Legal Document

472 U.S. 713 105 S.Ct. 2919 86 L.Ed.2d 565 UNITED STATES, Petitionerv.NATIONAL BANK OF COMMERCE. No. 84-498. Argued April 15, 1985. Decided June 26, Syllabus Section 6331(a) of the Internal Revenue Code 1954 provides that Government may collect taxes a delinquent taxpayer "by levy upon all property and rights to . belonging such person." 6332(a) then "any person in possession (or obligated with respect to) or subject which has been made shall, demand Secretary [of Treasury his delegate], surrender Secretary, except part as is an attachment execution." The Service (IRS) levied on two joint accounts respondent bank Arkansas for income owed by only one persons whose names stood. When respondent, contending it did not know how much money deposit belonged opposed codepositors, refused comply levy, United States brought action Federal District Court, seeking judgment against amount taxes. Court granted respondent's motion dismiss. Appeals affirmed, holding because under garnishment law creditor depositor subrogated depositor's power withdraw account, IRS, too, could stand shoes, make use administrative procedure without negating quantifying claims taxpayer's codepositors might have funds question. court reasoned possess sufficient interest support competing funds, IRS normally intended third parties bears its face parties. Held: had right Pp. 719-733. (a) A served notice defenses failure demand: neither "in of" nor "obligated to" taxpayer, "subject prior judicial Here, latter defense was available, so constitute "property property" taxpayer. 721-722. (b) In applying Code, state controls determining nature legal property. this case, absolute from accounts, state-law constitutes [or] him within meaning § 6331(a). Respondent, turn, 6332(a), since required honor any withdrawal request he make. Respondent thus no basis refusing levy. proceeding, acquires whatever himself possesses. 722-726. (c) question whether "property" "right federal tax-collection purposes matter law. Thus, facts creditors exercise their favor, proceeding would join are irrelevant. That other account legitimate statutory provisional remedy, does determine until after made, postseizure hearings. 726-733. 726 F.2d 1292 (CA8 1984), reversed. Albert G. Lauber, Jr., Washington, D.C., petitioner. Terry F. Wynne, Pine Bluff, Ark., respondent. Justice BLACKMUN delivered opinion Court. 1 1954, amended, 26 U.S.C. 6331(a), person."1 Secretary."2 2 controversy case concerns Arkansas.3 issue those order obtain control over 3 * A. 4 relevant stipulated. On December 10, 1979, assessed Roy J. Reeves taxes, penalties, taxable year 1977 total $3,607.45. As result payments credits, owing assessment reduced $856.61. App. 11. 5 13, 1980, there were National Bank Commerce, at sum $321.66 checking $1,241.60 savings each "Roy Ruby Neva R. Reeves." Id., 11-12.4 Each named, Reeves, authorized contract withdrawals these accounts. 12. 6 same date, is, pursuant 6331(d) 6331(d), demanding pay sums up $1,302.56. Subsequently, Partial Release Levy excess October final payment bank. 7 bank, Neva, Ibid. thereupon instituted Eastern Arkansas, 6332(c)(1) 6332(c)(1), $856.61.5 8 By way supplement stipulation facts, agreed "[n]o further evidence ownership monies will be submitted." 17. consequence, we do three law, owned what proportion. come us very bare form. We confronted dispute who owns share deal simply persons, entitled draw out B 9 submitted cross motions summary bank's dismiss complaint. 18-24. dismiss, procedurally "premature." 554 F.Supp. 110, 117 (1982). concluded due process mandates "something more than post-seizure lawsuit allowed" Code's procedures. 114. view, "the minimum distraint actions accounts," ibid., compelled identify provide them opportunity heard. 114-115. outlined procedures believed Constitution requires follow when levying account. Specifically, ruled receiving should freeze assets codepositors. notify give reasonable time respond both government affidavit appropriate means, specifically setting they claim factual claim." 115. If information, "believes genuine exists legality by" "it refuse portion claimed." 116. At point, bring suit enforce contested funds," but must name defendants along 10 Eighth Circuit affirmed. (1984). It expressed Court's constitutional analysis. 1293, 1300. reached essentially result, however, construction. burden proving actual value jointly property." 1293. observed here various parties," id., 1300, determined. Therefore, shown required. 11 acknowledged withdrawn wished used debts, including ." 1295. rejected, Government's contention stood Roy's shoes anything do, duties owes Neva," 1295-1296, "at least ordinary creditors, [that] Arkansas." 1296. Under noted, codepositor "subrogated co-owner's entire account." Instead, co-owners permit "show parol otherwise extent her 12 similar precept apply proceedings Code. accordingly prevail belief "is interest" "against bearing parties." situation, free "brin[g] foreclose lien 7403," joining defendants. 13 Because appeared conflict, directly principle, decisions Courts Appeals,6 certiorari. 469 1105, 775, 83 771 (1985). II 14 6321 6321, provides: "If liable tax neglects refuses demand, shall favor property, real personal, succeeding 6322, generally arises continues liability satisfied becomes unenforceable reason lapse time." 15 language "all property," appearing (and, well, §§ and, essentially, see nn. 2, supra ), broad reveals Congress meant reach every have. See B. Bittker, Taxation Income, Estates Gifts ¶ 111.5.4, p. 111-100 (1981) (Bittker). "Stronger hardly selected reveal purpose assure collection taxes." Glass City v. States, 326 265, 267, 66 108, 90 L.Ed. 56 (1945). 16 lien, self-executing. Affirmative unpaid principal tools purpose. first lien-foreclosure suit. 7403(a) authorizes institution civil district "to nature, delinquent, right, title, interest, tax." 7403(b) "All having liens claiming involved thereto." plenary "shall adjudicate matters therein finally merits 7403(c). Rodgers, 461 677, 680-682, 103 2132, 2136-2137, 76 236 (1983). second tool remedy typically "does require intervention." 682, S.Ct., 2137. governing statute n. 1, supra. which, 6331(b), "includes seizure means." 17 situation where held another, custodian customarily 6332(a). This gives upon, Eiland, 223 118, 121 (CA4 1955), creates custodial relationship between comes into constructive Government. Phelps 421 330, 334, 95 1728, 1731, 44 201 (1975). honors "discharged obligation arising payment." 6332(d). If, hand, incurs refusal. 6332(c)(1). 18 aptly described "provisional remedy." 111.5.5, 111-108. contrast suit, seized superior claimants; it, protect diversion loss while being resolved. "The underlying principle" justifying need promptly secure revenues." Phillips Commissioner, 283 589, 596, 51 608, 611, 75 1289 (1931). "Indeed, readily acknowledge existence essential our self-assessment system," "enhances voluntary compliance G.M. Leasing Corp. 429 338, 350, 97 619, 627, 50 530 (1977). "Among advantages quick relatively inexpensive." U.S., 699, 2145. 19 constitutionality procedure, course, "has long settled." 595, 611. 352, 18, 628, 18. 20 well established species levy," 6331 6332. permitted Act 1924, 1016, 43 Stat. 343, Regulations explicitly authorize levies. Treas.Reg. 301.6331-1(a)(1), CFR 301.6331-1(a)(1) 21 courts uniformly demand." Sterling & Trust Co. New York, 494 919, 921 (CA2 1974), cases cited. One words defense, again reference F.2d, 921. Accord, Nevada 251 820, 824 (CA9 1957), cert. denied, 356 938, 78 780, 813 (1958). 22 There suggestion execution. Nor doubt because, concedes, question." Brief 2. therefore, Reeves. C 23 " '[I]n application revenue act, property.' Aquilino 363 509, 513, 80 1277, 1280, 1365 (1960), quoting Morgan 309 78, 82, 60 424, 426, 84 585 (1940). also Bank, follows fact "creates merely attaches consequences, federally defined, created law." Bess, 357 51, 55, 1054, 1057, 1135 And consequences "a left 683, "[O]nce determined interests [taxpayer] satisfy requirements [the statute], inoperative," thenceforth dictated 56-57, 1057-1058. Fidelity Deposit Maryland York Housing Authority, 241 142, 144 1957); Note, Property Subject Tax Lien, 77 Harv.L.Rev. 1485, 1486-1487 (1964). 24 Bess purchased life insurance policies, death proceeds cash value. 55-56, conclusion, said, followed insured policy compel insurer sum." 56, 1058. insured's lien. "under State represented creditors' liens" defined definition concern operation 25 noted above, stipulated unqualified full amounts event, wholly apart stipulation, secured provisions. Ark.Stat.Ann. 67-521 67-552 (1980).7 part, requests make, even correctly that, lawful complaint bank." Roy, then, outstanding balances This, seems us, end agree constituted levy.8 27 overwhelming majority considered unrestricted "rights regardless exist ultimate unresolved time. See, e.g., 921-922; Citizens Southern 538 1101, 1105-1107 (CA5 1976), 430 945, 1579-1580, 792 (1977); Peoples Pensacola, Fla. 570 1279, 1282-1284 1978); Babb Schmidt, 496 957, 958-960 1974); 824-826; First Arizona, 348 388, 389 (Ariz.1970), aff'd, 458 513 1972); Equitable Co., 49 AFTR2d 82-428 (Md.1982); Sebel Lytton Savings Loan Assn., 65-1 USTC 9343 (SD Cal.1965); Tyson 63-1 9300 (Mass.1962); Third Nat. 111 152, 155-156 (MD Pa.1953). itself "unqualified contractual receive levy." St. Louis Union 617 1302 (1980).9 28 Common sense dictates qualifies 'steps shoes,' 691, 16, 2141, 111-102; M. Saltzman, Practice Procedure 14.08, 14-32 (1981); 8. circumstances, where, inconceivable prohibit plainly accessible taxpayer-depositor." F.Supp., 389. 1107.10 analogous IRS's funds. Both similarly later belongs her. III 29 Appeals, applied beyond point law's specification bound certain shoes. gloss, contrary analysis adduced justifications result. deposit, asserted them. stated conclusion "levy parties, likely interest." 30 persuaded justifications. 31 Appeals' rested heavily understanding rights, particularly garnishment. 1295-1296. Hayden Gardner, 238 Ark. 351, 381 S.W.2d 752 suggested, misconceives role properly played matters. unlike himself, relates rights. remit "compare[s] class superior." Randall H. Nakashima 542 270, 274, 1976). 32 concerned affected if honored. 1297-1300. reasoning, runs counter observation above two, possible stated, applicable here. another party defense. 33 understandable Ruby's Neva's interests, ignored scheme Crucially, remedy. [a levy] settles seizure." England Merchants 465 83, 87 (Mass.1979). Other claimants, assert recognized summary-collection enacted, S.Rep. 1708, 89th Cong., 2d Sess., (1966), U.S.Code Cong. Admin.News 1966, 3722, provided 7426 7426, another's sale returned.11 provided, 6343(b), effective inexpensive return 301.6343-1(b)(2), 301.6343-1(b)(2) (1984).12 34 balanced speedy claimants reconciled permitting once, leaving disputes resolved proceeding. Sand Gravel Contractors, Inc. 624 733, 739 1980); Valley Finance, 203 U.S.App.D.C. 128, 136-137, 629 162, 170-171 (1980), sub nom. Pacific Development, 451 1018, 101 3007, 69 (1981). Its decision yield provisionally governmental disregarded Appeals. exposed double remedies Government, attempt enforcement scheme.13 35 justification "as felt designed "whose 'inadvertently.' 36 disagree. terms considerable deference. moreover, provisions contemplate less ownership. 29. Further, nothing distinguishes among third-party claimants. encompasses advertent seizures inadvertent ones.14 express implied (1983), contrary. 37 Rodgers 7403 empowers family house though nondelinquent spouse homestead 698-700, 2145-2146. ruling, contrasted 6331. 696, 2144. 6331, 7403, "implicate action, "are 'wrongfully upon,' either through channels action." words, now explicit: hearings.15 38 force pursue institute practical effect eliminate alternative lightly discard relief clearly execute uneconomical, matter, small easy evade, defer, obligations placing While enthusiastic about paying still true "taxes life-blood government, prompt availability imperious need." Bull 295 247, 259, 55 695, 79 1421 (1935). 39 40 ordered. 41 POWELL, whom BRENNAN, MARSHALL, STEVENS join, dissenting. 42 presented lawfully seize single codepositor's much, any, delinquent. me today misreads language, overrules substantially ignores taxpayers, I dissent. following facts. 11-12. individuals Also $1,302.56, balance him. issued partial release moneys $856.61 Neva. sued Before submit knows codepositor. dismissed (ED Ark.1982). [a] co-depositor erroneously taken [required ] some stage. Due process, found, before seizing affirmed expressing particular, requires. 45 need," (1935), "formidable arsenal .," 2137, Central "arsenal" foreclosure, can sell interest. specific kinds situations ensure paid respecting nondelinquents 46 today, nondelinquents. holds delinquent's entitles funds—even stipulated, actually holding, disregards plain structure statute, century-long interpretation (effectively overruling Mansfield Excelsior Refining 135 326, 825, 162 (1890), (1958) 47 Administrative drastic primary procedures.1 supra, 259-260, 699-700. allowing summarily delinquent]," permits intervention. "summary, non-judicial method self-help Commissioner convenient satisfying claims." Sullivan, 333 100, 116 (CA3 1964). seized. individual discovers believes wrongful, recourse seek review 6343(b) nine months2 file 7426(a)(1) time.3 48 quite different collecting taxes.4 Attorney General, Treasury, institutes delinquent] 7403(a). All "claiming joined 7403(b), "duly notified action," Unlike "adjudicate[s] involved" "finally determine[s] decree distribution "according findings States." central difference applies allows interest—even many cases, unimportant. procedures, example, completely necessarily "belonging a[n] general, opposite always true. "belon[g] hence susceptible Until foreclosure past century. complete fee leased term years. subsequent conveyed freehold leasehold Harlan analyzed follows: neglected mode sold; namely, equity, interested [delinquent] default proper officers elect satisfaction demands means collector [delinquent's] only, premises They chose adopt former method, sold." 341, 831. 52 administratively proceeded equity (the forerunner 7403) condemn approach, take "belong[ed] latter, part.5 Blacklock 208 75, 228, 396 (1908). 53 recently reaffirmed scheme. After noting exhibits "grea[t] solicitude 2143, discussed differ: 54 "Under nonexempt 'property taxpayer]. .' hearing implicated Indeed, inadvertently filed court. absence 'wrongful levy,' conducted applied, sort expenses sale, general taxpayer." 2144 (first emphasis original, added). inexpensive. Among highest forced profound. Nevertheless, punctilious protecting vested caught effort, ensuring entitled." 2145 (emphasis added).6 57 clear, interpreted delinquent" mean exactly that. 6331's extends IV 58 narrow presented, Reeves's unquestionably withdraw. But accorded mutual convenience independent encompassed possession, use, withdrawn. Black Black, 199 609, 617, 837, 841 (1940); Hayse Hayse, Ark.App. 160-B, 160-F, 630 48, 49-50 These determining, principles issue.7 59 mere withdraw, little reaches accounts—no belong to. could, argues, but, itself, legally others, let alone unlawfully convert others so. cannot ' "ste[p] shoes," ante, 725, quotingUnited sense. comports "[c]ommon sense" relies on, hold delinquent.8 nevertheless determinative 'it taxpayer-depositor.' "9 Ante, 2927, (Ariz.1970) added), 1972) (per curiam ). accessibility controls, effectively overrides 'controls ha[s] "10 quotingMorgan 1057. allow knew none "belonged codepositor, i.e., themselves.11 Cf. 3, 1280 ("It indeed anomalous say property' included all"). Such position exceeds own powers. Rev.Ruling 55-187, 1955-1 Cum.Bull. 1971 ("A therein, case"). position, possession. 61 argues "provisional" 715, 720, 726, 728. pursue—if taking—either relief. characterize taking innocent party's notice, especially when, discovered, recovery proceedings.12 Furthermore, absent kind, months administrative, judicial, 6532(c)(1), ordinarily contest short indeed. certainty discover someone else's owners common unimproved estate, occasion one's short, often place serious jeopardy.13 V 62 portion, decides silentio decisions. Moreover, prove ineffective parties.14 63 dissent, affirm reads pertinent part: days (except exempt section 6334) person. 7701(a)(11)(B) reads: 'Secretary' delegate." "Except subsection (b), discharge obligation) execution process." basic conception 'joint account' names." Harbour Harbour, 207 551, 555, 181 805, 807 (1944). No distinction Reeves" assume, accordingly, record disclose indicated wife mother. liability, 6332(c)(2), 50% penalty. 7. subsequently waived penalty claim, amended accordingly. 13-15. 922 1579, 1580, 824-826 Rev.Rul. 79-38, 1979-1 406, 407. Effective March 25, 1983, issuance here, repealed. 1983 Ark.Gen.Acts, 843, recodification substantial change. dissent misunderstands import post, 741-748. puts limits regards asserts limited constraints. Thus urges greater given else. therefore characterizes authority 741-745, 10. (1960). Once attach right. adequate justify dissent's references concerning implications 741, entirely irrelevant, "inoperative" "irrelevant," 744, 9, stems erroneous assumption not, proposition notwithstanding questions unresolved. stress holding. finding characterization forms find Stock Yards Louisville, 231 628 (CA6 1956), Raffaele Granger, 196 620 1952). 743, distinguishable. attempted bonds, husband wife, husband's liability. "limitations conditions delineated 630. decided enactment added Lien 110(a), 1142. Granger point. propriety Pennsylvania wife's together tenants entirety, spouse. spouse's obligations. 622-623. otherwise; forward claim. pass addressed adequacy sparse indicate practice notification context. address remand, score, 747-748, decidedly premature. recover pre-empted. resolve question, for, 67-521, 67-552(h) (1980). Since likewise insulate argument apes suggesting something compared read proof "completely belong[s]" 741 adverb, language. bases reading interest," delinquent." 737-741. statutes plausible, too Government's, light refers "property." legislative history supports agency's enacted cause wrongfully levied, "where levies least, considers his." (1966) 3750 never enact 7426. plausible supported whole, history, reject possible. incorrect implies word "wrongful" strained "wrongful[ly]" 746, makes clear 7426(a) intentional wrongdoing rather "refers taxpayer's." 30, 3751. misreading piece misunderstanding 740-743, 6. "punctilious effort," purport protects punctiliously protected. comparing manner, compares apples oranges. telling comparison wrongful 7426(a)(1). just context Rodgers. (1890) (which surprisingly relied here), related today. 1868 distiller rented ran distillery "waiver" feeholder stipulating priority mortgage executing waiver, giving rightful title forfeiture. July 20, 1868, ch. 186, 8, 128. 328-329, 338-339, 826-827, 830. waiver entitle treat held, premises, 339, irrelevant present controversy. Insofar stands "had 738, turn around interest—an kind Mansfield, affects renter/distiller fee. phrase cited gave equity. "(a) Authority "(b) Seizure 'levy' includes means. (whether tangible intangible)." states determines return— "(1) "(2) equal "(3) received "Property returned An expiration date sold (other arose) States. regard surrendered Secretary." 6532(c)(1) Filing "In refusal neglect tax, thereof, General delegate, direct Parties thereto. "(c) Adjudication duly proceed established, according 7403. today's unremarkable 732, 15. presence feeholder, tangential case. feeholder's did, consider transfer Harlan, writing found highly pertinent—if controlling—authority. attempts minimize conflict mischaracterizing "[t]he [Rodgers 'implicate parties,' 731. Nothing suggests implicate reason. quotation text indicates, explicit "unpaid [to] ]. like "apples oranges." suffices 695-697, 2143-2144; "more telling" wrongful-levy 731-732, works stating pursued inadvertently," 2144, reasoning Supreme granting terms: "[The was] passed protection made. doing statute[, however,] effects investiture depositors themselves, relieves responsibility duty making inquiry respective accepted interrelationship [Reeves] conversion. inter sese [granting withdrawal]. Those depend intention whoever deposited money, agreement, co-owners, rule spouses' names, tenancy entirety created, defeasible withdrawal. married fact, studiously avoided out. know, presume, co-owner know." 1292, 1295 1984) (citation omitted) accepts, must, court's determination despite (1958); 726-729. (then Judge) Stewart, court, bondholder's bond redemption, full, thereby far issuer "Proof element government's lack falls." 631. distinguish ground "[s]avings bonds 728, expressly analogized 631, points distinguishing feature. difference. Likewise, 1952), rejected view tenancies "either them." 622. "power argued determinative, [spouses] either," ibid. States," person, spouse, another." 623. "did misleading. Raffaele, quashing warrant distraint. initial matter. it. 'property' 'rights 724-725. deciding, correct, statement 741-743. insofar "these mistaken. Not one, "all," proposition. cites Courts, decide Sixth Circuits, 5, Four individual's unexercised setoff checks drawn 1279 1978) (unpaid checks); 1101 1976) (unexercised setoff), 919 1974) (same); 820 1957) (same), 388 1972). fifth 957 allowed community "ha[d] 960. themselves. 155 Pa.1953) (delinquent sole owner tenant); AFTR 82-428, 82-725 (Md.1982) ("[P]rior [codepositors] tenants, fund. Consequently, codepositor] ."); Cal.1965) (joint tenancy); (Mass.1962) (holding funds). dispel fear "bring wishe[s] 2931. my existing many, most, grants right—which 7, supra—levy proper. grant "belong several points, mischaracterizes reliance suggest "puts withdraw] constraints." 724, "state 9. strawmen ago rejected. Like 1057 states, known "federal consequences" effect, construing rewrite provision seriously, fruitless. wrongful. extreme position. apparently her." recognition ownership, controls. To avoid transparently unreasonable switches appears, depends trying recoup offers standard, yields none. justified "[the proceeding." 731, incorrectly 6331(b). surprised "merely interests. Assuming discovered (for required), most sale. "remedy" "punctiliously protect[s]" claims. emphasizes 726. proves much. anyone's anyone nearly owner] [property] conversion taking. prescribed And, Congress, wishes, levy-type observes requirements, notice. dispositive (as Appeals),

Classification Label: 11