Certified U.S. Mail c/o [address]
#P-xxx-xxx-xxx [City] zip code exempt
Return Receipt Requested [State] REPUBLIC
Restricted Delivery Requested
[Date of Notice]
[Name of Bank]
Attention: Legal Department
[City] zip code exempt
NOTICE AND DEMAND
FOR RESTORATION OF ACCOUNT
Re: IRS "Notice of Levy" dated [mm/dd/yy]
Notice and demand are hereby served upon you to restore all
funds which have been paid by [Name of Bank] from account number
[Account Number] to the Internal Revenue Service, under color of
IRS Form 668-A "Notice of Levy" dated [mm/dd/yy] (see attached).
Formal Notice is hereby given to you concerning law(s)
applicable to IRS levies, and your liabilities for violating
those laws. IRS Forms 668-A, 668-A(c) and 668-W are the "Notices
of Levy" that are sent to third parties such as banks, employers,
and other financial institutions to confiscate property for the
purpose of collecting taxes allegedly owed. This NOTICE AND
DEMAND to you covers the relevant factors in the correct
lien/levy procedure, and demonstrates how the IRS has misused and
abused their extremely limited authority in this area,
particularly in the case of funds which were unlawfully
confiscated from [Name of Bank] account #xxxx-xxxxxx (hereinafter
"Victim's Account") by alleged agent(s) of the "Internal Revenue
Service" [sic] (hereinafter "IRS").
In what follows, we explain first what a "levy" is, and we
examine how it is commonly mis-perceived by both the third
parties who receive it (e.g. banks) and by the IRS agents who
issue it. Then we cover the legal requirements that must be met
before a Notice of Levy can be valid. We also discuss how, in
many cases, IRS agents use the Internal Revenue Manual
(hereinafter "IRM") as their legal "authority" in the levy
process, even though the courts have ruled that the IRM conveys
no such legal authority. We then relate the specific effect this
has on IRS employees who fail to recognize the limited nature of
their authority. We review the responsibilities and liabilities
of third parties (like [Name of Bank]) who may receive an IRS
Notice of Levy. Finally, attached is a checklist for determining
whether or not an IRS Notice of Levy is valid.
To understand the limited nature of a levy, we begin by
defining the term. A "levy" is a confiscation of property in
accordance with a legal judgment. From the definition itself, we
see that there are two elements to a levy: the first element is
that a levy is a confiscation of property; but, the definition
is limited by the second element which is that, before property
can be confiscated, it must be in accordance with a legal
In civil law, the specific process is carried out by a Writ
of Execution, or Warrant of Distraint, which is a "formal process
issued by court[s] generally evidencing the debt of the defendant
to the plaintiff and commanding the officer to take the property
of the defendant in satisfaction of the debt." (Federal Rules of
Civil Procedure, Rule 69) The plaintiff in the instant case is
the IRS; the defendant is a [Status of Victim(s)]. The Warrant
of Distraint, or its equivalent, results in a lien filed against
the property by the court. A lien, by definition, is a claim on
property for payment of debt.
The following are important points to understand regarding
the nature of a levy:
(a) levy can only come after seizure;
(b) seizure only applies to property subject to forfeiture;
(c) the only property subject to forfeiture is that which comes
under the provisions of IRC Subtitle E -- Alcohol, Tobacco,
and Certain Other Excise Taxes; and
(d) all the enabling regulations pertaining to levies are found
in Title 27 CFR, which pertains only to those activities
described in (c) above.
The individual who actually receives the Notice of Levy is a
third party, but rarely, if ever, do third parties realize that
the responsibility for determining the validity of a levy is
theirs (i.e. the bank employee's, or officer's, responsibility).
Nor does such a third party ever fully realize the importance of
making a correct legal determination, since an incorrect
determination can lead to a personal liability and possibly also
a criminal charge for "conversion of property."
From Black's Law Dictionary, Fifth Edition, we find that
conversion is an unauthorized and wrongful exercise of dominion
and control over another's personal property, to the exclusion of
or inconsistent with the rights of the owner. Anyone still doing
business with banks or other financial institutions must take the
time to notify the appropriate bank officials of the Notice of
Levy's limited application. These officials will benefit from
the knowledge necessary to protect them from perfectly justified
damage suits brought against them by damaged customers.
Information available to us indicates that a rapidly growing
number of People are becoming aware of the applicable law and are
not bowing down to IRS threats and bullying tactics.
Most People have little or no understanding of the
applicable law, and thus are unaware of the statutory
requirements that must be met before a Notice of Levy can be
valid. We have found that most People assume the IRS has already
made that determination; otherwise, why would the IRS be sending
the Notice of Levy in the first place? In their minds, it
naturally follows that the IRS is then legally responsible for
any errors. What those who receive the Notice of Levy fail to
consider is that, since they are the fiduciary in possession of
the property, it is they who are ultimately responsible for
determining its disposition -- not the IRS. The trust we place
in those who maintain our property is much like the trust we
place in our doctor; it should be maintained at the highest
possible level of honesty and integrity.
The IRS agent who sends a Notice of Levy is usually acting
on the presumption that he has the requisite authority.
Unfortunately, most IRS agents have no idea what the law
requires. Surprisingly, the agent has no legal obligation to
tell the third party whether the levy is valid and, more than
likely, the agent doesn't know himself. Rather, because the
third party has possession of the property, it is his/her
responsibility to know the law and to act accordingly, or to seek
competent legal advice (assuming any can be found). The bottom
line is this: were it not for the many parties involved and the
various legal aspects that seem to confuse the average attorney,
it would be impossible for the IRS to seize property under the
guise of collecting income taxes.
AUTHORITY FOR THE LEVY
The authority to levy is restricted to and contained within
Section 6331(a) of the Internal Revenue Code ("IRC"). The
annotated version of the United States Codes provides more
insight into the purpose of Section 6331. Title 26 USCA 6331,
under Note 5, describes the purpose of this section as follows:
Purpose. This section was enacted to subject salaries of
federal employees to the same collection procedures as are
available against all other taxpayers, including employees
of a state.
You will not see either of these paragraphs printed on the
back of any Notice of Levy form. For some reason, the IRS begins
quoting their levy authority with the ominous sounding words of
subsection (b): "Seizure and sale of property." However, that
subsection is only an explanation of the term "levy" as that term
is used in the previous subsection, IRC 6331(a), that limits the
authority for that levy.
Section 6331(a) contains the following key sentence:
Levy may be made upon the accrued salary or wages of any
officer, employee, or elected official, of the United
States, the District of Columbia, or any agency or
instrumentality of the United States or the District of
Columbia, by serving a notice of levy on the employer (as
defined in section 3401(d)) of such officer, employee, or
This sentence would seem to imply that only government
employees are subject to levy. This would be correct if it
specifically referred to the "employment tax" on income under
Subtitle C, but it is important to emphasize that this section is
implemented by regulations pertaining to, and making enforceable,
levies on the manufacture of alcohol, tobacco, and firearms under
27 CFR Part 70, and certain other excise taxes under Subtitle E
of the IRC.
The USC/CFR Parallel Table of Authorities reveals quite
clearly the limited application of this IRC Section by
identifying these excise taxes. The enabling regulations that it
specifies pertain ONLY to 27 CFR Part 70 (alcohol, tobacco, and
firearms) and those other miscellaneous excise taxes found in
Subtitle E of the IRC. There is simply no connection whatsoever
with income tax in Subtitle A. Therefore, assuming that all
other legal requirements are met (e.g., notice and demand, court
order, lien, etc.), a levy may be made only on property of those
persons who are described in IRC Subtitle E, and on the property
of the government employees described in 6331(a). No similar
provisions exist for anyone or anything else!
One of the more troubling statements which the IRS makes
appears in IRS Publication 1 (Rev. 10-90) entitled Your Rights as
a Taxpayer. On the last page under the subheading, "Access to
your private premises," it states:
A court order is not generally needed for a collection
officer to seize your property. However, you don't have to
allow the employee access to your private premises, such as
your home or the non-public areas of your business, if the
employee does not have court authorization.
We will show that the statement "A court order is not
generally needed for a collection officer to seize your property"
is an incredible distortion of the truth. Keep in mind that the
IRS admits that its interpretation of the law may directly
conflict with court decisions. This is often the case,
unfortunately, because its interpretations seem to be designed
more to intimidate than to represent the intent of the law.
Section 6331 is the only authority in the entire IRC that
provides for the levy of property such as wages, salaries, etc.
The limitation for that authority should be rather obvious since
it pertains ONLY to those persons who are subject to the
provisions of IRC Subtitle E, and certain officers, employees,
and elected government officials and, of course, their "employer"
-- the government. But, there are further limitations! We say
"certain" officers, employees, and elected officials because, in
this particular section, the applicable definition of "United
States" restricts the list of government agencies to those
operating within the geographical confines of U.S. government
possessions and territories such as Guam, American Samoa, etc.
There are at least three (3) definitions of the term "United
States" in the IRC, and it is important to know which definition
is in operation with respect to any given section.
In this case, the ONLY government "employer" under such an
obligation and legally bound to honor the levy would be a federal
agency outside the 50 Union states. We make the distinction
because there are many federal officers, employees, and elected
officials working for government agencies within the 50 Union
states who might otherwise think that the law provides for a levy
from their own agency. They are concerned because they are
employed within the 50 Union states, but no other third party is
identified by this section, and thus, no other third party may be
served with such a notice.
The technical aficionado who might question this should note
that this section identifies the subject of a levy by specifying
the employer as defined in section 3401. IRC 3401 is in Subtitle
C (Social Security) and the employer referred to is, or course,
an entity that is defined for the purpose of administering
Subtitle C provisions.
An employer is NOT the taxpayer under Subtitle A. Rather,
he, she, or it is an entity that is defined for the purpose of
administering the provisions of Subtitle C only, and who, by the
definition contained within Section 3401, employs other
participants (defined as "employees") within the geographic
confines of the insular island possessions and territories of the
United States. Thus, the "employer," for purposes of this
section, is a territorial government agency.
Since this geographic area is outside the borders of the 50
Union states, the lawmakers were not under any constitutional
prohibition regarding direct or indirect taxation, or any
restriction pertaining to the rules of apportionment and
uniformity. The Constitution for the United States, as such,
does not extend beyond the limits of the States which are united
by and under it. (See Downes v. Bidwell, 182 U.S. 244 (1901).)
As far as the average person is concerned, it is completely
inapplicable to those who have not voluntarily applied to obtain
a benefit in federal entitlement programs or who have revoked
their application to participate, based on the fact that their
signatures were obtained via a constructively fraudulent process
(if they were led to believe that participation was required).
DELEGATION OF AUTHORITY
Despite the apparent loopholes which seem to exonerate and
provide an escape for an IRS agent's errantly exercising a
presumed authority, there are other provisions that do hold him
responsible for its administration. Specifically, these
provisions deal with what are called "delegation orders." No
agent may administer a provision of law without a proper order
delegating authority to do so.
The authority to administer the provisions of Section 6331,
regardless of its applicability, is further restricted by
national and local delegation orders designed to ensure agency
compliance within the limits of the law.
As with all authority under the IRC, it is the Secretary of
the Treasury who must administer the provisions for levy, or
delegate the authority to do so, if and when appropriate. The
delegation orders that do exist for liens and levies are
remarkably limited. For example, the Delegation Order for
authority to execute lien and levy actions in the Newark District
Office of the IRS lists the "Internal Revenue Manual, Sections
5312, 5314, 5326, 5343.2, 5421, 5541, and 5450." Notice that the
citations pertaining to liens and levies within these orders do
not actually contain the statutory authority to levy that we have
examined thus far (i.e., IRC Section 6331).
Interestingly, the back side of the Notice of Levy form
itself also shows a similar peculiarity. On Form 668-W, the
authorities listed include 6331(b) thru 6331(e), but they omit
the elusive 6331(a), which is the actual authority for a levy and
the statute upon which the others rely and to which they refer.
Why is Section 6331(a) not cited on the form?
In the Delegation Order, the remainder of the cite refers to
the IRM which is, of course, only "directive" in nature. Since
it is not the law, it cannot possibly convey actual legal
authority. It can only clarify what that authority is for the
benefit of agents seeking to understand how to administer the
law. A nationwide search of all delegation orders has revealed
that section 6331(a) has indeed been omitted from each and every
one; but then again, if the authority for the levy pertains only
to those previously mentioned, then it should certainly come as
no surprise that delegation orders pertaining to service centers
and district offices within the 50 Union states of the Union
(including [State] REPUBLIC, of course) cannot authorize such a
If agents are puzzled by this, their only other source for
clarification is the Internal Revenue Manual ("IRM").
THE INTERNAL REVENUE MANUAL
The IRC is the body of law that contains the legal authority
for the Secretary (and his delegates) to administer provisions
pertaining to the collection of income taxes. It is, however,
not unusual for the IRS to cite the IRM as their legal authority
for various aspects of a collection procedure.
As long as there is some illusion of authority, it is easy
for IRS agents to justify (in their own minds) that certain
actions are within the scope of their authority and, as mentioned
previously, the delegation orders do list another "authority,"
specifically the IRM. But, research has revealed that at least
six courts have ruled that the IRM does not have the force of
law. The courts have ruled that the provisions of the IRM are
only directory in nature and not mandatory. See Lurhing v.
Glotzbach, 304 F.2d 360 (4th Cir. 1962); Einhorn v. DeWitt, 618
F.2d 347 (5th Cir. 1980); and United States v. Goldstein, 342
F.Supp. 661 (E.D.N.Y. 1972); Boulez v. C.I.R., 810 F.2d 209
(D.C. Cir. 1987); United States v. Will, 671 F.2d 963, 967 (6th
The simple fact is that the IRM may not be relied upon as
the legal authority for any part of a collection action, which
leaves Section 6331(a) as the sole authority for a levy. As we
have just seen, this Section is severely limited. So, it would
seem that the non-judicial collection powers of the IRS (without
a court order) are not as awesome as some IRS officials would
have the public believe. Or, is it just another case of the
naked emperor deluding himself? Either way, it doesn't end
there. The Notice and Demand is another nail in the coffin.
THE IRS NOTICE AND DEMAND
The non-judicial collection authority is wholly dependent
upon a statute (Section 6321, also enabled by 27 CFR Part 70),
which provides for a lien to arise automatically when a taxpayer
fails to pay a tax that is demanded via a "Notice and Demand"
under Section 6303. If such "demand" is not or cannot be made,
then a lien cannot automatically arise, and subsequent collection
activity cannot occur. All of the available case law confirms
this. In Linwood Blackston et al. v. United States of America,
778 F.Supp. 244 (D. Md. 1991), the court held that:
The general rule is that no tax lien arises until the IRS
makes a demand for payment. Myrick v. United States [62-1
USTC 9112], 296 F.2d 312 (5th Cir. 1961). Without a valid
notice and demand, there can be no tax lien; without a tax
lien, the IRS cannot levy against the taxpayer's property
... this Court concludes, consistent with the views
expressed in Berman, Marvel, and Chila that the appropriate
"sanction" against the I.R.S. for its failure to comply with
the [Sec.] 6303(a) notice and demand requirement is to take
away its awesome non judicial collection powers.
IRC Section 6303 is the law that requires a "Notice and
Demand" to be issued; however, the IRS does not issue such
notices for reasons which are beyond the scope of our discussion
here. As is evident from the court case just mentioned, it is
impossible for the IRS to move forward with the legal action that
is required by Section 7403 (entitled Action to enforce lien or
to subject property to payment of tax) if they have not issued a
Notice and Demand. In most cases, the Notice of Levy given to a
third party falsely states that a Notice and Demand has been
issued; but if the IRS fails to issue the required Notice and
Demand pursuant to section 6303, then they cannot possibly obtain
the necessary legal sanction through a court of law to enforce
the levy. Why? Because, in order to obtain the sanction of a
court, they would need to produce a copy of the Notice and Demand
that was referenced on the Notice of Levy form, and they can't do
that if it does not exist. If the IRS is unable to send the
Notice and Demand, then it follows that it would be impossible to
obtain the necessary court order.
Throughout this explanation, it is important to keep in mind
that no single IRS official is necessarily guilty of fraud. It
is more accurate to say that the process itself is constructively
fraudulent. In other words, it is not necessarily intentional.
It is sufficient to explain that there are many IRS employees
involved, and that the employee responsible for any given part of
the "presumed correctness" of any given action rarely, if ever,
has any communication with any of the other employees, who then
act on those presumptions.
Those who have worked in a typical busy office environment
know that the responsibility for getting things done often falls
on a low-level employee who is trying to do the work of 10
People. The short-cuts they teach their fellow workers are not
necessarily in the best interest of their employer, but since
they are unfamiliar with the details of their company's inner
workings, the reason that it is a detriment is beyond their
understanding. Of course, if there is no penalty for their
actions, the likelihood that their invented procedure will be
corrected by a superior is slim. When new employees are hired,
they learn the same defective way of doing things.
The government is more prone to this situation than any
privately owned business because its employees are generally less
productive and have less incentive to change anything. In the
situation we are examining, the law is written to protect People
from these inadvertent short-cuts made by lower level employees.
That is why a court order is necessary to effect a levy.
THE COURT ORDER
Page 57(16) of the IRM entitled Legal Reference Guide for
Revenue Officers confirms (on the upper right-hand corner of the
page) that a court order (i.e., Warrant of Distraint) is
necessary. We say "confirms" because the IRM is merely referring
to established principles of law, since it does not itself
constitute the law that requires the Warrant of Distraint.
Moreover, the IRM shows that the IRS even agrees with those
established principles and encourages their agents to abide by
them. The IRM, for example, cites the authority of United States
v. O'Dell, 160 F.2d 304 (6th Cir. 1947), to confirm that a proper
levy against amounts held as due and owing by employers, banks,
stockbrokers, etc., must issue from a Warrant of Distraint (i.e.,
a court order) and not by mere notice. The O'Dell court
specifically states that:
The method of accomplishing a levy on a bank account is the
issuing of warrants of distraint, the making of the bank a
party, and the serving with notice of levy, [a] copy of the
warrants of distraint, and [the] notice of lien.
The court emphasized that:
Levy is not effected by mere notice.
Agents who bother to read the IRM know that the "Warrant of
Distraint" mentioned above is the court order which is required
pursuant to IRC Section 7403.
In the case of Freeman v. Mayer, 152 F.Supp. 383 (1957), a
U.S. District Court ruled, "A levy for delinquent taxes, pursuant
to statute, requires execution of warrant for distraint ...." In
the case of In re Holdsworth, 113 F.Supp. ____, No. 279-50
(1953), a U.S. District Court ruled that "... a mere notice of
levy is not tantamount to an effective levy upon and distraint of
all sums of money due from debtors of bankrupts, in absence of
warrant of distraint." In a recent Memorandum of Points and
Authorities in Support of an Application to Enter the Premises of
a safe deposit box at Wells Fargo Bank in California, an
Assistant U.S. Attorney admitted on record that the IRS is
required to obtain a court order to do so:
The Supreme Court recognizes the broad power of seizure and
distraint authorized by 26 U.S.C. 6331, but has held that
the government must seek a warrant before entering private
premises to search for distrainable assets to satisfy tax
assessments. G.M. Leasing Corporation v. United States, 429
U.S. 338 (1977). See also, United States v. Condo, 782 F.2d
1502 (9th Cir. 1986).
Thus, the relevant authorities, including the U.S. Supreme
Court, make it abundantly clear that a court ordered Warrant of
Distraint is required before property can be confiscated by the
IRS for payment of delinquent taxes.
In a decision involving the tax indebtedness of Stephens
Equipment Company, Inc. (debtor), 54 BR 626 (D.C. 1985), the
The role of the district court in issuing an order for the
seizure of property in satisfaction of tax indebtedness is
substantially similar to the court's role in issuing a
criminal search warrant. In either case, there must be a
sufficient showing of probable cause.
More importantly, the court held that, in order to
substantiate such an order, the IRS must present the court with
certain validation. The court stated that:
... to effect a levy on the taxpayer's property [an order]
must contain specific facts providing the following
an assessment of tax has been made against the taxpayer,
including the date on which the assessment was made, the
amount of the assessment, and the taxable period for which
the assessment was made;
notice and demand have been properly made, including the
date of such notice and demand and the manner in which
notice was given and demand made;
the taxpayer has neglected or refused to pay said assessment
within ten days after notice and demand; ... property
subject to seizure and particularly described presently
exists at the premises sought to be searched and that said
property either belongs to the taxpayer or is property upon
which a lien exists for the payment of the taxes;
and facts establishing that probable cause exists to believe
that the taxpayer is liable for the tax assessed.
In their Memorandum of Points and Authorities supporting
entry into a safe deposit box at Wells Fargo Bank, the government
reiterated the standard of probable cause necessary for an entry
In the Ninth Circuit, the standard of probable cause
necessary for an entry order is similar to the standard used
for criminal search warrants. ... In particular, the
government must establish the following elements to be
entitled to an ex parte order:
(1) The Internal Revenue Service has made an assessment of
tax and notice and demand for payment;
(2) the taxpayer has neglected or refused to pay the tax;
(3) notice of intent to levy has been given; and
(4) there presently exists, at the premises to be searched,
some property subject to seizure which belongs to the
taxpayer or is otherwise encumbered by a federal tax
lien. citing In re Gerwig, 461 F.Supp. 449 at 452
(C.D. Cal. 1978)
Is it any wonder that, in most cases, the IRS cannot seek a
court order? Nevertheless, the court order is a statutory
requirement for the levy procedure because it establishes the
validity of the IRS's claim to the third party to whom the levy
is presented. These procedures assure the third party that the
lien and subsequent levy have been executed in a lawful manner.
The court order also protects the third party from a liability
which may arise under 26 CFR Part 301.6332-1(c), which states in
... Any person who mistakenly surrenders to the United
States property or rights to property not properly subject
to levy is not relieved from liability to a third party who
owns the property ....
Again, one of the purposes of the court order is to prevent
overzealous IRS agents from taking a short-cut as previously
Please be advised that there is on record no court order or
declaratory judgment holding that the "[Name of Trust or Other
Entity]" is a Nominee, Transferee, or Alter Ego of "[Victim(s)]"
as is alleged on IRS Form 668-A dated [mm/dd/yy].
It is amazing what happens when People insist that the IRS
obey the law. What is even more encouraging is that more People
are doing this each and every day, and the political pressure is
now becoming impossible for the IRS to ignore. According to IRS
Commissioner Margaret Milnor Richardson in a speech before the
National Association of Enrolled Agents in Nevada on August 26,
1993, (as of that year) 1 in 5 People had stopped (voluntarily)
complying, and the situation was out of control. We would say
just the opposite: the situation is finally becoming
controllable because the public seems to have developed the will
to study and know the law, and to confine the IRS within the law.
We have reviewed the nature of, confusion surrounding, and
authority for the levy. We have examined it in light of its
application, the enabling regulations, the pertinent delegation
orders, the missing notice and demand that is the cornerstone of
the process leading up to the lien/levy procedure, and we have
shown why the IRS may not obtain the necessary court order
without it. A levy cannot be made against a bank account without
a court order, which cannot be obtained without the due process
requirements of proper notice and hearing on the matter. The
U.S. Constitution has never been repealed, and the Due Process
guarantees of the Fourth and Fifth Amendments are still in full
force and effect, because they have not been waived.
DEMAND FOR RESTORATION
Wherefore, demand is hereby made upon you to restore all
funds which were paid by [Name of Bank] from the [Victim(s)] to
the IRS under color of IRS "Notice of Levy" Form 668-A dated
[mm/dd/yy]. Our records indicate that the amount in question was
at least [Dollar Amount].
RESERVATION OF RIGHTS AND
NOTICE OF LIABILITY FOR DAMAGES
[Victim(s)] explicitly reserves all their Rights to hold
[Name of Bank], and all employees who were involved in the
transaction in question, jointly and severally liable for actual,
consequential, and exemplary damages incurred by [Victim(s)] as a
consequence of this transaction.
NOTICE OF DEADLINE
If the [Victim(s)] account is not restored to its full value
prior to unlawful confiscation by the IRS, and if formal written
notice of same is not received by us, within thirty (30) calendar
days of the date of this NOTICE AND DEMAND, then [Victim(s)] will
have no alternative but to hold [Name of Bank] and the individual
employees involved jointly and severally liable for all actual,
consequential, and exemplary damages, which have arisen under 26
CFR Part 301.6332-1(c), which states in part:
... Any person who mistakenly surrenders to the United
States property or rights to property not properly subject
to levy is not relieved from liability to a third party who
owns the property ....
We have provided you with a readable summary of the law
relevant to levies performed under authority of the Internal
Revenue Code. A much more detailed exposition of this law can be
provided to you, upon request. In addition to an irrefutable
reason for restoring the [Victim(s)]'s account to its original
status, it is our sincere hope that this letter will also give
you and other bank officials sufficient legal justification to
handle IRS Notices of Levy quite differently in the future. May
we recommend that you consider adopting the attached checklist as
your standard operating procedure for handling all IRS Notices of
Levy from now on?
Thank you in advance for your immediate cooperation in this
[Name(s) of Victim(s)]
copies: litigation files
Third Party Checklist for Determining Validity
of Internal Revenue Service Notices of Levy
(Do not proceed beyond each step unless the answer to each
question is YES. If the answer to any question is NO, the levy
is invalid. Inform the IRS that you are unable to honor the levy
until all legal requirements are met.)
[ ] Is there a copy of the court ordered Warrant of Distraint
and Notice of Lien included with the Notice of Levy?
[ ] Does the tax that the IRS claims is owed arise from taxable
activities subject to miscellaneous excise taxes under IRC
Subtitle E, or those that would pertain to the enabling
regulations of Title 27 CFR Part 70 (alcohol, tobacco, and
firearms), or are you a federal employer as defined in IRC
Section 3401(d) (in one of the U.S. territories and
responsible for administering provisions under IRC Subtitle
[ ] Was a valid Notice and Demand for unpaid tax sent to the
individual (or entity) whose property is the target of the
[ ] Has a valid Notice of Lien been filed with the appropriate
court at least ten (10) days after the Notice and Demand was
received and has the court issued a Warrant of Distraint
pursuant to IRC Section 7403?
[ ] Has the IRS sent at least three notices to the individual
(or entity) asking for payment and has the individual (or
entity) refused to pay?
[ ] Has the IRS sent a Notice of Intent to Levy to the
individual (or entity) at least 30 days prior to the date on
the Notice of Levy you received?
[ ] Is the Notice of Levy signed by an IRS agent and is there a
delegation order in existence giving that particular agent
the authority to issue a Notice of Levy?
If all of the above conditions have been satisfied, the levy
could be a valid one. However, if you turn over property in
response to an improper levy, the individual (or entity) who owns
the property can sue you personally for actual as well as
exemplary and consequential damages (see 26 CFR 301.6332-1(c)).
It is your responsibility as a fiduciary to insure that all
legal requirements are met.
# # #
Roscoe Pound Warned Us
Mr. Roscoe Pound was Dean of the Law School of Harvard
University from 1916 to 1936. He was awarded the American Bar
Association medal of "conspicuous service to the cause of
American jurisprudence" in 1940. He was the author of many works
in various fields of law. He deserves our ear when he speaks.
Back in 1946, Mr. Pound wrote a paper entitled
"Administrative Agencies and the Law." A few succinct comments
from that paper follow:
"To them, administrative officials, law is whatever is done
officially. And so administrative law is whatever is done
by administrative agencies ....
"There was a steady growth of administrative agencies in the
states in the last decade of the nineteenth century and the
first decade of the present century, as part of the rise of
social legislation. At first, this produced a certain
friction with the courts .... This led some advocates of
administrative development to denounce the separation of
powers which is fundamental in American constitutional law
"Today, exemption from judicial scrutiny of its actions
seems to be the ambition of every federal administrative
agency ... but in the hands of agencies and subordinates of
agencies not disposed to be scrupulously fair, these simple,
nontechnical methods may easily serve as traps for the
citizen who is seeking to obey the law ....
"But, it is a characteristic tendency of present-day
administrative agencies to use as a ground of decision some
idea of policy not to be found in the statute or general law
nor even in any formulated rule of the agency ....
"Many of these agencies entertain complaints; institute
investigations upon them; begin what are in effect prosecu-
tions before themselves; allow their own subordinates to
act as advocates for the prosecution; and often make the
adjudications in conference with those same subordinates.
All this runs counter to the most elementary and universally
recognized principles of justice."
He goes on to say that excessive zeal, absence of a fair
hearing, disregard of evidence, prejudgment by administrative
agencies, improper delegation of authority and obstruction of
judicial relief, are the characteristics which require checks.
Does this sound as if he is speaking of the Internal Revenue
# # #
to Table of Contents for
Bank Levy Procedure