The Department of Justice

 

            The Department of Justice is the branch of our government that is responsible for prosecuting individuals the IRS accuses of tax crimes.  The DOJ is presided over by the Attorney General and he represents the United States in legal matters generally and furnishes advice and opinions on legal matters to the President and the Cabinet.

 

            The Tax Division is one division of the Department of Justice.  It is supervised by an Assistant Attorney General. Currently there are over 400 attorneys who are involved in civil litigation, criminal litigation and appellate litigation.  There are three Deputy Assistant Attorneys General. One is responsible for civil trial litigation; one is responsible for civil appeal litigation and another is responsible for criminal litigation including criminal appeals.

 

            The Department of Justice except for Tax Court Litigation conducts all Federal Tax Litigation. (See 28 C.F.R. 220.70(a).

 

            The civil division is organized into six sections.  Five sections handle civil litigation, including bankruptcy litigation in different parts of the country, specifically: Northern, Eastern, Southern, Central and Western.  The sixth section conducts litigation in the United States Claims Court.

 

            The United States Attorneys generally play a supporting position in civil tax litigation.  However, there are three United States Attorney's Offices that do handle some civil tax cases.  These are: The Central District of California, The Northern District of California, and The Southern District of New York.

 

            The Tax Division is also responsible for supervising all the criminal proceedings that arise under the Internal Revenue Laws, 28 C.F.R. Section 0.70(b).

 

            Criminal tax investigations and prosecutions are generally controlled by the local United States Attorney's office.  However, the Tax Division in Washington sometimes helps out on more complicated criminal cases.  The Tax Division in Washington must authorize the prosecution of an individual on tax charges.  The Tax Division must also approve indictments on Federal tax charges.

 

            The Tax Division also is responsible for the appellate proceedings that come out of the civil district Court cases. The Appellate Section handles the civil appeals and the criminal appeals are handled by the Criminal Appeals and Tax Enforcement Policy Section.  There is also an Office of Review, which reviews offers in settlement and concessions in major civil tax litigation.

 

            If you are on the front lines of the Freedom Movement, you are likely to come into contact at some point in time with the Department of Justice.  Let's hope that you are on the plaintiff end of the lawsuit!

Divorce and the IRS Lien

 

 

The IRS may lose it's lien priority once a divorce petition is filed.

 

            The laws of the state that you live in may protect marital assets from an IRS lien after a divorce petition is filed, according to a recent Federal District court case. The decision could help divorcing couples regardless of whether the divorce is amicable or contested.

 

            A Kansas woman filed for a divorce in April of 1986. Most of the property which she and her husband had acquired during their marriage (so-called "marital property") was owned by her husband. In her divorce action she sought to obtain almost all of it. Her husband, it turned out, owed the IRS considerable back taxes (apparently the couple had filed separate returns) and in September of 1986, the IRS filed a lien against the husband's property. The divorce court eventually awarded virtually all of the marital property to the woman, who then brought an action against the IRS to force the removal of its lien.

 

            The IRS has first rights to property if it files its lien while the taxpayer owns the property (and before any other judgment or lien creditors file), and it argued that, since its lien was filed before the divorce court ordered the property transferred to the woman, it had the right to take the property.

 

            The Court reasoned, however, that the question of who owned the property at the time that the lien was filed was a question of state law, and under the law of Kansas (as in many other states), upon the filing of a divorce petition involving marital assets the assets become jointly-owned property until the divorce court determines who gets them.

 

            Therefore, the court said, when the IRS filed its lien, the ownership of the marital assets was undetermined, and the husband did not own any assets that the IRS could file a lien against. Since the divorce court eventually awarded all the marital assets to the woman, the IRS's lien against her husband was never valid. The Court ordered the IRS to remove its liens.

 

            This case is of interest not only to couples involved in an unfriendly divorce, but also to couples who, though intending to get divorced, for one reason or another, wish to preserve their assets for one another or for their children or for anyone besides the IRS.

 

            When only one spouse faces a tax liability (because separate returns were filed or the tax is from a pre-marriage year or it is an employment tax imposed on only one spouse), it may be advisable to file a divorce petition earlier than anticipated. If doing so potentially puts the IRS in second place, the divorce court may feel inclined to dispose of the assets in a manner which protects the family at the expense of the IRS.  (See Terryl A. Gardner, Civ. No. 90-1570-FGT, USCD District of Kansas).