Appellant United Sand and Gravel Contractors, Inc. ("United Sand"), plaintiff below, is attempting to recover from the United States, appellee, $8,600 it has never received for work performed as a subcontractor on a prime contract between Americ Constructions of New Orleans, Inc. ("Americ") and the United States Army Corps of Engineers ("Corps"). The court below dismissed the suit, holding that the suit was not filed within the nine-month time period established by the relevant statute. We agree with the district court and therefore affirm its decision.
Most of the material facts are not seriously disputed. On review of this dismissal on the pleadings, we accept United Sand's factual allegations on any issues which are not free from doubt. United Sand is a sand and gravel contractor. In 1974, it entered into a subcontract with Americ to perform services under a prime contract between Americ and the Corps. The prime contract related to improvements to the West Atchafalaya River Levee near Krotz Springs, Louisiana.
On September 1, 1976, Americ notified the Corps that the final payment of $8,600 due on the prime contract should be made payable jointly to Americ and United Sand. This payment would also have been the final payment to United Sand for its work as a subcontractor.
On September 30, 1976, before the $8,600 had been disbursed, the Internal Revenue Service ("I.R.S.") served the Corps with a notice of levy in the amount of $13,189.52 for the seizure of all property held by the Corps for the account of Americ. The $13,189.52 represented unpaid tax obligations of Americ. The Corps submitted a check in the amount of $8,600 to the I.R.S. United Sand asserted a claim to the $8,600 by letter to the I.R.S. dated August 9, 1977.
On June 2, 1978 United Sand filed its complaint "for enforcement of assignment proceeds and for return of property wrongfully levied." The United States moved to dismiss for lack of subject matter jurisdiction or, in the alternative, for failure to state a claim upon which relief can be granted. The court below granted the motion of the United States, holding that the action was not filed within the period established by I.R.C. § 6532(c) and that no claim was stated against the Corps because it had no right to resist the levy.
I.R.C. § 7426 allows persons other than the taxpayer against whom an assessment is made who claim an interest in property which has been levied upon to sue to recover their property.
Since the levy at issue here occurred on September 30, 1976 and the suit was not filed until June 2, 1978, the suit was not timely under § 6532 unless United Sand's request dated August 9, 1977 effectively extended the period. If the request extended the period, the suit is timely because it was filed less than six months after January 12, 1978, the date of the denial of the request by the I.R.S.
Section 6532(c)(2) does not explicitly specify when a request must be made to the I.R.S. However, it is implicit in the structure of section 6532(c) that the request must be filed within nine months of the levy. If the nine month period during which a suit must be filed could be extended by filing a request after the nine month period has ended, the nine month rule would be without effect, and there would be no effective limitation period. Both the Treasury Regulations, see Treas. Regs. § 301.6532-3(c) (1974), § 301.6343-1(b)(1) (1972), and the only courts that have faced the issue, see Universal Specialties, Inc. v. United States, 443 F.Supp. 87 (D.D.C.1977); De Gregory v. United States, 395 F.Supp. 171 (E.D.Mich.1975), adopt the position that a section 6532(c)(2) request must be filed within nine months of the date of levy to extend the nine month period. We agree.
United Sand contends that since both the I.R.S. and the Corps are agencies of the United States government, any levy purportedly conducted by the I.R.S. upon property held by the Corps was not actually a levy but was rather a set off which affected only the rights of Americ. Neither party disputes that the United States may refuse to pay funds owed to a contractor who owes taxes to the United States, and may apply these funds as a set off against the tax indebtedness. See, e. g., United States v. Trinity Universal Insurance Co., 249 F.2d 350 (5th Cir. 1957); Aetna Insurance Co. v. United States, 456 F.2d 773, 197 Ct.Cl. 713 (1972). United Sand, however, contends that even if the the I.R.S. goes through the formalities of levying upon property or rights to property of a tax delinquent in the hands of another agency of the government, the legal effect of such action is the same as if the government has proceeded by set off. We disagree.
First, there is nothing in the general levy authorization statute, I.R.C. § 6331,
Second, it has been an established practice of the I.R.S., recognized by the courts, to proceed against property in the hands of other federal agencies by a formal levy rather than by set off. See, e. g., United States v. Freedman, 444 F.2d 1387 (9th Cir. 1971); Carlo v. United States, 286 F.2d 841, 848-49 (2d Cir.), cert. denied, 366 U.S. 944, 81 S.Ct. 1672, 6 L.Ed.2d 855 (1961); Simpson v. Thomas, 271 F.2d 450 (4th Cir. 1959);
United Sand attempts to find such an implied exclusion in the second sentence of section 6331(a), in which Congress explicitly stated that the salary or wages of federal employees is subject to levy. A similar argument was made, and rejected by the Supreme Court, in Sims v. United States, 359 U.S. 108, 79 S.Ct. 641, 3 L.Ed.2d 667 (1959). In Sims, the Court faced the argument that "by specifically providing in § 6331 for levy upon the accrued salaries of federal employees, but not mentioning state employees [Congress] evinced an intention to exclude the latter from levy." Id. at 112, 79 S.Ct. at 645. The Court rejected this argument, noting that the specific inclusion of salaries of federal employees was intended to overcome the holding of Smith v. Jackson, 246 U.S. 388, 38 S.Ct. 353, 62 L.Ed. 788 (1918), that, absent congressional authorization, federal disbursing officers have no authority to withhold the salary of a federal officer.
Just as the specific inclusion of salaries of federal employees was held in Sims not to exclude by implication salaries of state employees, we now hold that the specific inclusion of federal salaries does not exclude by implication federal contract payments. Since there has never been a holding like Smith, supra, prohibiting those in charge of federal payments other than salaries from withholding those payments to satisfy other debts, Congress would have perceived no necessity to provide specific authorization to withhold any type of payment other than salaries. The general language of the first sentence of section 6331 is sufficient to empower the I.R.S. to levy upon property or rights to property which is in the hands of other government agencies.
Third, the contention that the transfer of funds from one federal agency to another has no real effect but is merely a bookkeeping transfer misses the point that the I.R.S. levies upon rights to property of the taxpayer, not the other agency. See I.R.C. § 6331(a). Prior to the notice of levy, the Corps was obligated to deliver the $8,600 in question to Americ. After the levy, the Corps was obligated to deliver the funds to the I.R.S. See I.R.C. § 6332. The rights seized by levy belonged to Americ not the Corps.
United Sand contends that 28 U.S.C. § 2410 provides an alternate waiver of the sovereign immunity of the United States
First, the United States does not "ha[ve] or claim a mortgage or other lien" upon the $8,600 but rather possesses the $8,600 outright. Although there is a dearth of authority on the question of whether the waiver applies in cases in which the United States has or claims outright ownership rather than a mortgage or other lien, the few we have been able to locate which explicitly address this issue are in accord with our view that the above-quoted language does not encompass cases like the one before us. See Hull v. Tollefson, 138 F.Supp. 315
Second, even if section 2410 waives sovereign immunity to suits disputing ownership to property possessed by the United States
Kreider involved a situation very much like the one here. The general provision was section 24(20) of the Judicial Code, an earlier version of 28 U.S.C. § 2401, which set a limitation period for suits against the United States. The specific provision provided a shorter limitation period for suits for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected. The Court said that the language of section 24(20)
Id. at 447, 61 S.Ct. at 1010.
Section 2401(a) is also couched in negative terms: "Every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues." 28 U.S.C. § 2401(a). This, like its earlier version in Section 24(20) of the Judicial Code, merely establishes an outside limit. Nothing in its language precludes Congress from enacting a shorter limitation period for certain classes of actions.
I.R.C. § 6532(c) is precisely such a statute. It prescribes a shorter limitation period for a certain class of actions for which Congress has decided a short period is desirable.
If persons who claim an interest in property seized by the United States to satisfy a third person's taxes can challenge an I.R.S. levy by a cause of action which falls within 28 U.S.C. § 2410, the intent of Congress to set a short time limit for wrongful levy actions will be completely undercut. Rather
We are buttressed in this view by the legislative history of the Federal Tax Lien Act of 1966, which created the cause of action for wrongful levy by the I.R.S. The Senate Report on the Act states that:
S.Rep.No. 1708, 89th Cong., 2d Sess., reprinted in  U.S.Code Cong. & Admin. News, pp. 3722, 3750-51.
United Sand advances the further argument that the Corps held more than $28,000 in funds of Americ other than the $8,600 levied upon, and that the levy should be deemed to have been honored by those other funds. We view this contention as yet a further attempt by United Sand to circumvent its failure to follow the procedures necessary to pursue a suit for wrongful levy under I.R.C. § 7426(a). The levy was not paid from other funds, but from the $8,600 claimed by United Sand. The $8,600 was in fact levied upon and transferred to the I.R.S. United Sand had no interest in the other $28,000. The Corps was required by I.R.C. § 6332 to turn over funds due Americ.
When someone other than the taxpayer claims an interest in property or rights to property which the United States has levied upon, his exclusive remedy against the United States is a wrongful levy action under I.R.C. § 7426.
The wrongful levy action under I.R.C. § 7426 "fits the present case like a glove," as the district court aptly stated. United Sand failed to file a timely claim, and thus cannot avail itself of this remedy. It may well be that, were the Corps a private party rather than an agency of the United States, United Sand would have a second potential defendant from which to attempt to recover its "lost" funds. However, the Corps is a federal agency. The United States need not provide parties in the position of United Sand here with alternate remedies. As we have noted, several of United Sand's theories would make meaningless the nine month limitation contained in I.R.C. § 6532(c). See p. 736, supra; p. 738 supra. Because we do not believe Congress intended its provision to be meaningless, and because we hold that I.R.C. § 7426 is