United States v. Vermont, 377 U.S. 351 (1964)

United States v. Vermont

No. 509

Argued April 21, 1964
Decided June 1, 1964
377 U.S. 351

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

A State assessed a solvent taxpayer for unpaid state taxes under a law providing that the amount owed shall be a lien in favor of the State upon the taxpayer’s property, and that the lien arises at the time the assessment is made. Later, the Commissioner of Internal Revenue, proceeding under 26 U.S.C. §§ 6321 and 6322, provisions virtually identical with the state law, assessed the taxpayer for federal taxes. The State thereafter sued and secured a judgment in the state court against the taxpayer and a bank which held sums owing to the taxpayer. The United States then sued in federal court to foreclose the federal lien; the District Court upheld the State’s contention that its original assessment gave its lien priority; and the Court of Appeals affirmed.

Held: The state lien had priority over the later federal lien. Pp. 354-359.

(a) The State’s lien was choate, since the identity of the lienor, the property subject to the lien, and the amount of the lien were established. United States v. New Britain, 347 U.S. 81, followed. Pp. 354-355, 358.

(b) Where, in a case involving a solvent debtor, a federal tax lien arises under §§ 6321 and 6322 subsequent to a state tax lien, it is not necessary that property be reduced to the possession of the state tax lienor to defeat the federal claim, as would have been the case under R.S. §3466, which accords the United States priority with respect to a claim against an insolvent debtor. United States v. Gilbert Associates, 345 U.S. 361, distinguished. Pp. 356-359.

317 F.2d 446, affirmed.