United States v. National Bank of Commerce

UNITED STATES NATIONAL BANK OF COMMERCE No. 84-498. Argued April 15, 1985 Decided June Court, in Burger, opinion delivered Blackmun, J., O’Connor, JJ., joined. Powell, J., and Rehnquist, White, J., C. Marshall, Stevens, Brennan, in which dissenting opinion, filed a JJ., joined, post, p. 733. argued the cause for the United Lauber, Jr.,

Albert G. Lee, Solicitor General the brief were on With him States. Estabrook, Attorney Archer, S. William Assistant General Dudeck, A. Jr. and John for argued a brief

Terry Wynne and filed the cause F. respondent. opinion Court. delivered Blackmun

Justice 6331(a) Code of Revenue of the Internal Section 6331(a), provides that the Govern- S. C. amended, U. “by delinquent taxpayer taxes of ment collect upon all property and rights . . . belonging such person.”1 6332(a) Section of the Code, 26 U. S. C. § 6332(a), then provides that “any person in possession (or obligated to) with respect or rights to property subject to levy upon which a levy has been made shall, upon demand of the Secretary, surrender such . . . to the Secretary.”2 controversy this case concerns two joint accounts in a bank in Arkansas.3 The issue is whether the Internal Revenue (IRS) Service has a those accounts for delinquent federal income taxes owed by only one of the persons in whose names the joint accounts stand in order that the IRS may obtain provisional control over the amount question.

I A The relevant facts are stipulated. On December 10, 1979, the IRS assessed against Roy J. Reeves federal income taxes, penalties, and interest for the taxable year in 1977 1 6331(a) Section pertinent reads in part: “If any person pay to any liable tax neglects or pay refuses the same within days 10 after notice demand, and it shall be lawful for the Secretary to collect such tax ... levy upon all property rights to property (except such property as is exempt 6334) under section belonging to such person. . . .” 7701(a)(ll)(B)

Section of the Code reads: term “The ‘Secretary’ means the Secretary of the Treasury or his delegate.” 6332(a) Section reads: “Except as provided otherwise in (b), subsection any person posses- (or sion of obligated to) respect with or to property subject to levy upon which a has been shall, made upon demand of the Secre- tary, surrender such (or or rights discharge obligation) such the Secretary, except such part of the property is, or as at the time demand, such subject to an attachment execution under judicial process.” 3“The legal basic conception ‘joint of a account’ means that it be in two or more names.” Harbour v. Harbour, 551, Ark. 181 S. W. 2d payments and As a result of $3,607.45. amount of the total owing was reduced on the assessment the amount credits, App. 11. $856.61. deposit respondent on with there were 13, 1980,

On June sum of Bluff, Ark., at Pine Commerce, National Bank checking in a $1,241.60 the sum of account and $321.66 savings Ruby “Roy Reeves or the names account, each 11-12.4 Each of the Id., at R. Reeves.” Reeves or Neva Ruby Roy persons and Neva R. Reeves, Reeves, named, to make with the bank authorized contract Reeves, was Id., at 12. accounts. from each of these withdrawals a notice of 13, 1980, on June date, is, the same On 6331(d) § respondent pursuant was served on the 6331(d), pay § demanding that the bank 26 U. S. C. Code, Roy owed to J. all sums the bank over to the United States Subsequently, up there was a of $1,302.56. Reeves to a total Levy in excess of for the amount Partial Release of $856.61. payment was served on the a final demand for On October bank. contending much of the that it did not know how

The bank, Roy opposed Ruby belonged money deposit levy. comply Ibid. The refused to with Neva, thereupon in the United States instituted this action pursuant Arkansas, District of for the Eastern District Court 6332(c)(1) 6332(e)(1), seeking C. Code, U. S. judgment against amount of the bank $856.61.5 any “Roy J. Reeves” point made as to distinction between No made, “Roy whose against was and the Reeves” whom the assessment assume, Roy accordingly, that J. name was the two accounts. We on person. Roy Reeves and Reeves are one and the same among the any relationship that exist The record does not disclose Roy’s Neva is wife codepositors. parties three The have indicated that Ruby and that is his mother. 6332(c)(2), pen complaint liability, The under for 50% also asserted Government, however, alty. App. subsequently waived See 7. The Id., accordingly. at 13-15. penalty claim, complaint was amended and the By way supplement of a stipulation to the facts, was agreed “[n]o further ownership evidence as to the monies in the bank accounts will be submitted.” Id., consequence, 17. As a we do not know which of the three codepositors, as a matter of state law, owned the funds in the two proportion. accounts, or in what The facts thus come to very inus bare form. We are not confronted with dis- pute as to who owns what share the accounts. We deal simply joint with two accounts in the persons, names of three with each of the three entitled to money out draw all the each of the accounts.

B The case was submitted to the District Court on cross- summary for judgment motions respondent and on the bank’s motion complaint. to dismiss the Id., at 18-24. The Dis- granted trict Court the motion holding to dismiss, the case procedurally “premature.” Supp. 554 F. 110, 117 The court process concluded that due “something mandates post-seizure more than the lawsuit allowed” the Code’s levy procedures. Id., at 114. In its view, “the minimum process required due against distraint joint actions bank compelled accounts,” ibid., identify the IRS to codeposi- tors of taxpayer provide and to them with no- tice opportunity an to be heard. Id., at 114-115. The court procedures then outlined the it believed the Constitu- requires tion the IRS to levying follow when joint on a ac- Specifically, count. it ruled upon that a bank, receiving levy, notice of should freeze the assets the account and provide the IRS with the codepositors. names of the Id., at 114. notify then IRS codepositors should give them a reasonable time “in respond which gov- both to the ernment and to the appropriate affidavit or other specifically setting means, any ownership out they account which claim and the legal factual and basis for claim.” Id., at 115. If the bank, the basis of dispute genuine exists as that information, “believes such by” codeposi- ownership legality any claim made of to the any portion may so of the funds surrender “it refuse to tors, government point, “the 116. At that Id., at claimed.” bring funds,” ibid., on the contested suit to enforce along codepositors with as defendants it must name but the bank. Eighth Appeals for the Circuit of

The United States Court opinion expressed no It F. affirmed. 726 2d analysis. at Id., the District Court’s constitutional essentially however, result, the same 1300. It reached statutory IRS, It ruled that construction. a matter prov- levying on a has the burden account, when taxpayer’s delinquent ing value of the “the actual property.” jointly 1293. It observed Id., at owned parties,” had id., of the various here “the had not the Government Therefore, determined. not been possession or to be shown the bank taxpayer, Roy belonging J. to the 6331(a) required. Reeves, as “Roy acknowledged Appeals could have

The Court from the account and used amount he wished withdrawn including pay taxes. . . .” Id., federal income debts, it to his rejected, contention the Government’s however, at 1295. It Roy Roy’s anything could “in shoes and could do that it stood Roy Ruby Neva,” owes to to whatever duties do, ordinary that “at least as to 1295-1296, for observed id., [that] at 1296. Id., not the law of Arkansas.” creditors, garnishment a creditor of a law, noted, the court Under state codepositor power “subrogated to that co-owner’s

is not join must Instead, account.” creditor withdraw the entire permit them to “show co-owners as defendants both parol in the the extent of his or her interest or otherwise Ibid. account.” precept Appeals then concludedthat a similar

The Court of levy proceedings apply under the in administrative should Internal Revenue Code. It ruled that accordingly the Gov- ernment could not prevail without or negating quantifying the claims that or Neva Ruby might have to in the funds It question. expressed the belief that an IRS administrative “is not normally intended for use as against in which third parties have an interest” or as “against property on its face bearing the names of third parties.” Id., at 1300. In such a situation, the Government was free to suit “brin[g] to foreclose its lien under Section 7403,” joining the codeposi- Ibid. tors as defendants.

Because the opinion of the Court of Appeals to us appeared to conflict, in directly or with principle, of other decisions Courts of Appeals,6 granted we certiorari. U. S. 1105 (1985).

II A Section 6321 of the Code, 26 S. C. U. §6321, provides: “If any person liable to pay any tax or neglects refuses to pay the same after demand, the amount . . . shall be a lien in favor of the United States upon all property and whether property, real personal, to such belonging per- son.” Under the succeeding 6322, the lien generally arises when an assessment is made, and it continues until the tax- payer’s liability “is satisfied or becomes unenforceable by reason of lapse of time.”

The statutory “all language and rights to prop- erty,” appearing §6321 (and, 6331(a) §§ well, and, supra), essentially, 6332(a), see nn. 1 2, is broad 6See, g., e. United Sterling States v. National Bank Trust & Co. of York, New (CA2 919, 494 F. 2d 1974); United States v. Citizens & Southern National Bank, 538 F. (CA5 1101, 2d 1976), 1105-1107 cert. denied, (1977); 430 U. S. 945 Schmidt, Babb 957, 496 F. 2d 958-960 (CA9 1974); Bank States, Nevada 251 F. 2d 824-826 (CA9 1957), denied, (1958). cert. 356 U. S. 938 also 79-38, See Rul. Rev. 1979-1 Cum. Bull. 407. every Congress to reach meant its face that reveals taxpayer might 4See have. Estates and Gifts Income, Taxation Federal Bittker, B. (1981) (Bittker). language “Stronger p. ¶ 111-100 111.5.4, purpose to assure hardly to reveal a have been selected could City States, v. United Bank taxes.” Glass collection 326 U. S. self-executing. Affirm- is not however, lien, tax

A federal required collection of is enforce the IRS action ative provides unpaid Revenue Code The Internal the taxes. purpose. lien- is the principal The first for that tools two 7403(a) the institution authorizes suit. Section foreclosure “to a lien enforce district court to action federal aof civil delinquent, any property, the nature, of of whatever payment any right, the interest, or title, he has or 7403(b) having persons provides: “All Section such tax.” property claiming upon involved the or liens parties a The suit is thereto.” be made action shall in such adjudicate . . all . plenary the court “shall action which finally merits of the and determine involved therein matters 7403(c). § upon property.” See the to and liens all claims Rodgers, 680-682 generally 677, 461 U. S. United States (1983). unpaid tax is the collectionof The second tool remedy levy provisional levy. and is a The administrative any judicial require typically Id., intervention.” “does not 6331(a). § supra. governing n. See statute is The 682. 6331(b), §by by levy which, tax collection the It authorizes by any power means.” seizure distraint “includes property taxpayer’s is held In situation where customarily levy upon the custodian is notice of another, 6332(a). gives § pursuant the IRS the This notice served upon, property Eiland, United States all levied (CA4 1955), rela- a custodial and creates 223 F. 2d property person holding tionship between posses- property comes into the constructive IRS so Phelps 421 U. S. States, v. United of the Government. sion (1975). 330, 334 If the levy, custodian honors the he is “discharged any obligation liability from or to the taxpayer respect with to such

arising payment.” 6332(d). from such surrender or If, the other hand, the levy, custodian refuses to honor a he in- liability curs 6332(c)(1). to the Government for his refusal. levy aptly administrative has been described as a “provisional remedy.” ¶ 4 Bittker, 111.5.5, at 111-108. In contrast to the levy lien-foreclosure suit, the does not deter mine whether the Government’s to the seized superior are to those of other claimants; it, however, does protect against the Government diversion or loss while such being are underlying claims resolved. principle” jus “The tifying levy govern administrative is “the need of the promptly ment to secure Phillips its revenues.” v. Com missioner, 283 S. U. “Indeed, one readily acknowledge power the existence of the is part an essential of our system,” self-assessment tax for it voluntary compliance “enhances in the collection of taxes.” Leasing Corp. G. M. v. United States, U. S. 338, 350 (1977). “Among advantages of administrative quick relatively that it inexpensive.” is United v. Rodgers, 461 U. at S., 699. constitutionality levy procedure, of of course, “has

long Phillips been settled.” v. Commissioner, 283 at S., U. Leasing 595. Corp. See G. M. v. United States, 429 U. S., n. 352, 18.

B It is well species established that a bank account is a of property “subject levy,” §§ meaning 6331_and within the 6332. A permitted on a bank has account been since the Revenue Act of Treasury 1924, 1016, 43 Stat. 343, and the Regulations explicitly Reg. authorize such levies. Treas. §301.6331-1(a)(1), §301.6331-1(a)(1)(1984). 26 CFR uniformly

The courts have held that a served with an only IRS notice of “has two defenses for a failure to com- 722 Sterling National United States v. with the demand.”

ply (CA2 New York, Bank Trust Co. & 919, 494 F. 2d in the bank, is that the cases cited. One defense 1974), “in nor “obligated neither of” 6332(a), possession §of is words rights property belonging to” or with respect with defense, again The other taxpayer. to the delinquent that the is “sub 6332(a), §to taxpayer’s property reference 2d, or execution.” 494 F. attachment judicial to a ject prior States, Bank Nevada v. United 251 F. 2d Accord, at 921. (1958). (CA9 denied, cert. 356 U. S. 938 1957), 820, here that the Reeves accounts were There is no suggestion or execution. Nor is to a attachment prior judicial with “obligated respect there doubt that bank was as it Reeves did because, concedes, “Roy to” the accounts under Arkansas law to make withdrawals from have a right 2. Brief for question.” Respondent the bank accounts therefore, is that the accounts defense, The bank’s only property” Roy did not constitute “property 6331(a). J. Reeves. See

C “ revenue state act, the. of a federal law application ‘[I]n the nature of the interest which determining legal controls Aquilino v. United had in the taxpayer property.’” Morgan Com States, v. (1960), 363 U. quoting S. Sterling missioner, (1940). 309 U. See also S. National Bank, 2d, 494 F. at 921. This follows from but fact that the federal statute “creates no property rights federally defined, attaches merely consequences, Bess, created under state law.” United States 357 U. S. matter left to those are “a And consequences Rodgers, States law.” S., 461 U. at 683. federal state law creates suffi it has determined that been “[O]nce [taxpayer] satisfy requirements cient interests and the tax con state law is statute], inoperative,” of [the federal law. by are dictated thenceforth sequences Fidelity & Bess, States S., at 56-57. See also 357 U. Deposit Maryland Co. City New York Housing Author ity, (CA2 241 F. 2d 1957); Property Subject Note, the Federal Tax Lien, 77 Harv. L. Rev. 1485, 1486-1487 In the Bess case, the Court held tax- payer, purchased who had life policies, insurance did not “property have property” proceeds the death policies, but that he did have such in their cash surrender value. 357 U. S., at 55-56. The latter conclu- sion, it was said, followed from the fact taxpayer that the insured had “the policy under the compel contract to pay insurer to him this sum.” Id., 56. Thus, the insured’s interest in the cash subject surrender value was the federal tax lien. The fact that “under State law the property right insured’s represented by the cash surrender value is not to creditors’ liens” was irrelevant. Id., at 56-57. State law defined the taxpayer’s nature of the property, but the consequences state-law that definition are of no concern operation to the of the fed- eral tax law. As noted stipulated above, it is Roy J. Reeves had the unqualified right to withdraw the full deposit amounts on accounts codepositors. without notice to his any In wholly apart

event, stipulation, from the Roy’s right of with- drawal is secured his contract with the bank, as well the relevant statutory provisions. Arkansas See Ark. Stat. §§ (1980).7 Ann. obligated 67-521 and 67-552 part, On its the bank was any

to honor requests Roy withdrawal might make, up even to the full amounts of the accounts. The Court of Appeals correctly thus concluded that, under Arkansas law, “Roy could have withdrawn amount he wished from the pay account and used it to his including debts, federal income 7Effective 25, 1983, March after the issuance of the notice of here, § 67-552 was amended and 67-521 was repealed. 1983 Ark. Acts, Gen. §§ No. 843, 1 and 2. The result was recodification without substantial change.

724 complaint lawful had no have would co-owners his

taxes, and 1295. F. 2d, the bank.” against and law state under right the absolute had then, Roy, of the payment compel to the bank contract with under his it seems This, two accounts. the balances outstanding the with agree for we case, to the an end have been should us, to constituted right a state-law such that the Government Roy, . . to” belonging . to property [or] “property turn, in its was 6331(a). bank, The §of meaning the within that property, to Roy’s right to” respect with “obligated withdrawal it to honor law required state 6332(a), since for refusing basis had The no bank make. might he request levy.8 the to honor have considered that courts majority overwhelming unrestricted taxpayer’s a delinquent have held that issue

the prop- “rights “property” constitutes withdraw right facts of the regardless levy, IRS provisional erty” Bess, 357 import of United States the misunderstands The dissent gives state law (1958). Because at 741-748. post, 51, 55 See U. S. rights of limits on the withdraw, puts certain but right delinquent right regards to that consequences creditors, attaches certain and is limited that the Government himself, the asserts dissent delinquent urges Government’s Thus constraints. same state-law these right law, the state rights given under greater than is no right here erroneously characterizes nothing else. It therefore to withdraw levy on the right to to the authority here as limited Government’s 741-745, 9 and 10. and nn. post, withdraw, nothing else. See of the determining the nature only in Bess, controls state law But under Aquilino also property. See has in the taxpayer which the legal interest it is determined Once States, S.U. v. United in a right to withdraw has the law the under state consequences attach law what account, matter it is a federal of fed as a matter the Government that with right. agree And we to this account joint bank money from right to withdraw law, state-law eral provisional justify the use of adequate “right property” is a concerning cases to state references dissent’s procedure 6331. The 741, thus post, at withdraw, see right to implications the state-law determining “inoperative” irrelevant, state law for such entirely are See to withdraw. delinquent’s right consequences of tax the federal Bess, S., at 56-57. 357 U.

that other claims to the funds may exist and that the question of ultimate ownership may be unresolved at the time. See, g., e. United Sterling States National Bank & Trust Co. New York, 494 F. 2d, at 921-922; States v. Citizens & Southern National Bank, 538 F. 2d 1101, (CA5 1105-1107 1976), cert. denied, 430 U. S. 945 (1977); Peoples Citizens & National Bank Pensacola, Fla. v. United States, of F. 2d 1279, (CA5 1282-1284 1978); Babb v. Schmidt, 496 F. 2d (CA9 958-960 1974); Bank Nevada v. United States, of 251 F. 2d, at 824-826; United States v. First National Bank Arizona, 348 F. Supp. (Ariz. 388, 389 of 1970), aff’d, 458 (CA9 F. 2d 513 Equitable United 1972); States v. Trust Co., (Md. ¶ AFTR2d Lytton 82-428 Savings Sebel v. 1982); & Loan Assn., 65-1 ¶9343 (SD Tyson USTC Cal. 1965); United States, 63-1 (Mass. ¶9300 USTC 1962); United States v. Third Nat. Bank & Trust Co., 111 F. Supp. 152, 155-156 (MD 1953). Pa. And the Eighth Circuit itself has observed that the “unqualified contractual right to receive property is itself a property right subject to seizure by St. Louis levy.” Union Trust Co. v. United States, F. 2d 1293, 1302 (1980).9

Common sense dictates that a right to withdraw qualifies as a right to for purposes §§ 6331 and 6332. In a levy proceeding, the IRS “‘steps into the taxpayer’s shoes,”’ Rodgers, United States 461 U. S., at 691, n. 16, quoting ¶ Bittker, 111.5.4, at 111-102; M. Saltzman, IRS Practice ¶ Procedure 14.08, p. 14-32 (1981); Brief for Respond- ent 8. The IRS acquires whatever rights the taxpayer him- self possesses. And in such circumstances, where, under 9 The dissent’s suggestion that these cases are “irrelevant,” post, see 9,n. stems from its erroneous assumption that state law dictates the extent of the Government’s power levy. not, It does and these cases all stand proposition for the that a delinquent’s right state-law to withdraw funds from the bank account ais property interest pur sufficient for poses of federal law for the Government account, notwithstand ing questions the fact that as to the ultimate ownership of the funds be unresolved. right taxpayer to withdraw the unrestricted has law, state Congress “it is inconceivable account, funds from the levying prohibit from Government . . . intended taxpayer- plainly to the accessible is that which First National Bank depositor.” States v. United of v. Supp., Accord, at 389. 348 F. Arizona, 1107.10 2d, 538 F. Bank, National & Southern Citizens analogous taxpayer’s right in this sense to withdraw the funds. and secure on the IRS’s similarly provisional later to a Both actions are belongs money him by codepositor in fact claim a or her.

Ill beyond applied Appeals, state law however, The Court prop- specification point the nature of the law’s of that consequences erty right, to certain the IRS and bound garnishment property under Arkansas Because state law. deposi- subrogated depositor to the is not of a a creditor law, power reasoned that account, the court to withdraw tor’s depositor’s in shoes. This could stand IRS, too, holding analysis contrary gloss, to the is us, it seems to (1958). The Court of Bess, 357 U. S. justifications principal Appeals for its result. three adduced Roy Arkansas law did not that under its belief The first was support the funds have a sufficient levy. Ruby might and Neva concern The second was its deposit, possess competing and that the funds on claims to might them. The asserted to claims the bank be normally “levy is not conclusion that third was its stated right holding. By finding that the our the narrow nature of We stress property subject right is a joint account funds from bank to withdraw opinion concerning the levy express we no under to administrative created forms of other kinds of state-law characterization of federal only upon joint right levy concerns the ownership. This case accounts. against property bearing

intended for use as . . . on its face parties, the names parties of third and in which those third likely have a interest.” 726 F. 2d, at 1300. persuaded by any

We are not justi- of these asserted fications. Appeals’ Roy possess

The Court of conclusionthat did not “property [or] property” on which the IRS could heavily understanding rested on its of the Arkansas law rights, particularly garnishment. creditors’ those in Id., Hayden at 1295-1296. See v. Gardner, 238 Ark. 351, 381 suggested, S. W. 2d 752 As we have this miscon- properly played by ceives the role state law federal tax- question collection right matters. The whether a state-law “property” “rights property” constitutes is a matter of federal law. United States v. Bess, 357 S.,U. at 56-57. Roy’s Thus, the facts that under Arkansas law creditors, Roy unlike himself, could not exercise his of withdrawal garnishment proceeding in their favor and would have join codepositors his are irrelevant. The federal statute taxpayer’s rights relates to the and not to his rights. Appeals creditors’ The Court of would remit the IRS rights only ordinary to the an creditor would have under “compare[s] government state law. That result to a superior.” class of creditors to which it Randall v. (CA5 1976). H. Nakashima Co., & 542 F. 2d n. 8 Appeals Ruby The Court of also was concerned that might Neva have that are affected if the were reasoning, honored. 726 F. 2d, at 1297-1300. This how- runs ever, counter to the observation above that a bank only served possible with a notice of has and two, two, comply defenses for failure to with the demand: that it is not possession property taxpayer, in prop- or that the erty subject prior judicial is to a attachment or execution. applicable As we have stated, neither defense is here. That party parties may competing another have claims to the legitimate statutory accounts is not a defense. Ruby’s prop- concern for and Neva’s

In its understandable statu- interests, the Court of has Appeals ignored erty established those by Congress protect rights. scheme tory levy, noted, only the administrative has been Crucially, in “The final action remedy. judgment levy] [a provisional to seizure.” United no property settles New Merchants Bank, National 465 F. England States v. (Mass. 1979). Other if have 83, claimants, they Supp. Congress recognized assert them. this when may rights, were summary-collection procedures enacted, Rep. S. Code’s (1966), 89th 2d and when it 1708, Cong., Sess., No. § § one Code, 7426 of the 26 U. S. C. provided an interest seized for another’s taxes claiming property a civil action to have the bring against the United States or the sale returned.11 proceeds Congress its property § an and provided, by 6343(b), inexpensive also has effective remedy for the return of the See property. administrative support The dissent would find in United States v. Stock Yards Bank (CA6 Louisville, 1966), Granger, 231 F. 2d 628 and 196 F. Raffaele (CA3 1952). post, clearly 2d 620 See n. 8. Both cases are distin attempted levy upon Yards Bank guishable. Stock concerned an bonds, wife, savings satisfy held in the names of husband liability. Savings bonds, however, joint husband’s tax are different from possess accounts and “limitations and conditions . . . which are delin by by 2d, the terms of the eated contract federal law.” 231 F. at 630. Furthermore, prior the case was decided to the enactment of by was added to Internal Revenue Code the Federal Tax Lien Act of 1966, 110(a), 1142. Stat. Granger point. is even less on The decision there did not Raffaele propriety provisional remedy,

concern the of a ownership but the final question. Pennsylvania The court held that under law a together husband and wife’s bank account was held them as ten- entirety, ants and that therefore the Government could not use the money satisfy obligations in the account to spouse. tax of one The fact spouse that either could withdraw the did not mean that it could satisfy spouse’s obligations. 2d, used to either be tax 196 F. at 622-623. otherwise; merely The Government here does not claim asserts the parties on such and have all third who claim to own it come forward and make their claim.

Treas. § Reg. 301.6343-1(b)(2), 26 CFR §301.6343-1(b)(2) (1984).12

Congress thus balanced the the Government the collection speedy of taxes against the interests of any claimants to the property, and reconciled those interests by permitting IRS to on the assets once, leaving ownership disputes be resolved in a postseizure adminis trative or judicial proceeding. See United Sand & Gravel Contractors, Inc. v. United States, (CA5 624 F. 2d 733, 739 Finance, 1980); Valley Inc. v. United States, 203 U. S. App. D. C. 128, 136-137, 629 F. 2d 162, 170-171 (1980), cert. nom. sub denied Inc. Development, States, Pacific 451 U. S. 1018 Its decision that certain property yield must provisionally to governmental need should not have been disregarded Court Appeals. Nor would the bank be exposed to double liability it were to honor the IRS levy. The Code provides administrative and judicial remedies for codepositors against the Government, and any attempt to secure payment this situation from itself would be contrary to the federal enforcement scheme.13

The Court of Appeals’ justification final for its was holding its belief that an IRS not “is normally intended for use as pass We do upon questions constitutional were addressed Court, the District but not by the Appeals, Court of concerning the adequacy of provided the notice by 6343(b) persons 7426 to with competing claims to levied property. nothing There is sparse record this case to indicate whether Ruby and Neva Reeves were on notice levy, as to the or as to what the practice Government’s concerning codepositors notification of in this context. As the parties are free to remand, address this issue on the dissent’s score, concerns on post, this see 747-748, are decidedly premature. result, As a well be that attempt against to recover the bank under state pre-empted. law would be We need not question, resolve that however, for, law, under Arkansas payment depositor bank’s to one complete was a against defense codepositor’s suit on a claim. Ark. Stat. (h) (1980). §§67-521, Ann. 67-552 Since the Government Roy’s stood in shoes when it upon levied account, payment the bank’s to the IRS would likewise insulate the bank by Roy’s from codepositors. actions or parties interest” have an against property third in bearing of third the against property its face names on “as prop- likely parties a have parties, those third in which acknowledged The court erty at 2d, F. 1300. interest.” designed § that statute was felt 7426but that of the existence property parties been only has “whose protect third those to ‘inadvertently.’” 1300. 2d, F. at seized understanding terms of of the disagree. IRS’s The We more- Here, deference. to considerable the is entitled Code taxpay- contemplate plainly a provisions that collection over, ownership. full property less than be in er’s “property” only to but also to The tax lien attaches Rep. 29. Fur- property.” 1708, No. “rights See S. to §7426 language nothing dis- in the of we see ther, third-party species among claimants. of tinguishes various encompasses seizures language advertent of the statute The nothing express or is There inadvertent ones.14 as well of apes decision the Court argument the of 14 Thedissent’s central §of 6331 something language in the is suggesting that there Appeals in § that it be read requires language the that, compared to when the proof has the only the case where Government apply delinquent. post, at See belong[s]” to upon “completely levied part of the statu added). however, simply is not adverb, (emphasis The reading the contrast between on bases its tory language. The dissent delinquent] any right, has [the ... in which 7403, “property § language in rights to “property § language interest,” title, with post, at While See 737-741. delinquent.” belonging . . . plausible, is so too is reading the statutes contrast the dissent’s “rights § that 6331 refers Government’s, light of the fact especially history supports the legislative also “property.” property” as well as Congress statutory language. Thus when agency’s understanding wrongfully property was for whose of action one §in 7426 enacted a cause against the situation protecting it recognized that was levied, explicitly it least, third which, part levies “where the Government Sess., 29 Cong., 2d 89th Rep. his.” S. No. person considers be added). § the Govern (1966) give 6331 to Congress If intended (emphasis wholly owned it knows to be levy only upon property power to ment the When need to 7426. felt the enact would have delinquent, never by the supported its statute interpretation of plausible agency’s whole, and the statute, statutory scheme as a meaning plain implied in United States v. Rodgers, 461 U. S. 677 (1983), the contrary.

Rodgers held that 7403 empowers a district court to order the sale of a family house in which a delinquent taxpayer has an interest, even though a nondelinquent spouse also has homestead interest in the house under state law. 461 U. S., at 698-700. In so ruling, the Court contrasted the operation of §7403 with that §6331. See 461 U. S., at 696. The Court noted that §6331, unlike §7403, does not “implicate the rights of third parties,” because an administrative levy, unlike a judicial lien-foreclosure action, does not determine the ownership rights to the property. Instead, third parties whose seized in an administrative levy “are enti- tled to claim that the property has been ‘wrongfully levied upon,’ and may for apply its return either through admin- istrative channels ... or through a civil action.” Ibid. The Court, other words, recognized what we now make ex- plicit: §6331 that is a provisional remedy, which does not determine the rights of third parties until the levy is after made, postseizure administrative or judicial hearings.15 legislative history, we shall reject not it because plausible another reading of the possible. statute is The dissent also is incorrect implies when it that the gives Court the word “wrongful” a strained understanding in finding a that third party’s property could be “wrongful[ly]” levied even though the prop Government erly following was procedures the §of 6331. post, See 746, at n. 11. The legislative history makes clear the that word “wrongful” as it is used in 7426(a) § refers not to intentional wrongdoing on the part, Government’s but rather “refers to a proceeding against property which is not the tax payer’s.” Rep. S. 1708, No. at 30. 15The dissent’s misreading Rodgers of is of piece a with its misunder standing of the § Government’s use of 6331 provisional as a remedy to seize property. post, 740-743, See at n. and 6. The § reason that 6331 is not “punctilious itself in protecting the rights vested parties of third caught the Government’s effort,” collection Rodgers, S., 461 U. 699, is that the purport does not any determine rights to the property. It merely protects the Government’s so interests that to the property may be postseizure determined in a proceeding. It is in those proceedings that any claim who an interest to the property are pune- if IRS, force result would Appeals’ The Court in joint a taxpayer’s a to pursue wished § under suit lien-foreclosure a to institute account, effect The practical defendants. codepositors all joining manner, § in this to 7403 comparing In tiliously protected. to the telling comparison oranges. A more apples and compares dissent administrative with the §7403 be would proceeding lien-foreclosure has been parties whose third remedies for judicial and 7426(a)(1). 6343(b) just such It was is, §§ levy, with wrongful Rodgers. See by the Court in this context that was made comparison a id., at 696. (which (1890) Co., Refining 135 U. S. 326 v. Excelsior Nor is Mansfield or the Court District Court by relied on not surprisingly was not holding any way to our here), in related parties by any of the Appeals that required Tax Code the 1868 provisions of case involved today. That distillery to obtain it ran its upon rented the who distiller a lien of the United States stipulating feeholder “waiver” from priority over have shall the distiller taxes property for owed waiver, giving the Govern executing person mortgage held July Act of case of property in forfeiture. rightful title to the ment the 328-329, The S., 338-339. U. 8, 15 128. See 135 Stat. 1868, ch. treat the Government did not entitle waiver this held that Court Tax purposes of the then for the distiller belonged to if it property as held, waiver, did Id., the Court at 338. levy provisions. Code’s give the nor did it Govern premises, in the a fee interest give the distiller Id., at 339. prior lien. a first or anything more than ment the the controversy. Insofar as present the holding is That irrelevant concerning the Government’s at all proposition any general for case stands the to freeze assets when levy be used a cannot levy, it is not that power to levied, see in the complete interest” than a “had less delinquent inter- a leasehold may upon not but that Government post, at kind entirely different a fee interest —an sell turn around and est and then in- no held Mansfield, the Court held In of interest. nothing to case has upon, and so that levied be in fee that could terest levy when the extent can the Government whether the question do with finally not determined. property is in the delinquent’s interest has to with nature upon by the do relied dissent part decision by the held of the interest the characterization as it affects the “waiver” in dissent phrase cited underlying fee. The in the renter/distiller delin- give the waiver did proposition for the context stands gave levy upon, but rather could Government that the quent a fee interest equity. through a suit its lien foreclose on right to the Government

of this be would to eliminate the alternative for procedure administrative §§6331 under and 6332. We do not lightly discard this alternative relief that Congress so clearly provided has for the If Government. the IRS were required bring lien-foreclosure suit each time it wished to execute a tax lien on funds account, would un- be economical, as a practical matter, to do so on small sums of money such as those at issue here. And it would be easy for a delinquent taxpayer to evade, or at least defer, his ob- ligations by placing his funds joint bank accounts. While one might not be enthusiastic about paying taxes, it is still true that “taxes are the life-blood of government, and their prompt and certain availability an imperious need.” Bull United States, 295 U. S. 247,

The judgment of the Court of Appeals is reversed.

It is so ordered. Justice Powell, with whom Justice Brennan, Jus- tice Marshall, and Justice Stevens join, dissenting.

The issue presented is whether the Internal Revenue Serv- (IRS) ice seize lawfully a joint bank account for payment of a single codepositor’s delinquent taxes when it does not know how if much, any, of the account belongs to the delin- quent. itAs seems to me that the Court today misreads the relevant statutory language, effect overrules prior deci- sions of this Court, and substantially ignores the property nondelinquent I taxpayers, dissent.

I—I The parties have stipulated the following facts. On June 13, 1980, respondent bank held in a $321.66 checking account $1,241.60 in a savings account, each in the names of “Roy Reeves or Ruby Reeves or Neva R. Reeves.” App. 11-12. Under state law and by contract with the bank, each of these individuals could withdraw any amount from either account. on Also June 13, the IRS served a notice of on the levy bank that it over demanding pay all sums owed to J. Roy Reeves 734 against him. tax assessment

up of a the $1,302.56, balance to moneys levy of in excess partial for of release It later issued payment bank. on the for final demand and served a $856.61 pay this amount because over refused however, bank, The money in the accounts the much of know how it did belonged Ruby opposed and Neva. Roy as Reeves levy, for the sued bank then its enforce Government, agreed parties District Court Before $856.61. ownership mon- of the as to the “[n]o evidence further submit App. a re- 17. As . .” . . accounts in the ies much knows how the Court nor the Government neither sult, codepositor. by each owned was in each funds account of the “prema- complaint as dismissed Court The District 1982). (ED It held Supp. Ark. 117 F. 554 ture.” ownership having his co-depositor [a] in not of interest “the government erroneously taken account in the levy stage .” procedure . . . at the [required] notice some . . . give required process, the IRS found, it Due 114. Id., seizing before action codepositors notice Appeals for The Court 114-115. Id., accounts. opinion expressing Eighth without affirmed Circuit analysis. 1292 F. 2d process 726 due District Court’s as a (1984). matter result a similar it reached Instead, Gov- particular, that the held statutory In construction. prop- possession to be the bank shown had not ernment delinquent, belonging to the tax erty requires. statute II government, and their the life-blood “taxes are Because imperious availability need,” Bull an prompt certain (1935), Congress cre- has S. States, U. . . . United ,” tools of collection arsenal a “formidable ated to this Central Rodgers, U. S. levy, §6331, and C. U. S. administrative are “arsenal” procedures judicial §7403, two foreclosure, delin- which the sell can seize Government quent designed procedure is Each taxpayer interest. has an

735 apply specific to to kinds of situations to ensure that taxes paid respecting owed are rights while nondelinquents of may who have property. an interest in the today, ignores Court property rights however, of nondelinquents. It delinquent’s right holds that a compel payment joint from a bank of in a balances account entitles levy Government to on all of those funds—even it when stipulated, inas this case, that the Government does not any money know that actually belongs the account delinquent. By holding, so disregards the Court both plain language and ignores structure of the statute, this century-long interpretation Court’s (effectively of the Code overruling v. Refining Excelsior Co., 135 U. S. Mansfield (1890), part 326 and of United States Bess, 357 U. S. 51 (1958)), disregards and the fact that under Arkansas law a codepositor may property have no interest in funds that he may withdraw from the account.

HH h—I levy Administrative under S.U. C. 6331 is the more .26 primary drastic proce- Government’s two collection dures.1 supra, See Bull v. United By States, at 259-260. allowing summarily the Government to seize and sell “all property rights and belonging [the . . . delin- quent],” §6331(a), U. S. C. permits administrative unpaid the IRS to judicial collect taxes without intervention. 1Section provides in pertinent part: “(a) Authority Secretary any person “If pay any liable to tax neglects pay or refuses to the same days within 10 after notice demand, and shall be for Secretary lawful collect such upon tax ... all property. ..

belonging person to such .... “(b) Seizure and sale of property “The term ‘levy’. . . power includes by any distraint and seizure means. ... In case in Secretary may which the levy upon property or

rights to property, he seize and sell such prop- or (whether erty personal, tangible real or intangible).” self-help a method process, non-judicial “summary, It is with the Commissioner which provides statute authorized tax satisfying for method convenient a prompt (CA3 Sullivan, F. 2d claims.” that property to third parties no 1964). notice It provides If indi- an has been seized. have an interest they may his wrongful, it was and believes levy a discovers vidual under review seek administrative is to recourse only “her or in fed- or file suit §6343(b) nine months2 within C. 26 U. S. 7426(a)(1) the § within 26 U. S. C. under court district eral time.3 of amount same collect- method for different a quite 7403 provides

Section General, the Attorney § Under taxes.4 ing 6343(b) part: pertinent in states Section levied wrongfully has been property Secretary “If the determines Secretary to return— the lawful for upon, it shall be

“(1) upon, property levied specific the money upon, or levied “(2) amount of money equal to the of an amount by the money of received “(3) money equal to the amount of an amount property. a sale such States from United equal to the amount An any time. amount may returned at “Property be any may be returned from such sale money upon or received levied levy.” such date of from the expiration of 9 months the before time 7426(a)(1) follows: provides as Section pursuant has been sold property or property “If has been made (other assessed against whom is person any than levy, person and to arose) lien on interest in or claims an who such tax out of which may upon wrongfully levied was that such property and such of the in a district court against the United States bring a civil action whether regard to brought without be action Such States. Secretary.” by the to or sold surrendered property has been such seeking adminis- 6532(c)(1) parties are requires third who Section levy. nine months of file suit within review to trative pertinent part as follows: provides in Section “(a) Filing tax, any or neglect pay to a refusal or there has been “In case where levy has been thereof, or not respect whether liability in discharge any request Secre- delegate, his made, Attorney General the United in court of filed a district action be tary, may direct a civil respect this title with United States under the lien of the to enforce

at the of the request Secretary the Treasury, institutes a civil in action federal district court “to subject any property ... in which [the has delinquent] any right, title, or interest, to the payment 7403(a). of such tax.” § 26 U. S. All C. per- sons “claiming any must property” be joined § parties, 7403(b), 7403(c). and § notified of the “duly action,” § Unlike a 6331 §a 7403 levy, suit is a plenary action which the court all “adjudicate^] matters involved” and “finally the merits of all determine^] claims to and liens upon 7403(c). § property.” The district court may decree the sale of the distribution of the “accord- proceeds ing of the findings court to the interests respect and of the parties United States.” Ibid. of these language two provisions reveals the central difference between them. -While 6331 applies “property . . . belonging [the delinquent],” §6331(a), § 7403 ... applies “property de- [the 7403(a). has linquent] any right, title, or interest . . . ,” In other §6331 words, seizure and sale permits of property or property rights to the belonging while 7403 delinquent, allows the Government to seize and sell any property right in which the has an interest —even a in- delinquent partial terest. In many cases, course, this difference is unimpor- tant. Both for procedures, to example, apply any property liability to subject any property, nature, such tax or or to of whatever of the delinquent, title, or in which right, interest, he has or to the payment liability. of such tax or . . .

“(b) Parties persons having

“All upon claiming any property liens or in interest the in parties involved such action shall be made thereto.

“(c) Adjudication and decree shall, action, parties duly

“The court after the have been notified of the proceed adjudicate finally all involved therein matters determine the upon property, and, merits of all claims in cases to and liens all established, may where a claim or interest of the United therein is decree a sale property proceeds of such . . . and a distribution of the according respect such sale in interests findings of the court to the parties of the and of the United . . .” 26 U. C. 7403. States. S. belongs completely delinquent, to the for interest “belonging any right property necessarily to” true that property a[n] delinquent . . . in he “has is also which always opposite general, In is not however, interest.” only property right delinquent has a A which true. “belon[g] delinquent partial to” the interest does susceptible levy. hence is not interpretation today, this has followed this

Until Court past century. provisions for the of the and foreclosure (1890), Refining In Excelsior 135U. S. 326 Co., Mansfield prop- held that the Government could not the Court complete erty delinquent rights in had less than a which In had levied on the fee case, Government interest. delinquent had leased for a term that the interest years. presented whether the Govern- One issue was conveyed subsequent the freehold ment’s sale of the only ana- The first Justice Harlan or the leasehold interest. lyzed the issue as follows: only by government neglected pursue the mode

“The namely, equity, in a suit in sold; the fee could be which persons have all interested could which [delinquent] parties. inwas de- been made When the proper respect it was for the officers taxes, fault they government seek sat- to elect whether would by of a seizure and sale isfaction of its demands means only, [delinquent’s] the collector of the having upon premises persons claims suit to which all par- government made had a lien should be on which the adopt They under method, the former ties. chose only . could be . . the interest Id., seized and sold.” at 341. levied could have either

In words, other Government proceeded equity administratively only or on the leasehold §7403) (the the entire freehold to condemn forerunner of only approach, it could take the former interest. Under completely “belonged] delinquent, while to” interest under the latter, it could take property interests of which the delinquent owned only part.5 Accord, Blacklock v. United States, U. S. 75

In United States v. Rodgers, 461 U. S. 677 (1983), we recently reaffirmed this understanding of the statutory scheme. After noting that 7403 exhibits “grea[t] solicitude for third parties,” id., at 695, we discussed §§6331 how 7403 differ:

“Under ... 6331(a), the Government may sell for the collection of unpaid taxes all nonexempt ‘property and . . . belonging [the delinquent taxpayer] . . . Section 6331, unlike §7403, does not notice require and hearing for third parties, because no rights third parties are intended to be implicated §6331. Indeed, third parties whose property or in- terests in property have been seized inadvertently are entitled to claim that the property has been ‘wrongfully levied upon,’ and may apply for its return either through administrative channels ... through civil action filed in a federal district court. ... In the absence of such ‘wrongful levy,’ the entire proceeds of a sale con- ducted pursuant to administrative levy may be applied, without any prior distribution of the sort required by 5The Court argues that is irrelevant to today’s decision be Mansfield cause it stands for the proposition unremarkable that “the Government levy upon a leasehold interest and then turn around and sell a fee entirely interest —an different kind of Ante, interest.” n. 15. It bases this reading of presence of a waiver from the Mansfield feeholder, which was in fact tangential to the Court’s holding in that case. The Court in discussed the feeholder’s only waiver Mansfield in order to determine gave whether it the Government an the fee. 135 S.,U. If did, 338-339. it was clear that the Government could sell the fee. Court, however, concluded that gave the waiver the Govern ment no such Id., interest. Thus, at 339. the Court had to consider whether on the property could effectively transfer more itself than the delinquent’s leasehold interest. Harlan, Justice writing for the Court, found that the not, could Mansfield and it respect is in this is a highly pertinent not a Mansfield controlling authority. —if — 740 sale, specific and levy of the expenses

§ to tax and the general on the seized property, tax liability (first Id., at taxpayer.” the delinquent of liability added). second original, emphasis each of advantages various described The Court later as follows: of tax method collection that it is administrative advantages “Among the advan- Among relatively inexpensive. and is quick the Federal it gives is that § proceeding of a 7403 tages return highest seek the to the opportunity Government liable interests of property forced sale on the possible The provisions taxes. of federal payment for the Nevertheless, § is and profound. are § 7403 broad 7J/.03 third par- the vested rights in protecting punctilious and effort, collection Government’s ties caught not receive out that the Government in ensuring it is that than to the sale more proceeds added).6 Id., (emphasis at entitled.” properly holding today conflict between its to minimize the attempts The Court mischaracterizing that Court case. holding Rodgers and the §6331, §7403, unlike does [Rodgers] Court noted “[t]he states that levy, an administrative parties,’ because of third ‘implicate rights ownership action, not determine does judicial unlike a lien-foreclosure however, Nothing Rodgers, Ante, at rights property.” 731. rights this third-party for implicate § not intended suggests is that 6331 clearly in Rodgers in the text above from quotation reason. As first explicit its rights implicate such because dicates, § meant 6331 is not ‘property and nonexempt “unpaid [to] all for taxes language limits levies taxpayer] . . .’” belonging [the . . . Rodgers). (emphasis in comparing 7403 like comparing 6331and argues that The Court also say this Ante, 732, n. 15. It suffices oranges.” at “apples and provisions. two See United comparison of these always has Court relied 695-697; S., Excelsior Rodgers, 461 U. Refin Mansfield comparison Furthermore, telling” the “more Co., S., ing at 341. U. wrongful- §7403 and a Rodgers between made that the Court believes today’s actually against 731-732, works action, ante, n. see As Mansfield, Rodgers make clear, long this Court has interpreted “property belonging to delinquent” the exactly to mean that. Section 6331’sreach only extends delinquent. property rights to completely belonging to the

IV question The narrow presented, then, is whether the Gov- upon ernment levied or belonging only Roy Reeves. The Court holds that the Government did so Roy because it levied on right Reeves’ under state law require pay the bank to over to him outstanding bal- ances in the right accounts. This unquestionably belonged Roy tó Reeves, as it did to each of the codepositors. other They all right had the same to withdraw. right But the to withdraw funds was no more than that. It right awas parties joint accorded accounts as a matter of mutual independent convenience, it was any right to or in property. encompassed It right no possession, use, ownership over the funds when withdrawn. See Black v. Black, 199Ark. 609, 617,135 S. W. (1940); 2d 837, 841 Hayse Hayse, App. 4 Ark. 160-B, 160-F, 630 S. 2d 48, W. 49-50 property rights, These levy provides which the no way determining, by independent are defined principles of Arkansas law that are not now at issue.7 By result. stating that wrongful-levy actions can pursued be “prop- when erty ha[s] been seized inadvertently,” S., U. the Rodgers Court makes clear its assumption that the Government cannot on property it knows belong to third parties. The reasoning of the today, Court however, would allow exactly this result. 7The Supreme Arkansas Court has described the statute granting co- depositors the right to withdraw in the following terms: “[The statute passed was] protection for the of the bank in which the deposit was permits made. It the bank to pay deposit out the . . . and protects the bank in doing . . so. . The statute[, however,] effects no in- vestiture of title as between the depositors themselves, only but relieves the bank of the responsibility duty of making inquiry as respec- to the mere levying not however, Government, The right without little value is of withdraw, underlying reaches ownership. at issue The belong they to. whom matter accounts—no in the funds all argues, withdrawn have Court Roy as the could, Reeves independent had no law he state if but, under funds, possess legally could he itself, right in the pay his taxes. use them alone let others, funds money of unlawfully might convert That the give the Government pay does not taxes his others right “‘“ste[p] into cannot Government to do so. quoting ante, taxpayer’s shoes,””’ Black, v. Black . . . .” deposit in the depositors of tive interests 837, 841 2d 617, W. 609, 135 S. 199 Ark. law and of Arkansas this characterization accepted Appeals of The Court and the to withdraw right interrelationship between described rights as follows: underlying from wished any amount he have withdrawn could “Roy [Reeves] taxes, and income including debts, federal pay his it to used account But the bank. against complaint lawful had no have would his co-owners of the conversion. Roy for against claim had a they might have statutes Arkansas by . . . determined not sese are inter co-owners of the intention depend on withdrawal]. Those of right a [granting any, might if agreement, money, or on whatever deposited the whoever rule applicable other some co-owners, or on among the made have been account in a deposit bank makes spouse example, a If, for law. state created, defea- entirety is by tenancy names, a spouses’ both that bears But here a withdrawal. by making simply at will spouse by either sible fact, both In Ruby or Neva. to Roy is married know whether we do finding out. ... In studiously avoided have bank and the government all withdraw could each co-owner know, presume, short, we 1984) (CA8 1292, 1295 2dF. know.” 726 accounts, that is all we but both added). omitted) (citation (emphasis Arkansas determination court’s must, the state accepts, as it The Court this Court it, despite what law overrides federal simply holds that It law. (1960), quoting 509, States, S. 363 U. United v. Aquilino has held Bess, v. (1940); 78, 82 Commissioner, 309 U. S. Morgan ante, at 726-729. (1958); see 51, 55 357 U. S. Rodgers, S., U. at 691, 16, n. in this sense. It hardly “[cjommon with the comports sense” the Court relies on, ante, at to hold that the Government seize and sell property belonging to only third taxes parties pay owed the delinquent.8

The Court nevertheless holds that the right withdraw all of a joint account is determinative because “‘it inconceiv- 8The Appeals Courts of that have considered whether the can IRS jointly on pay held a co-owner’s taxes have held that it cannot when it does not know how much property actually belongs to the delinquent. In United States v. Stock Yards Louisville, Bank 231 F. 2d (CA6 (then 1956), Judge) Stewart, Justice writing court, for the held joint right present that a bondholder’s redemption, bond for receive payment full, thereby completely eliminate the other co-owner’s interest as far as the issuer was give concerned did not IRS the levy on the pay entire bond to one co-owner’s taxes. “Proof of the actual taxpayer’s value of the govern was an essential element of the statute, ment’s case under the and for proof lack of such the case falls.” Id., attempts at 631. The Court distinguish ground this case on the “[sjavings . joint bonds . . are different from bank . accounts . . .” Ante, In Bank, however, n. 11. Stock Yards Appeals the Court of expressly analogized savings joint accounts, 2d, bonds to 231 F. today points and the Court to no relevant distinguishing feature. It merely creates a distinction without a difference. Likewise, (CA3 Granger, 1952), 196F. 2d 620 the Court of Raffaele Appeals rejected the IRS’s view that it could bank accounts entirety held as tenancies spouse may when “either upon draw Id., them.” “power at 622. The court spouse found that the of each funds,” withdraw argued determinative, ibid., which the IRS was was ac- tually irrelevant because under ownership [spouses] state law “the of both by either,” attaches to funds withdrawn States,” ibid. “The United it held, power property “has no to take person, from one spouse, the innocent satisfy obligation Id., of another.” at 623. The attempts Court distinguish ground this case on the that it “did not propriety concern the provisional remedy, a the final ownership property but of the in question.” Ante, 728, misleading. Raffaele, at n. 11. This is In Appeals the Court of quashing affirmed the District Court’s of a warrant of distraint. It thus right held that the property IRS had no to seize the as an initial matter. It properly did not hold that the had IRS seized the but had to return it. 744 . intended to the Government prohibit . . Congress that

able delin- accessible to the is plainly on that which levying from Ante, 726, at United quoting taxpayer-depositor.’”9 quent 9 overwhelming majority of courts that today “[t]he states that The Court taxpayer’s delinquent unrestricted have held that a the issue considered have ‘rights property’ ‘property’ or constitutes withdraw right to to the funds that other claims levy, regardless of the facts IRS provisional at ownership be unresolved question of ultimate and that the may exist can Ante, states that the IRS Insofar as the Court at 724-725. time.” withdraw, assume, deciding, that one can without right to levy on the case, present the IRS In the correct, statement is irrelevant. because underlying right in the withdraw, right to but on levying on the is not supra, belong parties. See may well to innocent third property, cases hand, states that “these insofar as the Court On the other 741-743. right to withdraw delinquent’s a state-law proposition stand for all pur sufficient for account is a from [a] funds ,” ante, . . the account. law for the Government poses of federal “all,” one, let alone these cases simply mistaken. Not 725, n. it is cites from the Courts of proposition. this The cases the Court stand for decide a different Courts, the Tax Court either the District Appeals, position taken the Third and Sixth Cir actually support the question or Appeals cases and one of the supra. cuits, n. Four of Court see ac “property” an individual’s concern the amount of Court cases District right of setoff or checks still either an unexercised the bank has count when Peo Citizens & levy. against account at the time drawn to be 1978) (CA5 States, (unpaid Bank v. F. 2d 1279 ples National United 570 Bank, 538 F. 2d National v. Citizens & Southern United States checks); 1976) (unexercised setoff), denied, (CA5 cert. 430 U. S. 945 right of 1101 Co., Bank Trust Sterling National & 494 F. 2d 919 States v. United (1977); (CA9 States, 1974) Nevada (CA2 251 F. 2d 820 Bank (same); v. First United States 1957) denied, (1958); (same), cert. U. S. (Ariz. 1970)(same), aff’d, 458 Arizona, Supp. F. National Bank of (CA9 1972). case, Appeals the other District The fifth Court of 2d 513 F. support holding opposite to the case, Tax cases a and all the Court Court (CA9 1974), Schmidt, for exam In Babb 496 F. 2d 957 today. Court’s community property only levy against because allowed the ple, the court . . . .” [delinquent] rights given . . . “ha[d] law state all the Tax- Court Id., District Court case and And in the other at 960. only right gave that state law the court found cases underlying possession in the of use or but also of withdrawal Co., National Bank & Trust v. Third themselves. United States funds 1953) (MD sole owner of (delinquent Pa. was either Supp. 111 F.

745 States v. First National Bank Arizona, 348 F. 388, Supp. of (Ariz. 1970) (emphasis added), aff’d, (CA9 458 F. 2d curiam). (per 1972) By holding that mere con- accessibility trols, the Court simply ignores the plain language §6331. “ It also effectively state overrides law that ‘controls de- termining nature of the legal interest which the tax- Aquilino payer ha[s] the property.’”10 v. United States, joint funds or tenant); United Equitable States v. Co., Trust 49 AFTR 2d (Md. ¶ 82-428, 1982) (“[P]rior at 82-725 to the levy, federal tax both [co- depositors] owned joint tenants, accounts as having each the absolute right to use or withdraw the entire fund. . . . Consequently, [the delin- quent codepositor] had property rights in checking .”); account. . . Lytton Sebel v. Savings & Assn., Loan (SD 1965) ¶9343 65-1 USTC Cal. (joint tenancy); Tyson States, (Mass. 63-1 1962) ¶ USTC 9300 (holding in the alternative that assessment jointly was against both co- depositors or that granted law state right creditor the possession funds). codepositor’s either These cases dispel should also the Court’s fear that the IRS will be “bring forced a lien-foreclosure suit each time it wishe[s] a tax execute lien joint on funds in a Ante, account. . . .” at 733. Nothing my opinion suggests under existing federal never law IRS can levy on joint bank account. As the clear, cited cases many, make most, if not give codepositors property rights in all the funds in a account. long As grants as state law right such a not, Arkansas law does see —which n. supra all pay single funds to codepositor’s taxes is — proper. only It is when state grant law does not right such a that the IRS should not be allowed to under 6331 without first determining that “belong funds to” the delinquent. The position, however, Court’s permit would levies even when the IRS knows that none of the fluids in the belongs account taxpayer. points, At several the Court my mischaracterizes reliance on state law. I do not suggest that “puts because state law certain limits on the rights creditors, and attaches consequences certain [the to with regards the delinquent draw] himself. . . the Government is limited Ante, these same state-law constraints.” at n. 8. suggest Nor do I that “state law dictates the extent of the power levy.” Government’s Ante, at n. 9. These are strawmen that long ago rejected. the Court Bess, United States S., 357 U. 56-57. Court, Like the I would follow Bess statement “creates no merely but consequences, attaches federally defined, created under state Id., law added). . . . .” (emphasis today states, As the Court Bess, “under state only law controls in determining the legal nature (1960),quoting Morgan 509, Commissioner, 363 U. v. S. (1940); 78, Bess, S., 309 U. 357 U. S. United States reasoning, example, codepos- at 55. Under the for a Court’s right levy itor’s to to withdraw would allow the Government joint if on a account even the knew that under Government joint “belonged state law none of the funds in the account delinquent codepositor, delinquent e., to” the i. had property Aquilino no interest in the funds themselves.11 Cf. (“It supra, n. States, at would indeed be say taxpayer’s ‘property anomalous to that the property’ included in which, under the relevant all”). law, state he had no interest at a Such position interpretation exceeds even the IRS’s own of its Ante, taxpayer property.” interest which the has in the n. 8. Here, however, delinquent taxpayer may legal have no property. right All that known is that is he has a of withdrawal completely independent 7, supra. that is of the funds themselves. n. See Nevertheless, consequences” attaches “federal Court sufficient to levy effect, In today on the accounts. what the Court holds that the is delinquent’s right against creates consequences” the bank “federal that completely right By attach to the different to the funds themselves. so construing Bess, consequences” nothing the “federal the Court does less provision levy only “property than rewrite a that authorizes property belonging delinquent. to” 11Moreover, seriously, if reasoning taken the Court’s would make levy wrongful right action for If the payment fruitless. mere to withdraw interest, is indeed the determinative then a on a account for payment codepositor’s wrongful. always of a taxes can never be It will be right belonged delinquent true that a codepositor. to withdraw to the The Court, course, actually position. does not take this extreme It would apparently party subsequently allow a ground third to contest a on the money belongs Ante, him (emphasis “the fact or her.” at 726 added). This, however, recognition right amounts to it is withdraw, ownership, right rather than the that controls. To avoid taking transparently position, a unreasonable the Court switches the basis analysis. property interest, appears, depends upon of its The relevant trying party try whether the Government is to seize or a third is ing recoup applying it. The Court offers no reason for this double standard, yields and the statute itself none.

levy powers. Ruling (“A Rev. 55-187, 1955-1 Cum. Bull. 197 joint checking account levy only to the extent of taxpayer’s interest therein, which will be determined from case”). the facts in each position, This effectively moreover, only overrules not part but also of United States v. Mansfield swpra, Bess, case which this Court held that a “property could right have no property” over funds possession. he had no 357 U. S., 55-56. disregards Court also statutory language and prior argues its cases when it levy that the authorized § only “provisional” 6331is remedy. Ante, at 715, 720, 726, parties and 728. Third property who have may their taken pursue they taking know about the —if administra- —either judicial tive or relief. hardly But one would characterize as “provisional” the taking Government’s party’s of an innocent property especially without notice, taking when, even if the is discovered, the burden is then party on the innocent recovery institute proceedings.12 Furthermore, absent no- tice kind, the nine months that the administrative, §6343(b), 26 U. S. judicial, C. 6532(c)(1), U. S. C. ordinarily give remedies parties third levy to contest a is a short time indeed. certainty There is no that within this they time will discover that their has been used to pay someone may else’s taxes. particularly This be true as 12The argues also Court that a on third-party property may justi be fied levy] “[the because merely protects the Government’s interests so that rights to may be determined in postseizure proceeding.” Ante, n. 15. This statement incorrectly states the law. Under levy statute, power IRS has the only not to seize but also to sell property. 6331(b). U. S. C. A co-owner of a house seized and sold to pay a delinquent’s taxes would be surprised indeed to discover that levy “merely protects IRS’s the Government’s interests . . . .” Assuming that the co-owner discovered within nine months that the IRS had levied (for on the property no notice to him is required), he could recover in a wrongful-levy action at most some of proceeds from the sale. This “remedy” hardly “punctiliously protects]” the rights of parties, third Ante, the Court claims. 731-732, n. 15. savings in common of accounts, owners of joint to the owners in other situations where estate, and owners real unimproved that one’s has to know little occasion there be decision short, In the Court’s levy. seized an IRS been in serious third parties the property often will place jeopardy.13

V what por- did not know the IRS facts, the stipulated On to” “belong[ed] levied upon if accounts tion, any, he had a to withdraw right only Reeves. It knew Roy the possession, no law encompassed that under state In allowing withdrawn. of the funds when use, ownership circumstances, only the Court today these under of the relevant decisions to all contrary decides this case sub overrules effectively but also Appeals of the Courts silentio its own prior the Court relies Moreover, decisions. inmay many no notice is that, provided, on remedies because of third protecting cases ineffective prove parties.14 affirm the and would dissent, judgment

I accordingly of Appeals. Court justified is be emphasizes also that administrative The Court withdraw, “subject to a later claim cause, delinquent’s right to is like the Ante, him money belongs or her.” by codepositor that the fact reasoning, proves too much. Under Court’s 726. This statement pay anyone else’s taxes because anyone’s property to IRS could on by nearly always “subject [the to a later claim wrongful such are seizures belongs him her.” The fact that [property] in fact owner] that the conversion does every wrongful taking subsequent to a claim for justify taking. pre by following procedure funds like these 14 TheIRS reach wishes, may authorize And, course, Congress, if it scribed 7403. levy-type procedure, provided it observes under a collection of funds I of notice. As would find particularly that requirements, constitutional (as Appeals), I do not statutory dispositive did the Court of language the District Court. process the due claim relied address

Case Details

Case Name: United States v. National Bank of Commerce

Court Name: Supreme Court of the United States

Date Published: Jun 26, 1985

Citation: 472 U.S. 713

Docket Number: 84-498

Court Abbreviation: SCOTUS