Unpublished Dispositionjames J. Kimball, Plaintiff-appellant v. Ford Motor Company, et al., Defendants-appellees, 802 F.2d 458 (6th Cir. 1986)

The appellant taxpayer contends that his employer's compliance with a Notice of Levy served by the Internal Revenue Service is a deprivation of his property without due process of law and a breach of contract. The district court disagreed, and so do we.

The taxpayer, an employee of Ford Motor Company, was indebted to IRS on account of an unpaid penalty. On or about June 6, 1983, the garnishment representative for Ford's Payroll Services Department received an IRS Notice of Levy directing Ford to start sending IRS that portion of the taxpayer's wages not statutorily exempt from levy. Ford complied.

On August 10, 1984, the taxpayer filed an "Affidavit and Claim" in a Michigan state court, naming Ford and its garnishment representative as defendants, and claiming that compliance with the Notice of Levy constituted breach of contract and deprivation of property without due process of law. Ford removed the case to the federal district court and moved to dismiss. The district court granted the motion, stating that it lacked subject matter jurisdiction under the Anti-Injunction Act, 26 U.S.C. § 7421(a), and that the claims lacked any legal basis. The taxpayer's appeal to this court was dismissed following failure to pay the docket fee.

In April of 1985 Ford received another IRS Notice of Levy with respect to this taxpayer. Once again deductions were forwarded to the IRS. On June 5, 1985, the taxpayer filed an "At-Law-Complaint for Civil Damages" in federal district court naming Ford, the garnishment representative, and the latter's supervisor as defendants. Again the appellant claimed that compliance with the Notice of Levy was a deprivation of his property without due process of law. He argued that the administrative levy provided in 26 U.S.C. § 6331(a) applies only to officers, employees, and elected officials of the United States, the district of Columbia, or any agency or instrumentality of the United States or the District of Columbia. He further argued that the Notice of Levy must be accompanied by a "court executed Notice of Seizure." On June 25, 1985, Ford filed a Motion to Dismiss and a Motion for Summary Judgment. On July 5, 1985, the appellant filed a Motion for Preliminary Injunction.

By an order dated August 29, 1985, the district Court granted Ford's motion to dismiss on the basis of collateral estoppel and the underlying reasons set forth in the order in the first suit. The court denied the motion for preliminary injunction as moot and because the court lacked subject matter jurisdiction under the Anti-Injunction Act.

Section 6331(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 6331(a)) provides in relevant part as follows:

"(a) Authority of Secretary or delegate. -- If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary or his delegate to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. 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 elected official."

The second sentence of this section does not limit application of the section to federal government employees. Sims v. United States, 359 U.S. 108 (1959). The use of the term "any person" in the first sentence means that the Secretary could levy upon the wages of the taxpayer in the present case.

Further, the district court was correct that the Internal Revenue Code does not require a Notice of Seizure or a Warrant of Distraint to accompany a Notice of Levy. " [L]evy may be made by serving a notice of levy on any person in possession of or obligated with respect to, property or rights to property subject to levy, including receivables, bank accounts, evidences of debt, securities, and salaries, wages, commissions, or other compensation." 26 C.F.R. Sec. 301.6331-1(a) (1). No judicial intervention is necessary. United States v. National Bank of Commerce, 472 U.S. ----, 105 S. Ct. 2919, 2924 (1985). The constitutionality of this procedure is settled. Id. at ----, 105 S. Ct. at 2925.

A person in possession of the property levied on by the IRS is obligated to forward the property to the government when served with a notice of levy. 26 U.S.C. § 6332. Any person who complies with the notice of levy is "discharged from any obligation or liability to the delinquent taxpayer with respect to such property or rights to property arising from such surrender of payment." 26 U.S.C. § 6332(d).

Having complied with the statutory procedure for collection of taxes, Ford is not obligated to pay to the taxpayer the money it has already paid to IRS on the taxpayer's account. Ford is not a governmental body, moreover, and is not bound by the Due Process Clause of the Fifth Amendment. The district court was correct in holding that the taxpayer has no valid monetary claim against Ford.

The district court was also correct in denying the taxpayer's motion for a preliminary injunction. Not only was that motion rendered moot by the dismissal of the claim, but the Anti-Injunction Act deprives the court of jurisdiction to entertain any suit the purpose of which is to restrain the assessment or collection of any tax. 26 U.S.C. § 7421(a). None of the statutory exceptions applies to suits brought by a taxpayer to enjoin his employer from compliance with an IRS notice of levy. See id.

Accordingly, the district court's order is AFFIRMED.