United States District Court, District of Massachusetts
MEMORANDUM OF DECISION
DATE RYA W. ZOBEL, UNITED STATES DISTRICT JUDGE
Robert Reitano had significant federal tax liabilities when he died on July 25, 2002. Those liabilities are the subject of this case. The United States of America (“plaintiff”) filed a two-count complaint seeking to (1) reduce to judgment the tax liability against Reitano’s estate and Marci McNicol as its executrix (Count 1), and (2) hold McNicol personally liable under the “Federal Priority Statute, ” 31 U.S.C. § 3713, for distributing the estate’s assets without first paying its federal tax debts (Count 2). The parties have cross-moved for summary judgment (Docket ## 14, 17). After holding a hearing and directing the parties to engage in settlement discussions which proved unsuccessful, I ALLOW plaintiff’s cross-motion and DENY defendants’ cross-motion.
Defendants did not file a statement of the undisputed material facts along with their cross-motion for summary judgment, wherefore, plaintiff’s version of the facts is admitted. U.S. Dist. Ct. Rules D. Mass., Local Rule 56.1. Those facts are as follows.
An Internal Revenue Service (“IRS”) review performed after Reitano’s death showed an unpaid tax liability. Declaration of IRS Technical Services Advisor Mary Bishop, Docket # 15-1, at ¶¶ 2-3. The IRS notified McNicol, who had been appointed executrix of Reitano’s estate, of the liability. Id. at ¶ 4. The IRS submitted a formal probate claim on October 27, 2003. Id. at ¶ 5. For some years thereafter, the parties cooperated to try to resolve the matter, but the cooperation ended in late 2008. Id. at ¶ 8. The IRS formally notified McNicol of her potential liability under the Federal Priority Statute, in November 2008. Id. at ¶ 9. After additional efforts to resolve the matter failed, the IRS transferred the case to the Department of Justice in April 2011. Id. at ¶ 14.
Reitano’s esstate had two significant assets: fifty percent of the shares of stock in RR Fishing Corporation (McNicol owned the other fifty percent), and one hundred percent of the shares of stock in Sophia Gale, Inc. Defs.’ Ans. to Interrogs., Docket # 15-7, at Response 3. Each corporation owned a fishing boat as its sole asset. Id. RR Fishing Corporation owned the Makaira; Sophia Gale, Inc., owned the Sophia Gale. Id. The value of shares, and of the estate, was co-extensive with the value of the two boats. Id.
On July 30, 2002, McNicol, acting as executrix of the estate, transferred the Estate’s shares in Sophia Gale, Inc., to herself. Docket # 15-8. The shares were worth $80, 000 at the time of the transfer. Ans. to Interrogs. at Response 3. On April 11, 2003, McNicol transferred the estate’s shares in RR Fishing Corp.to herself. Docket # 15-9. The shares were worth $107, 500 at the time of the transfer. The parties stipulate that the Makaira was subject to liens with a value to the estate of $61, 562.37.Third Joint Statement, Docket # 23, at 2. The government agreed to reduce its claim against McNicol by the value of the liens to the estate. Id.
All told, plaintiff seeks a judgment of $342, 538.93 (as of October 31, 2013) against the estate and McNicol as executrix, and a judgment of $125, 937.63 against McNicol personally.
II. Legal Standard
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). I must view the record in the light most favorable to the nonmovant and draw all justifiable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). If the evidence presented would allow a reasonable jury to return a verdict for the nonmovant, summary judgment must be denied. Id. at 248. When the parties cross-move for summary judgment, I apply the same standard to each motion. Atl. Fish Spotters Ass’n v. Evans, 321 F.3d 220, 224 (1st Cir. 2003).
A. Count 1
In Count 1, plaintiff seeks to reduce Reitano’s outstanding liability to judgment against the estate and McNicol as executrix. The Internal Revenue Code provides,
If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all ...