- Ag Docket
This case points out that the interest of the IRS in a delinquent taxpayer's bank accounts vests immediately on issuance of a levy and the property subject to levy must be immediately surrendered. If not, the bank is personally liable for the depositor's tax bill. Here, the taxpayer had an AGI of $21,594 in 2008 but received a tax refund of $78,169 in 2009 attributable to the 2008 tax year. Instead of notifying the IRS of the obvious error, the taxpayer deposited the funds with the defendant, the taxpayer's bank. The defendant also did not inform the bank that he was not actually entitled to the funds and that the source of the funds was an obvious IRS error. An IRS revenue officer assigned to the matter went to the taxpayer's home with a jeopardy levy in hand at 9:30 a.m. on Sept. 9, 2009, and notified the taxpayer that he owed roughly $93,000. The revenue officer demanded payment, but the taxpayer did not pay the deficiency at that time. The IRS revenue officer served the taxpayer with the IRS notice to levy his bank accounts. Ten minutes later, the IRS revenue officer served the jeopardy levy on the defendant. Less than two hours later, the taxpayer withdrew all of the funds in one of his bank accounts with the defendant, and left less than $8,000 in a different account, which was turned over to the IRS. Two days later, the defendant froze the bank accounts. The IRS sought the balance of the taxpayer's tax liability from the defendant. The court noted that, for a jeopardy levy, IRS need only provide the taxpayer with notice and demand for immediate payment under I.R.C. Sec. 6331 before imposing the levy. IRS properly followed that procedure and could then levy immediately. The defendant claimed that it acted reasonably within two hours of receiving the IRS levy and should not be held personally liable for the withdrawn funds. The court disagreed, noting that I.R.C. Sec. 6332 (the liability provision) does not contain any reasonability requirement. In addition, the court noted that the government's interest vested immediately upon notifying the bank of the levy and the bank was immediately responsible for preserving the taxpayer's bank accounts for the IRS. The court also noted that I.R.C. Sec. 6332 contained a reasonability requirement only with respect to an additional 50 percent penalty which could make the defendant liable for 150 percent of the levied property. United States v. JPMorgan Chase Bank NA, CV 13-3291 GAF (RZx), 2014 U.S. Dist. LEXIS 113896 (C.D. Cal. Aug. 15, 2014).
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