19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 112–630 

AMENDING TITLE 5, UNITED STATES CODE, TO MAKE CLEAR THAT 

ACCOUNTS IN THE THRIFT SAVINGS FUND ARE SUBJECT TO CERTAIN 

FEDERAL TAX LEVIES 

JULY 30, 2012.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. ISSA, from the Committee on Oversight and Government 

Reform, submitted the following 

R E P O R T 

[To accompany H.R. 4365] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Oversight and Government Reform, to whom 

was referred the bill (H.R. 4365) to amend title 5, United States 

Code, to make clear that accounts in the Thrift Savings Fund are 

subject to certain Federal tax levies, having considered the same, 

report favorably thereon with an amendment and recommend that 

the bill as amended do pass. 

CONTENTS 

Page 

Committee Statement and Views ........................................................................... 2 

Section-by-Section .................................................................................................... 3 

Explanation of Amendments ................................................................................... 3 

Committee Consideration ........................................................................................ 3 

Application of Law to the Legislative Branch ....................................................... 3 

Statement of Oversight Findings and Recommendations of the Committee ...... 4 

Statement of General Performance Goals and Objectives .................................... 4 

Federal Advisory Committee Act ............................................................................ 4 

Unfunded Mandate Statement ............................................................................... 4 

Committee Estimate ................................................................................................ 4 

Budget Authority and Congressional Budget Office Cost Estimate .................... 4 

Changes in Existing Law Made by the Bill as Reported ...................................... 6 

The amendment is as follows: 

At the end of the bill, add the following: 

SEC. 2. DISPOSITION OF AMOUNTS. 

Any potential revenue gain attributable to the enactment of this Act, as determined by the Director of the Congressional Budget Office— 

(1) shall be deposited in the general fund of the 

Treasury of the United States; and 


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1 5 CFR 2635.809. 

2 Internal Revenue Service, Federal Employee/Retiree Delinquency Initiative (FERDI), Civilian/Military/Retiree Detail Report (2010). 3 26 U.S.C. § 6331(a). 

4 5 U.S.C. § 8437(e)(3). 

5Statement of Gregory T. Long, Executive Director, Federal Retirement Thrift Investment 

Board, Before the House Subcommittee on Federal Workforce, U.S. Postal Service and Labor 

Policy, 112th Cong., 1–12 (July 27, 2011). Print. 6Office of Legal Counsel, U.S. Department of Justice, Applicability of Tax Levies Under 26 

U.S.C. § 6334 To Thrift Savings Plan Accounts, 34 Opinions of Legal Counsel, (May 3, 2010). 

(2) shall be used solely for purposes of deficit reduction. 

COMMITTEE STATEMENT AND VIEWS

PURPOSE AND SUMMARY

H.R. 4365 provides the Internal Revenue Service (IRS) explicit 

authority to levy an individual’s Thrift Savings Plan (TSP) account. 

Levy is the IRS’s administrative authority to seize a taxpayer’s 

property, or right to property, to pay the taxpayer’s liability. The 

legislation would bring the TSP in line with private sector 401(k) 

savings plans, which are already subject to levy. 

BACKGROUND AND NEED FOR LEGISLATION

Failure to pay federal taxes is a violation of the Government 

Code of Ethics, which prescribes that federal employees ‘‘satisfy in 

good faith their obligations as good citizens, including all just financial obligations, especially those such as Federal, State or local 

taxes that are imposed by law.’’ 1

Despite this requirement to comply with federal tax law, 279,000 

federal employees owed $3.4 billion in federal taxes by the end of 

2010.2 When an employee in the private sector is delinquent on his 

or her taxes, the IRS can levy the person’s 401(k) account. Levy is 

the legal process by which the IRS orders a third party to turn over 

property in its possession that belongs to the delinquent taxpayer 

named in a notice of levy.3 The IRS may establish a levy by attaching a tax lien to a taxpayer’s property as long as that property is 

not exempt from levy, the IRS has provided notice of its intent to 

levy, and the IRS provides notice to the taxpayer of his or her right 

to an administrative hearing at least 30 days before it applies the 

levy. 

The TSP’s governing statute includes an anti-alienation provision 

that protects funds from execution, levy attachment, garnishment, 

or other legal process, except to provide for child support, alimony 

payments, restitution orders, certain forfeitures, or certain obligations of the TSP Executive Director.4 The anti-alienation provision 

does not specifically mention the authority for the IRS to levy an 

individual’s TSP account. In the absence of such explicit authorization in title 5, the Federal Retirement Thrift Investment Board has 

not honored notice of levies against TSP accounts.5

The IRS has asserted that IRS levies on TSP accounts should be 

honored. In May 2010, the Department of Justice Office of Legal 

Counsel provided a formal opinion which states the IRS is allowed 

to levy TSP accounts under the Internal Revenue Code, notwithstanding the anti-alienation provision in title 5 that governs TSP 

accounts.6


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7P.L. 99–335, 100 Stat. 514. 

8 5 U.S.C. 8437(e)(2). 

9 5 U.S.C. 8437(e)(3). 

10 5 U.S.C. 8467(a)(1). 11P.L. 104–93, 109 Stat. 961, 965. 12P.L. 111–31, 123 Stat. 2815, 1856. 

H.R. 4365 amends Section 8437(e)(3) of title 5, United States 

Code to clarify that monies in the Thrift Savings Fund accounts of 

federal employees are subject to IRS levy for payment of delinquent 

taxes, in addition to the other provisions currently enumerated. 

LEGISLATIVE HISTORY

The Federal Employees’ Retirement System Act of 1986 7 (FERSA) 

provides that ‘‘[e]xcept as provided in paragraph (3), sums in the 

Thrift Savings Fund may not be assigned or alienated and are not 

subject to execution, levy, attachment, garnishment, or other legal 

process. . . .’’ 8 FERSA excepted from this provision court orders 

for child support, alimony and enforcement of a judgment for physical, sexual, or emotional abuse of a child.9 FERSA contained one 

other exception to the anti-alienation prohibition outside of paragraph 5 U.S.C. 8437(e)(3), for a court ordered property settlement 

in connection with a divorce, legal separation, or annulment.10

FERSA was subsequently amended to allow for forfeiture of employer contributions and attributable earnings of TSP accounts of 

employees convicted of a national security offense.11 The Thrift 

Savings Plan Enhancement Act of 2009 made clear that Mandatory 

Victims’ Restitution Act orders may be satisfied from TSP accounts.12

SECTION-BY-SECTION

Section 1. Amendments 

This section makes clear that the Internal Revenue Service may 

issue a levy against an individual’s Thrift Savings Plan account. 

Section 2. Disposition of amounts 

This section requires any increase in revenue resulting from enactment of H.R. 4363 be deposited in the general fund of the U.S. 

Treasury and used solely for deficit reduction. 

EXPLANATION OF AMENDMENTS

Mr. Cummings offered an amendment directing that any revenue 

gain attributable to enactment of H.R. 4365 be deposited in the 

general fund of the U.S. Treasury for purposes of deficit reduction. 

The amendment was agreed to by voice vote. 

COMMITTEE CONSIDERATION

On April 18, 2012, the Committee met in open session and ordered reported favorably the bill, H.R. 4365, as amended, by voice 

vote, a quorum being present. 

APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104–1 requires a description of 

the application of this bill to the legislative branch where the bill 


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relates to the terms and conditions of employment or access to public services and accommodations. This bill provides the Internal 

Revenue Service explicit authority to levy an individual’s Thrift 

Savings Plan (TSP) account. As such this bill does not relate to employment or access to public services and accommodations. 

STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF

THE COMMITTEE

In compliance with clause 3(c)(1) of rule XIII and clause (2)(b)(1) 

of rule X of the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in the 

descriptive portions of this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee’s performance goals and 

objectives are reflected in the descriptive portions of this report. 

FEDERAL ADVISORY COMMITTEE ACT

The Committee finds that the legislation does not establish or 

authorize the establishment of an advisory committee within the 

definition of 5 U.S.C. App., Section 5(b). 

UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandates Reform Act, P.L. 104–4) requires a statement as to whether 

the provisions of the reported bill include unfunded mandates. In 

compliance with this requirement the Committee has received a 

letter from the Congressional Budget Office included herein. 

EARMARK IDENTIFICATION

H.R. 4365 does not include any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

COMMITTEE ESTIMATE

Clause 3(d)(2) of rule XIII of the Rules of the House of Representatives requires an estimate and a comparison by the Committee of the costs that would be incurred in carrying out H.R. 

4365. However, clause 3(d)(3)(B) of that rule provides that this requirement does not apply when the Committee has included in its 

report a timely submitted cost estimate of the bill prepared by the 

Director of the Congressional Budget Office under section 402 of 

the Congressional Budget Act. 

BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST

ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of 

the Rules of the House of Representatives and section 308(a) of the 

Congressional Budget Act of 1974 and with respect to requirements 

of clause 3(c)(3) of rule XIII of the Rules of the House of RepresentVerDate Mar 15 2010 05:00 Jul 31, 2012 Jkt 019006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR630.XXX HR630

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atives and section 402 of the Congressional Budget Act of 1974, the 

Committee has received the following cost estimate for H.R. 4365 

from the Director of Congressional Budget Office: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, July 19, 2012. 

Hon. DARRELL ISSA, 

Chairman, Committee on Oversight and Government Reform, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4365, a bill to amend title 

5, United States Code, to make clear that accounts in the Thrift 

Savings Fund are subject to certain federal tax levies. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Barbara Edwards. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 4365—A bill to amend title 5, United States Code, to make 

clear that accounts in the Thrift Savings Fund are subject to 

certain federal tax levies 

H.R. 4365 would eliminate an apparent conflict that exists in 

current law between the Federal Employees’ Retirement System 

Act of 1986 (FERSA) and the Internal Revenue Code. The Internal 

Revenue Code provides broad authority to the Internal Revenue 

Service to collect unpaid federal taxes by levy, a legal process that 

includes ordering a third party to turn over property in its possession that belongs to the taxpayer who has unpaid tax liabilities. 

FERSA includes a provision (as contained in U.S. Code, title 5, section 8437) that broadly protects assets in Thrift Savings Plan accounts from levy, with certain exceptions. Currently, those exceptions do not include federal tax levies, and the Federal Retirement 

Thrift Investment Board has refused to honor notices of such levies. H.R. 4365 would include federal tax levies in the list of exceptions. 

The staff of the Joint Committee on Taxation (JCT) estimates 

that enacting H.R. 4365 would increase revenues by $24 million 

over the 2012–2022 period. The entire revenue increase would result from an increase in on-budget revenues, and thus pay-as-yougo procedures apply. Enacting the bill would not affect direct 

spending. 

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct 

spending or revenues. Enacting H.R. 4365 would result in revenue 

gains in each year from 2013 to 2022. The net reduction in the deficit is shown in the following table. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS OF H.R. 4365, AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM ON APRIL 18, 2012 

By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012– 

2017 

2012– 

2022 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-YouGo Impact ............. 0 ¥1 ¥2 ¥2 ¥2 ¥2 ¥3 ¥3 ¥3 ¥3 ¥3 ¥10 ¥24 

Source: Staff of the Joint Committee on Taxation. 

Note: Components may not sum to totals because of rounding. 

JCT has determined that the bill contains no intergovernmental 

or private-sector mandates as defined in the Unfunded Mandates 

Reform Act. 

The CBO staff contact for this estimate is Barbara Edwards. The 

estimate was approved by Frank Sammartino, Assistant Director 

for Tax Analysis. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

TITLE 5, UNITED STATES CODE 

* * * * * * * 

PART III—EMPLOYEES 

* * * * * * * 

SUBPART G—INSURANCE AND ANNUITIES 

* * * * * * * 

CHAPTER 84—FEDERAL EMPLOYEES’ RETIREMENT 

SYSTEM 

* * * * * * * 

SUBCHAPTER III—THRIFT SAVINGS PLAN 

* * * * * * * 

§ 8437. Thrift Savings Fund 

(a) * * * 

* * * * * * * 

(e)(1) * * * 

* * * * * * * 

(3) Moneys due or payable from the Thrift Savings Fund to any 

individual and, in the case of an individual who is an employee or 

Member (or former employee or Member), the balance in the account of the employee or Member (or former employee or Member) 

shall be subject to legal process for the enforcement of the individVerDate Mar 15 2010 05:00 Jul 31, 2012 Jkt 019006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6601 E:\HR\OC\HR630.XXX HR630

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ual’s legal obligations to provide child support or make alimony 

payments as provided in section 459 of the Social Security Act (42 

U.S.C. ø659)¿ 659), the enforcement of an order for restitution 

under section 3663A of title 18, forfeiture under section 8432(g)(5) 

of this title, or an obligation of the Executive Director to make a 

payment to another person under section 8467 of this titleø.¿, and 

shall be subject to a Federal tax levy under section 6331 of the Internal Revenue Code of 1986. For the purposes of this paragraph, 

an amount contributed for the benefit of an individual under section 8432(c)(1) (including any earnings attributable thereto) shall 

not be considered part of the balance in such individual’s account 

unless such amount is nonforfeitable, as determined under applicable provisions of section 8432(g). 

* * * * * * * 

Æ 


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