United States v. Craft Supreme Court of the United States, 2002. Facts: Sandra Craft (plaintiff) and her husband owned a residence in Grand Rapids, Michigan, as tenants by the entirety. In 1988, the Internal Revenue Service (IRS) attached a federal tax lien to the property in response to Mr. Craft’s nonpayment of his federal income tax. Mr. and Mrs. Craft executed a quitclaim deed transferring Mr. Craft's interest in the residence to Mrs. Craft for one dollar. A few years later, Mrs. Craft attempted to sell the residence, but she discovered that the tax lien still existed. The IRS agreed to release the lien and allow Mrs. Craft to sell the residence, on the condition that one-half of the net proceeds of the sale were to be held in escrow pending a determination of the government's interest in the property. Procedural History: Mrs. Craft brought suit against the United States government (defendant) to quiet title to the sale proceeds being held in escrow. The district court determined that the lien entitled the government to one-half of the proceeds from Mrs. Craft’s sale of the residence, because Mr. Craft's sale of his interest to Mrs. Craft terminated the tenancy by the entirety and caused the tax lien to attach to the property. Mrs. Craft appealed to the United States Court of Appeals for the Sixth Circuit, which determined that under Michigan law, Mr. Craft had no separate interest in the property as a tenant by the entirety, and he thus was unable to encumber the residence with a tax lien. The United States Supreme Court granted certiorari. Issue: Under federal tax law, does an individual with an interest in property as a tenant by the entirety have a property right to unilaterally encumber the property? Holding: Yes. Tax law permits liens to attach to a multitude of property interests, including interests held by tenants by the entirety. Reasoning: At English common law, a husband and wife were treated as one person under the law. Thus, a tenancy by the entirety was not considered a form of concurrent ownership; rather, it was a single property interest owned by the married couple. Most states abolished or altered the concept of tenancies by the entirety after the passage of the Married Women's Property Acts in the late 1800s. Michigan recognizes a modern version of a tenancy by the entirety; under Michigan law, a tenancy by the entirety creates a single property right held by the married couple, but each tenant has the right, among other things, to encumber his property with the other tenant’s consent. United States tax law permits tax liens to be levied on a broad array of property interests, including tenancies by the entirety. To allow tenancies by the entirety to escape tax liens would set a precedent that would encourage tax evasion, as many married couples hold their property through this type of tenancy. In this case, Mr. Craft's interest in the tenancy by the entirety is a property interest that is subject to a federal tax lien. Mr. Craft was therefore able to encumber the residence he held with Mrs. Craft. Accordingly, the judgment of the Sixth Circuit Court of Appeals is reversed, and the matter is remanded.