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and that petitioners had no recourse against MMI because section
6332(d) precluded petitioners from seeking recourse against MMI.
Respondent contends that the seizure of intangible property
by levy does not constitute a transfer of ownership, relying on
United States v. Whiting Pools, Inc., 462 U.S. 198 (1983), and
Murphy v. United States, 45 F.3d 520 (1st Cir. 1995).4 Respondent
contends that the tax liability is not paid until the account
receivable is either collected or sold, relying on Whiting Pools,
Inc. and Cash v. United States, 961 F.2d 562 (5th Cir. 1992).
Respondent contends that the levy on MMI had the effect of making
respondent an involuntary assignee of petitioners, relying on In
re Quakertown Shopping Ctr., Inc., 366 F.2d 95 (3d Cir. 1966).
Accounts receivable are subject to levy. See sec. 301.6331-
1(a)(1), Proced. & Admin. Regs. A levy is effective when the
notice of levy is served on a third party. See id. Section
301.6331-1(a)(1), Proced. & Admin. Regs., provides that “a levy
extends only to property possessed and obligations which exist at
the time of the levy.”
In Phelps v. United States, supra at 336-337, the Supreme
Court decided that the bankruptcy court below lacked summary
jurisdiction under the Bankruptcy Act over an account receivable
4In the instant case, respondent is not seeking to collect
petitioners’ 1971 tax liability that was assessed in 1977 and
finally satisfied by the distribution from MMI’s bankruptcy
trustee in March 2000. Rather, respondent is seeking to collect
the interest that accrued on that tax liability after it was
assessed in 1977.
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