In 2000, the Worcester Superior Court decided Luchini v. Commissioner in favor of the Commissioner. C.A. 98-0592. The taxpayer appealed and on March 25, 2002, the Supreme Judicial Court (SJC) upheld the Superior Court's conclusions that (1) the Luchinis had waived their right to appeal the validity of the assessment by failing to exhaust their administrative remedies; (2) tax liens may attach to after-acquired property, and (3) that the time for enforcement of the lien in question had not expired. Luchini v. Commissioner, 436 Mass. 403 (2002). This TIR discusses the Department of Revenue's response to the second holding only, as the general questions of exhaustion of remedies and expiration of liens are fact specific and otherwise well settled
A. Brief Statement of Facts.
The taxpayers lived abroad from 1980 through 1988 and filed no Massachusetts returns during that time. They were assessed taxes owed for these years in 1992. Subsequently, they filed an application for abatement without paying the assessed taxes. The abatement was denied, and the taxpayer did not appeal to the Appellate Tax Board.
In 1993, DOR filed notice of and recorded a tax lien against the taxpayers for all property and rights to property in the Commonwealth, but the taxpayers did not then own any property here. More than one year afterward, the taxpayer acquired real property in Massachusetts, to which the previously recorded lien attached. The taxpayers argued that imposition of the tax lien was improper since the lien could not attach to after-acquired property.
B. Validity of the Lien.
The Massachusetts tax lien statute provides that "[i]f any person liable to pay any tax, neglects or refuses to pay the same after demand, the amount . . . shall be a lien in favor of the Commonwealth upon all property and rights to property whether real or personal belonging to such person." G.L. c. 62C, Â§ 50(a). The regulation states that the lien will continue to attach to property and rights to property belonging to a taxpayer "at any time during the period of the lien until the liability for the amount assessed or deemed to be assessed is satisfied." 830 CMR 62C.50.1.
Upon review, the SJC concluded that although the question of whether a lien can attach to after-acquired property was one of first impression in the Commonwealth, the parallel language of the federal tax lien statutes, 26 U.S.C. Â§Â§ 6321, 6322 (1994), had long been construed to apply to after-acquired property.1 The Court found the federal precedent persuasive. Thus, it went on to state that "[t]he statutory language establishing that a lien 'upon all property and rights to property, whether real or personal, belonging to [the taxpayer] . . . shall continue until the liability . . . is satisfied,' G.L. c. 62C, Â§ 50(a), indicates that 'the lien applies to property owned by the delinquent at any time during the life of the lien.'" Luchini at 406 quoting Glass City Bank v. United States, 326 U.S. 265, 268 (1945).
C. DOR Response .
Luchini confirms the Department's long-standing position that, like the equivalent federal tax lien statute, G.L. c. 62C, Â§ 50(a) attaches to after-acquired property. The Commissioner's lien will thus attach to a taxpayer's property whenever it is acquired, so long as tax debt remains unpaid and the lien is still enforceable. The Commissioner will continue to levy and seize after-acquired property in appropriate circumstances.
The Commissioner's liens are filed at the Secretary of State's office in Boston, at the Registry of Deeds of the county in which the taxpayer resides and/or where any real property is situated. Administrative Procedure 631.1.2.
/s/Alan L. LeBovidge Alan L. LeBovidge
Commissioner of Revenue
June 19, 2002
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