Provided that the FBO accounts are set up to clearly establish that the LLC is only the agent for the third parties who have the equitable interests in the accounts’ funds, the accounts should not be subject to a garnishment or levy for the obligations of the LLC.

For resources related to our guidance, please see:

• IRS Internal Revenue Manual, Collecting Process, Levy and Sale (“Because a trustee holds bare legal title for the benefit of others, neither the corpus nor income therefrom may generally be levied upon to satisfy the trustee’s individual tax liabilities. The exception is if the trustee-taxpayer is a beneficiary . . . .”)

• United States v. Schaudt, 2008 WL 4567645, at *5 and *6 (N.D. Ill. 2008) (“It is clear that . . . without question, the federal tax lien statute reaches equitable interests owned for the benefit of the taxpayer.”)

• In re Estate of Muhammad, 165 Ill.App.3d 890, 893 (1st Dist. 1987) (“[T]rue ownership of a deposit may be proved to be in another than the person in whose name it is made . . . . The right of an owner to money belonging to him is not defeated by the fact that it is deposited in the name of another.”)