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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).]
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