UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 98-11170
OXFORD CAPITAL CORPORATION,
Plaintiff-Appellant,
VERSUS
UNITED STATES OF AMERICA; ET AL,
Defendants,
UNITED STATES OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Texas
May 2, 2000
Before JONES and DENNIS, Circuit Judges, and PRADO,* District
Judge:
PER CURIAM:
This is an appeal from the decision of a magistrate judge that
a levy imposed by the Internal Revenue Service (“IRS”) on bank
accounts of Oxford Capital Corporation (“Oxford”) to satisfy tax
liabilities of one of its subsidiaries was not a wrongful levy
under 26 U.S.C. § 7426. Oxford filed this appeal, contending that
*
District Judge of the Western District of Texas, sitting by
designation.
the magistrate judge erred both in its application of the
applicable standard and in its factual findings. For the reasons
discussed, we vacate the decision of the magistrate judge and
remand for further proceedings consistent with this opinion.
I.
Oxford is a publicly-traded corporation incorporated in
Nevada, which operates as a holding company for multiple
subsidiaries. RX was incorporated in the state of Texas as an
employee leasing company in 1995 by Jerry Stovall and Rick Tarrell.
Due in part to substantial unauthorized withdrawals by an employee,
RX suffered severe financial difficulties and fell into arrears in
its payment of employee payroll taxes. Due to these financial
difficulties, Stovall and Tarrell sold RX to Oxford in 1996, at
which time RX became a wholly-owned subsidiary of Oxford. RX
continued to fall into arrears with respect to its payment of
payroll taxes, and by November 1997 RX owed over three million
dollars in back payroll taxes to the government for the third and
fourth quarter of 1996 and the first quarter of 1997.
In its attempt to collect the unpaid payroll taxes, the
Internal Revenue Service (“IRS”) issued notices of levy on RX and
on clients of RX that owed accounts payable to RX in November 1997.
Soon afterwards, Oxford directed clients of RX to remit payments
owed to RX directly into a bank account in the name of Oxford
rather than to RX. Fearing that assets of RX were being diverted,
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the IRS issued a notice of levy against three bank accounts of
Oxford in satisfaction of RX’s tax liability -- contending that
Oxford was a nominee of RX.
Oxford brought this suit in the Northern District of Texas
contending that the levies against its bank accounts constituted
“wrongful levies” under 26 U.S.C. § 7426. The parties consented to
the case being heard before a magistrate judge pursuant to 28
U.S.C. § 636(c). Before the magistrate judge, the government
introduced evidence to support the contention that Oxford was in
reality the “alter ego” of RX, rather than a mere nominee. The
government introduced evidence collected subsequent to the levy
that Oxford and RX shared officers and directors in common, filed
consolidated financial statements, shared a common floor in an
office building and failed to follow many corporate formalities.
Based on this information, the magistrate judge held that Oxford
was in fact an alter ego of RX and thus the levies were not
wrongful. Oxford timely filed a notice of appeal to this court.
II.
A.
A lien in favor of the United States arises with respect to
all property and rights to property of a taxpayer upon failure to
pay a tax liability after demand. See 26 U.S.C. § 6321. The IRS
has broad authority to impose levies on property and rights to
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property of taxpayers upon which liens have attached. See 26
U.S.C. § 6331(a). This power is not unlimited, however. For
example, the IRS may not impose a levy on property until a thorough
investigation of the status of such property has been completed.
See 26 U.S.C. § 6331(j)(1). Similarly, a levy is wrongful if
imposed upon property in which the taxpayer had no interest at the
time the lien arose or thereafter or if the levy or sale pursuant
to levy effectively destroys or otherwise irreparably injures a
person’s proprietary interest that is senior to the Federal tax
lien. See 26 C.F.R. § 301.7426-1(b)(1). Congress has waived the
sovereign immunity of the United States for suits claiming wrongful
levy and has allowed persons other than the taxpayer to file suit
against the United States for either damages or return of the
property. See 26 U.S.C. § 7426.
The elements of a wrongful levy action under section 7426 are
well settled -- to establish a wrongful levy claim a plaintiff must
show (1) that the IRS filed a levy with respect to a taxpayer’s
liability against property held by the non-taxpayer plaintiff, (2)
the plaintiff had an interest in that property superior to that of
the IRS and (3) the levy was wrongful. See Texas Commerce Bank-
Fort Worth v. United States, 896 F.2d 152, 156 (5th Cir. 1990). To
prove that a levy is wrongful, (1) a plaintiff must first show some
interest in the property to establish standing, (2) the burden then
shifts to the IRS to prove a nexus between the property and the
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taxpayer, and (3) the burden then shifts back to the plaintiff to
prove the levy was wrongful, e.g., that the property in fact did
not belong to the taxpayer. See Century Hotels v. United States,
952 F.2d 107, 109 (5th Cir. 1992).
The Fifth Circuit, joined by the majority of the other
circuits addressing the issue, has held that the IRS must prove a
nexus between the property levied upon and the taxpayer by
substantial evidence while a minority of circuits have required
only proof by a preponderance of the evidence. See, e.g., LiButti
v. United States, 107 F.3d 110, 118 (2nd Cir. 1997) (“If the
government satisfied that substantial evidence burden, meaning that
the evidence was ‘considerably more than a preponderance but less
than clear and convincing proof’ the plaintiff would have the
‘ultimate burden’ to prove that the levy was wrongful.”) (citing
Century Hotels, 952 F.2d at 109). The policy behind requiring such
a heightened standard of proof is that the government has unique
access to the information it used as a basis for its levy and,
after an opportunity to fully develop the factual record, fairness
mandates that the government come forward with substantial evidence
of the connection between the property levied upon and the
taxpayer. See Valley Finance, Inc. v. United States, 629 F.2d 162,
171 n. 19 (D.C. Cir. 1980) (“Considerations of fairness impel us to
conclude that once the factual record has been fully developed over
time . . . the government must establish its asserted nexus between
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taxpayer and a third party by substantial evidence.”); Flores v.
United States, 551 F.2d 1169, 1175-76 (9th Cir. 1977) (“Principles
of fair play and common sense dictate the result which we reach.”).
B.
In the present case, the IRS issued a levy against multiple
bank accounts in the name of Oxford. The notice of levy indicated
that the levy was being imposed on funds of Oxford as “nominee,
transferee, alter ego, agent and/or holder of a beneficial interest
of taxpayer RX Staffing Corporation.” The levy applied to two bank
accounts - the so-called “2020 account” and the so-called “2069
account.” According to the field notes of Wayne Honeycutt, the
revenue officer responsible for issuing the notice of levy, the
levy was issued against Oxford’s accounts because funds owed to RX
were transferred to Oxford’s 2020 account -- making this “a
possible case for either a DBA [Doing Business As] levy or a
NOMINEE levy.” At the evidentiary hearing, Honeycutt testified
that at the time of the levy the only information he had to support
a levy on Oxford was the direct wiring of funds into the 2020
account. Honeycutt further testified that at the time of the levy,
he had no information with respect to the officers, directors,
accounting methods, tax returns or employees of either RX or
Oxford. Before the magistrate judge, however, the government
contended that the levy against Oxford’s accounts was not wrongful
because Oxford was the “alter ego” of RX.
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While related, the concepts of “nominee”, “transferee”, and
“alter ego” are independent bases for attaching the property of a
third party in satisfaction of a delinquent taxpayer’s liability.
“A nominee theory involves the determination of the true beneficial
ownership of property. An alter ego theory focuses more on those
facts associated with a ‘piercing the corporate veil’ analysis. In
contrast, a transferee theory requires (1) an intent to defraud the
Internal Revenue Service as a creditor or (2) a transfer without
consideration which rendered the taxpayer insolvent. These issues
are fact-intensive and involve imprecise legal rules.” WILLIAM D.
ELLIOT, FEDERAL TAX COLLECTIONS, LIENS AND LEVIES ¶ 9.10[2] (2nd Ed. 2000).
Specific property in which a third person has legal title may be
levied upon as a nominee of the taxpayer if the taxpayer in fact
has beneficial ownership of the property. See, e.g., Towe Antique
Ford Foundation v. Internal Revenue Service, 791 F. Supp. 1450,
1454 (D.Mont.1992), aff’d w/o opinion, 999 F.2d 1387 (9th Cir.
1993).1 Under the alter ego doctrine, however, all the assets of
an alter ego corporation may be levied upon to satisfy the tax
1
The court in Towe listed the following factors that are
generally considered in determining nominee status: “(a) No
consideration or inadequate consideration paid by the nominee; (b)
Property placed in the name of the nominee in anticipation of a
suit or occurrence of liabilities while the transferor continues to
exercise control over the property; (c) Close relationship between
transferor and the nominee; (d) Failure to record conveyance; (e)
Retention of possession by the transferor; and (f) Continued
enjoyment by the transferor of benefits of the transferred
property.” Towe Antique Ford Foundation, 791 F. Supp. at 1454
(citing United States v. Miller Bros. Constr. Co., 505 F.2d 1031
(10th Cir. 1974)).
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liabilities of a delinquent taxpayer-shareholder if the separate
corporate identity is merely a sham, i.e., it does not exist
independent of its controlling shareholder and that it was
established for no reasonable business purpose or for fraudulent
purposes. See United States v. Jon-T Chemicals, 768 F.2d 686 (5th
Cir. 1985).2 Cause to believe that a third party is holding
particular property of the taxpayer as a nominee, without cause to
believe alter ego status, justifies a levy upon the property of the
third party only with respect to that specific property held as a
nominee.
At the evidentiary hearing, the magistrate judge found that
the government had introduced substantial evidence of alter ego
status, e.g., that Oxford and RX shared officers and directors in
common, that they shared office space and telephone numbers, that
corporate formalities were rarely if ever followed and that one
individual, Robert Cheney, exercised de facto control over both
2
While adopting a totality of the circumstances test, this
circuit has developed a non-exhaustive list of factors to consider:
(1) the parent and subsidiary have common stock ownership; (2) the
parent and subsidiary have common directors or officers; (3) the
parent and subsidiary have common business departments; (4) the
parent and subsidiary file consolidated financial statements; (5)
the parent finances the subsidiary; (6) the parent caused the
incorporation of the subsidiary; (7) the subsidiary operated with
grossly inadequate capital; (8) the parent pays salaries and other
expenses of subsidiary; (9) the subsidiary receives no business
except that given by the parent; (10) the parent uses the
subsidiary’s property as its own; (11) the daily operations of the
two corporations are not kept separate; (12) the subsidiary does
not observe corporate formalities. See Century Hotels, 952 F.2d at
110 n.5 (5th Cir. 1992).
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corporations. Based on this evidence, the magistrate judge
determined that Oxford was, in fact, the alter ego of RX and thus
the levy was not wrongful. The magistrate judge did not apply the
traditional wrongful levy burden shifting analysis described in
Texas Commerce, however. Rather, the magistrate judge looked
solely at the evidence before it, based on a fully developed
record, to determine whether in fact Oxford was the alter ego of
RX.
It is not possible to determine from the record whether
application of the proper burden-shifting framework to the present
case would have produced a different result. It is clear that the
property levied upon was in the hands of Oxford, as the bank
accounts were clearly registered in the name of Oxford and not in
the name of RX. Thus, the burden shifted back to the government to
prove a nexus between Oxford’s bank accounts and the taxpayer at
the time of the trial by substantial evidence.
The sole evidence introduced by the IRS to justify the levy at
the time the levy was imposed was the tracing of specific funds
owed to RX to Oxford’s 2020 account. Based solely on this
information, the government levied upon funds in both the 2020
account and the 2069 account. As noted by Honeycutt, such tracing
possibly justified a nominee levy on the 2020 account (as Oxford
could have been holding funds of RX as its nominee) but alone was
insufficient to support an alter ego levy on all the assets of
Oxford. That the government may have subsequently compiled
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sufficient facts to establish alter ego status by substantial
evidence is irrelevant to the issue of whether it had grounds to
believe alter ego status at the time of the levy. Based on the
record before us, it appears that at the time of the levy, the IRS
may have had cause to believe that Oxford held property of RX as a
nominee, but not cause to believe that RX was Oxford’s alter ego.
At that time the 2020 account appears to have been the only Oxford
account that the IRS had cause to believe held property of the
taxpayer, RX. If that was the case, the levy upon the 2069 account
would have been wrongful under section 7426 for lack of cause at
the time of the levy to believe that the 2069 account held funds of
the taxpayer as a nominee.
While not dispositive, the IRS’s failure to follow its own
internal operating procedures is a further indication that it did
not have cause to believe that RX was the alter ego of Oxford at
the time the levy was imposed.3 IRS internal operating procedures
3
As a general rule, the internal operating procedures of the IRS
as described in the Internal Revenue Manual do not create rights in
the taxpayer and thus a violation of these procedures does not
establish a cause of action for the taxpayer. See United States v.
Caceres, 440 U.S. 741, 752 (1973); Cargill, Inc. v. United States,
173 F.3d 323, 340 n.43 (5th Cir. 1999). A corollary to this broad
rule has developed however -- that internal operating procedures
intended to protect a citizen’s constitutional rights can establish
a cause of action. See, e.g., United States v. McKee, 192 F.3d
535, 544 (6th Cir. 1999) (“If the IRS’s internal operating
procedures afford anything less than faithful adherence to
constitutional guarantees, then public confidence in the IRS will
necessarily be undermined”); United States v. Horne, 714 F.2d 206,
207 (1st Cir. 1983) (per curiam). Since we are remanding to apply
the proper shifting burden of proof, we need not address whether
the failure to follow section 5.12.1.33 of the Internal Revenue
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provide:
Do not file a NFTL [Notice of Federal Tax Lien] in the
name of an alter ego without legal review, advice and
written direction from District Counsel as to:
the need for a supplemental assessment,
a new notice and demand, and
the language to be incorporated in the NFTL and levy.
INTERNAL REVENUE MANUAL § 5.12.1.33. Although Honeycutt did consult a
more experienced revenue agent prior to imposing the levy, it is
undisputed that he did not receive the written approval of District
Counsel prior to filing the notice of levy. Rather, Honeycutt
testified that he did not distinguish between the terms “nominee
levy” or “alter ego levy” and did not request advice from district
counsel as to which to pursue, although the manual specifically
recommends pursuing other options prior to imposing an alter ego
levy. This failure to pursue the internal policies further
indicates that the IRS did not have cause to impose an alter ego
levy at the time the levy was imposed.
However, because the magistrate judge did not apply the proper
burden-shifting framework, it is not possible to determine based on
the record as developed whether and to what extent the IRS had
developed cause to believe alter ego status at the time the levy
was imposed. Further, it is not possible to determine if the IRS
alternatively developed substantial evidence of nominee liability
at the time of the evidentiary hearing sufficient to prevent a
Manual renders the levy per se wrongful for purposes of section
7426.
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finding of a wrongful levy under Texas Commerce. Accordingly, we
vacate the magistrate judge’s judgment and remand the case for
further proceedings to apply the proper burden shifting framework
to determine (1) if the IRS proved a nexus by substantial evidence
and (2) if Oxford can then prove that the levy was otherwise
wrongful, e.g., that the levy was imposed without a sufficient
evidentiary basis to do so. See Smithwick v. Green Tree Financial
Services Corp., 121 F.3d 211, 215 (5th Cir. 1997) (remanding to
apply the proper presumption); Cooper v. Brookshire, 70 F.3d 377,
378 (5th Cir. 1995) (remanding to magistrate judge to reinstate
improperly dismissed cause of action); cf. United States v.
Stricklin, 591 F.2d 1112, 1124 (5th Cir. 1979) (remanding to apply
proper burden-shifting framework). In so doing, we state no
opinion as to the magistrate judge’s factual finding of alter ego
status at the time of evidentiary hearing.
III.
In the present case, after Oxford established standing, the
magistrate judge erred in failing to place the burden of proof on
the IRS to demonstrate a nexus between Oxford’s property and RX by
substantial evidence and then shift the burden back to Oxford to
prove the levy was nonetheless wrongful, and thus failed to make
the requisite factual determinations necessary to properly
determine wrongful levy status. Accordingly, we VACATE the
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judgment of the magistrate judge and REMAND the case for further
proceedings consistent with this opinion.
VACATED AND REMANDED.
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DENNIS, Circuit Judge, concurring:
I agree that the magistrate judge erred in failing to apply
the proper burden-shifting analysis and that the case should be
remanded so that Oxford may have the opportunity to demonstrate
that the levy was wrongful. I write separately because this appeal
presents an issue that courts have had few opportunities to
address, viz., the evidentiary criterion necessary to sustain the
IRS’s initial imposition of a levy upon property. It is
indisputable that a levy is a seizure of property. See 26 U.S.C.
§ 6331(b) (“the term ‘levy’ as used in this title includes the
power of distraint and seizure by any means”). The Supreme Court
has clearly held that seizures of property, whether made pursuant
to a search or not, are subject to the limitations of the Fourth
Amendment regardless of any additional protections that may be
afforded by the Fifth Amendment. See Soldal v. Cook County, 506
U.S. 56, 63 (1992) (“our cases unmistakably hold that the [Fourth]
Amendment protects property as well as privacy.”); United States v.
Paige, 136 F.3d 1012, 1016 (5th Cir. 1998). Thus, it appears that
as a threshold matter the Fourth Amendment requires that the IRS
have probable cause to believe that the property to be levied upon
is actually owned by the delinquent taxpayer.
The Supreme Court has never directly addressed the issue of
whether the existence of such probable cause is necessary before
the IRS may levy upon property. However, the Court has held that
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a judicial warrant is mandated under the Fourth Amendment before
the IRS may enter a taxpayer’s home to seize assets pursuant to a
properly issued levy. See G.M. Leasing Corp. v. United States, 429
U.S. 338 (1977). Although the Court did not directly address the
issue, in G.M. Leasing it assumed that a showing of probable cause
to believe the targeted property belonged to the taxpayer was
necessary before a levy thereon may properly issue, stating:
We therefore approach this case accepting the Court of
Appeals’ determinations that the assessments and levies
were valid and that petitioner was Norman’s alter ego.
Those facts necessarily establish probable cause to
believe that assets held by petitioner were properly
subject to seizure in satisfaction of the assessments.
Petitioner does not claim that there was no probable
cause to believe that the automobiles were held by
petitioner, nor does it claim that there was no probable
cause to believe that its offices would contain other
seizable goods. There being probable cause for the search
and seizures, the only questions before the Court are
whether warrants were required to make “reasonable”
either the seizures of the cars or the entry into and
seizure of goods in the cottage.
Id. at 351 (emphasis added).
The circuits that have addressed this issue have consistently
recognized this implicit holding in G.M. Leasing and have held that
the IRS must make a showing of probable cause at the time a levy is
imposed to comply with the Fourth Amendment. See Valley Finance,
629 F.2d 162, 171 (D.C. Cir. 1980); Flores v. United States, 551
F.2d 1169, 1174 (9th Cir. 1977). Specifically, the Ninth Circuit
in Flores held:
We start by observing that just as police need probable
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cause to believe that evidence sought is to be found in
the area to be searched and that such evidence relates to
a crime, so, too, the Internal Revenue Service needs
probable cause at the time assets are initially seized to
connect those assets to a taxpayer with outstanding taxes
due.
Flores, 551 F.2d at 1174. In describing the policy behind such a
requirement, the Ninth Circuit noted:
Were this not the case, the taxes of a California
resident could be collected from a totally unrelated
person in New York, and the New Yorker would be forced to
prove a negative fact about which he has absolutely no
information, i.e., that the Californian has no interest
in his property.
Id. at 1175 (citing Elkins v. United States, 364 U.S. 206, 218
(1960) (“as a practical matter it is never easy to prove a
negative”)). The District of Columbia Circuit has employed similar
reasoning. See Valley Finance, 629 F.2d at 171 n. 19 (“A
government showing of probable cause, familiar in other Fourth
Amendment settings, can rebuff immediate challenges to the
propriety of a levy”).
Although not directly addressing the present issue, this
circuit, in addition to many others, has cited Flores and Valley
Finance with approval. See, e.g., LiButti v. United States, 107
F.3d 110, 118 (2nd Cir. 1997); Texas Commerce Bank-Fort Worth v.
United States, 896 F.2d 152, 156 (5th Cir. 1990); Security
Counselors, Inc. v. United States, 860 F.2d 867, 869 (8th Cir.
1988); Morris v. United States, 813 F.2d 343, 345 (11th Cir. 1987);
Arth v. United States, 735 F.2d 1190, 1193 (9th Cir. 1984); United
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States v. Bailey, 707 F.2d 19, 21 (1st Cir. 1983). The other courts
that have addressed this issue directly are markedly consistent in
holding that the Fourth Amendment applies to all levies of property
by the government, including tax levies. See, e.g., Andrews v.
Crump, 984 F. Supp. 393 (W.D.N.C. 1996); Colello v. United States
Securities and Exchange Commission, 908 F. Supp. 738 (C.D.Cal.
1995); Matter of Stubblefield, 810 F. Supp. 277 (E.D.Ca. 1992); TMG
II v. United States, 778 F. Supp. 37 (D.D.C. 1991) (Oberdorfer,
J.); Peters v. Sjoholm, 631 P.2d 937 (Wa. 1981).4
Such a finding is further supported by the background and
history of the Fourth Amendment itself. The Supreme Court has
noted that “one of the primary evils intended to be eliminated by
the Fourth Amendment was the massive intrusion on privacy
undertaken in the collection of taxes pursuant to general warrants
and writs of assistance.” G.M. Leasing, 429 U.S. at 355.
Commentators have generally agreed, finding that the intended
purpose of the Fourth Amendment was to prevent abusive enforcement
of the tax laws through the baseless seizure of property. See
4
This circuit has stated in dicta that tax seizures that do not
involve the invasion of one’s premises do not violate the Fourth
Amendment. See Baddour, Inc. v. United States, 802 F.2d 801, 807
(5th Cir. 1986). Such an argument was subsequently rejected by the
Supreme Court in Soldal. Regardless, Baddour was a case brought
under 42 U.S.C. § 1983 and not under section 7426 of the Internal
Revenue Code. Thus, the holding in Baddour is solely that, at the
time, the application of the Fourth Amendment to non-invasive tax
levies was not sufficiently “clearly established” to overcome
qualified immunity for purposes of section 1983.
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generally Erin Suzanne Enright, Comment, Probable Cause for Tax
Seizure Warrants, 55 U.CHI.L.REV. 210, 234 (1988).
Accordingly, I believe that the Fourth Amendment applies to
tax levies and mandates that the IRS develop probable cause to
believe the property being levied upon is in fact the property of
a delinquent taxpayer subject to a lien at the time the levy is
imposed. Thus, because the Fourth Amendment applies to a levy as
a seizure of property, a levy made without probable cause to
believe the property seized belongs to the taxpayer amounts to an
unconstitutional seizure and is thus wrongful for purposes of
section 7426 regardless of any post hoc justification offered by
the IRS. Failure to insist upon such probable cause as a
prerequisite to an IRS levy would flout the principles of fairness
and privacy embodied in the Fourth Amendment and the Supreme Court
decisions in G.M. Leasing and Soldal.5
5
Such a requirement applies to traditional tax enforcement
proceedings, however, and not to emergency “jeopardy assessments”
where if “the Secretary believes that the assessment or collection
of a deficiency . . . will be jeopardized by delay, he shall . . .
immediately assess such deficiency.” 26 U.S.C. § 6861. “A
taxpayer against whom a jeopardy assessment has been made may seek
administrative review of the reasonableness and appropriateness of
the assessment by requesting it within 30 days after the day on
which the taxpayer is furnished a written statement of the
information upon which the IRS relies in making a jeopardy
assessment . . . [f]ollowing administrative review, the taxpayer
may obtain expedited judicial review of the reasonableness of the
IRS’s determination that collection of the taxes would be
jeopardized by delay and of the propriety of the amount assessed.”
Humphreys v. United States, 62 F.3d 667, 670 (5th Cir. 1995) (per
curiam). Such special procedures were implemented by Congress in
response to the Supreme Court’s questioning of the
constitutionality of jeopardy assessments without such prompt post-
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This does not mean that a third person may refuse to comply
with a levy on the ground that it is not based on probable cause.
See United Sand & Gravel Contractors v. United States, 624 F.2d 733
(5th Cir. 1980). A third person has only two possible defenses or
justifications for failure to comply with a levy: (1) that the
third person is not in possession of property of the taxpayer or
(2) that the property is subject to a prior judicial attachment or
execution. See United States v. National Bank of Commerce, 472
U.S. 713, 727 (1985). This is because “levy procedures do not
determine ownership rights, and . . . third parties whose assets
are ‘wrongfully’ seized may apply to the government for the return
of that property.” Texas Commerce, 896 F.2d at 157. Thus, a
wrongful levy action under section 7426 is the exclusive remedy of
a third person whose property has been seized without probable
cause of a nexus between the property and the tax debtor. See
United Sand & Gravel, 624 F.2d at 739.
On remand, I believe that if Oxford can demonstrate that the
IRS levied upon its property without having developed probable
cause at the time the levy was imposed to believe that the property
being levied upon was, in reality, the property of RX, then the
levy was wrongful under section 7426.
seizure hearings. See BORIS I. BITTKER AND LAWRENCE LOKKEN, FEDERAL
TAXATION OF INCOME, ESTATES AND GIFTS ¶ 111.6.3 (3rd ed. 1999) (citing
Commissioner v. Shapiro, 424 U.S. 614 (1976); Laing v. United
States, 423 U.S. 161 (1976)). There is no indication that the IRS
pursued a jeopardy assessment in the present case, however.
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