Litigation and Taxes

MASSACHUSETTS COLLECTORS AND
TREASURERS ASSOCIATION
Collectors and Treasurers School - August 18, 2010
Course Nos. 260
A&
B
- Litigation & Taxes
POP QULZ
John D. Finnegan, Esq. & Robert J. Kerwin, Esq.
Tarlow, Breed, Hart & Rodgers, P.C.
1.
Developer Sneaky as trustee of Notme Realty Trust receives approval Planning Board
to build a subdivision in Yourtown" The Trust provides $84k in security for the
construction of roadways and utilities for the subdivision by establishing a passbook
account at the local bank, and transferring that passbook to the Planning Board"
Planning Board votes to reduce the amount of security by $20,000 and to release
these excess funds to the Trust. The Collector receives a Notice of Levy for $31k
from the IRS, naming Developer Sneaky individually, which s/he passes along to the
Treasurer. Developer Sneaky when paylng an unrelated tax bill, tells the Collector
the levy does not apply to the released $20k, as it was not against Notme Realty
Trust. The Treasurer prepares a check in the amount of $20,000 made payable to
"Notme Realty Trust, and Internal Revenue Service" and sends this check to the IRS,
who credits it against Sneaky's personal tax levy. Sneaky then brings suit against the
Town, and the Collector and Treasurer, personally, for breach of their fiduciary
duties. Will his claims succeed?
Yes
No
In 2008 Commercial owner files for bankruptcy. Mortgagee on property receives
relief from the automatic stay and sells to real estate Speculator at a foreclosure sale
in 2009" Pre-petition taxes had not been paid since FY2007" After purchase,
Speculator offers to pay all post-petition taxes and interest, but only 60lo interest on
pre-petition amounts. City does not respond and Speculator brings civil suit against
Collector in 2010, stating that where the City failed to respond to the initial offer, it
should be estopped from collecting the additional interest that had accrued" Will
Speculator be successful?
Yes
No
3" A property is owned by Husband and Wife" As part of an estate planning
plan, the
property is transferred to their son reserving a life estate to Husband and Wife. The
Assessors, unaware of the transfer as yet, still assess taxes on the property to Husband
and Wife as the deed was not promptly recorded. The Wife dies. The Wife's estate
is not probated. Son later dies, and his estate probated in another county. Finally,
Husband passes. The Property continues to be assessed to Husband and Wife. As
Collector, you have recorded the tax taking on the property in Husband and Wife's
name, consistent with prior assessments. With no immediate family mernber alive, a
niece Judy Moneygrabber claims the Property and hires Attorney Nogoodnik.
Attorney Nogoodnik claims the Property was wrongly assessed with a tax and that the
tax titles should be removed. Should the tax taking be removed?
Yes
No
4" A moderately
successful Developer seems to sell a variety of town house lots but
never completely sells out because some of the properties are reportedly on wetlands"
As a result, he has a number of small "leftover" lots in your cofirmunity. Each are
owned by a Real Estate Nominee Trust. The Developer is the Trustee. The
beneficiaries of the Trust are not disclosed" The Developer also owns a restaurant in
Town. You request the Board of Selectman to revoke his occupancy license in light
of the Trust's failure to pay taxes. Will you be successful?
Yes
5.
No
A former gas station in you town is several years delinquent in Real Estate Taxes.
The Selectman are hesitant for you to take the property due to potential
environmental concerns" You know that the owner has a "McMansion" in a
neighboring town. You want to seek an attachment on his house for the taxes in order
to force him to pay taxes" Can you do so?
Yes
6.
No
A local Developer is delinquent on real estate taxes due on common area from
remaining lots in an incomplete subdivision. The Developer has a performance bond
for completion of a road for a separate, completed subdivision under another entity.
You want to offset the bond money to pay for the outstanding taxes. can you
lawfully do so?
Yes
No
7
" The City provides water and sewer services pursuant to its by-laws and will estimate
usage,
if
access to a water meter is not allowed, and the taxpayer declines to return
meter cards to the Water Department" For several years, the City has left estimate
cards for the tax payer which have gone unanswered. As a result, the Water
Department estimated usage and billed the taxpayer. Where the bills have gone
unpaid you have subsequented the water charges to the Real Estate tax and have
advertised the property for taking. The taxpayer seeing the notice in the newspaper is
upset, where his real estate taxes have been paid. The taxpayer finally grants the City
access to his meter. Upon visiting property, the Water Department notes the meter
reads "0". Will you be able to collect the estimated charges?
Yes
8.
No
A Developer owns a parcel of partially recorded, partially registered land. The
Developer goes out of business" The taxes go unpaid and the City records takings for
each parcel. Through inadvertence, the street number is transposed in the property
descriptions on the takings. The Mortgagee forecloses and sells the property to
individuals unrelated to the taxpayer. The purchase is a cash deal. As a result, no
title search is performed and no MLC is requested. A new Certificate of Title is
issued to taxpayer and the City's Taking is noted on the Memoranda of
Encumbrances. Taxes go unpaid for several years. The Taxpayer subsequently seeks
financing and is upset at you when he learns of the tax taking. The Taxpayer claims
that the Taking is invalid due to the error in parcel description and the fact that the
Taking was only registered, not recorded. Is the taking valid?
Yes
9"
The taxes on a property are delinquent and you are preparing to record an instrument
of taking. You receive a notice of the filing of a petition for relief in bankruptcy from
a debtor living at the property" The debtor is not the record owner. The property is
owned by a Trust whose beneficiaries aren't disclosed. Can you record your taking
or will it be deemed a violation of the automatic stay?
Yes
10"
No
No
An excise tax is levied upon an individual who runs a sole proprietorship in Town.
You don't doubt his ability to pay, but he hasn't done so and continues to ignore the
Town's bills. You want to compel him to come to the District Court and to explain to
you why he has failed to pay his taxes. Can you compel his appearance?
Yes
No
1
1.
Your town has passed a number of byJaws regulating certain activities, including: an
Animal Control / Dogs Bylaw; a Junk Car ByJaw; a Recycling By-law; a Snow
Removal By-law; and a Winter Parking Ban ByJaw. The Selectmen are having
trouble collecting fines for violations and you, under the collector's statutory powers
suggest that the Town place a lien on the violators' properties in an effort to collect
the outstanding charges. Can you place a lien on the property without judicial
process?
No
Yes
12.The new Mayor, who was elected on a platform of "we help our citizens", has come
to you, a ten-year collector, to discuss a strategy by which several of the City's more
financially strapped citizens are not actually pursued for their taxes for six months.
He has authorized you to continue to record tax titles on properties where the
taxpayers have neglected to pay past due taxes, but has specifically instructed you to
withhold delivery of your delinquency list by which you alert the Town licensing
boards that there are outstanding and unpaid certain real estate taxes for a period of 6
months. Is this delay in the issuance of a delinquency list lawful?
No
Yes
Mayor has spoken out passionately about the need to be more aggressive against
"Dead Beat Dads" and the need to assist mothers in need. Shortly after his comments
are reported in the local paper, you receive an inquiry at the front desk that a mother,
who is having child support problems and who has obtained Department of
Revenue's collection assistance, wishes to pay off the $10,000.00 Real Estate taxes.
The taxpayer tells you that the taxpayer has a check she received from her mother for
$5,000.00. The taxpayer requests that you accept the $5,000.00 and issue a certificate
of redemption. The taxpayer says she will pay the Town the remaining $5,000.00
after refinancing. Can you accept the payment and issue the Certificate of
Redemption on the grounds of hardship?
13" The
No
Yes
4