823 F.2d 911 (6th Cir. 1986), 85-5050, United States v. Bank of Celina

Docket Nº:85-5050.
Citation:823 F.2d 911
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. BANK OF CELINA, Defendant-Appellant.
Case Date:February 25, 1986
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 911

823 F.2d 911 (6th Cir. 1986)

UNITED STATES of America, Plaintiff-Appellee,

v.

BANK OF CELINA, Defendant-Appellant.

No. 85-5050.

United States Court of Appeals, Sixth Circuit

February 25, 1986

Page 912

Mark H. Westlake, Nashville, Tenn., for defendant-appellant.

Michael L. Paup, Glenn L. Archer, Jr., Tax Div., Dept. of Justice, Appellate Section, Washington, D.C., Carleton D. Powell, Steven W. Parks, argued, James C. Thomason, III, Asst. U.S. Atty., Nashville, Tenn., for plaintiff-appellee.

Before CONTIE and MILBURN, Circuit Judges, and CELEBREZZE, Senior Circuit Judge.

CONTIE, Circuit Judge.

This is an appeal from the district court's order awarding post-judgment interest to the United States at a rate established by 26 U.S.C. Sec. 6621 and measured from the date of the original judgment, March 31, 1982, to the date payment was actually made. Appellant, Bank of Celina, argues that the interest should have been calculated pursuant to 28 U.S.C. Sec. 1961 (1948), measured from the date of the modified judgment, May 20, 1982, to the date payment was deposited by the clerk of the district court to the United States Treasury account, March 16, 1984.

I.

This case has appeared before this court on a previous occasion, United States v. Bank of Celina, 721 F.2d 163 (6th Cir.1983), at which time we upheld the district court's ruling that the United States' tax lien, arising out of RBS Sportswear, Inc.'s failure to pay federal employment taxes, attached to funds that had been deposited with the Bank of Celina. 1 Since the tax lien continued to encumber the funds, we affirmed the district court's order awarding the United States an amount totaling $56,316.98. 2

The Bank of Celina issued a check in the amount of $65,500 which was deposited with the district court on March 12, 1984. This payment was intended to represent the judgment amount plus $9,138.02 interest. The Bank states that this is $1,077.70 less than the amount due, calculated from May 20, 1982, the date of the modified judgment, to March 16, 1984, the date this check was deposited by the clerk of the district court into the United States Treasury account at the Federal Reserve Bank, Nashville Branch. The interest was calculated at a rate of ten percent as required by state law. See Tenn.Code Ann. Sec. 47-14-121. 3 Payment was received by the United States Department of Justice on December 27, 1984 in the form of a United States Treasury check.

Although inquiries had been made, official confirmation of this payment was never received by the Bank. However, the United States sent a letter to the Bank, dated July 10, 1984, demanding payment of $78,816.59 which represented the judgment amount plus $22,499.61 in post-judgment interest.

On July 26, 1984, Bank of Celina filed a motion with the district court to confirm the amount of payment made and the total amount due. The Bank requested the court find that it owed $1,077.70 in unpaid interest, calculating interest in accordance with 28 U.S.C. Sec. 1961. The United States responded to this motion on October 9, 1984, arguing that interest should be calculated in accordance with 26 U.S.C. Sec. 6621 pursuant to 28 U.S.C. Sec. 1961(c)(1), and further stated that the $22,499.61 figure represented accrued interest from the initial date of judgment, March 31, 1984, to July 21, 1984.

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The district court did not draft an order but merely adopted the Government's response to the Bank's motion on October 29, 1984. The court therefore ordered that the Bank pay $56,316.98, plus interest pursuant to 26 U.S.C. Sec. 6621. The court did not state whether $78,816.59 was the total amount due or whether interest had continued to accrue. Further, the court did not acknowledge that $65,500 had been paid. 4

II.

A.

The district court held that interest should be calculated under 26 U.S.C. Sec. 6621 pursuant to the revised version of section 1961, 28 U.S.C. Sec. 1961(c)(1) (1982). Section 1961(c)(1) provides, inter alia, that the interest rate for Internal Revenue tax cases shall be established under 26 U.S.C. Sec. 6621. The appellant asserts, and the United States agrees, that the district court erred by relying on this revised version of section 1961 since it was not in effect when the original judgment was entered. Therefore, the issue before this court is whether the district court's order can be upheld despite the erroneous reliance upon section 1961(c)(1) 5--whether section 6621 nonetheless controls the outcome in this case.

26 U.S.C. Sec. 6601(a) provides:

If any amount of tax imposed by this title ... is not paid on or before the last date prescribed for payment, interest on such amount at an annual rate established under section 6621 shall be paid for the period from such last date to the date paid. 6

Section 6621 states that the rate of interest under this section "shall be such adjusted rate as is established by the Secretary...."

The tax liability in this case arose from nonpayment of employment taxes, or taxes "imposed by this title" within the meaning of section 6601(a). 7 It is clear that interest would have accrued on RBS's deficiencies pursuant to section 6621 prior to the judgment, which was undoubtedly included as part of the district court's judgment. However, the question is whether section 6621, prior to the 1982 revisions to section 1961, continued to be applicable once a judgment has been rendered.

The Bank argues that 28 U.S.C. Sec. 1961 was applicable because that was the only provision that established a rate for post-judgment interest. Section 1961, prior to revision, provided:

Interest shall be allowed on any money judgment in a civil case recovered in district court.... Such interest shall be calculated from the date of the entry of the judgment, at the rate allowed by State law.

Both parties agree that the annual rate of interest under state law is ten percent. Tenn.Code Ann. Sec. 47-14-121. The revised version of section 1961 eliminates the reference to state law for computing post-judgment interest, 28 U.S.C. Sec. 1961(a), and expressly exempts federal tax cases. 28 U.S.C. Sec. 1961(c)(1). The Bank asserts that the section 1961(c)(1) tax case exemption would have been unnecessary if post-judgment interest had always been computed pursuant to 26 U.S.C. Sec. 6621. If the tax assessments had never been reduced to a money judgment, then interest would have

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continued to accrue in accordance with section 6621.

The Government, on the other hand, argues that...

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