Annotations- Amount of
Exemption
6334 Annotations:
Amount of Exemption- Levy
Property Exempt from
Levy: Amount of Exemption
Notice 2004-81
, I.R.B. 2004-51, 996,
December 20, 2004
.
[ Code
Sec. 6334]
Levy: Amounts exempt from levy: Individual's income: Tables:
Publication 1494. --
The
IRS has released Publication 1494, which contains tables that are to be
used in computing the amount of an individual's income that will be
exempt from a notice of levy to collect delinquent taxes in 2005.
1.
Table for Figuring Amount Exempt From Levy on Wages, Salary, and Other
Income (Forms 668-W(c), 668-W(c)(DO)) and 668-W(ICS) 2005
Publication 1494, shown below, provides tables that show the amount of
an individual's income that is exempt from a notice of levy used to
collect delinquent tax in 2005.
(Amounts are for each pay period.)
_______________________________________________________________________
Filing Status: Single
_______________________________________________________________________
Number of Exemptions Claimed on Statement
_______________________________________________________________________
Pay
Period 1 2 3 4 5 6 More than 6
_______________________________________________________________________
Daily 31.54 43.85 56.15 68.46 80.77 93.08 19.23 plus
12.31 for
each exemption
_______________________________________________________________________
Weekly 157.69 219.23 280.77 342.31 403.85 465.38 96.15 plus
61.54 for
each exemption
_______________________________________________________________________
Biweekly 315.38 438.46 561.54 684.62 807.69 930.77 192.31 plus
123.08 for
each exemption
_______________________________________________________________________
Semimonthly 341.67 475.00 608.33 741.67 875.00 1008.33 208.33
plus 133.33 for
each exemption
_______________________________________________________________________
Monthly 683.33 950.00 1216.67 1483.33 1750.00 2016.67 416.67
plus 266.67 for
each exemption
_______________________________________________________________________
_______________________________________________________________________
Filing Status: Unmarried Head of Household
_______________________________________________________________________
Number of Exemptions Claimed on Statement
_______________________________________________________________________
Pay
Period 1 2 3 4 5 6 More than 6
Daily 40.38 52.69 65.00 77.31 89.62 101.92 28.08 plus
12.31 for
each exemption
_______________________________________________________________________
Weekly 201.92 263.46 325.00 386.54 448.08 509.62 140.39 plus
61.54 for
each exemption
_______________________________________________________________________
Biweekly 403.85 526.92 650.00 773.08 896.15 1019.23 280.77 plus
123.08 for
each exemption
_______________________________________________________________________
Semimonthly 437.50 570.83 704.17 837.50 970.83 1104.17 304.17 plus
133.33 for
each exemption
_______________________________________________________________________
Monthly 875.00 1141.67 1408.33 1675.00 1941.67 2208.33 608.33 plus
266.67 for
each exemption
_______________________________________________________________________
Filing Status: Married Filing Joint Return (and Qualifying Widow(er)s)
_______________________________________________________________________
Number of Exemptions Claimed on Statement
_______________________________________________________________________
Pay
Period 1 2 3 4 5 6 More than 6
_______________________________________________________________________
Daily 50.77 63.08 75.38 87.69 100.00 112.31 38.46 plus
12.31 for
each exemption
_______________________________________________________________________
Weekly 253.85 315.38 376.92 438.46 500.00 561.54 192.31 plus
61.54 for
each exemption
_______________________________________________________________________
Biweekly 507.69 630.77 753.85 876.92 1000.00 1123.08 384.62 plus
123.08 for
each exemption
_______________________________________________________________________
Semimonthly 550.00 683.33 816.67 950.00 1083.33 1216.67 416.67 plus
133.33 for
each exemption
_______________________________________________________________________
Monthly 1100.00 1366.67 1633.33 1900.00 2166.67 2433.33 833.33 plus
266.67 for
each exemption
_______________________________________________________________________
_______________________________________________________________________
Filing Status: Married Filing Separate Return
_______________________________________________________________________
Number of Exemptions Claimed on Statement
_______________________________________________________________________
Pay
Period 1 2 3 4 5 6 More than 6
_______________________________________________________________________Daily 31.54 43.85 56.15 68.46 80.77 93.08 19.23 plus
12.31 for
each exemption
_______________________________________________________________________
Weekly 157.69 219.23 280.77 342.31 403.85 465.38 96.15 plus
61.54 for
Biweekly 315.38 438.46 561.54 684.62 807.69 930.77 192.31 plus
123.08 for
each exemption
_______________________________________________________________________ Semimonthly 341.67 475.00 608.33 741.67 875.00 1008.33 208.33 plus
133.33 for
each exemption
_______________________________________________________________________
Monthly 683.33 950.00 1261.67 1483.33 1750.00 2016.67 416.67 plus
266.67 for
each exemption
_______________________________________________________________________
2. Table for Figuring Additional Exempt Amount for Taxpayers at Least
65 Years Old and/or Blind
Additional
Exempt Amount
_______________________________________________________________________Filing Status * Daily Wkly Bi-Wkly Semi-Mo Monthly
_______________________________________________________________________Single or Head 1 4.81 24.04 48.08 52.08 104.17
of Household 2 9.62 48.08 96.15 104.17 208.33
_______________________________________________________________________
Any Other 1 3.85 19.23 38.46 41.67 83.33
Filing Status 2 7.69 38.46 76.92 83.33 166.67
3 11.54 57.69 115.38 125.00 250.00
4 15.38 76.92 153.85 166.67 333.33
_______________________________________________________________________
* ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of levy.
Examples
These tables show the amount exempt from a levy on wages, salary, and
other income. For example:
1. A single taxpayer who is paid weekly and claims three exemptions
(including one for the taxpayer) has $280.77 exempt from levy.
2. If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL
STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy, $304.81 is
exempt from this levy ($280.77 plus $24.04).
3. A taxpayer who is married, files jointly, is paid bi-weekly, and
claims two exemptions (including one for the taxpayer) has $630.77
exempt from levy.
4. If the taxpayer in number 3 is over 65 and has a spouse who is blind,
this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space
on Parts 3, 4, & 5 of the levy. Then, $707.69 is exempt from this
levy ($630.77 plus $76.92).
Notice 2004-4
, I.R.B. 2004-2, 273,
January 9, 2004
.
[ Code
Sec. 6334]
Levy: Amounts exempt
from levy: Individual's income: Tables: Publication 1494. --
The
IRS has released Publication 1494, which contains tables that are to be
used in computing the amount of an individual's income that will be
exempt from a notice of levy to collect delinquent taxes in 2004. For
example, according to the tables, a single taxpayer who is paid weekly
and claims three exemptions will have $272.12 exempt from levy. A
married individual who files a joint return, is paid biweekly and claims
two exemptions will have $611.54 exempt from levy.
Publication
1494, shown below, provides tables that show the amount of an
individual's income that is exempt from a notice of levy used to collect
delinquent tax in 2004.
1. Table for Figuring Amount Exempt from Levy on Wages, Salary, and
Other Income (Forms 668-W(c), 668-W(c)(DO) & 668-W(ICS)) 2004
(Amounts are for each pay period.)
_______________________________________________________________________
Filing Status: Single
_______________________________________________________________________ Pay Number of Exemptions Claimed on Statement
Period 1 2 3 4 5 6 More Than 6
_______________________________________________________________________
Daily 30.58 42.50 54.42 66.35 78.27 90.19 18.65 plus 11.92 for
each exemption
_______________________________________________________________________ Weekly 152.88 212.50 272.12 331.73 391.35 450.96 93.27 plus 59.62 for
each exemption
_______________________________________________________________________Biweekly 305.77 425.00 544.23 663.46 782.69 901.92 186.54 plus 119.23
for each exemption
_______________________________________________________________________Semimonthly 331.25 460.42 589.58 718.75 847.92 977.08 202.08 plus
129.17 for
each exemption
_______________________________________________________________________Monthly 662.50 920.83 1179.17 1437.50 1695.83 1954.17 404.17 plus
258.33 for
each exemption
_______________________________________________________________________
Filing Status: Unmarried Head of Household
_______________________________________________________________________ Pay Number of Exemptions Claimed on Statement
Period 1 2 3 4 5 6 More Than 6
_______________________________________________________________________Daily 39.42 51.35 63.27 75.19 87.12 99.04 27.50 plus 11.92
for each exemption
_______________________________________________________________________ Weekly 197.12 256.73 316.35 375.96 435.58 495.19 137.50 plus 59.62
for each exemption
_______________________________________________________________________Biweekly 394.23 513.46 632.69 751.92 871.15 990.38 275.00 plus 119.23
for each exemption
_______________________________________________________________________Semimonthly 427.08 566.25 685.42 814.58 943.75 1072.92 297.92 plus
129.17 for
each exemption
_______________________________________________________________________Monthly 854.17 1112.50 1370.83 1629.17 1887.50 2145.83 595.83 plus
258.33 for
each exemption
_______________________________________________________________________
Filing Status: Married Filing Joint Return (and Qualifying Widow(er)s)
_______________________________________________________________________ Pay Number of Exemptions Claimed on Statement
Period 1 2 3 4 5 6 More Than 6
_______________________________________________________________________ Daily 49.23 61.15 73.08 85.00 96.92 108.85 37.31 plus
11.92 for
each exemption
_______________________________________________________________________ Weekly 246.15 305.77 365.38 425.00 484.62 544.23 186.54 plus 59.62
for each exemption
_______________________________________________________________________Biweekly 492.31 611.54 730.77 850.00 969.231088.46 373.08 plus 119.23
for each exemption
_______________________________________________________________________Semimonthly 533.33 662.50 791.67 920.83 1050.00 1179.17 404.17 plus
129.17 for
each exemption
_______________________________________________________________________Monthly 1066.67 1325.00 1583.33 1841.67 2100.00 2358.33 808.33 plus
258.33 for
each exemption
_______________________________________________________________________
Filing Status: Married Filing Separate Return
_______________________________________________________________________ Pay Number of Exemptions Claimed on Statement
Period 1 2 3 4 5 6 More Than 6
_______________________________________________________________________
Daily 30.58 42.50 54.42 66.35 78.27 90.19 18.65 plus 11.92 for
each exemption
_______________________________________________________________________ Weekly 152.88 212.50 272.12 331.73 391.35 450.96 93.27 plus 59.62 for
each exemption
_______________________________________________________________________Biweekly 305.77 425.00 544.23 663.46 782.69 901.92 186.54 plus 119.23
for each exemption
_______________________________________________________________________Semimonthly 331.25 460.42 589.58 718.75 847.92 977.08 202.08 plus
129.17 for
each exemption
_______________________________________________________________________Monthly 662.50 920.83 1179.17 1437.50 1695.83 1954.17 404.17 plus
258.33 for
each exemption
_______________________________________________________________________
2.
Table for Figuring Additional Exempt Amount for Taxpayers at Least 65
Years Old and/or Blind
Additional
Exempt Amount
_______________________________________________________________________
Filing Status * Daily Weekly Biweekly Semimonthly Monthly
_______________________________________________________________________
Single or 1 4.62 23.08 46.15 50.00 100.00
Head of Household 2 9.23 46.15 92.31 100.00 200.00
_______________________________________________________________________
1 3.65 18.27 36.54 39.58 79.17
2 7.31 36.54 73.08 79.17 158.33
Any Other Filing 3 10.96 54.81 109.62 118.75 237.50
Status 4 14.62 73.08 146.15 158.33 316.67
_______________________________________________________________________
* * ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of levy.
Examples
These tables show the amount exempt from a levy on wages, salary, and
other income. For example:
1. A single taxpayer who is paid weekly and claims three exemptions
(including one for the taxpayer) has $272.12 exempt from levy.
2. If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL
STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy, $295.20 is
exempt from this levy ($272.12 plus $23.08).
3. A taxpayer who is married, files jointly, is paid bi-weekly, and
claims two exemptions (including one for the taxpayer) has $611.54
exempt from levy.
4. If the taxpayer in number 3 is over 65 and has a spouse who is blind,
this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space
on Parts 3, 4, & 5 of the levy. Then, $684.62 is exempt from this
levy ($611.54 plus $73.08).
Cumulative Bulletin Notice 2002-78, 2002-2
CB 919, I.R.B. 2002-48, 919
[Code Sec. 6334 ]
Levy: Amounts exempt from levy: Individual's income: Tables:
Publication 1494.--The IRS has revised Publication 1494, which
contains tables that are to be used to determine the amount of an
individual's income that is exempt from a notice of levy used to collect
delinquent taxes in 2003.
1. Table for Figuring Amount Exempt From Levy on Wages, Salary, and
Other Income (Forms 668-W(c) and 668-W(c)(DO)) 2003
Publication
1494, shown below, provides tables that show the amount of an
individual's income that is exempt from a notice of levy used to collect
delinquent tax in 2003.
(Amounts
are for each pay period.)
Filing Status: Single
Pay Period Number of Exemptions Claimed on Statement
1 2 3 4 5 6 More Than 6
Daily 30.00 41.73 53.46 65.19 76.92 88.65 18.27 plus
11.73 for
each exemption
Weekly 150.00 208.65 267.31 325.96 384.62 443.27 91.35 plus
58.65 for
each exemption
Biweekly 300.00 417.31 534.62 651.92 769.23 886.54 182.69 plus
117.31 for
each exemption
Semi- 325.00 452.08 579.17 706.25 833.33 960.42 197.92 plus 127.08
Monthly for each exemption
Monthly 650.00 904.17 1158.33 1412.50 1666.67 1920.83 395.83 plus
254.16 for
each exemption
Filing Status: Unmarried Head of Household
Pay Period Number of Exemptions Claimed on Statement
1 2 3 4 5 6 More Than 6
Daily 38.65 50.38 62.12 73.85 85.58 97.31 26.92 plus 11.73
for each exemption
Weekly 193.27 251.92 310.58 369.23 427.88 486.54 134.62 plus 58.65
for each exemption
Biweekly 386.54 503.85 621.15 738.46 855.77 973.08 269.23 plus
117.31 for
each exemption
Semi- 418.75 545.83 672.92 800.00 927.08 1054.17 291.67 plus
Monthly 127.08 for
each exemption
Monthly 837.50 1091.67 1345.83 1600.00 1854.17 2108.33 583.33 plus
254.16 for
each exemption
Filing Status: Married Filing Joint Return (and Qualifying Widow(er)s)
Pay Period Number of Exemptions Claimed on Statement
1 2 3 4 5 6 More Than 6
Daily 42.31 54.04 65.77 77.50 89.23 100.96 30.58 plus 11.73
For each exemption
Weekly 211.54 270.19 328.85 387.50 446.15 504.81 152.88 plus 58.65
For each exemption
Biweekly 423.08 540.38 657.69 775.00 892.31 1009.62 305.77 plus 117.31
for each exemption
Semi- 458.33 585.42 712.50 839.58 966.67 1093.75 331.25 plus 127.08
Monthly for each exemption
Monthly 916.67 1170.83 1425.00 1679.17 1933.33 2187.50 662.50 plus
254.16 for
each exemption
Filing Status: Married Filing Separate Return
Pay Period Number of Exemptions Claimed on Statement
1 2 3 4 5 6 More Than 6
Daily 27.02 38.75 50.48 62.21 73.94 85.67 15.29 plus 11.73
for each exemption
Weekly 135.10 193.75 252.40 311.06 369.71 428.37 76.44 plus 58.65
for each exemption
Biweekly 270.19 387.50 504.81 622.12 739.42 856.73 152.88 plus 117.31
for each exemption
Semi- 292.71 419.79 546.88 673.96 801.04 928.13 165.62 plus 127.08
Monthly for each exemption
Monthly 585.42 839.58 1093.75 1347.92 1602.08 1856.25 331.25 plus
254.16 for
each exemption
2.
Table for Figuring Additional Exempt Amount for Taxpayers at Least 65
Years Old and/or Blind
Additional Exempt Amount
Filing Status * Daily Wkly Bi-Wkly Semi-Mo Monthly
Single or Head of 1 4.42 22.12 44.23 47.92 95.83
Household 2 8.85 44.23 88.46 95.83 191.67
Any Other Filing 1 3.65 18.27 36.54 39.58 79.17
Status 2 7.31 36.54 73.08 79.17 158.33
3 10.96 54.81 109.62 118.75 237.50
4 14.62 73.08 146.15 158.33 316.67
* ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of levy.
Examples
These
tables show the amount exempt from a levy on wages, salary, and other
income.
1.
A single taxpayer who is paid weekly and claims three exemptions
(including one for the taxpayer) has $267.31 exempt from levy.
2.
If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL
STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy, $289.43 is
exempt from this levy ($267.31 plus $22.12).
3.
A taxpayer who is married, files jointly, is paid biweekly, and claims
two exemptions (including one for the taxpayer) has $540.38 exempt from
levy.
4.
If the taxpayer in number 3 is over 65 and has a spouse who is blind,
this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space
on Parts 3, 4, & 5 of the levy. Then, $613.46 is exempt from this
levy ($540.38 plus $73.08).
Cumulative
Bulletin Notice 99-56, , I.R.B. 1999-50, 668
[Code Sec. 6334 ]
Levy: Amounts exempt from levy: Individual's income: Tables.--The
IRS has released tables used in computing the amount of income exempt
from a notice of levy to collect delinquent tax in 2000. These tables
are also printed in Publication 1494. BACK REFERENCE: ¶38,225.04 .
1. Table for Figuring Amount Exempt from Levy on Wages, Salary, and Other Income (Forms 668-W, 668-W(c), & 668-W(c)(DO))
2000
Publication 1494, shown below, provides tables which show the amount of an individual's income that is exempt from a
notice of levy used to collect delinquent tax in 2000.
(Amounts are for each pay period.)
Filing Status: Single
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ........ 27.69 38.46 49.23 60.00 70.77 81.54 16.92 plus
10.77 for
each exemption
Weekly ...... 138.46 192.31 246.15 300.00 353.85 407.69 84.62 plus
53.85 for
each exemption
Biweekly ... 276.92 384.62 492.31 600.00 707.69 815.38 169.23 plus
107.69 for
each exemption
Semi-monthly. 300.00 416.67 533.33 650.00 766.67 883.33 183.33 plus
116.67 for
each exemption
Monthly .. 600.00 833.33 1066.67 1300.00 1533.33 1766.67 366.67 plus
233.33 for
each exemption
Filing Status: Unmarried Head of Household
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ..... 35.58 46.35 57.12 67.88 78.65 89.42 24.81 plus
10.77 for
each exemption
Weekly ....... 177.88 231.73 285.58 339.42 393.27 447.12 124.04 plus
53.85 for
each exemption
Biweekly .... 355.77 463.46 571.15 678.85 786.54 894.23 248.08 plus
107.69 for
each exemption
Semi-monthly. 385.42 502.08 618.75 735.42 852.08 968.75 268.75 plus
116.67 for
each exemption
Monthly ... 770.83 1004.? 1237.50 1470.83 1704.17 1937.50 537.50 plus
233.33 for
each exemption
Filing Status: Married Filing Joint (and Qualifying Widow(er)s)
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ...... 39.04 49.81 60.58 71.35 82.12 92.88 28.27 plus
10.77 for
each exemption
Weekly ...... 195.19 249.04 302.88 356.73 410.58 464.42 141.35 plus
53.85 for
each exemption
Biweekly .... 390.38 498.08 605.77 713.46 821.15 928.85 282.69 plus
107.69 for
each exemption
Semi-monthly. 422.92 539.58 656.25 772.92 889.58 1006.25 306.25 plus
116.67 for
each exemption
Monthly ... 845.83 1079.? 1312.50 1545.83 1779.17 2012.50 612.50 plus
233.33 for
each exemption
Filing Status: Married Filing Separate
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ...... 24.90 35.67 46.44 57.21 67.98 78.75 14.13 plus
10.77 for
each exemption
Weekly ..... 124.52 178.37 232.21 286.06 339.90 393.75 70.67 plus
53.85 for
each exemption
Biweekly ... 249.04 356.73 464.42 572.12 679.81 787.50 141.35 plus
107.69 for
each exemption
Semi-monthly. 269.79 386.46 503.13 619.79 736.46 853.13 153.13 plus
116.67 for
each exemption
Monthly ..... 539.58 772.92 1006.25 1239.58 1472.92 1706.25 306.25 plus
233.33 for
each exemption
2. Table for Figuring Additional Exempt Amount for Taxpayers at
Least 65 Years Old and/or Blind
Additional Exempt Amount
Filing Status * Daily Wkly Bi-Wkly Semi-Mo Monthly
Single or ....... 1 4.23 21.15 42.31 45.83 91.67
Head of Household 2 8.46 42.31 84.62 91.67 183.33
Any Other ....... 1 3.27 16.35 32.69 35.42 70.83
Filing Status ... 2 6.54 32.69 65.38 70.83 141.67
3 9.81 49.04 98.08 106.25 212.50
4 13.08 65.38 130.77 141.67 283.33
* ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of
levy.
Examples
These
tables show the amount exempt from a levy on wages, salary, and other
income. For example:
1.
A single taxpayer who is paid weekly and claims three exemptions
(including one for the taxpayer) has $246.15 exempt from levy.
2.
If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL
STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy, $267.30 is
exempt from this levy ($246.15 plus $21.15).
3.
A taxpayer who is married, files jointly, is paid bi-weekly, and claims
two exemptions (including one for the taxpayer) has $498.08 exempt from
levy.
4.
If the taxpayer in number 3 is over 65 and has a spouse who is blind,
this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space
on Parts 3, 4, & 5 of the levy. Then, $563.46 is exempt from this
levy ($498.08 plus $65.38).
Cumulative
Bulletin Notice 98-60, , 1998-2 CB 689
[Code Sec. 6334 ]
Levy: Exempt income: Tables.--The IRS released tables for
figuring the amount of an individual's income that is exempt from a
notice of levy used to collect delinquent tax in 1999. BACK REFERENCE:
¶39,125.04 .
1. Table for Figuring Amount Exempt From Levy on Wages, Salary, and Other
Income (Forms 668-W, 668-W(c), & 668-W(c)(DO)) 1999
Publication 1494, shown below, provides tables which show the amount of an
individual's income that is exempt from a notice of levy used to collect
delinquent tax in 1999.
(Amounts are for each pay period.)
Filing Status: Single
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ....... 27.12 37.69 48.27 58.85 69.42 80.00 16.54 plus
10.58 for
each exemption
Weekly ..... 135.58 188.46 241.35 294.23 347.12 400.00 82.69 plus
52.88 for
each exemption
Biweekly ... 271.15 376.92 482.69 588.46 694.23 800.00 165.38 plus
105.77 for
each exemption
Semi-monthly 293.75 408.33 522.92 637.50 752.08 866.67 179.17 plus
114.58 for
each exemption
Monthly .. 587.50 816.67 1045.83 1275.00 1504.17 1733.33 358.33 plus
229.17 for
each exemption
Filing Status: Unmarried Head of Household
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ..... 35.00 45.58 56.15 66.73 77.31 87.88 24.42 plus
10.58 for
each exemption
Weekly .... 175.00 227.88 280.77 333.65 386.54 439.42 122.12 plus
52.88 for
each exemption
Biweekly . 350.00 455.77 561.54 667.31 773.08 878.85 244.23 plus
105.77 for
each exemption
Semi-monthly 379.17 493.75 608.33 722.92 837.50 952.08 264.58 plus
114.58 for
each exemption
Monthly ... 758.33 987.50 1216.67 1445.83 1675.00 1904.17 529.17 plus
229.17 for
each exemption
Filing Status: Married Filing Joint (and Qualifying Widow(er)s)
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ..... 38.27 48.85 59.42 70.00 80.58 91.15 27.69 plus
10.58 for
each exemption
Weekly ... 191.35 244.23 297.12 350.00 402.88 455.77 138.46 plus
52.88 for
each exemption
Biweekly ... 382.69 488.46 594.23 700.00 805.77 911.54 276.92 plus
105.77 for
each exemption
Semi-monthly 414.58 529.17 643.75 758.33 872.92 987.50 300.00 plus
114.58 for
each exemption
Monthly ... 829.17 1058.? 1287.50 1516.67 1745.83 1975.00 600.00 plus
229.17 for
each exemption
Filing Status: Married Filing Separate
Number of Exemptions Claimed on Statement
Pay Period 1 2 3 4 5 6 More Than 6
Daily ....... 24.42 35.00 45.58 56.15 66.73 77.31 13.85 plus
10.58 for
each exemption
Weekly .... 122.12 175.00 227.88 280.77 333.65 386.54 69.23 plus
52.88 for
each exemption
Biweekly ... 244.23 350.00 455.77 561.54 667.31 773.08 138.46 plus
105.77 for
each exemption
Semi-monthly 264.58 379.17 493.75 608.33 722.92 837.50 150.00 plus
114.58 for
Each exemption
Monthly ..... 529.17 758.33 987.50 1216.67 1445.83 1675.00 300.00 plus
229.17 for
each exemption
2. Table for Figuring Additional Exempt Amount for Taxpayers of Least 65 Years Old and/or Blind
Additional Exempt Amount
Filing Status * Daily Wkly Bi-Wkly Semi-Mo Monthly
Single of Head of Household .... 1 4.04 20.19 40.38 43.75 87.50
2 8.08 40.38 80.77 87.50 175.00
Any Other Filing Status .........1 3.27 16.35 32.69 35.42 70.83
2 6.54 32.69 65.38 70.83 141.67
3 9.81 49.04 98.08 106.25 212.50
4 13.08 65.38 130.77 141.67 283.33
* ADDITIONAL STANDARD DEDUCTION claimed on Parts 3, 4, & 5 of levy.
Examples
These
tables show the amount exempt from a levy on wages, salary, and other
income.
For
example:
1.
A single taxpayer who is paid weekly and claims three exemptions
(including one for the taxpayer) has $241.35 exempt from levy.
2.
If the taxpayer in number 1 is over 65 and writes 1 in the ADDITIONAL
STANDARD DEDUCTION space on Parts 3, 4, & 5 of the levy, $261.54 is
exempt from this levy ($241.35 plus $20.19).
3.
A taxpayer who is married, files jointly, is paid bi-weekly, and claims
two exemptions (including one for the taxpayer) has $488.46 exempt from
levy.
4.
If the taxpayer in number 3 is over 65 and has a spouse who is blind,
this taxpayer should write 2 in the ADDITIONAL STANDARD DEDUCTION space
on Parts 3, 4, & 5 of the levy. Then, $553.84 is exempt from this
levy ($488.46 plus $65.38).
[93-1
USTC ¶50,073]
United States of America
, Plaintiff v. Metro Interior, Inc. and Charles Benigar, Defendants
U.S.
District Court, West. Dist.
Mo.
, West. Div., 90-0889-CV-W-1,
10/5/92
[Code Secs.
6332 and 6334 ]
Tax levies: Failure to comply: Penalties: Calculation.--A
corporation and its president were liable for their failure to comply
with tax levies on the wages of corporate employees. Both the
corporation and its president were "persons" in possession of
property subject to levy and neither had a permissible defense for
failing to honor a tax levy. In addition, a penalty was imposed because
there was not reasonable cause for failure to honor the levies. However,
the amount of the levy for each employee was uncertain and the extent of
personal liability and of the penalty could not be determined until the
levy had been recalculated. A motion to join the employees was denied
for lack of jurisdiction.
ORDER
WHIPPLE,
District Judge:
There
are three motions before the Court: plaintiff's and defendants' Motion
for Summary Judgment and defendants' Motion to Join Additional Parties.
For the reasons set forth below, defendants' Motion for Summary Judgment
and Motion to Join Additional Parties is denied. Plaintiff's Motion for
Summary Judgment is granted as to liability.
I.
Background
Plaintiff
is suing defendants Charles Benigar (Benigar) and Metro Interior, Inc.
(Metro) for failing to honor numerous tax levies. Metro is a
Missouri
corporation with its principal place of business in
Missouri
. Benigar, a resident of
Missouri
, supervises and controls all financial aspects of Metro.
The
present case stems from events that occurred in October, 1983. At that
time Harry Carr (Carr), Steve Garrett (Garrett) and John Holmes (Holmes)
agreed with Dasta Corporation (Dasta) to form two subcontracting
companies: Division Nine and Union Drywall. Dasta was to provide
Division Nine and Union Drywall all of their business. Although Dasta
did provide Division Nine and Union Drywall with business, it filed for
bankruptcy while owing the subcontracting companies $257,000. Carr,
Garrett and Holmes state that because Division Nine and Union Drywall
were owed $257,000, the three employees were not able to pay the
companies' payroll taxes. All three employees were responsible for
withholding and paying payroll taxes to the IRS. Presumably, both
Division Nine and Union Drywall are no longer in business.
All
three employees later joined Metro between July and September of 1986.
In 1987, the United States Treasury made a 100% penalty assessment under
26 U.S.C. §6672 against Carr,
Garrett and Holmes for not withholding payroll taxes. Specifically, the
Treasury assessed Carr for $153,120.44, Garrett for $80,005.94 and
Holmes for $73,114.50. Plaintiff states, and defendants do not dispute
that the IRS gave Carr, Garrett and Holmes notices and demands for
payment of the assessments. The assessments were not paid. On
February 1, 1990
, the Treasury served a Notice of Levy on Metro demanding that it give
the IRS all wages in Metro's possession that it was obligated to Carr.
The Treasury also served Notice of Levy on Metro in regards to Garrett
and Holmes on
August 23, 1988
and
September 9, 1988
respectively. Later the Treasury served a Final Demand upon Metro to
honor the levies upon Carr, Holmes and Garrett. Each of the three
employees worked for Metro until
March 23, 1990
.
Metro
has not complied with the levies. Not including interest and penalties,
the balance on the assessments is $151,984.44, $75,551.44 and $67,878.11
for Carr, Garrett and Holmes respectively. Plaintiff seeks to hold
defendants liable for the failure to honor the levies. Additionally,
plaintiff seeks penalties against defendants for their failure to honor
the levies.
II.
Plaintiff's Motion for Summary Judgment
A. Summary Judgment Basics
A
movant is entitled to summary judgment under Fed. R. Civ. P. 56(c),
"if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law." Thus, the moving
party bears the burden of proof. Aetna Life Ins. Co. v. Great Nat'l
Corp., 818 F.2d 19, 20 (8th Cir. 1987). When considering a motion
for summary judgment, the Court must scrutinize the evidence in the
light most favorable to the non-moving party and the non-moving party
"must be given the benefit of all reasonable inferences." Mirax
Chemical Products Corp. v. First Interstate Commercial Corp., 950
F.2d 566, 569 (8th Cir. 1991) (citation omitted). If the moving party
meets its burden of proof, the burden shifts to the non-moving party who
must set forth specific facts showing that there is a genuine issue for
trial to defeat a motion for summary judgment.
Anderson
v. Liberty Lobby, Inc., 477
U.S.
242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
B.
A Road Map to Collecting Unpaid Taxes
If
a person does not pay her taxes, a lien automatically arises upon
assessment, 26 U.S.C. §6322 , on all 1 her
property. 26 U.S.C. §6321 ("If any person
liable to pay any tax neglects or refuses to pay the same after demand .
. . [there] 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 continues until the taxes are fully paid.
26 U.S.C. §6322 . If the tax remains
unpaid, then within ten days after notice and demand, "it shall be
lawful for the Secretary to collect such tax . . . by levy upon all
property and rights to property . . . belonging to such person . . .
." 26 U.S.C. §6331(a) . 2
When,
as in the present case, a third-party holds property of the taxpayer,
the IRS may serve notice on the third-party. This notice gives the
"IRS the right to all property levied upon . . . and creates a
custodial relationship between the person holding the property and the
IRS so that the property comes into the constructive possession of the
Government." United States v. National Bank of Commerce [85-2
USTC ¶9482 ], 472 U.S. 713, 720, 105 S.Ct. 2919, 86 L.Ed.2d
565 (1985) (citation omitted). See also, 26 U.S.C. §6332(a) . If the
third-party honors the levy, the third-party is discharged from
liability. §6332(e) . If the
third-party does not honor the levy, the third-party is personally
liable for the amount of the levy, §6332(d)(1)
, and unless "reasonable cause" is shown for not
honoring the levy, the third-party is also liable for a penalty of 50%
of the levy. §6332(d)(2) .
C.
Application of the Law
In
the present case, plaintiff served a Notice of Levy on Metro demanding
that it give the IRS all wages in Metro's possession that it was
obligated to Carr, Holmes and Garrett. Metro did not honor the levy.
Before determining whether defendants' were justified in not honoring
the levy and if not, the consequences, the Court must determine if
defendants, Benigar and Metro, are "persons" under §6332 .
Section 6332(f) states that
a person "includes an officer or employee of a corporation . . .
under a duty to surrender the property or rights to property . . .
." In his deposition, Benigar stated that he currently is, and at
the time of the levy was, President of Metro and in sole control of
Metro's finances. Deposition of Charles Benigar, p. 12-13. It was
Benigar who, on the advice of counsel, decided not to honor the levies.
Thus, Benigar is a "person" under §6332 . Section 6332(f) does not
expressly include Metro as a "person," but it also does not
exclude it. The word "includes" does not exclude other
individuals or entities from being "persons" under §6332 . §7701(c) ("The terms
'includes' and 'including' when used in a definition contained in this
title shall not be deemed to exclude other things otherwise within the
meaning of the term defined."). The Tax Code generally defines the
term "person" as including a corporation such as Metro. 26
U.S.C. §7701(a)(1) . Thus, Metro
is also a "person" under §6332
.
1.
No Defense for Not Honoring the Levies
Defendants
offer two defenses for not honoring the levies. The first defense is
that the IRS did not follow its own procedures before it levied on
Metro. Defendants argue that Carr, Garrett and Holmes each made an offer
of compromise to the IRS and that the IRS's policy is to withhold all
collection efforts during the consideration of the offers of compromise.
Defendants suggest that the policy of the IRS is to conduct a financial
investigation of a taxpayer's ability to pay before it rejects any offer
of compromise. A financial investigation was not conducted before
Carr's, Garrett's or Holmes's offer of compromise was rejected.
Defendants state that given the three employees' ability to pay, the
offers of compromise are reasonable. Because the offers were reasonable
and were rejected without a financial investigation, defendants argue
that the IRS did not follow its own procedures and thus, the levies are
invalid. The second defense is that the three employees would have left
Metro if the levies were honored. This, defendants contend, would have
been "devastating to the business." Suggestions in
Opposition to
United States
' Motion for Summary Judgment, p. 5.
The
United States Supreme Court holds that there are only two defenses for
failing to honor a levy. National Bank of Commerce [85-2 USTC ¶9482 ],
472
U.S.
at 721-22. The first defense is that the person levied does not hold
property or rights to property of the taxpayer.
Id.
The second defense is that the property is "subject to a prior
judicial attachment or execution."
Id.
Defendants do not meet either of the two defenses available.
As
to the first defense, defendants do not deny that Metro was holding the
accrued wages of Carr, Garrett and Holmes; Metro's payroll records
indicate that it did hold the accrued wages. Further, accrued wages are
"property or rights to property" to which a lien can attach
and thus be subject to levy. As the Supreme Court states: "it is
quite clear, generally, that accrued salaries are property and rights to
property subject to levy." Sims v. United States [59-1
USTC ¶9338 ], 359 U.S. 108, 111, 79 S.Ct. 641, 3 L.Ed.2d 667
(1959). Defendants do not suggest any reason why accrued wages are not
"property" subject to levy. Defendants do not meet the first
defense.
As
to the second defense, the only accrued wages subject to garnishment was
a state garnishment on Garrett for child support. Plaintiff does not
claim to levy on these wages, rather, plaintiff claims to levy on the
wages remaining after the state garnishment. Defendants also fail to
meet the second defense.
In
summary, even if plaintiff did indeed fail to follow its own procedures,
3 this is not
a recognized defense for not honoring the tax levies. Likewise, not
honoring a levy because it might hurt or ruin Metro's business is not a
valid defense. Thus, defendants are personally liable for the amount of
Carr's, Garrett's and Holmes's wages that were levied upon.
2.
No Reasonable Cause
Section §6332 , in
addition to holding a third-person personally liable, also imposes a
penalty of 50% of the amount the person is held personally liable for
unless there is "reasonable cause" for not honoring a tax
levy. §6332(d)(2) . Generally,
there are two situations that constitute "reasonable cause"
under the statute: (1) "a bona fide dispute over the amount owing
to the taxpayer" or, (2) a bona fide dispute over the "legal
effectiveness of the levy itself." S. Rep. No. 1708, 89th Cong., 2d
Sess., reprinted in 1978 U.S. Code Cong. & Admin. News 3722,
3740.
Defendants
do not dispute the amount of wages they owed to Carr, Garrett or Holmes,
thus the first situation is not applicable. Defendants do not state why
the penalty should not apply to them, but presumably they attempt to
fall into the second situation. Defendants argue that the levies were
invalid because the IRS did not follow its own procedures. This argument
denies that the levies were legally effective. There must be, however, a
bona fide legal dispute as to the legal effectiveness of the
levies. Defendants do not point to any case law or other authority that
states that the failure of the IRS to follow its own procedures is a
defense for not honoring a tax levy. Further, they are unable to
characterize their defense as falling under one of the two defenses the
Supreme Court articulated in National Bank of Commerce.
Generally,
in the cases that refuse to apply the penalty, there is an unsettled
question of law. See, United States v. Sterling Nat'l Bank &
Trust Co. [74-1 USTC ¶9336 ],
494 F.2d 919, 923 (2nd Cir. 1974) (unsettled questions of law--no
penalty applies); State Bank of Fraser v. United States [88-2 USTC ¶9592 ],
861 F.2d 954, 962 (6th Cir. 1988) (no unsettled questions of
law--penalty applies); United States v. Donahue Industries, Inc.
[90-2
USTC ¶50,343 ], 905 F.2d 1325, 1331-32 (9th Cir. 1990) (no
unsettled questions of law--penalty applies); United States v.
Metropolitan Life Ins. [89-1
USTC ¶9362 ], 874 F.2d 1497, 1501 (11th Cir. 1989) (no
unsettled questions of law--penalty applies). Defendants do not point to
and the Court is at a loss to find any unsettled questions of law in the
present case. Therefore, plaintiff is entitled under §6332(d)(2) to the 50%
penalty.
3.
Ambiguity as to Damages
The
government can not levy on all of the wages of Carr, Garrett and Holmes
that the lien attached to. Wages subject to child support orders, 26
U.S.C. §6334(a)(8) , as in the
case of Garrett are exempt. Also, a statutory minimum portion of the
three employees's wages is exempt from levy. §6334(a)(9) & (d).
The
computation of the minimum amount of wages that are exempt from levy is
specified in §6334(d) which was amended
in 1988. Based on the numbers that plaintiff furnished the Court, it
appears that plaintiff is following the pre-1988 computation. 4 If plaintiff
is using the pre-1988 computation, plaintiff has not given the Court any
reason why that computation should be used in a case filed in 1990. It
is unclear what the amount of the levy for each of the three employees
is. Until the amount of the levies is determined, the extent of
defendants' personal liability and the penalty cannot be determined. The
parties must brief this issue in a stipulation or, if necessary,
individually.
III.
Defendants' Motions
For
the same reasons that plaintiff's Motion for Summary Judgment is granted
on the issue of liability, defendants' Motion for Summary Judgment and
Motion to Join are denied. Even if summary judgment is not granted for
plaintiff, the Motion to Join would still be denied.
Defendants
ask the Court to join Carr, Garrett and Holmes to the present suit.
Unless the Court determines the validity of the underlying taxes,
defendants argue, it is possible that defendants and the three employees
will be subject to inconsistent decisions. The Court rejects the motion
on jurisdictional grounds.
This
Court has original, concurrent jurisdiction in civil cases:
against
the United States for the recovery of any internal-revenue tax alleged
to have been erroneously or illegally assessed or collected, or any
penalty claimed to have been collected without authority or any sum
alleged to have been excessive or in any manner wrongfully collected
under the internal-revenue laws;
28
U.S.C. §1346(a)(1). However, the Court does not have jurisdiction until
a claim for a refund has been filed. 26 U.S.C. §7422(a) ("No suit
shall be maintained in any court for the recovery of any internal
revenue tax alleged to have been erroneously or illegally assessed or
collected . . . until a claim for a refund . . . has been duly filed . .
. ."). A claim for a refund cannot be filed until the disputed
amount has been fully paid. Flora v. United States [60-1
USTC ¶9347 ], 362
U.S.
145 149-50, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960). Defendants have not paid
the full amount of the tax assessment, thus the Court does not have
jurisdiction over questions of tax liability. Because the Court does not
have jurisdiction over questions of tax liability, joiner would be
improper. Therefore, defendants' Motion to Join Carr, Garrett and Holmes
is denied even without plaintiff's summary judgment.
V. Conclusion
Therefore,
it is ORDERED that plaintiff's Motion for Summary Judgment is GRANTED as
to liability. It is further
ORDERED
that plaintiff and defendants brief the Court as to the amount of wages
that are subject to levy in a stipulation or, if necessary,
individually. It is further
ORDERED
that defendants' Motion for Summary Judgment is DENIED. It is further
ORDERED
that defendants' Motion to Join Carr, Garrett and Holmes is DENIED.
1
The reach of the tax lien is very broad. Congress intended "to
reach every interest in property that a taxpayer might have." United
States v. National Bank of Commerce [85-2 USTC ¶9482 ],
472 U.S. 713, 720, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985) (citation
omitted).
2
Another method of collecting the tax is through a lien-foreclosure suit.
26 U.S.C. §7403 . This method, by
its nature, requires judicial intervention.
In
the present case the government chose to collect the taxes using §6331 . This method is
referred to as an administrative remedy and does not require any
judicial intervention. United States v. National Bank of Commerce
[85-2 USTC ¶9482 ],
472 U.S. 713, 720, 105 S.Ct. 2919, 86 L.Ed.2d 565 (1985) (citation
omitted).
3
Assuming the failure to follow IRS procedures is a valid defense, the
Court is not persuaded that the IRS did fail to follow its own
procedures. In support of their proposition that collection activity is
supposed to stop from the time an offer of compromise is made to the
time a financial investigation is completed, defendants quote the IRS's
Manual: "Collection activity will be withheld on any open accounts if
it is determined that the offer merits consideration and there is no
reason to believe that collection will be jeopardized." Internal
Revenue Manual, Administration, p. 7337 (emphasis added). This
language only states that if the IRS decides the offer of compromise is
worth considering, then collection activity will stop. It does not state
that collection activity will stop until a financial investigation is
completed. If this were true then the IRS would be required to conduct a
financial investigation for every offer of compromise it
receives. There is no evidence that the IRS is under such a requirement.
Further,
even if the IRS Manual states that all collection activity will stop
until a financial investigation is completed, procedures in the Manual
are not binding on the IRS. See e.g., Estate of Jones v. Commissioner
[86-2
USTC ¶13,675 ], 795 F.2d 566, 571 (6th Cir. 1986) The Court
is unpersuaded by defendants' citation to The Tax Lawyer given
the precedent in several circuits.
4
For example, plaintiff calculates that it is entitled to a levy on
Holmes's 1990 wages as follows:
13 weeks at $650.00/week gross pay ......................... $8,450.00
Less authorized deductions ................................. 1,928.70
Less Personal exemption at $75/week ........................ 975.00
---------
Subtotal .............................. .................... $5,546.30
Under
pre-1988 §6334 , the calculation of
the weekly exempt amount is $75 plus $25 for each individual specified
in the statute. The current calculation of the weekly exempt amount is
the "sum of the standard deduction and the aggregate amount of the
deductions for personal exemptions," divided by 52. There are also
other considerations such as whether Carr, Garrett or Holmes filed
anything with the Secretary "specifying the facts necessary to
determine" the above computation. §6334 .
[93-2
USTC ¶50,389]
United States of America
, Plaintiff v. Metro Interior, Inc. and Charles Benigar, Defendants
U.S.
District Court, West. Dist. Mo., West Div., 90-0889-CV-W-1,
6/1/93
, On motion for reconsideration of a District Court decision, 93-1
USTC ¶50,073
[Federal Rules of Civil Procedure 60 and Code Secs. 6332 and 6334 , prior to amendment
by P.L. 100-647 ]
Motion
for reconsideration: Levied wages: Employer's duty: Damages.--A
corporation's payment of FICA taxes, rather than FUTA taxes, made so
that the district court would obtain subject matter jurisdiction over
three employees, did not warrant reconsideration of an earlier decision.
The employees' wages were levied upon, but the employer failed to honor
the levies and was held liable for the amount of wages subject to them,
plus a 50-percent penalty. The employer sought reconsideration when the
employees were not joined to this case, claiming that its payment of
FICA taxes was a mistake or excusable neglect. The wrong payment was
deemed carelessness; thus, the court had no jurisdiction over the
employees, and the motion for reconsideration was denied. The court did
alter the calculation of damages to reflect the employer's incorrect use
of net wages and the IRS's overcounting of the number of payroll
periods.
ORDER
WHIPPLE,
District Judge:
The
matters before the Court are defendant's Motion for Reconsideration and
their Motion to Stay Final Judgment. For the reasons stated below, the
motions are denied and the Court will determine the amount of damages
plaintiff is entitled to.
I.
Background
The
United States Treasury made a 100% penalty assessment against Harry
Carr, Steve Garrett and John Holmes for unpaid taxes. When the
assessments were not paid, the Treasury served levies on defendants for
wages that they were obligated to pay to Carr, Garrett and Holmes.
Defendants failed to honor the levies.
The
Court, on
October 5, 1992
, held defendants personally liable for the amount of wages that were
subject to levy and also for a penalty of 50% of the amount of the levy.
The Court also refused to allow Carr, Garrett and Holmes to join in the
present case.
II.
Motion to Reconsider or in the Alternative to Stay
Defendants
ask the Court to reconsider its
October 5, 1992
Order which refused to allow Carr, Garrett and Holmes to join in the
present case. Defendants argue that the three taxpayers are not liable
for the underlying taxes and thus, defendants were never required to
honor the levies. Unless the Court determines the validity of the
underlying taxes, defendants argue, it is possible that defendants and
the three taxpayers will be subject to inconsistent decisions.
A.
The Standard for Evaluating a Motion to Reconsider
The
Federal Rules of Civil Procedure do not recognize a motion to
reconsider, but the Court will treat such a motion as either a motion to
alter or amend under Rule 59(e) or a motion for relief from judgment
under Rule 60(b) depending on whether the motion was filed within 10
days of the Court's Order. In re Trout v. Trout, 984 F.2d 977,
978 (8th Cir. 1993) (citing Sanders v. Clemco Indus., 862 F.2d
161 (8th Cir. 1988)). See also, Lavespere v. Niagara Mach. & Tool
Works, Inc., 910 F.2d 167, 173 (5th Cir. 1990). Defendants and the
three taxpayers filed their first motion for reconsideration on
October 19, 1992
, or ten days after the Court's
October 5, 1992
Order excluding weekends and holidays. See, Fed. R. Civ. P. 6(a).
Defendants and the three taxpayers withdrew their motion on
October 26, 1992
. On
November 3, 1992
, they filed the motion for reconsideration that is presently before the
Court. The Court will treat the motion as a motion for relief from
judgment under Rule 60(b) because excluding holidays and weekends, the
motion was not filed within ten days of the Court's
October 5, 1992
Order.
Rule
60(b) reads in part:
[T]he
court may relieve a party . . . from a final judgment, order, or
proceeding for the following reasons: (1) mistake, inadvertence,
surprise, or excusable neglect; (2) newly discovered evidence which by
due diligence could not have been discovered in time to move for a new
trial under Rule 59(b); (3) fraud . . . misrepresentation . . . or other
misconduct of an adverse party; (4) the judgment is void; (5) the
judgment has been satisfied, released, or discharged, . . . or it is no
longer equitable that the judgment should have prospective application;
or (6) any other reason justifying relief from the operation of the
judgment.
Not
only do defendants need to meet one of the six reasons listed in Rule
60(b), but also they have a difficult burden to meet because Rule 60(b)
"provides for extraordinary relief which may be granted only upon
an adequate showing of exceptional circumstances." Sanders,
862 F.2d at 169 n.14 (citation omitted).
B. Application of Rule 60(b)
The
Court's
October 5, 1992
Order explains that although the Court does have concurrent jurisdiction
to hear a taxpayer case, the taxpayer must first pay the disputed taxes
and file a claim for a refund. The Court notes that although its Order
states that the taxpayers would need to pay all of the disputed taxes
before filing for a refund, there is an exception that allows the
taxpayers to pay only a portion of the tax if the tax is divisible. Flora
v. United States [60-1 USTC ¶9347 ],
362 U.S. 145, 171-75 nn.37 & 38, 80 S.Ct. 630, 4 L. Ed. 2d 623
(1960); Steele v. United States [60-1 USTC ¶9573], 280 F.2d 89,
90-91 (8th Cir. 1960). The three taxpayers did pay Federal Unemployment
taxes (FUTA), but as the three taxpayers admit, payment of FUTA taxes
does not give this Court subject matter jurisdiction to hear their
claims. The three taxpayers admit that as of the Court's
October 5, 1992
Order, they had not paid any taxes which would give this Court subject
matter jurisdiction to determine whether the taxpayers actually owed the
amount that the Treasury assessed. There is no doubt that the Court did
not have jurisdiction to hear the taxpayers' claims at the time of the
Court's
October 5, 1992
Order.
On
November 3, 1992
, the attorney for defendants and presumably also for the three
taxpayers, sent the Court a letter stating that "we have corrected
the jurisdictional flaw in the refund suit by Carr, Holmes and Garrett
by paying FICA and withholding taxes and having the amended claim for
refund and abatement denied by the Internal Revenue Service."
Because they have fixed the jurisdiction flaw almost a month after the
Court's Order, defendants and the three taxpayers ask the Court to
reconsider its
October 5, 1992
Order refusing to allow the three taxpayers to join in the present case.
The
only reasons listed in Rule 60(b) that might apply to the present case
are the first and sixth reasons. Arguably the first reason,
"mistake, inadvertence, surprise, or excusable neglect," is
applicable because defendants paid the wrong tax in an attempt to obtain
subject matter jurisdiction with this Court. However, the first reason
is not available when the attorney was simply careless. Cline v.
Hoogland, 518 F.2d 776, 779 (8th Cir. 1975) (Neglected to file
because busy with other matters); United States v. Thompson, 438
F.2d 254, 256 (8th Cir. 1971) (Failed to bring statute to court's
attention); Fenix v. Finch, 436 F.2d 831, 837 (8th Cir. 1971)
(Stipulated to 6% interest even though there was no statutory provision
for the government to pay interest.); Hoffman v. Celebrezze, 405
F.2d 833, 835 (8th Cir. 1969) ("Government counsel cannot obtain
relief by pointing to his carelessness or negligence."). In the
present case, paying the wrong taxes in an attempt to obtain subject
matter jurisdiction with the Court amounts to carelessness, thus the
first reason is unavailable for Rule 60(b) relief in the present case.
The
sixth reason, "any other reason justifying relief from the
operation of the judgment," is also not applicable to the present
case. Arguably, attorney error in advising the taxpayers to pay FUTA tax
instead of Federal Insurance and Contribution Act tax (FICA) and
withholding taxes in their attempt to obtain subject matter jurisdiction
with this Court is such as to justify "relief from the operation of
judgment." However, Rule 60(b)(6) is mutually exclusive from the
first five reasons and the first reason, which includes neglect or
mistake, covers this argument. See also, Liljeberg v. Health Servs.
Acquisition Corp., 486 U.S. 847, 863, 108 S. Ct. 2194, 100 L. Ed. 2d
855 (1988) (Rule 60(b)(6) relief is available if it is "made within
a reasonable time and is not premised on one of the grounds for relief
enumerated in clauses (b)(1) through (b)(5)."); In re Dakota
Cheese, Inc., 923 F.2d 576, 577 (8th Cir. 1991) (Defendant
characterized the motion as a 60(b)(6) motion, but it was actually a
60(b)(2) motion.). Thus, Rule 60(b)(6) is not applicable to the present
case and as explained earlier, attorney carelessness is not a proper
ground for relief under the first reason.
The
Court will deny defendants' "Motion to Reconsider" the Court's
October 5, 1993
Order because they do not meet the test for Rule 60(b) relief. There is
also no reason to stay a final judgment.
III.
Determination of Damages
The
Court's
October 5, 1992
Order held defendants personally liable for the amount of wages that
were subject to levy and also for a penalty of 50% of the levy. Neither
party had correctly calculated the amount of wages that were subject to
levy, so the Court did not make a determination as to damages and
directed the parties to brief the Court as to the amount of wages that
were subject to levy.
Defendants
calculate that the amount of wages subject to levy was $51,069.96.
Defendants' calculation is incorrect for several reasons, two of which
should be noted. First, plaintiff can levy on "[a]ny amount payable
to or received by an individual as wages" that is not exempt. The
initial determination is whether to use net or gross wages. Defendants
use net wages, but using net wages, in effect, exempts health and life
insurance payments which were subtracted from the three taxpayers'
paychecks before calculating net wages. The only items that are exempt
from levy are listed in Title 26, section 6334(a) of the
United States Code; health and life insurance payments are not among the
listed exempt items. Allowing defendants to use net wages would
circumvent the determination of Congress that only the listed items
should be exempt from levy. §6334(c) ("Notwithstanding
any other law of the
United States
. . . no property or rights to property shall be exempt from levy other
than the property specifically made exempt by subsection (a).").
Second, Congress amended section 6334 in 1988 making
the amended version effective to levies issued on or after
July 1, 1989
. Technical and Miscellaneous Revenue Act of 1988, Pub. L. No. 100-647,
§6236(h)(1), 102 Stat. 3342 (1968). Thus, contrary to defendants'
calculation, for a levy served before
July 1, 1989
, the pre-1988 version of section 6334 is applicable
even if the levy continues beyond
July 1, 1989
. The 1988 version of section 6334 is applicable
only for those levies served on or after
July 1, 1989
.
Plaintiff
calculates that the amount of wages subject to levy was $56,380.41.
Plaintiff's method of calculating the amount of wages subject to levy
results in a smaller levy than plaintiff is entitled to, but there is no
reason why plaintiff cannot choose to collect less than it is entitled
to. Following plaintiff's method of calculation, however, plaintiff
over-counted the number of payroll periods by one period for each of the
three taxpayers. The Court agrees that plaintiff is entitled to begin
levy on the first payroll period after the employer receives the levy.
Plaintiff argues, for example, that because the Treasury served a levy
on defendants to collect the wages of Carr on February 1, 1990, that the
first payroll period that it could begin levy on was February 2, 1990.
However, the payroll ledger states that the payroll period ended
on February 2, 1990. The first payroll period following the levy was
from February 3, 1990 to February 9, 1990, and noted on the payroll
ledger as the payroll period ending February 9, 1990. Thus, the levy
attached to seven and not eight weeks of Carr's wages. Similarly, the
first levy on Holmes's wages was served on September 8, 1988, and was
effective starting the payroll period ending September 16, 1988, not the
payroll period ending September 9, 1988. The levy attached to eighty and
not eighty-one weeks of Holmes's wages. There is an additional
complication with the calculation of Garrett's wages because although
the "effect of a levy on salary or wages" is continuous, §6331(e) , plaintiff
levied on Garrett's wages a second time. The first levy on Garrett's
wages was served on August 23, 1988, and was effective starting the
payroll period ending September 2, 1988. The second levy on Garrett's
wages was served on January 10, 1990, and was effective starting the
payroll period ending January 19, 1990. The first levy thus includes the
payroll period ending September 2, 1988, to the payroll period ending
January 12, 1990, or 72 weeks; the second levy includes the payroll
period ending January 19, 1990, to the payroll period ending March 23,
1990, or ten weeks.
Following
plaintiff's calculations with an adjustment in the number of payroll
periods, the amount of wages subject to levy was $55,343.58. Defendants
are personally liable for the $55,343.58 that was subject to levy plus
$27,671.79 in penalties for a total of $83,015.37. §§6332(d)
(1 & 2). Plaintiff is also entitled to interest and
costs, §6332(d)(1) . 1
IV.
Conclusion
It
is therefore ORDERED that defendants' Motion to Reconsider is DENIED. It
is further
ORDERED
that defendants' Motion to Stay is DENIED. It is further
ORDERED
that defendants pay plaintiff $83,015.37 plus interest and costs.
1
The Court notes without deciding that arguably plaintiff may be entitled
to interest and costs, §6332(d)(1)
, plus a penalty of fifty percent of the sum of the interest
and costs. §6332(d)(2) (The penalty
applies to the entire amount recovered under §6332(d)(1) and because
interest and costs are recoverable under §6332(d)(1) , the penalty
applies to interest and costs as well.). The Court does not decide this
issue because plaintiff does not ask for these damages.
[2000-1
USTC ¶50,289]
United States of America
, Plaintiff v. John W. Marsh, Sean Marsh & Heather Marsh, as
Trustees of the Marsh Trust, and Bank of
Hawaii
, Defendants
U.S.
District Court, Dist.
Hawaii
, Civ. 99-00355 SOM, 3/2/2000, 89 FSupp2d 1171.
[Code
Sec. 7433 ]
IRS levy: Civil damages: Unauthorized collection: Retirement
payments: Time for filing suit: Two-year limitations period.--A sole
proprietor's claim for damages against the IRS based on allegations that
the notice of levy on his retirement payments was invalid because it was
not properly countersigned and that the IRS should have filed a notice
of levy for each semi-monthly retirement payment was barred by the
two-year limitations period. The taxpayer knew of the actions giving
rise to these claims more than two years before asserting his
counterclaim.
[Code
Sec. 7433 ]
Civil damages: Time for filing suit: Two-year limitations period:
Administrative remedies, exhaustion of.--The two-year limitations
period for commencing damage claims against the IRS was not tolled
pending exhaustion of a sole proprietor's administrative remedies. The
taxpayer was not required to exhaust his administrative remedies before
filing an action for damages; however, he chose to pursue administrative
remedies rather than file suit in federal court. Since he could have
filed suit as soon as his cause of action accrued, the statute of
limitations applicable to his Code Sec. 7433 claims was
not tolled. Moreover, the two-year limitations period was not equitably
tolled since the taxpayer did not show that an inequitable event
prevented his timely action.
[Code
Secs. 6331 , 6334
and 7433 ]
IRS levy: Civil damages: Unauthorized collection: Retirement
payments: Continuous levy: Exemption amounts.--A sole proprietor's
contention that he did not receive the proper exemption amount of his
retirement payments because the IRS was only allowed to levy 15% of each
semi-monthly payment was rejected. The taxpayer erroneously construed Code
Sec. 6331(h) as eliminating the right of the IRS to levy
amounts exceeding the minimum exemption on wages, salary, and other
income and limiting any continuous levy to 15% of the exempt amount.
Instead, Code
Sec. 6331(h) expanded the IRS's ability to levy against funds
previously exempt from levy under Code
Sec. 6334 .
ORDER GRANTING SUMMARY JUDGMENT ON THE COUNTERCLAIM
MOLLWAY,
District Judge:
Plaintiff
United States of America
("
United States
") has filed this action to collect unpaid federal employment and
unemployment taxes owed by Defendant John W. Marsh ("Marsh").
Marsh has filed a Counterclaim against the
United States
for unauthorized collection practices pursuant to 26 U.S.C. §7433.
The
United States
has moved for summary judgment on the Counterclaim. Because all of the
allegations contained in the Counterclaim are either time-barred or not
cognizable, the court grants the
United States
' motion.
BACKGROUND
Between
1985 and 1989, Marsh operated a sole proprietorship called S & H
Masonry. During that time, Marsh paid wages to various S & H Masonry
employees but failed to pay federal employment and unemployment taxes.
Marsh admits that the assessments against him for the unpaid taxes are
correct. See Stipulation Regarding Amount of Assessments at Issue
and to Continue Hearing on
United States
' Motion to Dismiss Counterclaim of John W. Marsh; Order filed on
December 3, 1999
.
To
collect the unpaid taxes Marsh owed, the Internal Revenue Service
("IRS") served a Notice of Levy dated
November 18, 1996
, ("November 18, 1996 levy") on the Employees' Retirement
System of the State of Hawaii ("Retirement System"). See
Declaration of Rebecca McKenzie-Young ("McKenzie-Young Dec.")
¶3, attached to Plaintiff's Motion to Dismiss; Exhibit 1, attached to
Plaintiff's Motion to Dismiss. Marsh, a retired police officer, was
receiving retirement payments 1 from the
Retirement System. The
November 18, 1996
levy was on Form 668-A(c) and indicated that Marsh owed the IRS
$510,219.96.
On
December 2, 1996
, Marsh's counsel wrote a letter to Revenue Officer Rebecca
McKenzie-Young asking that the
November 18, 1996
levy on the Retirement System be released because the IRS "is only
entitled to any amounts pursuant to levy on a pension plan where the
taxpayer has an unconditional right to demand payment from the
plan." See Exhibit 4, attached to Plaintiff's Motion to
Dismiss. Marsh's counsel argued that, because Marsh was only entitled to
receive payments in the future, the retirement payments could not be
levied.
Id.
Marsh's counsel further asked the IRS to honor his power of attorney and
communicate only through him.
Id.
On
December 9, 1996
, the IRS responded to Marsh's counsel's
December 2, 1996
letter, explaining that the IRS had not realized that the power of
attorney was relevant because the power of attorney form executed by
Marsh's counsel had not included Marsh's employer identification number.
See Exhibit B, attached to Defendants' Opposition to Plaintiff's
Motion to Dismiss. The IRS said that it would research Marsh's
"right to demand payment from his pension plan."
Id.
At
some point, Marsh's counsel also complained to the IRS that the
November 18, 1996
levy was invalid because it was not properly signed by a manager. See
Exhibit H, attached to Defendants' Opposition to Plaintiff's Motion to
Dismiss.
The
IRS served its Final Demand for payment on the Retirement System on
January 6, 1997
. See McKenzie-Young Dec. ¶4; Exhibit 2, attached to Plaintiff's
Motion to Dismiss. On
January 15, 1997
, the Retirement System honored the
November 18, 1996
levy and remitted $1,188.83 to the IRS. See McKenzie-Young Dec.
¶5; Exhibit 3, attached to Plaintiff's Motion to Dismiss.
The
IRS served another Notice of Levy dated
January 17, 1997
on the Retirement System ("January 17, 1997 levy"). The
January 17, 1997
levy was also on Form 668-A(c) but stated a different
amount--$496,309.31--owed by Marsh. This levy was signed by an IRS
manager. See Exhibit D, attached to Defendants' Opposition to
Plaintiff's Motion to Dismiss.
The
IRS also served a Notice of Levy dated
September 19, 1997
("September 19, 1997 levy"). This levy, however, was on Form
668-W(c). 2 See
Exhibit G, attached to Defendants' Opposition to Plaintiff's Motion to
Dismiss.
Between
January 15, 1997
and
October 15, 1997
, the IRS levied $22,572 of Marsh's retirement payments, which was all
but $19 of the amount Marsh was entitled to receive. See Exhibit
H at 4, attached to Defendants' Opposition to Plaintiff's Motion to
Dismiss.
"Without
notice or explanation, on
October 31, 1997
, the IRS reduced the levied amount to $963."
Id.
The balance of $299.58 was remitted to Marsh.
On
May 17, 1999
, the
United States
filed this action. It amended the Complaint on
May 24, 1999
. The
United States
seeks to reduce to judgment unpaid federal employment and unemployment
taxes assessed against Marsh and to set aside allegedly fraudulent
transfers of two parcels of real property from Marsh to the Marsh Trust.
On
July 22, 1999
, Marsh filed a Counterclaim against the
United States
for damages for unauthorized collection practices under 26 U.S.C. §7433.
Marsh claims that the IRS acted improperly in attempting to collect the
taxes it claims Marsh owes. Marsh seeks the return of all monies levied,
$1,000,000 in damages, and attorney's fees and costs.
The
United States
has moved to dismiss the Counterclaim on statute of limitations grounds
under Fed.R.Civ.P. 12(b)(1), which concerns lack of subject matter
jurisdiction. 3 The
United States
relies on the wrong court rule. "[F]ederal statutory time
limitations on suits against the government are not jurisdictional in
nature." Irwin v. Department of Veterans Affairs, 498 U.S.
89 (1990), reh'q denied, 498
U.S.
1075 (1991). See also Capital Tracing, Inc. v. U.S. [95-2 USTC ¶50,473],
63 F.3d 859, 861 n.3 (9th Cir. 1995). Accordingly, the
United States
' motion is one under Rule 12(b)(6), not under Rule 12(b)(1). Because
the
United States
, however, has submitted evidence beyond the pleadings, the court treats
this motion as one for summary judgment. See Keams v. Tempe Tech.
Inst., Inc., 110 F.3d 44, 46 (9th Cir. 1997) (if matters outside the
pleadings are considered, a motion to dismiss under Rule 12(b)(6) is
treated as one for summary judgment);
Anderson
v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996). 4
STANDARD
Summary
judgment shall be granted when
the
pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.
FED.R.CIV.P.
56(c). One of the principal purposes of summary judgment is to identify
and dispose of factually unsupported claims and defenses. Celotex
Corp. v. Catrett, 477
U.S.
317, 323-24 (1986).
Summary
judgment must be granted against a party who fails to demonstrate facts
to establish what will be an essential element at trial.
Id.
at 322. The burden initially lies with the moving party to identify for
the court "the portions of the materials on file that it believes
demonstrate the absence of any genuine issue of material fact." T.W.
Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626,
630 (9th Cir. 1987) (citing Celotex Corp., 477
U.S.
at 323). "When the moving party has carried its burden under Rule
56(c), its opponent must do more than simply show that there is some
metaphysical doubt as to the material facts." Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S.
574, 586 (1986) (footnote omitted). The nonmoving party may not rely on
the mere allegations in the pleadings and instead must set forth
"specific facts showing that there is a genuine issue for
trial."
Id.
At least some " 'significant probative evidence tending to support
the complaint' " must be produced. Summers v. A. Teichert &
Son, Inc., 127 F.3d 1150, 1152 (9th Cir. 1997) (quoting Anderson
v. Liberty Lobby, Inc., 477
U.S.
242, 252 (1986)). "[I]f the factual context makes the non-moving
party's claim implausible, that party must come forward with more
persuasive evidence than would otherwise be necessary to show that there
is a genuine issue for trial." California Architectural Bldg.
Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th
Cir. 1987) (citing Matsushita Elec. Indus. Co., Ltd., 475
U.S.
at 587), cert. denied, 484
U.S.
1006 (1988).
However,
when "direct evidence" produced by the moving party conflicts
with "direct evidence" produced by the party opposing summary
judgment, "the judge must assume the truth of the evidence set
forth by the nonmoving party with respect to that fact." T.W.
Elec. Serv., 809 F.2d at 631. All evidence and inferences must be
construed in the light most favorable to the nonmoving party.
Id.
Inferences may be drawn from underlying facts not in dispute, as well as
from disputed facts that the judge is required to resolve in favor of
the nonmoving party.
Id.
DISCUSSION
I.
The Statute of Limitations Bars Two Claims In The Counterclaim.
In
his Counterclaim, Marsh has sued the
United States
for monetary damages arising from the IRS's collection of taxes it
claims Marsh owes. The
United States
, however, "is immune from suit save as it consents to be
sued." United States v. Mitchell, 445 U.S. 535, 538 (1980)
(quoting United States v. Sherwood, 312 U.S. 584, 586 (1941)), reh'g
denied, 446 U.S. 992 (1980) The party bringing suit against the
United States bears the burden of proving that sovereign immunity has
been waived. See Cato v. United States, 70 F.3d 1103, 1107 (9th
Cir. 1995); Holloman v. Watt, 708 F.2d 1399, 1401 (9th Cir.
1983), cert. denied, 466 U.S. 958 (1984).
The
United States
has consented to be sued for damages when an IRS employee intentionally
or recklessly disregards any provision of the Internal Revenue Code, or
any regulation promulgated under the Internal Revenue Code in connection
with the collection of federal tax. See 26 U.S.C. §7433 (1997). 5
"[W]hen
consent to sue the
United States
is granted, such as by way of §7433, the precise terms, conditions, and
qualifications of such consent must be scrupulously followed." Caparaso
v. Commissioner of Internal Revenue, 907 F.Supp. 1235, 1239 (N.D.
Ind. 1995) (citing Long Island Radio Company v. NLRB, 841 F.2d
474, 477 (2d Cir. 1988)).
An
action to enforce liability under section 7433 "may be brought only
within two years after the date the right of action accrues." 26
U.S.C. §7433(d)(3) (1997). A cause of action accrues "when the
taxpayer has had a reasonable opportunity to discover all essential
elements of a possible cause of action." 26 C.F.R. §301.7433-1(g)(2).
Marsh
claims that section 7433 was violated because: (1) the
November 18, 1996
levy "was not properly countersigned"; (2) a Notice of Levy
was not served for each semi-monthly retirement payment; and (3) the
September 19, 1997
exempt amount was incorrect. 6 The first
two of these claims are time-barred. Marsh filed his Counterclaim on
July 22, 1999
. Thus, the section 7433 claim based on any of these allegations must
have accrued on or before
July 22, 1997
.
A.
Marsh's Allegation That The First Levy Was Not Properly Signed Is
Time-Barred.
Marsh
alleges that the
November 18, 1996
levy "was not properly countersigned by the IRS District Authorized
Person." Counterclaim ¶7. According to Marsh's attorney, on
December 2, 1996
, he wrote to McKenzie-Young to request that she release the levy.
Marsh's attorney says that Group Manager Rebecca Nadler responded to his
concerns, "agree[ing] that the
11/8/96
levy was not properly issued as it was not signed as required." See
Exhibit H at 3, attached to Defendants' Opposition to
United States
' Motion to Dismiss. "The IRS subsequently acknowledged that the
[l]evy was erroneous and a mistake and reissued a signed [l]evy in
February 1997." Counterclaim ¶7. Because Marsh knew of any section
7433 claim based on this allegation as early as
December 2, 1996
, the claim is time-barred. 7
B.
Marsh's Allegation That a Notice of Levy Should Have Been Filed For
Each Semi-Monthly Payment Is Time-Barred.
Marsh
claims that section 7433 was violated because the IRS failed to file a
separate Notice of Levy for each semi-monthly retirement payment made to
Marsh by the Retirement System. According to Marsh, the
November 18, 1996
and
January 17, 1997
levies were "snapshot" levies that entitled the IRS to only
the particular semi-monthly payments owed to Marsh at the times of the
two levies. The Retirement System made multiple remittances to the IRS
under these levies.
This
court need not decide whether the IRS should have filed a separate
"snapshot" levy addressing each semi-monthly payment. Even if
the court were to assume the correctness of Marsh's argument, his
section 7433 claim would still be time-barred. The Retirement System
made its first payment to the IRS on
January 15, 1997
. Thereafter, the Retirement System remitted $1188 to the IRS twice a
month. At the same time, the Retirement System sent Marsh the remaining
one dollar that had not been levied by the IRS. From this repeated
semi-monthly payment of only one dollar directly to him, Marsh knew well
before July 1997 that the Retirement System was continually remitting
$1188 semimonthly to the IRS. Accordingly, Marsh's allegation that the
IRS should have filed a Notice of Levy for each semi-monthly retirement
payment is time-barred.
C.
The Limitations Period Was Not Tolled While Marsh Was Pursuing
Nonmandatory Administrative Remedies.
Marsh
claims that summary judgment should not be granted on the Counterclaim
because the limitations period was tolled while he was pursuing his
administrative remedies.
A
plaintiff is not required to exhaust administrative remedies before
filing a section 7433 action. See 26 U.S.C. §7433(d)(1) (1997).
Instead, "[t]he amount of damages awarded . . . may be reduced if
the court determines that the plaintiff has not exhausted the
administrative remedies available to such plaintiff within the Internal
Revenue Service."
Id.
When
a complainant is not required to exhaust his administrative remedies
before bringing suit, the Supreme Court has held that the statute of
limitations is not tolled, even if the complainant chooses to seek
optional administrative remedies. See Delaware State College v. Ricks,
449 U.S. 250, 261 (1980) (holding a 42 U.S.C. §1981 claim untimely as
"the pendency of a grievance, or some other method of collateral
review of an employment decision, does not toll the running of the
limitations periods"); Johnson v. Railway Exp. Agency, Inc.,
421 U.S. 454, 460-61 (1975) (refusing to toll §1981 statute of
limitations even though a Title VII complaint was pending in the
administrative agency); see also Andrews v. Consolidated Rail Corp.,
831 F.2d 678, 684 (7th Cir. 1967) (pursuit of nonmandatory
administrative remedy under Rehabilitation Act did not toll the statute
of limitations); Smith v. McClammy, 740 F.2d 925, 927 (11th Cir.)
("[s]ince exhaustion of administrative remedies is not a
prerequisite to filing suit, the statute would not be tolled pending
pursuit of administrative remedies but would begin to run on the date
the cause of action accrued"), reh'g denied, 748 F.2d 690
(11th Cir. 1984).
Thus,
the statute of limitations applicable to a section 7433 action is not
tolled pending exhaustion of administrative remedies, but runs from the
time the cause of action accrued. Marsh chose to pursue administrative
remedies rather than immediately sue in federal court. Although
administrative remedies were an option, they were not a prerequisite to
filing suit. Because Marsh could have sued immediately rather than
awaiting the result from the administrative agency, Marsh's section 7433
claim was not tolled. 8
D.
The Limitations Period Was Not Equitably Tolled.
Nor
is the statute of limitations on his section 7433 claim equitably
tolled. The doctrine of equitable tolling of a statute of limitations
may be applied in suits against the federal government. Irwin v.
Department of Veteran Affairs, 498
U.S.
89, 95-96 (1990). However, "tolling is an extraordinary remedy
which should be extended only sparingly." Justice v. United
States, 6 F.3d 1474, 1479 (11th Cir. 1993) (citing Irwin, 498
U.S.
at 96).
Courts
should toll a statute of limitations only when there is an inequitable
event that prevents timely action.
Id.
The Supreme Court has recognized equitable tolling only "where the
claimant has actively pursued his judicial remedies by filing a
defective pleading during the statutory period, or where the complainant
has been induced or tricked by his adversary's misconduct into allowing
the filing deadline to pass." Irwin, 498
U.S.
at 96 (footnotes omitted). 9
Neither
of these two circumstances applies here. Marsh did not file a defective
pleading during the statutory period, and there is no evidence that
Marsh was induced or tricked by the
United States
into allowing the filing deadline to pass.
Marsh
argues that equitable tolling is warranted because the IRS initially
told Marsh that the first and second levies were proper but turned
around and served the third levy, which included an exempted amount.
According to Marsh, McKenzie-Young told Marsh's attorney in February
1997 that the continuous levy form (668-W) would be issued. Two weeks
later, IRS District Counsel Henry O'Neill told Marsh's counsel that the
first two levies were proper. Seven months later, the IRS issued the
Form 668-W (third levy). See Defendants' Supplemental Memo. at
105.
Marsh
does not indicate how this conduct misled him. Marsh instead appears to
argue that this conduct was general evidence of the IRS's misconduct.
Without evidence that Marsh was induced or tricked by the
United States
into allowing the filing deadline to pass, there is no basis for
equitable tolling.
The
court has found time-barred two of Marsh's allegations, that is, the
allegation that the
November 18, 1996
levy "was not properly countersigned" and the allegation that
a Notice of Levy should have been served for each semi-monthly
retirement payment. There is no equitable basis for tolling the
limitation period on either of those allegations.
There
is no evidence that the IRS induced or tricked Marsh into allowing the
filing deadline to pass on the claim that the
November 18, 1996
levy was not countersigned. In fact, the IRS addressed this allegation
two months later by serving a properly countersigned levy on
January 17, 1997
.
There
is also no evidence that the IRS induced or tricked Marsh into allowing
the filing deadline to pass on the claim that a Notice of Levy should
have been served for each semi-monthly payment. The IRS delay in serving
the
September 9, 1997
levy was irrelevant to Marsh's claim that a Notice of Levy should have
been filed for every semi-monthly payment, as the delay was in serving a
continuous levy, not in serving a one-time levy. Taking all of the
allegations as true and in the light most favorable to Marsh, no
possible construction of the facts exists that would support equitable
tolling.
II.
Summary Judgment is Granted on Marsh's Allegation That The Exempt
Amount Was Incorrect.
Marsh's
third section 7433 claim is that, even if the IRS acted correctly in
issuing what it deemed to be a "continuous levy," the IRS was
only allowed to levy 15 percent of each semimonthly payment under 26
U.S.C. §6331(h). The court disagrees.
Section
6331(h) was enacted in 1997 and only applies to levies issued after
August 5, 1997
. Taxpayer Relief Act of 1997, Pub. L. No. 105-34, §1024(b), 111 Stat.
788, 923-24 (1997). Thus, the only levy to which Marsh's 15 percent
argument applies is the third levy, issued on
September 19, 1997
.
The
effect of section 6331(h) was to subject to continuous levy funds that
previously, under section 6334, had been exempt from levy. Section
6331(h) states:
The
effect of a levy on specified payments to or received by a taxpayer
shall be continuous from the date such levy is first made until such
levy is released. Notwithstanding section 6334, such continuous levy
shall attach to up to 15 percent of any specified payment due to the
taxpayer.
26
U.S.C. §6331(h)(1) (1998).
A
"specified payment" is (1) "any Federal payment other
than a payment for which eligibility is based on the income or assets
(or both) of a payee," (2) "any payment described in
paragraphs (4), (7), (9), or (11) of section 6334(a)," and (3)
"any annuity or pension payment under the Railroad Retirement Act
or benefit under the Railroad Unemployment Insurance Act."
Id.
§6331(h)(2). Payments described in section 6334(a) are for unemployment
benefits (section 6334(a)(4)), workmen's compensation (section
6334(a)(7)), the "[m]inimum exemption for wages, salary, and other
income" (section 6334(a)(9)), and certain public assistance
(section 6334(a)(11)).
The
only category Marsh's state retirement payments could possibly fall
within is section 6334(a)(9). Section 6334(a)(9) exempts from levy a
certain portion of wages, salary, and other income. Before section
6331(h) took effect, unemployment benefits, workmen's compensation, and
certain public assistance payments were also exempt from levy. Section
6331(h) changed the law to permit continuous levies on such payments and
to allow a continuous levy on up to 15 percent of the minimum exemption
for wages, salary, and other income.
Marsh
reads the words "notwithstanding section 6334" in section
6331(h) as eliminating the right of the IRS to levy amounts exceeding
the "minimum exemption" referred to in section 6334(a)(9).
According to Marsh, section 6331(h) now limits any continuous levy on
wages, salary, and other income to 15 percent of the wages, salary, and
other income. This reading makes a nullity of 26 U.S.C. 6334(d), which
calculates the exempt amount listed in section 6334(a)(9). The court
declines to read section 6331(h) as repealing provisions not expressly
repealed. Instead, the court reads section 6331(h) as expanding the
right of the IRS to levy amounts previously exempt from levy under
section 6334. This reading gives effect to all of the statutory
provisions in issue. See H.R. Rev. No. 148, at 1061 (1997), reprinted
in 1997 WL 353016 ("The Committee believes that if wages are
subject to levy, wage replacement payments should also be subject to
levy. In addition, the Committee believes that it is inappropriate to
exempt from levy one type of annuity or pension payment while most other
types of these payments are subject to levy"). Thus, the court
reads section 6331(h) as subjecting to levy the minimum exemption for
wages, salary, and other income.
What
this means is that, instead of being permitted to levy only the excess
over the exempt amount, the IRS could levy that excess plus up to 15
percent of the exempt amount. When the September 19, 1997 levy was
served, Marsh was entitled to $1262.58 from the Retirement System twice
a month. Under section 6334(d), Marsh was allegedly 10 entitled to
a minimum exemption of $258.33, which meant the IRS was entitled to
$1004.25. 11 Under
section 6331(h), the IRS was, in addition, entitled to levy continuously
15 percent, or $38.75, of the $258.33 minimum exemption. In short, the
IRS was entitled to collect $1043.00 ($1004.25 plus $38.75) twice a
month. Marsh was then entitled to a semi-monthly payment of $219.58, or
$258.33 minus $38.75. Marsh actually received $299.58 12
semi-monthly, which is more than he was entitled to receive under this
scenario. Thus, Marsh was not deprived of the proper exemption amount,
and the exemption cannot be the basis for a section 7433 claim.
CONCLUSION
Based
on the foregoing, the court grants summary judgment on the Counterclaim.
This order disposes of Plaintiff's Motion to Dismiss Counterclaim of
John W. Marsh, which this order treats as a motion for summary judgment.
IT
IS SO ORDERED.
1
Marsh says that he elected to receive his accumulated contributions in a
lump sum when he retired. In addition to the lump sum payment, Marsh was
to receive a retirement allowance equal to the maximum retirement
allowance reduced by the actuarial equivalent of the contributions.
These payments will cease at Marsh's death. See Haw. Rev. Stat.
§88-83.
2
The court asked the parties to clarify the total amount due on the
September 19, 1997
levy because the court's copy of the levy was illegible. Neither party
was able to state the total amount due on that levy, but this fact is
not essential for purposes of ruling on this motion.
3
[Marsh] The United States has also moved to dismiss some of the
allegations in the Counterclaim for failure to state a claim upon which
relief can be granted.
4
Local Rule 56.1 of the United States District Court for the District of
Hawai'i requires that motions for summary judgment be accompanied by a
"separate concise statement detailing each material fact as to
which the moving party contends . . . [t]hat there are no genuine issues
to be tried . . . [and] [w]hich are essential for the court's
determination of the issue or issues presented on summary
judgment." Marsh objected to the
United States
' failure to file a concise statement of material facts. In fairness to
both parties, the court continued the hearing on the
United States
' motion and set a timetable for supplemental briefing that would comply
with Local Rule 56.1.
5
Section 7433 provides:
If,
in connection with any collection of Federal tax with respect to a
taxpayer, any officer or employee of the Internal Revenue Service
recklessly or intentionally disregards any provision of this title, or
any regulation promulgated under this title, such taxpayer may bring a
civil action for damages against the
United States
in a district court of the
United States
. Except as provided in section 7432, such civil action shall be the
exclusive remedy for recovering damages resulting from such actions.
Section
7433 was subsequently amended to impose liability for negligent conduct
by an IRS employee. See 26 U.S.C. §7433 (1999). The amendment,
however, only applies to actions taken after
July 22, 1998
.
6
Marsh also alleges in his Counterclaim that IRS employee Rebecca
McKenzie-Young disregarded a power of attorney and "yelled at
Defendant Sean Marsh." At the hearing on this motion, Marsh's
counsel stated that these allegations were not the basis for Marsh's
section 7433 action. Instead, Marsh claims that these allegations are
evidence of the IRS's alleged animus against Marsh.
Even
if those allegations were the basis for a section 7433 claim, they would
be time-barred. Marsh knew by
December 2, 1996
, that McKenzie-Young had allegedly "disregarded the power of
attorney." See Exhibit 4, attached to Plaintiff's Motion to
Dismiss ("Therefore, to follow up on my complaint about my [power
of attorney] being circumvented, I am sending a copy of this letter to
the PRO"]; Exhibit B, attached to Defendants' Opposition to
United States
' Motion to Dismiss. By
November 8, 1996
, Marsh also knew that McKenzie-Young had allegedly "yelled at
[him] . . . in a threatening, insulting and hostile manner" on
November 8, 1996
. See Exhibit J, attached to Defendants' Separate and Concise
Statement of Facts; Exhibit H, attached to Defendants' Opposition to
United States' Motion to Dismiss (Marsh's attorney states, "On
November 8, 1996
, I received a telephone call from [] Mr. Marsh telling me that RO
McKenzie-Young had come to his home looking for him and harassed his
son. . . . Apparently, she stood in a neighbor's driveway and yelled
like 'a fishwife' at the son in a confrontational manner demanding that
he answer her questions"). Having occurred before
July 22, 1997
, both of these allegations would have also been time-barred.
7
Marsh's allegation that section 7433 was violated by the IRS's failure
to properly sign the
November 18, 1996
levy also fails to state a claim upon which relief may be granted.
"Section 7433 authorizes suits only where an IRS agent has violated
the taxing statutes or regulations. Therefore, any 'rights' not created
by statute or regulation, such as internal IRS policy in publications
disseminated to taxpayers or state statutes not incorporated into the
federal statute, cannot be relied upon under §7433." Amoco
Prod. Co. v. Aspen Group [99-1 USTC ¶50,459], 59 F.Supp.2d 1112,
1122 (D. Colo. 1999). See, e.g., Gonsalves, 975
F.2d at 16 ("The government has not consented to suit for
violations of rights created in [IRS publications]"). The
countersignature requirement is set forth in an IRS manual, not in the
Code or any regulations promulgated pursuant to the Code. Accordingly,
the countersignature allegation does not state a section 7433 claim and
that is an additional ground for dismissal of that allegation.
8
Even if exhaustion was mandatory, Marsh's claims would still have been
time-barred. Marsh attempted to exhaust his administrative remedies by
writing a letter to the Taxpayer Advocate on
February 17, 1999
. See Exhibit H, attached to Defendants' Opposition to
Plaintiff's Motion to Dismiss (Marsh's attorney states, "This
letter is Mr. Marsh's good faith attempt to exhaust all administrative
remedies before filing suit in District Court"). As discussed
above, Marsh's claims accrued on or before
July 22, 1997
. Marsh's attempt to exhaust his administrative remedies in February
1999, almost two years after the claims accrued, is not a sufficient
basis to save Marsh's claims.
9
The
United States
argues that equitable tolling does not apply to this action after United
States v. Brockamp [97-1 USTC ¶50,216; 97-1 USTC ¶60,259], 519
U.S. 347 (1997). The court disagrees. Brockamp addressed a
particular tax provision. There is no indication that the Supreme Court
meant Brockamp to apply to all tax claims. The court in Brockamp
held that Congress did not intend the equitable tolling doctrine to
apply to the statute of limitations for filing tax refund claims.
Id.
at 354. The Court noted that, "[o]rdinarily limitations statutes
use fairly simple language, which one can often plausibly read as
containing an implied 'equitable tolling' exception."
Id.
at 350. In contrast, "[s]ection 6511 sets forth its time
limitations in a highly detailed technical manner, reiterates them
several times in different ways, imposes substantive limitations, and
sets forth explicit exceptions to its basic time limits that do not
include 'equitable tolling.' "
Id.
at 350-51. The statute of limitations at issue here for section 7433
claims is more akin to the ordinary limitations statute that merely sets
forth when a cause of action will have run. Accordingly, Brockamp
does not prohibit equitable tolling here.
10
The
United States
claims that, even though the IRS gave Marsh the exemption, Marsh was not
entitled to receive that exemption if he had other sources of income in
excess of the exempt amount. The record shows that Marsh refused to
provide evidence of his financial condition. Thus, Marsh has not met his
burden of demonstrating his entitlement to the exemption. Marsh's
failure to meet this burden provides yet another reason that Marsh
cannot maintain his section 7433 claim with respect to the exemption.
11
The exempt amount is the sum of the standard deduction and the aggregate
amount of the deductions for personal exemptions allowed the taxpayer
under 26 U.S.C. §151. When the income is received periodically, the
total amount is divided by the appropriate number of annual payments.
Id.
§6334(d). Under §6634(d)(2), the amount is to be calculated by
dividing the sum of the standard deduction for a married individual
filing separately ($3,550) and the personal exemption amount ($2,650) by
the number of payments (24). Under this formula, the semimonthly
statutory exemption amount would be $258.33.
12
In giving Marsh an exemption of $299.58, the IRS apparently added 15
percent of the minimum exemption to Marsh's minimum exemption, instead
of subtracting 15 percent. This error is harmless for purposes of
Marsh's Counterclaim, as Marsh received more than he was entitled to
receive.
