- 23 - taxpayer’s risk with respect to the levied-upon property.15 In each case, the court held that the taxpayer was entitled to equitable relief in the form of credit against tax liability for the value of the property seized. Because current section 6335(f) had not yet been enacted when Barlows and Pittman were decided, those cases necessarily did not consider the effect of the Government’s failure to adhere to the mandate of section 6335(f) to comply with the owner’s request to sell the seized property (absent a determination and notification to the owner that the sale would not be in the best interests of the United States). Confronted with that issue in this case, we have concluded that the consequences to petitioners 15 The Court of Appeals in United States v. Pittman, 449 F.2d 623, 627 (7th Cir. 1971), noted that had the Government followed the requirements of sec. 6335(b) to advertise and sell the seized real estate, there would have been no question that the taxpayer’s liability would have been reduced to reflect the seizure. As the court observed, the Government “did not follow through and sell the property, as required by the Code. Instead, it held it and permitted it to deteriorate in value”. Id. at 628. Consequently, the court concluded: “We do not conceive that the error of the Government and any loss resulting from it are attributable to the taxpayer.” Id. The Court of Appeals in United States v. Barlows, Inc., 767 F.2d 1098 (4th Cir. 1985), affirmed on the basis of the District Court’s opinion, which stated in part: the IRS assumed the risk of * * * [the third-party debtor’s] default when the IRS acted inconsistently with the statute [sec. 6335(b)], thereby increasing Barlows’ risk in the property and precluding Barlows from proceeding against the account itself. [United States v. Barlows, Inc., 53 Bankr. 986, 989 (E.D. Va. 1984), affd. 767 F.2d 1098 (4th Cir. 1985).]Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Next
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