## Facts

- Franklin L. McNulty won approximately $128,410 (50,000 Irish pounds) in the Irish Hospitals Sweepstakes in March 1973.
- To avoid U.S. income tax, he collected the winnings in Ireland and deposited them in a secret bank account on the Island of Jersey.
- McNulty was later convicted of income tax evasion and imprisoned.
- In a separate civil action, the United States obtained a judgment for $67,791 in taxes, penalties, and interest.
- The United States asserted McNulty had no known domestic funds to satisfy the judgment and sought an order compelling him to transfer the Jersey funds to the United States and deposit them with the court.
- The government relied on 26 U.S.C. § 7402(a) as authority for the requested enforcement order.

## Issues

1. Whether 26 U.S.C. § 7402(a), together with general equitable powers, authorizes a federal district court with personal jurisdiction over a tax judgment debtor to order the debtor to repatriate foreign-held assets and deposit them with the court to satisfy a tax judgment.
2. Whether the foreign location of the assets bars an order directed at the debtor to bring the assets within the court’s control.

## Decision

- The court granted the government’s motion.
- The court held that § 7402(a) authorizes broad enforcement measures, including “other orders and processes” necessary or appropriate to enforce internal revenue laws.
- Because the court had personal jurisdiction over McNulty, it could order him to take action concerning property located abroad and enforce compliance through contempt.
- The court found no substantiated conflict with Jersey law sufficient to deny relief.

## Legal Principles

- Under 26 U.S.C. § 7402(a), federal district courts may issue injunctions and other orders necessary or appropriate to enforce internal revenue laws; these remedies supplement other government collection tools.
- A court with personal jurisdiction over a party may order that party to act with respect to assets located outside the court’s territorial jurisdiction.
- The foreign location of assets does not defeat an enforcement order directed at a judgment debtor, absent a concrete showing that compliance would violate foreign law or other compelling countervailing considerations.

## Conclusion

The court enforced a federal tax judgment by ordering the taxpayer, who was subject to the court’s personal jurisdiction, to repatriate funds held in a secret foreign account and deposit them with the court pursuant to the broad remedial authority conferred by 26 U.S.C. § 7402(a) and equitable practice.


United States v. McNulty, 446 F. Supp. 90 (N.D. Cal. 1978)