Loving Saviour Church v. United States

United States Court of Appeals for the Eighth Circuit · 1984 · Corporations

728 F.2d 1085 (1984)

Updated August 22, 2026

CorporationsIRS levytax lienproperty rightsfraudulent conveyancealter egochurch propertyunincorporated association

Facts

The IRS seized real estate, vehicles, and bank accounts titled in the name of Loving Saviour Church and the Anderson Business Trust to satisfy the income tax liabilities of Dr. Albert Anderson and Myrtle Anderson. After purchasing trust forms and placing their property in trusts, the Andersons later formed Loving Saviour Church, and Dr. Anderson, after taking a vow of poverty, transferred property from the trusts and business trust to the church for no consideration. Dr. Anderson became pastor and trustee, with his wife, daughter, and sister-in-law as the other trustees. The Andersons continued to live on and use the property as their residence, chiropractic clinic, farmland, automobiles, and support, while church funds and property were used for their personal expenses.

Issue

Whether property titled in the name of Loving Saviour Church and the Anderson Business Trust could be levied upon by the IRS to satisfy the Andersons' federal tax liabilities because the transfers were fraudulent conveyances and the church was the Andersons' alter ego.

Rule

When, under applicable state property law, taxpayers transfer property to an entity they control but retain possession, control, and personal use of the assets, the transfer may be treated as a sham and fraudulent conveyance, and the entity may be treated as the taxpayers' alter ego. In that circumstance, the property is subject to IRS levy to satisfy the taxpayers' federal tax liabilities.

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In Sioux Falls, South Dakota, Daniel Mercer owed substantial federal income taxes. After the assessments were made, he deeded his home, workshop, and pickup truck to New Day Fellowship, an unincorporated religious group he had just organized, for no consideration, but he continued living in the home, operating his carpentry business from the workshop, and using the truck every day.

If the IRS levies on the property titled in New Day Fellowship's name to satisfy Daniel's tax debt, which argument most strongly supports the levy under the governing rule?

Explanation. The majority approved levy where taxpayers transferred property to an entity they controlled, for little or no consideration, yet retained possession, control, and personal use. On those facts, the transfer could be treated as a sham and fraudulent conveyance, allowing levy despite nominal title in the entity. (Derived from Loving Saviour Church v. United States (1984).)