In its 1996 decision of Zuroff v. First Wisconsin Trust Company, 41 Mass. App.Ct. 491, 671 N.E. 2d 982, the appeals court held that federal tax liens against the beneficiaries of a nominee trust do not attach to the title held by the nominee trust. The case derived from an action by high bidders at a foreclosure auction to recover their deposit and their refusal to complete the purchase of the property, after they had discovered two federal tax liens filed against all property owned by Steven and Pamela DiSarro. The title to the property was held by a nominee trust at the time of the foreclosure sale, where Pamela DiSarro was the trustee as well as a 51% beneficiary. The plaintiffs claimed that the foreclosure proceeding was not valid because the mortgagee did not comply with G.L. c. 244 §14 or 26 U.S.C. §7425(c)(1) by not giving proper notice of sale to the IRS and not disclosing the IRS liens in its legal notice, and that the property was still subject to the IRS liens. The court stated that because the IRS liens were filed against Pamela DiSarro individually after she had conveyed the property to the trust, "nothing in the trust property's history would indicate that a lien filed against Pamela DiSarro individually would encumber the trust property" Although the plaintiffs didn't not dispute the fact that under Massachusetts law the property that one holds as the trustee is not subject to payment of trustee's personal debts, they argue that "special incidents of a nominee trust make a beneficiary's interest in many cases subject to the payment of his or her personal debts" The court responded that, although the IRS could technically have reached Pamela DiSarro's 51% beneficial interest in the trust, "it does follow that the Federal lien attached to the 1408 Commonwealth Avenue, the trust res, so as to enable the IRS to reach it in hands of purchaser for value". The court further noted that that fact the Pamela Disarro was a beneficiary of the trust was not part of the public records, and that a reasonable inspection could not reveal the existence of the lien. Therefore, the court concluded that the IRS liens against Pamela Disarro did not constitute a lien against subject property.

Despite the decision in the above case, Old Republic maintains the position that while this case maybe helpful in addressing back title issues, we would still require that IRS liens filed against present trustees of nominee trusts in their individual capacity are paid off prior to or at the time of closing.