The opinion of the court was delivered by: JOHN C. LIFLAND
Presently before the Court is defendant's motion for summary judgment.
On October 23, 1992, the Internal Revenue Service ("IRS") filed an Amended Complaint against defendant, Josephine Perrina ("Josephine"). IRS alleges that defendant owes IRS $ 87,500 in partial fulfillment of the tax liability of her deceased husband, Joseph Perrina ("Joseph"). IRS seeks judgment against Josephine as a transferee of Joseph's property, which, IRS alleges, was fraudulently conveyed.
IRS alleges that Joseph fraudulently conveyed property located at 299 Cindy Street, Old Bridge, New Jersey (the "Old Bridge property") to Josephine in 1985 at a time when he was insolvent or, alternatively, with the intent to hinder, delay or defraud his creditors, including the United States. (Amended Complaint, PP 13-17.)
Tax Liability of Joseph Perrina
The parties stipulate that from June 30, 1984 to June 30, 1986, Joseph was the president and 51% shareholder of Lime Waterproofing, Inc. (Proposed Final Pre-Trial Order, Stipulation of Facts, p. 1.) IRS alleges that Lime Waterproofing incurred substantial employment tax liabilities for the last two quarters of 1984, the whole of 1985, and the first two quarters of 1986. (Amended Complaint, P 7 and Proposed Final Pre-Trial Order, Plaintiff's Contested Allegations, P 3.) IRS alleges that on March 9, 1987, it assessed tax liability against Joseph in the amount of $ 228,888.73 pursuant to 26 U.S.C. § 6672 "because he was a person responsible for collecting, accounting for and paying over to the IRS the withheld income and social security taxes of the employees of Lime Waterproofing, and because he willfully failed to do so." (Amended Complaint, P 8.) IRS alleges that Joseph's liability accrued during the third and fourth quarters of 1984 and the first, second, third and fourth quarters of 1985.
(Amended Complaint P 12.) IRS also alleges that as of April 13, 1992, Joseph owed the United States $ 358,813.35. (Proposed Final Pre-Trial Order, IRS's Contested Allegations, P 6.)
Josephine asserts that no assessment was ever made against her for all or any portion of this tax liability. IRS does not dispute this.
The following facts are undisputed. From 1966 to 1985, Joseph and Josephine held the Old Bridge property as tenants by the entirety. By deed dated October 7, 1985, this tenancy was severed when Joseph conveyed his entire interest in the property to Josephine for the sum of $ 100. On March 30, 1990, Josephine conveyed the Old Bridge property to her son for $ 175,000, which was full and fair consideration. Joseph died on June 7, 1992. (Proposed Final Pre-Trial Order, Stipulation of Facts, pp. 1-2.) IRS argues that Josephine owes the United States the value of Joseph's interest in that sale, i.e., $ 87,500, half of $ 175,000.
No assessment has been made or, at this point, could be made against Josephine. However, even if the United States cannot proceed under § 6901, that alone will not bar the United States from recouping value fraudulently transferred.
It is clear that § 6901 is not an exclusive remedy, but was enacted as an alternative, cumulative remedy. The United States has "the right . . . to proceed against transferees by suit" and that right remains "unless taken away by . . . specific words or clear intendment." Leighton v. United States, 289 U.S. 506, 507-08, 77 L. Ed. 1350, 53 S. Ct. 719 (1933). In that case, the Supreme Court held that failure to personally assess shareholders of a defunct corporation as required by § 6901 did not bar an action to impose transferee liability on them. In United States v. Geniviva, 16 F.3d 522 (3d Cir. 1994), the Third Circuit noted that "Leighton has never been overruled, either by the Court or by statute, and it is binding upon us" and held that a § 6901 assessment is not a prerequisite to an action against transferees under 26 U.S.C. § 6324 (a) (2), which imposes liability on the transferees of a decedent's estate when the estate itself fails to pay its federal taxes. The Court held that § 6324 was a remedy separate from that supplied by § 6901. Id. See also ...