Annotations- Third-Party Interest Page2

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U.S.C.A. Title 6, Section 15, under which these bonds were deposited in lieu of bail contains these provisions:--

Nothing contained therein shall effect the authority of the Courts over the securities where such bonds are taken as security in judicial proceedings or the authority of any administrative officer of the U.S. to receive U.S. Bonds for security in cases authorized by existing laws.

This section would be meaningless if it did not permit the Court to determine the rightful ownership of the bonds where contesting liens or claims are filed with the consent of the Court against the bonds so deposited. This is clear from Bankers Mortgage Company v. McComb, 60 Fed. (2nd) 218 (C.C.A. 10).

Upon the argument much stress was laid upon the claimed irregularity of the lien filed by the Collector of the 3rd collection district against the property of Flegenheimer on the ground that the latter was a resident not of the 3rd but of the 14th collection district. The indictment in this district under which Flegenheimer was tried and acquitted was urged as conclusive that Flegenheimer was a resident of the 14th district and not of the 3rd district of which the defendant Higgins is collector. Such indictment is not conclusive as to the residence of Flegenheimer. Chatangco v. Abaron, 218 U.S. 476.

But the conclusive answer to the claim of insufficiency or invalidity of the lien filed by the Collector of the third district against Flegenheimer because he is claimed to be a resident of the 14th District is found in 26 U.S.C.A. Section 1613. This section provides that any collector may seize or sell any property, real or personal, or any right or interest therein, situated in any other collection district within the state in which such officer resides, notwithstanding the provision of Section 3209 of the revised statutes.

It is clear, therefore, that the collector may file a lien against the property of the defendant Flegenheimer whether he resides in the 3rd or 14th collection districts of the State of New York .

We come now to the chief question in the case, viz., whose was the money used to purchase the bonds.

The $40,000 provided by Weinberg and the $24,000 provided by Schneck may be viewed from three aspects:--

(a) That these moneys were at all times the moneys of Flegenheimer.

(b) That Weinberg and Schneck loaned the money to Flegenheimer through his agent Davis.

(c) That Weinberg and Schneck gave the money to Davis as bailee merely to deposit as bail for Flegenheimer and then to be returned to them.

This last is plaintiff's claim. But in addition plaintiff was permitted over defendant's objections to show by the testimony of Weinberg and Schneck at the last hearing that they were both willing that plaintiff should receive all the bonds including any purchased with their money or in which they might have an interest, making a sort of legal or equitable assignment to plaintiff on the trial.

This is also inconsistent with the contention that legal title to the bonds was in plaintiff and is doubtless intended to cure any defect in plaintiff's legal title to the bonds or as stated by plaintiff's counsel, to meet the court's previous suggestion that Weinberg and Schneck might be made parties.

That this $40,000 obtained from Weinberg and the $24,000 from Schneck was in reality the property of Flegenheimer, may reasonably be inferred from the evidence. Neither could give any satisfactory explanation of the source from which they obtained the money.

Weinberg said he kept it in a tin box in a secret compartment in the floor of his flat. He also had a secret compartment in the flat which he occupied before he moved to his present place of residence and probably at or about the time he produced the money, but he was very hazy as to which apartment he lived in at the time he delivered the money to Davis. He testified that he always carried large sums around with him and had no bank account and no safe deposit box and no place from which he obtained the money except the little tin box in the secret compartment in the floor of his flat.

Schneck said that he took the money from a safe deposit box in both of the denominations of $50.00 and $100.00 each. It will be remembered that Schneck's $24,000.00 was in denominations of $500.00 and $1,000.00 each.

These two men procured this money the same or the next day after the request by Davis, Flegenheimer's attorney and agent. It is a more reasonable inference that they knew or were told where to go and get money belonging to Flegenheimer, left with them or with some one else, than it is to conclude that they actually kept such large sums of money of their own in a tin box concealed in the floor or elsewhere concealed. It is true that Schneck was first sworn as a witness for the defendant collector but on this later hearing he was expressly made a witness for plaintiff and Weinberg was plaintiff's witness. Schneck was in any event in the nature of an adverse party. He was extremely vague as to how, when and where he obtained the money except that he won it on horse races in 1934.

Both were long time friends of Flegenheimer. Schneck admitted that Flegenheimer did him a great favor some years ago.

The record of one and the business and associates of both are not such as to require one to believe that they would let deviation to truth militate too much against their own interests on that of their friends. Neither was supported by any other witness as to the source from which the money was obtained and there were apparently some witnesses available to prove that they had the money where they said they did, had that been the fact.

But be that as it may, and assuming that the $40,000 and $24,000 was their own money, the facts clearly warrant the conclusion that they gave the money to Davis for Flegenheimer to use for Flegenheimer's benefit. In short, a loan to Flegenheimer.

It is undisputed that they delivered the money to Davis, the attorney and agent of Flegenheimer, who had been instructed by the latter to go to them and get the money. Clearly Davis was Flegenheimer's agent. This would be true whether the agency arose from his services as attorney or otherwise. Here the agency was specific and definite.

It is true that both Schneck and Weinberg under cross examination by the plaintiff said they advanced the money to Davis for bail and expected to get it back when the purposes of bail had been completed and Davis rather vaguely said the same thing. Davis thought he gave both of them some receipt so reciting. Neither produced any such receipt, if any ever existed. If any such receipt had been in existence it would have been produced for all parties knew its importance.

Weinberg and Schneck both knew when they testified that the $40,000 and $24,000 was at stake. They knew also that Flegenheimer was no longer living and it may be assumed that they believed that there was probably little or no chance of recovering the money from his estate.

Weinberg said be expected plaintiff's attorney and Davis to get for him the money they delivered to Davis . Both knew, of course, that the Government claimed the money under the tax lien against Flegenheimer. The testimony that the money was delivered to Davis for bail only and to be returned to them was afterthought made to serve their own interests. That they knew Flegenheimer wanted to use it for his bail in no way militates against the view that they loaned the money to Flegenheimer. It was no less a loan because they knew for what purpose he intended to use it.

Moreover, Schneck admitted upon cross-examination that he loaned the money to the Dutchman, meaning Flegenheimer. Clearly if he loaned the money to Flegenheimer he did not deliver it to Davis as bailee for bail purposes only.

The Court is not obliged to accept the testimony of these witnesses in this respect when it is inconsistent with other testimony and reasonable inferences therefrom and is so plainly self serving.

Davis ' statement on the subject is vague and unconvincing and not free from the category of evidence seeking to serve the interest of himself and others.

The conclusion then is that Schneck and Weinberg loaned the money to Flegenheimer through his agent Davis with title passing to Flegenheimer and the money was therefore the property of Flegenheimer.

It was this money then obtained from Weinberg and Schneck, after being used in a circuitous "collateralization" of loans obtained thereunder and a certified check of "Stitch" McCarthy, that was the purchase price of the bonds and was all delivered to Isaac N. Jacobson, who used it, after taking something for his services, and the $25,000 of Joseph Jacobson, for purchase of these bonds.

As heretofore stated, the device of the plaintiff Joseph Jacobson in giving his note in the sum of $78,003.21 to Isaac N. Jacobson for the loan of the money which secured the bonds is valueless as a device to transfer title to the bonds. It follows, therefore, that all the bonds were purchased with the Flegenheimer money except so much of the purchase price as came from the plaintiff.

When we come to the matter of the contribution of Joseph Jacobson to the purchase of the bonds, it is reasonably clear that it was his money drawn from savings banks. At least that is the oral testimony and while the books were not presented and he was not sworn as a witness by either party, the burden of proof is that it was his money. He never knew Flegenheimer, so far as the evidence discloses and never had any transactions with him nor with his agent, J. Richard Davis. He loaned the money at the request of his uncle, the attorney Isaac N. Jacobson, to buy the bonds for the purpose of depositing them as bail.

There seems no reason to believe that so far as this $25,000 is concerned, that it was ever the property of Flegenheimer. Jacobson loaned the money to his nephew, Isaac N. Jacobson. True, the latter was also an attorney for Flegenheimer, but it was well known and understood at the time that the loan was for the purchase of liberty bonds to be deposited as bail for Flegenheimer in the name of the plaintiff. There can be no doubt that plaintiff Joseph Jacobson relied upon his nephew, Isaac N. Jacobson, the attorney, to use the money for the purchase of bonds and knew that the bonds purchased therewith were to be deposited by him in his name and that he would secure their return when the purposes of bail had been satisfied. It would be unreasonable under the evidence in this case to conclude that he ever intended to loan money to Flegenheimer or to accept the latter's responsibility. True, he took the chance that Flegenheimer might not appear to answer the indictment but that is vastly different from making any loan to Flegenheimer. That is the element of risk in all bail.

Plaintiff who advanced only $25,000 should have only bonds to that amount which have matured or been called and if that is not sufficient he should have out of the proceeds of the remainder, only so much as will bring him a total of $25,000.

The bonds subject to the last stated condition are awarded to the defendant collector under his lien to be enforced as the statute provides.

Decree may be entered in accordance herewith to be settled on notice if not agreed upon as to form.

 

 

 

[91-1 USTC ¶50,276] Joseph Carl Dickerson and wife, Mary Elizabeth Dickerson, Plaintiffs v. United States of America, Defendants

U.S. District Court, East. Dist. Tenn., Winchester Div., Civ. 4-90-001, 5/20/91

[Code Secs. 6103 , 6303 , 6331 , 6335 , and 7426 ]

Wrongful levy: Wages: Proper party: Assessment: Sale of seized property: Disclosure of return information.--A suit by individual taxpayers alleging a wrongful levy on their wages and illegal disclosures of their return information to the employer subject to the levy was dismissed. Taxpayers have no standing to bring a wrongful levy action, as that remedy is reserved to third parties, but they may challenge the procedural regularity of a tax lien. Since the government properly made a formal assessment of tax and mailed the notice to the taxpayers, however, a valid tax lien was created. That notice was properly sent and received was evidenced by letters the taxpayers sent to the IRS objecting to the notice. The taxpayers' objection to the sale of their property was improper since levied wages are not sold. Finally, the IRS did not make improper disclosure of return information to the taxpayers' employer. Regulations allow disclosure of information necessary for collection, and no disclosures were made other than those necessary to effectuate levies, liens and possible sales of assets.
MEMORANDUM OPINION

JARVIS, District Judge:

This is an action by two pro se tax protesters, Joseph and Mary Dickerson, in which they contend that the IRS wrongfully levied on their wages from The Carrier Corporation and made unauthorized and illegal disclosures of their return and/or return information on September 5 and 18, 1989. They also seek to quiet title to various real and personal property subject to the liens of the IRS. Although many of the voluminous pleadings plaintiffs have filed are confusing and difficult to understand, it does not appear that plaintiffs challenge the underlying tax liabilities. Rather, they challenge the statutory notice procedures which they contend have not been carried out. Currently pending is the defendant's motion for summary judgment. For the reasons that follow, the motion is granted.

Plaintiffs Joseph and Mary Dickerson failed to submit income tax returns for the 1983, 1984 and 1985 tax years. Therefore, the IRS determined their tax liabilities for them and issued notices of deficiency to them. As reflected by IRS records, the notices were sent to Mr. Dickerson on September 14, 1987 for 1983, November 2, 1987 for 1984, and October 17, 1988 for 1985. Notices were sent to Mrs. Dickerson on June 8, 1987 for 1984, and August 8, 1988 for 1985.

The Dickerson[s] concededly failed to file petitions in the Tax Court and accordingly deficiencies were assessed for their tax liabilities for the delinquent years. On July 27, 1989 , final notices of intention to levy were sent by certified mail to the Dickersons. These notices notified the Dickersons of, among other things, the following actions which the IRS might take should the taxpayers fail to pay the amount due within thirty days:

If you do not comply with this notice, we may take enforcement action without any further notice to you. We may file a notice of Federal tax lien which is public notice to your creditors that a tax lien exists against your property. We may serve a notice of levy on your employer for salary or wages you are due, and may levy on any bank accounts, receivables, commissions, or other kinds of income you have. We may also seize your property or rights to property, such as automobiles, and sell it to satisfy your tax liability.

That both taxpayers received these final notices of intention to levy is evidenced by the IRS's receipt of acknowledging letters dated July 31, 1989 in which the Dickersons claimed they were not "persons" within the meaning of 26 U.S.C. §6331(d) , the statutory provision requiring notice to a taxpayer before levy.

On September 5, 1989 , notices of levy were issued to the plaintiffs' employer, The Carrier Corporation, to seize non-exempt wages of plaintiffs. Notices of federal tax lien were filed in the Registrar's Office for Coffee County , Tennessee on September 18, 1989 .

Plaintiffs first allege that the United States wrongfully levied on their property because they did not follow proper collection procedures outlined in the Code. Under 26 U.S.C. §7426(a) , only a third party may bring an action for wrongful levy against the United States :

. . . If a levy has been made on property or property has been sold pursuant to a levy, any person (other than the person against whom is assessed the tax out of which such levy arose) who claims an interest in or lien on such property and that such property was wrongfully levied upon may bring a civil action against the United States in a district court of the United States . . .

Thus, plaintiffs have no standing to bring a wrongful levy action.

Under 28 U.S.C. §2410, a taxpayer may challenge the procedural regularity of a United States tax lien, but not the validity of the underlying tax liability. Pollack v. U.S. [87-2 USTC ¶9463 ], 819 F.2d 144 (6th Cir. 1987). In this case, the IRS carried out all of the statutory requirements for creating valid tax liens. Pursuant to 26 U.S.C. §6203 , the IRS made a formal assessment of the tax due by the Dickersons. Pursuant to the requirements of 26 U.S.C. §6303(a) , the IRS mailed notice of the assessment and demand for payment to the Dickersons at their last known address. Thus, the Government complied with the prerequisites for the creation of a valid tax lien and is entitled to summary judgment on any claim by plaintiffs under 28 U.S.C. §2410.

Plaintiffs also complain that the IRS did not give plaintiffs proper notice pursuant to 26 U.S.C. §6331(d) . That section requires:

(d) Requirement of notice before levy.--

(1) In general. Levy may be made under subsection (a) upon the salary or wages or other property of any person with respect to any unpaid tax only after the Secretary has notified such person in writing of his intention to make such levy.

(2) Ten-day requirement. The notice required under paragraph (1) shall be--

(A) given in person

(B) left at the dwelling or usual place of business of such person, or

(C) sent by certified or registered mail to such person's last known address,

no less than 10 days before the day of the levy.

26 U.S.C. §6331(d) . On July 27, 1989 , the required final notices, including notice of intention to levy, were sent by the IRS to the Dickersons. That the Dickersons received the notices is undeniable by virtue of their acknowledging letters of July 31, 1989 .

26 U.S.C. §6335 deals with the sale of seized property and provides for notice to the property owner of the seizure of his property as soon as practicable after the seizure. Although the IRS has apparently established liens on plaintiffs' real and personal property, plaintiffs do not allege in their complaint that any of this property has been seized other than plaintiffs' wages. Those wages are, of course, not amenable to sale. There are no facts upon which plaintiffs can base a claimed violation of 26 U.S.C. §6335 .

Plaintiffs' complaint also alleges that the IRS has made unauthorized disclosures of plaintiffs' return and/or return information to third persons. Plaintiffs identify these disclosures as occurring on September 5, 1989 and September 18, 1989 and "other times unknown to the plaintiffs." Apparently plaintiffs refer to the Notices of Levy filed on September 5, 1989 with plaintiffs' employer and the Notices of Federal Tax Liens recorded on September 18, 1989 at the Register of Deeds Office.

26 U.S.C. §6103(k)(6) allows the Secretary to prescribe the circumstances under which certain disclosures can be made. The regulations promulgated by the Secretary allow the IRS to disclose return information

(6) To establish or verify the financial status or condition and location of the taxpayer against whom collection activity is or may be directed, to locate assets in which the taxpayer has an interest, to ascertain the amount of any liability described in subparagraph (3) of this paragraph to be collected, or otherwise to apply the provisions of the Code relating to establishment of liens against such assets or levy on or seizure or sale of the assets to satisfy any such liability . . .

Treas. Reg. §301.6103(k)(6)-1(b) . Plaintiffs have not alleged any facts which would support a conclusion that the IRS made any disclosures other than those necessary to effectuate levies and liens and the possible sale of assets. Accordingly, the defendant is entitled to summary judgment on plaintiffs' claim of unauthorized disclosures.

In light of the foregoing, defendant's motion for summary judgment is granted and this action is dismissed. Plaintiffs' motion to strike defendant's exhibits [Court File #57] is not well taken and is denied. Any other pending motions are denied as moot.

Order accordingly.

 

 

 

[92-2 USTC ¶50,544] Cristofora Berlanga, Plaintiff v. United States of America , Internal Revenue Service, Defendant

U.S. District Court, East. Dist. Mich. , So. Div.-Flint, CIV. 91-CV-40385-FL, 8/19/92

[Code Secs. 6335 , 6532 , 7421 and 7426 ]

Summary judgment: Suit for wrongful levy: Statute of limitations: Notice and service of levy.--An issue of fact existed regarding the validity of the service of levy and the notice of seizure. The court could not make a determination on the IRS summary judgment motion because the validity of the levy and of the notice of seizure affected the statute of limitations issue of whether the plaintiff's suit for wrongful levy was timely. The parties were given ten days to file supplemental briefs concerning the validity of such service and notice.

MEMORANDUM OPINION AND ORDER

NEWBLATT, District Judge:

Before the Court is the defendant's Motion for Summary Judgment, the plaintiff's response, the plaintiff's supplemental memorandum in support of her response, and the defendant's reply. For the reasons which follow, disposition of the motion is WITHHELD pending the filing and review of supplemental briefs in accordance with this opinion. Plaintiff's counsel's motion to withdraw is GRANTED.

I.

The defendant argues that this Court lacks jurisdiction to hear this case because the plaintiff's claim is barred by the statute of limitations. Subchapter D of Chapter 64 of the Internal Revenue Code, 26 U.S.C. §6301 et seq., provides a procedure by which the government can seize and sell the property of delinquent taxpayers. For the seizure and sale to be valid, the government must serve notice of the seizure of property on the owner of the property. 26 U.S.C. §6335(a) . Subchapter B of Chapter 76 of the Code, 26 U.S.C. §7421 et seq., governs proceedings by third parties against the government. §7426(a) provides a cause of action against the government to any person who claims an interest in property that is subject to a tax lien.

The government believes that Cristofora Berlanga holds the subject properties as nominee for Santos Berlanga, her son (hereafter Santos ) and that the property is therefore subject to levy for Santos ' tax delinquencies. The IRS served a levy and notice of seizure on Maria Berlanga, the plaintiff's daughter in law, on November 30, 1989 . The property was sold on April 12, 1990 . The plaintiff brings this suit pursuant to §7426(a) alleging that the levy placed upon the property was wrongful because she, and not the delinquent taxpayer, is the owner of the seized property.

Subchapter D of Chapter 66 of the Code provides periods of limitations in judicial proceedings. §6532(c)(1) provides a period of nine months from the date of the levy within which a person protesting the seizure of the property may file suit against the IRS. This nine-month period is extended for a year if a request for return of the property is made within the original nine-month period. The one year extended limitations period is marked from the date of filing of the request for return of the property. §6532(c)(2) .

On August 27, 1990 , the plaintiff sent a request for return of property to the IRS. The request was received on September 6, 1990 . The present law suit was filed on September 4, 1991 , more than one year after the date the request was sent, but less than one year from its receipt.

II.

The plaintiff focuses first upon the validity of the service of the levy and the notice of seizure on November 30, 1989 . She seems to be arguing in her brief that the person served had to be in possession of the property when served. Since there is a question of fact as to whether the plaintiff was in possession, the plaintiff argues that an issue of fact exists regarding the validity of the service of notice, and the factual issue precludes summary judgment. The plaintiff's attack on the validity of the service is erroneous when it is based on the issue of possession. The validity of the levy and the notice of seizure affects the critical dates in this statute of limitations issue.

§7502(a)(1) of the tax code operates, in certain circumstances, to change the date of filing of the request for return.

(1) Date of delivery.--If any return, claim, statement, or other document required to be filed . . . within a prescribed period or on or before a prescribed date . . . is, after such period or such date, delivered by United States mail to the agency, . . . the date of the United States postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery . . ..

If the request is received before the expiration of the prescribed period, the request is deemed to have been filed on the date of receipt. Only if the date of receipt is after the prescribed period has expired does §7502(a)(1) change the filing date to the date postmarked on the envelope.

The plaintiff argues that her request was received before the expiration of the prescribed nine-month period, so the September 6, 1990 date of receipt of the request marks the beginning of the one-year limitations period, not the postmark date of August 27th. Under this interpretation, the plaintiff would have had until September 6, 1991 to file her complaint, and her September 4th filing would not be barred by the statute of limitations.

The nine-month period is marked from the date of the levy. 26 U.S.C. §6532(c)(1) . The September 6, 1990 receipt of the request could be timely only if service of the levy and notice of seizure was not made nine months before; in other words, before December 6, 1989 . As discussed above, the plaintiff argues that the November 30, 1989 service was invalid since she was not in possession of the subject property when notice was given. She is willing to concede that the levy was made when the property was sold on April 12, 1990 , but she argues that there is an issue of fact whether the levy was made before that date, or before December 6, 1989 . The factual uncertainty of the date of the levy precludes any entry of summary judgment that is based on the statute of limitations.

The plaintiff misreads the statute. It requires service of notice of levy and seizure on the owner of the property. 26 U.S.C. §6335(a) . Service must be made on the person in possession of the property only when personal property is being seized. 26 U.S.C. §6335(a) . The cases cited by the plaintiff in her Supplemental Memorandum are inapplicable to this case. The property at issue in this case is real property. The cited cases consider proper service in cases involving personal property and are, therefore, distinguishable. It is immaterial whether the government has established that the plaintiff was in possession of the seized property at the time.

The Court still is uncertain whether the levy and notice of seizure was valid on November 30, 1989 . 26 U.S.C. §6335(a) requires the levy and notice to be served on the owner of the property. The levy and notice in this case was made upon Maria Berlanga, but I believe the record demonstrates that the plaintiff, Cristofora Berlanga, is the owner of record. Even if seizure of the residence may have been proper because Cristofora merely was a nominee for the true owner and delinquent taxpayer, Santos Berlanga, the statute would seem to require that the notice of seizure, if it is to be valid, be served on the owner of record. The government cites Dieckmann v. United States [77-1 USTC ¶9224 ], 550 F.2d 622 (10th Cir. 1977) to argue that it is not necessary for the government to serve with notice all the individuals with ownership interests in the seized property. Certainly there is language in Dieckmann to support this argument.

The law has always imposed a duty on the owners of property to exercise some reasonable duty to care for it. In ordinary commercial transaction and in speculative ventures, this duty or burden exists. We must assume that Congress in fixing the nine-month period in section 6532 within which an action may be brought assumed that owners of property would exercise reasonable diligence in looking after it. Thus the period within which the action may be brought under section 6532 was designed to provide an opportunity to a person of reasonable diligence (in keeping track of his own property) to discover if someone with whom it had been entrusted no longer had it in his possession. Thus the period was fixed and it will be applied. We must also assume that this was the time fixed to permit the agency to function with some reasonable dispatch. Some balance had to be reached between the rights and duties of the individual, and of the needs of the governmental machinery.

Dieckmann [77-1 USTC ¶9224 ], 550 F.2d at 624. Dieckmann involved investors in a corporation organized to purchase silver. The government's obligation to notify all of the numerous investors with an ownership interest in a corporation is distinguishable from its obligation to give notice to the single owner of record of a residence. I am not comfortable concluding, based on the briefs filed thus far, that the levy and notice of seizure served on Maria Berlanga is valid when Cristofora Berlanga is the owner of record.

The validity of the November 30, 1989 levy and notice of seizure is the critical link in the plaintiff's web of arguments that there is a factual issue as to the appropriate date to start the tolling of the one-year limitations period. Ultimately she argues that the one-year period, marked from the filing of the request for return of property, should be marked from the date the request was received by the IRS, September 6, 1990 . This would make the September 4th filing of the present law suit timely.

Assuming for the moment that the November 30, 1989 service of the levy and notice of seizure upon Maria Berlanga satisfied the requirements of §6532 , the nine-month limitations period began to run on that date, and expired on August 30, 1990 . The request for return was received on September 6, 1990 , and would not have been timely. As a result, §7502(a)(1) would operate to change the date of filing of the request for return of property from the untimely September 6, 1990 date to the timely postmark date of August 27, 1990 , and the one-year limitations period would begin to run on that date. The one-year period in which the plaintiff had to file a complaint to avoid staleness would have expired on August 27th, 1991, and her September 4th filing of the complaint would not be timely.

If, on the other hand, service of the levy and notice of seizure on Maria did not satisfy statutory requirements, there plainly is an issue of fact as to when notice was given. Given the close proximity of the critical dates in this case, only a few days of delay in the proper service of the notice of seizure would make the September 6, 1990 request for return timely when received. §7502(a)(1) would not change the date of filing to the postmark date, and the filing of the complaint on September 4, 1991 would be timely.

Due to the critical nature of the issue, IT IS HEREBY ORDERED that the parties have ten days from the entry of this Order to file supplemental briefs that are limited to arguments regarding the validity of the November 30, 1989 service of the levy and notice of seizure upon Maria, as opposed to Cristofora, Berlanga. Given the narrow issue involved, a strict five-page limit will be enforced on these briefs.

Plaintiff's counsel also filed a motion to withdraw as counsel. A copy of the motion was served upon the plaintiff. The motion is GRANTED.

SO ORDERED.

 

 

[2001-2 USTC ¶50,640] Ralph G. Sachs, Plaintiff v. United States of America, acting through the Internal Revenue Service, and Quick and Reilly, Inc., a New York Corp., Defendants

U.S. District Court, East. Dist. Mich. , So. Div., 00-CV-73070-DT, 8/20/2001

[Code Secs. 6331 and 7433 ]

Suits by taxpayers: Unauthorized collection: Constitutional provisions: Fourth Amendment: Failure to state claim.--An individual's complaint alleging that the IRS violated the United States Code, IRS regulations and his constitutional rights in connection with the collection of his tax through liens and levies was dismissed for failure to state a valid claim. His claims that the IRS violated a revenue ruling and an Internal Revenue Manual provision by not physically seizing his negotiable instruments held by his financial broker, as well as the Fourth Amendment by not obtaining a writ of entry when it "constructively seized" his negotiable instruments were without merit. Because such claims were neither provisions of Title 26 of the U.S. Code nor regulations promulgated under Title 26, they were not relevant to a suit for damages under Code Sec. 7433 .

[Code Sec. 1 ]

Constitutional provisions: Bivens claim.--An individual was not permitted to amend his unauthorized collection complaint so that he could bring a Bivens suit against individual IRS employees. Bivens claims seeking monetary damages for actions arising out of the collection of taxes are not valid.

[Code Sec. 6335 ]

Validity of lien: Expiration of.--IRS levies on negotiable instruments owned by an individual were valid despite the individual's claim that notices of federal tax lien against him had expired before the levies were assessed. Because the individual owned the instruments, a valid lien was not required in order to effectuate the levy.

[Code Sec. 6335 ]

Notices of seizure: Sufficiency of.--A taxpayer's claims that he was not provided with the requisite Notice of Seizure in a collection action and that the notice provided to his financial broker was not sufficiently specific were rejected. Because the broker was the possessor of the securities, the IRS was only obligated to provide notice to the broker. Moreover, the IRS properly specified "various negotiable instruments" and attached a list of property to be seized.
[Code Sec. 6502 ]

Statute of limitations: Collection statute expiration date.--The government timely filed a collection action against a taxpayer within the limitations period. The taxpayer's contention that the collection statute expiration date (CSED) had passed was rejected. The record demonstrated that court proceedings to reduce the tax assessment to judgment began three days prior to the CSED.

[Code Sec. 6332 ]

Compliance with levy: Effect of.--A financial broker did not breach its fiduciary duty when it complied with an IRS levy against a taxpayer's holdings. The broker was legally bound to honor the levy and was not required to make a good faith determination that the property was actually subject to a levy.

ORDER GRANTING UNITED STATES' MOTION TO DISMISS AND GRANTING QUICK AND REILLY'S MOTION TO DISMISS

CLELAND, District Judge:

Pending before the court are two motions for dismissal for failure to state a claim upon which relief can be granted, brought by Defendant United States of America ("the U.S. ") and Defendant Quick and Reilly ("Q & R"), filed on October 19, 2000 and October 11, 2000 , respectively. The motions are in response to a complaint filed by Plaintiff Ralph Sachs on July 7, 2000 , claiming unauthorized collection action against the U.S. and claiming breach of fiduciary duty against Q&R.

I. HISTORY

Internal Revenue Service ("the IRS") Revenue Officer Jacqueline Zogut was assigned to collection from Mr. Sachs of a tax liability resulting from underpayment of taxes in 1978 and 1979. The collection statute expiration date ("CSED") for the tax liability was July 4, 1999 . (Compl. ¶8.) The IRS sent a notice of levy to Q&R on June 1, 1999 . ( Id. at ¶1.) On July 1, 1999 , the IRS initiated court proceedings to have the tax liability reduced to a judgment. The IRS cashed a check from Q&R in the amount of $251,511.09 to satisfy the tax liability on July 13, 1999 . The funds were obtained by levying and then liquidating various negotiable instruments owned by Mr. Sachs and held by Q&R in its capacity as a financial broker. On September 23, 1999 , Mr. Sachs filed a claim for refund from the IRS, which was rejected on February 9, 2000 , thus exhausting his administrative remedies for his claim against the IRS.

II. STANDARD

If a plaintiff fails to state a claim upon which relief can be granted, then a defendant can move for relief under Federal Rule of Civil Procedure 12(b)(6). A Rule 12(b)(6) motion tests whether a claim has been adequately stated in the complaint. ¹ In evaluating a motion to dismiss under Rule 12(b)(6), all well-pleaded factual allegations in the complaint are taken as true and the complaint is construed liberally in favor of the non-moving party. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987); Westlake , 537 F.2d at 858; Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996). A complaint should not be dismissed because it does not state all the elements giving rise to a legal basis of recovery, or because plaintiff misconceived the proper theory or claim, if plaintiff is entitled to relief under any theory. Myers v. United States , 636 F.2d 166, 169 (6th Cir. 1981). However, even though the pleading standard is liberal, bald assertions and conclusions of law will not enable a complaint to survive a Rule 12(b)(6) motion. Leeds , 85 F.3d at 53.

III. ANALYSIS

A. Unauthorized Collection--IRS Claim

Mr. Sachs brings his claim pursuant to 26 U.S.C. §7433(a), which authorizes suits against the U.S. if "in connection with any collection of Federal tax . . . any officer or employee of the [IRS] recklessly or intentionally, or by reason of negligence disregards any provision of this title, or any regulation under this title." He makes essentially six claims: (1) the IRS violated a revenue ruling and Internal Revenue Manual ("IRM") provision by not physically seizing his negotiable instruments, (2) the IRS violated the Fourth Amendment by not obtaining a writ of entry when it "constructively seized" his negotiable instruments, (3) the IRS collected the negotiable instruments without a valid tax lien, (4) the IRS did not follow proper procedure in its summons of a Q&R employee, (5) the IRS did not notify him of the seizure of securities, and (6) the IRS did not collect the liabilities within the allowable time period. The U.S. asserts that Mr. Swift does not present a cognizable basis for relief under §7433.

1. Violation of Revenue Rulings and the IRM

Mr. Sachs points out that Revenue Ruling 75-355, 1975-2 C.B. 478, and IRM §5.11.6.8(3) require physical seizure when negotiable instruments are seized. The U.S., however, claims that since these are neither a provision of Title 26 of the U.S. Code nor a regulation promulgated under Title 26, neither the Revenue Ruling not the IRM are relevant to a suit for damages under §7433.

In Schwarz v. U.S. [2001-1 USTC ¶50,111], 234 F.3d 428, (9th Cir. 2000), the Court of Appeals for the Ninth Circuit addressed the applicability of IRM provisions and the IRS National Policy Statement ("NPS") to §7433 claims. The court wrote that "because the manual and the NPS are not code provisions or regulations, violations of the manual and the NPS cannot support a claim under §7433." Id. at 434. This court is persuaded by the Ninth Circuit's reasoning and by a clear reading of the statute, which states that a successful claim under §7433 only occurs when Title 26, or a regulation promulgated thereunder, is violated. ² Thus, this aspect of Mr. Sachs's claim must fail.

2. Illegal Seizure

Mr. Sachs points to GM Leasing Corp. v. United States [77-1 USTC ¶9140], 429 U.S. 338 (1997), to support his contention that the IRS could not seize his assets without a writ of entry. The IRS, however, never physically seized the assets. Q&R liquidated Mr. Sachs' stocks and gave the IRS a check in satisfaction of his tax liability. Mr. Sachs claims this was a "constructive seizure" because the IRS required Q&R to liquidate his assets.

The Fourth Amendment cannot be part of a §7433 claim, as it is not a part of Title 26, nor a regulation promulgated under Title 26. An action seeking monetary damages for constitutional violations by the government should take the form of a Bivens ³ claim. Given this anticipated determination, Mr. Sachs seeks leave to amend his complaint so he can bring a Bivens suit against individual IRS employees. Mr. Sachs concedes that Bivens actions seeking monetary damages cannot be brought against the U.S. or the IRS. (Resp. to IRS's Mot. at 9.) Granting leave to amend, however, would be pointless because Mr. Sachs cannot bring a Bivens claim seeking monetary damages for actions arising out of the collection of taxes. Fishburn v. Brown [97-2 USTC ¶50,742], 125 F.3d 979, 982-83 (6th Cir. 1997).

3. Lack of a Valid Lien

According to Mr. Sachs, the IRS held four Notices of Federal Tax Lien ("NFTL") against Mr. Sachs, but all four NFTLs had expired before the IRS levied Mr. Sachs' assets that were held by Q&R. (Automated Lien Report, attached as Compl. Ex. A.) He asserts that an NFTL supercedes the statutory lien provided under 26 U.S.C. §6321 ⁴, which is applicable whenever a taxpayer refuses to pay all or part of their taxes. Accordingly, once an NFTL expires, he argues, the statutory lien no longer attaches to the property. Nothing on the NFTL, however, says that it supercedes the statutory lien. (NFTL, attached as Compl. Ex. B.) Moreover, a valid lien is not required for all levies. The Code of Federal Regulations dealing with Title 26 states that "[t]he district director may levy upon any property, or rights to property, whether real or personal, tangible or intangible, belonging to the taxpayer. The district directory may also levy upon all property with respect to which there is a lien. . . . " 26 C.F.R. §301.6331-1 (emphasis added). As the negotiable instruments held by Q&R were owned by Mr. Sachs, a valid lien was not required.

4. Improper Summons

Mr. Sachs claims that the IRS did not follow proper procedure in its summons of Mr. Edwin Mendez, a Q&R employee. He claims that the IRS summons was served by fax and required a response within one day. Pointing to 26 U.S.C. §§7603 ⁵ and 7605(a) ⁶, respectively, Mr. Sachs claims the IRS violated portions of Title 26.

The portions of Title 26 cited by Mr. Sachs are located in Chapter 78, entitled "Discovery of Liability and Enforcement of Title." The summons to Mr. Mendez dealt with a levy and not with the discovery of liability or the enforcement of title. Summonses relating to levies are governed by 26 U.S.C. §6333, located under Chapter 64, Subchapter D, entitled "Collection; Seizure of Property for Collection of Taxes," which states that:

If a levy has been made or is about to be made on any property, or right to property, any person having custody or control of any books or records, containing evidence or statements relating to the property or right to property subject to levy shall, upon demand of the Secretary, exhibit such books or records to the Secretary.

Absent from §6333 is any discussion of the requirements for the processing of a summons intended to effectuate the collection of a levy. Thus, the summons was proper.

5. Lack of Notice of Seizure

Mr. Sachs complains that he was not provided with the requisite Notice of Seizure, mandated by 26 U.S.C. §6335(a), although his attorney was. (Compl. ¶25(v).) He further argues that the Notice of Seizure that was filed was not sufficiently specific, since it only stated that "various negotiable instruments" had been seized. (Resp. to IRS's Mot. at 11-12.)

Although Mr. Sachs claims he was not provided with the Notice of Seizure, attached to Mr. Sachs' complaint was a Notice of Seizure with the addressee listed as "Ralph G Sachs; P.O. Box 10; Troy, MI 48099-0010." Moreover, 26 U.S.C. §6335(a) provides that a Notice of Seizure "shall be given by the Secretary to the owner of the property (or, in the case of personal property, the possessor thereof)." Q&R was the possessor of Mr. Sachs' negotiable instruments (Compl. at ¶12.) As Q&R was the possessor of the securities, the IRS was only required to provide a Notice of Seizure to Q&R.

Mr. Sachs further complains that the Notice of Seizure lacked the requisite specificity. ⁷ (Resp. to IRS's Mot. at 11-12.) The IRS stated that the property seized was "various negotiable instruments," however, which was an account of the property, as required by §6335(a). Moreover, on page two of the Notice of Seizure attached to the Complaint, the IRS lists a description of the property, including the number and type of shares liquidated and then seized. ⁸

6. Statute of Limitations

Mr. Sachs asserts that the levy on the assets held by Q&R was improper because it was not satisfied until after the CSED. The IRS asserts that 26 U.S.C. 6502(a), governing the collection of a levy, allowed it to collect the tax liability after the expiration of the CSED.

The IRS points to the following language of §6502 to support its assertion:

If a timely proceeding in court for the collection of a tax is commenced, the period during which such tax may be collected by levy shall be extended and shall not expire until the liability for the tax (or a judgment against the taxpayer arising from such liability) is satisfied or becomes unenforceable.

26 U.S.C. §6502(a). The IRS brought a proceeding in court on July 1 to reduce the tax assessment to a judgment ⁹, which was prior to the CSED of July 4. Accordingly, the deadline for collecting the tax was extended until the tax liability was satisfied, which occurred on July 13.

Mr. Sachs's only rebuttal to the plain language of this statute is that "a valid levy never occurred on [sic] this case." (Resp. to IRS's Mot. at 12.) He provides no support for this contention. In his complaint and in his response to the IRS's motion, he does discuss the alleged invalidity of the lien, but nowhere else does he make the argument that the levy itself is invalid. Indeed, no evidence on the record supports such a conclusion. Mr. Sachs fails to state how or why the levy was invalid, other than his futile claim, previously discussed, that the levy was improper without a valid lien.

B. Breach of Fiduciary Duty--Q&R Claim

Mr. Sachs's claim against Q&R vaguely avers that because Q&R failed to investigate his assertion that physical seizure was required when levying negotiable instruments, it breached its fiduciary duty to him. (Compl. ¶29.) Q&R responds that it was legally required to comply with an IRS levy.

Mr. Sachs claims that Q&R was not required to liquidate his negotiable instruments and turn them over to the IRS because of Revenue Ruling 75-355, which requires the IRS to satisfy a levy on a negotiable certificate of deposit by having said certificates surrendered to the IRS. Initially, this revenue ruling deals with certificates of deposit and not stocks, as were levied by the IRS in the instant case. Moreover, Q&R is legally bound to honor an IRS levy pursuant to 26 U.S.C. §6332(e), which states that:

Any person in possession of . . . property or rights to property subject to levy and upon which a levy has been made who . . . surrenders such property . . . to the Secretary . . . shall be discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment.

26 U.S.C. §6332(e). Indeed, one who ignores a levy may face stiff sanctions, including liability for the entire amount of the levy, plus costs, taxes and a penalty not greater than 50% of the value of the levy. 26 U.S.C. §6332(d)(1), (2).

Mr. Sachs concedes that there was a levy in place. (Compl. ¶¶11, 13.) He also admits that §6332(a) provides statutory immunity to "certain third parties who surrender property pursuant to an Internal Revenue Service . . . levy." (Resp. to Q&R's Mot. at 2.) He argues, however, that Q&R is not entitled to such immunity because "prior to any allowance of immunity under Section 6332(e) the third party involved must make a 'good faith determination' that the property at issue was actually subject to a levy." ( Id. ) Despite the lack of such a limitation on immunity in the language of §6332(e), Mr. Sachs asserts that 26 C.F.R. §301.6332-1(c)(2) requires a "good faith determination" before there is statutory immunity.

The reliance on 26 C.F.R. §301.6332-1(c)(2) is misguided. That section of the Code of Federal Regulations is entitled "Exception for Certain Incorrectly Surrendered Property" and removes statutory immunity when a levy is enforced against property in which an uninvolved third party has an interest, unless the levied party makes a good faith determination that the delinquent taxpayer also has an interest in the levied property. Clearly, that situation has no bearing on the instant case. There is no need for a good faith determination in this case because this suit is not being brought by a third party to whom the levy did not apply. There is no debate that the levied property belonged to Mr. Sachs, nor is there debate that it was Mr. Sachs who incurred the tax liability.

The Complaint only makes one other vague allegation against Q&R that "[a]t all times . . . Q&R's first loyalty was to IRS [sic], and despite explicit Treasury Regulations clearly on point, only after receiving permission from Zogut did Mr. Davidson [of Q&R] agree that the twenty-one day period would conclude as of July 6." ¹⁰ (Compl. ¶30.) The fact that Q&R waited for permission from the IRS to agree that the levy would expire on July 6 is not a basis for a claim of breach of fiduciary duty.

IV. CONCLUSION

For the foregoing reasons, Mr. Sachs has failed to state a claim upon which relief can be granted. Accordingly,

IT IS ORDERED that the United States ' "Motion to Dismiss" is GRANTED.

IT IS FURTHER ORDERED that Quick and Reilly's "Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6)" is GRANTED.

¹ Federal Rule of Civil Procedure 8 sets forth the pleading requirements for a complaint and requires only a "short and plain statement of the claim." Fed. R. Civ. P. 8(a). Thus, a complaint is sufficient if it gives the defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976). However, the complaint is required to provide a ' "statement of circumstances, occurrences, and events in support of the claim presented.... [T]he complaint must disclose information with sufficient definiteness.' " Veney v. Hogan, 70 F.3d 917, 921-22 (6th Cir. 1995) (citation omitted).

² In addition, Revenue Ruling 75-355 deals with negotiable certificates of deposit, not stock certificates as were levied in this case, making the ruling seemingly inapplicable to Mr. Sachs's case.

³ Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971).

⁴ The statute provides that:

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount ... shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

26 U.S.C. §6321.

⁵ 26 U.S.C. §7603 requires service of a summons by registered or certified mail.

⁶ 26 U.S.C. §7605(a) requires that the IRS allow at least ten days to respond to a summons.

⁷ The Notice of Seizure "shall specify the sum demanded and shall contain, in the case of personal property, an account of the property seized." 26 U.S.C. §6335(a).

⁸ The Notice of Seizure lists the property seized as follows:

 4,950 shares of Lucent Technologies Inc stock

 2,000 shares of Ligand Pharmaceuticals Inc stock

 4,000 shares of Micron Technology Inc stock

    50 shares of Niagara Mohawk Holdings Inc stock

 1,000 shares of PSS World Medical Inc stock

 2,000 shares of Altera Corp stock

36,000 shares of Atmel Corp stock

 1,000 shares of Bank of Tokyo-Mitsubishi Ltd-- stock

 2,000 shares of Cendant Corp stock

 

(Notice of Seizure at 2, attached as Compl. Ex. B.)

⁹ The U.S. withdrew this suit on September 17, 1999 , as it was rendered moot by the successful levy of the funds in July.

¹⁰ The levy was received by Q & R on June 11, 1999 and required Q & R to satisfy the levy within twenty one days. Because of the July 4 holiday weekend, the twenty one days expired on July 6, according to Mr. Sachs.

 

 

 

[2003-1 USTC ¶50,277]Ralph G. Sachs, Plaintiff-Appellant v. United States of America, acting through the Internal Revenue Service, Defendant-Appellee.

U.S. Court of Appeals, 6th Circuit; 01-2224, 59 FedAppx 116, February 21, 2003 .

Unpublished opinion affirming DC Mich., 2001-2 USTC ¶50,640.

[ Code Secs. 6331 and 7433]

Unauthorized collection actions: Civil actions: Damages: Exclusive remedy. --

An individual's complaint was properly dismissed because an alleged IRS violation of the Internal Revenue Manual and a revenue ruling could not support a claim under Code Sec. 7433, as that provision authorizes damages only in cases where Title 26 or any corresponding sections of the regulations have been violated. Alleged Fourth Amendment violations similarly fell outside the scope of Code Sec. 7433. Furthermore, because Code Sec. 7433 is the exclusive remedy for recovering damages against IRS agents for violation of constitutional rights, a Bivens action could not be maintained.

[ Code Secs. 6333 and 6335]

Summonses: Seizure: Notice requirements. --

A summons issued to a brokerage firm that held securities for an individual was proper, even though it did not provide ten-day notice and was not sent by certified mail. The summons was issued for the purpose of collection or seizure pursuant to Code Sec. 6333; therefore, the certified mailing and notice requirements of Code Sec. 7602 did not apply. Furthermore, the IRS was only required to provide a notice of seizure to the brokerage firm, and not to the individual himself.

[ Code Sec. 6502]

Sale of seized property: Notice of sale or seizure. --

An IRS levy on an individual's assets was not barred due to the expiration of the limitations period. The IRS brought suit against the taxpayer prior to the expiration date of the collection statute, whereupon the period of collectibility was extended, and the time period did not lapse until the tax was satisfied.

Before: Daughtrey and Cole, Circuit Judges, and Sargus, District Judge.

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

OPINION

COLE, JR., Circuit Judge: Plaintiff-Appellant Ralph G. Sachs appeals the dismissal of his claim against Defendant-Appellee United States of America, acting through the Internal Revenue Service ("IRS"), for unauthorized collection actions in violation of 26 U.S.C. §7433. Quick and Reilly, Inc. ("Q&R") was also named as a defendant in the original complaint; however, Sachs does not appeal the dismissal of his complaint against Q&R. Pursuant to Federal Rule of Civil Procedure 12(b)(6), the district court dismissed Sachs's complaint for failure to state a claim upon which relief could be granted. For the reasons that follow, we AFFIRM the judgment of the district court.

I. BACKGROUND

Sachs owed the IRS back taxes for the years 1978 and 1979. The Collection Statute Expiration Date ("CSED"), until which the IRS could collect the underlying tax liability in this matter, was July 4, 1999 .

On June 1, 1999 , the IRS mailed a Notice of Levy to Q&R, the brokerage firm which held Sachs's investment securities. Q&R received the notice on June 11, 1999 , and had twenty-one days from the date of receipt to forward the requested funds to the IRS. During this three-week period. Sachs informed Q&R that he believed IRS internal rulings prohibited Q&R from liquidating his securities and forwarding the funds to the IRS. In response, Revenue Officer Jennifer Zogut faxed a summons to Edwin Mendez, Q&R's Assistant Director of Compliance, requesting information regarding the negotiable instruments Q&R held for Sachs, and requesting a response by the next afternoon.

On or about July 1, 1999 , Q&R informed Sachs that it was going to respond to the Notice of Levy by liquidating certain securities which he owned and forwarding the corresponding monies to the IRS. On July 1, 1999 , the IRS initiated court proceedings to have the tax liability reduced to a judgment.

On or about July 13, 1999 , a check in the amount of $251,511.09, in full satisfaction of the levy, was obtained by the IRS from Sachs's account with the local Q&R office. On September 23, 1999 , Sachs filed a Form 843, Claim for Refund, which was denied by the IRS. By filing this claim, Sachs effectively exhausted his administrative remedies, thereby providing the district court with jurisdiction over the present suit.

II. ANALYSIS

This Court reviews de novo a district court's grant of a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Downie v. City of Middleburg Heights , 301 F.3d 688, 693 (6th Cir. 2002). In reviewing a Rule 12(b)(6) motion, this Court treats all well-pleaded allegations in the complaint as true, and the Court affirms the dismissal only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims that would entitle him or her to relief." Id.

A. Absence of Physical Seizure

26 U.S.C. §7433(a) provides for the recovery of damages resulting from unauthorized collection activities when "any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence disregards any provision of this title, or any regulation promulgated under this title." Section 6331(a) of the Internal Revenue Code ("the Code") states that when any person is liable to pay any tax and neglects or refuses to pay that tax, it shall be lawful for the United States to collect that tax "by levy upon all property and rights to property ... belonging to such a person or on which there is a lien provided in this chapter for the payment of such tax." 26 U.S.C. §6331(a). The Code also notes that "[t]he term `levy' as used in this title includes the power of distraint and seizure by any means." 26 U.S.C. §6331(b).

Sachs contends that the IRS was required to physically seize the securities, rather than "seizing" their monetary value by check after their liquidation. In failing to physically seize the securities, Sachs argues that the IRS violated §6331 of the Code, thereby entitling Sachs to damages under §7433.

Section 7433 of the Code authorizes damages for the intentional, reckless, or negligent disregard of a "provision of this title, or any regulation promulgated under this title." 26 U.S.C. §7433(a). A successful claim under §7433 can only occur, therefore, when Title 26, or a regulation promulgated thereunder, is violated. Here, the alleged violation is a violation of the Internal Revenue Manual and a Revenue Ruling. These are not violations of Title 26, nor are they violations of any corresponding sections of the Code of Federal Regulations. As such, Sachs's claim falls outside the scope of §7433's protection.

The Ninth Circuit has ruled similarly. In Shwarz v. United States [ 2001-1 USTC ¶50,111], 234 F.3d 428 (9th Cir. 2000), the court ruled that "because the [IRS] manual and the [IRS National Policy Statement] are not code provisions or regulations, violations of the manual and the NPS cannot support a claim under §7433." Id. at 434; see also Gonsalves v. Internal Revenue Serv. [ 92-2 USTC ¶50,474], 975 F.2d 13, 16 (1st Cir. 1992) (holding that §7433 does not support a claim for a "right" that is created by internal IRS policy); cf. Schweiker v. Hansen, 450 U.S. 785, 789 (1981) ( per curiam) (holding that an agency policy manual "is not a regulation," "has no legal force," and "does not bind" the agency).

Because the alleged violation pertains to an internal IRS policy, rather than a portion of the Code or corresponding regulations, §7433 cannot support a claim by Sachs based on the failure of the IRS to physically seize the actual securities.

B. Illegal Seizure in Violation of the Fourth Amendment

Sachs argues that by forcing Q&R to liquidate the securities, the IRS "constructively seized" the assets, and that by constructively forcing this liquidation to obtain a check rather than the instruments themselves, the United States violated the Fourth Amendment. Sachs contends that this position is supported under any one of three alternative theories: (1) a §7433 theory: (2) a G.M. Leasing theory; and (3) a Bivens theory.

1. Section 7433 Theory

The Fourth Amendment is not a provision of Title 26, nor is it a regulation promulgated thereunder. See 26 U.S.C. §7433(a). Thus, by the plain language of the statute alleged Fourth Amendment violations fall outside its scope.

2. G.M. Leasing Theory

Sachs argues that the IRS was required to obtain a writ of entry in order to physically seize his securities. The Supreme Court has held that a warrantless entry by IRS agents into a corporation's private offices violated the Fourth Amendment because a search of private property without proper consent is unreasonable unless it has been authorized by a valid search warrant. G.M. Leasing Corp. v. United States [ 77-1 USTC ¶9140], 429 U.S. 338, 352-53 (1977).

In this case, the IRS agents never entered any private property of Sachs. Sachs nevertheless argues that because the securities were seized on behalf of the government and subsequently liquidated on the government's behalf, this "constructive seizure" was substituted for the required physical seizure, and therefore gives rise to a Fourth Amendment claim.

G.M. Leasing does not support the extrapolation suggested by Sachs. In this context, the "constructive seizure" that Sachs contends occurred is not the legal equivalent of an actual, physical seizure because G.M. Leasing recognizes a Fourth Amendment violation based on the privacy concerns that accompany a physical intrusion. The G.M. Leasing Court stated that, while §6331 of the Code is "silent on the subject of intrusions into privacy," it is also an "authorization for all forms of seizure." Id. at 358 (emphasis added). While the IRS does need a warrant to enter private premises in order to seize a delinquent taxpayer's property, the IRS does not need judicial authorization to simply seize property where it does not intrude upon privacy rights. See id. at 358: see also Maraziti v. First Interstate Bank of Cal. [ 92-1 USTC ¶50,206], 953 F.2d 520, 524 (9th Cir. 1992) (stating that "when the government seizes property to collect delinquent taxes, there is no violation of the Fourth Amendment if the seizure is not an invasion of the taxpayer's personal effects or premises"). The G.M. Leasing Court did not find a Fourth Amendment violation in the seizure of automobiles which "took place on public streets, parking lots, or other open places and did not involve any invasion of privacy." [ 77-1 USTC ¶9140], 429 U.S. at 351.

Because the IRS did not invade Sachs's privacy rights, G.M. Leasing does not support a finding in the present case that there was a Fourth Amendment violation.

3. Bivens Theory

Lastly, Sachs argues that he is able to state a claim for a Fourth Amendment violation under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). In Bivens, the Court held that damages may be obtained for injuries resulting from a violation of the Fourth Amendment by federal officials. Id. at 395-96.

This argument is unavailing because this Court has held that a Bivens claim seeking monetary damages cannot be brought for actions arising out of the collection of taxes. See Fishburn v. Brown [ 97-2 USTC ¶50,742], 125 F.3d 979, 982-83 (6th Cir. 1997); accord Downie, 301 F.3d at 695 (citing Fishburn for the proposition that a taxpayer cannot bring a Bivens action against IRS agents for Fourth Amendment violations).

Sachs contends that Fishburn should not be read as a blanket prohibition against claims for monetary damages for actions out of the collection of taxes. Rather. he asserts that Fishburn only precludes Bivens actions that should have been part of a §7433 claim. There is no basis for such a reading of Fishburn.

This Court has previously stated explicitly and unequivocally that taxpayers cannot "bring a Bivens action against IRS agents for violations of [their] Fourth Amendment rights." Downie. 301 F.3d at 695. Section 7433 provides that it shall be the "exclusive remedy for recovering damages from such actions." 26 U.S.C. §7433(a). "Although the damages provision does not mention constitutional violations, [this Court] noted that `[t]hese carefully crafted legislative remedies confirm that, in the politically sensitive realm of taxation, Congress's refusal to permit unrestricted damages actions by taxpayers has not been inadvertent." Downie, 301 F.3d at 695 (quoting Fishburn [ 97-2 USTC ¶50,742], 125 F.3d at 983).

Thus, because Bivens actions are not available to taxpayers claiming violations of the Fourth Amendment, Sachs's Bivens theory is not a valid claim for which relief may be granted.

Because none of the theories provided by Sachs is legally viable, the district court's dismissal of his Fourth Amendment claim under 12(b)(6) was proper.

C. Remaining Issues

In addition, we are not persuaded by any of the other arguments asserted by Sachs on this appeal. First, Sachs argues that he possesses an actionable claim under 26 U.S.C. §7433(a) because the IRS did not possess a valid federal tax lien. However, the IRS did possess a valid lien, statutorily imposed pursuant to 26 U.S.C. §6321. Moreover, a valid federal lien is not required for the IRS to levy property under 26 U.S.C. §6331.

Sachs also contends that the IRS issued an improper summons because the summons was not sent by certified mail, and the summons did not provide ten-day notice. This argument is unavailing because these requirements apply to summonses issued for the purpose of ascertaining the correctness of a return, making a return, or determining a tax liability pursuant to 26 U.S.C. §7602. The summons in question here, however, was issued for the purpose of collection or seizure pursuant to 26 U.S.C. §6333, and the certified mailing and notice requirements therefore do not apply.

Next, Sachs asserts that the IRS failed to adequately notify Sachs of the seizure. Pursuant to 26 U.S.C. §6335, the IRS was only required to provide a notice of seizure to Q&R, and it properly did so.

Lastly, Sachs argues that the levy on the assets held by Q&R was improper because the statute of limitations had expired. The period during which a tax may be collected is extended if a court proceeding is filed, and the time period shall not lapse until the liability for the tax is satisfied. See 26 U.S.C. §6502(a). Because the IRS brought suit against Sachs prior to the expiration date of the collection statute, the deadline was extended.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the district court.