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United States v. Haynes

United States District Court, D. Maine

December 11, 2017

UNITED STATES OF AMERICA, Petitioner
v.
JOSEPH D. HAYNES, Respondent

          ORDER APPROVING PETITION TO LEVY PRINCIPAL RESIDENCE

          JOHN C. NIVISON U.S. MAGISTRATE JUDGE

         The matter is before the Court on the United States' petition for judicial approval of levy on Respondent Joseph D. Haynes's principal residence, based on Respondent's nonpayment of tax liabilities assessed by the Internal Revenue Service. For reasons stated below, I grant the petition.

         Background

         On September 19, 2017, the United States (“Petitioner”) filed its Petition for Judicial Approval of Levy Upon Principal Residence. (ECF No. 1.) In support of the petition, Petitioner submitted the Declaration of Revenue Officer Todd N. Greeley (ECF No. 1-1), which declaration is prima facie evidence that (1) Joseph Haynes (“Respondent”) is liable for unpaid taxes for the tax years 2007, 2008, 2010, and 2011, and for civil penalties related to quarterly employment tax periods ending March 30, 2010, through March 30, 2013, which liabilities totaled, with interest, $333, 479.22, as of August 15, 2017; (2) Petitioner provided Respondent with notice of the assessments and demand for payment; (3) Respondent failed to pay Petitioner the liabilities in full; (4) Petitioner provided Respondent with notice of the intent to levy and notice of taxpayer's rights to an administrative hearing prior to levy; and (5) the IRS attempted to satisfy the liabilities from assets other than the property in question, and no reasonable alternative exists to satisfy the unpaid liabilities. (Greeley Declaration, ECF No. 1-1.)

         The petition and declaration state that the subject property is located at Map FR27, Plan 01, Lot 24, Salem Township, Maine 04983, and that the subject property qualifies as Respondent's principal residence. (Petition ¶ 4; Greeley Declaration ¶ 5.)

         On September 20, 2017, the Court issued its Notice and Order to Show Cause, in which notice and order the Court informed Respondent of the pending proceeding and the claim asserted, and that Petitioner had made a prima facie showing that it complied with the regulatory prerequisites of 26 C.F.R. § 301.6334-1(d). In the notice and order, the Court informed Respondent that he had 30 days to file a written objection to the petition, through which objection Petitioner should demonstrate that he has satisfied the liabilities or has other assets from which the liabilities can be satisfied, or that Petitioner failed to comply with the regulatory procedures required for imposition of the levy. The Court further informed Respondent that a hearing would be scheduled on the matter, but that if he failed to file an objection, he would waive his right to a hearing. (Notice and Order to Show Cause, ECF No. 3.)

         The record reflects that on September 21, 2017, Deputy Sheriff Peter Mars personally served Respondent, in hand, with a copy of the notice and order, and with a copy of the petition and the supporting declaration. Additionally, Petitioner provided Respondent copies of the documents by certified mail, return receipt requested, directed to Respondent's residence and another dwelling in Strong, Maine. Petitioner received a return receipt for the certified mail delivered to the Strong address, which receipt bears the signature of Respondent. (Declaration of Service, ECF No. 8; Deputy Mars's Service Receipt, ECF No. 8-1; USPS Return Receipt, ECF No. 8-2.)

         As of the date of this order, Respondent has not filed an objection to the petition.

         Discussion

         The Internal Revenue Code exempts certain property from levy, including “principal residences.” 26 U.S.C. § 6334(e)(1). However, “[a] principal residence shall not be exempt from levy if a judge or magistrate of a district court of the United States approves (in writing) the levy of such residence.”[1] Id. § 6334(e)(1)(a). If the court grants the levy, the United States may sell the residence. 26 U.S.C. § 6335. The taxpayer may redeem the property within 180 days of the sale by paying the purchaser the purchase price plus interest. 26 U.S.C. § 6337(b)(1), (2).

         The Department of the Treasury has issued the following regulation regarding the manner by which the United States will seek approval of a levy on a principal residence.

(d) Levy allowed on principal residence. The Service will seek approval, in writing, by a judge or magistrate of a district court of the United States prior to levy of property that is owned by the taxpayer and used as the principal residence of the taxpayer, the taxpayer's spouse, the taxpayer's former spouse, or the taxpayer's minor child.
(1) Nature of judicial proceeding. The Government will initiate a proceeding for judicial approval of levy on a principal residence by filing a petition with the appropriate United States District Court demonstrating that the underlying liability has not been satisfied, the requirements of any applicable law or administrative procedure relevant to the levy have been met, and no reasonable alternative for collection of the taxpayer's debt exists. The petition will ask the court to issue to the taxpayer an order to show cause why the principal residence property should not be levied and will also ask the court to issue a notice of hearing.
(2) The taxpayer will be granted a hearing to rebut the Government's prima facie case if the taxpayer files an objection within the time period required by the court raising a genuine issue of material fact demonstrating that the underlying tax liability has been satisfied, that the taxpayer has other assets from which the liability can be satisfied, or that the Service did not follow the applicable laws or procedures pertaining to the levy. The taxpayer is not permitted to challenge the merits underlying the tax liability in the proceeding. Unless the taxpayer files a ...

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