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July 17, 1980

UNITED STATES of America, Plaintiff,
Naima M. SALEH and Joseph M. Saleh, individually and as Executors of the Estate of Menashi J. Saleh and as Trustees under the last will and testament of Menashi J. Saleh, Joseph Rolnick, Katie Rolnick, Barry Dubin, Lois Dubin, Herman Zell a/k/a Herman Zelkovitz, Marcia Zelkovitz a/k/a Marcia Zell, Continental Searchers, Inc., J & M Land Co., Atlantic City Electric Co., Inc. a/k/a Atlantic Electric Co., Inc., Cumberland County, Mathew Banka, Francine Banka, Howard A. Silvers, Helen V. Silvers, Howard Jeffrey Levin, Carmen Levin, James M. Kirk, Viola E. Kirk, Earl L. Pangburn, Nina Pangburn, Richard Cole, Marian Cole, Richard Tulley, Laura Tulley, Herbert Walter Sheppard, American Theological Institute, K. S. Pascal Bailon, Amy A. Rosalinas Bailon, Howard Lonsk, Gloria Lonsk, Elsa Enzman, Mauvline Stiles, Frank D. Ottinger, Edward J. Gallagher, Robert R. Caudik, Linda M. Caudik, Donn Richard Scharlet, Defendants

The opinion of the court was delivered by: GERRY


This is an action to foreclose so-called "special" estate tax liens imposed under 26 U.S.C. § 6324(a)(1). Decedent Menashi J. Saleh died on December 26, 1969; he was a resident of the State of New York. His will was admitted to probate on January 15, 1970. The United States made assessments against the estate's executors on May 7, 1971, and on March 5, 1974, in the amount of $ 149,918.46; those assessments remain unpaid.

 At various times subsequent to the assessments, the executors, who are also defendants herein, conveyed several parcels of real estate located in Cumberland County, New Jersey, to the several transferee-defendants. All or portions of that real estate was subsequently reconveyed to other transferee-defendants. The Government concedes that no notice of any federal tax lien respecting these properties was ever filed in Cumberland County.

 This lien foreclosure action was filed on December 26, 1979, ten years to the day following the decedent's death.

 Most, but not all, of the transferee-defendants now move for summary judgment, arguing that, as a matter of law, the special estate tax lien imposed by 26 U.S.C. § 6324(a)(1) has a maximum duration of ten years following the decedent's death and cannot be enforced thereafter, notwithstanding the filing of a foreclosure action within the ten-year period. For purposes of this motion, defendants accept the facts as set forth in the complaint.


 It must be noted at the outset that the Government's complaint claims only a special estate tax lien under 26 U.S.C. § 6324(a)(1). Accordingly, defendants' arguments that the Government is not entitled to a general tax lien under 26 U.S.C. § 6321, for failure to comply with the notice requirements of 26 U.S.C. § 6323(a) and (b), are not directly applicable to this action.

 The statutory prerequisites of the general tax lien, however, do provide a useful comparison for those of the special estate tax lien. The general (or "assessment") tax lien is created by 26 U.S.C. § 6321 and is applicable to "any tax" for which demand has been made and payment neglected or refused. By contrast, the "special" lien of § 6324(a)(1) is imposed only for federal estate taxes. (§ 6324(b) imposes a similar "special" lien on account of the federal gift tax.) Section 6323 details the prerequisites for validity and priority of the general tax lien against certain persons, including purchasers. Section 6322 also defines the "period" of the general lien: (1) it arises at the time the assessment is made, and (2) it continues until the amount assessed (a) is satisfied, or (b) "becomes unenforceable by reason of lapse of time."

 The latter phrase refers to the Code's Limitations sections, 26 U.S.C. §§ 6501, 6502. Section 6501(a) states the general rule for limitations on assessments:

Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed ... and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.

 Section 6502(a) further provides that following timely assessment of the tax, "such tax may be collected by levy or by a proceeding in court, but only if the levy is made on the proceeding begun (1) within 6 years after the assessment of the tax, or (2) pursuant to a written agreement providing for a longer payment period."

 The special estate tax lien differs from the general tax lien in several important respects. Section 6324(a)(1) reads:

Unless the estate tax imposed by chapter 11 is sooner paid in full, or becomes unenforceable by reason of lapse of time, it shall be a lien upon the gross estate of the decedent for 10 years from the date of death, except that such part of the gross estate is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien.

 (Emphasis added.) Unlike the general tax lien of § 6321, the special estate tax lien is imposed on the gross estate of the decedent; that part of the gross estate used for the payment of charges and administration expenses may be divested of the lien. (Subsection (2) further defines the liabilities of transferees and others.) Moreover, the special estate tax lien arises immediately at the date of death, without assessment. Detroit Bank v. United States, 317 U.S. 329, 63 S. Ct. 297, 87 L. Ed. 304 (1943). From that point, the tax "shall be a lien ... for 10 years." By the terms of the statute, the ten-year lien period may be shortened if the estate tax ...

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