_____________

                            No. 95-1575WM
                            _____________

State Farm Life Insurance        *
Company,                         *
                                 *
          Plaintiff-Appellee,    *
                                 *
     v.                          *
                                 *
Faye A. Howell;                  *
                                 *
          Defendant,             *
                                 *
Maximillian D. Howell, a         *   Appeal from the United States
Minor; Neldra Moody Flint,       *   District Court for the Western
Co-Guardian of Maximillian D.    *   District of Missouri.
Howell, a Minor, and             *
Conservator of the Estate of     *
Maximillian D. Howell, a Minor, *
and Appointed as guardian ad     *
litem; Jacqueline Tomlin,        *
Co-Guardian of Maximillian D.    *
Howell, a Minor;                 *
                                 *
          Defendants-Appellants,*
                                 *
Falisa Howell,                   *
                                 *
          Defendant.             *
                           _____________

                 Submitted:    September 14, 1995

                       Filed: February 9, 1996
                            _____________

Before FAGG, FLOYD R. GIBSON, and MAGILL, Circuit Judges.
                          _____________


FAGG, Circuit Judge.


     Charles W. Howell was murdered in 1990. At the time of his
death, Charles was the insured under a life insurance policy and a
retirement annuity issued by State Farm Life Insurance Company

                                 -1-
(State Farm). Charles designated his wife, Faye A. Howell, as the
primary beneficiary and his son, Maximillian D. Howell, as the
contingent beneficiary of both policies. After Faye was charged
with Charles's murder, the Internal Revenue Service (IRS) served
State Farm with a levy on Charles and Faye's property to recover
their delinquent taxes. See 26 U.S.C. § 6332 (1994). State Farm
paid the IRS's levy by turning over the retirement annuity proceeds
and a portion of the life insurance proceeds (collectively the
disputed proceeds). After a jury convicted Faye of murdering her
husband, State Farm filed an interpleader action and deposited the
remaining life insurance proceeds with the district court.
Maximillian then counterclaimed contending State Farm should have
refused to pay the disputed proceeds to the IRS.       The district
court decided State Farm acted properly and dismissed Maximillian's
counterclaim. Maximillian appeals and we affirm.


     The IRS may levy on "all property and rights to property"
belonging to a delinquent taxpayer.      

   Congress
intended the levy power "to reach every interest in property that
a taxpayer might have," United States v. National Bank of Commerce,

, 720 (1985), including any property in the custody of
a third party, 26 U.S.C. § 6332(a) (1994). "[E]ven if others claim
an interest in the property and the taxpayer's interest [is small],
the property remains subject to attachment by levy and must be
surrendered until ultimate ownership can be resolved." Congress
Talcott Corp. v. Gruber, 

, 319 (3rd Cir. 1993); see 26
U.S.C. §§ 6343, 7426 (1994) (allowing recovery of erroneously
levied property from the IRS). Thus, if Faye had an interest in
the disputed proceeds at the time of the levy, State Farm was
required to turn the proceeds over to the IRS.


     Maximillian contends Faye never acquired an interest in the
disputed proceeds because she was convicted of Charles's murder.
See Baker v. Martin, 

, 535 (Mo. Ct. App. 1986).
Under Missouri law, "[a] beneficiary who intentionally and

                               -2-
feloniously causes the death of an insured may not [recover the
proceeds] under a policy of insurance." 

A beneficiary
retains an interest in the proceeds, however, until a court decides
the beneficiary killed the insured. See In re McCarty, 

, 461 (Mo. Ct. App. 1988); Bradley v. Bradley, 

,
379-80 (Mo. Ct. App. 1978); Minnesota Mut. Life Ins. Co. v. James,

, 245-46 (W.D. Mo. 1962). Although charged, Faye
had not been convicted of murdering her husband when State Farm
received the levy. Because Faye had an interest in the disputed
proceeds at the time of the levy, State Farm is "discharged from
any obligation or liability to the delinquent taxpayer and any
other person [arising from the surrender of the levied property]."
26 U.S.C. § 6332(e) (1994).


     Contrary to Maximillian's view, State Farm was not required to
incur liability for the delinquent taxes and a fifty percent
penalty by refusing to surrender Faye's property to the IRS. See

Allstate Fin. Corp. v. United States, 

, 656-57 (D. Minn. 1994).        We also reject Maximillian's
suggestion that State Farm should have filed an interpleader action
against the United States rather than complying with the levy.
Assuming State Farm could interplead the United States, we fail to
see why State Farm should be required to do so.         State Farm
properly responded to the IRS's levy, and we affirm the district
court's judgment.


     A true copy.


          Attest:


               CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                               -3-