Dorothy Saligoe Schmit v. United States

Plaintiff-Appellee Dorothy Schmit (“Schmit”) brought an action in the federal district court pursuant to I.R.C. § 7426 to enjoin Defendant-Appellant United States from levying against her home for unpaid taxes and to adjudge the tax lien wrongful and order it released. The taxes are owed by Schmit’s now deceased former husband, Joseph Saligoe (“Saligoe”).

Schmit’s home was purchased entirely with Schmit’s separate property, but title was recorded in the name of Schmit and her husband as joint tenants. In 1980, Schmit and her husband were divorced, and the state divorce court ruled that the home was primarily Sehmit’s separate property and awarded the home to her. On January 24, 1986, the Nevada court entered Amended Findings of Fact, Conclusions of Law, and Decree of Divorce Nunc Pro Tunc and held that the property “was and is the sole and separate property” of Schmit.

On the basis of stipulated facts contained in the proposed joint pretrial order, the federal district court agreed with the state court that the home was always Schmit’s separate property and granted Schmit’s motion for summary judgment 688 F.Supp. 1466 . The United States appeals, arguing that under 28 U.S.C. §…