No. 00-1831 

In the Supreme Court of the United States 

UNITED STATES OF AMERICA, PETITIONER 

v. 

SANDRA L. CRAFT 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT 

PETITION FOR A WRIT OF CERTIORARI 

BARBARA D. UNDERWOOD 

Acting Solicitor General 

Counsel of Record 

CLAIRE FALLON 

Acting Assistant Attorney 

General 

LAWRENCE G. WALLACE 

Deputy Solicitor General 

KENT L. JONES 

Assistant to the Solicitor 

General 

DAVID ENGLISH CARMACK 
JOAN I. OPPENHEIMER 

Attorneys 

Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

QUESTION PRESENTED 

Whether the federal tax lien that arises by operation 
of law in “all property and rights to property” of a 
delinquent taxpayer (26 U.S.C. 6321) attaches to the 
rights of that taxpayer in property held in a tenancy by 
the entirety. 

(I) 

TABLE OF CONTENTS 

Page 

Opinions below ............................................................................... 
1 

Jurisdiction ...................................................................................... 1 

Statutory provision involved ....................................................... 
2 

Statement ........................................................................................ 2 

Reasons for granting the petition ............................................... 
8 

Conclusion ....................................................................................... 26 

TABLE OF AUTHORITIES 

Cases: 

Arango v. Third Nat’l Bank, 992 F.2d 611 (6th Cir. 

1993) ......................................................................................... 23 

Bank One Ohio Trust Co. v. United States, 80 F.3d 

173 (6th Cir. 1996) .................................................................. 

15 

BNY Fin. Corp. v. Moran, 154 Misc. 2d 435, 584 

N.Y.S.2d 261 (Sup. Ct. 1992) ................................................ 

23 

Beacon Milling Co. v. Larose, 138 Vt. 457, 418 A.2d 

32 (1980) ................................................................................... 

24 

Beal Bank, SSB v. Almand & Assocs., 780 So. 2d 

45 (Fla. 2001) ........................................................................... 

24 

Bloomfield v. Brown, 67 R.I. 452, 25 A.2d 354 

(1942) ........................................................................................ 23 

Boggs v. Boggs, 26 Ark. App. 188, 761 S.W.2d 956 

(1988) ........................................................................................ 24 

Ciconte v. Barba, 161 A. 925 (Del. Ch. 1932) .................... 

24 

Cline, In re, 164 B.R. 592 (Bankr. S.D. Ohio 1994) ............. 

21 

Cole v. Cardoza, 441 F.2d 1337 (6th Cir. 1971) ................. 

4, 13, 

14, 16 

Colorado Nat’l Bank v. Miles, 711 P.2d 390 (Wyo. 
1985) ......................................................................................... 23 

Commissioner v. Sunnen, 333 U.S. 591 (1948) ................ 

20 

Cox v. Commissioner, 121 F.3d 390 (8th Cir. 

1997) ......................................................................................... 19 

Cuevas v. Cuevas, 191 So. 2d 843 (Miss. 1966) ................. 23 

(III) 

IV 

Cases—Continued: Page 

DeYoung v. Mesler, 373 Mich. 499, 130 N.W.2d 38 

(1964) ........................................................................................ 25 

Dealer Supply Co. v. Greene, 108 N.C. App. 31, 422 

S.E.2d 350 (1992), review denied, 333 N.C. 343, 

426 S.E.2d 704 (1993) ............................................................. 

23 

Diss v. Agri Bus. Int’l, Inc., 670 N.E.2d 97 (Ind. Ct. 

App. 1996) ................................................................................ 

23 

Dow v. State, 396 Mich. 192, 240 N.W.2d 450 (Mich. 

1976) ......................................................................................... 13 

Drye v. United States, 528 U.S. 49 (1999) .................... 

passim 

Estate of Wall, In re, 440 F.2d 215 (D.C. Cir. 1971) .......... 

24 

Faulk v. Estate of Haskins, 714 P.2d 354 (Alaska 

1986) ......................................................................................... 24 

Finley v. Thomas, 691 A.2d 1163 (D.C. 1997) ................... 

23 

Geiselman v. United States, 961 F.2d 1 (1st Cir.), 

cert. denied, 506 U.S. 891 (1992) ....................................... 

22-23 

Glass City Bank v. United States, 326 U.S. 265 

(1945) ........................................................................................ 11 

Hatchett v. IRS, 126 F. Supp. 2d 1038 (E.D. Mich. 

2000), appeal docketed, No. 00-1645 (6th Cir. 

June 13, 2000) .......................................................................... 

10 

Hallmark v. Stillings, 648 S.W.2d 230 (Mo. Ct. App. 

1983) ......................................................................................... 24 

Hoffman v. Newell, 60 S.W.2d 607 (Ky. 1932) .................. 

23 

Kerner v. McDonald, 60 Neb. 663, 84 N.W. 92 

(1900) ........................................................................................ 22 

Koehring v. Bowman, 194 Ind. 433, 142 N.E. 117 

(1924) ........................................................................................ 25 

Koffman v. Smith, 453 Pa. Super. 15, 682 A.2d 1282 

(1996) ........................................................................................ 23 

Lowell v. Lowell, 138 Vt. 514, 419 A.2d 321 (1980) .......... 

23 

Madden v. Gosztonyi Sav. & Trust Co., 331 Pa. 476, 

200 A. 624 (1938) .................................................................... 

24 

Masonry Prods., Inc. v. Tees, 280 F. Supp. 654 

(D.V.I. 1968) ............................................................................ 23 

V 

Cases—Continued: Page 

Mitchell v. Wilmington Trust Co., 449 A.2d 1055 

(Del. Ch. 1982), aff ’d, 461 A.2d 696 (Del. 1983) ................ 

23 

Morgan v. Commissioner, 309 U.S. 78 (1940) .................. 

14 

Morris v. Solesbee, 48 Ark. App. 123, 892 S.W.2d 281 

(1995) ........................................................................................ 23 

Oliver v. Givens, 204 Va. 123, 129 S.E.2d 661 (1963) ....... 

24 

Rogers v. Rogers: 

136 Mich. App. 125, 356 N.W.2d 288 (1984) ....................... 

12 

257 Va. 323, 512 S.E.2d 821 (1999) ...................................... 

23 

SNB Bank & Trust v. Kensey, 145 Mich. App. 765, 378 

N.W.2d 594 (1985) .................................................................. 

23 

Sawada v. Endo, 57 Haw. 608, 561 P.2d 1291 

(1977) ........................................................................................ 23 

Sitomer v. Orlan, 660 So. 2d 1111 (Fla. Dist. Ct. 

App. 1995) ................................................................................ 

23 

Snyder, In re, 231 B.R. 437 (Bankr. D. Mass. 1999) ........... 

23 

State v. One 1984 Toyota Truck, 69 Md. App. 235, 517 

A.2d 103 (1986), aff ’d, 311 Md. 171, 533 A.2d 659 

(1987) .................................................................................... 

23, 24 

Thor Power Tool Co. v. Commissioner, 439 U.S. 

522 (1979) ............................................................................... 

9, 20 

Traders Travel Int’l, Inc. v. Howser, 69 Haw. 609, 

753 P.2d 244 (1988) ................................................................. 

24 

Tyler v. United States, 281 U.S. 497 (1930) ............. 

8, 17, 18 

United States v. American Nat’l Bank, 255 F.2d 

504 (5th Cir.), cert. denied, 358 U.S. 835 (1958) ............... 

19 

United States v. Bess, 357 U.S. 51 (1958) .......................... 

14 

United States v. Brynes, 848 F. Supp. 1096 (D.R.I. 

1994) ......................................................................................... 24 

United States v. Davenport, 106 F.3d 1333 (7th Cir. 

1997) ......................................................................................... 21 

United States v. Diemer, 859 F. Supp. 126 (D.N.J. 

1994), rev’d on other grounds sub nom. United 

States v. Avila, 88 F.3d 229 (3d Cir. 1996) ..................... 24 

VI 

Cases—Continued: Page 

United States v. Hutcherson, 188 F.2d 326 (8th Cir. 

1951) ......................................................................................... 19 

United States v. Irvine, 511 U.S. 224 (1994) .. 

4, 5, 7, 8, 13, 17 

United States v. Jacobs, 306 U.S. 363 (1939) ................ 

19, 22 

United States v. Jones, 877 F. Supp. 907 (D.N.J.), 

aff ’d mem., 74 F.3d 1228 (3d Cir. 1995) .............................. 

23 

United States v. Kocher, 468 F.2d 503 (2d Cir. 

1972), cert. denied, 411 U.S. 931 (1973) ............................. 

21 

United States v. Mitchell, 403 U.S. 190 (1971) ................. 

16 

United States v. National Bank of Commerce, 

472 U.S. 713 (1985) .............................................. 

5, 8, 11, 14, 16 

United States v. Overman, 424 F.2d 1142 (9th Cir. 

1970) ......................................................................................... 21 

United States v. Ragsdale, 206 F. Supp. 613 (W.D. 

Tenn. 1962) .............................................................................. 

24 

United States v. Rodgers, 461 U.S. 677 (1983) .................. 

4, 8, 

12, 13, 15, 16, 19, 21 
Van Der Heide, In re, 164 F.3d 1183 (8th Cir. 

1999) ......................................................................................... 23 

Washington v. United States, 402 F.2d 3 (4th Cir. 

1968), cert. denied, 402 U.S. 978 (1971) .............................. 

21 

White v. Watson, 571 S.W.2d 493 (Tenn. Ct. App. 

1978) ......................................................................................... 24 

Wilde v. Mounts, 95 Or. App. 522, 769 P.2d 802 

(1989) ........................................................................................ 23 

Woodard v. Woodard, 216 Mass. 1, 102 N.E. 921 

(1913) ........................................................................................ 24 

Constitution and statutes: 

U.S. Const. Amend. V (Due Process Clause) ...................... 

13 

Internal Revenue Code (26 U.S.C.): 

§ 2040(b) ................................................................................... 

18 

§ 6013(d)(3) .............................................................................. 

10 

§ 6321 ........................................................................... 

2, 11, 14, 15 

§ 7403 ........................................................................................ 

12 

§ 7403(c) ................................................................................... 12 

VII 

Statutes—Continued: Page 

Revenue Act of 1916, ch. 463, § 202(c), 39 Stat. 778 .......... 

17 

Alaska Stat. § 09.38.100(a) (Michie 2001) .............................. 

23 

735 Ill. Comp. Stat. Ann. 5/12-112 (West 1993 & Supp. 

2000) ..................................................................................... 

21, 23 

Ky. Rev. Stat. Ann. § 140.050 (Michie 1991) ........................ 

24 

Mich. Comp. Laws Ann. (West): 

§ 554.872(g) (Supp. 1997) .................................................. 

12, 13 

§ 554.872(i) (Supp. 1997) ....................................................... 

12 

§ 557.71 (1988) ......................................................................... 

12 

§ 700.2901(g) (Supp. 2001) ................................................ 

12, 13 

§ 700.2901(i) (Supp. 2001) ................................................. 

12, 13 

Ohio Rev. Code Ann. §§ 5302.17-5302.21 (Anderson 

1989 & Supp. 2000) ................................................................. 

21 

Okla. Stat. Ann. tit. 60, § 74 (West 1994) .......................... 

23, 24 

Miscellaneous: 

R. Heaton, Note, Administration of Entireties Property 

in Bankruptcy, 60 Ind. L.J. 305 (1985) .............................. 

21 

S. Johnson, After Drye: The Likely Attachment of 

the Federal Tax Lien to Tenancy-by-the-Entireties 
Interests, 75 Ind. L.J. 1163 (2000) ..................................... 

19-20 
S. Johnson, Fog, Fairness, and the Federal Fisc: 

Tenancy-by-the-Entireties Interests and the Federal 

Tax Lien, 60 Mo. L. Rev. 839 (1995) ........................ 

20, 22, 25 

Note, Property Subject to the Federal Tax Lien, 77 

Harv. L. Rev. 1485 (1964) ..................................................... 

16 

W. Plumb, Federal Tax Liens (3d ed. 1972) ......................... 14 

In the Supreme Court of the United States 

No. 00-1831 

UNITED STATES OF AMERICA, PETITIONER 

v. 

SANDRA L. CRAFT 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT 

PETITION FOR A WRIT OF CERTIORARI 

The Acting Solicitor General, on behalf of the United 
States of America, respectfully petitions for a writ of 
certiorari to review the judgment of the United States 
Court of Appeals for the Sixth Circuit in this case. 

OPINIONS BELOW 

The opinions of the court of appeals (App., infra, 1a- 
41a, 44a-69a) are reported at 140 F.3d 638 and 233 F.3d 
358. The opinions of the district court (App., infra, 70a- 
93a, 95a-104a) are reported at 74 A.F.T.R.2d (RIA) 
6362, 76 A.F.T.R.2d (RIA) 7447, and 65 F. Supp. 2d 651. 

JURISDICTION 

The judgment of the court of appeals was entered on 
November 22, 2000. App., infra, 42a. The petition for 
rehearing was denied on March 16, 2001. App., infra, 

(1) 

2 

43a. The jurisdiction of this Court is invoked under 28 
U.S.C. 1254(1). 

STATUTORY PROVISION INVOLVED 

Section 6321 of the Internal Revenue Code, 26 U.S.C. 
6321 provides: 

If any person liable to pay any tax neglects or 
refuses to pay the same after demand, the amount 
(including any interest, additional amount, addition 
to tax, or assessable penalty, together with any 
costs that may accrue in addition thereto) shall be a 
lien in favor of the United States upon all property 
and rights to property, whether real or personal, 
belonging to such person. 

STATEMENT 

1. a. Don Craft failed to file federal income tax 
returns for the years 1979 through 1986. In 1988, the 
Internal Revenue Service assessed $482,446 in unpaid 
income tax liabilities owed by him and demanded 
payment. App., infra, 45a. When Mr. Craft failed to 
pay these taxes, the federal tax lien attached by opera- 
tion of law to “all property and rights to property” in 
which he owned any interest. 26 U.S.C. 6321. Notice of 
the federal tax lien was filed on March 30, 1989, in the 
county of his residence. App., infra, 45a. 

b. Sandra L. Craft is the wife of Don Craft and the 
respondent in this case. In 1972, Don and Sandra Craft 
purchased real property in Grand Rapids, Michigan, as 
tenants by the entirety. App., infra, 45a. On August 
28, 1989, after the notice of tax lien had been filed for 
the taxes owed by Don Craft, the Crafts jointly exe- 
cuted a quitclaim deed that purported to transfer this 
property solely to Sandra Craft for one dollar. Id. at 
70a. When she thereafter attempted to sell the 

3 

property in 1992, a title search revealed the govern- 
ment’s lien. The Internal Revenue Service agreed to 
release the tax lien from this property so that the sale 
could be made, with the stipulation that half of the net 
proceeds—amounting to $59,944.10—were to be held in 
escrow pending a final determination of the rights of 
the parties. Id. at 45a-46a. 

2. Sandra Craft then brought this action to quiet 
title to the escrowed proceeds. The government as- 
serted in its answer (i) that the federal tax lien attached 
to Don Craft’s interest in the property when it was held 
by the Crafts as tenants by the entirety, (ii) that when 
the property was conveyed to respondent it remained 
subject to the government’s lien and (iii) that the 
government is therefore entitled to one-half of the sale 
proceeds. The government further asserted that Don 
and Sandra Craft’s purported conveyance of the prop- 
erty to Sandra Craft was invalid as a fraud on creditors. 
The district court granted the government’s motion 
for summary judgment. The court held (i) that the 
conveyance of the property to respondent terminated 
the tenancy by the entirety, (ii) that, at that moment, 
each spouse took an equal one-half interest in the estate 
and (iii) that the government’s lien attached to Don 
Craft’s one-half interest in the estate at that time and 
remained attached to the property throughout any sub- 
sequent transfers. App., infra, 104a. The court con- 
cluded, however, that the tax lien attached only to the 
value of Don Craft’s interest as of the date of the 
Crafts’ conveyance of the property to respondent and 
not to any appreciation of that property’s value that 
occurred subsequent to that date. Id. at 46a-48a, 104a. 

3. a. Both parties appealed. App., infra, 44a. On 
respondent’s appeal, the court of appeals reversed the 
determination of the district court that the tax lien 

4 

attached to the property.1 Relying on that circuit’s 
earlier decision in Cole v. Cardoza, 441 F.2d 1337 (6th 
Cir. 1971), the panel majority held that Don Craft never 
had an attachable interest in the property held in a 
tenancy by the entirety—either prior to, or at the 
transitory moment of, the conveyance to respondent. 
App., infra, 54a-56a. In reaching that conclusion, the 
majority relied on the common-law fiction, adopted in 
Michigan, that property held in a tenancy by the 
entirety is not owned by either of the spouses but is 
instead owned by the “marital unit.” The court 
concluded that the husband (who owed the taxes) had 
no separate interest in entirety property to which the 
tax lien could attach. Ibid. Since Michigan law exempts 
property held in a tenancy by the entirety from seizure 
by creditors for the debts of only one spouse, the 
majority concluded that this property was exempt from 
the federal tax lien for the separate tax debt of one 
spouse. Id. at 57a-58a. 

According to the panel majority, the decisions of this 
Court in United States v. Irvine, 511 U.S. 224 (1994), 
and United States v. Rodgers, 461 U.S. 677 (1983), have 
no effect “on the government’s ability to attach a lien to 
an entireties estate, because these cases do not alter 
the basic tenet that state law governs the issue of 
whether any property interests exist in the first place.” 
App., infra, 55a. The court remanded the case for 
consideration of the fraudulent conveyance issue which 
had not been addressed by the district court. Id. at 58a. 

1 As a result of that ruling, the court of appeals did not consider 
the government’s appeal of the district court’s determination that 
the tax liens did not attach to any appreciation occurring after the 
Crafts’ conveyance of the property to respondent. 

5 

b. Judge Ryan concurred in the remand but dis- 
sented from the majority’s conclusion that a spouse’s 
interest in entirety property is not “property or rights 
to property” to which the federal tax lien may attach. 
App., infra, 69a. He concluded that each spouse has 
valuable, legally-protected rights in property held in a 
tenancy by the entirety to which the tax lien attaches 
as a matter of federal law: in particular, each spouse has 
the right to share in the proceeds of any sale or lease of 
the property and the right to the entire property if the 
other spouse predeceases him. Id. at 61a. Judge Ryan 
added that this Court’s decisions in United States v. 
National Bank of Commerce, 472 U.S. 713 (1985), and 
United States v. Irvine, supra, make it clear that the 
state legal fiction that the husband and wife are a single 
entity—and the associated fiction that neither has any 
separate interest in entirety property—cannot be inter- 
posed to preclude the operation of the federal lien 
(App., infra, 63a-64a): 

As the Supreme Court has made clear, such state- 
law fictions, while they are perhaps valid defenses 
against state-law creditors, have no effect on an IRS 
lien. For example, in National Bank of Commerce, 
the fact that no Arkansas creditor could reach funds 
of a taxpayer-debtor that were held in a joint 
account with other nondebtor individuals did not 
prevent the IRS from attaching the entire account. 

* * * 

Although the majority disagrees, I am satisfied that 
United States v. Irvine, 511 U.S. 224 (1994), also 
undermines Sandra Craft’s position. In Irvine, the 
Court reiterated that legal fictions—although valid 
protection from creditors under state law—could 
not be used to avoid federal tax liabilities. 

6 

Judge Ryan noted, moreover, that the majority opinion 
“not only contravenes established precedent,” it also 
“provides an avenue for easy avoidance of federal 
income-tax laws.” Id. at 69a.2 

4. On remand, the district court concluded that 
when, as here, property is made exempt from the 
claims of creditors under state law, a conveyance of that 
property cannot be a fraudulent transfer under state 
law. App., infra, 79a-85a. The court stated, however, 
that this “no-harm-no-foul rule” is inapplicable when 
the debtor, while insolvent, places non-exempt funds 
beyond the reach of his creditors by using them to 
enhance exempt property. Id. at 85a-86a. Since Don 
Craft had enhanced the value of the property by 
making mortgage payments while he was insolvent, the 
court held that the government is entitled to a lien on 
his share of the sale proceeds to the extent of the 
enhanced value—which the court concluded was $6693. 
Id. at 86a, 92a.3 

5. Both parties again appealed. App., infra, 1a-2a. 
The government also petitioned the court of appeals for 

2 Judge Ryan was of the view that the federal tax lien would 
not follow the property after its transfer to respondent unless that 
transfer was set aside as fraudulent. See App., infra, 69a-70a. He 
concurred in the remand solely for the purpose of determining 
whether Don and Sandra Craft’s transfer of the property for $1 to 
Sandra Craft as sole owner constituted a fraud on creditors. Id. at 
70a. 

3 This figure included only the portion of the mortgage pay- 
ments that had been applied to reduce the principal balance of the 
loan. The district court rejected the government’s additional claim 
to recover the far greater interest payments, as well as local ad 
valorem property tax payments, that Don Craft made over the 
years with the untaxed income that generated the tax liability in 
the first place. App., infra, 92a-93a. 

7 

hearing en banc on the ground that the decision in Craft 
I conflicted with the relevant decisions of this Court. 
The court of appeals denied that petition in December 
1999. App., infra, 6a. 

a. The panel to which the appeal was assigned 
concluded that it was bound by the prior decision in 
Craft I and dismissed the government’s appeal.4 App., 
infra, 2a. 

The panel stated that it was bound by Craft I 
because the relevant Supreme Court decisions do not 
“directly h[o]ld otherwise” (id. at 11a) and because the 
recent decision of this Court in Drye v. United States, 
528 U.S. 49 (1999), which was issued after Craft I was 
decided, “has not so fundamentally changed the legal 
landscape as to overrule Craft I.” App., infra, 18a. 

b. In a concurring opinion, Judge Gilman agreed that 
the panel was bound by Craft I but concluded “that the 
result reached in Craft I, and that this court endorses 
today, is inconsistent with Supreme Court precedent 
and should be reversed.” App., infra, 35a. Judge Gil- 
man therefore recommended “that this case be revis- 
ited en banc.” Ibid. 

Judge Gilman stated that the decision in Craft I was 
inconsistent with the decisions of this Court that make 
clear that the federal tax laws are “not struck blind” by 
state-law legal fictions. App., infra, 36a (quoting 
United States v. Irvine, 511 U.S. at 240). Judge Gilman 
stated that (App., infra, 38a): 

[i]n contravention of Irvine, the majority in Craft I 
failed to look past Michigan’s characterization of an 
individual’s interest in entireties property and 

4 On respondent’s appeal, the panel affirmed the district court’s 
ruling that the government is entitled to a lien on the property to 
the extent of taxpayer’s payments of the principal of the out- 
standing mortgage loan. App., infra, 20a-23a. 

8 

ignored the substantial rights actually held by Don 
Craft, which similarly had undeniable value. In 
other words, I believe that the majority in Craft I 
was “struck blind” by Michigan’s “legal fictions.” 

Judge Gilman noted that each spouse has several 
valuable, legally-protected rights in entirety property 
to which the federal tax lien may attach: (i) the right to 
enter and enjoy the property and to exclude all others; 
(ii) the right to half of any rental or sale proceeds; (iii) a 
contingent right of survivorship; and (iv) in the event of 
divorce, the right to bring an action for partition and 
sale. App., infra, 37a-38a. Because these valuable 
rights are protected under state law, “Craft I reached 
the wrong result, and the IRS ought to have had the 
right to attach Don Craft’s valuable interest in the 
tenancy by the entirety.” Id. at 38a. Although Judge 
Gilman believed the panel was bound by Craft I, he 
recommended that the case be reheard en banc because 
“Craft I contravenes recent Supreme Court decisions.” 
Id. at 41a. 

c. Following the entry of the panel decision, the 
government filed a petition for rehearing en banc. That 
petition was denied when “less than a majority of the 
judges” of that circuit voted to grant it. App., infra, 
43a. 

REASONS FOR GRANTING THE PETITION 

The decision of the court of appeals departs from 
numerous recent decisions of this Court, including Drye 

v. United States, 528 U.S. 49 (1999), United States v. 
Irvine, 511 U.S. 224 (1994), United States v. National 
Bank of Commerce, 472 U.S. 713 (1985), and United 
States v. Rodgers, 461 U.S. 677 (1983). It is also irrec- 
oncilable with older precedent of this Court, such as 
Tyler v. United States, 281 U.S. 497 (1930). 

9 

The question presented in this case has substantial, 
recurring importance. Tenancies by the entirety are 
recognized in 24 States, which have adopted widely 
varying rules regarding the rights of creditors in such 
property. See note 14, infra. Under the decision in this 
case, taxpayers in States that maintain the common law 
fiction that property held in a tenancy by the entirety is 
held by the “marital unit”—rather than by the indivi- 
dual spouses acting collectively—receive an exemption 
from enforcement of the federal tax lien that is not 
available in jurisdictions with a more modern jurispru- 
dence. See note 15, infra. Similarly, a taxpayer who 
owns entirety property in States where creditors can- 
not attach such property for the debts of only one 
spouse is treated more favorably than a taxpayer who 
owns property in the States where creditors are 
permitted by state law to attach such property. See 
note 16, infra. The conflicting treatment that results 
under the erroneous decision of the court of appeals 
warrants review by this Court, for it is well established 
that the Nation’s tax laws are to be interpreted and 
applied to “ensure as far as possible that similarly 
situated taxpayers pay the same tax.” Thor Power Tool 
Co. v. Commissioner, 439 U.S. 522, 544 (1979). See 
pages 20-24, infra. 

Further review is especially warranted because the 
decision in this case “not only contravenes established 
precedent, but provides an avenue for easy avoidance of 
federal income-tax laws.” App., infra, 70a (Ryan, J.). 
Significant opportunities for extraordinarily facile eva- 
sion of tax obligations exist under the decision in this 
case. Under the laws of many States, both real and 
personal property may be held in a tenancy by the 
entirety. See notes 17-18, infra. Under the decision in 
this case, not only residences but also bank accounts 

10 

and other financial assets may be purchased with 
untaxed income and then shielded from tax collection 
through the simple artifice of placing ownership in the 
“marital unit” through a tenancy by the entirety. It is 
difficult to conceive of a more simple or widely available 
method of tax evasion.5 

The amount of revenue potentially affected by the 
rule adopted by the court of appeals is obviously 
enormous, for it provides a ready device for avoiding 
collection of the taxes owed by all married persons in 
the many states (such as Michigan) that maintain the 
common-law fiction that ownership of tenancy-by-the- 
entirety property resides solely with the “marital unit.” 
Under the reasoning of the court of appeals, both 
spouses could earn income, file separate returns,6 and 

5 This is illustrated by another pending Michigan case that in- 
volves a lawyer who filed tax returns for several years that re- 
ported extensive income from his law practice. Instead of paying 
these taxes, the lawyer used his untaxed income to accumulate 
equity in four valuable parcels of property that he placed in a 
tenancy by the entirety. The district court concluded that, under 
the decision in Craft I, the federal tax liens did not attach to these 
properties. The government has appealed that decision (Hatchett 

v. IRS, 126 F. Supp. 2d 1038 (E.D. Mich. 2000), appeal docketed, 
No. 00-1645 (6th Cir. June 13, 2000)), but the taxpayer’s transpar- 
ent scheme to avoid collection appears likely to succeed in the 
absence of review by this Court of the decision in this case. 

6 Married taxpayers become jointly and severally liable for 
taxes when they elect to file joint returns. See 26 U.S.C. 
6013(d)(3). Since, if they file a joint return, both spouses are liable 
for the resulting taxes, property held in a tenancy by the entirety 
could then be seized for collection in states (such as Michigan) that 
allow such property to be seized to collect a debt owed by both 
spouses. See App., infra, 52a. The tax avoidance scheme sanc- 
tioned by the court of appeals in this case thus operates only when 
married taxpayers file no returns or file separate, rather than 
joint, returns. See note 7, infra. 

11 

avoid paying taxes by shielding their residence, bank 
accounts and other financial assets in a tenancy by the 
entirety.7 Review by this Court of this recurring ques- 
tion is needed to prevent the “easy avoidance of federal 
income-tax laws” that is sanctioned by the decision 
below. App., infra, 70a (Ryan, J.). 

1. When a taxpayer fails to pay taxes after a demand 
for payment has been made, a lien arises by operation 
of law “in favor of the United States upon all property 
and rights to property” of that taxpayer. 26 U.S.C. 
6321. The question in this case is whether the interest 
of a married taxpayer in property held in a tenancy by 
the entirety is encompassed within the sweeping scope 
of this statutory lien. As this Court has emphasized on 
several occasions, “[t]he statutory language ‘all prop- 
erty and rights to property’ * * * is broad and reveals 
on its face that Congress meant to reach every interest 
in property that a taxpayer might have.” United States 

v. National Bank of Commerce, 472 U.S. at 719-720 
(emphasis added). Indeed, “[s]tronger language could 
hardly have been selected to reveal a purpose to assure 
the collection of taxes.” Glass City Bank v. United 
States, 326 U.S. 265, 267 (1945). Recognizing the 
sweeping text and purpose of the statute, this Court 
has recently held that this broad federal tax lien 
“reach[es] every species of right or interest protected 

7 The decision in this case provides obvious incentives for tax 
protestors (and others) to employ the tenancy-by-the-entirety de- 
vice to obstruct collection of tax obligations. Indeed, taxpayers 
have not been shy about employing this tax avoidance method. 
The Internal Revenue Service informs us that, among Michigan 
taxpayers, while only 3% of married taxpayers who file jointly 
have unpaid taxes outstanding, approximately 14% of married tax- 
payers who file separately have unpaid taxes outstanding. 

12 

by law and having an exchangeable value.” Drye v. 
United States, 528 U.S. at 56. 

The interest of a married taxpayer in a tenancy by 
the entirety is a valuable, legally protected “species of 
right or interest” and is therefore encompassed within 
the federal tax lien.8 During the period of a tenancy by 
the entirety, each spouse has separate rights in the 
present use of the property and in its disposition upon 
the termination of the tenancy by sale, death or divorce. 
For example, in Michigan, “joint property”—a category 
that includes a tenancy by the entirety in real or 
personal property—“consist[s] of a present interest 
and a future interest.” Mich. Comp. Laws Ann. 
§ 554.872(g), (i) (West Supp. 1997), recodified, id. 
§ 700.2901(g), (i) (West Supp. 2001). The “present 
interest” entitles each spouse to reside on the property, 
to exclude third parties from the property, to share in 
the profits of the property, to join or refuse to join in a 
sale of property and, upon the sale, individually to 
receive half the proceeds. Id. § 557.71 (West 1988); see 
Rogers v. Rogers, 136 Mich. App. 125, 135, 356 N.W.2d 
288, 293 (Mich. Ct. App. 1984). The “future interest” 

8 The fact that a federal tax lien has been imposed on entirety 
property does not, by itself, divest the “marital estate” from pos- 
session. The primary effect of a lien is to ensure that such prop- 
erty remains potentially available for payment of delinquent taxes 
and cannot be transferred free of the government’s claim in the 
interim. Moreover, as this Court emphasized in United States v. 
Rodgers, 461 U.S. at 696, the government’s lien reaches only the 
taxpayer’s interest in property. If the government seeks to sell 
the property to enforce its lien under 26 U.S.C. 7403, the court may 
deny foreclosure in “the exercise of reasoned discretion.” 461 U.S. 
at 706. And, if a sale is authorized, the non-liable spouse must be 
compensated for her interest “according to the findings of the 
court in respect to the interests of the parties and the United 
States.” Id. at 697 (quoting 26 U.S.C. 7403(c)). 

13 

described in the statute “is the right of survivorship,” 
which is the right to receive the property in fee simple 
absolute upon the death of the other spouse. Mich. 
Comp. Laws Ann. § 554.872(g) (West Supp. 1997), 
recodified id. § 700.2901(g) (West Supp. 2001). These 
valuable interests are expressly described as “prop- 
erty” rights under state law. Id. § 700.2901(i). 

The Michigan Supreme Court has emphasized that 
each spouse holding a tenancy by the entirety has “a 
significant interest in property” that is protected by the 
Due Process Clause of the United States Constitution. 
Dow v. State, 396 Mich. 192, 204, 240 N.W.2d 450, 456 
(Mich. 1976). As Judge Gilman stated in his separate 
opinion in the court of appeals, the panel majority in 
this case has thus “ignored the substantial rights 
actually held by Don Craft.” App., infra, 38a. These 
legally-protected rights have “undeniable value” and 
thus constitute “property or rights to property” within 
the broad scope of the federal tax lien. Ibid.9 

2. The court of appeals erred by relying (App., infra, 
51a-53a) on its decision in Cole v. Cardoza, 441 F.2d 
1337 (6th Cir. 1971), and in failing to follow the more 
recent, clear guidance of this Court in Drye v. United 
States, supra, United States v. Irvine, supra, and 
United States v. Rodgers, supra. 

a. The rationale of Cole v. Cardoza, 441 F.2d at 1343, 
is that state law “governs the property rights of tax- 
payers” and that courts must therefore “look to the law 
of” the State in determining whether “the federal tax 

9 The valuable, legally-protected rights of a taxpayer in en- 
tirety property under Michigan law are not less extensive than the 
right of an heir-at-law to inherit under Arkansas law–-a right to 
which the federal tax lien attached under this Court’s decision in 
Drye v. United States, 528 U.S. at 59-60. 

14 

lien attach[es] to the * * * property.” The court 
concluded that, since “tenants by the entirety hold 
under a single title” under Michigan law, the federal tax 
lien cannot attach to the property for the debts of one 
spouse only. Ibid. The court of appeals repeated the 
reasoning of Cole by relying on what it described as 
“the basic tenet that state law governs the issue * * * 
whether any property interests exist in the first place.” 
App., infra, 46a. 

That reasoning is demonstrably in error, however, 
for this Court has made it clear that “[i]t is not material 
that the economic benefit to which the [taxpayer’s] 
right pertains is not characterized as ‘property’ by local 
law.” Drye v. United States, 528 U.S. at 58 n.5 (quoting 
W. Plumb, Federal Tax Liens 27 (3d ed. 1972)). This 
Court has clearly held that, while state law determines 
the nature of a taxpayer’s interest in property, federal 
law determines whether that interest is sufficient to 
constitute “property” or “rights to property” under 26 
U.S.C. 6321. In United States v. National Bank of 
Commerce, 472 U.S. at 722 (internal quotations 
omitted), the Court explained that: 

[o]nce it has been determined that state law creates 
sufficient interests in the [taxpayer] to satisfy the 
requirements of the [statute], state law is inopera- 
tive, and the tax consequences thenceforth are 
dictated by federal law. 

Courts are therefore to “look * * * to federal law to 
determine whether the taxpayer’s state-delineated 
rights qualify as ‘property’ or ‘rights to property’ with- 
in the compass of the federal tax lien legislation.” Drye 

v. United States, 528 U.S. at 58. See also United States 

v. Bess, 357 U.S. 51, 56-57 (1958); Morgan v. Com- 
missioner, 309 U.S. 78, 80 (1940). And, applying this 

15 

federal standard, this Court has clearly and concisely 
held that the tax lien attaches to “every species of right 
or interest protected by law and having an exchange- 
able value.” Drye v. United States, 528 U.S. at 56. 

b. Each spouse in a tenancy by the entirety pos- 
sesses valuable legally-protected rights that constitute 
“property or rights to property” to which the lien 
applies under this expansive federal standard. See 
pages 12-13, supra. Indeed, the court of appeals ulti- 
mately appeared to acknowledge in the present case 
that each spouse possesses valuable rights in a tenancy 
by the entirety that are protected under state law. The 
court reasoned, however, that the federal tax lien does 
not attach to these interests in property—such as the 
right of survivorship—because the rights of each 
spouse are not treated as “separate” or “severable” in- 
terests under state law. App., infra, 57a-58a. 

That reasoning conflicts with the plain text of the tax 
lien statute and with the clear holdings of this Court. 
The federal tax lien attaches to “all property and rights 
to property” (26 U.S.C. 6321 (emphasis added)), not 
merely to property that is immediately transferable by 
the person who owns the interest. For example, in 
United States v. Rodgers, 461 U.S. at 684-685, which 
concerned a married taxpayer who held an interest in 
homestead property that could not be mortgaged, sold 
or abandoned without the consent of the other spouse 
under state law, the Court held that the inability of the 
taxpayer to exercise his rights separately from the 
rights of his spouse was not a basis for denying fore- 
closure of the federal tax lien. Id. at 702. See also Bank 
One Ohio Trust Co. v. United States, 80 F.3d 173, 176 
(6th Cir. 1996) (federal tax lien attaches to the interest 
of the beneficiary of a spendthrift trust) (cited in Drye 

16 

v. United States, 528 U.S. at 58 n.5 & 60 n.7); note 9, 
supra. 

c. The court of appeals similarly ignored the prece- 
dents of this Court in relying on the fact that Michigan 
does not authorize the seizure of tenancy by the 
entirety property for the debts of only one spouse. 
App., infra, 52a (citing Cole v. Cardoza, 44 F.2d at 
1343). This Court has frequently emphasized that 
state-law restrictions on seizure and exemptions from 
foreclosure do not operate to prevent the attachment 
and enforcement of the federal tax lien. See Drye v. 
United States, 528 U.S. at 59 (quoting United States v. 
Mitchell, 403 U.S. 190, 204 (1971) (“exempt status under 
state law does not bind the federal collector”)); Note, 
Property Subject to the Federal Tax Lien, 77 Harv. L. 
Rev. 1485, 1498 (1964) (stripped of its fiction that hus- 
band and wife are a legal unit, the entirety theory 
“serves much the same function as an exemption 
created by state law” and thus should not “defeat the 
federal lien”). As this Court explained in detail in 
United States v. National Bank of Commerce, 472 U.S. 
at 727: 

The question whether a state-law right constitutes 
“property” or “rights to property” is a matter of 
federal law. * * * [T]he facts that under [state] 
law [the taxpayer’s] creditors * * * could not 
[seize or attach the property] are irrelevant. The 
federal statute relates to the taxpayer’s rights to 
property and not to his creditors’ rights. 

Indeed, in United States v. Rodgers, 461 U.S. at 700, the 
Court expressly held that “state-created exemptions 
against forced sale” of jointly-owned property are 
ineffective against the federal lien. 

17 

d. The court of appeals plainly erred in relying on 
the legal fiction employed in Michigan that property 
held in a tenancy by the entirety is owned by the 
marital unit, rather than by the individual spouses 
acting collectively. App., infra, 51a-53a. The court 
reasoned that the consequence of this legal fiction is 
that neither spouse has an interest in “property” or a 
“right to property” to which the federal tax lien could 
attach. Ibid. 

This Court has emphasized, however, that the federal 
tax lien statute is not “struck blind” by state legal 
fictions concerning property ownership. Drye v. United 
States, 528 U.S. at 59. In Drye, the Court applied that 
principle in holding that the federal tax lien attached to 
the interest of an heir who disclaimed his rights in an 
intestate estate even though state law deemed any such 
disclaimer to have occurred before the death of the 
decedent so that creditors would be unable to attach 
the disclaimant’s interest in the estate. The Court held 
that the federal tax lien statute is “not struck blind” by 
the legal fictions of state law and that the right of the 
heir to inherit is “a valuable, transferable, legally pro- 
tected right” to which the federal tax lien attached 
before the disclaimer was made. Id. at 59, 60. See also 
United States v. Irvine, 511 U.S. at 240 (“Congress had 
not meant to incorporate state-law fictions as touch- 
stones of taxability when it enacted the Act.”). 

Indeed, in Tyler v. United States, 281 U.S. 497 (1930), 
this Court specifically rejected the proposition that 
federal tax law is “struck blind” by the state law fiction 
that entirety property is owned by the “marital unit” 
rather than by the spouses acting collectively. That 
case concerned the constitutionality of the Revenue Act 
of 1916, ch. 463, § 202(c), 39 Stat. 778, which taxed the 
total value of entirety property–-both the share attrib- 

18 

utable to the decedent and to the surviving spouse—in 
the estate of the first spouse to die. 

10 The estate 
administrators contended that the entirety property 
was owned by the marital unit under state law and that, 
on the death of the first spouse, the survivor merely 
retained what she already had. They argued that a 
transfer of property therefore did not occur on the date 
of death and that the estate tax, as applied to this 
situation, constituted an unconstitutional direct tax 
without apportionment. 281 U.S. at 500. The Court 
rejected this argument and explained in detail why the 
“amiable fiction of the common law [that] husband and 
wife are but one person” is not binding on federal tax 
legislation (id. at 503): 

According to the amiable fiction of the common 
law, * * * husband and wife are but one person 

* * *. This view, when applied to a taxing act, 
seems quite unsubstantial. The power of taxation is 
a fundamental and imperious necessity of all gov- 
ernment, not to be restricted by mere legal fictions. 
Whether that power has been properly exercised in 
the present instance must be determined by the 
actual results brought about by the death, rather 
than by a consideration of the artificial rules which 
delimit the title, rights and powers of tenants by the 
entirety at common law. 

Federal tax law thus looks to “the actual results” rather 
than merely to “the artificial rules” of state law in 
determining the nature and taxability of the rights 
possessed by tenants by the entirety. Ibid. In Tyler, 

10 Section 2040(b) of the Internal Revenue Code currently in- 
cludes only one-half of the value of such property in the decedent’s 
gross estate. 26 U.S.C. 2040(b). 

19 

because the death of the first spouse resulted in an 
expansion of the survivor’s “actual” property rights, 
the Court upheld the constitutionality of the estate tax 
on the entire value of the entirety property. 281 U.S. at 
504. 

11 

In United States v. Rodgers, 461 U.S. at 703 n.31, 
although the precise question at issue here was not 
presented, the Court stated that it was not convinced of 
the correctness of appellate decisions that, prior to that 
date, had concluded that the federal tax lien would not 
attach to a taxpayer’s interest in a tenancy by the 
entirety. 

12 Noting that these older cases had rested on 
“the peculiar legal fiction governing tenancies by the 
entirety in some States,” the Court emphatically 
questioned “if the tenancy by the entirety cases are 
correct.” Ibid. (emphasis in original). As one com- 
mentator has observed, the reasoning of the older cases 
that relied on the state legal fiction of the “marital unit” 
“was dubious before” and “[n]ow, after Drye, its incor- 
rectness is glaringly clear.” S. Johnson, After Drye: 
The Likely Attachment of the Federal Tax Lien to 

11 In explaining the reasoning of Tyler in United States v. 
Jacobs, 306 U.S. 363 (1939), the Court emphasized that “[t]he con- 
stitutionality of an exercise of the taxing power of Congress is not 
to be determined by such * * * ancient fictions” as the ownership 
of entirety property by the marital unit. Id. at 369. 

12 The cases cited by the Court in Rodgers are United States v. 
American National Bank, 255 F.2d 504, 507 (5th Cir.), cert. 
denied, 358 U.S. 835 (1958), and United States v. Hutcherson, 188 
F.2d 326, 331 (8th Cir. 1951). The Eighth Circuit recently dis- 
tinguished its decision in Hutcherson in Cox v. Commissioner, 121 
F.3d 390, 392 (1997). 

20 

Tenancy-by-the-Entireties Interests, 75 Ind. L.J. 1163, 
1189-1190 (2000). 

13 

e. In his separate opinion below, Judge Gilman 
agreed with the government that the decision of the 
panel majority “contravenes recent Supreme Court 
decisions.” App., infra, 41a. The panel majority stated, 
however, that the decisions of this Court concerning the 
relationship of federal and state law under the federal 
tax lien statute “have wavered over time” and that the 
most recent decisions (such as Drye and Irvine) have 
“not so fundamentally changed the legal landscape” as 
to require a different result in this case. Id. at 14a n.12, 
18a. The court of appeals thus squarely refused to 
apply the recent and clear admonition of this Court in 
Drye that, notwithstanding state legal fictions, the 
federal tax lien statute reaches the realities of the 
taxpayer’s “valuable” and “legally protected” interests 
in property. 528 U.S. at 58-59. In view of the court’s 
refusal (at the suggestion of one of its members) to 
redress this conflict en banc, certiorari review is the 
only means now available for obtaining compliance with 
the “recent * * * decisions” of this Court. App., infra, 
42a. 

3. This Court has emphasized the importance in a 
national tax system of avoiding “inequalities in the 
administration of the revenue laws” and of ensuring 
that taxpayers do not receive “treatment different from 
that given to other taxpayers of the same class.” Com- 
missioner v. Sunnen, 333 U.S. 591, 599 (1948). See also 
Thor Power Tool Co. v. Commissioner, 439 U.S. at 544. 
The decision of the court of appeals disserves that 

13 See also S. Johnson, Fog, Fairness, and the Federal Fisc: 
Tenancy-by-the-Entireties Interests and the Federal Tax Lien, 60 
Mo. L. Rev. 839, 871 (1995). 

21 

principle. The tenancy by the entirety is a form of 
property ownership that exists in 24 States, the Virgin 
Islands and the District of Columbia. 

14 Of all the forms 
of joint property ownership, the tenancy by the en- 
tirety is the only form that has been treated as exempt 
from the federal tax lien. Every other type of jointly- 
owned property has consistently been held subject to 
the federal tax lien. See, e.g., United States v. Rodgers, 
461 U.S. at 690-691 (homestead property); United 
States v. Davenport, 106 F.3d 1333, 1337 (7th Cir. 1997) 
(joint tenancy); United States v. Kocher, 468 F.2d 503, 
507 (2d Cir. 1972), cert. denied, 411 U.S. 931 (1973) 
(tenancy in common); United States v. Overman, 424 
F.2d 1142, 1145 (9th Cir. 1970) (community property); 
Washington v. United States, 402 F.2d 3, 7 (4th Cir. 
1968), cert. denied, 402 U.S. 978 (1971) (property sub- 
ject to dower interest). Under the decision in this case, 
a taxpayer who owns property in a tenancy by the 
entirety is thus treated more favorably than a taxpayer 
who owns property in the 26 States that do not 
recognize, or have abolished, that form of ownership. 

15 

14 These States are Alaska, Arkansas, Delaware, Florida, Ha- 
waii, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michi- 
gan, Missouri, Mississippi, New Jersey, New York, North Caro- 
lina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, 
Vermont, Virginia, and Wyoming. See R. Heaton, Administration 
of Entireties Property in Bankruptcy, 60 Ind. L.J. 305, 309 n.24 
(1985); 735 Ill. Comp. Stat. Ann. 5/12-112 (West 1993 & Supp. 2000). 
In addition, between 1972 and 1985, a tenancy by the entirety 
could be created in Ohio, and an entirety interest created during 
that period is still treated as valid. Ohio Rev. Code Ann. §§ 
5302.17-5302.21 (Anderson 1989 & Supp. 2000); see In re Cline, 164 
B.R. 592, 593-594 (Bankr. S.D. Ohio 1994). 

15 As part of the progressive recognition of women’s property 
rights during the Nineteenth Century (under what were generally 
known as the Married Women’s Property Acts), several western 

22 

There is no adequate basis in the text or the purpose 
of the federal tax lien statute for this difference in 
treatment. To the contrary, as this Court has stated, 
there is a “sufficient similarity between joint tenancies 
and tenancies by the entirety to have moved Congress 
to treat them alike for purposes of taxation.” United 
States v. Jacobs, 306 U.S. 363, 370 (1939). In all other 
respects, these two forms of ownership have consis- 
tently received equal treatment under the revenue laws 
(ibid. (emphasis added)): 

A tenancy by the entirety “is essentially a joint 
tenancy, modified by the common law theory that 
husband and wife are one person.” Only a fiction 
stands between the two. Survivorship is the pre- 
dominant and distinguishing feature of each. 

Even within the group of States that recognize 
tenancies by the entirety, the decision in this case pro- 
duces inconsistent treatment. Under the decision 
below, taxpayers who own entirety property in the 
States where creditors can attach such property for a 
debt owed by one spouse are treated less favorably 
than taxpayers who own such property in the States 
where creditors can attach such property only for a 
debt owed by both spouses. 

16 See, e.g., Geiselman v. 

States never chose to adopt the tenancy by the entirety and 
several other states elected to abolish or restrict that form of 
ownership. S. Johnson, supra, 60 Mo. L. Rev. at 843. See, e.g., 
Kerner v. McDonald, 60 Neb. 663, 84 N.W. 92 (1900). In England, 
where the tenancy by the entirety originated, that form of 
ownership was abolished in 1925. S. Johnson, supra, 60 Mo. L. 
Rev. at 843. 

16 Fourteen States (and the Virgin Islands and the District of 
Columbia) prohibit creditors from attaching entirety property for 
the debts of only one spouse: Delaware, Florida, Hawaii, Illinois, 

23 

United States, 961 F.2d 1, 7 (1st Cir.), cert. denied, 506 
U.S. 891 (1992) (husband’s interest in entirety property 
is subject to the federal tax lien because Massachusetts 

Indiana, Maryland, Michigan, Missouri, North Carolina, Penn- 
sylvania, Rhode Island, Virginia, Vermont and Wyoming. See 
Mitchell v. Wilmington Trust Co., 449 A.2d 1055, 1057-1058 (Del. 
Ch. 1982), aff ’d, 461 A.2d 696 (Del. 1983); Finley v. Thomas, 691 
A.2d 1163, 1166 (D.C. 1997); Sitomer v. Orlan, 660 So. 2d 1111, 1114 
(Fla. Dist. Ct. App. 1995); Sawada v. Endo, 57 Haw. 608, 617, 561 
P.2d 1291, 1297 (1977); 735 Ill. Comp. Stat. Ann. 5/12-112 (West 
1993 & Supp. 2000); Diss v. Agri Bus. Int’l, Inc., 670 N.E.2d 97, 99 
(Ind. Ct. App. 1996); State v. One 1984 Toyota Truck, 311 Md. 171, 
187, 533 A.2d 659, 667 (1987); SNB Bank & Trust v. Kensey, 145 
Mich. App. 765, 775-777, 378 N.W.2d 594, 599 (1985); In re Van Der 
Heide, 164 F.3d 1183, 1184 (8th Cir. 1999) (Missouri law); Dealer 
Supply Co. v. Greene, 108 N.C. App. 31, 34, 422 S.E.2d 350, 352 
(1992), review denied, 333 N.C. 343, 426 S.E.2d 704 (1993); 
Koffman v. Smith, 453 Pa. Super. 15, 27, 682 A.2d 1282, 1288 
(1996); Bloomfield v. Brown, 67 R.I. 452, 25 A.2d 354 (1942); 
Masonry Prods., Inc. v. Tees, 280 F. Supp. 654, 657 (D.V.I. 1968); 
Rogers v. Rogers, 257 Va. 323, 326, 512 S.E.2d 821, 822 (1999); 
Lowell v. Lowell, 138 Vt. 514, 516, 419 A.2d 321, 322 (1980); 
Colorado Nat’l Bank v. Miles, 711 P.2d 390, 393-394 (Wyo. 1985). 
Nine of the States that recognize the tenancy by the entirety, 
however, permit creditors to attach one spouse’s interest in such 
property for the debts of only that spouse, subject to the rights of 
the nondebtor spouse: Alaska, Arkansas, Kentucky, Massachu- 
setts, New Jersey, New York, Oklahoma, Oregon, Rhode Island, 
and Tennessee. See Alaska Stat. § 09.38.100(a) (Michie 2001); 
Morris v. Solesbee, 48 Ark. App. 123, 128, 892 S.W.2d 281, 283 
(1995); Hoffman v. Newell, 60 S.W.2d 607, 613 (Ky. 1932); In re 
Snyder, 231 B.R. 437, 442 (Bankr. D. Mass. 1999); United States v. 
Jones, 877 F. Supp. 907, 916-920 (D.N.J.), aff ’d mem., 74 F.3d 1228 
(3d Cir. 1995); BNY Fin. Corp. v. Moran, 154 Misc. 2d 435, 436, 584 
N.Y.S.2d 261, 262 (Sup. Ct. 1992); Okla. Stat. Ann. tit. 60, 
§ 74 (West 1994); Wilde v. Mounts, 95 Or. App. 522, 524-525, 769 
P.2d 802, 803-804 (1989); Arango v. Third Nat’l Bank, 992 F.2d 611, 
613 (6th Cir. 1993) (Tennessee law). The rule in Mississippi is 
uncertain. See Cuevas v. Cuevas, 191 So. 2d 843 (Miss. 1966). 

24 

law permits creditors to attach his interest in the 
property); United States v. Diemer, 859 F. Supp. 126, 
131 (D.N.J. 1994), rev’d on other grounds sub nom. 
United States v. Avila, 88 F.3d 229 (3d Cir. 1996) (same 
under New Jersey law); United States v. Brynes, 848 F. 
Supp. 1096, 1099 (D.R.I. 1994) (same under Rhode 
Island law); United States v. Ragsdale, 206 F. Supp. 613 
(W.D. Tenn. 1962) (same under Tennessee law). 

The arbitrary inequality of treatment that results 
under the decision in this case is magnified by the fact 
that entirety ownership is not limited to real estate. At 
least fourteen States (and the District of Columbia) also 
allow personal property—such as automobiles, stocks, 
bonds and bank accounts—to be owned in a tenancy by 
the entirety. 

17 Several other States allow some, but not 

17 These jurisdictions are: Alaska, Arkansas, Delaware, the Dis- 
trict of Columbia, Florida, Hawaii, Kentucky, Maryland, Massachu- 
setts, Missouri, Oklahoma, Pennsylvania, Tennessee, Vermont, and 
Virginia. See Faulk v. Estate of Haskins, 714 P.2d 354 (Alaska 
1986); Boggs v. Boggs, 26 Ark. App. 188, 190, 761 S.W.2d 956, 957 
(1988); Ciconte v. Barba, 161 A. 925 (Del. Ch. 1932); In re Estate of 
Wall, 440 F.2d 215, 219 (D.C. Cir. 1971); Beal Bank, SSB v. 
Almand & Assocs., 780 So. 2d 45, 53-54 (Fla. 2001); Traders Travel 
Int’l, Inc. v. Howser, 69 Haw. 609, 613, 753 P.2d 244, 246 (1988); Ky. 
Rev. Stat. Ann. § 140.050 (Michie 1991); State v. One 1984 Toyota 
Truck, 69 Md. App. 235, 237-238, 517 A.2d 103, 104 (1986), aff ’d, 311 
Md. 171, 533 A.2d 659 (1987); Woodard v. Woodard, 216 Mass. 1, 2, 
102 N.E. 921, 922 (1913); Hallmark v. Stillings, 648 S.W.2d 230, 
233 (Mo. Ct. App. 1983); Okla. Stat. Ann. tit. 60, § 74 (West 1994); 
Madden v. Gosztonyi Sav. & Tr. Co., 331 Pa. 476, 483, 200 A. 624, 
628 (1938); White v. Watson, 571 S.W.2d 493, 495 (Tenn. Ct. App. 
1978); Beacon Milling Co. v. Larose, 138 Vt. 457, 461, 418 A.2d 32, 
33 (1980); Oliver v. Givens, 204 Va. 123, 126, 129 S.E.2d 661, 663 
(1963). 

25 

all, types of personal property to be owned in a tenancy 
by the entirety. 

18 

4. The decision in this case not only produces in- 
consistent treatment of similarly situated taxpayers, it 
also provides significant opportunities for obstructing 
and avoiding the collection of taxes. For example, 
under the reasoning of the decision below, both spouses 
may earn income, fail to file returns or file only sepa- 
rate returns (see note 6, supra), place their assets— 
such as real property, stocks, bonds and bank accounts 
—in a tenancy by the entirety, and claim an exemption 
of that property from tax collection. They could then 
use that “exempt” property to earn income or to pay 
other debts. As Judge Ryan emphasized in his separate 
opinion in this case, the majority opinion “not only 
contravenes established precedent, but provides an 
avenue for easy avoidance of federal income-tax laws.” 
App., infra, 70a. This decision has, in short, “left us 
with a rule which compromises the revenue, creates a 
ready pathway for tax avoidance, defeats equal treat- 
ment of taxpayers, and lacks any defensible doctrinal 
underpinning.” S. Johnson, supra, 60 Mo. L. Rev. at 
888. 

18 For example, Michigan allows bonds, stocks, mortgages, 
promissory notes, debentures, and other financial assets to be held 
in a tenancy by the entirety. DeYoung v. Mesler, 373 Mich. 499, 
505, 130 N.W.2d 38, 41 (1964) (dissenting opinion). In Michigan and 
Indiana, personalty derived from real estate (such as crops) and 
the proceeds of the sale of real estate may be owned in tenancy by 
the entirety when the underlying real estate was itself held in that 
form of ownership. See ibid.; Koehring v. Bowman, 194 Ind. 433, 
142 N.E. 117, 118 (1924). 

26 

CONCLUSION 

The petition for a writ of certiorari should be 
granted. 

Respectfully submitted. 

BARBARA D. UNDERWOOD 

Acting Solicitor General 

CLAIRE FALLON 

Acting Assistant Attorney 

General 

LAWRENCE G. WALLACE 

Deputy Solicitor General 

KENT L. JONES 

Assistant to the Solicitor 

General 

DAVID ENGLISH CARMACK 
JOAN I. OPPENHEIMER 

Attorneys 

JUNE 2001