2246

State and Local Real Property Taxes in Civil and Criminal Forfeiture Cases

BACKGROUND: In light of the Supreme Court's decision in United States v. 92 Buena Vista Ave., 113 S. Ct. 1126 (1993), the Office of Legal Counsel (OLC) was asked to reconsider its July 9, 1991, opinion concerning payment of state and local property taxes in civil forfeiture cases. The Office of Legal Counsel opinion reprinted in this Manual at 2283 represents the Department's official position on the issue. The opinion concluded that the United States must pay state and local taxes on properties civilly forfeited where the taxing authority establishes its innocent owner status prior to the entry of a final order of forfeiture. Given the unique nature of the interest of taxing authorities, Department policy presumed the innocence of taxing authorities in the absence of exceptional circumstances. However, as to state and local taxes on criminally forfeited real property, the Department remained bound by the Office of Legal Counsel's opinion of July 9, 1991. In order to facilitate the resolution of this discrepancy between civil and criminal forfeiture cases regarding the payment of property taxes, on March 19, 1994, by order No. 1860-94, see this Manual at 2286, the Attorney General delegated to the Director, Asset Forfeiture Office, Criminal Division, her discretionary authority with respect to property forfeited under the original forfeiture statutes to " . . . take any other action to protect the rights of innocent persons which is in the interest of justice and which is not inconsistent with the provisions of [the applicable chapter or section]." See 18 U.S.C. § 1467(h)(1) (obscene material); 18 U.S.C. § 1963(g)(1) (RICO); 18 U.S.C § 2253(h)(1) (sexual exploitation of minors); 21 U.S.C. § 853(i)(1)(controlled substances); and, by incorporation of 21 U.S.C § 853(i) by reference, 18 U.S.C § 982(b)(1) (money laundering) and 18 U.S.C. § 793(h)(3) and 794(d)(3) (espionage). Pursuant to this delegated authority, the Acting Director, Asset Forfeiture Office, Criminal Division, now the Chief of the Asset Forfeiture and Money Laundering Section (AFMLS), authorized the payment of state and local taxes on criminally forfeited real property in the same manner and to the same extent as is authorized for the payment of such taxes on civilly forfeited real property. Subsequently, on September 13, 1994, Congress enacted 28 U.S.C. §  524(c)(1)(H), which specifically authorized payment of state and local property taxes on forfeited real property that accrued between the date of the violation giving rise to the forfeiture and the date of the forfeiture order. [cited in USAM 9-114.100]