Applicability of Tax Levies to Thrift Savings Plan Accounts ( 2010 )

Applicability of Tax Levies to Thrift Savings Plan Accounts
Thrift Savings Plan accounts are subject to federal tax levies under sections 6331 and
6334 of the Internal Revenue Code, notwithstanding a statute that, standing alone,
would protect such accounts from “levy” except as expressly provided in that statute.
May 3, 2010
MEMORANDUM OPINION FOR THE CHIEF COUNSEL
INTERNAL REVENUE SERVICE
Your office has asked whether Thrift Savings Plan (“TSP”) accounts,
which permit tax-deferred retirement savings for certain federal employ-
ees, are subject to federal tax levies under sections 6331 and 6334 of the
Internal Revenue Code, notwithstanding a statute that, standing alone,
would protect such accounts from “levy” except as expressly provided in
that statute. 1 We believe that TSP accounts are subject to federal tax
levies under the applicable statutes.
I.
Your question deals with the interaction between the federal tax levy
provisions of the Internal Revenue Code, see 26 U.S.C. §§ 6321, 6331,
6334 (2006), and a provision of the Federal Employees’ Retirement
System Act of 1986 (“FERSA”), 5 U.S.C.A. § 8437(e)(2) (West 2007).
The Internal Revenue Code has long given broad authority to the
Treasury Secretary to collect unpaid federal taxes (and associated inter-
est, penalties, and costs) by levy. See Internal Revenue Code of 1954,
Pub. L. No. 83-591, §§ 6331(a), 6334(c), 68A Stat. 1, 783, 785. Under
current Code provisions, “[i]f any person liable to pay any tax neglects or
refuses to pay the same after demand,” the amount of the liability, includ-
ing interest and penalties, “shall be a lien in favor of the United States
upon all property and rights to property, whether real or personal,
belonging to such person.” 26 U.S.C. § 6321. If a taxpayer “liable to pay
any tax neglects or refuses to pay the same within 10 days after notice and
1 In addition to the views of your office and the Federal Retirement Thrift Investment
Board, we have considered views submitted by the Tax Division of the Department of
Justice.
157
34 Op. O.L.C. 157 (2010)
demand,” the Treasury Secretary may “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 [which includes section 6321] for the payment of
such tax.” Id. § 6331(a). The code defines such levies to “include[] the
power of distraint and seizure by any means” and states that “[i]n any case
in which the Secretary may levy upon property or rights to property, he
may seize and sell such property or rights to property (whether real or
personal, tangible or intangible).” Id. § 6331(b).
Section 6334(a) does exempt specified categories of assets from levies.
Since 1966, such exempt assets have included “[a]nnuity or pension
payments under the Railroad Retirement Act, benefits under the Railroad
Unemployment Insurance Act, special pension payments received by a
person whose name has been entered on the Army, Navy, Air Force, and
Coast Guard Medal of Honor roll (38 U.S.C. 1562), and annuities based
on retired or retainer pay under chapter 73 of title 10 of the United States
Code.” 26 U.S.C. § 6334(a)(6) (codifying the Federal Tax Lien Act of
1966, Pub. L. No. 89-719, § 104(c)(2), 80 Stat. 1125, 1137). 2 Section
6334(c) directs that “[n]otwithstanding 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).” Section 6334 makes no express exemp-
tion for TSP accounts.
Congress enacted FERSA in 1986 to reform the retirement savings sys-
tem for federal employees. See FERSA § 100A, reprinted in 5 U.S.C.
§ 8401 note (2006). Among other things, FERSA established the Thrift
Savings Plan, which enables federal employees to hold individual retire-
ment savings accounts in the Thrift Savings Fund, an investment fund
managed by the Federal Retirement Thrift Investment Board (“FRTIB”).
See 5 U.S.C.A. §§ 8432, 8437 (West 2007 & West Supp. 2009); 5 U.S.C.
§§ 8472, 8479(b) (2006). These accounts, commonly known as “Thrift
2 Under section 6331(h) of the Code, certain payments otherwise covered by exemp-
tions in section 6334(a), including “any annuity or pension payment under the Railroad
Retirement Act or benefit under the Railroad Unemployment Insurance Act,” may be
subject to a tax levy, generally limited to fifteen percent of the payment,
“[n]otwithstanding section 6334.” See 26 U.S.C. § 6331(h).
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Applicability of Tax Levies to Thrift Savings Plan Accounts
Savings Plan” or “TSP” accounts, see 5 C.F.R. § 1690.1 (2009), offer
federal employees a tax-deferred retirement savings opportunity similar
to that offered to private-sector employees by so-called “401(k)” plans
established under section 401(k) of the Internal Revenue Code, 26
U.S.C.A. § 401 (West Supp. 2009). See 5 U.S.C. § 8440 (2006); see
also, e.g., Hewitt v. Thrift Sav. Plan, 664 F. Supp. 2d 529, 530 (D.S.C.
2009) (describing the Thrift Savings Plan as “a retirement plan for certain
federal government employees that was designed to allow government
employees savings-related benefits very similar to those enjoyed by
private sector employees whose employers offer them 401(k) retirement
plans”); Cavanaugh v. Saul, 233 F.R.D. 21, 22 (D.D.C. 2005) (similar);
In re Hasse, 246 B.R. 247, 252 (Bankr. E.D. Va. 2000) (similar).
FERSA includes a provision that broadly protects assets in TSP ac-
counts from “levy,” subject to specified exceptions. It states:
Except as provided in paragraph (3), sums in the Thrift Savings Fund
may not be assigned or alienated and are not subject to execution,
levy, attachment, garnishment, or other legal process. For the pur-
poses of this paragraph, a loan made from such Fund to an employee
or Member shall not be considered to be an assignment or alienation.
5 U.S.C.A. § 8437(e)(2). The cross-referenced paragraph (3) permits legal
process to obtain “[m]oneys due or payable from the Thrift Savings Fund”
or the “balance” in a TSP account for enforcement of certain child support
or alimony obligations under the Social Security Act, 42 U.S.C.A. § 659
(West Supp. 2009); enforcement of certain victim restitution orders under
the Mandatory Victims Restitution Act of 1996 (“MVRA”), 18 U.S.C.
§ 3663A (2006); forfeiture under a FERSA provision, 5 U.S.C.A.
§ 8432(g)(5), of government contributions to a TSP account based on
the account-holder’s commission of one or more specified national securi-
ty offenses; and payments required by another FERSA provision, 5 U.S.C.
§ 8467 (2006), to satisfy certain divorce, annulment, or separation decrees
and certain judgments for physical, sexual, or emotional abuse of a child.
See 5 U.S.C.A. § 8437(e)(3). Paragraph (3) does not cross-reference
section 6334 and thus does not expressly indicate that federal tax levies
under that provision may be imposed on TSP accounts.
159
34 Op. O.L.C. 157 (2010)
II.
A.
To resolve the question here, we must reconcile these two statutes,
each of which appears exclusive on its face. While FERSA provides that
funds in TSP accounts shall not be subject to levy except as provided in
5 U.S.C.A. § 8437(e)(3), the Internal Revenue Code directs that “[n]ot-
withstanding any other” federal law, no property is exempt from federal
tax levies except as provided in section 6334(a) of the Code. And al-
though both statutes include express exceptions, neither includes a cross-
reference to the other specifying how the two statutes should be recon-
ciled. 3
Despite the apparent conflict between the TSP provision and the federal
tax levy statute, our “duty” is “to regard each as effective” if the two
statutes are “capable of co-existence.” Morton v. Mancari, 417 U.S. 535,
551 (1974). “[I]t is ‘[a] long-standing maxim of statutory construction that
statutes are enacted in accord with the legislative policy embodied in prior
statutes, and that therefore statutes dealing with the same subject should
be construed together.’” Relationship Between Illegal Immigration Re-
3 We do not consider here the validity of federal tax levies on any state-law community
property interests that spouses of account-holders may have in TSP accounts. In a 1981
opinion, this Office addressed whether a federal tax levy under 26 U.S.C. § 6331(a) could
be asserted against a tax delinquent’s community property interest in his wife’s federal
pension, despite a provision directing that the pension benefits in question were “not
assignable, either in law or equity, except under [certain provisions], or subject to execu-
tion, levy, attachment, garnishment, or other legal process, except as otherwise may be
provided by Federal laws,” 5 U.S.C. § 8346(a) (2006). Validity of Federal Tax Lien on
Civil Service Retirement Refund, 5 Op. O.L.C. 37, 37 (1981). We concluded that “Neva-
da’s community property law, in the absence of explicit legislation by Congress, has not
created for [the delinquent taxpayer] ‘property [or] rights to property’ in his wife’s
retirement deductions that are assailable by IRS.” Id. at 40 (quoting 26 U.S.C. § 6331(a)).
Your office has asked us here to address the validity of “federal tax levies served on
[FRTIB] to attach taxpayer’s rights in their individual TSP accounts in order to satisfy
outstanding tax liabilities.” Letter for David J. Barron, Acting Assistant Attorney General,
Office of Legal Counsel, from Clarissa C. Potter, Acting Chief Counsel, Internal Revenue
Service at 1 (July 1, 2009). Because it appears undisputed that taxpayers’ rights in their
own TSP accounts constitute “property [or] rights to property” of the individual taxpayer,
we need not consider here whether the reasoning of our 1981 opinion should extend to
any community property interests in TSP accounts.
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Applicability of Tax Levies to Thrift Savings Plan Accounts
form and Immigrant Responsibility Act of 1996 and Statutory Require-
ment for Confidentiality of Census Information, __ Op. O.L.C. Supp. __,
at *5 (May 18, 1999) (“IIRIRA Opinion”) (quoting Memorandum for
Glen E. Pommerening, Assistant Attorney General for Administration,
from Antonin Scalia, Assistant Attorney General, Office of Legal Coun-
sel, Re: Establishing a Maximum Entry Age Limit for Law Enforcement
Officer Positions in the Department of Justice at 3 (Apr. 3, 1975), https://
www.justice.gov/olc/page/file/936041/download). In our view, the texts
of the two statutes are properly reconciled by giving primacy to the feder-
al tax levy provision in section 6334.
Although the TSP provision 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,” a category that necessarily includes
FERSA, 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 provi-
sions 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 prefato-
ry “notwithstanding” clause “does reflect a congressional intention to
displace inconsistent law”). 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.2d 413, 416 (1991) (internal
quotation marks omitted) (collecting other similar cases), and the Su-
preme 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 (1999);
see also In re Beam (Beam v. 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)”). In contrast, while the
TSP provision appears exclusive by its own terms because it establishes
a general bar on levies that applies “except as” provided in FERSA, this
provision does not include language comparable to the “notwithstanding”
clause in section 6334(c) that expressly overrides other potentially appli-
cable statutes. The text of section 6334 thus appears to reflect a stronger
161
34 Op. O.L.C. 157 (2010)
congressional intent to override conflicting statutes than does the text of
the TSP provision. Cf., e.g., Beam, 192 F.3d at 944 (holding that section
6334 overrides a bankruptcy statute directing that the bankruptcy trustee
“shall return” certain payments to the debtor in certain circumstances);
Crowley Caribbean Transp., Inc. v. United States, 865 F.2d 1281, 1282–
83 (D.C. Cir. 1989) (deeming it “implausible” that a statute applicable
“notwithstanding” any other statute did not override a separate statute
applicable “whenever” the United States took certain actions). As one
court has put it, the “plain language [of section 6334(c)] bars interpreting
5 U.S.C. § 8437(e)(2) as proscribing a § 6331 levy on a TSP account.”
In re Jones (Jones v. IRS), 206 B.R. 614, 617 (Bankr. D.D.C. 1997); see
also United States v. Laws, 352 F. Supp. 2d 707, 712 & n.7 (E.D. Va.
2004) (holding that criminal restitution order could be enforced against
TSP account under statute generally permitting such enforcement to the
same extent as federal tax levies). 4
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 “notwithstand-
ing” clause “less certain,” since “[t]he drafters of [section 6334(c)] can
hardly be said to have had [FERSA] specifically within their contempla-
tion.” Ill. Nat’l Guard v. FLRA, 854 F.2d 1396, 1403 (D.C. Cir. 1988)
(quoting N.J. Air Nat’l Guard v. FLRA, 677 F.2d 276, 283 (3d Cir.
1982)); cf. United States v. Novak, 476 F.3d 1041, 1046 (9th Cir. 2007)
(en banc) (observing that courts have “determined the reach of each such
‘notwithstanding’ clause by taking into account the whole of the statutory
context in which it appears”). Yet in cases involving later-enacted statutes
lacking their own applicable “notwithstanding” clauses, courts have
deemed “notwithstanding” clauses “powerful evidence that Congress did
not intend” other statutes, “whenever enacted,” to qualify the terms of the
4 As we have recently observed, “‘notwithstanding’ phrases are best read simply to
qualify the substantive requirement that follows.” Prioritizing Programs to Exempt Small
Businesses from Competition in Federal Contracts, 33 Op. O.L.C. 284, 296 (2009). They
therefore do not “support a broad construction of the substantive provision that would
give rise to . . . inconsistencies” with other statutes. IIRIRA Opinion at *7. Here, how-
ever, the substantive clause of section 6334(c) broadly states that “no property or rights to
property shall be exempt from levy other than the property specifically made exempt by
subsection (a),” 26 U.S.C. § 6334(c), and there appears to be no dispute that this substan-
tive provision is inconsistent with the TSP provision to the extent the former statute
authorizes levies while the latter restricts them.
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Applicability of Tax Levies to Thrift Savings Plan Accounts
earlier-enacted statute. Ill. Nat’l Guard, 854 F.2d at 1403 (quoting N.J.
Air Nat’l Guard, 677 F.2d at 283); see also, e.g., Am. Fed’n of Gov’t
Employees v. FLRA, 239 F.3d 66, 70 (1st Cir. 2001) (following N.J. Air
Nat’l Guard). As some courts have explained, “[t]he [notwithstanding]
language does not preclude a subsequent change of heart on the part of
Congress, but it does suggest that any qualification of the terms of [the
earlier-enacted statute] would be accepted by Congress only after some
consideration of the factors requiring or permitting such a change.” Ill.
Nat’l Guard, 854 F.2d at 1403 (quoting N.J. Air Nat’l Guard, 677 F.2d at
283). Moreover, the TSP anti-levy provision, as a later-enacted statute
that has no “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 “re-
peals by implication are not favored and will not be presumed unless the
intention of the legislature to repeal is clear and manifest.” Hawaii v.
Office of Hawaiian Affairs, 129 S. Ct. 1436, 1445 (2009) (internal quota-
tion marks and brackets omitted)). Here, we believe the text and history of
the two statutes support the conclusion that Congress, far from “clear[ly]
and manifest[ly],” id., intending to repeal section 6334(c), in fact intended
to permit federal tax levies on TSP accounts. 5
5 A related principle of statutory interpretation holds that “in the absence of a clear
intention to the contrary ‘a specific statute will not be controlled or nullified by a general
one, regardless of the priority of enactment.’” Disclosure of Confidential Business
Records Obtained Under the National Traffic and Motor Vehicle Safety Act, 4B Op.
O.L.C. 735, 736 (1980) (quoting Morton, 417 U.S. at 550–51). This canon is inapplicable
here, however, because neither statute is clearly more specific or more general than the
other in relevant respects. On the one hand, federal tax levies under section 6334 are only
a subset of the broader category of “levies” covered by the plain terms of the TSP provi-
sion, while on the other hand TSP accounts are only a subset of the broader category of
“property or rights to property” covered by the plain terms of federal tax levy provisions.
See, e.g., Restrictions on Travel by Voice of America Correspondents, 23 Op. O.L.C. 192,
195 n.2 (1999) (observing that an issue of statutory construction could not be resolved
“by turning to the principle that, absent a clear intention to the contrary, a specific statute
controls a general one” because one set of applicable statutes was “more specific” on one
question but “less specific” on another); Gulf War Veterans Health Statutes, 23 Op.
163
34 Op. O.L.C. 157 (2010)
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 “[t]he right of any
person to any future payment under this subchapter shall not be transfer-
able or assignable, at law or in equity, and none of the moneys paid or
payable or rights existing under this subchapter shall be subject to execu-
tion, levy, attachment, garnishment, or other legal process, or to the
operation of any bankruptcy or insolvency law.” Id. § 407(a). This provi-
sion itself had recently been amended to provide that “[n]o other provi-
sion of law, enacted before, on, or after April 20, 1983, 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.”
See Social Security Amendments of 1983, Pub. L. No. 98-21, § 335(a)(2),
97 Stat. 65, 130 (codified at 42 U.S.C. § 407(b)); Spending Reduction Act
of 1984, Pub. L. No. 98-369, div. B, tit. VI, § 2661(o)(5), 98 Stat. 494,
1159 (codified at 26 U.S.C. § 6334(c)); see also H.R. Rep. No. 98-861, at
1413 (1984) (Conf. Rep.) (describing subtitle including change to section
6334 as “contain[ing] a number of minor technical amendments to the
Social Security Act and the Internal Revenue Code, to correct clerical and
other minor errors either resulting from the Social Security Amendments
of 1983, or already existing in those acts”). The “express reference”
requirement of section 207 shows, if anything, a stronger congressional
intent to preclude levies than the relevant prohibitory 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” re-
quirement. Novak, 476 F.3d at 1048. “[B]y making clear that the ‘not-
withstanding’ clause ‘includes’ the one federal anti-alienation provision
that demands explicit statutory override, Congress manifested that [sec-
tion 6334(c)] means what it says”—that absent an express exception in
section 6334, no “property or rights to property” are exempt from levy.
O.L.C. 49, 52 (1999) (rejecting application of the canon where “the two provisions are at
the same order of specificity”).
164
Applicability of Tax Levies to Thrift Savings Plan Accounts
Id.; see also id. at 1076–77 (W. Fletcher, J., dissenting) (disagreeing with
majority’s conclusions regarding the statutes at issue but distinguishing
Internal Revenue Code section 6334).
Congress’s express exemption of certain retirement benefits from tax
levies under section 6334 reinforces the view that Congress did not
intend to provide a similar exception for TSP accounts, which are not
expressly exempted. The four exempted retirement statutes all include
anti-alienation provisions. While one of these statutes (the Railroad
Retirement Act) expressly cross-references the Internal Revenue Code
and applies “notwithstanding any other law of the United States,” see
45 U.S.C. § 231m(a) (2006), and another (the Railroad Unemployment
Insurance Act) also applies “[n]otwithstanding any other law of the Unit-
ed States,” id. § 352(e), the other two employ language closely similar to
the TSP provision. Specifically, provisions governing the exempted
“annuities based on retired or retainer pay under chapter 73 of title 10 of
the United States Code,” 26 U.S.C. § 6334(a)(6), provide, without any
express carve-out for the Internal Revenue Code, that “[e]xcept as provid-
ed” elsewhere in that chapter, certain annuities are not “assignable or
subject to execution, levy, attachment, garnishment, or other legal pro-
cess.” 10 U.S.C. § 1440 (2006) (covering annuities under one subchapter
of chapter 73); id. § 1450(i) (covering annuities under another subchapter
of chapter 73). And provisions governing the exempted “special pension
payments received by a person whose name has been entered on the
Army, Navy, Air Force, and Coast Guard Medal of Honor roll (38 U.S.C.
1562),” 26 U.S.C. § 6334(a)(6), provide that such “[s]pecial pension[s]
shall not be subject to any attachment, execution, levy, tax, lien, or deten-
tion under any process whatever.” See 38 U.S.C. § 1562(c) (2006).
Given the breadth of section 6334(c)’s terms— “no property or rights
to property shall be exempt from levy” except as “specifically” provided
in section 6334(a)—and its express applicability “[n]otwithstanding any
other law of the United States,” 26 U.S.C. § 6334(c), the express ex-
emptions from federal tax levies in section 6334(a) cannot be under-
stood as simply “clarify[ing]” the scope of the rule in section 6334(c).
Am. Fed’n of Gov’t Employees v. FLRA, 702 F.2d 1183, 1187 (D.C.
Cir. 1983) (opinion by Scalia, J.); see also Drye, 528 U.S. at 56 (con-
cluding that “[t]he enumeration [of exceptions to section 6334(c)]
contained in § 6334(a) . . . is exclusive”). Accordingly, section 6334’s
165
34 Op. O.L.C. 157 (2010)
express exceptions for these pension and annuity benefits suggest that
without the exceptions the benefits would be subject to levy under sec-
tions 6331 and 6334, despite the applicable anti-alienation provisions in
the cross-referenced statutes governing the benefits. By the same token,
it is unlikely Congress intended the comparable language of the TSP
provision—“[e]xcept as provided in [section 8437(e)(3)], sums in the
Thrift Savings Fund may not be assigned or alienated and are not subject
to execution, levy, attachment, garnishment, or other legal process,”
5 U.S.C.A. § 8437(e)(2) —to create an exemption from tax levies under
the Internal Revenue Code without an express exemption in section 6334.
In other words, there would be no apparent need for the express exemp-
tion for the retirement benefits listed in section 6334(a)(6) if language
such as that in the TSP provision sufficed on its own to establish such an
exemption.
The relevant legislative history of the two statutes accords with our
construction of them. With respect to section 6334, the legislative history
plainly shows that this provision should override other statutes. According
to the committee reports on the 1954 Internal Revenue Code, Congress
intended section 6334(c) to “make[] it clear that no other provision of
Federal law shall exempt property” from federal tax levies. See H.R. Rep.
No. 83-1337, at A409 (1954) (House Ways and Means Committee report
on Internal Revenue Code of 1954); S. Rep. No. 83-1622, at 578 (1954)
(Senate Finance Committee report on Internal Revenue Code of 1954).
And with respect to FERSA, the legislative history shows that Congress
“patterned” the Thrift Savings Plan “after [retirement savings plans]
found among large employers in private industry.” See S. Rep. No. 99-
166, at 48 (1985); see also H.R. Rep. No. 99-606, at 134 (1986) (Conf.
Rep.) (observing that “[t]he tax-deferred features of the plan . . . make the
Thrift Savings Plan economically attractive to employees” and that
“[t]hese popular tax-deferred savings plans should be as available to
Federal employees as they are to private sector employees”); S. Rep. No.
99-302, at 134 (1986) (Conf. Rep.) (same). Similar private-sector plans
are generally governed by the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C.A. §§ 1001–1461 (West 2008 & West
Supp. 2009; West 2009), which includes its own anti-alienation provision
directing that “[e]ach pension plan shall provide that benefits provided
under the plan may not be assigned or alienated.” See id. § 1056(d)(1).
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Applicability of Tax Levies to Thrift Savings Plan Accounts
Courts have construed section 6334 to permit tax levies on plans covered
by this provision. See, e.g., United States v. Hosking, 567 F.3d 329, 335
(7th Cir. 2009); United States v. Taylor, 338 F.3d 947, 950 n.3 (8th Cir.
2003); McIntyre v. United States (In re McIntyre), 222 F.3d 655, 660
(9th Cir. 2000); United States v. Sawaf, 74 F.3d 119, 124 (6th Cir. 1996);
Shanbaum v. United States, 32 F.3d 180, 183 (5th Cir. 1994); United
States v. Rogers, 558 F. Supp. 2d 774, 786 n.1 (N.D. Ohio 2008); see
also 26 C.F.R. § 1.401(a) -13(b) (providing that certain qualified ERISA
plans must provide that “benefits provided under the plan may not be
anticipated, assigned (either at law or in equity), alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable pro-
cess,” but indicating that such plans “shall not preclude . . . [t]he en-
forcement of a Federal tax levy made pursuant to section 6331”). These
courts, to be sure, have relied in part on ERISA’s savings clause, which
generally provides that “[n]othing in [ERISA] shall be construed to alter,
amend, modify, invalidate, impair, or supersede any law of the United
States.” 29 U.S.C.A. § 1144(d). But Congress’s decision to model TSP
accounts on private retirement savings plans is in line with the textual
indications that Congress did not intend to prevent tax levies on TSP
accounts of public employees who fail to pay taxes and suggests that
Congress did not wish to provide greater protection against federal tax
levies to the assets held in the TSP retirement accounts of federal employ-
ees than it conferred on the comparable accounts of private-sector em-
ployees.
Our interpretation of the relationship between section 6334 and the TSP
provision, moreover, continues to give effect to the term “levy” in the
latter statute. While federal tax levies under section 6331 may be one
common form of “levy,” the term has other applications as well. Black’s
Law Dictionary defines “levy” to mean not only “[t]he imposition of a
fine or tax; the fine or tax so imposed” (so-called “tax levies”), but also
“[t]he legally sanctioned seizure and sale of property; the money ob-
tained from such a sale” (so-called “levies of execution”). Black’s Law
Dictionary 991 (9th ed. 2009). In keeping with this definition, the term
has been used in other contexts to describe means of recovering a variety
of both public and private debts. See, e.g., 28 U.S.C. §§ 3002(3), (4),
3102(d), 3203(d) (2006) (authorizing “levies” to collect various debts
owed to the United States); U.C.C. § 6-111 (1987 Official Text), reprint-
167
34 Op. O.L.C. 157 (2010)
ed in U.C.C. app. V at 1497 (2005) (providing with respect to recovery of
certain private debts that “[n]o action under this Article shall be brought
nor levy made more than six months after the date on which the transferee
took possession of the goods unless the transfer has been concealed”
(emphasis added)); D.C. Code § 28:6-111 (2001) (codifying this provi-
sion); Md. Code Ann., Com. Law, § 6-111 (West 2009) (same); U.C.C.
§ 6-111 cmt. 2 (1987 Official Text), reprinted in U.C.C. app. V at 1497
(2005) (indicating that while “‘levy’ . . . is not a defined term under the
Code,” the term “should be read broadly [in this provision] as including
not only levies of execution proper but also attachment, garnishment,
trustee process, receivership, or whatever proceeding, under the state’s
practice, is used to apply a debtor’s property to payment of his debts”);
United States v. Holy Land Found. for Relief & Dev., 445 F.3d 771, 782–
85 (5th Cir. 2006) (discussing levies imposed on certain bank account
assets under New York, South Carolina, and Washington state law to
execute a federal court civil judgment), vacated in part on other grounds,
493 F.3d 469 (5th Cir. 2007) (en banc). Furthermore, a Treasury Depart-
ment regulation requires certain pension plans to bar “benefits provided
under the plan” from being “anticipated, assigned (either at law or in
equity), alienated or subject to attachment, garnishment, levy, execution
or other legal or equitable process,” but then exempts federal tax levies
under section 6331 from this prohibition. See 26 C.F.R. § 1.401(a) -13(b)
(emphasis added). As this regulation demonstrates, the term “levy” in the
Treasury Department’s view encompasses more than federal tax levies.
Therefore, a restriction on “levies,” as appears in FERSA, need not be
viewed as unnecessary or without meaningful effect where federal tax
levies are expressly permitted by a different statute that controls. In
short, absent some statutory restriction on doing so, both private and
governmental parties might seek to impose levies on TSP accounts to
collect debts other than federal tax liabilities. Because FERSA’s general
bar against levies on TSP accounts therefore need not be understood
solely as a limitation against federal tax levies, the provision is not ren-
dered superfluous by reconciling the two measures as we think proper.
B.
Against this reading of the proper means of reconciling the two stat-
utes, we have been offered several reasons to conclude that Congress
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Applicability of Tax Levies to Thrift Savings Plan Accounts
intended the TSP provision to bar federal tax levies under sections 6331
and 6334.
First, another FERSA anti-alienation provision (applicable to certain
annuities) includes the phrase “except as otherwise may be provided by
Federal laws,” 5 U.S.C. § 8470(a) (2006), and the Senate version of the
TSP anti-alienation provision included a similar clause that was dropped
from the final bill by a conference committee. See H.R. Rep. No. 99-606,
at 39; S. Rep. No. 99-302, at 39; H.R. 2672, 99th Cong. § 101(a) (as
ordered printed with Senate amendments, Nov. 14, 1985) (proposing new
5 U.S.C. § 8426(d)); S. Rep. No. 99-166, at 52. While the contrast be-
tween section 8470 and the TSP anti-alienation provision might suggest
that Congress intended to protect TSP accounts from levy under other
“Federal laws,” and thus presumably under section 6334 as well, the
conference committee did not explain its decision to omit this Senate
language. 6 See H.R. Rep. No. 99-606, at 133–39; S. Rep. No. 99-302, at
133–39. Given the “notwithstanding” clause in section 6334, Congress
might well have concluded that, whatever the effect of the anti-alienation
provision on other federal statutes, a broad express exception for “Federal
laws” was unnecessary to permit federal tax levies on TSP accounts.
Indeed, several years before Congress enacted FERSA, this Office con-
cluded that a similar “except as” clause in 5 U.S.C. § 8346(a) (2006), an
anti-alienation provision for certain federal pensions, “was probably
included pro forma” and “was not necessary to enable IRS to reach funds
payable under the retirement law to employees or former employees
6 As explained in the conference committee reports, the Senate passed the legislation
that became FERSA as an amendment to unrelated House legislation. H.R. Rep. No. 99-
606, at 125; S. Rep. No. 99-302, at 125; see also 131 Cong. Rec. 31,087 (1985) (Senate
passage of legislation). Although the House bill in the conference included no provisions
for the establishment of a new federal retirement system, the conferees “were cognizant
of” a pending House retirement reform bill, and they “incorporated many of [this bill’s
provisions] in the conference agreement.” H.R. Rep. No. 99-606, at 125; S. Rep. No. 99-
302, at 125; see also H.R. 3660, 99th Cong. (1985) (pending House bill); H.R. Rep. No.
99-1030, at 174–75 (1986) (review of committee activity describing legislative history of
FERSA and H.R. 3660). The House bill included a TSP anti-alienation provision that,
among other differences from the Senate provision, omitted the clause “except as may be
provided in a Federal law” that appeared in the Senate bill. See H.R. 3660, § 101(a)
(proposing new 5 U.S.C. § 8434(d)); H.R. 2672, § 101(a) (proposing new 5 U.S.C.
§ 8426(d)).
169
34 Op. O.L.C. 157 (2010)
delinquent in the payment of their taxes.” Validity of Federal Tax Lien
on Civil Service Retirement Refund, 5 Op. O.L.C. 37, 39 (1981). In any
event, we cannot presume that, contrary to the other considerations of text
and history discussed above, Congress’s omission of an “except as”
clause included in another provision and originally included in the Senate
bill signals the kind of “clear and manifest” intent, Office of Hawaiian
Affairs, 129 S. Ct. at 1445 (internal quotation marks omitted), that would
be required to repeal section 6334 by implication and thus shield TSP
accounts from federal tax levies.
Second, according to the legislative history, Congress enacted owner-
ship and vesting protections for TSP accounts to prevent “political in-
volvement in the thrift plan management” and eliminate any congressional
temptation to “use the large pool of thrift money for political purposes.”
See H.R. Rep. No. 99-606, at 136; S. Rep. No. 99-302, at 136. An IRS
levy to collect unpaid taxes, however, does not implicate these concerns,
because such levies are possible only in the case of a tax delinquency.
Third, in 1996, Congress amended FERSA to provide that “[n]otwith-
standing any other provision of law,” the government’s contributions to
an employee’s TSP account (and any associated earnings) “shall be for-
feited” if the employee forfeits certain other federal retirement benefits
under provisions authorizing such forfeiture based on the employee’s
commission of one or more specified national security offenses. See
Intelligence Authorization Act for Fiscal Year 1996, Pub. L. No. 104-93,
§ 304, 109 Stat. 961, 965 (1996) (codified at 5 U.S.C.A. § 8432(g)(5)).
Congress’s placement of the new provision, 5 U.S.C.A. § 8432(g)(5), in
provisions governing TSP accounts, rather than in the provisions general-
ly governing forfeiture based on national security offenses, might be
argued to support the conclusion that “Congress intended that TSP funds
were, and are, to be alienated only pursuant to the express exceptions set
forth in FERSA.” Letter for Daniel L. Koffsky, Deputy Assistant Attorney
General, Office of Legal Counsel, from Thomas K. Emswiler, General
Counsel, Federal Retirement Thrift Investment Board, at 5 (Sept. 17,
2009) (“FRTIB Submission”). Yet because other provisions of the subsec-
tion to which Congress added this provision deal with forfeiture of gov-
ernment contributions to TSP accounts, see 5 U.S.C.A. § 8432(g), it
would seem a natural, or at least convenient, place to locate the new
provision. In any event, we do not believe we can draw such a sweeping
170
Applicability of Tax Levies to Thrift Savings Plan Accounts
inference about congressional intent from Congress’s decision where to
codify this provision, which is described in the legislative history as
merely “clos[ing] a loophole.” See H.R. Rep. No. 104-138, pt. 1, at 29
(1995). In fact, if anything, this amendment reinforces the conclusion that
section 6334(c) permits federal tax levies on TSP accounts, because in
section 8432(g)(5) Congress authorized forfeiture from TSP accounts
using precisely the phrase—“notwithstanding any other” law—that also
appears in section 6334(c). 7
Finally, another FERSA amendment, enacted in 2009, created an ex-
press exception to the TSP anti-alienation provision for the “enforcement”
of certain victim restitution orders under the MVRA, 18 U.S.C. § 3663A.
See 5 U.S.C.A. § 8437(e)(3). Because a separate MVRA provision already
provided for civil enforcement of such restitution orders “[n]otwith-
standing any other Federal law (including section 207 of the Social Secu-
rity Act),” see 18 U.S.C. § 3613(a), (f) (2006), Congress’s addition of
this express exception could show that Congress did not believe that the
“notwithstanding” provision in the MVRA already authorized alienation
of TSP account assets and thus that Congress did not intend the closely
similar “notwithstanding” language of section 6334(c) to authorize such
alienation. The legislative background of this amendment, however,
undermines this inference. The Ninth Circuit, among other courts, had
held that the MVRA enforcement provision superseded ERISA’s anti-
alienation provision, thus allowing enforcement against funds in ERISA-
7 More broadly, FRTIB suggests that because certain provisions in Title 5 of the U.S.
Code governing the Thrift Savings Fund explicitly incorporate or cross-reference specific
provisions of the Internal Revenue Code (Title 26) applicable to analogous private
retirement savings plans, Congress “designed the TSP to be governed by title 5, not title
26,” and did not intend “[p]rovisions in the [Internal Revenue Code] applicable to private
sector plans [to be] self-executing with regard to the TSP.” FRTIB Submission at 10–11.
But express cross-references to such other Internal Revenue Code provisions would not
preclude the application of the federal tax levy provisions, which by their terms reach all
“property and rights to property,” to TSP accounts. 26 U.S.C. §§ 6331(a), 6334(c); see
also, e.g., Drye, 528 U.S. at 56 (observing that the language in section 6331(a) “‘is broad
and reveals on its face that Congress meant to reach every interest in property that a
taxpayer might have’” (quoting United States v. Nat’l Bank of Commerce, 472 U.S. 713,
719–20 (1985)). We express no view in this opinion about the applicability of any other
Internal Revenue Code provisions to TSP accounts or the Thrift Savings Fund.
171
34 Op. O.L.C. 157 (2010)
governed plans. 8 See Novak, 476 F.3d at 1053 (en banc); see also, e.g.,
United States v. Miller, 588 F. Supp. 2d 789, 796 (E.D. Mich. 2008);
United States v. Lazorwitz, 411 F. Supp. 2d 634, 636–37 (E.D.N.C. 2005);
United States v. James, 312 F. Supp. 2d 802, 804–05 (E.D. Va. 2004); cf.
United States v. Irving, 452 F.3d 110, 126 (2d Cir. 2006) (adopting the
“understanding” that “18 U.S.C. § 3613(a) permits courts to consider
ERISA protected assets in determining appropriate fines and restitution”
because “ERISA pension plans are not exempted from payment of taxes
under 26 U.S.C. § 6334, and thus they should not be exempted from
payment of criminal fines”); Hosking, 567 F.3d at 335 (holding that a
sentencing court “may order a lump-sum payment from [a retirement]
account to satisfy a restitution order”). In addition, at least one federal
court had held that TSP accounts were subject to MVRA orders. See
Laws, 352 F. Supp. 2d at 712 & n.7. FRTIB, however, advised Congress
and the Department of Justice that it nevertheless would not honor MVRA
orders. See FRTIB Submission at 6–7; Letter for Kenneth E. Melson,
Director, Executive Office for United States Attorneys, from Thomas K.
Emswiler, General Counsel, Federal Retirement Thrift Investment Board
(Apr. 30, 2009) (attachment 3 to FRTIB Submission); E-mail for Larry
Novey from Thomas Trabucco (Apr. 21, 2009) (“Trabucco E-mail”)
(attachment 4 to FRTIB Submission). FRTIB also approved a motion to
“seek clarification” from Congress as to whether the MVRA applied to
TSP accounts, and in e-mail correspondence FRTIB requested that a
congressional committee revise FERSA “[i]f after review the Committee
believes that the MVRA provision was intended to allow access to TSP
funds.” See Trabucco E-mail.
In light of FRTIB’s request for clarifying legislation, Congress may not
have intended to make any substantive change in the 2009 amendments,
but simply to clarify congressional intent and provide FRTIB with com-
fort that MVRA orders may be satisfied from TSP accounts. Indeed, at
the same time that it added the MVRA exception, Congress also added
an express exception to the anti-alienation provision for forfeiture under
the provision regarding government contributions enacted in 1996. See
8 Although several judges dissented from the en banc Ninth Circuit’s holding with
respect to the MVRA in Novak, the dissenters distinguished federal tax levies from the
MVRA. See Novak, 476 F.3d at 1076–77 (W. Fletcher, J., dissenting).
172
Applicability of Tax Levies to Thrift Savings Plan Accounts
Thrift Savings Plan Enhancement Act of 2009, Pub. L. No. 111-31, § 108,
123 Stat. 1853, 1856 (2009) (codified at 5 U.S.C.A. § 8437(e)(3)). This
change also seems to have been intended as a clarification, not a substan-
tive amendment, as it seems unlikely that Congress intended the 1996
amendment to have been ineffective before the anti-alienation provision
was thus amended to include an express cross-reference. See FRTIB
Submission at 5–6, 12 n.13 (asserting that the addition of this exception
to § 8437(e)(3) was “unnecessary” because forfeitable government con-
tributions under § 8432(g) are “not protected by 5 U.S.C. § 8437”). To the
extent the express exception for MVRA restitution orders was intended
to be clarifying rather than substantive, this amendment may only rein-
force the conclusion that Congress believed the closely similar language
of the federal tax levy provision also creates an exception to the TSP
provision. Cf. Am. Fed’n of Gov’t Employees, 702 F.2d at 1186–87 (con-
trasting clarifying provisions and exceptions to otherwise governing law).
In any event, the legislative history gives no clear explanation for the
2009 changes. Thus, here, too, the amendment fails to indicate a “clear
and manifest” intention, Office of Hawaiian Affairs, 129 S. Ct. at 1445(internal quotation marks omitted), partially to repeal section 6334(c) and
preclude federal tax levies on TSP accounts. 9
DANIEL L. KOFFSKY
Deputy Assistant Attorney General
Office of Legal Counsel
9 The Tax Division also argues that tax levies under sections 6331 and 6334 do not
fall within the scope of the TSP anti-alienation provision because that provision’s ban
on “execution, levy, attachment, garnishment, or other legal process,” 5 U.S.C.A.
§ 8437(e)(2) (emphasis added), applies only to forms of “legal process,” a term the Tax
Division argues should be understood to “require judicial intervention,” whereas tax
levies under sections 6331 and 6334 are imposed administratively. See Memorandum
for Daniel Koffsky, Deputy Assistant Attorney General, Office of Legal Counsel, from
John A. DiCicco, Acting Assistant Attorney General, Tax Division, Re: Validity of IRS
Tax Levies on Thrift Savings Fund Accounts at 8–9 (Dec. 18, 2009). We need not, and
therefore do not, reach this argument to resolve the question presented to us.
173