any fiduciary

capacity for any person.

(14) Taxpayer. The term "taxpayer"

means any person subject to any

internal revenue tax.

28 U.S.C. 455(a)

31 U.S.C. §3713. Priority of Government

Claims

(a)(1) A claim of the United States

Government shall be paid first when--

(A) a person indebted to the

Government is insolvent and-=

(i) the debtor without enough

property to pay all debts makes

a voluntary assignment of

property;

(ii) property of the debtor, if

absent, is attached; or

(iii) an act of bankruptcy is

committed; or

(B) the estate of a deceased debtor,

in the custody of the executor or

administrator, is not enough to pay

all debts of the debtor.

(2) This subsection does not apply to

a case under title 11 [11 USCS §§ 101

et seq.].

(b) A representative of a person or an

estate (except a trustee acting under title 11

[11 USCS §§ 101 et seq.]) paying any part of a

debt of the person or estate before paying a

claim of the Government is liable to the extent

of the payment for unpaid claims of the

Government.

(Sept. 13, 1982, P.L. 97-258, § 1, 96 Stat.

972.)

§950. Expenses, charges and debts; over of

iyment.

The debts of the decedent, the expenses of

administration and the charges against the

estate shall be paid in the following order:

(1) Expenses of administration;

(2) Funeral expenses;

(3) Expenses of last illness;

(4) Family allowance;

(5) Debts having preference by the

laws of the United States;

(6) Wages, to the extent of nine

hundred dollars ($900), of each

employee of the decedent, for work

done or personal services rendered

within 90 days prior to the death of

the employer. If there is not

sufficient money with which to pay

all such labor claims in full the

money available shall be distributed

among the claimants in accordance

with the amount of their respective

claims;

(7) Mortgages, judgments that are

liens, and other liens, in the order

their priority, so far as they may be

paid out of the proceeds of the

encumbered property. If such

proceeds are insufficient for that

purpose, the part of the debt

remaining unsatisfied shall be

classed with the general Gemancs

against the estate;

§974.

(8) Judgments that are not liens

rendered against the decedent in his

lifetime and all other demands

against the estate, without

preference or priority one over

another.

Payment of agreement for payment of

tax.

Before final distribution of the estate,

the estate tax shall be paid out of the estate

by the executor or administrator or evidence of

a written agreement for the payment of the

estate tax, executed between the federal taxing

authority and the executor, administrator, or

persons interests in the estate, shall be filed

withthe court.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.