Source: http://freedom-school.com/tax-matters/a-notice-of-levy-is-not-a-levy.html
Timestamp: 2019-04-18 21:39:18+00:00

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The apparent defense to this action raises substantial and critical questions of Constitutional significance as to whether a notice of levy by the IRS amounts to a levy. Jurisdiction of this court is clearly proper, and a case against Union Planters Bank would not be ripe if a levy has been perfected. Plaintiff submits arguments, including the plainly expressed Congressional intent, that warrants of distraint are required to affect an IRS levy. Additionally, better-reasoned case law requires warrants of distraint.
Levies in the 1939 version of the Internal Revenue Code required warrants of distraint. In addition, continuing levies on wages were not permitted under earlier versions of the Code. Would Congress extend so destructive a power as the ability to effect continuing levies on wages and withdraw the requirement of warrants of distraint and not say so? Particularly in light of the decision in Sniadach v. Family Finance Corp., 395 U.S. 337 (1969), that wages are special in the context of prejudgment garnishment under the 14th Amendment, so extensive a power must offend 5th Amendment due process. This court must decide 1) whether there has been a valid levy; 2) if not, whether there has been a valid exercise of the fiduciary responsibilities of the Defendant, because it is only when there has been a valid exercise of the taxing power that more limited due process standards apply, so the question of Plaintiff's dispute with the Defendant is valid in that context. The court must then decide, if there was a valid levy and a valid exercise of the taxing power, whether 3) the limits of 5th Amendment due process have been exceeded by the prejudgment exercise of the power, particularly in light of Sniadach; additionally, Plaintiff would contend that even if the court agreed with Defendant on all of the above, that the court would have to consider whether allowing the government so extensive a power to seize property without any local control and without a sworn affidavit, violates the 4th Amendment prohibition on unreasonable seizures.
Plaintiff contends that by stealthy encroachment the Defendant and the IRS seek to erase the Congressionally mandated requirement that warrants of distraint issue before the IRS may seize property. The Fourth Amendment to the United States Constitution requires: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
It is the duty of courts to protect the people from stealthy encroachment on their rights. In violation of federal law, no warrants of distraint were issued in this case. No one made "Oath or affirmation" of probable cause concerning the alleged indebtedness, as the Constitution's warrant requirement mandates. A careful reading of the notice of levy shows the IRS does not even claim that it was a levy. Plaintiff asserts he is not subject to liability for the alleged tax, that no proper assessment has been made, that he has not received the requisite notice and demand, and that no "seizure" has been made. Small wonder the IRS has not sworn to the debt as required by law. Allowing a notice of levy to operate as a levy violates the 4th and 5th Amendments to the United States Constitution, the limitation on delegation of the lawmaking powers under the separation of powers doctrine, and the clear intent of the legislators in the crafting and passing of legislation concerning levies.
Defense counsel has the burden of proving that there was a levy. Thus far, defense counsel has failed in its obligation to advise the court of the applicable law. Calling this case "frivolous", as defense counsel has threatened to do, works a fraud on this court. Plaintiff asserts his right to a trial in part to determine exemplary damages for this legally unauthorized levy on his property for which Defendant has frivolously failed to present its affirmative defense to which Plaintiff could respond. Plaintiff will assume Defense counsel's obligation to advise the court of the law.
A. The 6th Circuit Court of Appeals (and other courts) holds that a notice of levy does not affect a levy; Congress specifically expressed its intent to continue levy and distraint procedures which recognize this law.
Better reasoned and on point case law, and particularly the law of the 6th Circuit, holds that a notice of levy is not a levy and does not accomplish the distraint required by I.R.C. Title 26 Section 6331. United States v. O'Dell, 160 F.2d 304 (1947); Williamson v. Boulder Dam Credit Union, Justice Court, Boulder Township, Nevada, Case #97A017, decided May 19, 1998, copy attached to original complaint in this action, a recent case which made a fresh and more thorough examination of the question of whether a notice of levy effects a levy and held it does not.
Boulder is one of the few contemporary, competent efforts to more thoroughly review the relevant precedent, but even Boulder, which held that a notice of levy is not a levy, and did not have the clearly expressed intention of the legislature before it to consider. It is now more obvious than it was at the time of the Boulder opinion that a notice of levy is not a levy.
While O'Dell was decided prior to implementation of the 1954 Code, Congressional intent was to continue the existing law relating to distraint and levy: Sec. 6331. Levy and distraint This section continues in effect the provisions of existing law relating to distraint and levy (see secs. 3690 and 3692 of the present Internal Revenue Code). U.S. Code Congressional and Administrative News, Vol. 3 (1954).
"As we read the allegations of the petition, it asserts a threat to distrain rather than an actual distraint... The facts here, insofar as the procedure is concerned, appear to be quite similar to those in United States v. O'Dell, 6 Cir., 160 F.2d, 304, 307. There it was held that a Collector's notice to a trustee in bankruptcy that there were unpaid taxes due from the bankrupt, and that all money and other property in his hands belonging to the bankrupt was seized and levied upon for payment of the taxes did not constitute a seizure of such property but was only a statement of notice of claim... We think the same is true in our case. So far as the petition shows, there was no seizure, but only a threat of seizure - the petition alleges that the Collector threatens to issue a warrant of distraint." (Emphasis added) Givan v. Cripe, 187 F.2d at 227-228.
In Freeman v. Mayer, 152 F. Supp 383 (1957), the court held that a levy for delinquent taxes pursuant to the 1939 Internal Revenue Code, required execution of warrant for distraint: "The distress authorized by Sec. 3690 is different from anything known to the common law, both because it authorizes a sale of the property seized, and because it extends to other personalty than chattels. By its very nature it requires that the demands of procedural due process of law be rigorously honored. In the case at bar there was no lawful acquisition of possession of the property representing the surplus funds held by defendant, whether those funds were derived from the corporeal or intangible resources of Brokol The surplus should be returned to the Trustee to be administered under the Bankruptcy Act." Freeman v. Mayer, supra, 152 F.Supp. at 87.
As noted in United States v. Manufacturers National Bank 198 F.Supp. 157 (1961), even the Government acknowledged in its supplemental brief in La Salle Music Corp. v. Magarian Rest., Inc., 183 N.Y.S.2d 599, (1959), "that under the 1939 Internal Revenue Code a warrant of distraint was, in most cases, a necessary prerequisite to an effective levy." La Salle, supra, 183 N.Y.S.2d (1959). In Manufacturers, supra, a bank refused to surrender the funds in a bank account upon receiving a notice of levy for the collection of a tax liability. This should eliminate any notion that Plaintiff's suit is "frivolous", as was threatened by Defendants' attorney, and should render null his threat to file a Motion for Sanctions based on this erroneous claim of our suit being frivolous. If Manufacturer's National Bank did not believe it had received a lawful levy on these facts under the 1954 Code in 1959, since this question has never been definitively resolved by the Supreme Court, and the 6th Circuit opinion in O'Dell has never been overturned, the question is very much alive, particularly in light of the decisions in Sniadach and Boulder; supra.
Manufacturer's is poorly reasoned, relying on Eiland, which did not conclude that warrants of distraint were unnecessary, but which incredibly equated warrants of distraint and notices of levy. Additionally, the court in Manufacturer's disregarded the plain statement of legislative intent on a faulty pretext: "It is true that the clarity of purpose, from my viewpoint, as expressed by the new combined levy and distraint provisions in Section 6331, is somewhat clouded by legislative expression in the House and Senate Reports that the new section continues in effect the provisions of existing law relating to distraint and levy with particular reference to Sections 3690 and 3692 of the 1939 Code. (Vol. 3, U.S. Code Cong. & Ad. News, 83rd Congress, 2nd Session (1954) pgs. 4555, 5225). However, there is the hopeful statement in the general statement of the House Committee and the acceptance by the Senate Committee, now relied on by the government here, that the law is clarified with respect to the right of distraint and levy (seizure) for the collections of the tax liability. (Vol 3, U.S. Code, Cong. & Ad. New, 83rd Congress, 2nd Session (1954) pgs. 4133, 4776). Manufacturer's, supra, 198 F.Supp. at 159.
However, regardless of the procedure now deemed sufficient to constitute an effective levy against property of delinquent taxpayers, I cannot consider the enactment of either section 6331 or 6332 to constitute a repeal by implication of the original section 3672, as re-enacted by section 6323, which holds invalid the Government's lien for taxes as against a judgment creditor until notice thereof has been filed. Nor can such enactment be held to override the case of Sport-Craft, Inc., v. Lasker, supra, wherein a warrant of distraint was actually served by the Government. As a matter of fact both the House and Senate reports, in a detailed discussion of the technical provisions of the bill, stated that 'section (6331) continues in effect the provisions of existing law relating to distraint and levy (see secs. 3690 and 3692 of the present Internal Revenue Code'. 1954 U.S. Code Congressional and Administrative News, pp. 4555 and 5225, respectively.
If the Congress had intended to change in any way the existing law as it pertained to the steps necessarily to be taken by the Government in order for it to secure priority of its lien, over judgment creditors, whether it be under section 6323 by filing of notice thereof, or by an actual levy under section 6331 as construed by case law, it would have specifically so provided."
La Salle Music Corp., supra, 183 N.Y.S.2d at 601.
This court must uphold the clearly expressed Congressional intent that "the provisions of existing law relating to levy and distraint" "continue in effect", as well as the O'Dell court's decision that "(I)evy is not effected by mere notice" where no warrants of distraint are issued. Plaintiff's property has not been levied. Levy is only threatened. Defendant was under no legal obligation to turn over Plaintiff's property, and had no legal right to do so. Defendant is indebted to Plaintiff for all amounts wrongfully withheld.
Authority of Secretary. If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. Levy may be made upon the accrued salary or wages of any officer, employee, or elected official, of the United States, the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia, by serving a notice of levy on the employer (as defined in section 3401(d)) of such officer, employee or elected official. If the Secretary makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary and, upon failure or refusal to pay such tax, collection thereof by levy shall be lawful without regard to the 10-day period provided in this section.
Seizure and sale of property.-The term "levy" as used in this title includes the power of distraint and seizure by any means. Except as otherwise provided in subsection (e), a levy shall extend only to property possessed and obligations existing at the time thereof. In any case in which the Secretary may levy upon property or rights to property, he may seize and sell such property or rights to property (whether real or personal, tangible or intangible).
(2) 30-day requirement.-The notice required under paragraph (1) shall begiven in person, left at the dwelling or usual place of business of such person, or sent by certified or registered mail to such person's last known address, no less than 30 days before the day of the levy.
(4) Information included with notice.-The notice required under paragraph (1) shall include a brief statement which sets forth in simple and nontechnical terms the provisions of this title relating to levy and sale of property, the procedures applicable to the levy and sale of property under this title, the administrative appeals available to the taxpayer with respect to such levy and sale and the procedures relating to such appeals, the alternatives available to taxpayers which could prevent levy on the property (including installment agreements under section 6159), the provisions of this title relating to redemption of property and release of liens on property, and the procedures applicable to the redemption of property and the release of a lien on property under this title.
The plain language of Sec. 6331(a) distinguishes between a levy and a notice of levy. A notice of levy by the plain language of the statute is a method of levy that applies only to "the accrued salary or wages of any officer, employee, or elected official, of the United States, the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia..." This is the only time that the IRC states that the service of a notice of levy is sufficient to make a levy. In Sec. 6331(d), a notice requirement is imposed on the Secretary, is a benefit to a tax debtor, and does not use the expression "notice of levy".
One reason for the notice of levy as to government employees may be that the Secretary does not have to seize the money of these officers, employees, or elected officials. Their money is already in the Secretary's possession in the national treasury. This was the argument of the attorney for the Williamson's on appeal in the Boulder case, supra. In all other cases Sec. 6502(b) points out that a levy is completed only when a notice of seizure is given, and that this must have been preceded by an assessment, notice of deficiency, and a demand to be effective. Brewer v. United States, 764 F.Supp. 309, 315 (S.D.N.Y. 1991). Plaintiff denies that these procedures have been followed in his case, and notified the defendants this procedural error in two separate letters before the funds were wrongfully confiscated.
A better reason the case of government employees is distinguishable is that the sentence refers to the "accrued salary or wages" of officers... A notice of levy is sufficient to levy only on the "accrued wages" of the named parties. A "continuing levy on salary and wages", Sec. 6331(e) is distinguishable, and requires a complete levy. "The accrued salary or wage of an employee, held by an employer subject to the order of such employee, is an evidence of debt and may be levied upon as any other simple contract debt, such as a bank deposit." I.T. 1557, 11-1 CB172 (CCH 1501.11 3/1/39). Continuing levies on wages were not permitted under earlier versions of the Code. Would Congress extend so extensive a power as the ability to effect continuing levies on wages and withdraw the requirement of warrants of distraint and not say so?
Allowing a notice of levy to operate as a levy on the accrued wages of government employees creates a burden in exchange for a benefit. To ensure government employees are not harassed by levies, a new levy is required and continuing levies would not be allowed runs this argument. However, the notes to the 1954 Code Sec. 6332 and case law say government employees are not to be treated differently from other taxpayers. Since it is not clear that Congress intended to eliminate the full levy requirement as to the specified employees, and since it would probably not be Constitutional not to accord them the necessary protections, a better interpretation would be that the assets of employees may be frozen by the notice of levy. See Givan v. Cripe, supra, at p. 228: "As we interpret the facts, the notice of levy operated to freeze the assets of the taxpayer in the hands of the Bank, and no more." No where does Congress say that a notice of levy may effect a levy on other taxpayers, or be used to effect a "continuing levy on wages", which is covered by Sec. 6331(e)(1). It has merely been said that the named class may not generally be treated differently from taxpayers in general, and not that taxpayers in general may be treated as the named class. If the provision as to accrued salary works too great a departure from the general treatment of taxpayers, it must fail or be interpreted to fall within what the law allows. Needless to say, regulations cannot expand the statute.
When Congress added the language that government employees' accrued salary may be levied by notice of levy and placed it in Sec. 6331, it could be argued that it intended to change the authorization. Under the notes to Sec. 6332, Congress states, "The provisions as to levy on salaries of Government employees are the same as those applicable to any other delinquent taxpayer." U.S. Code Congressional & Administrative News, Vol 3, (1954) 83rd Congress, 2nd Session. The rules as to government employees must therefore conform to the rules applicable to other delinquent "taxpayers", and not the other way around. If the Congressional intent behind Sec. 6332 is not deemed to have changed when the clause as to government employees was added to Sec. 6331, then either the clause must fail, or it must be distinguished as not a clause pertaining to enforcement, but rather a clause governing what is subject to distraint - accrued wages only. Sec. 6331 may be deemed to deal with what property may be levied on - accrued wages. Sec. 6331 deals with authority to levy. The earlier expressed intent to Sec. 6332 dealt with procedures. The intent behind Sec. 6331 and the intent behind Sec. 6332 need not be the same.
If a federal statute does not clearly establish a prejudgment remedy, state law must be followed. See Fed. R. Civ. P. 64. A notice of levy is not a levy under federal law. Federal law does not permit seizure by using the notice of levy used in this case. Garnishment is an extraordinary remedy that does not permit recovery unless all proper ingredients are present. There is no such thing as a constructive garnishment under Tennessee law. Unless the Defendant can plainly show that the IRS has followed federal law, it has no defense to Plaintiff's suit. Nor has Defendant immunity under 26 U.S.C. Sec. 6332(e) because under that section, immunity is provided when honoring an IRS levy. However, in the instant case, Defendants were apparently sent only a notice of levy. Consequently, the law providing for immunity when releasing funds pursuant to a "levy" is not applicable. Boulder, supra, at 2.
"In support of its decision in this matter the court relied on United States v. O'Dell, 160 F.2d 304 (6th Cir. 1947). The O'Dell court found that, in addition to serving a notice of levy, a warrant of distraint must be issued and served to properly levy on property. The court's reliance on O'Dell in this matter is misplaced. O'Dell was decided under the Internal Revenue Code of 1939, which included a specific reference to a "warrant" which is not present in the applicable Internal Revenue Code of 1986, as amended. (Footnote omitted). Indeed, the reference to a 'warrant' was removed by Congress in the comparable provision of the Internal Revenue Code of 1954. See Rosenblum v. United States, 300 F.2d 843, 845 (1st Cir. 1962)."
The omitted footnote mis-cited Sec. 3692 of the 1939 Code as Sec. 3690. Sec. 3692 is cited above. It states in pertinent part: "In case of neglect or refusal under section 3690, the collector may levy, or by warrant may authorize a deputy collector to levy upon all property and rights to property..." The IRS works a fraud on the Boulder court by failing to offer the plain statement of legislative intent that the existing law be retained. Again, this statement of Congressional intent has almost never been offered in post-1954 cases that Plaintiff has found. Nor did the Rosenblum (error in IRS brief) court look at this intent when it drew its ill-founded conclusion that warrants of distraint were no longer necessary.
Considering the language of Sec. 3692, which gave some appearance of narrowing the warrant requirement to only delegates of the Collector, Congress most probably eliminated the section to avoid the confusion, because it fully understood that a warrant has a definite meaning under the 4th Amendment, requiring an Oath or affirmation supporting probable cause. Rather than eliminating the warrant requirement, the change, together with the statement of legislative intent, enhances the requirement, so there can be no question that the Collector himself must swear to the existence of the debt and obtain a warrant of distraint. See the quotation from Givan v. Cripe, supra, at p. 228, cited at page 3, supra: So far as the petition shows, there was no seizure, but only a threat of seizure - the petition alleges that the Collector threatens to issue a warrant of distraint. Again, Congress stated its plain intention to continue existing procedures and warrants of distraint, or a court case, to effect levy, were most definitely part of the existing procedure that Congress understood it was endorsing.
The Eiland court continued its disingenuous line of argument by forgetting about the word "warrant", and taking off on "distraint": "...he is serving a 'warrant of distraint'. No peculiar virtue inheres in the name ascribed to the notice. As said in Raffaele v. Granger , 3 Cir., 196 F.2d 620, 623: 'Distraint is a summary, extra-judicial remedy having its origin in the common law. There, a form of self-help, it consisted of seizure and holding of personal property by individual action without intervention of legal process for the purpose of compelling payment of debt."
"A creditor ordinarily perfects a lien upon a debt by attachment and garnishment with service of notice thereof upon the debtor. See Miller v. United States, 11 Wall. 268, 297, 20 L.Ed. 135; Kennedy v. Brent, 6 Cranch 187, 3 L.Ed. 194; Rickman v. Rickman, 180 Mich. 224, 146 N.W. 609, Ann.Cas.1916C, 1237, 1248; Strawberry Growers' Selling Col v. Lewellyn , 158 La. 303, 103 So. 823, 39 A.L.R. 1502; 4 Am.Jur . p. 896; 5 Am. Jur. P. 94; 7 C.J.S., Attachment, Sec. 224."
"Although these prejudgment replevin statutes are descended from the common-law replevin action of six centuries ago, they bear very little resemblance to it. Replevin at common law was an action for the return of specific goods wrongfully taken or 'distrained.' Typically, it was used after a landlord (the 'distrainor') had seized possessions from a tenant (the 'distrainee') to satisfy a debt allegedly owed. If the tenant then instituted a replevin action and posted security, the landlord could be ordered to return the property at once, pending a final judgment in the underlying action. However, this prejudgment replevin of goods at common law did not follow from an entirely ex parte process of pleading by the distrainee. For [t]he distrainor could always stop the action of replevin by claiming to be the owner of the goods; and as this claim was often made merely to delay the proceedings, the writ de proprietate probanda was devised early in the fourteenth century, which enabled the sheriff to determine summarily the question of ownership. If the question of ownership was determined against the distrainor, the goods were delivered back to the distrainee [pending final judgment]." 3 W. Holdsworth, History of English Law 284 (1927); Fuentes, supra, at 79.
"While Sniadach and Goldberg emphasized the special importance of wages and welfare benefits, they did not convert that emphasis into a new and more limited constitutional doctrine. Nor did they carve out a rule of "necessity" for the sort of nonfinal deprivations of property that they involved. That was made clear in Bell v. Burson, 402 U.S. 535, holding that there must be an opportunity for a fair hearing before mere suspension of a driver's license. A driver's license clearly does not rise to the level of 'necessity' exemplified by wages and welfare benefits. Rather, as the Court accurately stated, it is an 'important interest,' id, at 539, entitled to the protection of procedural due process of law. The household goods, for which the appellants contracted and paid substantial sums, are deserving of similar protection. While a driver's license, for example, 'may become [indirectly] essential in the pursuit of a livelihood,' ibid., a stove or a bed may be equally essential to provide a minimally decent environment for human beings in their day-to-day lives. It is, after all, such consumer goods that people work and earn a livelihood in order to acquire. No doubt, there may be many gradations in the 'importance' or 'necessity' of various consumer goods. Stoves could be compared to television sets, or beds [407 U.S. 67, 90] could be compared to tables. But if the root principle of procedural due process is to be applied with objectivity, it cannot rest on such distinctions. The Fourteenth Amendment speaks of 'property' generally. And, under our free-enterprise system, an individual's choices in the marketplace are respected, however unwise they may seem to someone else. It is not the business of a court adjudicating due process rights to make its own critical evaluation of those choices and protect only the ones that, by its own lights, are 'necessary.' "
As the Fuentes court points out, the due process clauses do not make some classes of property more protected than others. Courts must also recognize that these clauses do not disparage property rights compared with liberty rights, so that cases such as Phillips v. Commissioner of Internal Revenue, 283 U.S. 589 (1931), that imply that property rights are inferior to liberty rights, must be reconsidered.
C. The IRS itself uses forms that distinguish the difference between a Levy and a Notice of Levy.
D. The IRS knows Plaintiff has no lawfully established tax liability, and so did not perfect its levy.
It is entirely possible that one goal of the IRS in relying on third parties to turn over property without complying with the Congressional intent of I.R.C. Sec. 6331, is to avoid a test of whether the federal government may levy on wages or other personal property under the 5th Amendment after the decision in Sniadach limited the prejudgment remedy to the states under the 14th Amendment.
It also avoids a test of the other IRS procedural violations Plaintiff outlines, infra, including whether there has been an assessment; the question of whether Plaintiff is or is not a "taxpayer" - one subject to the tax; and whether a natural private person such as Plaintiff can have "taxable income" given that the "income tax" has been held by the Supreme Court and the 6th Circuit to be an excise tax, must therefore be a tax on a license or privilege, and the income the measure of the tax and not the subject of the tax.
The obscure language of the Notice of Levy reveals it is not a levy. "This is your copy of a Notice of Levy we have sent to collect this unpaid amount. We will send other levies if we don't get enough with this one." (Emphasis added.) Doesn't say this one is a levy. It goes on to say, "This levy requires the person who received it to turn over to us..." Which levy? The one they're going to send, since they haven't said this one is a levy? Come on. It is tragic that America has sunk so low in the slough of doublespeak and deceit.
Treating a notice of levy as a levy violates the plain language of I.R.C. Sec. 6331, the clearly expressed legislative intent to continue the existing provisions relating to distraint and levy in Secs. 3690 and 3692 of the pre-1954 Code, better reasoned and controlling case law, and violates the Fourth and Fifth Amendments to the United States Constitution, and exceeds permissible delegation of the power to delegate lawmaking authority, an aspect of the separation of powers doctrine.
First, it is interesting to note how well "means", as in "power of distraint and seizure by any means", would substitute for "tool" as used by the Supreme Court. It is also important to note how tentative the Court is about the levy remedy - "typically" and "customarily" do not address mandates. In any event, the excursion into notices of levy was not necessary to the holding in the case since it was not at issue. It is unfortunate to see the U.S. Supreme Court citing a case such as Eiland, but then dictum matters little. The Court cites Phelps v. U.S., 421 U.S. 330 (1975), but neither Phelps nor National Bank of Commerce looked at the warrant of distraint question, Congressional intent, or the cases reviewing them. Phelps is additionally distinguishable as a bankruptcy case, in which the court cited the administrative regulations without consulting the legislative intent. Additionally, the Phelps court relied on United States v. Pittman, 449 F.2d 623 (CA7 1971). But Pittman held that the taxpayer relied on the notice of levy and it should be seen more as an estoppel case. 'Where the Government serves notice of levy, compels transfer of legal title to itself and exercises the rights of an owner to control property by insuring it, renting it and compelling payment of rent to itself and no else, so that the taxpayer justly concludes he has no further right to deal with the property, there has been an effective levy and seizure within the meaning of 26 U.S.C. Sec. 6331'. (Emphasis added.) United States v. Pittman, 449 F.2d 623 (1971).
It is critical that the Supreme Court in the National Bank of Commerce case, when discussing the notice of levy in dictum, was quoting Phillips v. Commissioner "'The underlying principle' justifying the administrative levy is 'the need of the government promptly to secure its revenues... The constitutionality of the levy procedure, of course, 'has long been settled,' " United States v. National Bank of Commerce, 472 U.S. at 721, supra, quoting Phillips v. Commissioner, 283 U.S. at 596 and 595. So the Court in National Bank of Commerce relied on Phillips, for the ultimate constitutionality of the levy process. Phillips was of course a pre-1954 case. The Supreme Court could not have comprehended the issue under discussion in the instant case in its dictum in National Bank of Commerce.
It is also interesting to note that the Supreme Court of the United States is careful to point out as follows, as it did in the above-cited passage: Section 6331(a) of the Internal Revenue Code of 1954, as amended, 26 U.S.C. Sec. 6331(a), provides that the government may collect taxes of a delinquent taxpayer 'by levy upon..." National Bank of Commerce, supra, 472 U.S. at 714715.
"Under Section 6321 of the Internal Revenue Code... unpaid taxes are a 'lien in favor of the United States upon all property and rights to property whether real or personal, belonging to' a delinquent taxpayer. (Citations omitted). This lien 'arise[s] at the time the assessment is made' (citations omitted)... and attaches to all property or property rights the taxpayer owns at the time the lien arises or subsequently acquires..." IRS Brief at 2.
To determine whether information existed to evaluate IRS' use of collection enforcement authorities, we (1) asked IRS to provide us with available basic statistics on its use, and misuse, of lien, levy and seizure authority from 1993 to 1996; (2) reviewed a small and subjectively selected sample of seizure, revenue officer appeals, and problem resolution case files to identify the types of information that may be available from those files; and (3) interviewed IRS employees involved in these areas to determine how and when collection enforcement authorities were used, the controls for preventing misuse of those authorities, and the results of taxpayer complaints about the inappropriate use of the authorities.

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