Opinion
CIV. No. 94-0553-S-BLW
December 20, 2000
MEMORANDUM DECISION AND ORDER
MEMORANDUM DECISION
The Court has before it a motion to clarify. In an earlier decision, the Court ordered certain real property sold and the proceeds distributed to various parties. The Court ordered that one-fourth of the proceeds go to Richard Lavin and another one-fourth go to Judy Wood. There is no dispute about that division. Lavin and Wood were previously married, and the IRS had filed a tax lien against Lavin for taxes he failed to pay during the marriage. As the Court noted in its prior decision, the divorce decree stated that the community property and debts of the parties would be shared equally.
In granting that Lavin and Wood each get a fourth of the sales proceeds of the real property, the Court also had to determine bow the IRS tax lien would be paid. Because the IRS has the authority to pursue the community for unpaid taxes incurred during marriage by either spouse, the Court provided that the lien would come out of both of the parties' proceeds. Thus, the Court allotted one-fourth of the sales proceeds to Lavin and Wood, but provided that the IRS could satisfy its lien from both of these one-fourth portions. The actual language of the Court's opinion was as follows:
One-fourth to the United States to satisfy the unpaid federal tax liabilities of Richard Lavin, plus accrued interest, penalties and other statutory additions for the tax period ending June 30, 1987, with any sums remaining distributed to Richard Lavin; and one-fourth to be distributed first to the United States to pay the federal tax liabilities of Richard Lavin, plus accrued interest, penalties, and other statutory additions, for the tax period ending June 30, 1987, and any sums remaining distributed to Judy Wood.
There is no doubt that the IRS may collect from the community assets of Lavin and Wood the funds necessary to satisfy the IRS tax lien for unpaid taxes during the period of marriage. See McIntyre v. U.S., 222 F.3d 655 (9th Cir. 2000) (holding that wife's community interest in husband's pension was subject to IRS tax lien for husband's unpaid taxes); Babb v. Schmidt, 496 F.2d 957, 960 (9th Cir. 1974) (holding that bank accounts constituting California community assets to be subject to a tax lien for the husband' s premarital tax debts). These two Ninth Circuit cases were based on California law allowing creditors to collect against the community property of both spouses to pay the separate debt of one spouse. The Idaho law is identical. See Bliss v. Bliss, 127 Idaho 170, 898 P.2d 1081 (1995).
Wood does not really contest this point. She essentially concedes that the IRS can come after her share of community assets to collect Lavin's unpaid taxes. Instead, she argues that her one-fourth portion of the sale proceeds should only be tapped to pay the lien if Lavin's one-fourth is insufficient to pay the lien.
Under the law, Wood and Lavin are both responsible for the debt. In the absence of extraordinary circumstances, Lavin would pay half the debt and Wood would pay half the debt. That is what was contemplated in the Court's decision. There may be, however, extraordinary circumstances that make this allocation unfair. For example, if there was proof that the husband incurred the debt, and the wife did not benefit in any way from the debt, then perhaps the husband's limited fund should be used before tapping the wife's limited fund to pay the debt. There is no evidence here, however, of any such extraordinary circumstances that would justify such a change in the 50-50 split contemplated by the law.
For these reasons, the Court can find no reason to change its decision. Thus, half of the tax liability shall be collected from Lavin's one-fourth portion of the sales proceeds, and half from Wood's one-fourth portion. The motion to clarify will be denied.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motions for clarification (docket nos. 123, 125) shall be DENIED.