## Facts

- The IRS assessed substantial wagering excise tax liabilities against Frank Andrews on May 2, 1963.
- Morris Weintraub, a Kentucky attorney, had participated with his brother in Arizona real estate transactions funded by loans, including $135,000 from Andrews in 1960.
- After payment difficulties, Weintraub and his brother transferred their remaining interests in the parcels to other creditors through settlement in 1962.
- Believing Weintraub owed Andrews a debt arising from these transactions, the IRS served Weintraub with a notice of levy under I.R.C. § 6332 on May 3, 1963, demanding surrender of any Andrews property or rights to property in Weintraub’s possession.
- Weintraub responded in 1963 that he held no Andrews property or property rights.
- Weintraub was acquitted in 1965 of criminal charges for willfully failing to honor the levy and for making false statements.
- After continuing collection efforts against Andrews, the United States filed a civil action in 1976 under I.R.C. § 6332(c) against Weintraub for failure to honor the levy; a jury found for the United States.

## Issues

1. Whether I.R.C. § 6502’s tax-collection limitations period barred a civil suit under I.R.C. § 6332(c) against a third party served with a levy many years after the assessment against the taxpayer.
2. Whether laches barred the United States’ levy-enforcement action due to delay and alleged prejudice from lost evidence and deceased witnesses.

## Decision

- The Sixth Circuit affirmed the judgment for the United States.
- The court held the action was not barred by I.R.C. § 6502 because that limitations provision governs collection from the assessed taxpayer and did not clearly limit a § 6332(c) suit against a third party who failed to honor a levy.
- The court reasoned that service of levy placed the levied obligation in the government’s constructive possession; the later suit sought to reduce that right to actual possession.
- The court rejected laches, citing the rule that time does not ordinarily run against the sovereign and finding, in any event, no sufficient lack of diligence or actual prejudice.
- The court also treated laches as an equitable defense requiring clean hands and found Weintraub’s conduct inconsistent with equitable relief.

## Legal Principles

- Statutes of limitations do not bind the United States unless Congress clearly and unequivocally provides otherwise.
- I.R.C. § 6502 limits time to collect assessed taxes from the taxpayer and does not automatically bar a levy-enforcement action under I.R.C. § 6332(c) against a third party who fails to surrender property or rights to property subject to levy.
- An IRS levy can place a debt or obligation owed to the taxpayer in the government’s constructive possession; a subsequent § 6332(c) action may be treated as an effort to obtain actual possession of property already levied upon.
- Laches requires proof of (1) lack of diligence by the party against whom it is asserted and (2) actual prejudice to the party asserting it; delay alone is insufficient.
- Equitable defenses such as laches may be unavailable where the defendant’s conduct shows unclean hands.

## Conclusion

The Sixth Circuit upheld civil liability for failure to honor an IRS levy, holding that neither the general tax-collection limitations period in § 6502 nor laches barred the government’s delayed § 6332(c) suit against a third party absent a clear statutory time limit and absent concrete, equitable prejudice.


United States v. Weintraub, 613 F.2d 612 (6th Cir. 1979)