Can the IRS seize property in another’s name?

A well-known law called the Statute of Frauds states that when you transfer property after you have notice of a potential lawsuit or debt, the Court can reverse the transfer as being done to avoid the debt.  This is true when the transfer was for less than fair market value.  This most often happens when a potentially

 

 

liable spouse transfers his home or other property to the non-liable spouse for $1.00.  If the creditor sues and obtains a judgment, she can petition the Court to reverse the transfer as violating the  Statute of Frauds and the Court can order the Clerk of Court to sign a new deed transferring the property back to the debtor.  The IRS uses this tactic in many cases to seize property.

Another similar tactic used by the IRS is the “Nominee” situation.  A recent Tax Court case held that property held by an alter ego or nominee of the taxpayer can be seized and sold for the taxes.  In this case the entertainer Sinbad was the delinquent taxpayer and owed more than $8 million to the IRS.  The Court found that Michael Adkins held “bare legal title” to the property as a nominee of Sinbad and that IRS liens attached to that property even though not titled to Sinbad.