Tax stuff I think is interesting. It is either copied from my primary blog on forbes.com http://www.forbes.com/sites/peterjreilly/ or stuff that I did not put there because being on forbes is a good gig and they have, you know, standards. Also some guest posts.
Sunday, July 20, 2014
IRS Meets Mr. Mxyzptlk
Originally Published on forbes.com on July 22nd,2011
When I see a case called United States v Ultra Dimension, I know that I’m going to have to write about it. The last time I had a good science fiction reference was in April when I wrote about a hobby loss case concerning a retail store called aWrinkle in Time. I thought I exhausted my knowledge of extra dimensions in that one, but I forgot about Mr. Mxyzptlk . Mr. Mxyzptlk comes from an ultra dimension, specifically the 5th. When he visits our dimension, he favors the city of Metropolis, where he spends his time tormentingSuperman. Superman can banish him back to the 5th Dimension for 90 days by getting him to say his name backwards. As I read the case it seemed a little what I call lawyerly for me, but when I saw it also had a reference to a secret identity and time travel, I knew it was a winner.
I don’t know if Fred Neal was influenced by DC Comics, but he may have been. He figured out a way to send his real estate in Harrison County, Texas into the Ultra Dimension (Actually a trust with that name) so that his creditors in this dimension could not molest it. It worked pretty well. He made thetransfers from 1993 to 1997 and they were only just reversed (July 14, 2011). That is considerably longer than 90 days.
Mr. Neal did not appear in the decision. Perhaps he has personally winked out into the ultra dimension now that his real estate is back. The decision was two of his many creditors duking it out for who has priority on the real estate. The creditors are Kenneth Goolsby and the United States of America. Mr. Goolsby won a lawsuit against Mr. Neal in 1999. The total with fees was just shy of $25,000. He filed a lien against Mr. Neal in Harrison county, but at least by one school of thought the lien didn’t attach to the real estate. The real estate was in the Ultra Dimension.
I don’t know Kenneth Goosby. He may be quite a formidable fellow, but it is improbable that he is anywhere near as formidable as the United States of America, which in pursuit of taxes filed a lien against Ultra Dimension as an alter ego of Mr. Neal. So you thought it took them a long time to find Osama bin Laden. Thats how long it took to find the Texas real estate that had been sent to the Ultra Dimension.
The way it works is that when the IRS starts throwing on liens, they get ahead of just about everybody except people that had valid liens already. Mr. Goosby argues that when the court voided the transfers as fraudulent that made at as if they had never happened. Therefore when he filed the liens against Mr. Neal in 1999 the land was in Harrison county and owned by Mr. Neal not in the Ultra Dimension. So that when the IRS liened Ultra Dimension, now his liens were there, even though they weren’t there then. It is very difficult to deal with tenses when you get involved with time travel. That is why the agents of Poul Anderson’s Time Patrol have a special language called Temporal to deal with problems like that. We are stuck with legalese:
Goolsby, however, argues that under the Texas Uniform Fraudulent Transfer Act, the Court’s July 14, 2011 Order declaring the conveyances by the Neals to Ultra Dimensions to be fraudulent means that those conveyances are wholly null and void and may be treated by creditors—such as Goolsby—as if the transfers had never taken place. According to Goolsby, this would mean that the legal and equitable title in the Subject Property remained with the Neals for the purpose of satisfying their debts at the time that Goolsby’s judgment lien was filed. Essentially, Goolsby argues that because the Court has made the determination that the transfer to Ultra Dimensions was fraudulent and that Ultra Dimensions is the nominee of the Neals, Goolsby’s judgment lien on the Subject Property relates back to the date that Goolsby filed the Abstract of Judgment—May 25, 1999. This would mean that Goolsby’s judgment lien was perfected before the federal tax lien was filed and would take priority over the federal tax lien.
Those of us who have studied science fiction know how dangerous time travel can be. So you will be relieved to learn that when it comes to federal liens, it doesn’t work:
Federal law makes no provision for the subordination of a tax lien through the use of the “relation back” doctrine.