The IRS's levy power is enormous. IRC § 6331(b) defines levy to include "the power of distraint and seizure by any means." Read literally, that sounds like revenue officers can go anywhere and take anything. G. M. Leasing Corp. v. United States is the Supreme Court decision that drew a line through the middle of that power.
The Facts
George I. Norman, Jr. was the general manager of G. M. Leasing Corp., a Utah corporation organized in April 1972 whose stated purposes included leasing automobiles. Norman had been convicted in federal court in Colorado on bank fraud counts, and his conviction was affirmed. In March 1973, after the Supreme Court denied review, he surrendered to the U.S. Marshal and then, by a ruse, disappeared. He was still a fugitive when the case was argued.
His tax history was its own mess. For 1970, he and his wife filed a Form 1040 that showed little more than their names and an "estimated" tax of $280,000. For 1971, they got extensions, sent a check that apparently bounced, and never filed. Once Norman became a fugitive, the IRS determined deficiencies of $406,099.34 for 1970 and $545,310.59 for 1971 and made jeopardy assessments under IRC § 6861(a).
The next day, agents demanded payment at the Norman home, filed lien notices and levied a bank account. They noticed cars in the driveway registered to G. M. Leasing. Digging further, they found the corporation had no business license, no phone listing, no employees and no sales. They concluded it was Norman's alter ego.
On or about March 21, without a warrant, revenue officers seized several automobiles registered to the corporation, including Stutz and Rolls Royce models and a Jaguar, from streets and parking lots in Salt Lake City and Los Angeles. They also went to the corporation's office, a cottage-type building with a garage. A locksmith removed locks. A supervisor entered, saw a kitchen, and told the officers to hold off until they knew whether it was a residence.
Two days later, on March 23, agents came back without a warrant, entered with locksmiths and a moving van, and removed the cottage's contents, including books and records.
The District Court ruled for the corporation and found a Fourth Amendment violation. The Tenth Circuit mostly reversed, holding that the statute's "seizure by any means" language meant there was no illegal search.
The Issue
The Supreme Court limited its review to the Fourth Amendment. Assuming the assessments and levies were valid and the corporation was Norman's alter ego, did the IRS need warrants to seize the cars or to enter the office and seize its contents?
The Holding
Justice Blackmun wrote for the Court. The warrantless seizures of the cars from public places were constitutional. The warrantless entry into the office was not: "We therefore conclude that the warrantless entry into petitioner's office was in violation of the commands of the Fourth Amendment."
The Reasoning
Seizing in public is not searching
The cars sat on public streets, in parking lots and in other open places. Taking them "did not involve any invasion of privacy." The Court relied on a nineteenth-century decision holding that the government needs no judicial warrant to seize a debtor's land for a federal claim. Seizure in the open is about possession, not privacy.
Entering private premises is different
Seizing the records required going inside the corporation's office. The Court applied the general rule that a search of private property without consent is unreasonable unless authorized by a valid warrant, except in carefully defined classes of cases. Business premises are protected. Corporations have Fourth Amendment rights.
No tax collection exception
The government argued for a broad tax enforcement exception to the warrant requirement. The Court refused. It said that one of the primary evils the Fourth Amendment targeted was "the massive intrusion on privacy undertaken in the collection of taxes pursuant to general warrants and writs of assistance."
The statute authorizes seizure, not intrusion
The Court read § 6331(b)'s "seizure by any means" naturally: it authorizes every means of depriving a taxpayer of use, enjoyment or title to property. It does not speak to warrantless intrusions into privacy. Reading it otherwise would raise serious constitutional doubts, and the statute gave the IRS wide discretion over what to seize and where, with no standards that would make warrantless entry reasonable.
No emergency here
The government also claimed exigent circumstances. The agents' own conduct defeated that argument. They waited two days after the first entry, and more than a day after seeing boxes being moved, before going back in. Nothing about that looks like an emergency.
What It Means for Taxpayers Today
Revenue officers can take what is in plain public view
A car parked on the street or in a public lot can be seized without a warrant if the IRS has a valid levy basis. G. M. Leasing confirmed that, and it remains the rule. If you have an open balance and a revenue officer assigned, assume visible assets are within reach. Our article on what to do when a revenue officer shows up explains how these cases usually unfold.
Your home and your private office are another matter
To enter private premises to seize property, the IRS needs consent, a warrant or a true emergency. You do not have to let a revenue officer into your home or the non-public part of your business to look for assets. Be polite, do not obstruct, and call counsel.
Congress built more walls since 1977
The statute today goes further than the Constitution required in 1977. IRC § 6334(a)(13)(B) and (e)(1) exempt your principal residence from levy unless a federal district judge or magistrate approves the levy in writing. No residence can be levied for a levy of $5,000 or less under § 6334(a)(13)(A). Tangible personal property and non-rental real property used in an individual's trade or business cannot be levied without personal written approval from a senior IRS official, who must first find your other assets insufficient, unless collection is in jeopardy under § 6334(e)(2). The IRS's internal seizure procedures, in Internal Revenue Manual Part 5.10, add further review steps before any seizure.
Jeopardy assessments now come with review rights
The IRS moved fast against Norman because it made jeopardy assessments under IRC § 6861(a), which let it assess and collect immediately instead of following the normal deficiency process. That power still exists, but Congress has since attached review rights to it. Under IRC § 7429(a), a jeopardy assessment requires the personal written approval of the IRS Chief Counsel or a delegate, the IRS must give the taxpayer a written statement of the information it relied on within 5 days, and the taxpayer has 30 days to request administrative review. If that fails, § 7429(b) allows a suit in federal district court, where the government bears the burden of proving the assessment was reasonable under the circumstances. Those deadlines are short. If you receive a jeopardy assessment, the clock is already running.
Alter ego and nominee theories are alive
Do not miss the part of the case the Court accepted without review. The lower court found G. M. Leasing was Norman's alter ego, which let the IRS treat corporate assets as his. Putting assets in an entity you control does not necessarily put them beyond the IRS. The same idea shows up with nominee trusts in Drye v. United States.
The Bottom Line
The power to levy is real, and G. M. Leasing confirmed the IRS can seize property in the open without asking a judge. But the Court refused to let tax collection become an exception to the Fourth Amendment. When the government wants to come through your door, the Constitution, and now the Internal Revenue Code itself, make it stop and get permission first.