United States v. Stone (In re Stone)

The United States appeals from the Bankruptcy Appellate Panel’s decision affirming the bankruptcy court’s summary judgment order in favor of the State of Alaska (“State”), Fairbanks North Star Borough (“Borough”), Alaska Hotel & Restaurant Employee Trust Funds (“Hotel”), C.R. Ken-nelly (“Kennedy”), and K & L Distributors (“K & L”). This case arises out of a complaint filed by Chapter 11 debtor, Linda Jane Stone, to determine the nature, extent, validity and priority of liens on the proceeds she received from the sale of her liquor license. The bankruptcy court ruled that while a liquor license is property to which a federal tax lien may attach, the prior federal tax lien was subordinate to the claims of creditors who filed objections to the transfer of the liquor license under Alaska Statutes section 04.11.360(4)(A). 121 B.R. 25 .

The United States contends that to the extent that section 04.11.360 grants the state, its municipalities, and third-party creditors priority over a federal tax lien which was perfected prior to the state liens, it is preempted by federal law. In accordance with our holding in United States v. Battley (In re Kimura), 969 F.2d 806, 811-13 (9th Cir.1992),…