Towe Antique Ford Foundation, a Nonprofit Montana Corporation v. Internal Revenue Service Department of Treasury United States of America

Plaintiff-Appellant Towe Antique Ford Foundation (“TAFF”), a nonprofit charitable corporation incorporated under Montana law, appeals from the judgment in favor of the United States in this wrongful levy action brought pursuant to 26 U.S.C. § 7426 .

TAFF contends that reversal is compelled because the district court erred prejudicially in making the following rulings: 1) TAFF was the alter ego of Towe; 2) the alter ego doctrine was applicable although the Government did not offer any evidence to support a finding that Towe used TAFF to perpetrate fraud; 3) TAFF’s attorney, Thomas Towe, could not testify at trial; 4) the levy on the cars without a prior hearing did not violate the Fifth Amendment’s guarantee of due process; 5) denial of TAFF’s request for a jury trial; 6) TAFF was the nominee of Towe; 7) the United States’ fraudulent conveyance defense was not barred by the three year statute of limitations contained in 28 U.S.C. § 2415 (b); 8) Towe’s alleged transfer of the cars to TAFF was a fraudulent conveyance; and 9) the United States could use fraudulent conveyance as a defense at trial even though it did not initially plead it as a defense in its answer to TAFF’s…

dissenting:

Because the evidence does not support a finding that any transfer of the automobile collection from Edward Towe to the Towe Antique Ford Foundation (TAFF) was a fraudulent attempt to evade the payment of federal taxes, I would reverse the district court’s judgment. I would remand for factual findings on whether any transfer occurred and, if a transfer took place, whether the Internal Revenue Service can present sufficient evidence to show that the transfer defrauded the IRS or that TAFF was otherwise used to evade taxes.

I

The IRS began annual audits of Towe in 1960. By 1981, Towe had paid all determined liabilities for preceding tax years. At trial, uneontradicted documentary evidence prepared by TAFF’s financial expert showed that in 1981 Towe had net worth of over $1.9 million, taking into account all taxes for preceding years for which he would ultimately be held liable. TAFF relies upon this evidence on appeal, and the IRS does not challenge its accuracy.

TAFF, a tax-exempt corporation formed by Towe, alleged that by the end of 1981, Towe transferred the automobile collection to TAFF. The district court found it unnecessary to decide whether this transfer had…

999 F.2d 1387 72 A.F.T.R.2d 93 -5495, 93-2 USTC P 50,430 TOWE ANTIQUE FORD FOUNDATION, a Nonprofit Montana Corporation, Plaintiff-Appellant, v. INTERNAL REVENUE SERVICE; Department of Treasury; United States of America, Defendants-Appellees. No. 92-35317. United States Court of Appeals, Ninth Circuit. Argued and Submitted May 6, 1993. Decided July 22, 1993. Gerald Murphy, Moulton, Billingham, Longo & Mather, Billings, MT, for plaintiff-appellant; Thomas E. Towe, Towe, Ball, Enright & Mackey, Billings, MT (appearance only). Frank P. Cihlar, U.S. Dept. of Justice, Tax Div., Washington, DC, for defendants-appellees. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA. Before: SKOPIL, ALARCON and BEEZER, Circuit Judges. ALARCON, Circuit Judge: 1 Plaintiff-Appellant Towe Antique Ford Foundation ("TAFF"), a nonprofit charitable corporation incorporated under Montana law, appeals from the judgment in favor of the United States in this wrongful levy action brought pursuant to 26 U.S.C. § 7426 . 2 TAFF contends that reversal is compelled because the district court erred prejudicially in making the following rulings: 1) TAFF was the alter ego of Towe; 2)…