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described as a “personal, loving relation- to foreclose on the house, Matheson
ship” for three decades. The two lived transferred $300,000 to Dombrowski The $300,000
together in Michigan for the latter por- indirectly, through a transfer from one
tion of this relationship, from 2006 until of his business entities and a separate transfer created a
Matheson’s death in 2022. transfer through Dombrowski’s brother. statutory resulting
After the couple moved in together She used this money to purchase an-
in 2006, Dombrowski was either unem- other house in her name in Stillwater, trust in favor of the
IRS under Michigan
ployed or underemployed and for the Mich., for her and Matheson to live in.
most part relied on Matheson for sup- They moved into the Stillwater house law.
port. Matheson made his living carrying in the fall of 2012 after being evicted
on a series of what might charitably from the Goulette house. Matheson and
be described as “questionable” busi- Dombrowski lived at the house until his
ness enterprises. death in 2022, and Dombrowski contin- been determined that state law creates
While Matheson earned consider- ued living there afterward. sufficient interests in a taxpayer that
able income from his business activities, At the time of the $300,000 transfer, owes a federal tax liability to satisfy the
he did not pay tax on all the income Dombrowski (according to the district requirements of a state statute, state law
he earned. This led the IRS to assess court) knew or had reasonable cause is inoperative, and the tax consequences
deficiencies against Matheson for 2001, to know that Matheson owed millions are dictated by federal law. Thus, because
2003, 2004, 2007, and 2010. Matheson of dollars in tax debts and that he was Dombrowski and Matheson lived in
tried to avoid paying the taxes he owed insolvent. Dombrowski claimed that Michigan, the court determined that if
by filing offers in compromise and con- the $300,000 was transferred to her as a the IRS could prove under Michigan
testing his liabilities in Tax Court, but he payment on the over $400,000 Mathe- law that Matheson’s indirect $300,000
had little success convincing either the son owed her for the 2006 loans and the transfer to Dombrowski, which she
IRS or the court that he should not have interest on the original loan. used to buy the Stillwater property, was
to pay the full amount of the deficien- In July 2017, the IRS, looking to a voidable transfer or was a fraudulent
cies. When he finally consented to judg- make good on some of what Matheson conveyance that created a trust in the
ment on the outstanding assessments owed, filed a Notice of Federal Tax Lien IRS’s favor, the IRS had an interest in
against him in 2013, he owed over $3.2 in the name of “Laura Dombrowski as the Stillwater property to which his tax
million in taxes and interest. However, nominee of Ronald Matheson,” purport- debts attached. As a result, it would be
the judgment was not of much immedi- ing to attach to all Dombrowski’s “prop- able to enforce its lien against the prop-
ate use to the IRS, and at the time of erty and rights to property,” including erty to satisfy Matheson’s tax debts.
Matheson’s death, none of that amount specifically the Stillwater property. In The IRS argued four theories under
had been collected. response, Dombrowski brought an ac- which the $300,000 transfer would,
In 2006, Dombrowski transferred tion in district court to quiet title to the under Michigan law, be a voidable trans-
the entirety of her retirement account, Stillwater property and asked the court fer or a fraudulent transfer that created
$171,000, to Matheson, purportedly to hold that the IRS’s lien was invalid. a trust. Under the Michigan Uniform
as a loan. The loan was evidenced by The IRS counterclaimed under Sec. Voidable Transfers Act (MUVTA), the
a promissory note, under the terms of 7403 to enforce the tax lien. IRS asserted the transfer was a voidable
which Matheson was required to pay transfer because Dombrowski was an
back the money with 100% interest in The district court’s decision “insider” of Matheson and the transac-
one year. Later in 2006, Dombrowski The district court held that under tion met the requirements of a voidable
wrote Matheson checks for $50,000 Michigan law, the IRS had a property transfer to an insider, or, alternatively,
and $10,660, which were also purport- interest in the Stillwater property that Matheson did not receive reasonably
edly loans. could be used to satisfy Matheson’s tax equivalent value in exchange for the
In 2006, when Matheson and Dom- debts. Therefore, it could enforce its lien money. It further argued that under
browski moved in together, Matheson against the Stillwater property. Michigan law, the transfer resulted in a
borrowed $1.7 million to purchase a As the court explained, although statutory trust in favor of the IRS or a
home in Goulette, Mich. Although federal law governs federal income tax common law constructive trust.
the mortgage was in Matheson’s name, liabilities, state law determines the prop- Dombrowski argued that Matheson
the couple jointly owned the Goulette erty interests of a taxpayer upon which had received reasonably equivalent value
house. In 2013, with the bank preparing those tax liabilities attach. Once it has for the $300,000 transfer because it was

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