United States v. Jack Carl Ryals

[PUBLISH]

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 06-12308 MAR 12, 2007
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 03-00090-CV-MMP

UNITED STATES OF AMERICA,

Plaintiff
Counter-Defendant-
Appellee,
versus

JACK CARL RYALS,

Defendant
Counter-Claimant
Appellant.

________________________

Appeal from the United States District Court
for the Northern District of Florida
________________________

(March 12, 2007)

Before ANDERSON and MARCUS, Circuit Judges, and ALTONAGA,* District
Judge.

*
Honorable Cecilia M. Altonaga, United States District Judge for the Southern District of
Florida, sitting by designation.
PER CURIAM:

Jack Carl Ryals (“Mr. Ryals”) appeals the district court’s grant of summary

judgment in favor of the United States of America (the “Government”) on its

complaint, and the court’s dismissal of certain counts, and summary judgment on

other counts, of Mr. Ryals’ counterclaim. The Government filed suit against Mr.

Ryals seeking to reduce certain tax assessments to judgment. Mr. Ryals filed a

ten-count counterclaim for tax refunds.

The lower court granted the Government’s motion for summary judgment,

dismissed counts one through eight of the counterclaim on the basis that it did not

have subject matter jurisdiction to entertain them, and granted summary judgment

for the Government on counts nine and ten (the remaining counts) of the

counterclaim. Mr. Ryals argues that summary judgment was improvidently

granted because the applicable statute of limitations had expired prior to the

Government’s suit. Mr. Ryals also asserts that the lower court erred when it

dismissed the counterclaim, finding (1) that Mr. Ryals did not follow the proper

administrative claim procedure as a prerequisite to his first eight claims, and (2) as

to the final two counts of the counterclaim, that Mr. Ryals had not shown he had

overpaid any tax and was not entitled to exemption from levy. Finding no error in

the lower court’s decision, we AFFIRM.

2
 I. BACKGROUND

Mr. Ryals failed to pay his federal income taxes for the 1977 and 1978 tax

years. In 1989, the United States Tax Court entered a decision1 finding that Mr.

Ryals was liable for deficiencies in income tax and statutory additions for the 1977

and 1978 tax years. In June of 1989, notices of the assessment and demand for

payment were issued to Mr. Ryals. The total amount of deficiencies, statutory

additions and interest assessed was $526,465.

Despite the notices of the assessment and demand for payment, Mr. Ryals

did not pay the federal income tax assessed for 1977 and 1978. By March 31,

2003, he owed the sum of $1,678,065 for these two tax years.

Between the notices of the assessment and March 31, 2003, Mr. Ryals, who

had previously been convicted of a criminal tax offense, submitted two offers in

compromise to the Internal Revenue Service (“IRS”). The first offer in

compromise was presented on August 18, 1997, and related to the 1977 and 1978

tax years. The offer in compromise was presented on a form that provided that the

statute of limitations on an assessment would be suspended during the period that

the offer was pending and for one year thereafter. By letter dated July 17, 1998,

Mr. Ryals appealed an initial rejection of the offer, but on January 7, 2000, he

1
See Jack C. Ryals v. Comm’r, Docket No. 29418-84 (February 28, 1989).

3
faxed and mailed a withdrawal of the offer, requesting that the IRS re-commence

the running of the tax collection statute expiration date. Notwithstanding the

January 7, 2000 communication, the offer was finally rejected on January 25,

2000.

On June 14, 2000, Mr. Ryals submitted a second offer in compromise that

also related to the 1977 and 1978 federal income tax liabilities assessed. He

appealed an initial rejection of that second offer by letter dated July 11, 2001. The

second offer was finally rejected on March 12, 2002.

Each offer in compromise was submitted to the IRS on Form 656.

Subsection (m) of Form 656 contains the following pertinent language: “The offer

is pending starting with the date an authorized IRS official signs this form and

accepts my/our waiver of the statutory period of limitation. The offer remains

pending until an authorized IRS official accepts, rejects, returns or acknowledges

withdrawal of the offer in writing.” (Doc. 33, Exs. A & C) (emphasis added).2

Furthermore, subsection (n) provides that “[t]he waiver and suspension of any

statutory periods of limitation for assessment . . . continue[s] to apply: . . . while

the offer is pending. . . [and] for one additional year. . . .” (Id.). An authorized

2
Form 656 was revised in 2000. The form Mr. Ryals used for his second offer in
compromise did not contain the language shown in italics.

4
IRS official signed each of the forms submitted.

During the offer in compromise process and thereafter, Mr. Ryals

maintained that the revenue officer had improperly failed to allow him a statutory

exemption amount under 26 U.S.C. § 6634(a)(9) because the officer was

erroneously imputing tenants-by-the-entirety income to him. Thus, in May 2000,

Mr. Ryals submitted Forms 1040-X, Amended United States Individual Income

Tax Returns, seeking the refund of amounts he maintained had been improperly

and unlawfully seized by the IRS and applied to his tax deficiencies from 1992 to

1999. Mr. Ryals and his wife had filed joint federal income tax returns for the tax

years 1992 through 1999. While the Forms 1040-X that Mr. Ryals sent in May

2000 appear to have been received by the IRS, they were returned to Mr. Ryals

because they included only Mr. Ryals’ signature and Social Security number, not

his wife’s. The refund claims were returned to Mr. Ryals without processing by

the IRS.

Mr. Ryals and his wife also filed joint federal income tax returns for the

2000 and 2001 tax years. In September 2002, Mr. Ryals filed a Form 1040-X

(also missing his wife’s signature) for the years 2000 and 2001, seeking a return of

what he again maintained were illegally seized earnings. On April 28, 2003, he

filed a second set of Forms 1040-X and included his wife’s signature. On May 28,

5
2003, the IRS disallowed the claims in full.

The Government filed suit on May 20, 2003, seeking payment of the federal

income taxes assessed by the Tax Court for the years 1977 and 1978. The sum

requested was $1,678,065.01, plus fees and interest from March 31, 2003.

Among the defenses raised by Mr. Ryals was a statute of limitations defense. He

also presented a ten-count counterclaim seeking refund of taxes he maintained had

been erroneously and illegally collected for the years 1992 to 2001. The total

demand in the counterclaim was $166,250.00, plus interest and costs. Each count

corresponded to a different tax year.

The district court entered judgment on December 8, 2005. This appeal was

timely filed.

II. STANDARD OF REVIEW

The parties agree that each of the issues presented involves a question of

law subject to de novo review. See Broughton v. Fla. Int’l Underwriters, Inc., 139

F.3d 861, 863 (11th Cir. 1998). The construction of federal statutes, including

statutes of limitations, is a question of law. See United States v. Gibson, 434 F.3d

1234 (11th Cir. 2006). Furthermore, an order granting summary judgment is

reviewed de novo. See Dixon v. Burke County, 303 F.3d 1271, 1274 (11th Cir.

2002).

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 III. ANALYSIS

A. Tolling of the Statute of Limitations by the Offers in Compromise

Mr. Ryals first asserts that the lower court erred in concluding that the

complaint for collection after assessments was timely filed. The lower court’s

decision, and this Court’s de novo review of that issue, depends on a detailed

review of the facts presented as applied to several revisions in the applicable

statutes. Before embarking on that review, it bears noting that statutes of

limitations that bar the collection of taxes otherwise due and unpaid, as they are

here, are strictly construed in favor of the Government. See Atl. Land &

Improvement Co. v. United States, 790 F.2d 853, 858 (11th Cir. 1986); see also

Lucia v. United States, 474 F.2d 565, 570 (5th Cir. 1973) (“[A] period of

limitations runs against the collection of taxes only because the Government,

through Congressional action, has consented to such a defense. Absent

Government consent, no limitations defense exists.”) (citations omitted).

When a taxpayer fails to pay assessed taxes after notice and demand, the

Government may bring a suit to reduce the assessment to judgment. See 26 U.S.C.

§§ 7401-7403. Under 26 U.S.C. § 6502(a)(1),3 the Government has ten years from

3
At the time Mr. Ryals submitted his first offer in compromise on August 18, 1997,
section 6502(a)(2) provided in part:

7
the date of an assessment to collect a federal tax liability by bringing suit.

Offers in compromise operate as one way to suspend the running of the ten-

year statute of limitations. See 26 U.S.C. §§ 6331(k) and (i)(5). Offers in

compromise contain a waiver of the limitations period in order to enable the

Government to consider the offer without the prejudice resulting from a running of

the limitations period against collection of the tax. See United States v. Ressler,

576 F.2d 650, 652 (5th Cir. 1978) (citations omitted). “The running of the

statutory period is suspended until the offer of compromise is terminated,

withdrawn, or formally rejected.” Id. (citation omitted). Furthermore, one

additional year is added to the suspension period in accordance with the parties’

agreement as contained in the Forms 656 used by the taxpayer and the IRS here.

An attempted withdrawal of an offer in compromise by the taxpayer, as Mr.

Ryals attempted to effect with his 1997 offer, becomes effective only once an

(a) Length of period. – Where the assessment of any tax imposed by this title
has been made within the period of limitation properly applicable thereto, such tax
may be collected by levy or by a proceeding in court, but only if the levy is made or
the proceeding begun –

* * *

(2) prior to the expiration of any period for collection agreed upon in
writing by the Secretary and the taxpayer before the expiration of such 10-year period
(or, if there is a release of levy under section 6343 after such 10-year period, then
before such release).

8
authorized IRS official “returns or acknowledges withdrawal of the offer in

writing,” as is stated in the Form 656 submitted. See also United States v.

Donovan, 348 F.3d 509, 512 (6th Cir. 2003) (offer ceases to be pending for

purposes of statute of limitations when IRS officer, in writing, “accepts, rejects or

acknowledges withdrawal of the offer”). While Mr. Ryals certainly communicated

his withdrawal of the first offer in compromise, no written acknowledgment of the

withdrawal by an IRS official was ever made.

Mr. Ryals’ tax liabilities were assessed on June 22, 1989, and this event

triggered the ten-year statute of limitations. In the absence of any offers in

compromise or statutory provisions altering the ten-year period, the statute of

limitations on collection would have expired on June 22, 1999. A little less than

two years before the expiration of the limitations period, on August 19, 1997, the

first offer in compromise was submitted. This offer had the effect of suspending

the ten-year statute of limitations for the time it was pending, plus one additional

year. The Appeals Office rejected the first offer on January 25, 2000. Thus, the

limitations period was extended by three years, five months and seven days, from

the original deadline of June 22, 1999 to November 29, 2002.

However, just over one month was added to this extension by Congress’

passage, during the pendency of the first offer, of the Internal Revenue Service

9
Restructuring and Reform Act of 1998 (“Reform Act”), Pub. L. No. 105-206, §

3461(c)(2),112 Stat. 685, 764 (1998). The Reform Act took effect on January 1,

2000, and applied to requests to extend the period of limitations made after

December 31, 1999. See Reform Act at § 3461(c)(2), 112 Stat. 685, 764. As to

requests to extend the limitations period made on or before December 31, 1999,

however, the Reform Act amended section 6502(a)(2) and provided that where a

taxpayer agreed to extend such period beyond the ten-year period contained in

section 6502(a) of the Internal Revenue Code of 1986, the extension would expire

on the latest of: the last day of the ten-year period; December 31, 2002; or the 90th

day after the end of the period of an extension in the case of an extension in

connection with an installment agreement. See Reform Act at § 3461(c)(2), 112

Stat. 685, 764. Because here the first offer was presented before December 31,

1999, and the last day of the ten-year period was June 22, 1999, the effect of the

Reform Act was to extend the November 29, 2002 deadline previously computed

to December 31, 2002, the “latest” of the three possible dates set forth in the

Reform Act, section 3461(c)(2). See, e.g., United States v. Elton, 429 F. Supp. 2d

561, 574-75 (E.D.N.Y. 2006) (applying Reform Act).

Analysis of the relevant events and relevant statutes for tolling purposes

does not end here, however. On June 14, 2000, also after the effect of the Reform

10
Act, Mr. Ryals submitted his second offer in compromise. This offer remained

pending until March 12, 2002, when it was rejected. Several additional statutory

provisions govern the effect this second offer had on the expiration of the statute

of limitations.

Another change in the Reform Act, which operates to suspend the statute of

limitations on collection while an offer in compromise (made on or after

December 31, 1999) is pending, is the addition of section 6331(k). Under 26

U.S.C. § 6331(k), which was added by Pub. L. No. 105-206, § 3462(b), 112 Stat.

685, 765-66, the IRS is prohibited from making a levy on property or the rights to

property of a person with respect to an unpaid tax while an offer in compromise by

such person is pending, or if the offer is rejected, during the 30 days thereafter.4

An offer in compromise is pending beginning on the date the Secretary accepts the

offer for processing. Id. Pursuant to section 6331(i)(5), the period of limitations

is suspended while the IRS is prohibited from making a levy, and section

6331(k)(3) provides that rules similar to section 6331(i)(5) apply. Because Mr.

Ryals’ second offer was accepted for processing on June 14, 2000, section 6331(k)

applied to suspend the statute of limitations from June 14, 2000 to April 12, 2002.

4
If an appeal of the rejection is filed within 30 days, the IRS cannot levy property while
the appeal is pending. 26 U.S.C. § 6331(k)(1)(B).

11
 Later statutory enactments also apply to the determination of how this

second offer in compromise served to extend the statute of limitations. These are

The Community Renewal Tax Relief Act of 2000 (“Renewal Act”), Pub. L. No.

106-554, 114 Stat. 2763 (2000); and the Job Creation and Worker Assistance Act

of 2002 (“Worker Assistance Act”), Pub. L. No. 107-147, § 416(e)(1), 116 Stat.

21, 55 (2002). Effective December 21, 2000, the Renewal Act eliminated the

statutory suspension of the limitations period.5 Therefore, the second offer

suspended the limitations period only from June 14, 2000 through December 20,

2000, the effective date of the Renewal Act. The Worker Assistance Act, effective

on March 9, 2002, reinstated the statutory suspension,6 thereby tolling the

limitations period until March 12, 2002, the date the IRS rejected the second offer.

Thus, a total of six months and nine days of suspension, (i.e., from June 14,

2000 to December 20, 2000, plus three days from March 9, 2002 to March 12,

2002), are added to the suspension period derived by operation of the first offer in

compromise. Each of the statutory amendments discussed applies to the second

offer, and section 6502(a)(2) of the Reform Act applies to the first offer, because

5
The Renewal Act eliminated the suspension provision contained in the 1998 Reform
Act by amending section 6331(k)(3) to delete a cross-reference to subsection (5) of section
6331(i), effective December 21, 2000.
6
The Worker Assistance Act reinstated the statutory suspension by restoring the cross-
reference to subsection (5) in section 6331(i), effective March 9, 2002.

12
the Forms 656 that Mr. Ryals executed specifically reference any statutory periods

of limitation, and the statutes at issue were each enacted before expiration of the

limitations period(s) agreed upon. See Foutz v. United States, 72 F.3d 802, 806

(10th Cir. 1995) (“[T]he Form 900 that taxpayer signed . . . expressly referenced

extending the ‘statutory period.’. . . Treating the waiver not as a contract but as an

extension of the statute of limitations, the 1990 amendments were made before the

time for collection had expired.”). Because the first offer served to toll or suspend

the statutory limitations period until December 31, 2002, and adding six months

and nine days to that date extends the period until July 9, 2003, the suit was timely

filed on May 20, 2003.

Mr. Ryals raises two principal arguments in support of his position that the

suit is not timely. The first is that the Reform Act had absolutely no effect on the

original tax collection statute of limitations expiration date, and thus did not

extend the suspension period of the first offer in compromise from November 29,

20027 to December 31, 2002. This argument is premised on Mr. Ryals attempting

to discern congressional intent in first limiting (Reform Act), and then eliminating

(Renewal Act), and then reinstating (Worker Assistance Act), the tolling or

7
Mr. Ryals maintains the date is November 28, 2002 rather than November 29, 2002.
The one-day difference is immaterial.

13
suspension associated with offers in compromise in the various statutes discussed

above. The argument, Mr. Ryals insists, finds support in regulations promulgated

during the relevant time period, and even in the initial position the Government

expressed in its motion for summary judgment.

The second argument is that because the IRS did not suspend its collection

activities while the second offer in compromise was pending, the collection statute

of limitations was not suspended. This argument is premised on the language of

the applicable statute and regulation.

Addressing Mr. Ryals’ first argument, the lower court correctly discerned

the effect of the Reform Act on the first offer in compromise, because it applied

the clear words used in the statute. The Reform Act certainly limited the

Government’s ability to contractually extend the statute of limitations. However,

as to requests to extend the period of limitation made before December 31, 1999,

as this one was, that remained pending on December 31, 1999, a sunset provision

stated that the statute of limitations expires “on the latest of – (A) the last day of

the 10-year period; (B) December 31, 2002; or (C) in the case of an extension in

connection with an installment agreement, the 90th day after the end of the period

of such extension.” See Reform Act, § 3461(c)(2), 112 Stat. 685, 764 (1998)

(emphasis added). This express statutory language applied to the first offer in

14
compromise. Whether or not such a construction is at odds with temporary

regulations issued,8 congressional intent, or the initial position of the Government

as stated in its motion for summary judgment9 is irrelevant because the clear words

of the statute command this result. See United States v. Orozco, 160 F.3d 1309,

1313 (11th Cir. 1998) (where a statute’s language is plain, “the sole function of

the courts is to enforce it according to its terms”) (citations omitted).

Mr. Ryals’ second argument is that the statute of limitations on the IRS’

collection suit should not be considered suspended during the pendency of his

second offer in compromise (from June 14, 2000 to March 12, 2002), because the

IRS continued collection activities during that period of time in violation of the

relevant statute. In 1991, the IRS issued a wage levy10 to Mr. Ryals’ employer,

8
Mr. Ryals cites to Proposed Regulation § 301.6502-1 (March 4, 2005) to support his
argument that December 31, 2002 is not the deadline under the Reform Act, because that would
be contrary to the intent behind the legislative change, as presumably recognized by the IRS with
its proposed regulation. Proposed regulations, however, are merely suggestions for comment and
have no legal effect. See LeCroy Research Sys. Corp. v. Comm’r, 751 F.2d 123, 127 (2d Cir.
1984); Prop. Treas. Reg. § 301.6502-1(g) (section not applicable until the date final regulations
are published in Federal Register).
9
The motion for summary judgment argued that the first offer served to extend the statute
of limitations to November 29, 2002, the period that the offer remained pending plus one year.
In a supplemental brief in support of the motion, and filed pursuant to a court order directing the
parties to address certain questions, the Government argued that literal application of the statute
required the court to find that the statute was extended to December 31, 2002, which is what the
lower court found.
10
Under 26 U.S.C. § 6331(e), “[t]he effect of a levy on salary or wages payable to or received by
a taxpayer shall be continuous from the date such levy is first made until such levy is released under
section 6343.”

15
and bi-weekly payments from his employer have been sent to the IRS since that

time. The wage levy issued by the IRS in 1991 continued in effect throughout the

pendency of Mr. Ryals’ second offer in compromise.

Mr. Ryals’ argument that the statute of limitations should not be considered

suspended during the pendency of his second offer in compromise is based on the

interplay between two provisions of 26 U.S.C. § 6331. The first one, contained in

section 6331(k)(1)(A), provides that: “No levy may be made . . . on the property . .

. of any person with respect to any unpaid tax — during the period that an offer-in-

compromise by such person . . . is pending with the Secretary.” The second one,

contained in section 6331(i)(5),11 provides that: “The period of limitations under

section 6502 shall be suspended for the period during which the Secretary is

prohibited . . . from making a levy.” Relying on these two provisions, Mr. Ryals

argues that, to the extent the IRS continued to levy on his property (his bi-weekly

paychecks) during the pendency of his second offer in compromise, the IRS acted

contrary to section 6331(k)(1)(A) and should not be permitted to benefit by having

the statute of limitations on its collection suit suspended during that period. In

effect, Mr. Ryals asks us to remedy the IRS’ alleged violation of the statute by

11
Section 6331(i)(5) applies by its terms to the prohibition on levies made during the pendency
of certain refund actions. But it also applies, by cross-reference, to the prohibition on levies made during
the pendency of offers in compromise. See 26 U.S.C. § 6331(k)(3)(B).

16
treating the statute of limitations on the collection suit as having run throughout

the pendency of the second offer in compromise.

The Government acknowledges that the IRS is generally prohibited from

making new levies during the pendency of an offer in compromise, but argues that

this prohibition does not affect continuous, one-time levies (like the wage levy

challenged by Mr. Ryals) first made before the offer in compromise became

pending. The Government thus argues that the IRS did not violate section

6331(k)(1)(A) when it left in place the pre-existing levy on Mr. Ryals’ wages and

that, in any event, there is no indication that Congress intended a violation of

section 6331(k)(1)(A) to be remedied by running the statute of limitations on the

IRS’ collection suit. Because the statutory text supports the Government’s

position that the IRS did not violate section 6331(k)(1)(A), we reject Mr. Ryals’

argument to the contrary and have no occasion to decide what remedy is

appropriate where such a violation has occurred.

For purposes of construing section 6331(k)(1)(A)’s general prohibition on

levies made during the pendency of an offer in compromise, Congress has directed

us to apply “[r]ules similar to the rules of . . . paragraph[] (3) . . . of subsection (i).”

26 U.S.C. § 6331(k)(3)(A). The cross-referenced provision— section

6331(i)(3)—in turn contains a “rule” that states: “This subsection [subsection

17
(i)(1), which generally prohibits levies from being made during the pendency of

certain refund proceedings] shall not apply to . . . any levy which was first made

before the date that the applicable proceeding under this subsection commenced.”

26 U.S.C. § 6331(i)(3)(B)(ii). By analogy, then, a rule “similar to” the rule

contained in section 6331(i)(3)(B)(ii) would state: “This subsection [subsection

(k)(1)(A), which generally prohibits levies from being made during the pendency

of an offer-in-compromise] shall not apply to . . . any levy which was first made

before the date that the offer in compromise became pending.” The upshot of the

rule Congress has told us to apply in situations like this is that the IRS is not

prohibited from levying on a taxpayer’s property during the pendency of the

taxpayer’s offer in compromise, so long as the levy was “first made” before the

date on which the offer in compromise became pending. Applying that rule to this

case, we conclude that the IRS did not violate the general prohibition on levy set

forth in section 6331(k)(1)(A). We therefore reject Mr. Ryals’ claim to the

contrary and hold that the statute of limitations was properly suspended during the

pendency of his second offer in compromise.

B. The Refund Suit: The IRS May Levy Tenancy by the Entirety Property

The remaining issue concerns the lower court’s dismissal of counts one

through eight of the counterclaim and grant of summary judgment for the

18
Government as to counts nine and ten of the counterclaim. We need not address

whether the lower court was correct in its determination that it lacked subject

matter jurisdiction over the first eight counts of the counterclaim upon determining

that Mr. Ryals improperly filed the refund claims for the years 1992 through 1999.

See e.g., Gustin v. United States, 876 F.2d 485, 489 (5th Cir. 1989) (“Gustin did

not file a valid informal claim for his third quarter taxes. The district court had no

jurisdiction to consider Gustin’s claim for a refund. . . .”). Assuming Mr. Ryals’

informal claims for the 1992 through 1999 tax years were sufficient, and

considering the tax years of 2000 and 2001 raised in counts nine and ten of the

counterclaim, we address the taxpayer’s argument that the dividend income he and

his wife received as tenants by the entirety was improperly construed as wages,

salary or other income under 26 U.S.C. § 6334(d).

To be entitled to a refund of taxes, a taxpayer must show that the amount he

paid to the IRS “exceed[s] the amount which might have been properly assessed

and demanded.” Lewis v. Reynolds, 284 U.S. 281, 283 (1932). “[T]he established

law [is] that refunds are due only for overpayment of taxes.” Cindy’s Inc. v.

United States, 740 F.2d 851, 854 (11th Cir. 1984) (citing 26 U.S.C. § 6402(a)).

Mr. Ryals does not claim that he paid any taxes in excess of the amount(s)

properly due or that he does not owe the taxes on which the levy was based.

19
Rather, the claim is that the IRS’ levy was illegal because the dividend income Mr.

Ryals and his wife received as tenants by the entirety was improperly construed as

constituting wages, salary or other income under section 6334(d).

A levy is a “summary, non-judicial process, a method of self-help

authorized by statute which provides the Commissioner with a prompt and

convenient method for satisfying delinquent tax claims.” United States v.

Sullivan, 333 F.2d 100, 116 (3d Cir. 1964) (citations omitted). The power to levy

“is designed to enable the government ‘promptly to secure its revenues’ while

competing claims are resolved.” United States v. Ruff, 99 F.3d 1559, 1563 (11th

Cir. 1996) (quoting United States v. Nat’l Bank of Commerce, 472 U.S. 713, 721

(1985)). Section 6334 provides that certain property is exempt from levy, and

subsection 6334(d) exempts from levy an amount of the taxpayer’s wages, salary

or other income.

At issue for the tax years covered by the counterclaim are annual

distributions of dividends Mr. Ryals received. Where a taxpayer has multiple

sources of wages, salary or other income, the IRS may elect to levy on one or more

of those sources while leaving other sources free from levy. Treas. Reg. §

301.6334-2(c)(1). Where the wages, salary or other income left free from levy

equal or exceed the amount that qualifies for exemption from levy, the IRS “may

20
treat no amount of the taxpayer’s wages, salary, or other income” on which it

elects to levy as exempt. Id. Mr. Ryals maintains that the dividend income he and

his wife received during the years in question should be disregarded in

determining whether or not he had “other income.” He insists that because the

dividend income was received as tenants by the entirety property, it does not

qualify as “other income” under the regulation.

Admittedly, Florida law recognizes that property held by husband and wife

as tenants by the entirety is not subject to execution to satisfy the debts of one

spouse. See Winters v. Parks, 91 So.2d 649,651 (Fla. 1956). However, “the IRS’s

federal statutory powers to tax and attach liens to property trump[s] any state

property rights afforded to a taxpayer who holds property by the entireties with her

spouse.” In re Sinnreich, 391 F.3d 1295, 1297-98 (11th Cir. 2004) (discussing and

limiting United States v. Craft, 535 U.S. 274 (2002), to the “unique powers

granted to the IRS under federal law . . . to divide the property rights of tenancy by

the entireties property”). Because Mr. Ryals had income from sources other than

the source levied upon, and the income from those sources exceeded the statutory

exemption amount, he was not entitled to any exemption from levy for any amount

of his wages.

IV. CONCLUSION

21
 Finding no error in the lower court’s grant of summary judgment in favor of the

Government on the suit seeking to reduce tax assessment to judgment, or dismissal

and summary judgment on the counterclaim for tax refunds, we accordingly

AFFIRM.

22