B-136210, JULY 14, 1958, 38 COMP. GEN. 23

B-136210: Jul 14, 1958

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SET-OFF - POSTAL SAVINGS DEPOSITS - TAX DEBTS POSTAL SAVINGS DEPOSITS BELONGING TO DELINQUENT TAXPAYERS ARE CONSIDERED "PROPERTY OR RIGHTS TO PROPERTY" WITHIN THE MEANING OF SECTION 6331 OF THE INTERNAL REVENUE CODE OF 1954. IT IS REPORTED THAT ON APRIL 17. A NOTICE OF LEVY WAS SERVED ON THE POSTMASTER AT OMAHA. THE LEVY WAS FOR $789.96 INTERNAL REVENUE TAXES DUE. THE DEPUTY POSTMASTER GENERAL STATES THAT POSTAL SAVINGS ARE TRUST FUNDS. THAT ACCORDINGLY THE DEPARTMENT HAS ALWAYS HELD THAT THE BOARD OF TRUSTEES IS WITHOUT AUTHORITY TO SET OFF POSTAL SAVINGS FUNDS AGAINST ANY DEMAND OF ANY KIND WHATSOEVER WHETHER BY THE GOVERNMENT OR BY A PRIVATE CITIZEN. IT SHALL BE LAWFUL FOR THE SECRETARY OF THE TREASURY OR HIS DELEGATE TO COLLECT SUCH TAX BY LEVY UPON ALL PROPERTY AND RIGHTS TO PROPERTY (EXCEPT SUCH PROPERTY AS IS EXEMPT UNDER SECTION 6334) BELONGING TO SUCH PERSON.

B-136210, JULY 14, 1958, 38 COMP. GEN. 23

SET-OFF - POSTAL SAVINGS DEPOSITS - TAX DEBTS POSTAL SAVINGS DEPOSITS BELONGING TO DELINQUENT TAXPAYERS ARE CONSIDERED "PROPERTY OR RIGHTS TO PROPERTY" WITHIN THE MEANING OF SECTION 6331 OF THE INTERNAL REVENUE CODE OF 1954, WHICH MAKES THEM SUBJECT TO LEVY FOR DELINQUENT TAXES.

TO THE POSTMASTER GENERAL, JULY 14, 1958:

THIS REFERS TO LETTER OF MAY 15, 1958, FROM THE DEPUTY POSTMASTER GENERAL, REQUESTING OUR DECISION AS TO WHETHER A NOTICE OF LEVY, SERVED ON THE POST OFFICE DEPARTMENT, LEGALLY REACHES THE MONEY IN A POSTAL SAVINGS ACCOUNT OF A DELINQUENT TAXPAYER.

IT IS REPORTED THAT ON APRIL 17, 1957, A NOTICE OF LEVY WAS SERVED ON THE POSTMASTER AT OMAHA, NEBRASKA, AGAINST A POSTAL SAVINGS ACCOUNT IN THE NAME OF MR. SAMUEL BARTON. THE LEVY WAS FOR $789.96 INTERNAL REVENUE TAXES DUE. THE DEPUTY POSTMASTER GENERAL STATES THAT POSTAL SAVINGS ARE TRUST FUNDS, CITING LEKA, ADMINISTRATRIX V. UNITED STATES, 69 C.1CLS. 79, 87, AND THAT ACCORDINGLY THE DEPARTMENT HAS ALWAYS HELD THAT THE BOARD OF TRUSTEES IS WITHOUT AUTHORITY TO SET OFF POSTAL SAVINGS FUNDS AGAINST ANY DEMAND OF ANY KIND WHATSOEVER WHETHER BY THE GOVERNMENT OR BY A PRIVATE CITIZEN.

SECTION 6331 OF THE INTERNAL REVENUE CODE OF 1954, 68A STAT. 783, 26 U.S.C. SUPP. IV, 6331 (A), PROVIDES THAT 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 OF THE TREASURY OR HIS DELEGATE TO COLLECT SUCH TAX BY LEVY UPON ALL PROPERTY AND RIGHTS TO PROPERTY (EXCEPT SUCH PROPERTY AS IS EXEMPT UNDER SECTION 6334) BELONGING TO SUCH PERSON.

SECTION 6334 (A) OF THE CODE, 68A STAT. 784, 26 U.S.C. SUPP. IV, 6334 (A), EXEMPTS FROM LEVY CERTAIN CLOTHING, HOUSEHOLD ITEMS, PERSONAL EFFECTS, TOOLS, AND BOOKS. SECTION 6334 (C), PROVIDES:

(C) NO OTHER PROPERTY EXEMPT.--- NOTWITHSTANDING ANY OTHER LAW OF THE UNITED STATES, NO PROPERTY OR RIGHTS TO PROPERTY SHALL BE EXEMPT FROM LEVY OTHER THAN THE PROPERTY SPECIFICALLY MADE EXEMPT BY SUBSECTION (A).

IN VIEW OF THE FOREGOING PROVISIONS OF LAW ALL THAT IS NECESSARY TO DETERMINE FOR THE PURPOSE OF APPLICABILITY OF SECTION 6331 (A), IS WHETHER POSTAL SAVINGS ARE "PROPERTY OR RIGHTS TO PROPERTY" BELONGING TO THE DELINQUENT TAXPAYER. SINCE POSTAL SAVINGS ARE SAVINGS DEPOSITS SUBJECT TO WITHDRAWAL BY THE DEPOSITOR, THERE APPEARS TO BE NO QUESTION BUT THAT THEY ARE "PROPERTY OR RIGHTS TO PROPERTY" WITHIN THE CITED PROVISIONS OF THE INTERNAL REVENUE CODE OF 1954, AND THEREFORE IT IS THE VIEW OF OUR OFFICE THAT POSTAL SAVINGS ACCOUNTS ARE SUBJECT TO LEVY FOR DELINQUENT TAXES.