Liability of the United States for State and Local Taxes on Seized and Forfeited Property (II)

Liability of the United States for State and Local Taxes on Seized and Forfeited Property In c iv il fo rfe itu re p ro c e e d in g s (u n d e r 21 U S C § 8 8 1 ), th e U n ite d S ta te s is o b lig a te d to pay lie n s for s ta le a n d lo cal ta x e s a c c ru in g a fte r the c o m m is s io n o f th e o ffe n se le a d in g to fo rfe itu re an d b e fo re th e e n try o f a ju d ic ia l o rd e r o f fo rfeitu re, if th e lie n -h o ld e r e sta b lis h e s, b e fo re the c o u rt e n te rs the o r d e r o f fo rfe itu re , th a t it is an in n o cen t o w n e r o f the in te re s t it a sse rts In c rim in a l fo rfe itu re p ro c e e d in g s (u n d e r 18 U S C . § 1963 o r 21 U S C . § 8 53), the U n ite d S ta te s m ay n o t p a y s u c h h e n s b e c a u s e state and lo cal tax lie n -h o ld e rs a re not b o n a fide p u rc h a se rs for valu e o f th e in te re s ts th e y w o u ld a sse rt, and th e re fo re d o n o t c o m e w ith in a n y a p p lic ab le e x c e p tio n to a s ta t­ ute th a t, u p o n e n try o f a c o u r t’s final o rd e r o f fo rfe itu re , v e sts full o w n e rsh ip re tro a c tiv e ly in the U n ite d S ta te s as o f th e d a te o f th e offen se. O ctober 18, 1993 M e m o r a n d u m O p in io n f o r t h e D i r e c t o r a n d C h i e f C o u n s e l E x e c u t iv e O f f i c e f o r A s s e t F o r f e i t u r e You have asked us to reconsider our opinion that property seized by and for­ feited to the United States is not subject to state or local taxation for the period between the com m ission of the offense that leads to the order of forfeiture and the entry o f the order o f forfeiture. See Liability o f the United States fo r State and Local Taxes on Seized and Forfeited P roperty, 15 Op. O.L.C. 69 (1991) (“Harrison M em orandum ”). In light of the Supreme C ourt’s decision in United States v. 92 Buena Vista A ve., 507 U.S. 111 (1993), we partially reverse our opin­ ion. B ecause states and localities may not tax federal property (absent express con­ gressional authorization),1 the time at which ownership o f forfeited property passes to the United States and the extent of the ownership interest that passes to the United States determ ine whether state and local taxes are owed. In many property transactions, the time and the extent o f transfer o f ownership are unambiguous and independent issues. In cases of transfers of ownership under the federal forfeiture statutes, however, the answ er to the question of when ownership is transferred has been a m atter o f dispute, and of great consequence for the extent of the interest transferred. T he Harrison M emorandum expresses the Justice D epartm ent’s traditional view that title vests in the United States at the time of the offense. This view is based on 1 See, e g , U n ited S ta te s v C ttx oj D etroit, 355 U S 466, 4 6 9 (1958) ( “ a State cannot constitutionally levy a tax d irectly against the G overnm ent o f the U nited States o r its property w ithout the consent o f C o n ­ gress"), M 'C u llo ch v. M a ryla n d , 17 U S (4 W h eat.) 3 16 (1819). — 104 — Liability o f U.S. fo r State and L ocal Taxes on Seized and F orfeited P roperty an interpretation of the “relation back” doctrine, which provides that a judicial or­ der of forfeiture retroactively vests title to the forfeited property in the United States as of the time of the offense that leads to forfeiture, not as o f the time of the judicial order itself. See 21 U.S.C. § 881 (h) (“[a]ll right, title, and interest in prop­ erty [subject to forfeiture] shall vest in the United States upon commission of the act giving rise to forfeiture . . . .”); 18 U.S.C. § 1963 (c), 21 U.S.C. § 853 (c) (substantially identical to quoted language from 21 U.S.C. § 881 (h)). Under the Departm ent’s traditional interpretation, title in forfeited property vests in the fed­ eral government at the time of the offense. The date o f the judicial order o f for­ feiture is not significant. From the date of the offense, states and other parties are barred from acquiring interests in the property from the owner whose interests are forfeited to the United States. See In re One 1985 Nissan, 889 F.2d 1317 , 1319-20 (4th Cir. 1989); Eggleston v. Colorado, 873 F.2d 242, 245-48 (10th Cir. 1989), cert, denied, 493 U.S. 1070 (1990) (cases decided before Buena Vista and consis­ tent with the Harrison Memorandum). The Harrison M emorandum considers and rejects several possible grounds for limiting the operation of the relation back doctrine and requiring payment of state and local tax liens for the period between the offense and the forfeiture order. The two grounds of principal concern here are the “innocent ow ner” defense in the civil drug forfeiture statute, see 21 U.S.C. § 881 (a)(6)2, and the “bona fide purchaser” defense in the criminal drug forfeiture statute, see 21 U.S.C. § 853 (c), and in the forfeiture provision of the RICO statute, see 18 U.S.C. § 1963 (c). The Harrison Memorandum concludes that these defenses do not protect a state or locality (or anyone else) who innocently acquires a property interest after the time o f the of­ fense. The Supreme C ourt’s decision in Buena Vista forces us to reconsider this conclusion. We conclude that the Harrison M em orandum ’s conclusion concerning the innocent owner defense must be reversed, but that the Harrison M em orandum ’s conclusion regarding the bona fide purchasers defense is correct (although this latter conclusion is less certain than the Harrison M emorandum indicates and we reach it through an analysis different from that set forth in the Harrison M em oran­ dum). I. The civil drug forfeiture statute provides that “no property shall be forfeited . . . , to the extent of the interest of an owner, by reason o f any act or omission es­ tablished by that owner to have been committed or omitted without the knowledge or consent of that owner.” 21 U.S.C. § 881 (a)(6). The Harrison Memorandum ' T he conclusions w ith regard to § 881(a)(6), the innocent o w n er provision im m ediately at issue in B uena Visia and applicable to all “ things o f value" traceable to an exchange for a controlled substance also apply to § 881(a)(7), w hich co n tain s a nearly identical innocent ow ner provision applicable to real properly used in a drug offense See notes 3, 7, injra — 105 — Opinions o f th e Office o f L egal C ounsel accepted that “owner” could include a state or locality holding a tax lien on the property. See H arrison M emorandum, 15 Op. O.L.C. at 72 . The Memorandum concluded, however, that this “innocent ow ner” provision does not apply to as­ serted property interests that arise after the tim e of the offense because, as of the mom ent o f the offense, the property belongs (by operation of the relation back doctrine) to the United States, and not to the person from whom a third party inno­ cently acquires an interest. W e conclude, consistent with the Harrison M emorandum, that a state or locality holding a tax lien can be an “owner” as that term is defined in the civil forfeiture statute’s innocent ow ner provisions. The broad language of the statute — “[a ] ll. . . things o f value” and “ [a]ll real property, including any right, title and interest” — provides no reason to exclude a tax lien-holder from the definition of “owner.” 21 U.S.C. § 881 (a)(6), (7). The legislative history urges a broad reading.3 And the courts have followed, sometimes explicitly, the path suggested by Congress.4 The “innocence” requirem ent o f an innocent ow ner defense would seem to be easy to satisfy in most cases. Like an innocent donee or purchaser, a state or locality holding a tax lien generally has obtained its interest without knowledge of the of­ fense giving rise to the forfeiture. The Harrison M em orandum ’s further conclusion with regard to the innocent owner defense, however, cannot survive the ruling in Buena Vista. The plurality and concurring opinions reject the interpretation of the relation back doctrine set forth in the Harrison M emorandum, and agree that the innocent owner defense is available to persons who acquire interests in forfeitable property after the com m is­ sion o f the offense that rendered the property subject to forfeiture. The opinions differ only as to the reading of the statute that leads to this result. The plurality and the concurrence both analyze the common law doctrine of re­ lation back as transferring ownership of forfeited property retroactively to the date of the offense, but only upon the entry of a judgm ent of forfeiture. Until a court issues such a judgm ent, this retroactive vesting of ownership in the United States does not occur, and all defenses to forfeiture that an owner of the property other­ wise may invoke will remain available. Thus, a person who has acquired an inter­ est in the property may raise any such defense in a forfeiture proceeding. If that 3 S e e Jo in t E xplanatory S tatem en t of Titles II and III o f Pub L No 95-633, 95th C ong , 2d Sess. (1978), r ep rin te d in 1978 U S C C A N 9522 (in § 8 8 1 (a)(6 ), “ [t]he term ‘o w n er' should be broadly interpreted to include any person w ith a recognizable legal o r equitable interest in the property seized ), see also S. Rep. No 98-2 2 5 , at 195, 215 (1984), reprinted in 1984 U .S .C C A N 3182, 3378, 3398 (describing § 881(a)(7) as, in effect, ex te n d in g § 88 1 (a)(6 ) to cover re a l property used in a drug offense but not acquired w ith pro­ ceeds o f p ro h ib ited d rug tran sactio n s) 4 See, e g ., U n ite d S ta tes v. 7 / 7 S. W oodw ard S t , 2 F 3d 529, 535 (3d C ir.1993) (citing legislative h is­ tory); U n ited S ta te s v 6 9 6 0 M ira jlo res Ave , 9 9 5 F.2d 1558 , 1561 (11th C ir 1993) ("L ien holders have the right to assert th eir claim [s] o f innocent o w n ersh ip " u n d er § 881(a), as interpreted in B uena Vi,\ta); U nited Slates v' 6 1 0 9 G ru h b Rd., 886 F 2d 618 , 625 n 4 (3d C ir 1989) (cited in Buena Vista and citing legislative history); see a lso U nited S ta te s i\ 2350 N W 187 S t . 9 9 6 F.2d 1141 , 1144 (11th C ir 1993) (B uena Vista analysis o f § 8 8 1(a) innocent o w n er provisions assum ed to apply where purported innocent ow ner is local tax lien holder). — 106 — Liability o f U S. f o r State a n d Local Taxes on Seized an d F orfeited P roperty person prevails, a judgm ent of forfeiture will not vest (retroactively) ow nership of that property interest in the United States. Buena Vista, 507 U.S. at 125-27 , 12830 (plurality opinion) 131-38 (Scalia, J., concurring). The plurality and the concurrence both conclude that the federal civil forfeiture statute is fully compatible with the common law, and that the statutory innocent owner clause provides a defense for a third party who innocently acquires owner­ ship of the property after the offense and before a judgm ent of forfeiture. The plu­ rality notes that § 881(h), which sets forth the relation back doctrine for the civil forfeiture statute, applies that doctrine only to “property described in subsection (a) o f this section.” Subsection (a)(6) excepts, from its description o f forfeitable prop­ erty, the property of an innocent owner. Therefore, in the plurality’s analysis, sub­ section (a) places the property of an innocent owner beyond the reach of the forfeiture and relation back provisions in subsection (h). See Buena Vista, 507 U.S. at 127-30 . Accordingly, an ownership interest in forfeitable property that is transferred to an innocent person (after the offense giving rise to forfeiture) does not vest in the United States as of the time of the offense. Indeed, it does not vest in the United States at all. Interpreting the civil forfeiture statute as a more straightforward codification of common law doctrine,5 the concurrence reads the phrase, in subsection (h), ‘“ shall vest in the United States upon commission of the act giving rise to forfeiture’” as meaning “ ‘shall vest in the United States upon forfeiture, effective as of com m is­ sion of the act giving rise to forfeiture.’” Buena Vista, 507 U.S. at 134 (Scalia, J., concurring).6 The result, of course, is the same as under the plurality’s analysis: a property interest innocently acquired after the offense is not forfeited to the United States if an owner asserts the interest in a proper and timely way, before the entry o f a forfeiture judgment. In sum, we reverse the Harrison M emorandum’s conclusion that the innocent owner defense, set forth in 21 U.S.C. § 881 (a), does not protect state and local claims for tax liabilities arising between the time of an offense rendering property subject to forfeiture and the issuance of a court order of forfeiture.7 3 The concurrence specifically rejects the p lu rality 's reading o f the phrase, in subsection (h), "property described in subsection (a)" as m eaning, in effect, “property forfeitable under subsection (a) ” T he co n cu r­ rence stresses that subsection (h) refers to '‘property d escrib ed in subsection (a)." not property d eem ed for­ feitable under subsection (a) Since subsection (a) describes property generally and does not declare that property that cannot be forfeited is not ' ’p ro p e rty ,' the “property described in subsection (a)* refers to all relevant property interests, including those o f innocent ow ners Buena Vista, 507 U S. at 133 (S calia, J , concurring) 6 The concurrence "ack n o w le d g e ^ ] that there is som e textual difficulty w ith th[is] interp retatio n ,'1 but argues, first, that the im precision im puted to the quoted language in subsection (h) is to be e xpected “ in a legal culture fam iliar with retroactive forfeiture" and, second, that the civil forfeiture statute as a whole, including subsection (d) and u s adoption o f forfeiture procedures applicable under 19 U.S C. 1602-1631, does not make sense if one rejects the c o n cu rre n ce 's reading o f subsection (h) (and the plurality s reading o f subsections (a) and (h)). B uena Vista, 507 U S at 134 (Scalia, J . concurring). 7 The local tax lien cases decided by low er courts since the Suprem e C ourt s decision in B uena Vista do not alter our conclusion In 2 3 5 0 N .W 187 S t , 996 F 2d 1141 , the court vacated the ju d g m en ts in tw o cases in w hich the district courts had relied on the interpretation o f the relation back doctrine d escrib ed in the — 107 — Opinions o f the Office o f L eg a l C ounsel II. The two federal criminal forfeiture statutes addressed in the Harrison M em o­ randum do not contain an innocent owner defense. Those statutes, however, do provide protection for a “transferee [who] establishes in a hearing [to ‘am end’ an order o f forfeiture] that he is a bona fide purchaser for value of [the] property [subject to criminal forfeiture] who at the time of purchase was reasonably without cause to believe that the property was subject to forfeiture.” 21 U.S.C. § 853 (c); 18 U.S.C. § 1963 (c) (same). The Harrison M emorandum concluded that this statutory “bona fide purchaser” defense is not available to a state or locality as­ serting a lien for tax liability incurred after the offense that made the property sub­ ject to forfeiture. W e conclude, consistent with the apparent assumption of the Harrison M em o­ randum, that such tax liens are “property” or an “interest” in property under the two crim inal forfeiture statutes. Both statutes define property broadly, as including all “real property” and all “tangible and intangible personal property, including rights, privileges, interests, claims and securities.” 21 U.S.C. § 853 (b); 18 U.S.C. § 1963 (b) (same); see also 21 U.S.C. § 853 (c), (n)(6); 18 U.S.C. § 1963 (c), (1)(6) (forfeiture and bona fide purchaser defense provisions referring to “interest” in such property). The legislative history and the courts’ application of this statutory language also suggest a definition o f property interests broad enough to include state and local tax liens on real property.8 H a m so n M em orandum , and had granted sum m ary ju d g m e n t ag ain st a county invoking the innocent ow ner defense in 21 U .S.C . § 8 8 1 (a)(6), (7) to assert liens for properly taxes ow ed for som e o f the p en o d betw een an o ffen se giving rise to forfeiture and the en try o f a ju d g m en t o f forfeiture. The appellate court rem anded the cases for fu rth er co n sideratio n in light o f th e Suprem e C o u rt's d ecision in B uena Vista In U n ite d S ta tes v 7501 S W Virginia St., N o 9 2 -9 2 1 -B E (D O re Aug. 3, 1993), the district court held that a c o u n ty asserting a lien, for taxes accruing after the offense, in a forfeiture proceeding was an innocent ow ner un d er § 8 8 1 (a)(6), but that the relation b ack doctrine had vested the title in the U nited States as o f the date o f the o ffen se and therefore precluded p ay m en t o f the tax lien. T o support this conclusion, the court quoted the p lu ra lity ’s statem en t in Buena Vista that “ [o]ur d ecisio n d enies the G overnm ent no benefits o f the relation b ack d o ctrin e " Slip op. at 6 (quoting 507 U.S at 129). T he court has taken this quotation out of context, in terp retin g it as m eaning, in effect, “ o u r decision denies the G overnm ent no benefits o f the relation back d o c trin e as it had been understood, erro n eo u sly , in the case law that Buena Vista rejects ” T he district court sim p ly m isu n d erstan d s o r ignores the S u p rem e C o u rt's holding. T his m isinterpretation does not ap ­ pear to be w idely shared by courts applying th e Buena Vista analysis o f the relation back d o c tn n e in analo­ gous co n te x ts See, e.g , U nited States v D a cca rett, 6 F 3d 37, at 53-54 (2d C ir 1993); U nited States v 41741 N a t 7 Trails W ay, 989 F.2d 1089, 1091 (9th C ir. 1993); 2350 N .W 187 St., 996 F.2d 1141, 1144 ; U nited State* v. O ne 1990 L in co ln Town Car, 817 F. Supp. 1575, 1579-80 ( N D G a 1993). 8 S e e S. R ep No. 98 -2 2 5 , at 193, reprinted in 1984 U S C .C A N at 3376 (section enacting current 18 U S C § 1963(c) and 21 U .S C § 853(c) “allo w s the use o f crim inal forfeiture as an alternative to civil for­ feiture in all drug felony c ase s’*), id. at 211, rep rin ted in 1984 U .S.C C A N at 3394 (property defined as subject to crim in al fo rfeiture under 18 U S C . § 1963(a) and 21 U S C . § 853(a) is equivalent to property subject to civil fo rfeitu re un d er 21 U S C § 8 8 1 (a)), U nited S ta te s v. Reckm eyer, 836 F.2d 200 , 205 (4th Cir. 1987) (u n secu red cred ito r w ho has reduced h is claim to ju d g m e n t and acquired a lien could seek an am end­ m ent to a fo rfeitu re o rder under 21 U S C § 853(n)); U n ited S ta tes v R obinson, 721 F. Supp. 1541, 1545 (D .R .I. 1989) (a leaseh o ld in terest ordinarily is a real p roperty interest w ithin the definition m 21 U.S C § 8 5 3 (b )), se e also U n ited S ta tes v M onsanto, 491 U S. 600, 6 0 6 -09 (1989) (noting breadth o f forfeitable property u n d e r 21 U S.C . § 853(a)) — 108 — L ia b ility o f U S fo r Slate a n d Local Taxes on Seized and F orfeited P roperty The Harrison Memorandum suggests two arguments — one based on the rela­ tion back doctrine and another based on the definition of bona fide purchaser — to support its conclusion that the bona fide purchaser defense does not extend to holders of property interests that consist o f liens for state and local taxes for the period after the offense and before a judgm ent of forfeiture. A. The Harrison M em orandum ’s central argument concerning the relation back doctrine addresses the bona fide purchaser defense no less than the innocent owner defense. See Harrison Memorandum, 15 Op. O.L.C. at 72. On the interpretation set forth in the Harrison Memorandum, the United States has owned the property since the com m ission of the offense giving rise to the criminal forfeiture, and no one, including a bona fide purchaser, can later acquire any interest from the former owner. Although the question is a closer one than in the civil forfeiture context, we conclude that the Supreme C ourt’s decision in Buena Vista rejects this argum ent as well.9 We recognize that the plurality’s holding is based on a reading o f the civil forfeiture statute (and its innocent owner provisions) and does not address the criminal forfeiture statutes (and their bona fide purchaser provisions). That hold­ ing also does not require the plurality to adopt the interpretation of the common law relation back doctrine that the opinion sets forth. Nonetheless, the plurality’s discussion of the common law doctrine makes clear that it agrees with the concur­ rence that the relation back doctrine vests ownership retroactively in the United States only upon entry of a final judgm ent of forfeiture. Under that reading, if a state or locality establishes that it is a “bona fide purchaser” of an interest in the property by virtue of a tax lien, and does so before a court orders forfeiture, the order of forfeiture will not extend to the lien-holder’s interest and, therefore, will not vest title to that interest in the United States.10 W e also recognize that the concurrence in Buena Vista suggests that the relation back doctrine precludes a bona fide purchaser defense under the criminal statutes where it allows an innocent owner defense under the civil statute. As the concur­ rence points out, the criminal forfeiture statutes establish a procedure by which a person asserting a bona fide purchaser defense raises that defense after the court has entered an order o f forfeiture. See 21 U.S.C. § 853 (n); 18 U.S.C. § 1963 (1). In contrast, the civil forfeiture process (on both the plurality’s and the concurrence’s 9 Cf. U nited S ta tes v H arry, 831 F Supp. 679, 686-87 (E D Iow a) (draw ing on B uena Vista d iscussion of innocent ow ners to resolve bona fide p u rch aser issue under the crim inal forfeiture statute) 10 This conclusion w ould follow rather sim ply from the C o u rt's analysis in Buena Vista w hen the state or locality asserts its bona fide purchaser defense at or before the proceedings in w hich the court issues an order o f forfeiture T he con clu sio n is less certain under the procedure set forth in the crim inal forfeiture statutes, which provides for assertio n o f bona fide purchaser claim s at a hearing held after the court issues an initial order o f forfeiture T he rem ainder o f this subsection addresses this issue — 109 — Opinions o f th e O ffice o f L egal C ounsel reading) contem plates that a person asserting an innocent owner defense will do so before the court enters an order o f forfeiture. As the concurrence sees it, in the former case, the court order already has vested title retroactively in the United States (effective as o f the date o f the offense) before the “transferee” asserts a claim to be a bona fide purchaser. In the latter case, however, the court will not yet have issued the order vesting title retroactively when the “owner” asserts an inno­ cent ow ner claim. (The concurrence argues that the civil statute’s use of the term “ow ner” and the criminal statutes’ use of “transferee” reflects this distinction and suggests its significance.) On this view, if a transferee’s claim to be a bona fide purchaser succeeds and the court am ends the order of forfeiture, the amendment does not void, retroactively, the initial retroactive vesting of title in the United States. The am endm ent to the initial order of forfeiture simply effects a new trans­ fer of title to the bona fide purchaser, leaving undisturbed the United States’ own­ ership from the time o f the offense to the time o f the amendment to the forfeiture order. See Buena Vista, 507 U.S. at 136 (Scalia, J., concurring). The Buena Vista concurrence fails to establish, however, that the criminal for­ feiture statutes’ bona fide purchaser defense does not protect liens for state and local tax liabilities incurred after the offense giving rise to the forfeiture. Only the concurrence advances the argument. The plurality does not join in it, and nothing in the dissenting opinion suggests that the dissenters would adopt the concurrence’s views. Further, the concurrence’s argum ent reads too much into the actual, multi-step procedures by which a court adjudicates a criminal forfeiture claim. It thereby overlooks — or confuses those procedures with — the more fundamental legal (and fictional) process through which a retroactive transfer o f ownership occurs. The better interpretation o f the criminal forfeiture statutes is that the procedures of entering an order of forfeiture, holding a hearing at which transferees assert claims to be bona fide purchasers, and am ending the order of forfeiture upon successful presentation o f such a claim are but phases in a single (if protracted) process for determ ining what property interest vests, retroactively, in the United States when the court enters its final, amended order of forfeiture. The entire process is the equivalent o f the single order of forfeiture in the civil context. This interpretation fits more easily with the statutory language, especially when that language is read in light of the discussion in Buena Vista of common law rela­ tion back doctrine. The criminal forfeiture statutes provide that title in property subject to forfeiture “shall be ordered forfeited to the United States unless the transferee establishes” that he is a bona fide purchaser for value, and that “the United States shall have clear title to [the] property” only “following the court’s disposition o f all petitions” filed by transferees asserting claims to be bona fide purchasers. 21 U.S.C. § 853 (c), (n)(7); 18 U.S.C. § 1963 (c), (1)(7) (emphasis added). Such language would seem to suggest that the United States never obtains title from a bona fide purchaser, not that the U nited States first obtains title and — 110 — L iability o f U S. f o r State an d Local T axes on Seized a n d F orfeited P roperty then must give it back. Only after the entry o f the final, amended order of forfei­ ture would ownership vest retroactively in the United States.11 This conclusion also avoids an incongruity that the concurrence’s interpretation would create: an innocent owner (under the civil statute) would owe state and lo­ cal taxes from the moment he or she acquired the property, but a bona fide pur­ chaser for value (under the criminal statutes) would not owe taxes from the time he or she acquired the property until the time the court amended the order o f forfei­ ture. Finally, the conclusion we reach also is consistent with the statutory distinction between “ow ner” and “transferee.” A person claiming to be a bona fide purchaser is nothing more than a transferee until he or she establishes to the court that he or she is a bona fide purchaser (whether the transferee does so after an initial forfei­ ture order, as the statute contemplates, or at some earlier stage). Only after the transferee has made this showing is he or she recognized as an owner (indeed, an innocent owner) of a particular type. Similarly, a person claiming to be an inno­ cent owner is recognized as an innocent owner only after he or she proves to the court that he or she meets the standards o f innocent ownership. Before that, such a person is, in the eyes of the court, merely a transferee. The civil forfeiture laws simply do not address or refer explicitly to those who assert, but have not yet es­ tablished, that they are innocent owners. For these reasons, we do not believe that the concurrence’s discussion o f the le­ gal significance of the differences between the civil and criminal forfeiture statutes (which, in any case, is unnecessary to its conclusions) is correct. B. The Harrison Memorandum also states that state and local tax authorities cannot “qualify as bona fide purchasers for value” under the criminal forfeiture statutes. Harrison M emorandum, 15 Op. O.L.C. at 72. The Memorandum does not set forth the basis for this conclusion. The Buena Vista plurality and concurrence have nothing to say about this issue and, thus, do not require a reversal o f the Harrison Memorandum. Although the matter is not free from doubt, we believe that the stronger argument is that state and local tax lien-holders are not “bona fide pur­ chasers.” 11 A lthough the statutory language does not fit perfectly w ith the interpretation adopted here, som ew hat im precise drafting concerning the sequence o f events leading to a retroactive vesting o f title is, as the B uena Vista concurrence points out, perhaps to be expected in a legal culture fam iliar with retroactive vesting See Buena Vista, 507 U S al 134. M oreover, the legislative history o f the crim inal forfeiture provisions also seem s to su pport the in te rp reta ­ tion set forth in this M em orandum . It refers to hona fide p u rch aser claim s, raised after the initial forfeiture order, as “ in essence, . . . challenges to the validity o f the o rder o f forfeiture," and, w hen successful, as ■‘render[ing] that portion o f the o rder o f forfeiture reaching [the bo n a fide p u rc h a se r's] interest in v a lid ” S Rep. No. 98-225, at 208, reprinted in 1984 U S C .C .A .N . at 3391 (em phasis added) — 111 — O pinions o f the O ffice o f L egal C ounsel The courts have not adopted a clear and uniform view of how to interpret “bona fide purchaser” under the criminal forfeiture statutes. See, e.g., United States v. Lavin, 942 F.2d 177, 182-89 (3d Cir. 1991) (bona fide purchaser acquires interest through volitional, advertent and, generally, commercial transaction; victim of em­ bezzlem ent acquired interest through unwitting and inadvertent tortious action of another and therefore was not a bona fide purchaser); Reckmeyer, 836 F.2d at 20608 (bona fide purchaser includes a general, unsecured creditor of defendant who gave value to defendant in arms’-length transaction with expectation that he would receive equivalent value in the future, and whose interest must have been in some part o f the forfeited property because debtor’s entire estate had been forfeited); cf. United States v. Campos, 859 F.2d 1233, 1237-38 (6th Cir. 1988) (general, unse­ cured creditor is not a bona fide purchaser, because he does not have a legal inter­ est in the forfeited property); Torres v. $36,256.80 U.S. Currency, 827 F.Supp. 197, 203 (S.D .N .Y . 1993) (similar to Campos', also pointing out significance, for general, unsecured creditor, of unusual circumstance in Reckmeyer that entire es­ tate had been seized); United States v. Mageean, 649 F. Supp. 820, 824, 829 (D. Nev. 1986) (definition of bona fide purchaser cannot be “stretch[ed]” to include tort claim ants, but “there is no reason that a good-faith provider o f goods and services,” although an unsecured creditor, “cannot be a bona fide purchaser”), a ff’d without opinion, 822 F.2d 62 (9th C ir. 1987); see also United States v. 3181 S. W. 138th Place, 778 F. Supp. 1570, 1574-75 (S.D. Fla. 1991) (civil forfeiture case stating that locality is not bona fide purchaser by virtue of tax lien), vacated on other grounds, 996 F.2d 1141 (11th Cir. 1993); S. Rep. No. 98-225, at 201, 209, reprinted in 1984 U.S.C.C.A.N. at 3384, 3392. W e are aw are o f no case that has decided the precise question at issue here. We acknow ledge that some o f the claim s that courts have rejected are weaker than those presented by tax liens, and that at least one court has pointed to a primary purpose o f the crim inal forfeiture statutes’ relation back provisions that would not be served by denying the bona fide purchaser defense to holders o f liens for state and local taxes. See Reckmeyer, 836 F.2d at 208 (“C ongress’s primary concern in adopting the relation-back provision was to make it possible for courts to void sham or fraudulent transfers that w ere aimed at avoiding the consequences of for­ feiture”). N onetheless, we have found no authority that has construed bona fide purchaser broadly enough to encompass such a tax lien-holder. A state or locality does provide something o f value, in the form of government services, in return for the interest it acquires in property (ultimately in the form of a lien) by virtue o f its taxing authority. This exchange, however, does not fit the transactional, arm s’-length exchange of values contemplated in the case law and suggested by the statutory phrase “bona fide purchaser for value.” 12 12 See, e g., L a vtn , 942 F 2d at 185-86 (C o n g re ss deriv ed bona fide purchaser exception '‘from hornbook co m m ercial law ” p rin cip le o f protecting th e ‘“ innocent p u rch aser for valuable c o n sid e ra tio n ’” w hich had d e v elo p ed at co m m o n law “ in order to p ro m o te finality in com m ercial transactions and thus to . . foster — 112 — L ia b ility o f U.S. fo r Stale an d Local Taxes on Seized an d F orfeited Property Therefore, we do not reverse the Harrison Memorandum’s conclusion that the bona fide purchaser provisions cannot be relied upon to require payment of state and local tax liens.13 III. For the reasons set forth above, we reach the following conclusions: In civil forfeiture proceedings (under 21 U.S.C. § 881 ), the United States may — and, in­ deed, must — pay liens for state and local taxes accruing after the commission of the offense leading to forfeiture and before the entry of a judicial order o f forfei­ ture, if the lien-holder establishes, before the court enters the order of forfeiture, that it is an innocent owner of the interest it asserts. In criminal forfeiture pro­ ceedings (under 18 U.S.C. § 1963 or 21 U.S.C. § 853 ), however, the United States may not pay such liens because state and local tax lien-holders are not bona fide purchasers for value of the interests they would assert, and therefore do not come within any applicable exception to a statute that, upon entry of a court’s final order of forfeiture, vests full ownership retroactively in the United States as of the date of the offense. WALTER DELLINGER Assistant Attorney General Office o f Legal Counsel com m erce” ), Reckm ever, 836 F 2 d at 208 (scope o f bona fide p urchaser provision “construed liberally'* is to protect “all persons who give value to the defendant in an arm s’-length transaction w ith the expectation that they w ould receive equivalent value in return” ) The H arrison M em orandum also found that paym ent o f liens for state and local taxes, accruing after the offense, was not w ithin the A ttorney G e n eral’s discretionary authority under 28 U.S C § 524(c)(1)(D ) (“'paym ent o f valid liens . against property that has been forfeited") or 28 U .S.C § 524(c)( 1)(E) (paym ents “in connection w ith rem ission o r m itigation procedures relating to property forfeited” ). W e reach the same conclusion through a different analysis A tax lien-holder who establishes that he or she is an innocent ow ner under the civil forfeiture statute or a bona fide purchaser under the crim inal statutes is protected from the operation o f the relation back doctrine, and need not rely on the A ttorney G e n eral's discretionary pay­ m ent o f a valid hen o r rem ission o r m itigation of a forfeiture that has not occurred w ith respect to the lien­ h o ld e r's interest S ee S. Rep. No. 98-225, at 207-08, 217, rep rin ted in 1984 U.S C C A .N at 3390-91, 3400, Lavin, 942 F 2 d at 185 (bona fide purchaser provisions designed to require protection previously left to discretion o f A ttorney G eneral). If the tax lien-holder fails to establish that he or she is protected by one of these defenses to forfeiture, there can be no “valid lien” for taxes to be paid and no forfeited interest (in the form o f tax liabilities) for the A ttorney G eneral to "rem ift] o r m itigat[e] ” B ecause ow nership of the property will have vested in the U nited States as o f the com m ission o f the offense, state and local authorities cannot (absent a congressional w aiver o f im m unity from stale and local taxation that we do not find in 28 U .S C. § 524 or elsew here) levy taxes on such property after the dale o f the offense any more than they co u ld levy taxes on a federal courthouse o r post office — 113 —