CCA 1028034: IRS could use a paper levy to collect an existing stream of payments

Plain-English summary

Chief Counsel addressed whether the IRS could continue receiving payments under a paper levy instead of using the Federal Payment Levy Program. The advice states that a timely levy on a fixed and determinable stream of payments could continue after the collection statute expiration date under Treas. Reg. § 301.6343-1(b)(1)(ii). It also concludes that the 15 percent limit for continuous levies under IRC § 6331(h) did not apply when the levy attached to an existing obligation to make payments, so a levy under § 6331(a) could collect the full obligation. The memorandum relied on Hines v. United States and noted that an internal review of a cited IRM provision was ongoing.

Ruling snapshot

• Question: Could a paper levy collect an existing stream of payments without the 15 percent limit for a Federal Payment Levy Program levy?
• Outcome: advice given
• Key authorities: IRC §§ 6331(a) and 6331(h); Treas. Reg. § 301.6343-1(b)(1)(ii); Hines v. United States, 658 F. Supp. 2d 139 (D.D.C. 2009)

Full text (IRS public release)

ID: CCA_2010060914124047 Number: 201028034
Release Date: 7/16/2010
Office: --------------
UILC: 6331.00-00, 6404.00-00

From: ----------------------
Sent: Wednesday, June 09, 2010 2:12:48 PM
To: --------------------
Cc: --------------------------------------------------------------
Subject: FW: FPLP Levies v. paper levies - -----------------

1. In response to your question about use of FPLP v. a paper levy: we agree that the Service is
   authorized to continue to receive payments under Treas. Reg. 301.6343-1(b)(1)(ii) even after the CSED,
   because we timely levied on a fixed and determinable stream of payments.

We do take the position that we are not limited to the 15% cap for a FPLP levy under section 6331(h),
merely because the type of payment is a type which could be leviable under section 6331(h). Rather, we
can use a paper levy to collect the entire existing obligation to make a series of payments.

We argued this position in Hines v. United States, 658 F.Supp.2d 139, 145-147 (D.D.C. 2009). The court
agreed that the 15% cap on continuous levies under section 6331(h) did not apply to a levy on a
taxpayer's social security retirement benefits because the obligation to pay these benefits existed when
the levies attached under section 6331(b). Thus, the levy was not a continuous levy subject to the 15%
limitation.

The court distinguished continuing levies, under section 6331(h), which, like section 6331(e) continuous
wage levies, attach to new rights as they arise. The court noted that section 6331(h) expanded the rights
to collect from property previously exempt from levy, but did not limit the IRS' existing rights to attach
levies. Section 6331(h) has permissive language giving discretion, but not requiring, its use even where
the type of property might be eligible for FPLP levy.

In this case, as in Hines, the levy reached a fixed obligation to make payments. As such, levy under
section 6331(a) was proper without the 15% limitation.

FYI--someone in our office is currently reviewing the 5.19 IRM provision cited below to ensure it is
correct.

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We are continuing to look into this issue but wanted to get back to you on your primary question in the
meanwhile. I apologize for the delays.