Thursday, February 26, 2009

Tax liability: Levy: Principal residence: Judicial approval. --
A levy on an individual's principal residence to satisfy his unpaid tax liabilities was judicially approved because the individual did not show good cause to deny approval of the levy. The individual conceded the validity of the tax liabilities and did not dispute the government's presumptively correct tax assessments. His efforts towards satisfaction of his tax liability, including partial payment and attempts to obtain a loan, were insufficient to show good cause. Back reference: ¶38,225.141.

nited States of America, Petitioner v. Robert A. Peterson, Respondent.

U.S. District Court, No Dist. Calif., San Jose Div.; C-08-04709 RMW, February 9, 2009.

[ Code Sec. 6334]

Thomas M. Newmanm Counsel for United States.


WHYTE, United States District Judge: The Untied States petitions the court for judicial approval of a levy on the principal residence of Respondent Robert A. Peterson. The court issued an order to Mr. Peterson to show cause as to why the levy should not be approved. Mr. Peterson has not filed a response, but appeared at a hearing on December 12, 2008. The court has considered the papers filed by the United States and the arguments of counsel and Mr. Peterson. For the foregoing reasons, the court approves the levy.


Robert A. Peterson maintains his principal residence at 217 4th Avenue, Santa Cruz, California 95062. Pet. ¶ 4. The Internal Revenue Service has made assessments against Mr. Peterson for unpaid federal income taxes, penalties, and interest. Pet. ¶ 5. As of August 5, 2008, these assessments totaled $249,450.99. Newman Decl., Ex. 1 (levy); see id. Exs. 2-8 (certificates of assessments). The IRS has attempted to collect Mr. Peterson's liabilities from his other assets, but no reasonable alternatives exist. Accordingly, the IRS petitions this court for judicial approval of a levy against Mr. Peterson's principal residence. See 26 U.S.C. § 6334(e).

The court issued an order to Mr. Peterson to show cause as to why the court should not approve the levy. See Docket No. 11 (Oct. 28, 2008). The order to show cause required Mr. Peterson to appear before the court on December 12, 2008. See id. at 1. The order required that a copy of the order, the petition, and its supporting declarations "be served" upon Mr. Peterson at least 35 days prior to the hearing. Id. at 2. The order then required Mr. Peterson to file any written response at least 21 days before the hearing, i.e., by November 21, 2008, and instructed that the court would only consider issues raised in Mr. Peterson's written response to the government's petition. Id. at 2. IRS Revenue Officer Greg Yarborough personally served on Mr. Peterson copies of the United States' petition and the order to show cause at Mr. Peterson's principal residence on November 5, 2008. See Docket No. 12 (Nov. 28, 2008).

Mr. Peterson appeared at the show cause hearing. He agreed that he owes the taxes and penalties, and that he is trying to pay them off. He stated that he has paid over $80,000 toward his tax liability in the past 20 months. He also stated that he is trying to obtain a loan on the home to permit him to pay his tax debt.


The law authorizes the government to levy the property subject to a tax lien of any person that refuses to pay a tax. See 26 U.S.C. § 6331(a). The law exempts various categories of a person's property. See 26 U.S.C. § 6334. Pertinent to this petition, a person's principal residence is exempt from levy unless a court "approves" the levy in writing. 26 U.S.C. § 6334(a)(13)(B); (e)(1)(A).

Section 6334(e)(1)(A) does not instruct the court as to what standard it should apply in approving such levies. See id. However, in collection cases the burden is normally on the respondent to dispute the government's presumptively correct assessment when, as here, the government's assessments have a foundation and are admissible. See United States v. Janis, 428 U.S. 433, 440-41 (1976). 1 Moreover, the Treasury Department's regulations regarding levy proceedings state that, "Unless the taxpayer files a timely and appropriate objection, the court would be expected to enter an order approving the levy of the principal residence property." 26 C.F.R. § 301.6334-1(d)(2).

Mr. Peterson failed to file anything in response to the order to show cause. His statements in court indicate that the tax liabilities are valid and that there is no reason why the government's request for approval of its levy should be denied. However, Mr. Peterson appears to be working hard to pay the government and the circumstances he described make it sound as though he might be able to keep his home. The government maintained its request for approval of the levy, but stated that it will try to work with Mr. Peterson to avoid a forced sale of the home. The court is hopeful that the parties will be able to reach an accord. Nevertheless, Mr. Peterson has shown no good cause as to why the court should deny the request for approval of the levy.


For the foregoing reasons, the court grants the government's petition for approval of a levy on Mr. Peterson's principal residence, 217 4th Avenue, Santa Cruz, California 95062. The Internal Revenue Service may levy upon Robert A. Peterson's interest in the property located at 217 4th Avenue to satisfy part or all of Mr. Peterson's unpaid tax liabilities for the tax years in question. Such levy may be executed by any authorized officer of the Internal Revenue Service. The Clerk shall close the file.

The government shall serve a copy of this order on Mr. Peterson.

1 The IRS's certificates of assessment are admissible. Hughes v. United States, 953 F.2d 531, 540 (9th Cir. 1992). Moreover, they are "probative evidence in and of themselves and, in the absence of contrary evidence, are sufficient to establish that notices and assessments were properly made." Id.

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