Summary
recognizing that 18 U.S.C. § 3613 sets forth the property exempt from levy for restitution payments and does not exempt ERISA pension plans
Summary of this case from U.S. v. First Bank & Trust East TexasOpinion
Case No. 96-10049-01-JTM
November 6, 2003
MEMORANDUM AND ORDER
Defendant Antonio J. Garcia pleaded guilty to Wire Fraud ( 18 U.S.C. § 1343); Uttering Counterfeit Securities ( 18 U.S.C. § 513(a)); and Income Tax Evasion ( 26 U.S.C. § 7201). Garcia was sentenced to 41 months incarceration, and ordered to pay an assessment of $150.00, restitution in the amount of $1,944,394.98, and a fine of $10,000.00. (Dkt. No. 31). As of September 19, 2003, Garcia owed $1,490,663.85 in unpaid restitution, and $13,734.44 in unpaid fine and accumulated interest.
On June 4, 2003, the United States filed a Writ of Continuing Garnishment (Dkt. No. 35) against garnishee-defendant, Textron Savings Plan, pursuant to the Federal Debt Collection Procedures Act, (FDCPA), 28 U.S.C. § 3205. In its Answer, the garnishee Plan stated that it had in its custody, control, or possession a tax-qualified retirement plan belonging to Garcia with a current account balance of $31,049.41.
Garnishee, Textron Savings Plan objects to the garnishment because it is a qualified benefit plan under Section 401(a) of the Internal Revenue Code. The Plan contends that it is not subject to garnishment pursuant to 26 U.S.C. § 401(a)(13), and the corresponding restrictions set forth in Section 206(d) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1056(d). The matter is before the court on the Plan's objection.
The Plan's objection appears limited to the narrow issue of the potential application of 26 U.S.C. § 401(a)(13). The Plan expressly notes in its objection that, if the court specifically finds that the garnishment sought by the United States is permitted under Section 401(a)(13), it would withdraw its objection to the garnishment.
The Plan's objection is overruled. The procedure for collecting fines or restitution awards is set forth in 18 U.S.C. § 3613. The statute provides:
The United States may enforce a judgment imposing a fine in accordance with the practices and procedures for the enforcement of a civil judgment under Federal law or State law. Notwithstanding any other Federal law . . . a judgment imposing a criminal fine may be enforced against all property or rights to the property of the person fined, except that —
(1) property exempt from levy for taxes pursuant to Section 6334(a)(1), (2), (3), (4), (5), (6), (7), (8), (10), and (12) of the Internal Revenue Code of 1986 shall be exempt from enforcement of the judgment under Federal law;
(2) section 3014 of chapter 176 of title 283 shall not apply to enforcement under Federal law[.]18 U.S.C. § 3163(a) (emphasis added).
The statute thus incorporates the list of property exempt fromlevy identified by 26 U.S.C. § 6334, or rather, only specific portions of that list The exemption statute generally exempts the following property from levy:
(1) Wearing apparel and school books . — Such items of wearing apparel and such school books as are necessary for the taxpayer or for members of his family;
(2) Fuel, provisions, furniture, and personal effects . — So much of the fuel, provisions, furniture, and personal effects in the taxpayer's household, and of the arms for personal use, livestock, and poultry of the taxpayer, as does not exceed $6,250 in value;
(3) Books and tools of a trade, business, or profession . — So many of the books and tools necessary for the trade, business, or profession of the taxpayer as do not exceed in the aggregate $3,125 in value;
(4) Unemployment benefits . — Any amount payable to an individual with respect to his unemployment (including any portion thereof payable with respect to dependents) under an unemployment compensation law of the United States, of any State, or of the District of Columbia or of the Commonwealth of Puerto Rico.
(5) Undelivered mail . — Mail, addressed to any person, which has not been delivered to the addressee.
(6) Certain annuity and pension payments . — Annuity 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 (3 8 U.S.C. § 1562), and annuities based on retired or retainer pay under chapter 73 of title 10 of the United States Code.
(7) Workmen's compensation . — Any amount payable to an individual as workmen's compensation (including any portion thereof payable with respect to dependents) under a workmen's compensation law of the United States, any State, the District of Columbia, or the Commonwealth of Puerto Rico.
(8) Judgments for support of minor children . — If the taxpayer is required by judgment of a court of competent jurisdiction, entered prior to the date of levy, to contribute to the support of his minor children, so much of his salary, wages, or other income as is necessary to comply with such judgment.
(9) Minimum exemption for wages, salary, and other income. — Any amount payable to or received by an individual as wages or salary for personal services, or as income derived from other sources, during any period, to the extent that the total of such amounts payable to or received by him during such period does not exceed the applicable exempt amount determined under subsection (d).
(10) Certain service-connected disability payments . — Any amount payable to an individual as a service-connected (within the meaning of section 101(16) of title 38, United States Code) disability benefit under —
(A) subchapter II, III, IV, V, [FN1] or VI of chapter 11 of such title 38, or
(B) chapter 13, 21, 23, 31, 32, 34, 35, 37, or 39 of such title 38.
(11) Certain public assistance payments. — Any amount payable to an individual as a recipient of public assistance under —
(A) title IV or title XVI (relating to supplemental security income for the aged, blind, and disabled) of the Social Security Act, or
(B) State or local government public assistance or public welfare programs for which eligibility is determined by a needs or income test.
(12) Assistance under Job Training Partnership Act . — Any amount payable to a participant under the Job Training Partnership Act ( 29 U.S.C. § 1501 et seq.) from funds appropriated pursuant to such Act.
(13) Residences exempt in small deficiency cases and principal residences and certain business assets exempt in absence of certain approval or jeopardy. —
(A) Residences in small deficiency cases. — If the amount of the levy does not exceed $5,000 —
(i) any real property used as a residence by the taxpayer; or
(ii) any real property of the taxpayer (other than real property which is rented) used by any other individual as a residence. (B) Principal residences and certain business assets. — Except to the extent provided in subsection (e) —
(i) the principal residence ofthe taxpayer (within the meaning of section 121); and
(ii) tangible personal property or real property (other than real property which is rented) used in the trade or business of an individual taxpayer.
18 U.S.C. § 6334(a) (bold in original, italics added). Only the italicized portions ofthe general tax code exemption statute are incorporated as exceptions to the power ofthe government to execute in aid of fines or restitution under 18 U.S.C. § 3613. ERISA pension plans are not among the enumerated exemptions incorporated into Section 3613.
The broad nature ofthe ability to execute under Section 3613 is reflected in the express statement in subsection(a) that, except for the specifically identified exemption, all property ofthe defendant is subject to execution "[n]otwithstanding any other Federal law." 26 U.S.C. § 6334(c) makes the same point, providing:
Notwithstanding any other law ofthe United States (including section 207 ofthe Social Security Act), no property or rights to property shall be exempt from levy other than the property specially made exempt by subsection (a).
And it is not only the text of Section 3613(a) which leads to the conclusion that the general anti-alienation protection accorded qualified plans under the tax code and ERISA does not insulate such plans from execution for unpaid criminal fines. The same conclusion arises from the treatment accorded executions under Section 3613, and the limited nature ofthe anti-alienation protection. That is, the anti-alienation protection does not protect a qualified plan from the enforcement of federal tax levies and collections on a judgment for unpaid taxes. 26 C.F.R. § 1.401(a) — 13(b)(2). And, under 18 U.S.C. § 3613 (c), fines or orders of restitution "is a lien in favor of the United States on all property and rights to property of the person fined as if the liability of the person fined were a liability for a tax assessed under the Internal Revenue Code of 1986." (Emphasis added).
The cases which have directly addressed the issue of whether Section 3613 authorizes execution on ERISA qualified plans have reached the same conclusion. See United States v. Tyson, 242 F. Supp.2d 469 (E.D. Mich. 2003); United States v. Rice, 196 F. Supp.2d 1196 (N.D. Ok. 2002).
It may be noted, however, that the exemption to ERISA's anti-alienation protection exists as to fines and orders of restitution; it does not apply to special assessment orders. Tyson, 242 F. Supp.2d at 473. The assessment in the present action was satisfied August 19, 1998. Dkt. No. 32.
IT IS ACCORDINGLY ORDERED this 6th day of November, 2003, that the objection contained in the Answer of Textron Savings Plan (Dkt. No. 37) is hereby overruled. Textron Savings Plan is ordered and directed to comply with the Writ of Continuing Garnishment (Dkt. No. 35).