Taxation-Federal Tax Liens- First in Time Determines Priority Between State and Federal General Tax Lien

The United States brought an action in a federal district court to foreclose a tax lien against a solvent taxpayer. Vermont held a lien against the same taxpayer for unpaid withholding taxes which antedated the federal lien, and was joined as a defendant. The state lien was authorized by a statute drawn practically verbatim from the federal tax lien statute. Thus both liens dated from a refusal to pay assessed taxes on demand, reached all interests in property of whatever nature, and were enforceable either by distraint or civil action. The state claimed priority as first in time. The United States resisted this claim on the ground that the state lien did not bind specifically identifiable assets, but only the taxpayer’s property in general. On cross-motions for judgment on the pleadings the court ordered Vermont’s lien satisfied first. On appeal, held, affirmed. Specificity of a state tax lien is not essential when competing with a federal tax lien springing from identical statutory language, and therefore priority is governed by the principle that first in time is first in right. United States v. Vermont, 317 F.2d 446 (2d Cir.), cert. granted, 32 U.S.L. WEEK 3209 (Dec. 9, 1963).