The United States Court of Appeals for the First Circuit ruled in favor of McMahon & Associates’ client, Robyn Baker, in a tax dispute involving the division of assets in a divorce. The case is United States v. Scott G. Baker, Robyn Baker.
The defendant, Scott G. Baker divorced his wife, Robyn Baker, in 2008 in order to fraudulently transfer assets and avoid some of his tax liability. The defendant owed more than $5 million dollars to the Internal Revenue Service (IRS) as a result of an agreed judgment in 2015. The government argued that its tax liens attached to the defendant’s assets and to some of Ms. Baker’s assets too.
Ms. Baker’s attorney, D. Sean McMahon said, “I am pleased the First Circuit Court of Appeals agreed with us that Ms. Baker is entitled to her equitable share of marital assets. By affirming our trial victory over the IRS on it’s positions of sham divorce and tax lien tracing, the First Circuit has finally put to rest the government’s attempt to seize our client’s assets to pay her ex-husband’s tax debt.“
The district court set aside the Baker’s separation agreement as a fraudulent transfer and re-divided and reallocated the couple’s assets under Massachusetts law. The First Circuit reviewed the district court’s 50/50 allocation of the Baker’s escrowed funds and their home in Hingham, MA and found that:
- The government was not entitled to Ms. Baker’s half of the proceeds from the sale of the Hingham property and affirmed the district court’s ruling that the government had not submitted evidence sufficient to support a lien-tracing theory.
- It is not clear that the district court considered the fourteen factors required by Massachusetts law to arrive at an equitable division of the parties’ assets. Therefore, the division of the escrowed funds is vacated and remanded back to the district court to hear the case again.
Additionally, the First Circuit’s decision noted:
“As will become clear in this opinion, Robyn appears to be implicated in at least some of Scott’s fraudulent activity. However, she was never put on trial, and it appears that the government is not pursuing any claims for fraud against her. As such, nothing in this opinion is meant to suggest that Robyn has been found guilty of fraud.”
Read the full decision: US v Baker CA1 032417
About McMahon & Associates, PC
McMahon & Associates, PC specializes in representing individuals, estates and businesses in connection with federal and state tax matters including audits and examinations, tax litigation and appeals, submissions of offers in compromise, voluntary disclosures to the IRS, innocent spouse claims and more. The firm counsels and represents taxpayers in connection with the foreign bank [and investment] account reporting (FBAR) laws and regulations. Visit mcmahontaxlaw.com for more information.