Section 16.10 Property to Which a Tax Lien Attaches

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

B. (§16.10) Property to Which a Tax Lien Attaches

The tax lien is very broad in scope and attaches to both real and personal property owned by the taxpayer, together with all property rights
that the taxpayer possesses. I.R.C. § 6321; United States v. Nat’l Bank
of Commerce, 472 U.S. 713, 719–25 (1985). The IRS looks to state
law to determine the extent of a taxpayer’s ownership rights in property. See Hilco Prop. Serv., Inc. v. United States, 929 F. Supp. 526, 547–48 (D.N.H. 1996).

For purposes of the federal tax lien, it is irrelevant that certain of the taxpayer’s property might be exempt from levy by creditors. See United States v. Mitchell, 403 U.S. 190, 204–05 (1971); In re Goodykoontz,
284 B.R. 235, 237–38 (Bankr. N.D.W.V. 2001). In the leading case of United States v. Heasley, 283 F.2d 422, 427 (8^th Cir. 1960), the Eighth Circuit determined that the federal tax lien took priority over any homestead exemption that the taxpayers were otherwise permitted under state law. Other courts have similarly held that the federal tax lien attaches to the taxpayer’s wages, even when the taxpayer’s state of residence otherwise allows for a partial wage exemption. See, e.g., Sims v. United States, 359 U.S. 108, 110–11 (1959); United Sand & Gravel...