IRC 6321

In the case of Julie Dinwiddie v. United States of America, Internal Revenue Service, the Ninth Circuit Court of Appeals illustrates the reach of the federal tax lien. This case is No. 21-35368 filed May 11, 2023. The action in this case was an allegation by Julie Dinwiddie that her personal bank account was wrongfully levied by the IRS.  In 2007 the IRS assessed Julie Dinwiddie’s husband, Jeffrey, with $3.7 million in tax liabilities.  And a tax lien attached in favor of the government to his property.  At that time, Jeffery was sole shareholder of Evergreen Nursery Incorporated (“ENI”). As the court explains, a tax lien broadly reaches every interest in property that a taxpayer might have.  As such, the lien attached to the stock and any monetary distribution associated with that stock.  At some point after the lien is filed, Jeffrey transferred his stock to Julie.  Julie then distributed funds from ENI’s bank account to her personal account as the new sole stockholder.  Because the lien attached to ENI and the money that flowed from it, the IRS properly levied her personal bank account. There are methods to transfer property to another free of the federal tax lien, but none of those situations existed in this matter.