Federal Liens Now Threaten Marital Property

by Raymond J. Bowie

Will Rogers reputedly said of legislatures that no one's life or property is safe when they are in session. The same, unfortunately, may sometimes also be said about the nation's judiciary. Case in point: Even while the nation's public policy focuses on bolstering the institution of marriage, the U.S. Supreme Court has just take a judicial swipe at the very legal foundations of marital property.

In a recent decision of major import nationwide, the nation's highest court struck down traditional common law protections afforded real estate owned jointly by husband and wife.

In its decision April 17, 2002 in the case of United States v. Craft, the Supreme Court ruled that even when spouses hold title to their own home as 'tenants by the entireties' an IRS tax lien against just the husband would attach to the property they own jointly, giving the IRS power to seize half the marital residence over the wife's objection.

This decision overturned a venerable common law doctrine, cherished in many states, that when a married couple hold title to real property, they may enjoy a unique status called an 'estate by the entireties' in which the property is absolutely beyond the reach of any of their individual creditors including government agencies.

Prior to the April 17 decision of the Supreme Court, both federal and state courts had consistently ruled that real property owned jointly by spouses was protected against government liens to the same extent as private liens or judgments. Various court decisions have held such 'entireties' property to be beyond the reach of either private judgments, federal or state tax liens, criminal fines or penalties, or other government actions levied against only on e of the spouses individually.

Then came the case of U.S. vs. Craft before the Supreme Court. In this case, Don and Sandra Craft owned property in Michigan as tenants by the entireties. Mr. Craft failed to file income tax returns for seven years, and the IRS assessed a lien against him for $482,446 in back taxes. Mr. and Mrs. Craft then jointly deeded the entireties property to Mrs. Craft, who was not liable for any of the taxes. But when Mrs. Craft attempted to sell her property after her husband's death, the IRS asserted that its lien had attached to the entireties property at the time when both spouses owned it, and demanded half of her sales proceeds to pay Mr. craft's tax liability. Mrs. Craft had no income or inheritance from her husband other than the home, and needed all the proceeds to secure her retirement.

In upholding the IRS claim, the Supreme Court said that as a matter of federal law, each individual spouse is deemed to own a separate 50% interest in entireties property that can be separately reached by federal government agencies with lien powers.

The tremors of this precedent-shattering decisions are just now being felt throughout the country.

To appreciate better the consequences of the court's ruling, it helps to understand the traditional legal doctrine of tenants by the entireties, at least as it had been understood in this country prior to the Craft decision.

In many states, the law automatically creates an estate by the entirety any time property is conveyed to spouses jointly. The deed does not even have to recite that they are husband and wife, or use the words 'tenants by the entireties', although most deeds in fact do. The mere fact that they are married to one another is sufficient.

Over the centuries, as part of the social compact to protect the interests of wives and children in the marital home , the common law developed a legal doctrine called the 'estate by the entirety' to protect real property conveyed jointly to a husband and wife. Entirety is the concept that legally, the two spouses own the property as only one entity holding one single indivisible interest in the property. In a way, entireties ownership makes the two spouses into a single entity, almost like a corporation, for purposes of holding title to the property.

This means that neither of the spouses acting alone, nor any of their individual creditors, nor any court or government could divide entireties property into two separate individual ownership interests. Only both of the spouses acting together can do anything with or to the entireties property. Neither one of the spouses alone can sell, mortgage, lease, encumber or do anything with entireties property without the joiner of the other spouse.

By the same token, creditors to whom only one of the spouses might owe an obligation have not traditionally been able to reach entireties property to satisfy their judgments, claims or liens. Only if the married couple were jointly obligated to the same creditor on the same obligation might their common creditor reach their property.

It was this centuries-old legal doctrine that was struck down by the Supreme Court in holding that a federal lien against one individual spouse can indeed attach to half of any property owned jointly by both spouses as tenants by the entireties. In effect, what our highest court did was, for the first time, split an entireties property into two separate ownership interests for purposes of enforcing federal government liens.

In its ruling, the court brushed aside "the state law fiction that a tenant by the entireties has no separate interest in entireties property" and held that under federal law, each spouse possessed "individual rights in the estate sufficient to constitute property or rights to property for purposes of the federal tax lien statute."

In the aftermath of the Craft decision, entireties property will no longer be entitled to absolute protection from any and all liens incurred by one spouse but not the other. For liens arising under federal law in favor of federal agencies, such liens will now attach to a spouse's interest even in entireties property. 

One needs to realize the constantly increasing scope of federal government power in citizens' lives and the lien rights afforded various federal agencies under federal laws. The Supreme Court's ruling will subject entireties property not only to IRS tax liens but also to myriad other liens that can be imposed by other federal agencies for environmental hazards, statutory restitution, improper business practices and federal criminal fines and forfeitures.

And considering that federal tax rules now comprise 45,662 incomprehensible pages, increasing in size 74% over the last 16 years with some 7,000 tax code changes over those years, few taxpayers can disregard entirely the prospect of encountering an IRS tax lien sometime over the course of their lives.

One of the interesting questions the Supreme Court did NOT answer in the Craft decision was, however, what does the IRS get for its lien on half of an entireties property?

This issue was remanded for determination in lower federal courts. Can the IRS force the sale of the property and keep half the proceeds? Or does the tax lien lie dormant until the spouses sell the property themselves? Or until the innocent wife dies the husband owing the taxes becomes sole owner of the property?

THE DOMESTIC SECURITY ENHANCEMENT
ACT OF 2003

A PLAIN ANALYSIS

By Greg Kay

I have broken the 33 page summary/analysis down, section by section,  addressing the parts that might pertain to us, in plain English to make it easier to look up the parts of concern. This will make it
easier to evaluate the whole bill, which can be read at http://www.public-i.org/dtaweb/report.asp?
ReportID=502&L1=10&L2=10&L3=0&L4=0&L5=0 .

Please remember that the information here is ONLY from the analysis; the language of the bill itself will undoubtedly contain more surprises.

There's some scary stuff here, folks! FISA, by the way, is another federal alphabet an acronym for Foreign Intelligence Surveillance Act.

SECTION 101: All persons, including unaffiliated groups or individuals, who engage in "international terrorism", will be designated "a foreign power" eliminating any rights that they might have.

SECTION 102: Any person who engages in the legal collection (repealing the current requirement of the collection mode being illegal) of information that may be used by another country, including US reporters, could be deemed "agents of a foreign power", even if the information was used or intended to be used as a standard news media. What information gathered here is not used in foreign
news media?

SECTION 103: This would extend the government's right to unfettered (Without FISA court approval) searches and taps for a period of 15 days after a declaration of war by congress to also be invoked after Congressional authorization of the use of force or an attack, while SECTION 104 extends the term from 15 days to one year, and expands the scope of the surveillance.

SECTION 105: This would make it easier for FISA collected information to be made available to law enforcement.

SECTION 106: Gives immunity to agents who engage in searches without court approval.

SECTION 107: Eliminates the tighter restrictions on conducting investigations against US citizens than against foreign nationals in the US.

SECTION 109: Gives the FISA court the same powers as a regular court to force cooperation.

SECTION 110: To prevent sun-setting of certain aspects of the USA Patriot Act.

SECTION 111: Removing different rules between foreign nationals and US citizens in terrorism investigations.

SECTION 122: Allows electronic surveillance and monitoring without a court order in `emergencies' and makes it easier to allow foreign law enforcement requests for investigations in the US to be carried out.

SECTION 123: Extends tapping and surveillance and further minimizes judicial oversight and involvement.

SECTION 124: Extends a single search's legality over all functions of multi-function devices.

SECTION 125: Expands the types of crimes for which a federal judge in one district may issue a nationwide warrant valid in all areas.

SECTION 126: Allow Federal agents to obtain anyone's credit report, consumer records, and other financial records on request, and prevent the reporting agency from revealing to their customer that their records had been accessed.

SECTION 128: Allow the Justice Department, independent of a judge, to issue subpoenas.

SECTION 129: Would make compliance with the above subpoenas and other requests for records mandatory, and would make refusal or disclosure of the demand a felony punishable by 5 years in prison.

SECTION 201: Allows the government to hold people "detained in the investigation of terrorism" secretly and, apparently, indefinitely.

SECTION 202: Limits the safety information presented to the public on the potential hazards of chemical spills, releases, etc.

SECTION 203: Eliminates public release of the layout of government buildings.

SECTION 204: Makes it easier for the government to present secret, classified information to the court alone.

SECTION 205: Eliminates tax assessments on the value of private security systems and measures used by federal employees and officials for their protection. No such exemption extends to anyone else.

SECTION 206: Would impose on counsel contacted by those subpoenaed by a Grand Jury the same demand or secrecy that is imposed on those who
are actually subpoenaed.

SECTION 302: Would establish a DNA database, the identifying information to be taken from the following people: persons SUSPECTED of conspiring, attempting, or engaging in terrorism; enemy combatants and POW's; persons suspected of being members of a terrorist organization; aliens engaged in activity that endangers national security.

SECTION 303: Would require all law enforcement agencies to provide the above identifying data to the attorney general, would allow him to establish a database and either use the information or share it with other law enforcement agencies, specifically including foreign ones.

SECTION 311: Allows the sharing of credit, consumer, and financial information with foreign governments.

SECTION 312: Would make void most consent decrees issued by State and local governments that protect against unreasonable search and
seizure, thus allowing State and local law enforcement to operate under federal regulations rather than the restrictions of their own
localities, EXCEPT those consent decrees based on accusations of racism or racial profiling.

SECTION 313: Protects businesses and personnel from civil liability for voluntarily sharing information with federal law enforcement.

SECTION 321: Would eliminate the treaty clause and allow the federal government to engage in an investigation in the US on the request of any foreign power.

SECTION 322: Would allow, at the will of the attorney general and secretary of state, the extradition of suspects to a foreign country
for crimes not covered by extradition treaties, or even to those countries with whom we have no extradition treaty at all.

SECTION 401: Would make it a crime to "knowingly convey false or misleading information, where such information may be believed" and increases penalties for terrorism hoaxes.

SECTION 402: Provides definition for the material support of terrorism to include materials, instruction or teaching, or personnel to a terrorist organization.

SECTION 403: Extends federal jurisdiction over Weapons of Mass Destruction laws to cover virtually everything, including property within the US owned, leased or used by a foreign government; if any
form of interstate or foreign commerce is used in setting up the attack, if the property attacked relates to or is used in any activity that affects interstate or foreign commerce, or if the perpetrator travels or causes another to travel in interstate or foreign commerce in furtherance of the crime.

SECTION 404: Any person using encryption during or related to a federal crime will be sentenced to an extra 5 years in prison.

SECTION 405: Automatically denies bail to anyone charged with terrorism related activities.

SECTION 407: Extends interstate or foreign commerce jurisdiction similar to that described in SECTION 403 to virtually all terrorism-related crimes.

SECTION 408:  Allows for the placing of convicts on parole or probation for life, and eliminates re-sentencing violators for anything less than the original sentence. These provisions also apply
to computer virus makers and those who have donated money to terrorist groups.

SECTION 409: Any person suspected (not necessarily charged) of being
a terrorist-related threat may have his pilot's license suspended or revoked.

SECTION 410: Provides no statute of limitations for terrorist crimes, including cyber-terrorism or donating money to terrorist groups.

SECTION 411: Increases number of acts subject to the death penalty.

SECTION 421: Increases penalties for "financing terrorism" or for "trading with prohibited persons" to $50,000 per offence.

SECTION 422: Makes it easier to charge people with money laundering.

SECTION 423: Removes tax-exempt status from terrorist organizations (?).

SECTION 424: Anyone convicted of terrorism may be denied federal benefits.

SECTION 425: Defines financing terrorism.

SECTION 426: Adds RICO procedure to terrorist financing.

SECTION 427: Allows for the seizure of assets of persons committing or planning terrorism.

SECTION 428: More asset forfeiture.

SECTION 501: Americans can lose their citizenship if they serve in or provide material support to any organization designated as a terrorist group, and that the intent to relinquish nationality can be inferred from conduct.

SECTION 502: Allows increased penalties for immigration related crimes.

SECTION 503: Allows the Attorney General to bar admittance to or remove from the US "individuals" (aliens?) that he has reason to believe would be a danger to national security.

SECTION 504: Allows for the attorney general to automatically remove criminal aliens who have been convicted of certain crimes, expressly included among which is draft evasion.


"When the government fears the people you have Liberty. When the people fear the government  you have Tyranny." -Thomas Jefferson
 

The Malpractice Problem

The following national article illustrates the skyrocketing problem of malpractice claims for medical professionals. Every state is experiencing the same problem as Texas. 

Don't be one of those devastated by malpractice lawsuit. Our protection GUARANTEES you can never be sued successfully for malpractice. You will not lose any assets whatsoever as the result of a malpractice claim.

by Lynn Brezosky

Associated Press

BROWNSVILLE, Texas --

Life in the Rio Grande Valley is pleasant enough for Dr. Bradley Nordyke. The fast-growing population needs him, and he enjoys perks such as light traffic, proximity to Mexico and a quick drive to Gulf Coast Beaches.

The caveat is his fear of litigation.

"Being sued is part of practicing medicine. I have heard that same statement from lawyer friends of mine," Nordyke said. "One said, 'Don't take it personal, it's just part of business.' I'm sorry, but I DO take it personal. Plus, I have to worry about losing everything I've worked for."

Nordyke is one of about 600 private practice and hospital doctors who closed their offices for a day in April 2002 for a "day of awareness" about malpractice insurance fees and a litigious climate they say is driving rates up and driving doctors away.

"Up the coast in Nueces County, where 63% of doctors have had claims filed against them in the last 13 years, doctors showed similar support for the walkout, though emergency services at hospitals were not stopped.

"It's not something they want to do, but circumstances compel them to do it, " said Jon Opelt of Citizens Against Lawsuits Abuse, which is organizing the event. "They see this as a plea for survival for doctors and patients."

In Texas and across the nation, the insurance industry has been rocked by the stock market slide, 9-11 aftermath and lawsuit expenses.

In parts of the nation, doctors pay $200,000 or more for malpractice coverage. West Virginia's governor recently called lawmakers into special session to devise affordable insurance options to keep doctors from leaving the state.

Since 1999, seven of 17 malpractice insurance carriers serving Texas have either left or gone belly up, according to the Texas Department of Insurance.

"Over the last coupe of years we have been paying out more in claims then we have taken in, in premiums," said Julie Pulliam of the National Insurance Association. "Claim costs have gone through the roof. The primary reason is the cost of lawsuits."

Kim Ross, a lobbyist with the Texas Medical Association, attributed the surging premiums to several factors.

"Lawyers need to accept their responsibility for their failure to police themselves, and the insurance companies need to provide responsible pricing and underwriting accountability," Ross said.

Lawyers say doctors mistakenly believe that tort reforms limiting jury awards will lower their insurance premiums. They note that the New York-based Center for Justice & Democracy found that while insurance companies benefit by limitations on what juries can make them pay, the companies do NOT pass those savings on to customers.

"I really don't think it is a lawsuit problem, I think it's an insurance problem," McAllen attorney Albert Garcia said. "The public, if they're like me, doesn't like insurance companies and doesn't trust insurance companies. The companies know that and they have to blame someone and lawyers are easy targets."

Opelt of the lawsuit abuse organization blames lawyers for filing frivolous lawsuits, 86 percent of which result in no payment to the plaintiff (but expense to the doctor for defense of the lawsuit). But awards that are granted in the Valley "tend to be considerably larger than state average," he said.

There are several theories why south Texas juries are so generous.  The Valley is a geographically isolated region with large, young families and one of the poorest places in the nation. Large corporations are likely to be seen as distant big businesses with limitless wealth rather than mass employers.