Whether the interest of an heir in an estate constitutes "property"or a "right[ ] to property" to which the federal tax lien attachesunder 26 U.S.C. 6321 even though the heir thereafter purports retroactivelyto disclaim the interest under state law.




In the Supreme Court of the United States

NO. 98-1101
ROHN F. DRYE, JR., ET AL., PETITIONERS

v.

UNITED STATES OF AMERICA

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES


OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-18a) is reported at 152F.3d 892. The orders of the district court (Pet. App. 19a-24a, 25a-27a)are unreported.

The judgment of the court of appeals was entered on August 17, 1998. Thepetition for a writ of certiorari was filed on November 16, 1998 (a Monday),and was granted on April 19, 1999. The jurisdiction of this Court is invokedunder 28 U.S.C. 1254(1).

STATUTES INVOLVED
1. 26 U.S.C. 6321 provides:
If any person liable to pay any tax neglects or refuses to pay the sameafter demand, the amount (including any interest, additional amount, additionto tax, or assessable penalty, together with any costs that may accrue inaddition thereto) shall be a lien in favor of the United States upon allproperty and rights to property, whether real or personal, belonging tosuch person.

2. 26 U.S.C. 6322 provides:
Unless another date is specifically fixed by law, the lien imposed by section6321 shall arise at the time the assessment is made and shall continue untilthe liability for the amount so assessed (or a judgment against the taxpayerarising out of such liability) is satisfied or becomes unenforceable byreason of lapse of time.

3. 26 U.S.C. 6331(a) provides, in relevant part:
If any person liable to pay any tax neglects or refuses to pay the samewithin 10 days after notice and demand, it shall be lawful for the Secretaryto collect such tax (and such further sum as shall be sufficient to coverthe expenses of the levy) by levy upon all property and rights to property(except such property as is exempt under section 6334) belonging to suchperson or on which there is a lien provided in this chapter for the payment of such tax.

4. 26 U.S.C. 6334 (1994 & Supp. III 1997) provides, in relevant part:
(a) Enumeration
There shall be exempt from levy -
(1) * * * Such items of wearing apparel and such school books as are necessaryfor the taxpayer or for members of his family;
(2) * * * So much of the fuel, provisions, furniture, and personal effectsin the taxpayer's household, and of the arms for personal use, livestock,and poultry of the taxpayer, as does not exceed $6,250 in value;
(3) * * * So many of the books and tools necessary for the trade, business,or profession of the taxpayer as do not exceed in the aggregate $3,125 invalue.
(4) * * * Any amount payable to an individual with respect to his unemployment* * * under an unemployment compensation law * * * .
(5) * * * Mail, addressed to any person, which has not been delivered tothe addressee.
(6) * * * Annuity or pension payments under the Railroad Retirement Act,benefits under the Railroad Unemployment Insurance Act, special pensionpayments received by a person whose name has been entered on the Army, Navy, Air Force, and CoastGuard Medal of Honor roll * * * and annuities based on retired or retainerpay under chapter 73 or title 10 of the United States Code.
(7) * * * Any amount payable to an individual as workmen's compensation* * * under a workmen's compensation law * * * .
(8) * * * If the taxpayer is required by judgment of a court of competentjurisdiction, entered prior to the date of levy, to contribute to the supportof his minor children, so much of his salary, wages, or other income asis necessary to comply with such judgment.
(9) * * * Any amount payable to or received by an individual as wages orsalary for personal services * * * to the extent that the total of suchamounts * * * does not exceed the applicable exempt amount determined undersubsection (d).
(10) * * * Any amount payable to an individual as a service-connected ** * disability benefit * * * .
(11) * * * Any amount payable to an individual as a recipient of publicassistance under [specified federal and state programs].
(12) * * * Any amount payable to a participant under the Job Training PartnershipAct * * * .
(13) * * * Except to the extent provided in subsection (e), the principalresidence of the taxpayer * * * .
* * * * *
(c) Notwithstanding any other law of the United States * * * , no propertyor rights to property shall be exempt from levy other than the propertyspecifically made exempt by subsection (a).

1. Prior to June 1991, the Internal Revenue Service assessed income taxesand various penalties against petitioner Rohn Drye.1 Because petitionerfailed to pay these assessments, the Service filed notices of tax lien upon"all property and rights to property" belonging to him (26 U.S.C.6321). Pet. App. 3a. The federal tax lien arises on all "property andrights to property" of the taxpayer "at the time the assessmentis made" and continues in existence "until the liability for theamount so assessed * * * is satisfied or becomes unenforceable by reasonof lapse of time." 26 U.S.C. 6322.2
In August 1994, petitioner's mother died intestate, leaving an estate witha total value of approximately $233,000 to petitioner as her sole legalheir.3 At the time of his mother's death, petitioner was insolvent and owedthe government approximately $325,000 on the unpaid tax assessments forwhich notices of outstanding liens had been filed. Pet. App. 3a, 22a.
Because he was the "sole surviving heir" (C.A. App. 50), petitionerwas appointed administrator of his mother's estate on August 17, 1994. Seenote 3, supra. In February 1995, however, petitioner executed and filedin the probate court an instrument entitled "Disclaimer and Consent"in which he disclaimed his entire interest in his mother's estate. Pet.App. 3a, 21a. Pursuant to that disclaimer, the estate passed by operationof state law to petitioner's daughter, Theresa Drye. Id. at 21a.4 Petitioner'sdaughter concurrently established a trust (The Drye Family 1995 Trust),the beneficiaries of which were petitioner, his wife, and his daughter.Id. at 3a-4a, 22a. Petitioner resigned as administrator of the estate andhis daughter replaced him. Id. at 3a, 22a. The state probate court thereuponauthorized the distribution of the estate property to petitioner's daughter,who used the property to fund the trust. Id. at 3a-4a.
After petitioner revealed his beneficial interest in this family trust duringnegotiations with the Internal Revenue Service in 1995, the government fileda notice of tax lien against the trust, as Drye's nominee. Pet. App. 4a,21a.5 The Service also levied upon accounts held in the trust's name atan investment company. The account proceeds of $134,004.33 were paid tothe government pursuant to the levy. Id. at 4a, 23a.

2. On May 1, 1996, the trust filed a wrongful levy suit against the UnitedStates in federal district court under 26 U.S.C. 7426. The trustee contendedthat, because of the disclaimer of petitioner's interest in the estate,petitioner never held an interest in that estate to which the federal taxliens could attach. Pet. App. 2a, 4a, 26a. The United States filed a counterclaimagainst petitioner, the trust, the trustee, Sue Drye (petitioner's wife),and Theresa Drye (petitioner's daughter), seeking to reduce the assessmentsagainst petitioner to judgment and to foreclose on its tax liens (C.A. App.6-7, 64, 67-71).
The district court granted the government's motion for summary judgment.Pet. App. 19a-24a. The court concluded that petitioner "obtained avested interest in the estate property of his mother upon her death to whichthe federal tax liens properly attached so that the state disclaimer lawthat was later invoked was incapable of removing those federal liens."Id. at 23a. In response to the trustee's motion for reconsideration, thecourt emphasized that federal law determines the proper application of federaltax liens and that "a state disclaimer law that is later invoked afterthe liens properly attached cannot remove those federal liens." Id.at 26a.

3. The court of appeals affirmed. Pet. App. 1a-18a. The court explainedthat, under the federal tax lien statute, the court is to look to statelaw to determine "whether a given set of circumstances creates a rightor interest" (id. at 12a) and then look to federal law to determinewhether that right or interest constitutes "property" or "rightsto property" (26 U.S.C. 6321) to which the federal tax lien attaches(Pet. App. 12a-13a, citing United States v. National Bank of Commerce, 472U.S. 713, 727 (1985)). See also Pet. App. 6a-8a.6 The court held that aninterest in property under state law constitutes "property" or"rights to property" under federal law (to which the federal taxlien attaches under 26 U.S.C. 6321) if the interest is transferable andhas pecuniary value (Pet. App. 7a, 14a).
The court of appeals concluded that petitioner's right to inherit the propertyof his mother's estate satisfied this standard because that right was transferableand had pecuniary value (Pet. App. 8a, 14a). Petitioner's interest thusrepresented "property" or "rights to property" for purposesof the federal tax lien statute, and the tax liens filed against petitionerattached to his interest in his mother's estate. Id. at 13a.
The court explained that petitioner's subsequent disclaimer of his interestunder state law could not extinguish the federal liens that previously attachedto that interest. The fact that, for purposes of state law, the disclaimeris treated as if it relates back to the date of the decedent's death doesnot mean that, at the time the lien attached, petitioner held no "property"or "rights to property" in the estate. Because the federal liensvalidly attached to that property before the disclaimer was made, petitioner'ssubsequent efforts to dispose of his interest could not defeat the federallien. Title to the property transferred to the trust remained subject tothe preexisting federal tax lien, and the levy on the assets held in thename of the trust to satisfy petitioner's debt was therefore not wrongful.Pet. App. 4a-5a, 17a-18a.
The court of appeals noted that 26 U.S.C. 6334 manifests a specific intentthat the federal tax lien apply even to interests in "property"and "rights to property" that are validly disclaimed under statelaw. That statute establishes a comprehensive list of property intereststhat are exempt from the federal tax levy, and "[p]roperty or rightsto property disclaimed under state law are not included in the list of exemptproperty" (Pet. App. 16a). Since 26 U.S.C. 6334(c) expressly providesthat "no property or rights to property shall be exempt from levy otherthan the property specifically made exempt by [26 U.S.C. 6334(a)],"the fact that Congress did not "exclude property exempt from levy understate law" in the list of interests that are exempt from levy underfederal law "is indicative of its intention that such property be subjectto federal levy" (Pet. App. 16a).

1. Under Section 6321 of the Internal Revenue Code, the United States hasa lien "upon all property and rights to property" of a delinquenttaxpayer. 26 U.S.C. 6321. That lien reaches "every interest in propertythat a taxpayer might have" (United States v. National Bank of Commerce,472 U.S. 713, 720 (1985)) and therefore attached to the rights that petitioneracquired in his mother's estate.
Whether an interest that arises under state law constitutes "property"or "rights to property" for purposes of the federal tax lien isdetermined solely as "a matter of federal law." United Statesv. National Bank of Commerce, 472 U.S. at 727. Under the applicable federalstandard, the interest of an heir in an estate constitutes "property"or "rights to property" because that interest is "protectedby law," is transferable and has "an exchangeable value."See Jewett v. Commissioner, 455 U.S. 305, 309 (1982). Indeed, it is wellsettled that such a "right to receive property is itself a propertyright" to which the federal tax lien attaches. United States v. NationalBank of Commerce, 472 U.S. at 725.

2. Once the federal tax lien attached to petitioner's interest in the estate,the lien could not be divested by "an indirect transfer [of that interest]effected by means of a disclaimer" (Jewett v. Commissioner, 455 U.S.at 310). The federal tax lien "cannot be extinguished * * * simplyby a transfer or conveyance of the interest" (United States v. Rodgers,461 U.S. 677, 691 n.16 (1983)), for property subject to a federal tax lienpasses "cum onere." United States v. Bess, 357 U.S. 51, 57 (1958)(quoting Burton v. Smith, 38 U.S. (13 Pet.) 462, 483 (1839)). The state-law"legal fiction" under which the disclaimer has "the effectof canceling the transfer to the disclaimant ab initio" does not destroythe federal tax lien, for federal taxation looks to the realities of thetaxpayer's rights and is not "struck blind by a disclaimer." UnitedStates v. Irvine, 511 U.S. 224, 239-240 (1994). A state-law right "torenounce or repudiate must not be misconstrued as an indication" thatthe taxpayer, in fact, "never owned" the property. United Statesv. Mitchell, 403 U.S. 190, 204 (1971). The "retroactive * * * legalfiction * * * cannot change the 'readily realizable economic value' * ** which the[] taxpayer[] enjoyed" prior to the disclaimer. Healy v.Commissioner, 345 U.S. 278, 283 (1953). Once the federal lien attached tothe taxpayer's "right to receive [the] property" of the estate,state law was "inoperative" to destroy the lien. United Statesv. National Bank of Commerce, 472 U.S. at 722, 725. "[I]t is of thevery nature and essence of [the federal tax lien] that no matter into whosehands the property goes, it passes cum onere." United States v. Bess,357 U.S. at 57.

THE INTEREST OF AN HEIR IN AN ESTATE CONSTITUTES "PROPERTY" ORA "RIGHT[ ] TO PROPERTY" TO WHICH THE FEDERAL TAX LIEN ATTACHESUNDER 26 U.S.C. 6321 EVEN THOUGH THE HEIR THEREAFTER PURPORTS RETROACTIVELYTO DISCLAIM THE INTEREST UNDER STATE LAW

A. Federal Law Determines Whether A Right Or Interest Created Under StateLaw Constitutes "Property" Or "Rights To Property" ToWhich A Federal Tax Lien Attaches Under 26 U.S.C. 6321

Section 6321 of the Internal Revenue Code provides that, "[i]f anyperson liable to pay any tax neglects or refuses to pay the same after demand,the amount * * * shall be a lien in favor of the United States upon allproperty and rights to property, whether real or personal, belonging tosuch person." 26 U.S.C. 6321 (emphasis added). "[T]he purposeof the federal tax lien [is] to insure prompt and certain collection oftaxes due the United States from tax delinquents." United States v.Security Trust & Sav. Bank, 340 U.S. 47, 51 (1950). To achieve thatgoal, Congress employed the broadest terminology "to reach every interestin property that a taxpayer might have." United States v. NationalBank of Commerce, 472 U.S. 713, 720 (1985). "Stronger language couldhardly have been selected to reveal a purpose to assure the collection oftaxes." Glass City Bank v. United States, 326 U.S. 265, 267 (1945).In explaining the sweeping breadth of the statutory language, the Courthas stated: "While one might not be enthusiastic about paying taxes,it is still true that 'taxes are the life-blood of government, and theirprompt and certain availability an imperious need.'" United Statesv. National Bank of Commerce, 472 U.S. at 733 (quoting Bull v. United States,295 U.S. 247, 259 (1935)).
"The threshold question in this case, as in all cases where the FederalGovernment asserts its tax lien, is whether and to what extent the taxpayerhad 'property' or 'rights to property' to which the [federal] tax lien couldattach." Aquilino v. United States, 363 U.S. 509, 512 (1960). In addressingthat threshold issue, this Court has made clear that "[t]he questionwhether a state-law right constitutes 'property' or 'rights to property'is a matter of federal law." United States v. National Bank of Commerce,472 U.S. at 727. Although "state law controls in determining the natureof the legal interest which the taxpayer had in the property," whetherthat interest is sufficient to constitute "property" or "rightsto property" under Section 6321 is determined solely as a matter offederal law and "state law is inoperative" for this purpose. Id.at 722 (quoting United States v. Bess, 357 U.S. 51, 57 (1958)). See alsoUnited States v. Rodgers, 461 U.S. 677, 683 (1983); Bank One Ohio TrustCo. v. United States, 80 F.3d 173, 175-176 (6th Cir. 1996).
For example, in United States v. National Bank of Commerce, 472 U.S. at727, the Court held that the right of a co-depositor to withdraw funds froma joint bank account was an interest in "property" or a "right[] to property" to which the federal tax lien attached even though,under state law, a creditor could not seize and exercise the co-depositor'sright of withdrawal. Noting that the federal tax lien statute "relatesto the taxpayer's rights to property and not to his creditor's rights,"the Court held that it was improper to "remit[] the IRS to the rightsonly an ordinary creditor would have under state law," for that improperly"compare[s] the government to a class of creditors to which it is superior."Ibid. (quoting Randall v. H. Nakashima & Co., 542 F.2d 270, 274 n.8(5th Cir. 1976)). "[O]nce it has been determined that state law hascreated property interests sufficient for [the] federal tax lien to attach,state law 'is inoperative to prevent the attachment' of such liens."United States v. Rodgers, 461 U.S. 677, 683 (1983) (quoting United Statesv. Bess, 357 U.S. at 57).
Thus, while it is "state law [that] creates legal interests,"it is "the federal statute [that] determines when and how they shallbe taxed." United States v. Mitchell, 403 U.S. 190, 197 (1971) (quotingBurnet v. Harmel, 287 U.S. 103, 110 (1932)). If "federal law [were]not determinative of the [classification] of the state-created interest,states could defeat the federal tax lien by declaring an interest not tobe property, even though the beneficial incidents of property belie itsclassification." In re Kimura, 969 F.2d 806, 810 (9th Cir. 1992). See,e.g., Bank One Ohio Trust Co. v. United States, 80 F.3d at 176 ("Federallaw did not create [the taxpayer's] equitable income interest [in a spendthrifttrust] but federal law must be applied in determining whether the interestconstitutes 'property' for purposes of § 6321"); 21 West LancasterCorp. v. Main Line Restaurant, Inc., 790 F.2d 354, 357-358 (3d Cir. 1986)(although a liquor license did not constitute "property" and couldnot be reached by creditors under state law, it was nevertheless "property"subject to federal tax lien); W. Plumb, Jr., Federal Tax Liens 27 (3d ed.1972) ("it is not material that the economic benefit to which the [taxpayer'slocal-law property] right pertains is not characterized as 'property' bylocal law").7

B. The Interest Of An Heir In A Decedent's Estate Constitutes "Property"Or "Rights To Property" To Which The Federal Tax Lien AttachesUnder 26 U.S.C. 6321

1. The terms "property" and "rights to property" asused in Section 6321 are not defined in the statute. In ordinary usage,the term "property" is a flexible concept with a meaning thatvaries with context, and "[n]o decision of this court has announceda rule that will embrace every case." Scranton v. Wheeler, 179 U.S.141, 152 (1900) (Takings Clause).8 In enacting Section 6321, however, itis evident that Congress employed the broadest possible language "toreach every interest in property that a taxpayer might have." UnitedStates v. National Bank of Commerce, 472 U.S. at 720. When Congress usesthe term "property" in this broad sense, it "reach[es] everyspecies of right or interest protected by law and having an exchangeablevalue." Jewett v. Commissioner, 455 U.S. 305, 309 (1982) (quoting S.Rep. No. 665, 72d Cong., 1st Sess. Pt. 1, at 39 (1932); H.R. Rep. No. 708,72d Cong., 1st Sess. 27 (1932)).
In general use, the term "propery" is "commonly used to denoteeverything which is the subject of ownership, corporeal or incorporeal,tangible or intangible, visible or invisible, real or personal; everythingthat has an exchangeable value or which goes to make up wealth or estate.It extends to every species of valuable right and interest * * * ."Black's Law Dictionary 1382 (rev. 4th ed. 1968). An interest in "property"thus encompasses (i) any "right" that represents "a legallyenforceable claim of one person against another," (ii) any "privilege"that constitutes "a legal freedom on the part of one person * * * todo a given act," and (iii) any "power" that "is an abilityon the part of a person to produce a change in a given legal relation bydoing or not doing a given act." Restatement of Property §§1-3 (1936).9
Applying these basic principles under Section 6321, courts have routinelyheld that any right or interest that has "pecuniary value and is transferable"constitutes "property" or "rights to property" for purposesof the tax lien statute. See United States v. Stonehill, 83 F.3d 1156, 1159-1160(9th Cir.) (chose-in-action is subject to federal tax lien), cert. denied,519 U.S. 992 (1996); In re Kimura, 969 F.2d at 810-811 (liquor license issubject to federal tax lien); In re Terwilliger's Catering Plus, Inc., 911F.2d 1168, 1171-1172 (6th Cir. 1990) (same), cert. denied, 501 U.S. 1212(1991); 21 West Lancaster Corp. v. Main Line Restaurant, Inc., 790 F.2d354, 357-358 (3d Cir. 1986) (same); Little v. United States, 704 F.2d 1100,1104-1106 (9th Cir. 1983) (state-law right of redemption is subject to federaltax lien because it "represents an economic asset in the sense thatit has pecuniary value and is transferable").

2. a. Under these standards, the court of appeals correctly concluded (Pet.App. 8a) that the rights that petitioner acquired in his mother's estateat the time of her death constituted "property" or "rightsto property" to which the federal tax lien attaches. As petitioneracknowledges, at the time of his mother's death, he was "the partyentitled to inherit the estate" (C.A. App. 87). He thus acquired a"right" to receive the entire value of the estate (less its administrativeexpenses) and a "power" to compel the transfer of that propertyto him. See Restatement of Property, supra, §§ 1-3; Pet. App.8a. Those property interests were protected by law and plainly had a substantialpecuniary value. Id. at 3a, 8a.10
It is well established that a "right to receive property is itselfa property right" to which the federal tax lien attaches. United Statesv. National Bank of Commerce, 472 U.S. at 725 (quoting St. Louis Union TrustCo. v. United States, 617 F.2d 1293, 1302 (8th Cir. 1980)). Because thefederal tax lien attaches to "whatever rights the taxpayer himselfpossesses" (ibid.), the lien attached to petitioner's valuable rightto receive his mother's estate as her sole legal heir.

b. The broad concept of "property" that Congress has employedin the Internal Revenue Code requires only that the "property"or "right[ ] to property" be an enforceable interest that haspecuniary value. See Jewett v. Commissioner, 455 U.S. at 309; page 16, supra.It is not necessary to that broad concept for such an interest also to befreely transferable. Indeed, many types of recognized "property"interests are not transferable. For example, an interest in a spendthrifttrust is commonly understood to constitute a "property" interesteven though the beneficiary may not transfer that interest to third parties.See, e.g., Bank One Ohio Trust Co. v. United States, 80 F.3d at 176. Asthe court explained in the Bank One case (ibid.):
[W]hen Congress says, as it has done in § 6321, that an unpaid tax"shall" constitute a lien upon "all" of a delinquenttaxpayer's property or rights to property, it follows that the tax is alien both on property that is alienable under state law and on propertythat is not.
It is, in any event, unnecessary for the Court to address in the presentcase whether transferability is a necessary component of the concept of"property" or "rights to property" under Section 6321.This is because, as the court of appeals correctly held (Pet. App. 8a),petitioner's valuable right to receive the property of the estate plainlyis transferable under Arkansas law. A prospective heir may validly assignhis expectancy in an estate under Arkansas law, and the assignment willbe enforced when the expectancy ripens into a present estate. Clark v. Rutherford,298 S.W.2d 327, 329 (Ark. 1957); Bradley Lumber Co. v. Burbridge, 210 S.W.2d284, 288 (Ark. 1948). Arkansas law provides staunch protection for suchan assignment from an unreliable heir by providing that the heir's rightto disclaim an estate is barred not only by acceptance of the property butalso by any "assignment, conveyance, encumbrance, pledge, or transferof the property or interest." Ark. Code Ann. § 28-2-102 (Michie1987).11

c. When petitioner's mother died, leaving him as her sole legal heir, petitionerthus acquired an enforceable legal right that was valuable and transferable.That right constituted an interest in "property" and a "right[]to property" to which the federal tax lien attached. At the momentthat the right arose, the United States "step[ped] into the taxpayer'sshoes" and "acquire[d] whatever rights the taxpayer himself possesse[d]."United States v. National Bank of Commerce, 472 U.S. at 725 (quoting UnitedStates v. Rodgers, 461 U.S. at 691 n.16 (quoting 4 B. Bittker, Federal Taxationof Income, Estates and Gifts ¶ 111.5.4, at 111-102 (1981))). See alsoM. Saltzman, IRS Practice and Procedure ¶ 14.07[1], at 14-35 (2d ed.1991).

C. The Federal Tax Lien That Attached To Petitioner's Rights To PropertyWas Not Retroactively Divested By A Disclaimer Of Those Rights Under StateLaw

After the federal tax lien attached to petitioner's "property"and "rights to property," he disclaimed his right to the estateand thereby transferred that right to his daughter. She thereafter receivedand transferred the underlying property to the family trust, in which petitionerpossesses a life estate (Pet. App. 17a). The court of appeals correctlyconcluded that petitioner's disclaimer did not defeat the previously-attachedfederal tax lien, for "once a lien has attached to an interest in property,the lien cannot be extinguished * * * simply by a transfer or conveyanceof the interest." United States v. Rodgers, 461 U.S. at 691 n.16.

1. Petitioner errs in contending that, because of his valid state-law disclaimer,he never acquired any interest in his mother's estate. He argues that, onher death, he acquired "nothing more than a personal right of decisionas to whether to accept or reject the gift of inheritance offered"(Pet. Br. 13). He contends that such a "personal right of decision"is not "property" or a "right[ ] to property" to whichthe federal tax lien attached under Section 6321 because it "had nopecuniary value and was not transferable" (ibid.).
It is well established, however, that the "right to receive propertyis itself a property right" to which the federal tax lien attaches.United States v. National Bank of Commerce, 472 U.S. at 725. In particular,the power that petitioner held to compel the delivery of that valuable propertyto himself or to transfer that property to another plainly constitutes a"right[ ] to property" within the broad scope of Section 6321.12As the court of appeals correctly held, "[u]nder Arkansas law the rightto inherit has pecuniary value * * * and is transferable" and therefore"is property or a right to property" to which the federal taxlien attached (Pet. App. 8a, 17a). See page 19, supra.
The manifest flaw in petitioner's reasoning is that it incorrectly assumesthat the characterization of the interest for purposes of state law controlsin determining whether the interest constitutes "property" ora "right[ ] to property" under Section 6321. The Fifth Circuitmade that same error in Leggett v. United States, 120 F.3d 592 (1997), inholding that the federal tax lien did not attach to the interest of thetaxpayer in his aunt's estate because the "right of decision"whether to accept the estate "was not, itself, a property right underTexas law." Id. at 596 (emphasis added). In reaching that conclusion,the Fifth Circuit relied on the holding of a Texas appellate court thatthe state-law "'relation back' doctrine is based on the principle thata bequest or gift is nothing more than an offer which can be accepted orrejected." Id. at 595.13
Even if that narrow characterization of the nature of the state-law interestwere correct (which it is not, see notes 10 & 12, supra), an "offerwhich can be accepted or rejected" is nonetheless itself an interestin "property" or a "right[ ] to property" for purposesof Section 6321. It is a "species of right or interest protected bylaw and having an exchangeable value." Jewett v. Commissioner, 455U.S. at 309; pages 16, 18, supra. Whether the state courts would describesuch a valuable, transferable interest as a "property" interestfor purposes of state law is not determinative in applying the federal taxlien. Although state law determines "the nature of the legal interestwhich the taxpayer had," whether that interest is sufficient to constitute"property" or "rights to property" under Section 6321is determined solely as a matter of federal law and "state law is inoperative"for this purpose. United States v. National Bank of Commerce, 472 U.S. at727; page 13, supra.14
Petitioner errs in relying (Pet. Br. 9) on the fact that, at common law,a "gift" creates no enforceable right until it is accepted anddelivered. See Marshall v. Dossett, 20 S.W. 810, 811 (Ark. 1892) ("Thepromise to make a gift of chattels * * * confers no title or right of possessionto the property promised, and affords no ground for a remedy against thepromisor, by replevin or otherwise."); 38A C.J.S. Gifts § 16 (1996).Unlike an incomplete gift, the prospective interest of an heir in an estateis an enforceable and transferable right that vests immediately upon thedeath of the decedent and remains in existence until it is fulfilled (bythe receipt of the property of the estate) or is transferred by assignmentor by an "indirect transfer, effected by means of a disclaimer"(Jewett v. Commissioner, 455 U.S. at 310). Because this legally protectedinterest in the decedent's estate is valuable and transferable, it constitutesa "right[ ] to property" to which the federal tax lien attachesunder Section 6321.

2. a. Petitioner incorrectly asserts that the federal tax lien is retroactivelydestroyed by the legal fiction under state law that a disclaimer "relatesback for all purposes to the date of death of the decedent" (Pet. Br.12 (quoting Ark. Code Ann. § 28-2-108 (Michie 1987))). A state-law"legal fiction" of a retroactive renunciation of an interest inproperty "does not bind the federal collector" (United Statesv. Mitchell, 403 U.S. at 204). Instead, as this Court stated in United Statesv. Irvine, 511 U.S. at 239, "[c]ases like * * * this one illustrate* * * why it is that state property transfer rules do not translate intofederal taxation rules." In Irvine, after a gift had been fully executedby delivery of the property in trust, the taxpayer had disclaimed her beneficialinterest under the provisions of state law. Under "state property rules,"the taxpayer's subsequent disclaimer was treated as "having the effectof canceling the transfer to the disclaimant ab initio." Ibid. ThisCourt held, however, that the relation back of the disclaimer under statelaw did not mean that, for purposes of federal law, the taxpayer never helda "property" interest in the assets of the trust. Ibid. Federallaw is not "struck blind" by the State's "legal fiction"of a retroactive disclaimer. Id. at 240. Instead, for purposes of federallaw, the state-law disclaimer simply operates as an "indirect transfer"of the "property" to others. Id. at 233. Accord, Jewett v. Commissioner,455 U.S. at 310.
The Court has consistently held that the federal tax lien "cannot beextinguished * * * simply by a transfer or conveyance of the interest."United States v. Rodgers, 461 U.S. at 691 n.16. Any such transfer of "property"or "rights to property" made (as in this case) after the tax lienhas attached cannot undermine the effectiveness of the lien, for propertysubject to a federal tax lien passes "cum onere." United Statesv. Bess, 357 U.S. at 57. See also Phelps v. United States, 421 U.S. 330,334-335 (1975); Beaty v. United States, 937 F.2d 288, 290-292 (6th Cir.1991).
"Once it has been determined that state law creates sufficient interests"for "property" or "rights to property" to exist, statelaw becomes "inoperative, and the tax consequences thenceforth aredictated by federal law." United States v. National Bank of Commerce,472 U.S. at 722 (quoting United States v. Bess, 357 U.S. at 56-57) (internalbrackets and quotation marks omitted). The "legal fictions" adoptedunder state law and, in particular, the state-law "doctrine of relationback" may not be applied "to destroy the realities of the situation"(United States v. Security Trust & Sav. Bank, 340 U.S. 47, 50 (1950))."Congress had not meant to incorporate state-law fictions as touchstonesof taxability"; instead, federal taxation looks to the realities ofthe taxpayer's rights. United States v. Irvine, 511 U.S. at 240.15 As thisCourt held in United States v. Mitchell, 403 U.S. 190 (1971), a state-lawright "to renounce or repudiate must not be misconstrued as an indication"that the taxpayer, in fact, "never owned" the property. Id. at204.16
The courts below thus correctly concluded that "a state disclaimerlaw that is later invoked after the liens properly attached cannot removethose federal liens" (Pet. App. 26a; see id. at 17a). It is immaterialthat the "legal fiction" under the state-law doctrine of relation-backprecludes any recovery for private creditors against the property. The federaltax lien "relates to the taxpayer's rights to property and not to hiscreditor's rights." United States v. National Bank of Commerce, 472U.S. at 727. The "retroactive * * * legal fiction * * * cannot changethe 'readily realizable economic value' * * * which the[] taxpayer[] enjoyed"prior to the disclaimer. Healy v. Commissioner, 345 U.S. 278, 283 (1953).17As a "matter of federal law" (United States v. National Bank ofCommerce, 472 U.S. at 727), the federal tax lien attached to petitioner'sinterest in that "realizable economic value" at the time it arose.Petitioner's subsequent renunciation and transfer of that interest to hisdaughter cannot destroy either "the realities of the situation"or the federal tax lien (United States v. Security Trust & Sav. Bank,340 U.S. at 50). As the Second Circuit held in United States v. Comparato,22 F.3d 455, 457 (1993), cert. denied, 513 U.S. 986 (1994), "once thefederal liens attached [to the property right, the taxpayers'] subsequentrenunciations pursuant to state law were not effective against the federalliens."18 "[T]he priority of the tax lien is governed by federallaw, and federal law makes no provision for a subordination by use of alegal fiction." Rodriguez v. Escambron Dev. Corp., 740 F.2d 92, 98(1st Cir. 1984).19

b. The conclusion that a state-law disclaimer cannot retroactively destroyan existing tax lien is reinforced by the provisions of Section 6334 ofthe Code. That Section establishes a comprehensive list of property intereststhat are exempt from the federal tax levy (26 U.S.C. 6334(a)), and thenspecifies that "no property or rights to property shall be exempt fromlevy other than the property made exempt" in that statute (26 U.S.C.6334(c)). As the court of appeals correctly concluded in this case, thefact that "property or rights to property disclaimed under state law"are not included in the list of interests exempt from levy under this statuteindicates "that such property [is] subject to federal levy" (Pet.App. 16a). Accord, United States v. Comparato, 22 F.3d at 458:
[O]nce state law provided [the taxpayers] with a vested interest * * * ,federal law controlled whether their interests were exempt from levy bythe United States. * * * Since § 6334(a) does not provide an exemptionfor [the taxpayers'] interests in their son's estate, the federal tax liensare effective against their interests despite their subsequent renunciationspursuant to [state law].
In United States v. Mitchell, 403 U.S. at 204, this Court explained thata state-law renunciation of a property interest that is effective retroactivelyto make that interest exempt from creditors under state law "does notbind the federal collector." Instead, "[f]ederal law governs whatis exempt from federal levy." Ibid. The Court held in Mitchell thatthe text of Section 6334 "is specific and * * * clear and there isno room in it for automatic exemption of property that happens to be exemptfrom state levy under state law." Id. at 205. To the contrary, "[t]hefact that * * * Congress provided specific exemptions from distraint isevidence that Congress did not intend to recognize further exemptions whichwould prevent attachment of liens under [Section 6321]." United Statesv. Bess, 357 U.S. at 57. Accord, United States v. Rodgers, 461 U.S. at 701(it would "frustrate the policy of the statute [to] read[] such anexception into it").