Reported / Citable
Background
The United States sued to foreclose federal tax liens on approximately 13.984 acres owned by Francisco A. Acosta at 381 Long Run in Liberty Hill, Texas. In an earlier action, the court found Acosta liable for unpaid federal income taxes for 2006 through 2015, initially totaling $1,569,090.22 plus statutory additions and interest. The Government said the unpaid liability had grown to $1,725,251.11.
The Government filed notices of federal tax lien in Williamson County and sought to enforce the liens against the property. Acosta did not appear or respond after service, and the clerk entered default. Williamson County Tax Assessor-Collector Larry Gaddes and Liberty Hill ISD Interim Superintendent Travis Motal answered and stipulated with the Government to the priority of sale proceeds.
The Court’s Holding
Magistrate Judge Dustin M. Howell recommended granting the Government’s motion for default judgment against Acosta. Applying the Fifth Circuit’s default-judgment factors, the magistrate judge concluded that Acosta’s failure to respond left no material facts disputed, prejudiced the Government’s ability to pursue relief, and was not shown to result from mistake or excusable neglect.
The magistrate judge further concluded that the admitted allegations established valid federal tax liens attaching to Acosta’s property and authorized enforcement under 26 U.S.C. § 7403. The recommendation calls for foreclosure and sale of the Long Run Property, with proceeds distributed first to sale expenses, then unpaid Williamson County property taxes, then the United States’ federal tax liens, and finally as otherwise determined by the court. It also recommends statutory interest under the prior tax judgment.
Key Takeaways
- This is a report and recommendation, not a final district-court order.
- A taxpayer’s failure to answer can support default judgment enforcing federal tax liens.
- The recommended sale proceeds prioritize sale costs and local property taxes before federal tax liens.
Why It Matters
The recommendation illustrates the Government’s ability to use judicial foreclosure to collect an unsatisfied federal tax judgment from a taxpayer’s real property. It also highlights the importance of joining local taxing authorities and establishing lien priorities before a foreclosure sale.