US v. Purcell
| Citation | 798 F. Supp. 1102 |
| Decision Date | 02 October 1991 |
| Docket Number | Civ. A. No. 89-3642. |
| Parties | UNITED STATES of America v. Thomas W. PURCELL, Constance M. Purcell, John R. Gingras, David Stevenson, Main Line Federal Savings and Loan Association, Commonwealth of Pennsylvania State Employees Retirement System. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
COPYRIGHT MATERIAL OMITTED
David M. Katinsky, U.S. Dept. of Justice, Washington, D.C., for plaintiff.
William J. Hagan, Ambler, Pa., Steven J. Proctor, Pottstown, Pa., Keith R. Dutill, Eric Bland, Donald M. Donaldson, Philadelphia, Pa., for defendants.
This is a non-jury action brought by the United States to reduce to judgment certain federal tax assessments made against defendant Thomas W. Purcell for the tax years 1980-1986. The government seeks to set aside as fraudulent the conveyance of real property located at 211 Cricket Avenue, Ardmore, Pennsylvania from defendant Thomas Purcell to himself and defendant Constance Purcell as tenants in the entireties. The government seeks to foreclose existing federal tax liens on the Cricket Avenue property. The government also seeks to foreclose federal tax liens on real property located at 328 Locust Avenue, Ardmore, Pennsylvania.
I held a non-jury trial and the parties have submitted their proposed findings of fact and conclusions of law and supporting memoranda. This Memorandum constitutes my findings of fact and conclusions of law pursuant to Fed.R.Civ.P. Rule 52(a).
For the reasons that follow, I conclude that the transfer of property from Mr. Purcell to himself and Mrs. Constance Purcell was fraudulent, either by intent or by law. Therefore, I will enter judgment in favor of the United States and against defendants Thomas and Constance Purcell. I conclude that if the federal tax lien attached to the Locust Avenue property the IRS does not qualify for the protection of the Pennsylvania recording statutes because it had notice of the transfer of Mr. Purcell's interest in the Locust Avenue property to defendant Gingras. I therefore will enter judgment in favor of defendant Gingras and against the United States. I also will enter judgment in favor of the remaining defendants.
1. By his own description, Mr. Purcell is a "tax protester" and has for a number of years been a member of the Committee for Constitutional Taxation.
2. Mr. Purcell filed individual federal income tax returns for 1980 and 1981 in which he objected to listing any items of income or deductions and claimed the Fifth Amendment privilege.
3. On March 12, 1984, Mr. Purcell was notified of deficiencies for the 1980 and 1981 tax years and advised that a tax deficiency would be assessed against him unless he petitioned the Tax Court within 90 days. The deficiencies listed were:
Tax Year Additions to Tax Under 26 U.S.C
Ended Tax § 6651(a) § 6653(a)(1) § 6653(a)(2)
12/31/80 $12,886 $3,322 $644 —
12/31/81 11,483 2,871 574 50% of interest
due on $11,483
The Notice of Deficiency also informed Mr. Purcell that there were deficiencies due to penalties under 26 U.S.C. § 6654 in the amounts of $822 for 1980 and $880 for 1981.
4. On April 18, 1985, the United States Tax Court entered an Order and Decision in the case of Thomas W. Purcell v. Commissioner of Internal Revenue, Dkt. No. 17466-84. The Tax Court ordered and decided that the taxpayer owed all deficiencies listed in the Notice of Deficiency.
5. On September 9, 1985, the Internal Revenue Service made assessments and notices of demand and payment against Mr. Purcell for the 1980 and 1981 tax years. The IRS assessments were for the amounts in the Tax Court Order and Decision, except that the IRS added a negligence penalty pursuant to 26 U.S.C. § 6653(a)(2) as permitted by the Tax Court.
6. Mr. Purcell's unpaid assessed balance for the 1980 tax year is $27,529.07. His unpaid assessed balance for the 1981 tax year is $25,523.62.
7. Mr. Purcell does not dispute the accuracy of any of the figures he reported on his tax returns for the tax years 1982, 1983, 1984, 1985 or 1986.
8. Mr. Purcell filed a delinquent tax return which showed a deficiency for the 1982 tax year. On October 21, 1985, the IRS made an assessment and notice of demand and payment against Mr. Purcell in the following amounts: (1) $3620 in tax deficiency; (2) $353.07 in estimated tax penalty; (3) $905 in delinquency penalty; (4) $470.60 in failure to pay tax penalty and (5) $1383.28 in interest. On February 10, 1986, the IRS made an additional assessment and issued a notice and demand for the 1982 tax year in the following amounts: (1) $208 in negligence penalty; (2) $133.50 in delinquency penalty; (3) $534 in audit deficiency; (4) $409.30 in interest and (5) $54.30 in failure to pay tax penalty.
9. Mr. Purcell's unpaid assessed balance for the 1982 tax year is $8,071.05.
10. Mr. Purcell filed a delinquent tax return which showed a deficiency for the 1983 tax year. On August 12, 1985, the IRS made an assessment and issued a notice and demand for payment against Mr. Purcell in the following amounts: (1) $3125 in tax deficiency; (2) $781.25 in delinquency penalty; (3) $171.87 in failure to pay tax penalty and (4) $621.35 in interest. On August 18, 1987, the IRS made an additional assessment and issued a notice and demand for the 1983 tax year in the following amounts: (1) $376 in audit deficiency; (2) $94 in delinquency penalty; (3) $203.52 in negligence penalty; (4) $193.05 in interest.
11. Mr. Purcell's unpaid assessed balance for the 1983 tax year is $5,566.04.
12. On March 17, 1986, the IRS made an assessment and issued a notice and demand for payment against Mr. Purcell for the 1984 tax year. Mr. Purcell's unpaid assessed balance for the 1984 tax year is $3,584.05. The assessed balance results from the tax deficiency reported by Mr. Purcell on his filed tax return.
13. On August 10, 1987, the IRS made an assessment and issued a notice and demand for payment against Mr. Purcell for the 1985 tax year. Mr. Purcell's unpaid assessed balance for the 1985 tax year is $5,650.42. Except for an IRS imposed charge of $28 for fees and costs, the assessed balance results from the tax deficiency reported by Mr. Purcell on his filed tax return.
14. On August 24, 1987, the IRS made an assessment and issued a notice and demand for payment against Mr. Purcell for the 1986 tax year. Mr. Purcell's unpaid assessed balance for the 1986 tax year is $6,833.01. The assessed balance results from the tax deficiency reported by Mr. Purcell on his filed tax return.
15. There was no credible testimony challenging the amounts of the assessments against Mr. Purcell.
16. The assessed balance does not include interest and penalties which accumulate pursuant to law after the date of assessment. The overall balance of taxes, penalties and interest owed by Mr. Purcell through November 5, 1990 is $141,698.59.
17. On August 26, 1986, the government recorded a Notice of Federal Tax Lien against Mr. Purcell with the Prothonotary of Montgomery County, Pennsylvania. The Notice was for $64,666.29 and concerned the tax years 1980, 1981, 1982 and 1984.
18. On April 30, 1987, the government recorded a Notice of Federal Tax Lien against Mr. Purcell with the Prothonotary of Montgomery County, Pennsylvania. This Notice was for $69,393.76 and concerned the tax years 1980, 1981, 1982, 1983 and 1984.
19. On December 8, 1988, the government recorded a Notice of Federal Tax Lien against Mr. Purcell with the Prothonotary of Montgomery County in the amount of $11,141.42 and concerning the tax years 1985 and 1986.
20. On or about May 8, 1975, Mr. Purcell and Ellen C. Purcell, his then current and now former wife, acquired certain real property located at 211 Cricket Avenue, Ardmore, Montgomery County, Pennsylvania.
21. A purchase money mortgage dated May 8, 1975 and recorded May 9, 1975 was granted on the property in favor of Fidelity Bond and Mortgage Company in the amount of $25,000. On or about August 11, 1985, Fidelity Bond and Mortgage Company assigned the mortgage on the Cricket Avenue property to the Commonwealth of Pennsylvania State Employee Retirement Fund. The assignment was recorded on September 15, 1985.
22. By indenture dated July 30, 1979 and recorded August 30, 1979 with the Prothonotary of Montgomery County, Mr. Purcell and Ellen C. Purcell transferred the Cricket Avenue property to Mr. Purcell exclusively.
23. By indenture dated April 19, 1984 and recorded April 25, 1984 with the Office for Recording of Deeds of Montgomery County, Mr. Purcell transferred the Cricket Avenue property from himself to himself and defendant Mrs. Constance Purcell.
24. At the time of the 1984 conveyance of the Cricket Avenue property, Mr. Purcell was indebted to the United States for more than $40,000. This amount includes: (1) the amount owing for the 1980 and 1981 tax years, which at the time of the statutory notice of deficiency was $32,808.00, not including the penalty to be calculated under 26 U.S.C. § 6653(a)(2); (2) the amount owing the 1982 and 1983 tax years, which was $7,655 in tax alone, without interest or penalties.
25. At the time of the 1984 conveyance of the Cricket Avenue property, Mr. Purcell owned two lots worth between $17,000 and $20,000 in Accomack County, Virginia.
26. At the time of the 1984 conveyance of the Cricket Avenue property, Mr. Purcell owned a painting business. The business had approximately $5,000 to $6,000 in accounts receivable and approximately $1000 in accounts payable at the time of the marriage.
27. Mr. and Mrs. Purcell did not establish that at the time of the 1984 conveyance, the value of Mr. Purcell's assets was more than the...
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