United States v. Korman, 987 F.3d 1234 (9th Cir. 2023)
In United States v. Korman, the Ninth Circuit Court addressed the nuanced interplay between federal tax liens and property transfers, a topic critical to understanding the priorities of different legal claims on property.
Does a federal tax lien attach to property transferred to a bona fide purchaser without notice of the lien, and is such a lien enforceable against the subsequent purchaser?
Under 26 U.S.C. § 6321, federal tax liens attach to 'all property and rights to property, whether real or personal' belonging to a taxpayer. The Internal Revenue Code provides that these liens apply to all property even if transferred, so long as the conditions for lien attachment are met.
The court held that federal tax liens, once attached, remain with the property and are enforceable against subsequent transferees, even if those transferees had no notice of the liens at the time of purchase, provided the lien was properly recorded under federal law.
United States v. Korman is vital for law students and practitioners as it underscores federal supremacy in tax matters and the enduring nature of tax liens on property. It clarifies the risk inherent in transactions involving property that might be subject to federal liens, indicating the importance of performing thorough due diligence. The case also serves as an instructional vehicle in balancing federal tax enforcement against principles of property law and the protection of innocent purchasers.