In the 1986 case O'Connor et ux. v. United States, the Supreme Court ruled on whether a federal tax lien could be enforced against property held as "tenancy by the entirety" (a form of ownership where both spouses have equal rights to enjoy the entire property). The Internal Revenue Service sought to collect unpaid taxes from Mr. O’Connor by placing a lien on his home, which he owned with his wife as tenants by entirety under Michigan law. The court had to decide if such an action was permissible under federal law or if it violated state laws that protect such properties from creditors of only one spouse. The Supreme Court ruled in favor of the IRS and upheld its right to enforce liens against these types of properties for unpaid taxes owed by one spouse alone, even though this would not typically be allowed under state law protections for tenancies by entirety. This decision established that federal tax collection efforts can supersede certain state-level debtor protections.

In the dissenting opinion for O'Connor et ux. v. United States, Justice Stevens argued that the majority's decision was inconsistent with previous rulings and principles of federalism. He contended that it was inappropriate to apply a federal common law rule in this case, as doing so would undermine state property laws without any clear justification from Congress or the Constitution. Furthermore, he disagreed with the majority's interpretation of precedent regarding tax liens and suggested they had misapplied these cases to justify their ruling. Ultimately, Justice Stevens believed that deference should be given to state law unless there is a significant conflict with federal interests; in his view, no such conflict existed here.