Opinion ID: 464659
Heading Depth: 1
Heading Rank: 2

Heading: bail bond levy

Text: 24 The second issue raised by the defendant is whether his bail bond should be exonerated and the funds returned to their proper owner. Eschweiler appeals from the denial of his Rule 46(f) motion to exonerate. Because this is not the proper vehicle for challenging the levy, we hold that the district court properly denied the motion. 25 The defendant attacks the levy on several grounds. First, he claims that the levy is invalid because he did not receive notice of a deficiency assessment as required by 26 U.S.C. Sec. 6212. 12 Additionally, the defendant asserts that the IRS failed to comply with the 10-day waiting period of 26 U.S.C. Sec. 6331, 13 rendering the subsequent levy invalid. See 26 U.S.C. Sec. 6213. Finally, the defendant argues that levying against bail bonds is impermissible under the Eighth Amendment. 26 Unfortunately, the defendant failed to raise these issues properly below. A motion to exonerate is not the proper forum to present the district court with sufficient evidence upon which to make a decision. The defendant raised his factual contentions as to notice only in memoranda in support of the motion to exonerate. The government, particularly the IRS, did not have adequate opportunity to respond to the factual assertions. 14 Many factual issues need to be resolved before the validity of the levy can be established. For example, these significant facts remain unknown: (1) the date the IRS deficiency assessment was made; (2) the date the notice of deficiency was mailed; (3) the address to which the deficiency notice was mailed; (4) whether the defendant had actual or constructive notice of the deficiency; and (5) to whom the property belongs. 27 The government argues that the defendant cannot proceed in district court because he is barred by United States v. Doyal, 462 F.2d 1357 (5th Cir.1972), and 26 U.S.C. Sec. 7421(a). In Doyal, the Fifth Circuit held that a defendant who asserted no interest in the attached bail bond funds could not recover the funds pursuant to a motion to exonerate. Id. The court found that the motion was an attempt to enjoin collection of a tax and was thus barred by Sec. 7421(a). 15 Id. at 1358. The court went on to say that the proper action was for the owner of the property to bring a wrongful levy action under 26 U.S.C. Sec. 7426(a) 16 to contest the validity of the attachment. Id.; see also United States v. Neely, 357 F.Supp. 713 (S.D.Fla.1973). 28 Doyal is distinguishable on three grounds. First, the defendant in Doyal was not alleging that the IRS had failed to follow proper notice and levy procedures. Second, he was asserting that the money belonged to someone else. Third, that defendant did not raise a constitutional claim. 29 In this case Sec. 7421(a) does not apply because Eschweiler contends that the IRS failed to provide notice of the deficiency, as is required by Sec. 6212, and attached the levy prior to the ten-day waiting period required by Sec. 6331. Section 6213 states that Sec. 7421(a) does not apply when the government seeks to enforce collection of a tax before the required waiting period. 17 Where the IRS fails to follow procedures for deficiency assessment and collection, Sec. 7421(a) is inapplicable. Laing v. United States, 423 U.S. 161, 96 S.Ct. 473, 46 L.Ed.2d 416 (1976); Valley Finance, Inc. v. United States, 629 F.2d 162 (D.C.Cir.1980) (notice of deficiency is a jurisdictional prerequisite to the imposition of a tax lien and levies), certiorari denied sub nom. Pacific Development, Inc. v. United States, 451 U.S. 1018, 101 S.Ct. 3007, 69 L.Ed.2d 389 (1981); Shapiro v. Secretary of State, 499 F.2d 527 (D.C.Cir.1974) (power of the IRS to levy is inoperative until failure or refusal of taxpayer to pay the required amount), affirmed, 424 U.S. 614, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976). Accordingly the district court has jurisdiction to determine the validity of the levy and enjoin its enforcement. 30 Although the defendant contends in his brief that it is unnecessary to determine who owns the funds in question, a party challenging a levy must have sufficient interest in the levied property. See Rosenblum v. United States, 549 F.2d 1140, 1145 (8th Cir.1977), certiorari denied, 434 U.S. 818, 98 S.Ct. 58, 54 L.Ed.2d 74 (1977); Flores v. United States, 551 F.2d 1169, 1171 (9th Cir.1977). If the property belongs to someone other than the taxpayer, that person must bring suit under 26 U.S.C. Sec. 7426. Doyal, 462 F.2d at 1358. If the taxpayer owns the property but wants to contest the validity of notice, he or she can file suit to enjoin enforcement of the levy in district court, 18 see Sec. 6213; Laing v. United States, 423 U.S. 161, 96 S.Ct. 473, 46 L.Ed.2d 416 (1976); Austin v. Voskuil, 493 F.Supp. 780, 781 (E.D.Mo.1980); Needham v. United States, 564 F.Supp. 419, 421 (W.D.Okla.1983). A tricky question may arise if the defendant does not own the property, yet wants to raise a constitutional question; where is his or her forum? But that question is not before us because the defendant has sufficient property interest to challenge the levy. 31 When Eschweiler's bond was posted in April 1984, he was designated as the recipient of the $50,000 cash bail bond. The IRS attached the bond in August of 1984. It was not until well after that attachment that the designated recipient was changed. 19 That change in designation cannot defeat the prior interest of the IRS in the funds. Therefore, although the defendant had sufficient property interest to bring suit to enjoin enforcement of the levy, see United States v. National Bank of Commerce, --- U.S. ----, 105 S.Ct. 2919, 2929, 86 L.Ed.2d 565 (1985) (tax liens attach to rights to property), the district court's denial of his motion to exonerate was proper.