In the recent case of the United States v. Craft (No. 00–1831. Argued January 14, 2002—Decided April 17, 2002) decided by the United States Supreme Court, the Court held in a 6-3 opinion that a .
When the husband failed to pay federal income tax liabilities assessed against him, a federal tax lien attached to "all [of his] property and rights to property." 26 U. S. C. §6321. After the notice of the lien was filed, husband and wife (the "Respondent") jointly executed a quitclaim deed purporting to transfer to her his interest in a piece of real property in Michigan that they owned as tenants by the entirety. Subsequently, the Internal Revenue Service (IRS) agreed to release the lien and allow respondent to sell the property with half the net proceeds to be held in escrow pending determination of the Government's interest in the property. She brought an action to quiet title to the escrowed proceeds. The Government claimed, among other things, that its lien had attached to the husband's interest in the tenancy by the entirety. The District Court granted the Government summary judgment, but the Sixth Circuit Court of Appeals held that no lien attached because the husband had no separate interest in the entireties property under Michigan law.
However, the Supreme Court held that the husband's interests in the entireties property constitute "property" or "rights to property" to which a federal tax lien may attach.
In its opinion, the Court stated:
"We therefore conclude that respondents husbands [sic] interest in the entireties property constituted property or rights to property for the purposes of the federal tax lien statute. We recognize that Michigan makes a different choice with respect to state law creditors: [L]and held by husband and wife as tenants by entirety is not subject to levy under execution on judgment rendered against either husband or wife alone. Sanford v. Bertrau, 204 Mich. 244, 247, 169 N.W. 880, 881 (1918). But that by no means dictates our choice. The interpretation of 26 U.S.C. 6321 is a federal question, and in answering that question we are in no way bound by state courts answers to similar questions involving state law. As we elsewhere have held, exempt status under state law does not bind the federal collector. Drye v. United States, 528 U.S., at 51. See also Rodgers, supra, at 701 (clarifying that the Supremacy Clause provides the underpinning for the Federal Governments right to sweep aside state-created exemptions)."