Tax Legal Services · Primary-source case analysis
National Bank of Commerce: An IRS Levy Can Reach a Taxpayer’s Joint Account Rights
Decision: United States v. Nat’l Bank of Commerce, 472 U.S. 713 (1985).
United States v. National Bank of Commerce distinguishes the summary administrative levy from the later adjudication of competing ownership claims.
The levy targeted joint Arkansas accounts
The IRS served a levy on accounts held in the taxpayer’s name with other depositors. The bank refused, arguing that the government first had to determine which portion actually belonged to the delinquent taxpayer.
State withdrawal rights supplied property
Arkansas law allowed each named depositor to withdraw the account funds. That present right was property or a right to property belonging to the taxpayer and therefore fell within the federal levy statute.
Levy is a provisional collection device
The government need not conclusively adjudicate every third-party interest before serving a levy. The opinion identified two defenses to the bank’s failure to comply: It did not possess or owe property belonging to the taxpayer, or the property was already subject to a judicial attachment or execution. Neither applied to these stipulated accounts. That is different from deciding a codepositor’s ultimate ownership. Third-party ownership claims require their own statutory remedy and deadlines, not reliance on the bank to litigate every beneficial interest before surrender. National Bank of Commerce, 472 U.S. at 721–724.
The bank was required to honor the levy
The Court reversed the dismissal of the government’s action. It did not declare that the delinquent taxpayer beneficially owned every dollar; it held that his withdrawal right permitted levy while preserving statutory remedies for other claimants.
Key takeaways
- Identify the taxpayer’s present state-law withdrawal rights.
- Distinguish administrative levy from final ownership adjudication.
- Respond promptly to levy deadlines and statutory defenses.
- Use third-party remedies to prove a codepositor’s superior interest.
Address IRS bank levies and wrongful levy actions
Our firm can review IRS administrative levies, joint account documentation, and third-party wrongful levy options. Please bring IRS notice of levy forms, bank account agreements, and deposit tracing records. Call (949) 343-9735 or email office@mishrax.com.