restitution the government's required to step into the shoes of the dissent the question here is may the government liquidate an innocent spouse as i already in one half to satisfy the burden  f the criminal defendant for criminal restitution i think the central focus of the disagreement between myself and the government is the recognition or lack there of that retirement accounts are different they're not wages they're not checking accounts they're not classic property that we normally see that are run by state law there is federal statutory framework surrounding retirement accounts starting and four with a risk when the iranians were instituted and being amended in branching out to today where they set up ownership in these accounts they set up protections in guidelines for trustees asset class they were dealing with desire rays which are fully regulated by twenty six dollars u s c for a way it is for a way that we're asking for an analysis under novak and under bugs to determine the vested rights of when barry in these accounts for purposes of criminal restitution now novak is the th circuit case that looked at a risk accounts and whether they were subject to restitution with  said is when you have an asset class that is fully regulated by federal law and we look to federal law to determine the criminal defendants rights in that account and in that asset there's i think no doubt that section four a way it is the only statute that regulates iras there is no competing state statute that attempts to regulate contribution limits trustee guidelines ownership or any other aspect of viruses during the life of the owner now if that way design and distribution of fire is goes according to state law does it not can you in other words if a parent or a spouse dies the other the the the spouse or the children inherit the ira and of course i'm assuming that's according to state law because when you get a special you're correct that i think a distinction does have to be made to ir inherit it following the death of the owner they also allow the state courts to divvy up that property if khwaja has entered at the state court level there's nothing in for a way that  state law intervention in that property right during the life of the owner now i think another important distinction here is any restriction on the criminal defendant to access the fun talking about whether her rights vested it's important to look at the law the federal law in the plan and that's what the novak court says this isn't a restriction that was created by michael berry you're going barry they didn't set up a checking account only in michael's name it's not a manmade construction it's actually section for a way that ensures that when barry can never liquidate funds from that account without at least the spouse of consent of michael bear now the ownership in that account is dictated by federal law not state and the tax consequences are dictated by federal law to the owner if when barry was to liquidate one million dollars from this fund or if the garnishment order goes through the owner is still liable for the taxes on that distribution there is no way if we look at the record on appeal it five hundred and eighty five you'll see the garnishee sansar they struggle with how do we separate this property out case which said in footnote seven the district court also correctly held that the government could garnish todd's one half interest in any community property solway managed by lisa including her retirement savings account sure and none of those deal with accounts that are fully regulated by federal law it's a savings account when i do not believe that i raise that issue in loftus midhir is or any of the cases savings accounts that are not federally regulated in this in this era it's oh it's and then it cites twenty eight us c three thousand and three b one but that but collecting taxes so that's sort of a tax thing but so i don't know the answer to how many people or in federal federally regulated retirement accounts but surely there's a difference between a savings account that is not subject to his soul management and control right i know i don't admit that i think any community property claim during that gets into the bogs issue is totally inconsistent with the framework well but the whole point of when when people get divorced the wife makes a claim on the husband's ira and vice versa that's correct and i think it that i mean our it's assumed that was based on community property law it would be and that's intice a paid in for a way and actually the advice given to the trustee is to not assign not transfer unless acquired for a provision is put in so again i think there is a distinction between the irate phones as they criminal appeal of the lung where the berries appear to raise in a separate appeal the same challenges to the restitution order it in this appeal and then the court holds each claim fails and so that dispose of your case i've read that opinion i don't think that they directly attack the issues that i'm now presenting to the court but sort of an interesting observation anyway sure i mean there there was some overlap obviously in those two cases they are companion cases but this shoes that are being raised now were soley raised under this appellate number as they were split when barry is also on this if i'm allowed i'd like to clarify what that really stands for and what they're saying in that private letter ruling what happens the taxpayers asking for advice from the federal agency on whether they can do some sort of action and what he asks is whether he can split his iras down the middle give half to his wife in the transfer what the government says is that's fine you can do that but you're going to have to pay taxes on the transfer so what that stands for is you can't take an ira in its current form and just transferred over to a spouse you would have to liquidate the amount you want to transfer pay your taxes it's and post ira money over to the spouse i think that's important because now we're talking about the sole ownership of the account and how much activity or role the spouse plays which is far as i can tell is not during the life of the owner of the spouse has no access cannot access the phones cannot distribute phones and sending in her shoes i think the government is so restrictive you'll notice in their brief that they also late between the shoes they wish to stand on they will lay out why they can get to i raise a rule of law we're arguing that if michael barry was a defendant they can't access the irate funds i think the law is pretty clear that if you have a lump sum distribution that that's a vested right in that lump sum what we're arguing is that standing from her point of view section fo away and the terms of the plan invent ghar are an obstacle to her power to liquidate which is really the basis of the argument because then the government says and then michael berry has the power to liquidate they don't get to stand in his shoes i mean that's decades of precedent that require them to remain with when barry now separate from the novak issue is a preemption issue conflict preemption issue that uses guidance from box  bugs looked at the preemption clause of a risk but refused the invitation to use a preemption clause as the means for their ruling they went with a classic conflict preemption analysis which is courts where you find conflict between federal and state law and if that is an obstacle to the purpose of cunt congressional enactment of the statute the state law cannot stand there's some overlap in the conflicts like no transfer but i want to clarify the position is what i'm saying is a community property claim during the life of the owner is inconsistent with the framework and let's for example i look for a case that would involve a spouse's ability to devise her one half community property interest in the ira during the life of the owner and what would happen if under texas state law when barry died before this criminal action occurred and devised one half community property interests in the i or a the state law would distribute that one half interest but you can't change the own state law can't touch it so what you have is the devise e of going barry receiving a one million dollars out of his i and then you have michael barry who's going to pay three hundred and thirty three thousand dollars in taxes on that distribution i think those details and when you really start cutting down to what congress is trying to do by providing this tax deferred vehicle in it's for the sole benefit of the owner if that devising plan actually is executed it's no longer a tax deferred vehicle for the sole benefit of the owner he's the only one who's that detriment he's the one who loses three hundred and thirty three  for a devise that he had nothing to do with no control over another part of the of the preemption or human is the impact of for a weight g this section shall disregard any community property laws it is not under a subsection it is not an linked or tied to any individual part of for away it stands alone and i think the only way to read that is that during the life of the owner community property shall not be applied to iras that language has been interpreted by this court and by the th circuit in order to lock the language was with any determination you shell disregard community property laws now that's under the innocent spouse statute and that's narrowly tailored for determination of whether the spouse is innocent or not and now in the commission or out of this court under the joint accounts federal framework it says show disregard community property laws unless income is from real property and what this court said was that's clearly relating to a ta deficiency analysis because it has the language from real property present so we haven't really seen language like this interpret that so sweeping that's not set in its own section that congress is saying to disregard all community property laws unless in my opinion one of the interests of pated triggers happens like  so the conflict between state what between a community property claim and the federal framework of four away i think's apparent but the question is is that is that an obstacle to the goals that are set out by congress and i think one of the major goals that you'll see is the gold incentive by savings there was a drawback we're behind our competitors with the amount that was being say for a time in the u s and this is a tax deferred vehicle to help that i think instituting  property claims that give rights the norden vision by the statute cuts against that goal and i also think the ultimate goal of providing a tax deferred vehicle for the sole benefit of the owner is cut if every community property claim leads to one thing and that's the detriment of the owner and a huge tax bill well let me just ask you again about the loftus case because my understanding is that in the district court  and i don't know the issues raised right denecke of the issues raised before this court now certainly definitely the same kind of account and then the th circuit said consequently the district court correctly held that the government could garnish one half interest in any community property stolen managed by lisa including her retirement savings account for and i think there's a lot of the case law deals with the ability to cases are about no one has laid out the irony framework and asked the questions that i'm now presenting to the court so in his far as they approved of garnishment of that i already it is not on point with the issues now raise  nd half of her brief in this case argued that the restitution order for the amount was incorrect so i believe that the court pointed out that the nd half of her brief is moot because they found that the restitution order was proper and the only issue before the court today is whether the district court correctly ordered garnishment of gwendolyn barry's one half interest in michael very slowly managed community property to enforce her criminal restitution judgment now the berries until you're questioning today have refused to acknowledge this course precedent in a law loftus decay in controlling text the state property law which make it clear that the united states is entitled to garnish one half of a non debtor spouses s it does actually list the account name and it the abbreviation of the account name has ira in it and that day is what they garnished one half of so i do believe you are correct that this is not a case of st impression guarantee that they receive restitution that they are due the m p r a authorizes the government to seek enforcement of criminal orders of restitution using all remedies that are available for the collection of criminal funds so then the  property and all rights to property of the person fined as is the liability was for a tax assessed under the internal revenue code now this is the most important part is that the f t c p a provides under section anyway that the united states may enforce a judgment imposing a fine in accordance with the practices for the enforcement of a civil judgment under federal law or state law notwithstanding any other federal law a judgment imposing a fine may and be enforced against all property rights to property and then it goes on to list exceptions those exceptions are under section six hundred and thirty three dollars for a of the internal revenue code and those exceptions lay provide any exception for restitution debtors community property interest in a spouse retirement account and this court in decay a law she in loftus and i would point out the novak court that mr barry so heavily relies upon analyzed this notwithstanding clause and they all courts came to the same conclusion that the n p r is what controls it notwithstanding any other federal law and so that's where we get into their analysis of aris and what happened in this case is mr berry worked for conoco phillips for a very long time and then he retired in two thousand and six his retirement had to roll it over correct so at that point if we were talking in two thousand and six arista would because the decay opinion and i section four a one of the internal revenue code which is somewhat analogous to for eight and for a one is for pension plans in the decay case actually i think the represented party was the pension state pension plan they came in as a party and objected to the garnishment but the did get court analyzed for a one in the same and i think is analogous to section four a way that  the notwithstanding clause is sufficient to override any entire alienation provision of retirement sixty that they claim would make a partition to the community property law i didn't hear mr various counsel argue before a court but i would say that that is wholly and applicable there is no division of marital property in this case that would allow mr barry's irate to be separate property and i guess and i think that that's what mr barry's attorney misses in this case is that we can't somehow take this ira out of the community property scheme what happens is the federal law creates a lien on the defendant's property which is what the ira does and then state law defines what property  interest that lien attaches to and so in taxes there is only separate property and community property we cannot exclude the ira from existing in either one of those bundles and it's i would offer  court that it's understated that that asset is community property it's soley manage because it's a property that mr barry would have had if he were not married to mrs barry which is how we get to the soley managed property that he earned in his during the course of the marriage and therefore it's community property solely subject to his sole management and control that's character and so within that framework that is why we get to we are able to garnish one half of it because it is solely managed by mr barry as opposed to jointly manage where we would have attempted to garnish one hundred percent of  previously analyzed where the twenty five percent cap would be placed on pension plans payments this is an account that mr barry has unfettered access to some might use it as a checking account he withdraws any amount proposing is a balance between getting that interest satisfied along with the protection and vision by congress retirement accounts our position is not that the government can never access the funds in the ira it is that when they're distributed they then leave the protections of for away in one half which would then be community property so we determined by state law would then be subject to garnishment by that but the ira is not subject to four  restitution will be ordered and they can obtain amounts from the ira but not until distribution now the government talks about the notwithstanding clause with the anti alienation clause in  access those funds ever and the th circuit as well as every court that's looked at it has said that's not true that in the ira will trump the anti elimination clause that's the st part of nowak even in light of that understanding  property rights under federal enforcement statute now the facts of that case were they were trying to use an exemption under state law to hide money from foresman a tax levy proceed and they said look they can use state property laws to deleon eight if you have any property interest at all but then we come back to federal law to see if that's a property interest that we will recognize and that's what i'm asking the court to do is look at for a way and appl standard of does for a way prohibit her from having an absolute right to liquidation because if it does our position is the government has no right to take one half and leave half a one million dollars of the next three years and tax burden on michael