Forms and Instructions Online, Instruction 4.21: Challenge all Liens
Title 26, Appendix, Title XXXII: Lien and Levy Actions
Following Proper Levy Procedures-Treasury Inspector General
IRS Levy Forms:
CHAPTER 79 >
Sec. 7701. - Definitions
The term ''levy'' includes
the power of distraint and seizure by
26 U.S.C. §6332: Period of lien
26 U.S.C. §6334: Property exempt from levy
26 U.S.C. §6335: Sale of seized property
26 U.S.C. §6343: Authority to release levy and return property
26 U.S.C. §6332(c): Requires COURT ORDER!
TITLE 26 >
Subtitle F >
CHAPTER 64 >
Subchapter D >
PART II > § 6332
§ 6332. Surrender of property subject to levy
(c) Special rule for
banks Any bank (as defined in section 408 (n)) shall surrender (subject
to an attachment or execution under judicial process) any deposits (including
interest thereon) in such bank only after 21 days after service of levy.
42 U.S.C. §1717: Assignment of benefits; execution, levy, etc., against
42 > CHAPTER 12 > SUBCHAPTER II > § 1717
Assignment of benefits; execution, levy, etc., against benefits
The right of any person
to any benefit under subchapter I of this chapter shall not be transferable
or assignable at law or in equity except to the United States, and
of the moneys paid or payable (except money paid hereunder as reimbursement
for funeral expenses or as reimbursement with respect to payments of
workmen’s compensation or in the nature of workmen’s compensation benefits),
or rights existing under said subchapter, shall be subject to execution,
attachment, garnishment, or other legal process or to the operation
of any bankruptcy or insolvency law.
(Black's Law Dictionary, Sixth Edition, page 907)
To assess; raise; execute,
exact; tax; collect; gather; take up; seize. Thus, to levy (assess,
exact, raise, or collect) a tax; to levy (raise or set up) a nuisance;
to levy (acknowledge) a fine; to levy (inaugurate) war; to levy an execution,
i.e., to levy or collect a sum of money on an execution.
levy, n: (Black's
Law Dictionary, Sixth Edition, page 907) A seizure.
The obtaining of money
by legal process through seizure and sale of property; the raising of
the money for which an execution has been issued.
The process whereby
a sheriff or other state official empowered by writ or other judicial
directive actually seizes, or otherwise brings within her control, a
judgment debtor's property which is taken to secure or satisfy the judgment.
to taxation, the word may mean the legislative function and declaration
of the subject and rate or amount of taxation. People v. Mahoney,
13 Cal.2d 729, 91 P.2d 1029; or the rate of taxation rather than the
physical act of applying the rate to the property, Lowden v. Texas County
Excise Board, 187 Okl. 365 103 P.2d 98, 100; or the formal order, by
proper authority declaring property subject to taxation at fixed rate
at its assessed valuation, State v. Davis, 335 Mo. 159, 73 S.W.2d 406,
407; or the ministerial function of assessing, listing and extending
taxes, City of Plankinton v. Kieffer, 70 S.D. 329, 17 N.W.2d 494, 495,
496; or the extension of the tax, Day v. Inland Steel Co., 185 Minn.
53, 239 N.W. 776, 777; or the doing of whatever is necessary in order
to authorize the collector to collect the tax, Syracuse Trust Co. v.
Board of Sup'rs of Oneida County, 13 N.Y.S.2d 390, 394. When used
in connection with authority to tax, denotes exercise of legislative
function, whether state or local, determining that a tax shall be imposed
and fixing amount, purpose and subject of the exaction. Carkonen
v. Williams, 76 wash.2d 617, 458 P.2d 280, 286. The qualified
electors "levy" a tax when they vote to impose it.
Assess; Assessment; Tax.
Internal Revenue Manual,
Section 5.11: Notice of Levy
Prerequisites to levy and seizure
Notice of Federal
26 U.S.C. §6322.
Notice of Assessment,
Treasury Decision 1995 (This is to be established by making a special
FOIA request to the Department of the Treasury).
Notice and Demand for payment,
26 U.S.C. §6303. See also 26 CFR §301.6303-1(a).
Notice of Intent to Levy,
26 U.S.C. §6331(d). See also 26 CFR §301.6331-1(a)(1)
for levy made upon outstanding federal tax lien.
26 U.S.C. §6331, and 26 CFR §301.6331-1(c)-service of notice
of levy by mail.
Notice of Seizure,
26 U.S.C. §6502(b), and
26 U.S.C. §6335(a). See also 26 CFR §301.6502-1(b)
Applicable to Real and certain personal property
Notice of Sale,
26 U.S.C. §6335(b).
Manner and Condition of Sale,
26 U.S.C. §6335(e)
Redemption of property, within 180 days after sale,
26 U.S.C. §6337(a)(1).
26 U.S.C., Subchapter D - Seizure of Property for Collection of Taxes
Sec. 6331. Levy and distraint
(a) Authority of Secretary
If any person liable
to pay any tax neglects or refuses to pay the same within 10 days after
notice and demand, it shall be lawful for the Secretary to collect such
tax (and such further sum as shall be sufficient to cover the expenses
of the levy) by levy upon all property and rights to property (except
such property as is exempt under section
6334) belonging to such person or on which there is a lien provided
in this chapter for the payment of such tax.
Levy may be made upon the accrued
salary or wages of any officer, employee, or elected official, of the
United States, the District of Columbia, or any agency or instrumentality
of the United States or the District of Columbia, by serving a notice
of levy on the employer (as defined in section 3401(d)) of such officer,
employee, or elected official. If the Secretary makes a finding
that the collection of such tax is in jeopardy, notice and demand for
immediate payment of such tax may be made by the Secretary and, upon
failure or refusal to pay such tax, collection thereof by levy shall
be lawful without regard to the 10-day period provided in this section.
(b) Seizure and sale of property
The term ''levy'' as
used in this title includes the power of distraint and seizure by any
means. Except as otherwise provided in subsection (e), a levy shall
extend only to property possessed and obligations existing at the time
thereof. In any case in which the Secretary may levy upon property or
rights to property, he may seize and sell such property or rights to
property (whether real or personal, tangible or intangible).
Freeman v. Mayer, 152
F.Supp. 383 (1957):
A "levy" requires
that property be brought into legal custody through seizure, actual
or constructive, levy being an absolute appropriation in law of property
levied on, and
mere notice of intent to levy
is insufficient. United States v. O'Dell, 6
Cir., 1947, 160 F.2d 304, 307. Accord, In re Holdsworth, D.C.N.J.
1953, 113 F.Supp. 878, 888; United States v. Aetna Life Ins. Co. of
Hartford, Conn., D.C.Conn. 1942, 146 F.Supp. 30, 37, in which Judge
Hincks observed that he could "find
no statute which says that a mere notice shall constitute a 'levy.'"
There are cases which hold that a warrant for distraint is necessary
to constitute a levy. Givan v. Cripe, 7 Cir., 1951, 187 F.2d 225;
United States v. O'Dell, supra. The Court of Appeals for the Third
Circuit state in is opinion, 221 F.2d at page 642, "These sections [26
U.S.C. §§3690-3697] require that levy by a deputy collector be accompanied
by warrants of distraint [issued by a judge in a legal proceeding]."
In re Brokol Manufacturing Co., supra.
I am constrained to
conclude that a levy upon both tangible and intangible property under
§3692 requires the execution of warrant for distraint and then effective
only to amounts affixed thereon. As noted above, the Court of
Appeals for this Circuit declared when this matter was before it that
§§3690-3697 "require that a levy by a deputy collector be accompanied
by warrants of distraint."
The distress authorized
by §3690 is different from anything know to the common law, both because
it authorizes sale of the property seized, and because it extends to
other personality than chattels. By its very nature it requires
that demands of procedural due process of law be rigorously honored.
26 U.S.C. Sec. 6502(b): "The date on which a levy on property or
the rights to property is made shall be the date on which the notice
of seizure ... is given."
20 Fed. Proc. L Ed §48.548. WHAT MAY BE LEVIED UPON.
“…[W]ith regard to
a levy on salary or wages [26 U.S.C.S. §6331(e)(1); 26 CFR §301.6331-2(c
)] a levy extends only to property possessed and obligations existing
at the time of the levy [26 U.S.C.S. §6331(b); 26 CFR §301.6331-1(a)(1)].
Levy may be made upon the salaries of federal, [26 U.S.C.S. §6331(a)]
state, and municipal, [26 CFR §301.6331(a)(4)(ii)] employees and a pension
payable to a former state employee may be levied upon [Revenue Ruling
55-226, 1955-1 CB551].”
26 CFR §301.6331-1 Levy and Distraint
Levy may be made upon the salary or wages of any officer or employee
(including members of the Armed Forces) or elected or appointed official
of the of the United States, the District of Columbia or any agency
or instrumentality of the United States or the District of Columbia,
who has control of payment or wages…
State and Municipal
employees. Salaries, wages or other compensation of any
officer, employee, or elected or appointed official of a State or Territory,
or of any agency, instrumentality, or political subdivision thereof,
are also subject to levy to enforce collection of any Federal tax.
of seamen, apprentice seamen, or fishermen employed on fishing vessels
are subject to levy.”
Federal Register Vol.
55 No. 220 Wed Nov. 14 , 1990 at page 47623 in describing the 26 USC
6331 process Section 70.161 Levy and Distraint
(a) (4) (i) Federal
Employees. Levy may be made upon the salary or wages of any officer
or employee (including members of the Armed Forces), or elected or appointed
official, of the United States, the District of Columbia, or any agency
or instrumentality of either, by serving a notice of levy on the employer
of the delinquent taxpayer. PLEASE NOTE, THERE IS NO MENTION OF
PRIVATE SECTOR PEOPLE. As used in this paragraph, the term "employer"
(A) The Officer
or employee of the United States, the District of Columbia, or of the
agency or instrumentality of the United States or the District of Columbia,
who has the control of the payment of wages, or
(B) Any other officer
or employee designated by the head of the branch, department, or agency,
or instrumentality of the United States or of the District
of Columbia as the party upon whom service of the notice of levy may
If the head of such branch, department, agency or instrumentality designates
an officer or employee other than the one who has control of the payment
of the wages as the party upon whom service of the notice of levy may
be made, such head shall promptly notify the Director of the name and
address of each officer or employee so designated and the scope or extent
of the authority of such designee.
(NOTE THAT THE ABOVE IS WHY THE NOTICE OF LEVY SENT TO ALL PRIVATE
EMPLOYERS, WHO ARE NOT MENTIONED ABOVE, IS DEFICIENT OF 6331 PARAGRAPH
(a) ON THE BACK OF THE NOTICE. AS I HAVE WRITTEN BEFORE ALL GOVERNMENT
EMPLOYERS AND EMPLOYEES ARE DESIGNATED TO PART 70 OF THE 27 USC/CFR
TITLES AND ARE LISTED AS SUBJECTS OF THIS LEVY PROCESS. NOT ONE
MENTION OF PRIVATE EMPLOYERS AND EMPLOYEES. THE REASON THE DEFINITION
INCLUDES PRIVATE EMPLOYERS IN 6103 IS THE FACT THAT A GOVERNMENT EMPLOYEE
MAY ALSO WORK FOR A PRIVATE EMPLOYER IN WHICH THE GOVERNMENT EMPLOYEE
MUST HAVE HIS WAGES INCLUDED IN HIS INCOME TAX WITHHOLDING. THIS
6103 IS THE ONLY SECTION THAT USES "MEANS" WHEN DESCRIBING THE UNITED
STATES, AS ALSO INCLUDING THE 50 STATES BECAUSE OF INFORMATION SHARING
ONLY. EVERY OTHER STATUTE DESCRIBING THE UNITED STATES USES INCLUDES
WHICH IS RESTRICTIVE TO THOSE STATES DEFINED WHICH DOES NOT INCLUDE
ANY OF THE 50 STATES. NOTE THAT IN THE FEDERAL REGISTER THE WORD
"MEANS" IS USED AND NOT INCLUDES WHICH IS TELLING YOU THAT WHAT THEY
SAY MEANS WHAT THEY SAY AND DOES NOT INCLUDE ANY OTHER ENTITY SUCH AS
A PRIVATE SECTOR EMPLOYER OR EMPLOYEE. ITS ALL A "TERM" GAME.
The term game can be found on the Informer's article at
v. O'Dell, 160 F.2d 304 (1947)
Levy or Distraint
k. In General.
Most Cited Cases
A “levy” requires that
property be brought into legal custody through seizure, actual or
consturctive, levy being an absolute appropriation in law of the
property levied on, and mere notice is insufficient.
[. . .]
Section 3466 does not create a lien, but establishes a priority.
Beaston v. Farmers' Bank of Delaware, 37 U.S. 102, 9 L.Ed. 1017;
United States v. Fisher, 6 U.S. 358, 2 Cranch 358, 2 L.Ed. 304.
Section 3670, however, does create a lien in favor of the Government
which arises at the date when the assessment list is received by
the Collector. Section 3671. As to the first four excise tax items
listed in the stipulation, the assessment lists were received before
the date of the delivery of the mortgage, and the lien of the Government
as to $386.11 is clearly prior to possession of the assets *307
by the trustee, although not prior to the attachment of a majority
of the liens for local taxes, under Michigan law. But under this
record the question of priority is not conclusive. The judgment
was correct, not for the reasons stated by the District Court, but
because of the failure of the Government to comply with the statutory
Section 3710 requires the surrender of property or rights to property
(1) subject to distraint; (2) upon which a levy has been made; (3)
unless such property is subject to an attachment or execution under
judicial process. This section is new, having been enacted in 1926,
Act of Feb. 26, 1926, section 1114(e) and (f), 44 Stat. 117; but
the provision authorizing the Collector after failure or refusal
of the taxpayer to pay taxes due, to levy upon his property or property
rights (section 3692) dates from 1866. As pointed out in
United States v. Metropolitan Life Ins. Co., 2 Cir., 130 F.2d 149,
151, the procedure for distraint authorized under section 28
of the Revenue Act of 1864, 13 Stat. page 233, was in substance
like that of Section 3692 except that nothing was said about a levy.
In 1866, 14 Stat. 107, Sec. 9, Congress, among other changes, provided
that a levy was required to be made ‘upon all property and rights
to property * * * belonging to’ the taxpayer. The provision authorizing
levy is unchanged in the statute applicable here (section 3692).
Thus Congress enacted section 3710 with knowledge that for some
sixty years levy had been authorized in these cases. In section
3710, which provides a method of forcing a third person to surrender
property of the taxpayer for the payment of the taxes due, Congress
not only required that the property surrendered should have been
levied upon, but emphasized this provision by making the allowance
for costs and interest contained in subsection (b) run ‘from the
date of such levy.’ The property involved here falls within the
classes of property subject to distraint, section 3690, and is not
subject to an attachment or execution; but the record fails to show
that levy has been made.
The stipulation covering levy is as follows:
‘That one Giles Kavanagh, the duly appointed, qualified and acting
Collector of Internal Revenue for the District of Michigan, on September
8, 1941, as said Collector, gave written notice to the defendant
LeRoy E. O'Dell that the tax assessment . . . totalling $1,336.84,
including interest thereon, were unpaid and due and further notified
the defendant that all property, rights to property, moneys, credits
and/or bank deposits then in his possession or under his control
and belonging to said Howie Company, and all sums of money owing
from the defendant to said Howie Company, were seized and levied
upon for the payment of said taxes, together with penalties and
interest, and demand was then made upon the defendant for the sum
of $1,336.84, or such lesser sum as he was then indebted to said
Howie Company, to be applied in payment of said tax liabilities.’
This paragraph describes
a mere statement or notice of claim. Nothing alleged to have been
done amounts to a levy, which requires that the property be brought
into legal custody through seizure, actual or constructive, levy
being ‘an absolute appropriation in law of the property levied upon.’
Rio Grande R. Co. v. Gomila, 132 U.S. 478, 10 S.Ct. 155, 33 L.Ed.
In re Weinger, Bergman & Co., D.C., 126 F. 875, 877;
Smith v. Packard, 7 Cir., 98 F. 793.
Levy is not effected by mere notice. Hollister v. Goodale, 8 Conn.
332, 21 Am.Dec. 674;
Meyer v. Missouri Glass Co., 65 Ark. 286, 45 S.W. 1062,
67 Am.St.Rep. 927;
Jones v. Howard, 99 Ga. 451, 27 S.E. 765,
59 Am.St.Rep. 231.
Section 3692 does not prescribe any procedure for accomplishing
a levy upon a bank account. The method followed in the cases is
that of issuing warrants of distraint, making the bank a party,
and serving with the notice of levy copy of the warrants of distraint
and notice of lien. Cf.
Commonwealth Bank v. United States, 6 Cir., 115 F.2d 327;
United States v. Bank of United States, D.C., 5 F.Supp. 942, 944.
No warrants of distraint were issued here.
The cases relied on by the Government as supporting recovery under
section 3710 *308 arise in the main out of situations where a bank
has been sued, or joined as a party to an action claiming a bank
deposit. No such procedure was followed in this case. Moreover,
it does not appear that notice and demand were served upon the person
liable to pay the taxes, namely, the Howie Company, in accordance
with sections 3670 and 3690. This being the case, query, whether
the property or rights to property were within the meaning of section
3710 ‘subject to distraint,’ for under section 3690 the right to
collect the taxes by distraint and sale arises only after notice
It would seem to require not much exposition to demonstrate that
when the sovereign establishes any priority in its favor, and imposes
certain conditions upon the enforcement of that right, it is required
to comply with the conditions which it has laid down. Since no levy
was made upon the funds involved, one of the jurisdictional prerequisites
for the application of section 3710 is lacking, and the complaint
was rightly dismissed. Cf.
United States v. Etna Life Ins. Co. of Hartford, Conn., D.C., 46
F.Supp. 30, 37.
The judgment is affirmed.
FN1. Section 3710, I.R.C.
‘(a) * * * Any person in possession of property, or rights to
property, subject to distraint, upon which a levy has been made,
shall, upon demand by the collector or deputy collector making
such levy, surrender such property or rights to such collector
or deputy, unless such property or right is, at the time of
such demand, subject to an attachment or execution under any
‘(b) * * * Any person who fails or refuses to so surrender any
of such property or rights shall be liable in his own person
and estate to the United States in a sum equal to the value
of the property or rights not so surrendered, but not exceeding
the amount of the taxes (including penalties and interest) for
the collection of which such levy has been made, together with
costs and interest from the date of such levy.’
Section 3670, I.R.C.
‘If any person liable to pay any tax neglects or refuses to
pay the same after demand, the amount (including any interest,
penalty, additional amount, or addition to such tax, together
with any costs that may accrue in addition thereto) 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.’
Section 3671, I.R.C.
‘Unless another date is specifically fixed by law, the lien
shall arise at the time the assessment list was received by
the collector and shall continue until the liability for such
amount is satisfied or becomes unenforceable by reason of lapse
Section 3672, I.R.C.
‘(a) * * * Such lien shall not be valid as against any mortgagee,
pledgee, purchaser, or judgment creditor until notice thereof
has been filed by the collector- * * * .’
Section 3690, I.R.C.
‘If any person liable to pay any taxes neglects or refuses to
pay the same within ten days after notice and demand, it shall
be lawful for the collector or his deputy to collect the said
taxes, with such interest and other additional amounts as are
required by law, by distraint and sale, in the manner provided
in this subchapter, of the goods, chattels, or effects, including
stocks, securities, bank accounts, and evidences of debt, of
the person delinquent as aforesaid.’
Section 3692, I.R.C.
‘In case of neglect or refusal under section 3690, the collector
may levy, or by warrant may authorize a deputy collector to
levy, upon all property and rights to property, except such
as are exempt by the preceding section, belonging to such person,
or on which the lieu provided in section 3670 exists, for the
payment of the sum due, with interest and penalty for nonpayment,
and also of such further sum as shall be sufficient for the
fees, costs, and expenses of such levy’.
Section 3466, R.S., 31 U.S.C. § 191, 31 U.S.C.A. § 191.
‘Whenever any person indebted to the United States is insolvent,
or whenever the estate of any deceased debtor, in the hands
of the executors or administrators, is insufficient to pay all
the debts due from the deceased, the debts due to the United
States shall be first satisfied; and the priority established
shall extend as well to cases in which a debtor, not having
sufficient property to pay all his debts, makes a voluntary
assignment thereof, or in which the estate and effects of an
absconding, concealed, or absent debtor are attached by process
of law, as to cases in which an act of bankruptcy is committed.’
States v. O'Dell, 160 F.2d 304 (1947)]
Freeman v. Mayer,
The procedure of accomplishing a levy may be spelled out from
the reported cases. A
‘levy’ requires that property be brought into legal custody through
seizure, actual or constructive, levy being an absolute appropriation
in law of the property levied on, and mere notice of intent to levy
v. O'Dell, 6 Cir., 1947, 160 F.2d 304, 307.
In re Holdsworth, D.C.N.J.1953, 113 F.Supp. 878, 888;
Aetna Life Ins. Co. of Hartford, Conn., D.C.Conn. 1942,
30, 37, in which Judge
Hincks observed that he could ‘find
which says that a mere notice shall constitute a ‘levy.“ There are
cases which hold that a warrant for distraint is necessary to constitute
Givan v. Cripe, 7 Cir., 1951, 187 F.2d 225;
v. O'Dell, supra. The Court of Appeals for the Third Circuit
stated in its opinion,
221 F.2d at page 642,
‘These sections [26 U.S.C. §§ 3690-3697] require that a levy by
a deputy collector be accompanied by warrants of distraint.’
Brokol Manufacturing Co., supra.
Research has not disclosed any case which deals with the precise
issue here involved relating to the right of the Collector to retain
possession of a bankrupt's assets so that he may assert additional
warrants. In the case of
Brust v. Sturr, D.C.S.D.N.Y.1955, 128 F.Supp. 188, reversed
2 Cir., 1956, 237 F.2d 135, the facts are somewhat similar to
the instant matter, except that the Government had failed to issue
warrants for the full amount of taxes due. The trustee instituted
a plenary action for the surplus realized from a sale under authority
of the three warrants which had been issued and levied upon. The
Government defended by invoking the set-off provisions of § 68 of
the Bankruptcy Act,
11 U.S.C.A. § 108. Judge Palmieri held for the trustee. The
Court of Appeals sustained as to the ‘set-off’ aspect of the case,
but reversed on other aspects. On reading the appeal decision several
times, it is not clear on what grounds the District Court was reversed.
Nonetheless, the court concluded that the Government's status as
a lienor was perfected by a lawful acquisition of possession of
the property. Only in the appeals decision do we read that blanket
warrants for distraint were levied upon, and apparently these covered
all taxes assessed, and hence the surplus realized from the sale
could be retained. Even so, it is worthwhile to note the liability
of the Collector as the court saw it:
‘On the intervention of bankruptcy the Collector was subject
only to a contingent liability, viz., to account to the bankrupt
for so much of his property as should not be required to satisfy
the lien under process of enforcement by distraint.’
237 F.2d 135, 137. (Emphasis supplied.)
The case at bar and the Brust decision were analyzed by
Professor Seligson who concluded:
‘On the merits the answer is not at all clear in either of the
two cases. If, as has been said, service of the warrants of distraint
is a jurisdictional prerequisite, then the Government must lose.
A taking of possession of excess property without statutory authorization
should not confer greater rights on the Government than a failure
to levy with respect to the excess. The Government*386 simply has
no lien on the excess property, which has been converted into cash,
and it cannot avail itself of the set-off provisions of section
68.’ 1955 Annual Survey of Amer.Law, 31 N.Y.U.Law R. 515, 529.
Attention is directed to the retention by the defendant of proceeds
from accounts receivable of Brokol. Although defendant denied in
his answer that he collected these accounts, evidence was submitted
which establishes the fact that such collections constitute part
of the monies received by the District Director.FN3
Counsel argued the question of whether or not accounts receivable
were subject to distraint and sale and to levy. Section 3692, 26
U.S.C.A., states that:
‘In case of neglect or refusal under section 3690, the collector
may levy, or by warrant may authorize the deputy collector to levy,
upon all property and rights to property, except such as are exempt
by the preceding section, belonging to such person, or on which
the lien provided in section 3670 exists * * *.’
The courts which have had occasion to construe the scope of this
section are not in agreement. Generally the question arises from
an attempted levy upon the proceeds of the delinquent taxpayer's
insurance policy. Judge Hincks in
Aetna Life Ins. Co of Hartford, Conn., D.C.Conn.1942, 46
F.Supp. 30, 36, has stated that 3692 does not broadly subject
‘all property,’ which under § 3670 is subject to lien, also to levy.
He concludes that the levy under § 3692 is limited to corporeal
personal property except as otherwise provided in the same section.
By contrast, the court in
Cannon v. Nicholas, 10 Cir., 1935, 80 F.2d 934, 936, observed:
‘We do not believe, in the light of the sweeping language used
throughout these statutes, that Congress intended to limit distraint
to tangible property and to the specified classes of intangibles.
No reason is apparent why ‘stocks and securities' should be subject
to levy and an annuity contract not.’
v. Metropolitan Life Ins. Co., 2 Cir., 1942, 130 F.2d 149. There
is abundant authority holding, however, that a lien for taxes provided
26 U.S.C.A. 1 3670 can be asserted against intangible property,
such as a debt.FN4 As
with corporeal personal property, the problems of the procedure
of acquiring possession of intangible property subject to federal
tax lien are found in this area of the law. There is conflict among
the circuits as to the proper way to assert the lien. The Fourth
Circuit, disagreeing with the SixthFN5
and Seventh,FN6 has ruled
that *387 where the Government has made a levy upon an indebtedness
to the taxpayer, service of notice by the Government upon the taxpayer's
debtor is sufficient
v. Eiland, 4 Cir., 1955, 223 F.2d 118, 121. The cases of the
circuits noted in opposition insist that a warrant for distraint
is necessary in addition to the notice to the debtor. In the view
of the courts taking the latter position, a levy is a jurisdictional
Judge Smith of this District has subscribed to the view that
a levy is a jurisdictional prerequisite. He has noted that ‘where,
as here, the subject matter is an account receivable or chose in
action, the seizure may be effected by a levy and the service of
a warrant of distraint upon the debtor.’
In re Holdsworth, D.C.N.J.1953, 113 F.Supp. 878, 880, citing
the O'Dell and Cripe cases.
In the case at bar, defendant asserts that the filing of the
liens in the Register's Office of Essex County constituted adequate
notice to the debtors of Brokol. There was no notice to the taxpayer's
debtors, which the Eiland case demanded as a minimum, to
say nothing of warrants for distraint accompanying such notice which
the courts in the O'Dell and Cripe cases deemed indispensable.
It should also be mentioned that the accounts receivable were not
listed on the inventory compiled and signed by the Collector.FN7
[Freeman v. Mayer, 152 F.Supp. 383 (1957)]