Annotations- Effect of Honoring Levy Page3

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Surrender of property: Third party possession: Property exempt from levy: Pension payments.--A married couple could not prevail on their claim for conversion against a financial corporation and a pension trust that surrendered to the IRS the taxpayers' property that was subject to a levy because the corporation and the trust were obligated to surrender the property. Furthermore, the nongovernmental entities that surrendered such property were immune from liability to the taxpayers, and the levy notices received by the financial corporation and the pension trust covered the husband's pension payments and the wife's dividend income. The pension trust was immune from liability even though it, at the IRS's request, began turning over the husband's entire pension payment because the levy on the payments was not subject to any exemption. Prior to that time, the trust exempted a certain amount from each payment that it made to the IRS.

[Code Sec. 7422 ]

Refund action: Informal claims.--A married couple did not file their claims for refund within the time prescribed. Although they alleged that they filed informal claims, the documents filed did not contain written declarations under penalties of perjury, and the taxpayers did not show any basis for the allowance of a refund.

Henry A. Weiler, Frances L. Weiler, 20365 Haynes St. , Canoga Park , Calif. 91306 , for plaintiff-appellant. Gary R. Allen, Richard Farber, John A. Dudeck, Jr., Department of Justice, Washington, D.C. 20530, Robert Lane Morris, Fuchs & Marshall, 12100 Wilshire Blvd., Los Angeles, Calif. 90025-7116, Michael Quigley, Akin, Gump, Strauss, Hauer & Feld, 1333 New Hampshire Ave., N.W., Washington, D.C. 20036, Desmond C. Lee, DeCarlo, Connor & Selvo, 500 S. Virgil Ave., Los Angeles, Calif. 90020, for defendant-appellee.

Before: PREGERSON and NELSON, Circuit Judges, ^* and EZRA, District Judge. ^**

è Caution: This court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.ç

MEMORANDUM ^***

This case arises out of various federal taxes and penalties assessed against Appellants Henry A. Weiler and Frances L. Weiler (collectively "the Weilers") for the tax years 1981 and 1983 through 1988.

I.

The Weilers argue that the district court erred by granting AFC's Fed. R. Civ. P. 12(c) motion for judgment on the pleadings because the court reviewed evidence outside the pleadings without providing notice that it was going to do so. We conclude that the district court did not go outside of the pleadings in considering both the declaration of Thomas E. Mischell, a Vice President of AFC and a copy of the notice of levy that AFC received from the IRS. Although these documents were attached to AFC's motion to dismiss and/or judgment on the pleadings, they were in substance made part of AFC's answer. ¹ See Townsend v. Columbia Operations, 667 F.2d 844, 848-49 (9th Cir. 1982). Neither document contained any information that was previously unavailable for the district court's consideration.

II.

The district court properly dismissed the Weilers' fifth and sixth causes of action because as a matter of law, they cannot prevail on a claim for conversion against AFC and CPT. In general, any person in possession of or obligated with respect to property or rights to property subject to levy upon which levy has been made, must surrender the property or rights to the Secretary of the Treasury. 26 U.S.C.A. §6332(a) (West Supp. 1995). A person who fails to surrender the property subject to levy upon demand of the Secretary, "shall be liable in his own person and estate to the United States in a sum equal to the value of property or rights not so surrendered, ... together with costs and interests on such sum ...," and also shall be liable for a penalty equal to 50 percent of that amount. 26 U.S.C.A. §6332(d) ; Farr v. United States [93-1 USTC ¶50,229 ], 990 F.2d 451, 456 (9th Cir.) (citing United States v. National Bank of Commerce [85-2 USTC ¶9482 ], 472 U.S. 713, 721-26 (1985)), cert. denied, -- U.S. --, 114 S. Ct. 634 (1993). Additionally, such third persons are generally "discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to the property or rights to property arising from the surrender of payment." 26 U.S.C.A. §6332(e) ; 26 C.F.R. §301.6332-1(c) (1995); see Farr [93-1 USTC ¶50,229 ], 990 F.2d at 456; United States v. Miller [93-1 USTC ¶50,155 ], 817 F. Supp. 1493, 1497 (E.D. Wash. 1992), aff'd, 40 F.3d 1246 (9th Cir. 1994).

We hold that the district court did not err in concluding that the non-governmental defendants were immune from liability under §6332(e) . First, in Maisano v. Welcher [91-2 USTC ¶50,478 ], 940 F.2d 499, 502 (9th Cir. 1991), we expressly rejected the Weilers' assertion that the grant of statutory immunity is only available to custodians of levied property of federal employees pursuant to 26 U.S.C.A. §6331(a) (West Supp. 1995). Second, the Weilers' argument that the levy notices sent to AFC and CPT did not cover Henry Weiler's pension payments and Frances Weiler's dividend income is without merit. An IRS levy extends to property and rights to property which exist "at the time the levy is made," see 26 C.F.R. §301.6331-1(c) (1995), and Congress intended to attach a broad meaning to the statutory language "all property and rights to property." National Bank of Commerce [85-2 USTC ¶9482 ], 472 U.S. at 719-20. The phrase is expansive and reflects Congress's intent to "reach every interest in property that a taxpayer might have." Id. ²

The Weilers further contend that CPT is not immune under 6332(e) because beginning in April 1993, after its receipt of a fourth Notice of Levy, CPT began turning over all of Henry Weiler's pension, without exemptions, at the request of the IRS. Prior to that time, CPT had exempted $383.34 from each payment to the IRS and paid this amount directly to Henry Weiler. The Weilers' exclusive reliance on Farr v. United States is misplaced. That case involved an employer's failure to honor the workmen's compensation exemption under 26 U.S.C.A. §6334(a)(7) in attempting to comply with a notice of levy on the employee's wages. [93-1 USTC ¶50,229 ], 990 F.2d at 456-57. We determined that the IRS had not levied upon worker's compensation benefits and therefore, the employer was not immune from liability from turning those funds over to the IRS. Here, however, the Weilers claim that the levy on Henry Weiler's pension was subject to exemption under sections 6334(a)(9) and 6334(d) , which provide for a minimum exemption and its method of calculation for wages, salary and other income. The exemption under Section 6334(a)(9) is different from a section 6334(a)(7) exemption in that under the former provision, the district director may determine that no amount of wages, salary or other income is exempt, as long as notice is given to the person who has been presented with the notice of levy. 26 C.F.R. §301.6334-2(c)(1) (1995). Additionally, "[t]he employer or other person upon whom the levy is served may rely on such notification in paying over amounts pursuant to the levy." Id. In contrast, section 6334(a)(7) , which applies to workers compensation benefits, provides for an exemption in absolute terms. See 26 U.S.C.A. §6334(a)(7) .

III.

We have held that 28 U.S.C.A. §2410 (West 1994) permits quiet title actions to challenge the procedural aspects of tax liens, but not to collaterally attack the merits of the underlying tax assessments. Huff v. United States [93-2 USTC ¶50,633 ], 10 F.3d 1440, 1445 (9th Cir. 1993) (citing Arford v. United States [92-1 USTC 50,229], 934 F.2d 229, 232 (9th Cir. 1991)), cert. denied, -- U.S. --, 114 S. Ct. 2706 (1994); Elias v. Connett [90-2 USTC ¶50,397 ], 908 F.2d 521, 527 (9th Cir. 1990). We affirm the district court's dismissal of the Weilers' quiet title claim because they have presented no evidence to counter the Government's showing that all required procedures were followed with respect to the making of assessments, creation of the tax liens, and the issuance of levies against them. Furthermore, we reject the Weilers' allegation that they were deprived of due process because the district court first dismissed their third cause of action and then proceeded to grant summary judgment as to that claim. The record reflects that the Weilers had an ample opportunity to respond to the merits of the Government's summary judgment motion.

IV.

The district court also correctly determined that it lacked subject matter jurisdiction over the Weilers' claim for injunctive relief under both the statutory and judicial exceptions to the Anti-Injunction Act.

Actions to enjoin the assessment and collection of taxes by the IRS are narrowly limited by the Anti-Injunction Act. 26 U.S.C.A. §7421 (West 1989); ³ Elias [90-2 USTC ¶50,397 ], 908 F.2d at 523. The district court must dismiss for lack of subject matter jurisdiction any suit that does not fall within one of the statutorily or judicially created exceptions to the act. See Jensen v. IRS [88-1 USTC ¶9130 ], 835 F.2d 196, 198 (9th Cir. 1987).

The IRS is generally precluded from assessing or collecting a "deficiency" in tax until a notice has been duly issued to the taxpayer and the taxpayer is afforded an opportunity to contest the asserted deficiency in Tax Court. See 26 U.S.C.A. §6213(a) (West 1989). Under 26 U.S.C.A. §6211 (West 1989), a "deficiency" refers only to "income, estate, and gift taxes imposed by subtitles A and B and to excise taxes imposed by chapters 41, 42, 43, or 44," and generally is defined as the difference between the actual correct tax for the year and the tax shown on the taxpayer's return for the year. 26 U.S.C.A. §6211(a) ; 26 C.F.R. §301.6211-1 (1995). Accordingly, taxes and penalties imposed by other parts of the Code are not subject to deficiency procedures and may be immediately assessed without regard to the restrictions of §6213(a) . The Weilers sought injunctive relief against IRS collection action for the 1984 excise tax liability imposed pursuant to 26 U.S.C.A. §1491 (West 1988) and related penalties imposed against them for tax years 1984 through 1988. However, the excise tax imposed pursuant to section 1491 does not fall within the definition of deficiency under 6211: it neither constitutes an income, estate or gift tax nor is an excise tax imposed under chapter 41, 42, 43, or 44. See 26 U.S.C.A. §6211(a) . See Freedman v. Commissioner [CCH Dec. 35,826 ], 71 T.C. 564, 566-68 (1979) (declining to apply section 6211(a) deficiency procedures to section 1491 excise tax).

Similarly, the related negligence and failure to file penalties imposed under 26 U.S.C.A. §6651 (West 1989), imposed in connection with the property transferred by the Weilers are not "deficiencies" within the meaning of Section 6211(a) . These penalties are collected in the same manner as the taxes with respect to which such penalties are asserted. See 26 U.S.C.A. §6665(b) (West Supp. 1995); Fendler v. Commissioner [71-1 USTC ¶9380 ], 441 F.2d 1101, 1102 (9th Cir. 1971). Additionally, the penalties assessed against the Weilers for their failure to file information returns required by 26 U.S.C.A. §6048 (West 1989) ⁴ are specifically exempted from deficiency procedures by statute. See 26 U.S.C.A. §6677(b) (West 1989).

The Weilers unsuccessfully argue that the Anti-Injunction Act does not apply to "penalties." On the contrary, penalties assessed for failure to pay taxes are considered taxes and are subject to the Anti-Injunction Act. Shaw v. United States [64-1 USTC ¶9421 ], 331 F.2d 493, 496 (9th Cir. 1964); O'Brien v. Evans [83-1 USTC ¶9207 ], 560 F. Supp. 228, 229 (D. Ore. 1983); Crouch v. Commissioner [78-1 USTC ¶9376 ], 447 F. Supp. 385, 386 (N.D. Cal. 1978). Moreover, there is no merit to the Weilers' claims that the IRS cannot enforce section 6048 , requiring information returns as to certain foreign trusts, because its accompanying regulation, 26 C.F.R. §16.3-1(c) (1995), has expired, or that §6048 does not require the filing of annual returns. See 26 U.S.C.A. §6048(c) .

Moreover, the Weilers' claim for injunctive relief does not fall under the narrow judicial exception to the preclusive effect of the Anti-Injunction Act. Enochs v. Williams Packaging & Navigation Co. [62-2 USTC ¶9545 ], 370 U.S. 1, 7 (1962). Under Enochs, injunctive relief is available if the taxpayer can demonstrate that (1) under no circumstances could the Government prevail, and (2) the taxpayer will be irreparably harmed if the injunction is not granted. Id.; see Elias [90-2 USTC ¶50,397 ], 908 F.2d at 525. The Weilers cannot satisfy either prong of the Enochs standard. Here, the record is replete with evidence that the Government complied with all necessary procedures in creating valid assessments and collecting on them, and in imposing tax penalties. Additionally, the Weilers have not established that they suffer from more than mere financial hardship, which does not suffice for a finding of irreparable injury. Elias [90-2 USTC ¶50,397 ], 908 F.2d at 526-27.

Thus, the district court correctly determined that the Weilers had "alleged no facts which would bring them within an exception to the Anti-Injunction Act[,]" and dismissed the fourth cause of action.

V.

The district court did not err in granting summary judgment in favor of the Government after concluding (1) that it did not have subject matter jurisdiction over the Weilers' refund claims, or (2) that the Weilers failed to state any valid ground for obtaining an income tax refund for either 1981 or 1983.

The Government only consents to be sued in a tax refund action if (1) the taxpayer pays the requisite amount of tax assessed, see Thomas v. United States [85-1 USTC ¶9263 ], 755 F.2d 728, 729 (9th Cir. 1985), (2) files a claim with the IRS within the time prescribed by statute, see 26 U.S.C.A. §6511 (West 1989) and 26 U.S.C.A. §7422(a) (West Supp. 1989), and (3) files the tax refund suit within the time constraints prescribed by 26 U.S.C.A. §6532(a)(1) . See United States v. Felt & Tarrant Mfg. Co. [2 USTC ¶708 ], 283 U.S. 269 (1931).

The parties focus on the second requirement above. The Weilers contend that they filed "informal claims" for refunds for the years 1981 and 1983 and satisfied the jurisdictional requirement set forth in §7422 . However, neither document filed by the Weilers for those years contained written declarations under penalties of perjury, as required by 26 C.F.R. §301.6402-2(b)(1) (1995). Nevertheless, the Weilers argue that the absence of the declarations do not nullify the effect of their purported claims, citing to United States v. Kales [41-2 USTC ¶9785 ], 314 U.S. 186 (1941), and Angelus Milling Co. v. Commissioner [45-1 USTC ¶9310 ], 325 U.S. 293 (1945), which discuss the limited circumstances in which the IRS can be deemed to have waived the formal requirements of refund claims. The district court correctly concluded that there is no evidence in the record of such waiver by the IRS here. See Conclusions of Law, at ¶¶4, 5. Moreover, even assuming arguendo that the Weilers could have established that they filed timely and valid claims for refunds, they provide no cognizable basis for the allowance of a refund.

The district court's rulings are AFFIRMED in all respects.

^* The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. 34(a); 9th Cir. R. 34-4.

^** Honorable David Alan Ezra, United States District Judge for the District of Hawaii, sitting by designation.

^*** This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.

¹ Mischell's declaration, which consists of five brief paragraphs, states that AFC is a publicly traded Ohio corporation, responsible for, among other things, dispersing dividends to its shareholders; that Frances Weiler is shareholder of AFC stock; that in 1991, AFC was served with an IRS Notice of Levy in respect of her unpaid federal tax liabilities (Exhibit A to the Declaration); and that in response to the notice, AFC surrendered a dividend payment of $2,404.80 to the IRS.

² Moreover, contrary to the Weilers' assertions, the IRS had the authority and right to impose a continuous levy against Henry Weiler's pension payment because it was an "obligation" subject to levy under §6331(b) : "Obligations exist when the liability of the obligor is fixed and determinable although the right to receive payment thereof may be deferred to a later date." 26 C.F.R. §301.6331-1(a)(1) ; cf. 26 C.F.R. §301.6331-1(b) (providing for continuing effect of on salary or wages from the time levy is originally made until it is released). Since Henry Weiler's pension benefit payments are both fixed and determinable, only one notice of levy was needed to have a continuing effect on Henry Weiler's pension benefits.

³ The Anti-Injunction Act provides in part:

(a) Tax.--Except as provided in section 5212(a) and (c) , 6123(a), 6672(b) , 6694(c) , 7426(a) and (b)(1) and 7429(b) , no suit for the purpose of restraining the assessment or collection of any tax shall not be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.

26 U.S.C.A. §7421 .

⁴ Section 6048 requires a taxpayer to file returns in connection with the transfer of any money or property to a foreign trust by a citizen of the United States . 26 U.S.C.A. §6048 .

 

[97-2 USTC ¶50,621] In re John D. Schaffer and Peggy J. Schaffer, Debtors. John D. Schaffer and Peggy J. Schaffer, Plaintiffs v. United States of America , Defendant

U.S. Bankruptcy Court, Dist. Ida., 95-04021, 6/3/97

[Code Secs. 6321 , 6323 , 6334 and 7401 ]

Tax liens: Validity of: District where filed: Levies: Property subject to liens and levies: 401(k) plan interests: Assessment: Evidence.--

The vested interests of debtors in bankruptcy in their 401(k) plans constituted "property" or "rights to property" that were subject to attachment by a perfected federal tax lien. The IRS properly filed a prepetition notice of lien in the public records of the debtors' county of residence; thus, the lien was perfected and unavoidably attached to the 401(k) plan interests at the time it was recorded. Moreover, no exemption from levy applies to 401(k) plan benefits. The extent and nature of the debtors' interests in the plans were controlled by the terms of the plans, and the court was unable to speculate as to the tax consequences of the levy on those interests. A Certificate of Assessments and Payments established the amount of the government's tax claim since the debtors failed to produce evidence to the contrary.

Bruce A. Anderson, Elsaesser, Jarzabek & Anderson, P.O. Box 1049 , Sandpoint, Ida. 83864, for plaintiffs. Richard R. Ward, Department of Justice, Washington , D.C. 20530 , for defendant.

MEMORANDUM OF DECISION

HAGAN, Bankruptcy Judge:

John D. Schaffer and Peggy J. Schaffer ("Debtors") filed this adversary proceeding to determine their tax liability and the validity of a lien filed by the Internal Revenue Service ("Service"). Specifically, Debtors dispute the attachment of the lien to their 401(k) plan interests. Debtors also moved to amend their complaint to include the additional issues of whether the Service may levy on the Debtors' 401k plans and the tax consequences of such levy. A hearing was held and the motion to amend was granted.

FACTS

Debtors filed their petition for relief under Chapter 13 of Title 11, United States Code, on December 26, 1995. A plan was subsequently confirmed on June 12, 1996. Debtors' scheduled assets included fully vested 401(k) plans for each John Schaffer and Peggy Schaffer. These plans were claimed exempt. Debtors' current income is derived from Social Security and pension and retirement payments.

The Service assessed tax liabilities against the Debtors for the years 1983 through 1992 based upon adjustments to the returns for those years due to the Debtors' participation in certain tax shelters. Based on such assessments, the Service filed a tax lien in the public records of Bonner County , Idaho , on September 27, 1996.

ISSUES PRESENTED

The issues are: 1) whether the tax lien attached to the Debtors' interest in their 401(k) plans, 2) whether the service may levy upon a 401k plan which is not in pay status, and 3) whether the service may levy now, forcing a distribution from the plan.

DISCUSSION

I. Lien attachment

26 U.S.C. §6321 provides:

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount . . . shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

The lien may reach a taxpayer's interest in property only to the extent of such interest as determined by state law. In re Raihl [93-1 USTC ¶50,290], 152 B.R. 615, 617 (9th Cir. BAP 1993) citing U.S. v. National Bank of Commerce [85-2 USTC ¶9482], 472 U.S. 713, 719-720 (1985) see also, In re Kimura [92-2 USTC ¶50,397], 969 F.2d 806, 811 (9th Cir. 1992).

Federal law, however, controls whether state-created interests constitute property to which a federal tax lien may attach. Id. Additionally, "inalienability of the pension interests does not destroy their character as property or immunize the interest from the attachment of a federal tax lien." In re Raihl [93-1 USTC ¶50,290], 152 B.R. 615, 618 (9th Cir. 1993) citing Leuschner v. First Western Bank and Trust Co. [58-2 USTC ¶9723], 261 F.2d 705, 708 (9th Cir. 1958). Further, interests in ERISA qualified plans are "property or rights to property" under 26 U.S.C. §6321. In re Perkins, 134 B.R. 408, 410-11 (Bankr. E.D.Cal.1991) accord Shanbaum v. U.S. [94-2 USTC ¶50,512], 32 F.3d 180, 183 (5th Cir. 1994).

In Idaho , both real and personal property are defined by statute. "Personal property" is defined as "[e]very kind of property that is not real is personal." I.C. §55-102. Further, "[t]he words 'personal property' include money, goods, chattels, things in action, evidence of debt and general intangibles as defined in the Uniform Commercial Code-Secured Transactions." I.C. §73-114(3). Thus the Debtors' vested interests in their 401(k) plans represent a property interest to which a federal tax lien may attach.

The validity and priority of a lien as to third parties is determined by section 6323.

The lien imposed by section 6321 shall not be valid as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until notice thereof which meets the requirements of subsection (f) has been filed by the Secretary.

26 U.S.C. §6323(a).

Subsection (f) provides:

In the case of personal property, whether tangible or intangible, in one office within the State (or the county, or other governmental subdivision), as designated by the laws of such State, in which the property subject to the lien is situated, . . .

26 U.S.C. §6323(f)(1)(A)(ii), and further,

For purposes of paragraphs (1) and (4), property shall be deemed to be situated--

****

In the case of personal property, whether tangible or intangible, at the residence of the taxpayer at the time the notice of lien is filed.

26 U.S.C. §6323(f)(2)(B).

Idaho has determined that "[n]otices of liens upon personal property, . . . shall be filed as follows: . . . in the offices of the county recorder of the county where the taxpayer resides at the time of filing of the notice of lien." I.C. §45-202(b)(4).

The Service filed its notice of lien prepetition in the public records of Bonner County in September, 1996, the county of residence of the Debtors when the lien was filed. A tax lien is choate when nothing else need to be done to perfect. In re May Reporting Services, Inc. [90-2 USTC ¶50,464], 115 B.R. 652, 656 (Bankr. D.S.D.1990) citing In re Major, 67 B.R. 36, 39 (Bankr. W.D.Ky.1986) accord U.S. v. Cutting & Trimming, Inc. [62-2 USTC ¶9542], 206 F.Supp. 951, 954 (D. Vermont 1962) aff'd [63-1 USTC ¶9472], 317 F.2d 446 (2d Cir. 1963) and [64-2 USTC ¶9520], 377 U.S. 351 (1964). Thus, the Service's tax lien was perfected under 11 U.S.C. 545(2) and unavoidably attached to the Debtors, property and rights to property as of that date.

Debtors further contend the lien did not attach to the 401(k) plans because no attempt to levy was made by the Service. They cite to In re Taylor, 91-2 U.S.T.C. ¶50,354, (Bankr. D. MD. 1991) for the proposition that since no judgment or levy was obtained prepetition, the lien was inchoate as to the debtors' interests in the plans. Taylor is contrary to the case law in this circuit.

[T]he Ninth Circuit has specifically held that while a spendthrift clause may be effective to shield attachment and levy by general creditors against a beneficiary's interest in a trust, such shield is unavailing to attachment and levy of a federal tax lien. In addition, Congress has expressly indicated that even where a debtor may choose to exempt rights to a pension under section 522, such exemption does not affect a federal tax lien. (citations omitted)

In re Raihl [93-1 USTC ¶50,290], 152 B.R. 615, 618 (9th Cir. BAP 1993) quoting In re Perkins, 134 B.R. 408, 411 (Bankr. E.D.Cal. 1991). The lien attached at the time it was recorded. Since debtors' interest in the 401(k) plans constitutes "property" or "rights to property", those interests are subject to attachment of a properly perfected federal tax lien under 26 U.S.C. §6321.

II. Levy

As discussed above 11 U.S.C. §6321 creates a lien in favor of the United States upon all property and rights to property of the taxpayer. The cited statute, 11 U.S.C. §6331, allows the Service to levy on all property and rights to property of the taxpayer. The only limitation on the Service's right to levy is found in 11 U.S.C. §6334. Plan benefits under 401k are not exempt under this statute. Additionally, section 6334(c) provides:

Notwithstanding any other law of the United States (including section 207 of the Social Security Act), no property shall be exempt from levy other than the property specifically made exempt by subsection (a).

11 U.S.C. §6334(c).

Further, ERISA provides that its requirements shall not be "construed to alter, amend modify, invalidate, impair, or supersede any law of the United States . . . or any regulation issued under any such law." 29 U.S.C. §1144(d). See Shanbaum v. U.S. [94-2 USTC ¶50,512], 32 F.3d 180, 183 (5th Cir. 1994). Thus, the Service may levy on the Debtors' interest in the 401k plans.

III. Immediate levy

The timing of the Service's collection efforts is a matter of internal policy. This court has determined the Service's right to collect from the interest of the Debtors in the 401k plans. The extent of the Debtors' interest in the plans is controlled by the provisions of the plans. Debtors have submitted no evidence of the terms of the plans in question that determine the extent and nature of their interest. Thus, this Court cannot speculate as to the tax consequences of the levy on the Debtors' 401k plans within the context of this adversary proceeding. The Service's motion for summary judgment will be granted.

CONCLUSION

The Service has submitted a Certificate of Assessments and Payments, indicating the extent of the tax claim and that the amount claimed is the correct amount. The Debtors have submitted no evidence on the extent of the claim that would create a genuine issue of material fact. The Service's tax lien is thus valid and perfected and, as such, attaches to the Debtors' interest in the 401k plans. The Service also has the right to levy on the Debtors' interest in the plans.

Accordingly, the Service's motion for summary judgment of dismissal of the Plaintiffs' complaint will be granted by separate order.

 

[97-2 USTC ¶50,492] Rosser B. Melton, Jr., Plaintiff-Appellant v. Teachers Insurance & Annuity Association of America, Defendant-Appellee, United States of America, on behalf of its agency, the Internal Revenue Service, Intervenor Defendant-Appellee

(CA-5), U.S. Court of Appeals, 5th Circuit, 96-11134, 6/16/97, 114 F3d 557, 114 F3d 557. Affirming an unreported District Court decision

[Code Sec. 6332 ]

Levies: Annuity payments: Surrender of property: Effect of honoring levy: Immunity: Possession of taxpayer's property: Judicial attachment.--An annuity association did not commit fraud, breach of contract, or breach of fiduciary duty when it remitted an individual's monthly annuity payment to the IRS pursuant to a levy for the payment of delinquent taxes. Once the association received a notice of levy, it was obligated to surrender the funds to the IRS. It could not assert the defense that it was not in possession of the taxpayer's property, and the property was not subject to a prior judicial attachment or execution. Since the association properly complied with the levy, it was immune from liability to the taxpayer for such compliance.

[Code Secs. 6331 and 6334 ]

Levies: Exempt property: Annuity payments: Immunity for complying with levy: Other source of income available: Verified statement.--An individual's annuity payments were not exempt from levy absent proof that he lacked other sufficient sources of income. He produced no evidence to controvert the IRS's finding that other sources of income were available, and he failed to file the requisite verified statement.

Rosser B. Melton, Jr., P.O. Box 8102, Denton, Tex. 76203, pro se. Douglas W. Alexander, Michael W. Eady, Brown McCarroll & Oaks Hartline, 111 Congress Ave., Austin, Tex. 78701, for defendant-appellee. Charles E. Brookhart, Department of Justice, Washington , D.C. 20530 , for intervener defendant-appellee.

Before: JONES, DEMOSS and PARKER, Circuit Judges.

PARKER, Circuit Judge:

The Appellant, Rosser B. Melton, Jr. ("Melton"), brought suit in state court against Teachers Insurance & Annuity Association of America ("TIAA") alleging that TIAA committed fraud, breach of contract, and breach of fiduciary duty because TIAA was paying Melton's monthly annuity payment to the Internal Revenue Service ("IRS") pursuant to an IRS levy presented to it for the payment of back taxes owed by Melton. The United States , on behalf of the IRS, intervened and removed this action to federal court. The district court granted summary judgment to TIAA and the IRS. Based on the following discussion, we affirm.

FACTUAL BACKGROUND

On July 1, 1983, Melton was named as the annuitant on a Teachers Insurance & Annuity Association Contract (the "Annuity") created from an installment refund life annuity. The IRS maintains that Melton is indebted to the United States for unpaid federal income taxes for tax years 1975, 1976, 1977, 1983, and 1986 in the approximate amount of $113,728.88. As a result, on April 15, 1993, the IRS served a Notice of Levy upon TIAA against Melton's interest in the Annuity. TIAA responded to the levy and gave notice to Melton. TIAA also informed the IRS that the type of levy served upon it appeared to be only applicable to amounts due and owing to Melton at that specific point in time. Thus, the following month, the IRS served a second Notice of Levy upon TIAA against Melton's interest in the Annuity.

The second levy was a "continuing levy" effective against any amounts owed by TIAA to Melton whenever those amounts became payable. At the time of the second levy, the Annuity was providing Melton with monthly payments of $236.01. In addition to the second levy, the IRS notified TIAA that Melton was not entitled to any exemptions under §6334 of the Internal Revenue Code. The IRS also advised TIAA that the levy it presented to TIAA was amended to reflect that position. On June 4, 1993, TIAA gave notice to Melton that his entire monthly annuity benefit would be paid over to the IRS to honor its levy, beginning July 1, 1993. This cause of action ensued.

DISCUSSION

This Court reviews the district court's grant of summary judgment under a de novo standard of review. Estate of Bonner v. United States [96-2 USTC ¶60,237], 84 F.3d 196 (5th Cir.1996). We apply the same standard as the district court. Consequently, summary judgment is appropriate where the pleadings and summary judgment evidence present no genuine issue of material fact and the moving party is entitled to judgement as a matter of law. ¹ Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Hibernia Nat'l. Bank v. Carner, 997 F.2d 94 (5th Cir.1993). Furthermore, the moving party is entitled to judgment as a matter of law if the nonmoving party fails to make a sufficient showing of an essential element of the case to which the nonmoving party has the burden of proof. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. However, we must view the evidence in the light most favorable to the nonmovant. Hibernia , 997 F.2d at 97. The non-moving party must set forth specific facts to establish that there is a genuine issue for trial, but where the evidential submissions lack probative value as to a genuine issue, summary judgment is appropriate. Anderson, 477 U.S. at 249, 106 S.Ct. at 2511; Hibernia , 997 F.2d at 97-98. A summary assertion made in an affidavit is simply not enough evidence to raise a genuine issue of material fact. Hibernia , 997 F.2d at 98; see also Lechuga v. Southern Pacific Transp. Co., 949 F.2d 790, 798 (5th Cir.1992); Galindo v. Precision American Corp., 754 F.2d 1212, 1216 (5th Cir.1985). Following these well known standards, we find Melton's argument that the evidence presented by TIAA and the IRS was not competent summary judgment evidence to be meritless.

The district court found that the IRS was authorized by law to levy on the taxpayer's Annuity to collect his unpaid taxes under the authority of 26 U.S.C. §6331, and that Melton failed to produce any evidence to controvert the IRS's finding that Melton had sufficient other income to preclude the applicability of the exemption under §6334(a)(9). Melton does not contend that his Annuity is exempt under §6334(a)(6). Instead, Melton argues that his monthly Annuity payments are exempt under §6334(a)(9) and that he does not have the burden of proof as to an exemption. We now address Melton's arguments.

The §6334 exemptions come into play when the government seeks to collect delinquent taxes by administrative levy pursuant to §6331. Section 6334(a)(9) of the Internal Revenue Code provides a minimum exemption for wages, salary, and other income. Treas.Reg. §301.6334-2(c) provides in part that if the taxpayer has other income that equals or exceeds the amount exempt from levy, the IRS may treat no amount of the taxpayer's wages, salary, or other income on which the IRS elects to levy as exempt. The IRS made the determination that Melton had other sources of income and, thus, his Annuity income was subject to complete levy. In addition, the IRS complied with the requirement that it notify TIAA that no amount of the Annuity payment was exempt and that TIAA could rely on the notice in honoring the levy.

Melton, however, contends that he did not have the burden of proof as to an exemption regarding his annuity income. We disagree. This Court has noted that taxpayers have the burden of proof to prove that an IRS assessment of taxes is improper, Westbrook v. Commissioner [95-2 USTC ¶50,587], 68 F.3d 868 (5th Cir.1995), citing, United States v. Janis [76-2 USTC ¶16,229], 428 U.S. 433, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976), and that the plaintiff bears the burden of proving a wrongful levy. Century Hotels v. United States [92-1 USTC ¶50,080] 952 F.2d 107 (5th Cir.1992); see also McGinness v. United States [96-2 USTC ¶50,434], 90 F.3d 143 (6th Cir.1996). Moreover, Melton cites no authority for his position. Therefore, we hold that once the IRS has determined that a taxpayer, such as Melton, is not entitled to an exemption under §6334(a)(9), that the taxpayer bears the burden of proof to prove that his annuity income is exempt under §6334(a)(9). Because Melton, the nonmovant, having the burden of proof, failed to produce any evidence to controvert the IRS's finding that he had sufficient other income to preclude the applicability of the exemption under §6334(a)(9), Melton has failed to make a sufficient showing which would preclude summary judgment. Melton offered no proof, other than his conclusory statement, that he was entitled to an exemption. Nor did Melton file a verified statement pursuant to Treas.Reg. §301.6334-4. Consequently, under the summary judgment standards above, we uphold the district court's ruling.

Under §6331, the IRS is authorized to levy upon all property and rights to property belonging to the taxpayer in order to collect his assessed income tax liabilities. Shanbaum v. United States [94-2 USTC ¶50,512], 32 F.3d 180, 183 (5th Cir.1994); see also United States v. National Bank of Commerce [85-2 USTC ¶9482], 472 U.S. 713, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985). Annuities have been found to be within the scope of §6331. United States v. Metropolitan Life Ins. [89-1 USTC ¶9362], 874 F.2d 1497 (11th Cir.1989). Section 6332(a) of the Internal Revenue Code provides that "... any person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made shall, upon demand of the Secretary, surrender such property or rights...." National Bank of Commerce [85-2 USTC ¶9482], 472 U.S. at 715, 105 S.Ct. at 2921. The custodian of a taxpayer's property has two defenses for failure to comply with an IRS tax levy; one, the custodian is not in possession of the taxpayer's property, or two, the property is subject to a prior judicial attachment or execution. Id. at 722, 105 S.Ct. at 2925; United States v. General Motors Corp. [91-1 USTC ¶50,158], 929 F.2d 249, 251 (6th Cir.1991).

The district court granted summary judgment to TIAA on the basis that, once TIAA received notice of the IRS levy, it was obligated pursuant to §6332(a) to surrender Melton's monthly annuity payments to the IRS. TIAA could not assert the defense that it was not in possession of Melton's property, nor was the property subject to a prior judicial attachment or execution. Failure by TIAA to comply with the IRS's levy, absent any defense, would subject TIAA pursuant to §6332(d) to personally owing the amount of the property not surrendered, but not to exceed the taxes due along with costs of collection. In addition, §6332(d)(2) provides for a fifty percent penalty for failure to comply with the levy without reasonable cause. Consequently, TIAA was required, if not motivated, to honor the IRS levy and informed Melton that it would comply with the IRS levy. We find that TIAA fully complied with the statutory requirements of §6332(a) when it directed Melton's monthly annuity payments to the IRS as directed by the levy. Further, the district court concluded that TIAA was "discharged from any obligation or liability to the delinquent taxpayer ... with respect to such property or rights in property arising from such surrender or payment" under §6332(e). We agree. Because TIAA complied with the levy issued by the IRS under §§6331 and 6332, it is immune from liability to Melton for complying with the levy. See Burroughs v. Wallingford [86-1 USTC ¶9173], 780 F.2d 502, 503 (5th Cir.1986); General Motors [91-1 USTC ¶50,158], 929 F.2d at 251.

The district court awarded costs against Melton in favor of TIAA. Melton failed to address the issue on appeal. This Court has repeatedly stated that the brief of the appellant is required to contain a statement of the issues presented for review and an argument portion which analyzes and supports those contentions. Consequently, issues not raised or argued in the brief are considered waived and thus will not be noticed or entertained by this Court on appeal. See United Paperworkers Int'l. Union , AFLCIO, CLC v. Champion Int'l. Corp., 908 F.2d 1252 (5th Cir.1990). Because Melton failed to raise the issue of costs on appeal, we find that he has waived this issue.

CONCLUSION

Based on the foregoing discussion, we affirm the district court's grant of summary judgment for TIAA and the United States .

AFFIRMED.

¹ We note that