United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge.
The government has sued Joseph Rominski for unpaid federal income taxes, interest, and penalties. It seeks to enforce a federal tax lien against property in Lake County, Illinois, which the parties refer to as the Red Pine property. The legal title holder to the property is Lorrine Wallis, Rominski's former wife.
On April 5, 2013, the Court entered an agreed judgment holding Rominski liable for unpaid federal income taxes, interest, and penalties and determining that the overdue amounts constitute liens on all of Rominski's property and rights to property. The judgment reads as follows:
IT IS HEREBY ORDERED AND ADJUDGED that the defendant Joseph R. Rominski, SS No. XXX-XX-0706, is personally liable to the plaintiff, United States, in the amount of $382, 654.77, as of August 31, 2012, for federal income taxes assessed against him. On and after August 31, 2012, interest has accrued and shall accrue on these adjudged liabilities as specified in 26 U.S.C. §§ 6601, 6621-22, 28 U.S.C. § 1961(c), along with all other statutory additions. IT IS FURTHER ORDERED and ADJUDGED that under 26 U.S.C. §§ 6321-22, the amounts due, described above, constitute liens in favor of the United States upon all property and rights to property belonging to Joseph R. Rominski.
See Dkt. no. 46.
Earlier this year, the government moved for partial summary judgment, arguing that a lien arising from the April 2013 judgment has attached to the Red Pine property. The Court denied the motion, see United States v. Rominski, No. 12 C 7643, 2014 WL 2880392 (N.D. Ill. June 25, 2014), and it set the matter for trial.
A bench trial was held on September 23, 2014. Mr. Rominski was the only live witness at the trial. The parties also submitted the depositions of Ms. Wallis and Lawrence Kagan, a revenue officer, as well as a number of exhibits. This decision constitutes the Court's findings of fact and conclusions of law.
The Red Pine property consists of real estate and a single-family home in Gurnee, Illinois. Mr. Rominski has been a practicing attorney at all relevant times. He currently lives at the Red Pine property. Mr. Rominski purchased the property in 1994. He was not married at the time but had three daughters from a previous marriage.
Mr. Rominski and Ms. Wallis married in September 1996. At the time they were married, Ms. Wallis owned a townhouse in Gurnee. She maintained ownership of that home throughout the marriage. But from 1996 through sometime in 2002 or 2003, the couple lived together at the Red Pine property.
In March 1997, Mr. Rominski transferred the Red Pine property to Wallis, in her capacity as trustee of a trust she had established. Pl.'s Ex. 10. No consideration was paid in return for the property, but Mr. Rominski and Ms. Wallis were married at the time, and they were both living at the Red Pine home. The trust was revocable, in whole or in part, by Ms. Wallis during her lifetime. Pl.'s Ex. 9, art. IX. The trust instrument also permitted Ms. Wallis to sell any property belonging to the trust. Id., art. VII.
Mr. Rominski testified during the trial that he had two purposes for transferring the property to Ms. Wallis's trust. One purpose was asset protection, specifically, to "take care of [his] wife" and to shield his assets from possible legal malpractice creditors. At the time, he was not facing any actual or anticipated legal malpractice claims. Another purpose was to facilitate the eventual transfer of the property to his daughters, who at the time were all minors. During her deposition, Ms. Wallis testified that she had a similar understanding of the purposes for the transfer of the Red Pine property. The Court found the testimony of both of them credible in this regard.
Mr. Rominski had a history of filing his federal income tax returns late. His 1993 return was due in October 1994, but he did not file it until November 1995. See Pl.'s Ex. 1. He paid the balance due, including interest and penalties, in late March 1996, about a year before he transferred the Red Pine property to the Wallis trust. Id.
Mr. Rominski's 1994 return was due in April 1995, but he did not file it until June 1996, and he still owed taxes, interest, and penalties. See id. By May 1998, Mr. Rominski had paid the balance due in full. Id.
Based on the evidence, there is no indication that Mr. Rominski filed a tax return for 1995. This is unexplained by the evidence, and thus the Court does not know whether Mr. Rominski earned enough income during 1995 to require him to file a return. There is no ...