United States v. Boyce
2014 U.S. Dist. LEXIS 115545
C.D. Cal.2014Background
- Joel L. Boyce failed to file federal income tax returns for multiple years (1998–2008); the IRS assessed unpaid taxes and the government sued (filed Jan. 28, 2013) to reduce assessments to judgment, foreclose federal tax liens on real property at 163 Fallbrook Ave., Newbury Park, CA (the Property), and set aside a conveyance to "Perfect Accord Unlimited" (Perfect).
- The Property was conveyed by quitclaim to Perfect in December 1995; Perfect is an unregistered entity and Joel has repeatedly identified himself as its manager, continued to receive mail at and live at the Property, pay utilities and the mortgage, and otherwise exercise control.
- The government produced Forms 4340 (certificates of assessment) and Forms 1099 and proffered an IRS declaration describing standard notice procedures; notices of deficiency were produced for most years and certificates of assessment for others; Boyces offered no contrary sworn evidence.
- Procedurally: defaults and stipulations resolved some parties; Chase asserted a senior security interest; the court granted the government's motion for summary judgment and denied the Boyces’ motion to dismiss for lack of subject‑matter jurisdiction.
- The court found Perfect to be the Boyces’ nominee and the December 1995 transfer presumptively fraudulent under California’s UFTA; the court declined to apply outside reverse‑piercing (alter‑ego) theory to reach Perfect’s assets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction | United States: federal courts have jurisdiction under 26 U.S.C. § 7402 and 28 U.S.C. §§ 1340, 1345 to enforce tax liens and reduce assessments | Boyces: lack of valid notices of deficiency and fringe arguments (tax‑protester theories, FSIA sovereign immunity, jurisdiction limited to D.C.) | Court: jurisdiction exists; Boyces’ arguments rejected as frivolous or legally meritless |
| Validity and timeliness of assessments | Government: Forms 4340, 1099s, and IRS declarations supply minimal foundation; tolling of limitations for 1998 due to CDP hearings; action timely | Boyces: challenge existence/mailed delivery and authority for notices/SFRs | Court: assessments presumed correct; government met initial burden; tolling renders suit timely; Boyces presented no contrary evidence |
| Whether Property is subject to IRS liens (nominee / alter ego / fraudulent transfer) | Government: Perfect is nominee or holder of title to conceal Boyces’ interest; transfer was fraudulent under Cal. Civ. Code § 3439.04 | Boyces: maintain transfer and corporate separation; dispute reach and characterization | Court: Perfect is nominee as matter of law (multiple nominee factors favor government); outside reverse‑piercing (alter‑ego) denied; transfer is fraudulent under UFTA—liens attach to Property |
| Remedy and distribution of sale proceeds | Government: seek sale under 26 U.S.C. § 7403 and foreclosure of liens against Property, with priorities established | Boyces: contend nondebtor spouse interest and other defenses | Court: order reducing Joel’s liabilities to judgment, foreclosing federal tax liens, setting aside fraudulent conveyance, and ordering sale; because title was taken as joint tenants, one‑half interest belongs to Delynn (not converted to community property), so Perfect must be reimbursed one‑half of proceeds; Chase has senior lien; court could not determine complete priority of all remaining liens and directed stipulation |
Key Cases Cited
- Fourth Inv. LP v. United States, 720 F.3d 1058 (9th Cir. 2013) (nominee doctrine and factors for determining nominee/beneficial ownership)
- G.M. Leasing Corp. v. United States, 429 U.S. 338 (U.S. 1977) (federal tax liens reach property held by nominees/third parties)
- United States v. Rodgers, 461 U.S. 677 (U.S. 1983) (§ 7403 contemplates sale of entire property with judicial valuation and distribution to protect third‑party interests)
- In re Pletz, 221 F.3d 1114 (9th Cir. 2000) (§ 7403 allows sale of entire property despite non‑debtor co‑owner so long as non‑debtor is compensated)
- Stonehill v. United States, 702 F.2d 1288 (9th Cir. 1983) (government may carry initial burden in tax collection suits by introducing assessment)
- Mundt v. United States, 29 F.3d 233 (6th Cir. 1994) (rejecting tax‑protester claims about limited geographic application of federal tax laws)