JIMMY L. CROOM, Bankruptcy Judge.
This proceeding is before the Court on the Standing Chapter 13 Trustee's motion to quash a levy issued by the Internal Revenue Service ("IRS") against a creditor in several bankruptcy cases in the Western District of Tennessee, Eastern Division. The Standing Chapter 13 Trustee ("Trustee") alleges that the IRS levy violates the
For the reasons that follow, the Court concludes that the IRS levy does indeed violate the provisions of the automatic stay of 11 U.S.C. § 362. As such, the Court will grant the Trustee's motion to quash the levy, but will do so without legal prejudice to the IRS subsequently filing a motion under 11 U.S.C. § 362(d)(1) and Federal Rule of Bankruptcy Procedure 4001(a) seeking relief from the automatic stay. After notice and a hearing, and for cause shown, the Court shall grant relief from the stay.
This proceeding arises in a case referred to this Court by the Standing Order of Reference, Misc. Order No. 84-30, previously entered by the United States District Court for the Western District of Tennessee, Western and Eastern Divisions. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), (G), and (O). This Court has the statutory authority and jurisdiction over core proceedings pursuant to 28 U.S.C. §§ 157(b)(1) and 1334 to hear and enter a final order in this matter subject to traditional appeal rights. This memorandum opinion shall serve as the Court's findings of facts and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.
On March 28, 2014, the IRS sent a Notice of Levy on Wages, Salary, or Other Income ("Notice of Levy") to the Trustee seeking to collect all disbursements to which a West Tennessee business entity, Highway 64 Car and Truck Sales ("Highway 64"), would be entitled, as a creditor, in all pending Chapter 13 cases in this judicial district. At the time of the levy, Highway 64 was receiving payments as a secured creditor from the Trustee in a number of cases in the Western District of Tennessee, Eastern Division. In its levy, the IRS indicated that Highway 64 owed back taxes to the federal government and the IRS was entitled to collect all amounts necessary to satisfy Highway 64's overdue tax debt. The levy did not identify any particular cases in which it believed Highway 64 was a creditor. That burden fell to the Trustee's office. The IRS levy left to the Trustee and his staff the task of:
(Tr. Reply in Support of Mot. to Quash, ECF No. 110 at 1.)
On its own initiative, the Trustee's office determined that, on the date the levy was issued, Highway 64 was a creditor in twelve Chapter 13 bankruptcy cases with
Debtor's Case No. Ch. 13 Tr.'s Amount Amount Amount Name Balance on Received Highway 64 Disbursed Hand as of Between Would Have to Highway 3/28 3/28 Received if 64 on 4/14 and 4/14 Disbursement was on 3/28 Keno Palmer 13-11389 $58.93 $123.00 $0.00 $63.00 Torayo Brown 11-12607 $163.98 $340.00 $0.00 $43.00 Toneka Allen 11-12927 $349.59 $176.00 $235.00 $235.00Totals $572.50 $639.00 $235.00 $341.00
(Tr. Reply, ECF No. 110 at 3.)
As of March 28, 2014, the Trustee held a total of $572.50 attributable to the three remaining Chapter 13 cases. Because 11 U.S.C. § 1326 statutorily prohibits a Chapter 13 Trustee from making a distribution to any claimant in a particular class until there are enough funds to pay all claimants, only the $235.00 monthly payment attributable to Chapter 13 case number 11-12927, In re Toneka Allen, was subject to distribution at the time the IRS issued the levy. Based on conversations with the United States Attorney's office, the Trustee believed that the levy would probably be withdrawn. As a result, on April 14, 2014, the Trustee disbursed the $235.00 in Toneka Allen's case to Highway 64 pursuant to the terms of the confirmed plan and 11 U.S.C. § 1326.
The debtor in Chapter 13 case number 13-11389, Keno Palmer, voluntarily dismissed his case on October 3, 2014. See 11 U.S.C. § 1307(c). The Trustee made the final payment on Highway 64's claim in Toneka Allen's case after the levy was issued. According to the Trustee, there is now only one pending case in which Highway 64 is a creditor, Chapter 13 case number 11-12607, In re Torayo Brown. In that case, Highway 64 filed a proof of claim for $1,775.45 on March 15, 2012. As of the hearing in this matter, Torayo Brown had paid $1,016.00 of the principal on Highway 64's claim, and the Trustee had approximately $75.00 on hand earmarked for payment to Highway 64. The confirmed plan in Torayo Brown's case provides that Highway 64 was to receive additional payments of $54.00 per month until the remaining balance of $684.45 was fully satisfied. However, Torayo Brown has not made a plan payment since September 2014 so any further recovery seems increasingly unlikely. The Trustee has delayed moving for a case dismissal of Torayo Brown's case in order to maintain the status quo pending resolution of the present matter.
The Trustee filed a motion to quash the IRS levy on June 26, 2014. The Trustee challenges the levy on three grounds. First, the Trustee asserts the levy is an attempt to "obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate" in violation of the automatic stay under 11 U.S.C. § 362(a)(3). Second, the Trustee "believes that honoring the IRS levy against Highway 64 will create an undue hardship and cause irreparable
In support of the levy, the IRS argues that its actions do not violate the 11 U.S.C. § 362(d) automatic stay because the levy does not deplete the estate or attempt to control property of the estate. Rather, the levy merely seeks to intercept plan payments that are payable to Highway 64 as a creditor of various debtors in the Western District of Tennessee, Eastern Division: "A federal levy allows the United States to step into the taxpayer/creditor's shoes, and it only acquires whatever rights the taxpayer/creditor (i.e., Highway [64]) possesses." (IRS Resp. to Tr. Mot. to Quash, ECF No. 94 at 2.) Furthermore, the IRS assures the Trustee that compliance with the levy will discharge the debtors' obligations to Highway 64 pursuant to 26 U.S.C. § 6332(e).
The starting point of all statutory interpretation is the language of the statute itself. Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 1030, 157 L.Ed.2d 1024 (2004). In United States v. Ron Pair Enterprises, Inc., the Supreme Court provided specific guidance for interpreting the Bankruptcy Code: "The plain meaning of legislation should be conclusive, except in the rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." 489 U.S. 235, 242, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989) (citation omitted). When "the statute's language is plain, the sole function of the courts is to enforce it according to its terms." Id. at 241, 109 S.Ct. at 1030 (internal citation omitted).
Under 11 U.S.C. § 362(a), "operates as a stay, applicable to all entities,
11 U.S.C. § 362(a)(1) and (3). "The automatic stay of § 362(a) applies by its terms not only to actions against the debtor, but also to actions seeking to obtain property of the bankruptcy estate." Amedisys, Inc. v. Nat'l Century Fin. Enters., Inc. (In re Nat'l Century Fin. Enters., Inc.), 423 F.3d 567, 578 (6th Cir.2005) (citing 11 U.S.C. § 362(a)(1) and (3)). As Judge Magill recognized
Section 541(a)(1) of the Bankruptcy Code defines "property of the estate" broadly to include "all legal or equitable interests of the debtor in property as of the commencement of the case."
11 U.S.C. § 1306(a). Funds in the hands of a Chapter 13 Trustee typically come from debtors' postpetition income. Absent one of the events described in 11 U.S.C. § 1306(a), these funds remain property of the estate. Thus, a plain reading of these Code sections compels the conclusion that undistributed funds in the hands of a Chapter 13 Trustee constitute property of the estate. Several courts have recognized this principle. See, for example and among others, In re Johnson, 335 B.R. 805, 806 (Bankr.W.D.Tenn.2006); Clark v. United States (In re Clark), 207 B.R. 559, 565 (Bankr.S.D.Ohio 1997).
Confirmation of a Chapter 13 plan does not change the "property of the estate" analysis. Section 1327(b) provides: "Except as otherwise provided in the plan or order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor." 11 U.S.C. § 1327(b) (emphasis added.) Pursuant to orders confirming Chapter 13 plans in the Western District of Tennessee, all property which is defined as "property of the estate" by §§ 541 and 1306 of the Bankruptcy Code remains property of the estate until the debtor is discharged, the case is dismissed, or the court orders otherwise (e.g., grants relief from the automatic stay.) See Confirmation Order, ECF No. 28, ¶ 3. Furthermore, Chapter 13 confirmation orders in the Western District of Tennessee explicitly provide for the Bankruptcy Court's continuing exclusive jurisdiction under 28 U.S.C. §§ 157(a) and 1334(e) over undistributed funds: "the debtor(s) future earnings shall remain under the exclusive control of this Court. In the event of a case dismissal or conversion, funds held by the Trustee should be paid over to creditors unless otherwise ordered by the Court." (Id., ¶ 2) (emphasis added.) Accordingly, undistributed funds in the hands of a Chapter 13 Trustee in the Western District of Tennessee remain property of the estate postconfirmation absent a court order to the contrary. See, for example, Johnson, 335 B.R. at 806.
Section 362(a) of the Bankruptcy Code prohibits creditors from attempting
Id. at 286 (quoting H.R.Rep. No. 95-595 (1977) and S.Rep. No. 95-989 (1978)). The only exceptions to the automatic stay are found in 11 U.S.C. § 362(b). As will be discussed infra, none of these exceptions are applicable to the case at bar.
Section 362(c)(1) provides "the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate." The orderly administration of property of the estate is thus at the very heart of the automatic stay:
Clark, 207 B.R. at 565 (internal citations omitted).
Contrary to the IRS's assertions here, the IRS' Notice of Levy is not merely an administrative act establishing its right to payment. Rather, it is a legal action seeking to possess or control property of this bankruptcy estate. When a taxpayer is delinquent in paying taxes, § 6321 of the Internal Revenue Code empowers the government to impose a lien on "all property and rights to property" belonging to the taxpayer. As it has done here, the government may initiate an administrative levy under 26 U.S.C. § 6331(a) to enforce its hen. As the Supreme Court recognized in United States v. National Bank of Commerce, 472 U.S. 713, 720-21, 105 S.Ct. 2919, 2924-25, 86 L.Ed.2d 565 (1985), this administrative levy is only a "provisional remedy." It "does not determine whether the government's rights to the property are superior to others." Allstate Fin. Corp. v. United States, 860 F.Supp. 653, 656 (D.Minn.1994). Stated another way, an administrative levy "merely gives the Government temporary custody of the property to protect against
The IRS maintains that its levy has the practical effect of putting the United States in the shoes of Highway 64. According to the IRS, since the levy does not assert any right to payment beyond that due to Highway 64 it is no more a violation of the stay than any other postconfirmation assignment of a claim under Federal Rule of Bankruptcy Procedure 3001(e). (IRS Resp., ECF No. 94 at 3) ("The United States cannot ask for anything more than what the Trustee is already required to pay to Highway [64] under the confirmed Chapter 13 plan. Thus, the United States is not depleting the estate.")
The Court concludes that the blanket IRS levy in this Chapter 13 case is fundamentally unlike the transfer of a claim under Federal Rule of Bankruptcy Procedure 3001(e). The rights asserted by the IRS in this case go well beyond those to which a typical creditor stepping into the shoes of Highway 64 would be entitled for several reasons.
First, the broad demand of the IRS levy places the administrative burden of determining which payments, if any, Highway 64 was entitled to squarely on the shoulders of the Trustee. A claim transfer under Federal Rule of Bankruptcy Procedure 3001(e) requires the transferee to provide, at a minimum, evidence of a transfer of claim for which a proof of claim has been filed. Fed. R. Bankr.P. 3001(e). The levy at issue in this case is broadly stated to cover "this taxpayer's other income that you have now or for which you are obligated." (IRS Levy, Ex. 1 of Tr. Reply, ECF No. 110-1 at 2.) The Notice of Levy served on the Trustee in this case did not even identify cases in which Highway 64 was a creditor, let alone the specific proofs of claim or confirmed plans under which it was entitled to payment. Absent this crucial information, determining the IRS' rights under the levy required the Trustee and his staff to search all active Chapter 13 cases for ones in which Highway 64(i) was a creditor, (ii) that had filed a proof of claim, (iii) which had not already been paid in full, and (iv) for which there were sufficient funds on hand to make a payment. Although many of these tasks are part of the daily administrative duties of a Chapter 13 Trustee, the burden imposed
Second, the IRS takes the position that bankruptcy court review and approval of the government's rights to property of the estate pursuant to the levy are unnecessary. The scope of the levy, its continuous or fixed nature, and its application to funds subject to the jurisdiction of this Court are seriously ambiguous issues. Any creditor other than the IRS would have similar issues resolved by the claims allowance process. Comparatively, the IRS relies on the broad language of its levy to essentially circumvent the procedures typically governing the claims allowance process in bankruptcy.
The Notice of Levy provides: "This levy requires you to turn over to us ... [Highway 64's] other income that you have now or for which you are obligated." (IRS Levy, Ex. 1 of Tr. Reply, ECF No. 110-1 at 2.) The extent to which the Trustee is "obligated" by this language is complicated by the intersection of the Bankruptcy Code with the Internal Revenue Code and its corresponding Treasury Regulations. According to Treasury Regulation § 301.6331-1(a)(1), "[o]bligations exist when the liability of the obligor is fixed and determinable although the right to receive payment thereof may be deferred until a later date." 26 C.F.R. § 301.6331-1(a)(1) (emphasis added). However, as the dissent in Laughlin emphasizes, a claimant's right to payment in a Chapter 13 case remains contingent until the Chapter 13 Trustee makes the disbursement:
912 F.2d at 203 (Magill, dissenting) (internal citations omitted).
Both parties in the case at bar agree that payments made in preconfirmation cases, even though held by the Trustee and earmarked for payment to Highway 64 under 11 U.S.C. § 1326, are not sufficiently "fixed and determinable" to come within the Notice of Levy's scope. Furthermore, the Trustee asserts, and the IRS does not contest, that the levy does not apply to postconfirmation cases in which Highway 64 failed to file a proof of claim even though the terms of the confirmed plans in those cases provide Highway 64 with a right to payment as a secured claimant.
The IRS asserts its levy has a continuous effect and attaches to any payment that has been due and owing to Highway 64 since March 28, 2014. However, the plain language of the Internal Revenue Code seems to require successive seizures in situations analogous to the case at bar:
26 U.S.C. § 6331(c). The only exception to the general rule of successive seizures is found in 26 U.S.C. § 6331(e). Section 6331(e) provides that a levy on salary and wages shall be continuous from the date the levy is first made until the levy is released. It does not apply to "other income." The Court finds further support for the successive seizure interpretation in the majority opinion in Laughlin, wherein the majority analogized the role of the Chapter 13 Trustee to that of a bank:
Laughlin, 912 F.2d at 198-99. This analogy is particularly illustrative since the Treasury Regulations explicitly outline the effect § 6331 would have on a bank:
26 C.F.R. § 301.6331-1(a) (emphasis added).
By far the most glaring omission in the Notice of Levy in the case at bar is any mention of the Treasury Regulation exception for funds in the custody of the Bankruptcy Court:
26 C.F.R. § 301.6331-1(a)(3). In serving the Notice of Levy, the IRS unilaterally asserted that the proceedings in each case have progressed to the point at which compliance with the levy will not interfere with the work of the court. This assertion was premature given that, at the time it was made, neither the IRS nor the Trustee had identified the cases to which the Notice of Levy would apply.
Finally, the Notice of Levy potentially imposes personal liability on the Trustee for failing to comply with its ambiguous terms. Section 6332(d) of the Internal Revenue Code provides:
26 U.S.C. § 6332(d) (emphasis added). Although the IRS represented to the Court that it does not presently intend to seek penalties for the Trustee's noncompliance, the mandatory wording of § 6332(d) is enough to give pause to anyone in the Trustee's situation. Thus, the Trustee is put in the untenable position of deciding whether to honor his obligation under 11 U.S.C. § 1326(c) to "distribute any such payment in accordance with the plan as soon as practicable" or face personal liability for failure to comply with the Notice of Levy under 26 U.S.C. § 6332(d). (Tr. Reply, ECF No. 110 at 12-13.)
Accordingly, the Notice of Levy asserts rights beyond those due a typical creditor filing a transfer of claim pursuant to Federal Rule of Bankruptcy Procedure 3001. The rights asserted by the IRS invade the jurisdiction of the Court and interfere with the orderly administration of the estate by unilaterally determining the extent to which the Court's jurisdiction applies. Accepting the IRS's interpretation of its Notice of Levy would allow the IRS to act as "a self-determined arbiter of what constitutes property of the estate and what actions are permitted or prohibited by the stay." Clark, 207 B.R. at 565. Such unilateral action indeed impacts the orderly administration of this bankruptcy estate. Thus, the Notice of Levy is not merely an administrative act, but a violation of the 11 U.S.C. § 362 automatic stay.
As stated supra, § 362(b) of the Bankruptcy Code provides a list of 28 exceptions to the automatic stay. These exceptions are narrowly written and strictly construed. Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 453, 127 S.Ct. 1199, 1206, 167 L.Ed.2d 178 (2007). As the dissent in Hemmen recognized,
The IRS does not assert that the levy falls within any of § 362(b)'s exceptions. Rather, the IRS urges the Court to apply the judicially-crafted exception to the stay as outlined by the Eighth Circuit Court of Appeals in Laughlin, 912 F.2d at 198, and adopted by the Ninth Circuit Court of Appeals in Hemmen, 51 F.3d at 891. In Laughlin, the IRS served a Chapter 13 Trustee with notice of levy on funds payable to a debtor's counsel as fees from certain Chapter 13 estates. Laughlin, 912 F.2d at 198-99. The majority opinion in Laughlin found no violation of the automatic stay: "The Debtors, estates, and creditors — those entities the automatic stay is designed to protect — are unaffected by the levy." Id. at 198 (citation omitted). In Hemmen, the Ninth Circuit adopted the Laughlin approach to address an IRS levy served on a Chapter 7 Trustee. The Ninth Circuit held that "[a]ny perceived effect of a tax levy on the debtor, the estate's assets or the interests of other creditors is purely chimerical." Hemmen, 51 F.3d at 891.
This Court finds the majority holdings in Laughlin and Hemmen unpersuasive and inapplicable to the case at bar. As the dissents in Laughlin and Hemmen point out, both majority opinions disregard the plain language of 11 U.S.C. § 362(a). In Laughlin, the majority opinion intentionally avoided the question of whether undistributed funds in the hands of a Chapter 13 Trustee qualify as property of the estate:
Laughlin, 912 F.2d at 199, n. 4. Unlike the Chapter 13 confirmation order contemplated in Laughlin, Chapter 13 confirmation orders in the Western District of Tennessee unambiguously state that postconfirmation undistributed funds in the hands of a Chapter 13 Trustee remain property of the estate.
The majorities of Laughlin and Hemmen analyzed the validity of the IRS levy under § 301.6331-1(a) of the Treasury Regulations. In Laughlin, the judicially-crafted exception to the automatic stay is based on the minimal interference the IRS levy would impose on the bankruptcy process.
Laughlin, 912 F.2d at 199 (citing Bostwick v. United States, 521 F.2d 741, 744 (8th Cir.1975)). This sentiment is reflected in the Treasury Regulations relating to levying in bankruptcy or receivership cases:
26 C.F.R. § 301.6331-1(a)(3) (emphasis added). Likewise, the majority in Hemmen focused their attention almost entirely on whether an undistributed allowed administrative claim was sufficiently "fixed and determinable" to satisfy the Treasury Regulations. 51 F.3d at 890 ("Finding no case law on point, we turn directly to the language of 26 C.F.R. § 301.6331-1(a)(1) to determine whether Hemmen was obligated to honor the Service's levy on the facts before us."). Although Treasury Regulations may be informative, they do not provide the foundation for a judicial exception to the automatic stay nor do they supplant the plain language of the Bankruptcy Code. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984).
Finally, the IRS asserts that a judicially-crafted exception to the automatic stay much like those in Laughlin and Hemmen already exists in the Sixth Circuit. In its response to the Trustee's motion to quash, the IRS argued that: "The Sixth Circuit has held that the test for determining whether there is a violation of section 362(a)(3) is whether the action `actually depletes the bankruptcy estate.'" (IRS Resp., ECF No. 94 at 2)(quoting Nat'l Century Fin. Enters., Inc., 423 F.3d at 578). This characterization takes the Sixth Circuit's National Century decision out of context. The issue before the court in National Century was whether 11 U.S.C. § 362(a) prohibited state court actions against solvent non-debtors when the property at issue is, or likely is, property of the bankruptcy estate. Id. at 574. Based on § 362(a)(3)'s prohibition against "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate," the Sixth Circuit concluded that § 362(a)(3) prevents a creditor's state court action against a non-debtor when the creditor "seeks to obtain property of the bankruptcy estate." Id. at 575, 578.
Although it is true that the National Century court recognized that depletion of the bankruptcy estate may be a necessary factor in a § 362(a)(3) inquiry, it did so when refuting the appellant's argument that a bankruptcy court must extend § 362's automatic stay by issuing a preliminary injunction under 11 U.S.C. § 105 in order to stop actions against property of the estate:
Nat'l Century Fin. Enters., Inc., 423 F.3d 567, 578 (6th Cir.2005) (some internal citations omitted). As one bankruptcy court in the Sixth Circuit has recognized, the National Century analysis of whether a judgment "would actually deplete the bankruptcy estate" applies to situations in which a party is seeking a judgment against solvent codefendants. In re Cincom iOutsource, Inc., 398 B.R. 223, 228 (Bankr.S.D.Ohio 2008) (citing Nat'l Century Fin. Enters., Inc., 423 F.3d at 579) (other citations omitted)). In both National Century and Patton, the debtors were in pending Chapter 11 cases and the actions at issue were lawsuits filed against solvent codefendants in courts outside the bankruptcy arena. The situation in the case is bar is distinctively different.
Although either "depleting" or "dismembering" property of the estate are sufficient to violate the automatic stay under 11 U.S.C. § 362(a)(3), it does not follow that actions so severe are necessary to violate the automatic stay. Rather, the statute's terms "obtain possession" and "exercise control" indicate that a wide spectrum of acts are stayed. See Allentown Ambassadors, Inc. v. Northeast American Baseball, LLC (In re Allentown Ambassadors, Inc.), 361 B.R. 422, 437 (Bankr.E.D.Pa.2007) ("The term [exercise control] has been described as `elusive' and one which can be defined only in a `case by case' manner because a `continuum of conduct exists which the Court must evaluate in determining whether [a party] has assumed control of property of the estate.") (citations omitted). Moreover, if an act to possess or control property of the estate only violated § 362(a)(3) when it diminished the value of the bankruptcy estate, there would be nothing to stop a secured creditor from exercising its self-help remedies to foreclose on collateral in which the debtor has no equity. Creditors would rely on their own opinion of the debtor's bankruptcy to determine whether foreclosure would cause damage to the bankruptcy estate. Simply put, the IRS' interpretation of National Century completely disregards the essential and fundamental procedural role that the automatic stay plays in the bankruptcy process:
Clark, 207 B.R. at 564-65. The determination of "what constitutes property of the estate and what actions are permitted or prohibited by the stay" falls under the exclusive jurisdiction of the bankruptcy court. Id. The Sixth Circuit has never adopted the kind of judicial exception to 11 U.S.C. § 362(a) that would so thoroughly undermine the automatic stay. Accordingly, the IRS must first seek and obtain relief from the automatic stay before proceeding against property of the estate. See 11 U.S.C. § 362(a)(1) and Fed. R.Bankr.P. 4001(a).
Considering a totality of the particular facts and circumstances and applicable law, the Court finds and concludes that the IRS violated the automatic stay under 11 U.S.C. § 362(a) by issuing its Notice of Levy against the Trustee. Pursuant to 11 U.S.C. §§ 541(a)(1) and 1306 and the terms of Chapter 13 confirmation orders in the Western District of Tennessee, undisbursed funds in the hands of the Chapter 13 Trustee remain property of the estate until the debtor is discharged, the case is closed or dismissed, or the Court orders otherwise, e.g. grants relief from the automatic stay. Thus, any act to obtain possession of undistributed funds or to exercise control over or interfere with undistributed funds violates 11 U.S.C. § 362(a)(3). Section 362(b) of the Bankruptcy Code does not provide an exception for IRS levies, nor is there an extra-statutory exception accepted in the Sixth Circuit. Accordingly, the IRS must first seek and obtain leave from the automatic stay before seeking to enforce notices of levy against creditors in any pending bankruptcy cases in the Eastern Division of the Western District of Tennessee.
The Court will enter a separate order in accordance with the foregoing.
9-3001 Collier on Bankruptcy ¶ 3001.08[1][d] (16th ed. 2014).
