6
same after demand, the amount . . . shall be a lien in favor of the United States upon all
property and rights to property, whether real or personal, belonging to such person.” 26
U.S.C. § 6321. In United States v. Craft, the Supreme Court considered whether a federal
tax lien provided for in § 6321 could attach to a husband’s entireties interest when only the
husband owed the debt to the IRS. 535 U.S. 274, 276 (2002). The Craft Court found that
“each tenant [in a tenancy by the entirety] possesses individual rights in the estate sufficient
to constitute ‘property’ or ‘rights to property’ for the purposes of [a federal tax] lien.” Id.
In reaching this conclusion, the Supreme Court recognized that while state law may create
the legal “fiction” that each tenant in a tenancy by the entirety has no separate interest in
the property, in substance he has all the “most essential property rights,” even if he does
not possess the right of unilateral alienation.
2
Id. at 276, 279, 282–85. The Supreme Court
noted that statutory language authorizing a tax lien is “broad and reveals on its face that
Congress meant to reach every interest in property that a taxpayer might have.” Id. at 283
(quoting United States v. Nat’l Bank of Com., 472 U.S. 713, 719–20 (1985)). Accordingly,
2
In Craft, the Supreme Court looked to the relevant state law—in that case, the law
of Michigan—to determine the property rights a tenant holds in an entireties property.
Craft, 535 U.S. at 279–82. As in Michigan, tenants by the entirety in North Carolina
possess the most essential property rights, even if they do not possess the right to
unilaterally encumber or alienate the property. See N.C. Gen. Stat. § 41-58(a) (providing
that tenants by the entirety “shall have an equal right to the control, use, possession, and
income from [the] property”); id. § 41-58(b) (providing that “[n]either spouse may bargain,
sell, lease, mortgage, transfer, convey, sign, pay out, or in any manner encumber any
property held by them as tenants by the entirety without the written joinder of the other
spouse”); id. § 41-64(a) (providing a surviving spouse the right to survivorship in a tenancy
by the entirety upon the death of the other spouse). The Craft Court’s reasoning is equally
applicable to a North Carolina tenancy by the entirety.