Opinions of the Office of Legal counsel On SS Benefits

May 30, 2011
Opinions of the Office of Legal counsel in Volume 34 by Daniel L. Koffsky
Applicability of Tax Levies Under 26 U.S.C. §6334 to TSP Accounts
Memorandum Opinion For the Chief Counsel Internal Revenue Service (May 3, 2010) (In part)
 
 The opinion drafted by Mr. Koffsky addresses an apparent conflict between Thrift Savings Plan accounts being subject to tax levies under §§ 6331, 6334 of the IRC and a provision of the Federal Employees’ Retirement System Act of 1986, 5 U.S.C.A. § 8437(e)(2).  In the opinion he addresses two elements that have interested me, the terms “notwithstanding” and “express reference”.  He concluded at page 3 that “[i]n our view, he texts of the two statutes are properly reconciled by giving primacy to the federal tax levy provisions in section 6334.”
 
 In addressing § 6334, Mr. Koffsky comments, “Although the TSP provisions may appear absolute if read in isolation, section 6334(c)’s ‘notwithstanding’ clause indicates by its terms that all ‘”other law[s] of the United States, . . ., are ineffective to bar a federal tax levy, except as provided by the express exceptions in section 6334(a).   As a general rule “the use of such a ‘notwithstanding’ clause clearly signals the drafter’s intention that the provisions of the ‘notwithstanding’ section override conflicting provisions of any other section.” Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993); see also, e.g., IIRIRA Opinion at 7 (observing that a prefatory “notwithstanding” clause ‘does reflect a congressional intention to displace inconsistent law”) [See also, Shomberg v. United States, 348 U.S. 540, 547-548 (1955), ” In using the “notwithstanding” language in these sections, Congress clearly manifested its intent that certain policies should override the otherwise broad and pervasive principle of the savings clause.”].  Indeed, some courts have observed that ‘”a clearer statement”‘ of congressional intent to supersede  all other laws ‘”is difficult to imagine,'” see Cisneros, 508 U.S. at 18 (quoting Liberty Maritime Corp. v. United States, 928 F. 3d 413, 416 (1991) . . . and the Supreme Court has described the “notwithstanding” clause in section 6334 as “direct[ing]” that “[t]he enumeration [of exceptions] contained in §6334(a) . . . is exclusive.” Drye v. United States, 528 U.S. 49, 56 (1991); see also In re Beam (Beam vs. IRS), 192 F. 3d 941, 944 (9th Cir. 1999) (describing section 6334 as “unambiguous” in indicating “that Congress clearly intended to exclude from IRS levy only those 13 categories  of property specifically-exempted in section 6334(a)”)
 
Mr. Koffsky next addresses the applicability of seniority of the acts.
 
“It is true that FERSA was enacted after section 6334(c), which might be thought to make the preemptive effect of section 6334(c)’s “notwithstanding” clause “less certain,” since “[t]he drafters of [section 6334(c)] can hardly be said to have had [FERSA] specifically within their contemplation.” . . . Yet in cases involving later-enacted statutes lacking their own applicable “notwithstanding” clauses, courts have deemed “notwithstanding” clauses “powerful evidence tht Congress did not intend” other statutes, “whenever enacted,” to qualify the terms of the earlier-enacted statute.  Ill. Nat’l Guard, 854 F. 2d at 1403. . . .  Moreover, the TSP anti-levy provisions, as a later-enacted statute that has “notwithstanding” clause and does not expressly cross-reference section 6334 or even mention any exercise of authority by the Secretary of Treasury, could override section 6334 and thus preclude federal tax levies on TSP accounts only if it effected an implied partial repeal of section 6334’s broad directive that “no property or rights to property shall be exempt from levy other than the property specifically made exempt by [26 U.S.C. §6334(a)].” 26 U.S.C. §6334(c).  But “repeals by implication are not favored and will not be resumed unless the intention of the legislature to repeal is clear and manifest.”  Hawaii v. Office of Hawaiian Affairs, 129 S. Ct.1436, 1445 (2009)”
 
[The opinion’s next approach is to examine the phrase “by express reference”.]
 
“As one indication of section 6334(c)’s breadth, Congress amended that provision in 1984 expressly to include section 207 of the Social Security Act, 42 U.S.C. § 407 (2006), which provides that “[the right of any person to any future payment under this subchapter shall not be . . . ” Id. § 407(a).  This provision itself had recently been amended to provide that “[n]o other provision of law, enacted before, on, or after . . . , may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.” . . . . The ‘express reference’ requirement of section 207 show’s, if anything, a stronger congressional intent to preclude levies than the relevant language of FERSA, which includes no such ‘express reference’ requirement broadening its scope.  Accordingly, as the en banc Ninth Circuit recently observed in an analysis of provisions similar to those at issue here, ‘[i]t would . . . be anomalous to interpret’ section 6334(c) ‘as abandoning the protection of Social Security benefits but not of retirement plans’ covered by other provisions that do not even have a comparable ‘express reference’ requirement.  Novak, 476 F. 3d at 1948.
 
To the point addressed by Mr. Koffsky concerning ‘express reference’, I would add the key word in part (b) of section 407 is “by express reference”.  I looked up in Black’s Law Dictionary the word “express” and in very clear language; “Express:  Clear; definite; explicit; plain; direct; unmistakable; not dubious or ambiguous. … Directly and distinctly stated.  Made known distinctly and explicitly, and not left to inference. …  The word is usually contrasted with “implied.” 
 
In the conflict addressed in our issue, (§6334 vs. §407) there is the use of the “notwithstanding” clause in both section 6334(c) of the statute and section 407.  One thing becomes evident that the statute [26 U.S.C. §6334(c)] and the regulation promulgated for the statute by the Secretary of the Treasury [26 CFR Sec. 301.6334-1(c)] are not the same language. The challenge now arrises from the fact that the statute modifies the language of section 207 of the “compilation” of the Social Security Act.  In return, section 207 references section 407 of Title 42.  Would this is some respect be considered “ambiguous”?
 
26 U.S.C. 6334 (Statute)
“(c) No other property exempt.  Notwithstanding any other law of the United States (including section 207 of the Social Security Act), no property or rights to property shall be exempt from levy other than the property specifically made exempt by subsection (a).”
 
Compilation of the Social Security Act (www.ssa.gov/OP_Home/ssact/ssact.htm)
Sec. 207. [42 U.S.C. 407] (a) The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
(b) No other provision of law, enacted before, on, or after the date of the enactment of this section, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
(c) Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986 by the person entitled to such benefit or such person’s representative payee.
 
26 CFR Sec. 301.6334-1  Property exempt from levy (Regulation)
 
    (c) Other property. No other property or rights to property are exempt from levy except the property specifically exempted by section 6334(a).  No provision of a State law may exempt property or rights to property from levy for the collection of any Federal tax. Thus, property exempt from execution under State personal or homestead exemption laws is, nevertheless, subject to levy by the United States for collection of its taxes.  “
 
The language of the statute uses the clause “notwithstanding” while the regulation does not.  Secondly, the statute references section 207 of the Social Security Act (a compilation of the statute itself.  Section 207 is not the statute, but only cites the statute section 407), while, again, the regulation fails to reference either section 207 or section 407.  Note: The fact that the statute is not complete without its implementing regulation as the United States Supreme Court has outlined that  “… neither the statute nor the regulations are complete without the other, and only together do they have any force.  In effect, therefore, the construction of one necessarily involves the construction of the other.” United States v. Mersky, 361 US 431, 438 (1960).
 
It can be argued that congress in passing 26 U.S.C. § 6334(c) and failing to expressly reference the statute (§407), together with the regulation, also failing to reference section 407, that the requirement of 42 U.S.C. Section 407 have not been properly addressed.  Also, in referencing section 207 of the Compilation of the Social Security Laws, they have referenced only a “convenient reference” which “is not prima facie evidence of the provisions of the Social Security Act” itself.  The inclusion of section 407 in brackets ([ ]) are only citations; “Citations have been included to enable the reader to locate the SSAct provisions in the United States Code (U.S.C.). These U.S.C. citations are shown within brackets after the SSAct section.
 
For example: Social Security Act – Sec. 201. [42 U.S.C. 401]”  
(See Compilation of the Social Security Laws;  www.ssa.gov/OP_Home/ssact/ssact.htm)
 
When the laws have this ambiguity, which has priority, the statute or the regulation?
 
P.S.  I should make a comment on previous essays and letters when I indicated that there were no titles IV and XVI in Title 42.  It is correct as the division of the Act into titles occurs only in the Compilation of the Social Security Laws.  My next step is to go to the law library and research the United States Code Annotated and Public laws to see the notes and language.  Possibly some one out there can see a way around this.
 
Notes to 26 U.S.C. §6334: Section 207 of the Social Security Act is classified to section 407 of Title 42. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.
 
We have our work cut out for us.
Advertisements
Gallery | This entry was posted in levy on social security benefits, Social Security and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s