|
6331 - Code and Regulations |
||
|
|
||
|
|
6331 Code and Regulations |
|
|
Internal
Revenue Code §6631 - LEVY
6331(a) AUTHORITY OF SECRETARY. --If any person liable to pay any tax neglects or
refuses to pay the same within 10 days after notice and demand, it
shall be lawful for the Secretary to collect such tax (and such
further sum as shall be sufficient to cover the expenses of the
levy) by levy upon all property and rights to property (except
such property as is exempt under section 6334) belonging to such
person or on which there is a lien provided in this chapter for
the payment of such tax. Levy may be made upon the accrued salary
or wages of any officer, employee, or elected official, of the
United States, the District of Columbia, or any agency or
instrumentality of the United States or the District of Columbia,
by serving a notice of levy on the employer (as defined in section
3401(d)) of such officer, employee, or elected official. If the
Secretary makes a finding that the collection of such tax is in
jeopardy, notice and demand for immediate payment of such tax may
be made by the Secretary and, upon failure or refusal to pay such
tax, collection thereof by levy shall be lawful without regard to
the 10-day period provided in this section. 6331(b) SEIZURE 6331(c) SUCCESSIVE SEIZURES. --Whenever any property or right to property upon which levy
has been made by virtue of subsection (a) is not sufficient to
satisfy the claim of the United States for which levy is made, the
Secretary may, thereafter, and as often as may be necessary,
proceed to levy in like manner upon any other property liable to
levy of the person against whom such claim exists, until the
amount due from him, together with all expenses, is fully paid. 6331(d) REQUIREMENT OF NOTICE BEFORE LEVY. -- 6331(d)(1) IN GENERAL. --Levy may be made under subsection (a) upon the salary or
wages or other property of any person with respect to any unpaid
tax only after the Secretary has notified such person in writing
of his intention to make such levy. 6331(d)(2) 30- 6331(d)(2)(A)
given
in person, 6331(d)(2)(B)
left
at the dwelling or usual place of business of such person, or 6331(d)(2)(C)
sent
by certified or registered mail to such person's last known
address, no less than 30 days before the day of the levy. 6331(d)(3) JEOPARDY. --Paragraph (1) shall not apply to a levy if the Secretary has
made a finding under the last sentence of subsection (a) that the
collection of tax is in jeopardy. 6331(d)(4) INFORMATION INCLUDED WITH NOTICE. --The
notice required under paragraph (1) shall include a brief
statement which sets forth in simple and nontechnical terms -- 6331(d)(4)(A)
the
provisions of this title relating to levy and sale of property, 6331(d)(4)(B)
the
procedures applicable to the levy and sale of property under this
title, 6331(d)(4)(C)
the
administrative appeals available to the taxpayer with respect to
such levy and sale and the procedures relating to such appeals, 6331(d)(4)(D)
the
alternatives available to taxpayers which could prevent levy on
the property (including installment agreements under section
6159), 6331(d)(4)(E)
the
provisions of this title relating to redemption of property and
release of liens on property, and 6331(d)(4)(F)
the
procedures applicable to the redemption of property and the
release of a lien on property under this title. 6331(e) CONTINUING LEVY ON SALARY 6331(f) UNECONOMICAL LEVY. --No levy may be made on any property if the amount of the
expenses which the Secretary estimates (at the time of levy) would
be incurred by the Secretary with respect to the levy and sale of
such property exceeds the fair market value of such property at
the time of levy. 6331(g) LEVY ON APPEARANCE DATE OF SUMMONS. -- 6331(g)(1) IN GENERAL. --No levy may be made on the property of any person on any day
on which such person (or officer or employee of such person) is
required to appear in response to a summons issued by the
Secretary for the purpose of collecting any underpayment of tax. 6331(g)(2) NO APPLICATION IN CASE OF JEOPARDY. --This
subsection shall not apply if the Secretary finds that the
collection of tax is in jeopardy. 6331(h) CONTINUING LEVY ON CERTAIN PAYMENTS. -- 6331(h)(1) IN GENERAL. --If the Secretary approves a levy under this subsection, the
effect of such levy on specified payments to or received by a
taxpayer shall be continuous from the date such levy is first made
until such levy is released. Notwithstanding section 6334, such
continuous levy shall attach to up to 15 percent of any specified
payment due to the taxpayer. 6331(h)(2) SPECIFIED PAYMENT. --For the purposes of paragraph (1), the term "specified
payment" means -- 6331(h)(2)(A)
any
Federal payment other than a payment for which eligibility is
based on the income or assets (or both) of a payee, 6331(h)(2)(B)
any
payment described in paragraph (4), (7), (9), or (11) of section
6334(a), and 6331(h)(2)(C)
any
annuity or pension payment under the Railroad Retirement Act or
benefit under the Railroad Unemployment Insurance Act. 6331(h)(3) INCREASE IN LEVY FOR CERTAIN PAYMENTS. --Paragraph
(1) shall be applied by substituting "100 percent" for
"15 percent" in the case of any specified payment due to
a vendor of goods or services sold or leased to the Federal
Government. 6331(i) NO LEVY DURING PENDENCY OF PROCEEDINGS FOR REFUND OF DIVISIBLE
TAX. -- 6331(i)(1) IN GENERAL. --No levy may be made under subsection (a) on the property or
rights to property of any person with respect to any unpaid
divisible tax during the pendency of any proceeding brought by
such person in a proper Federal trial court for the recovery of
any portion of such divisible tax which was paid by such person if
-- 6331(i)(1)(A)
the
decision in such proceeding would be res judicata with respect to
such unpaid tax; or 6331(i)(1)(B)
such
person would be collaterally estopped from contesting such unpaid
tax by reason of such proceeding. 6331(i)(2) DIVISIBLE TAX. --For purposes of paragraph (1), the term "divisible
tax" means -- 6331(i)(2)(A)
any
tax imposed by subtitle C; and 6331(i)(2)(B)
the
penalty imposed by section 6672 with respect to any such tax. 6331(i)(3) EXCEPTIONS. -- 6331(i)(3)(A)
CERTAIN UNPAID TAXES. --This subsection shall not apply with respect to any unpaid tax if -- 6331(i)(3)(A)(i) the taxpayer files a written notice with the Secretary which waives the
restriction imposed by this subsection on levy with respect to
such tax; or 6331(i)(3)(A)(ii) the Secretary finds that the collection of such tax is in jeopardy. 6331(i)(3)(B)
CERTAIN LEVIES. --This
subsection shall not apply to -- 6331(i)(3)(B)(i) any levy to carry out an offset under section 6402; and 6331(i)(3)(B)(ii) any levy which was first made before the date that the applicable
proceeding under this subsection commenced. 6331(i)(4) LIMITATION ON COLLECTION ACTIVITY; AUTHORITY TO ENJOIN
COLLECTION. -- 6331(i)(4)(A)
LIMITATION ON COLLECTION. --No proceeding in court for the collection of any unpaid tax
to which paragraph (1) applies shall be begun by the Secretary
during the pendency of a proceeding under such paragraph. This
subparagraph shall not apply to -- 6331(i)(4)(A)(i) any counterclaim in a proceeding under such paragraph; or 6331(i)(4)(A)(ii) any proceeding relating to a proceeding under such paragraph. 6331(i)(4)(B)
AUTHORITY TO ENJOIN. --Notwithstanding section 7421(a), a levy or collection proceeding
prohibited by this subsection may be enjoined (during the period
such prohibition is in force) by the court in which the proceeding
under paragraph (1) is brought. 6331(i)(5) SUSPENSION OF STATUTE OF LIMITATIONS ON COLLECTION. --The
period of limitations under section 6502 shall be suspended for
the period during which the Secretary is prohibited under this
subsection from making a levy. 6331(i)(6) PENDENCY OF PROCEEDING. --For purposes of this subsection, a proceeding is
pending beginning on the date such proceeding commences and ending
on the date that a final order or judgment from which an appeal
may be taken is entered in such proceeding. 6331(j) NO LEVY BEFORE INVESTIGATION OF STATUS OF PROPERTY. -- 6331(j)(1) IN GENERAL. --For purposes of applying the provisions of this subchapter,
no levy may be made on any property or right to property which is
to be sold under section 6335 until a thorough investigation of
the status of such property has been completed. 6331(j)(2) ELEMENTS IN INVESTIGATION. --For
purposes of paragraph (1), an investigation of the status of any
property shall include -- 6331(j)(2)(A)
a
verification of the taxpayer's liability; 6331(j)(2)(B)
the
completion of an analysis under subsection (f); 6331(j)(2)(C)
the
determination that the equity in such property is sufficient to
yield net proceeds from the sale of such property to apply to such
liability; and 6331(j)(2)(D)
a
thorough consideration of alternative collection methods. 6331(k) NO LEVY WHILE CERTAIN OFFERS PENDING OR INSTALLMENT AGREEMENT
PENDING OR IN EFFECT. -- 6331(k)(1) OFFER-IN-COMPROMISE PENDING. --No
levy may be made under subsection (a) on the property or rights to
property of any person with respect to any unpaid tax -- 6331(k)(1)(A)
during
the period that an offer-in-compromise by such person under
section 7122 of such unpaid tax is pending with the Secretary; and 6331(k)(1)(B)
if
such offer is rejected by the Secretary, during the 30 days
thereafter (and, if an appeal of such rejection is filed within
such 30 days, during the period that such appeal is pending). For
purposes of subparagraph (A), an offer is pending beginning on the
date the Secretary accepts such offer for processing. 6331(k)(2) INSTALLMENT AGREEMENTS. --No levy may be made under subsection (a) on the
property or rights to property of any person with respect to any
unpaid tax -- 6331(k)(2)(A)
during
the period that an offer by such person for an installment
agreement under section 6159 for payment of such unpaid tax is
pending with the Secretary; 6331(k)(2)(B)
if
such offer is rejected by the Secretary, during the 30 days
thereafter (and, if an appeal of such rejection is filed within
such 30 days, during the period that such appeal is pending); 6331(k)(2)(C)
during
the period that such an installment agreement for payment of such
unpaid tax is in effect; and 6331(k)(2)(D)
if
such agreement is terminated by the Secretary, during the 30 days
thereafter (and, if an appeal of such termination is filed within
such 30 days, during the period that such appeal is pending). 6331(k)(3) CERTAIN RULES TO APPLY. --Rules similar to the rules of -- 6331(k)(3)(A)
paragraphs
(3) and (4) of subsection (i), and 6331(k)(3)(B)
except
in the case of paragraph (2)(C), paragraph (5) of subsection (i), shall
apply for purposes of this subsection. 6331(l) CROSS REFERENCES. -- 6331(l)(1) For
provisions relating to jeopardy, see subchapter A of chapter 70. 6331(l)(2) For
proceedings applicable to sale of seized property, see section
6335. 6331(l)(3) For
release and notice of release of levy, see section 6343.
(a) Authority
to levy (1) In general. --If any person liable to pay any tax neglects or refuses to
pay the tax within 10 days after notice and demand, the district
director to whom the assessment is charged (or, upon his request,
any other district director) may proceed to collect the tax by
levy. The district director may levy upon any property, or rights
to property, whether real or personal, tangible or intangible,
belonging to the taxpayer. The district director may also levy
upon property with respect to which there is a lien provided by
section 6321 or 6324 for the payment of the tax. For exemption of
certain property from levy, see section 6334 and the regulations
thereunder. As used in section 6331 and this section, the term
"tax" includes any interest, additional amount, addition
to tax, or assessable penalty, together with costs and expenses.
Property subject to a Federal tax lien which has been sold or
otherwise transferred by the taxpayer may be seized while in the
hands of the transferee or any subsequent transferee. However, see
provisions under sections 6323 and 6324(a)(2) and (b) for
protection of certain transferees against a Federal tax lien. Levy
may be made by serving a notice of levy on any person in
possession of, or obligated with respect to, property or rights to
property subject to levy, including receivables, bank accounts,
evidences of debt, securities, and salaries, wages, commissions,
or other compensation. A levy on a bank reaches any interest that
accrues on the taxpayer's balance under the terms of the bank's
agreement with the depositor during the 21-day holding period
provided for in section 6332(c). Except as provided in §301.6331-1(b)(1)
with regard to a levy on salary or wages, a levy extends only to
property possessed and obligations which exist at the time of the
levy. Obligations exist when the liability of the obligor is fixed
and determinable although the right to receive payment thereof may
be deferred until a later date. For example, if on the first day
of the month a delinquent taxpayer sold personal property subject
to an agreement that the buyer remit the purchase price on the
last day of the month, a levy made on the buyer on the 10th day of
the month would reach the amount due on the sale, although the
buyer need not satisfy the levy by paying over the amount to the
district director until the last day of the month. Similarly, a
levy only reaches property in the possession of the person levied
upon at the time the levy is made together with interest that
accrues during the 21-day holding period provided for in section
6332(c). For example, a levy made on a bank with respect to the
account of a delinquent taxpayer is satisfied if the bank
surrenders the amount of the taxpayer's balance at the time the
levy is made. The levy has no effect upon any subsequent deposit
made in the bank by the taxpayer. Subsequent deposits may be
reached only by a subsequent levy on the bank. (2) Jeopardy cases. --If the district director finds that the collection of any tax
is in jeopardy, he or she may make notice and demand for immediate
payment of such tax and, upon failure or refusal to pay such tax,
collection thereof by levy shall be lawful without regard to the
10-day period provided in section 6331(a), the 30-day period
provided in section 6331(d), or the limitation on levy provided in
section 6331(g)(1). (3) Bankruptcy or receivership cases. --During
a bankruptcy proceeding or a receivership proceeding in either a
Federal or a State court, the assets of the taxpayer are in
general under the control of the court in which such proceeding is
pending. Taxes cannot be collected by levy upon assets in the
custody of a court, whether or not such custody is incident to a
bankruptcy or receivership proceeding, except where the proceeding
has progressed to such a point that the levy would not interfere
with the work of the court or where the court grants permission to
levy. Any assets which under applicable provisions of law are not
under the control of the court may be levied upon, for example,
property exempt from court custody under State law or the
bankrupt's earnings and property acquired after the date of
bankruptcy. However, levy upon such property is not mandatory and
the Government may rely upon payment of taxes in the proceeding. (4) Certain types of compensation (i)
Federal employees. --Levy may be made upon the salary or wages of any officer or
employee (including members of the Armed Forces), or elected or
appointed official, of the United States, the District of
Columbia, or any agency or instrumentality of either, by serving a
notice of levy on the employer of the delinquent taxpayer. As used
in this subdivision, the term "employer" means (a)
the officer or employee of the United States, the District of
Columbia, or of the agency or instrumentality of the United States
or the District of Columbia, who has control of the payment of the
wages, or (b) any other officer or employee designated by
the head of the branch, department, agency, or instrumentality of
the United States or of the District of Columbia as the party upon
whom service of the notice of levy may be made. If the head of
such branch, department, agency, or instrumentality designates an
officer or employee other than one who has control of the payment
of the wages, as the party upon whom service of the notice of levy
may be made, such head shall promptly notify the Commissioner of
the name and address of each officer or employee so designated and
the scope or extent of his authority as such designee. (ii)
State and municipal employees. --Salaries, wages, or other compensation of any officer,
employee, or elected or appointed official of a State or
Territory, or of any agency, instrumentality, or political
subdivision thereof, are also subject to levy to enforce
collection of any Federal tax. (iii)
Seamen. --Notwithstanding
the provisions of section 12 of the Seamen's Act of 1915 (38 Stat.
1169; 46 U.S.C. 601), wages of seamen, apprentice seamen, or
fishermen employed on fishing vessels are subject to levy. See
section 6334(c). (5)
Noncompetent Indians. --Solely
for purposes of sections 6321 and 6331, any interest in restricted
land held in trust by the United States for an individual
noncompetent Indian (and not for a tribe) shall not be deemed to
be property, or a right to property, belonging to such Indian. (b) Continuing levies and successive seizures (1) Continuing effect of levy on salary and wages. --A
levy on salary or wages has continuous effect from the time the
levy originally is made until the levy is released pursuant to
section 6343. For this purpose, the term salary or wages
includes compensation for services paid in the form of fees,
commissions, bonuses, and similar items. The levy attaches to both
salary or wages earned but not yet paid at the time of the levy,
advances on salary or wages made subsequent to the date of the
levy, and salary or wages earned and becoming payable subsequent
to the date of the levy, until the levy is released pursuant to
section 6343. In general, salaries or wages that are the subject
of a continuing levy and are not exempt from levy under section
6334(a)(8) or (9), are to be paid to the district director, the
service center director, or the compliance center director
(director) on the same date the payor would otherwise pay over the
money to the taxpayer. For example, if an individual normally is
paid on the Wednesday following the close of each work week, a
levy made upon his or her employer on any Monday would apply to
both wages due for the prior work week and wages for succeeding
work weeks as such wages become payable. In such a case, the levy
would be satisfied if, on the first Wednesday after the levy and
on each Wednesday thereafter until the employer receives a notice
of release from levy described in section 6343, the employer pays
over to the director wages that would otherwise be paid to the
employee on such Wednesday (less any exempt amount pursuant to
section 6334). (2) Successive seizures. --Whenever any property or rights to property upon which
a levy has been made are not sufficient to satisfy the claim of
the United States for which the levy is made, the district
director may thereafter, and as often as may be necessary, proceed
to levy in like manner upon any other property or rights to
property subject to levy of the person against whom such claim
exists or on which there is a lien imposed by section 6321 or 6324
(or the corresponding provision of prior law) for the payment of
such claim until the amount due from such person, together with
all costs and expenses, is fully paid. (c) Service of notice of levy by mail. --A
notice of levy may be served by mailing the notice to the person
upon whom the service of a notice of levy is authorized under
paragraph (a)(1) of this section. In such a case the date and time
the notice is delivered to the person to be served is the date and
time the levy is made. If the notice is sent by certified mail,
return receipt requested, the date of delivery on the receipt is
treated as the date the levy is made. If, after receipt of a
notice of levy, an officer or other person authorized to act on
behalf of the person served signs and notes the date and time of
receipt on the notice of levy, the date and time so noted will be
presumed to be, in the absence of proof to the contrary, the date
and time of delivery. Any person may, upon written notice to the
district director having audit jurisdiction over such person, have
all notices of levy by mail sent to one designated office. After
such a notice is received by the district director, notices of
levy by mail will be sent to the designated office until a written
notice withdrawing the request or a written notice designating a
different office is received by the district director. (d) Effective date. --These
regulations are effective
(a) Authority to levy (1) In general. --If any person liable to pay any tax neglects or refuses to
pay the tax within 10 days after notice and demand, the district
director to whom the assessment is charged (or, upon his request,
any other district director) may proceed to collect the tax by
levy. The district director may levy upon any property, or rights
to property, whether real or personal, tangible or intangible,
belonging to the taxpayer. The district director may also levy
upon property with respect to which there is a lien provided by
section 6321 or 6324 for the payment of the tax. For exemption of
certain property from levy, see section 6334 and the regulations
thereunder. As used in section 6331 and this section, the term
"tax" includes any interest, additional amount, addition
to tax, or assessable penalty, together with costs and expenses.
Property subject to a Federal tax lien which has been sold or
otherwise transferred by the taxpayer may be seized while in the
hands of the transferee or any subsequent transferee. However, see
provisions under sections 6323 and 6324(a)(2) and (b) for
protection of certain transferees against a Federal tax lien. Levy
may be made by serving a notice of levy on any person in
possession of, or obligated with respect to, property or rights to
property subject to levy, including receivables, bank accounts,
evidences of debt, securities, and salaries, wages, commissions,
or other compensation. A levy on a bank reaches any interest that
accrues on the taxpayer's balance under the terms of the bank's
agreement with the depositor during the 21-day holding period
provided for in section 6332(c). Except as provided in §301.6331-1(b)(1)
with regard to a levy on salary or wages, a levy extends only to
property possessed and obligations which exist at the time of the
levy. Obligations exist when the liability of the obligor is fixed
and determinable although the right to receive payment thereof may
be deferred until a later date. For example, if on the first day
of the month a delinquent taxpayer sold personal property subject
to an agreement that the buyer remit the purchase price on the
last day of the month, a levy made on the buyer on the 10th day of
the month would reach the amount due on the sale, although the
buyer need not satisfy the levy by paying over the amount to the
district director until the last day of the month. Similarly, a
levy only reaches property in the possession of the person levied
upon at the time the levy is made together with interest that
accrues during the 21-day holding period provided for in section
6332(c). For example, a levy made on a bank with respect to the
account of a delinquent taxpayer is satisfied if the bank
surrenders the amount of the taxpayer's balance at the time the
levy is made. The levy has no effect upon any subsequent deposit
made in the bank by the taxpayer. Subsequent deposits may be
reached only by a subsequent levy on the bank. (2) Jeopardy cases. --If the district director finds that the collection of any tax
is in jeopardy, he or she may make notice and demand for immediate
payment of such tax and, upon failure or refusal to pay such tax,
collection thereof by levy shall be lawful without regard to the
10-day period provided in section 6331(a), the 30-day period
provided in section 6331(d), or the limitation on levy provided in
section 6331(g)(1). (3) Bankruptcy or receivership cases. --During
a bankruptcy proceeding or a receivership proceeding in either a
Federal or a State court, the assets of the taxpayer are in
general under the control of the court in which such proceeding is
pending. Taxes cannot be collected by levy upon assets in the
custody of a court, whether or not such custody is incident to a
bankruptcy or receivership proceeding, except where the proceeding
has progressed to such a point that the levy would not interfere
with the work of the court or where the court grants permission to
levy. Any assets which under applicable provisions of law are not
under the control of the court may be levied upon, for example,
property exempt from court custody under State law or the
bankrupt's earnings and property acquired after the date of
bankruptcy. However, levy upon such property is not mandatory and
the Government may rely upon payment of taxes in the proceeding. (4) Certain types of compensation (i)
Federal employees. --Levy may be made upon the salary or wages of any officer or
employee (including members of the Armed Forces), or elected or
appointed official, of the United States, the District of
Columbia, or any agency or instrumentality of either, by serving a
notice of levy on the employer of the delinquent taxpayer. As used
in this subdivision, the term "employer" means (a)
the officer or employee of the United States, the District of
Columbia, or of the agency or instrumentality of the United States
or the District of Columbia, who has control of the payment of the
wages, or (b) any other officer or employee designated by
the head of the branch, department, agency, or instrumentality of
the United States or of the District of Columbia as the party upon
whom service of the notice of levy may be made. If the head of
such branch, department, agency, or instrumentality designates an
officer or employee other than one who has control of the payment
of the wages, as the party upon whom service of the notice of levy
may be made, such head shall promptly notify the Commissioner of
the name and address of each officer or employee so designated and
the scope or extent of his authority as such designee. (ii)
State and municipal employees. --Salaries, wages, or other compensation of any officer,
employee, or elected or appointed official of a State or
Territory, or of any agency, instrumentality, or political
subdivision thereof, are also subject to levy to enforce
collection of any Federal tax. (iii)
Seamen. --Notwithstanding
the provisions of section 12 of the Seamen's Act of 1915 (38 Stat.
1169; 46 U.S.C. 601), wages of seamen, apprentice seamen, or
fishermen employed on fishing vessels are subject to levy. See
section 6334(c). (5)
Noncompetent Indians. --Solely
for purposes of sections 6321 and 6331, any interest in restricted
land held in trust by the United States for an individual
noncompetent Indian (and not for a tribe) shall not be deemed to
be property, or a right to property, belonging to such Indian. (b) Continuing levies and successive seizures (1) Continuing effect of levy on salary and wages. --A
levy on salary or wages has continuous effect from the time the
levy originally is made until the levy is released pursuant to
section 6343. For this purpose, the term salary or wages
includes compensation for services paid in the form of fees,
commissions, bonuses, and similar items. The levy attaches to both
salary or wages earned but not yet paid at the time of the levy,
advances on salary or wages made subsequent to the date of the
levy, and salary or wages earned and becoming payable subsequent
to the date of the levy, until the levy is released pursuant to
section 6343. In general, salaries or wages that are the subject
of a continuing levy and are not exempt from levy under section
6334(a)(8) or (9), are to be paid to the district director, the
service center director, or the compliance center director
(director) on the same date the payor would otherwise pay over the
money to the taxpayer. For example, if an individual normally is
paid on the Wednesday following the close of each work week, a
levy made upon his or her employer on any Monday would apply to
both wages due for the prior work week and wages for succeeding
work weeks as such wages become payable. In such a case, the levy
would be satisfied if, on the first Wednesday after the levy and
on each Wednesday thereafter until the employer receives a notice
of release from levy described in section 6343, the employer pays
over to the director wages that would otherwise be paid to the
employee on such Wednesday (less any exempt amount pursuant to
section 6334). (2) Successive seizures. --Whenever any property or rights to property upon which
a levy has been made are not sufficient to satisfy the claim of
the United States for which the levy is made, the district
director may thereafter, and as often as may be necessary, proceed
to levy in like manner upon any other property or rights to
property subject to levy of the person against whom such claim
exists or on which there is a lien imposed by section 6321 or 6324
(or the corresponding provision of prior law) for the payment of
such claim until the amount due from such person, together with
all costs and expenses, is fully paid. (c) Service of notice of levy by mail. --A
notice of levy may be served by mailing the notice to the person
upon whom the service of a notice of levy is authorized under
paragraph (a)(1) of this section. In such a case the date and time
the notice is delivered to the person to be served is the date and
time the levy is made. If the notice is sent by certified mail,
return receipt requested, the date of delivery on the receipt is
treated as the date the levy is made. If, after receipt of a
notice of levy, an officer or other person authorized to act on
behalf of the person served signs and notes the date and time of
receipt on the notice of levy, the date and time so noted will be
presumed to be, in the absence of proof to the contrary, the date
and time of delivery. Any person may, upon written notice to the
district director having audit jurisdiction over such person, have
all notices of levy by mail sent to one designated office. After
such a notice is received by the district director, notices of
levy by mail will be sent to the designated office until a written
notice withdrawing the request or a written notice designating a
different office is received by the district director. (d)
Effective date. --These
regulations are effective December 10, 1992.
§301.6331-2., Procedures
and restrictions on levies (a)
Notice of intent to levy (1) In general. --Levy may be made upon the salary, wages, or other property of
a taxpayer for any unpaid tax no less than 30 days after the
district director, the service center director, or the compliance
center director (director) has notified the taxpayer in writing of
the intent to levy. The notice must be given in person, be left at
the dwelling or usual place of business of the taxpayer, or be
sent by registered or certified mail to the taxpayer's last known
address. For further guidance regarding the definition of last
known address, see §301.6212-2. The notice of intent to levy is
separate from, but may be given at the same time as, the notice
and demand described in §301.6331-1. (2) Content of Notice. --The notice of intent to levy is to contain a brief statement
in nontechnical terms including the following information -- (i)
The
Internal Revenue Code provisions and the procedures relating to
levy and sale of property; (ii)
The
administrative appeals available with respect to the levy and sale
of property and the procedures relating to such appeals; (iii)
The
alternatives available that could prevent levy on the property
(including the use of an installment agreement under section
6159); and (iv)
The
Internal Revenue Code provisions and the procedures relating to
redemption of property and release of liens on property. (b) Uneconomical levy (1) In general. --No levy may be made on property if the director estimates
that the anticipated expenses with respect to the levy and sale
will exceed the fair market value of the property. The estimate is
to be made on an aggregate basis for all of the items that are
anticipated to be seized pursuant to the levy. Generally, no levy
should be made on individual items of insignificant monetary
value. For the definition of fair market value, see §301.6325-1(b)(1)(i).
See §301.6341-1 concerning the expenses of levy and sale. (2) Time of estimate. --The estimate, which may be formal or informal, is to be made
at the time of the seizure or within a reasonable period of time
prior to a seizure. The estimate may be based on earlier estimates
of fair market value and anticipated expenses of the same or
similar property. (3) Examples. --The following examples illustrate the application of this
paragraph (b): Example 1. A
director anticipates that the taxpayer has only one item of
property that can be seized and sold. This item is estimated to
have a fair market value of $250.00. The director also estimates
that the costs of seizure and sale will total $300.00 if this item
is seized. The director is prohibited from levying on this one
item of the taxpayer's property because the costs of seizure and
sale are estimated to exceed the property's fair market value. Example 2.
The facts are the same as in Example 1 except that the
director anticipates that the taxpayer has 10 items of property
that can be seized and sold. Each of those items is estimated to
have a fair market value of $250.00. The director also estimates
that the costs of seizure and sale will total $300.00 regardless
of how many of those items are seized. The director is prohibited
from levying on only one item of the taxpayer's property because
the costs of seizure and sale are estimated to exceed the fair
market value of the single item of property. The director,
however, would not be prohibited from levying on two or more items
of the taxpayer's property because the aggregate fair market value
of the seized property would exceed the estimated costs of seizure
and sale. Example 3.
The taxpayer has three items of property, A, B, and C. The
director anticipates that the value of items A, B, and C depends
on their being sold as a unit. The director estimates that due to
high anticipated costs of storing or maintaining item B prior to
the sale, the aggregate fair market value of items A, B, and C
will not exceed the anticipated expenses of seizure and sale if
all three items are seized. Accordingly, the director is
prohibited from levying on items A, B, and C. Example
4. The
facts are the same as in Example 3 except that the director
does not anticipate that the value of items A, B, and C depends on
those items being sold as a unit. If the director estimates that
the aggregate fair market value of items A and C exceeds the
aggregate anticipated costs of the seizure and sale of those two
items, items A and C can be seized and sold. The director is
prohibited from levying on item B because the high cost of storing
or maintaining item B is estimated to exceed the fair market value
of item B. (c)
Restriction on levy on date of appearance. --Except for continuing levies on salaries or wages described
in §301.6331-1(b)(1), no levy may be made on any property of a
person on the day that person, or an officer or employee of that
person, is required to appear in response to a summons served for
the purpose of collecting any underpayment of tax from that
person. For purposes of this paragraph (c), the date on which an
appearance is required is the date fixed by an officer or employee
of the Internal Revenue Service pursuant to section 7605 or the
date (if any) fixed as the result of a judicial proceeding
instituted under sections 7604 and 7402(b) seeking the enforcement
of the summons. (d) Jeopardy. --Paragraphs (a) and (c) of this section do not apply to a levy
if the director finds, for purposes of §301.6331-1(a)(2), that
the collection of tax is in jeopardy. (e)
Effective date. --These
regulations are effective December 10, 1992. [Reg. §301.6331-2.] Cross-reference. --For provisions relating to the making of levies while an offer to
compromise is pending, see §301.7122-1. [Reg. §301.6331-3.]
(a)
Prohibition on levy (1) In general. --No levy may be made to collect a tax liability that is the
subject of an installment agreement during the period that a
proposed installment agreement is pending with the Internal
Revenue Service ( (3) Revised proposals of installment agreements submitted following
rejection. --If,
following the rejection of a proposed installment agreement, the
taxpayer makes a good faith revision of the proposal and submits
the revision within 30 days of the date of rejection, the
provisions of this section shall apply to that revised proposal. (4) Exceptions. --Paragraph (a)(1) of this section shall not prohibit levy if
the taxpayer files a written notice with the (b) Other actions by the (1) In general. --The (i)
Crediting
an overpayment against the liability pursuant to section 6402; (ii)
Filing
or refiling notices of Federal tax lien; and (iii)
Taking
action to collect from any person who is not named in the
installment agreement or proposed installment agreement but who is
liable for the tax to which the installment agreement relates. (2) Proceedings in court. --Except as otherwise provided in this paragraph (b)(2),
the (c) Statute of limitations (1) Suspension of the statute of limitations on collection. --The
statute of limitations under section 6502 for collection of any
liability shall be suspended during the period that a proposed
installment agreement relating to that liability is pending with
the (2) Waivers of the statute of limitations on collection. --The
(d)
Effective date. --This
section is applicable on T.D.
8809 T.D. 8809 DEPARTMENT
OF THE TREASURY This
document contains amendments to the Procedure and Administration
Regulations (26 Prior
to January 1, 1983, the Under
section 6331(a), the Under
section 6331(d), the Notice of Intent to Levy must contain a brief
statement, in simple, nontechnical terms, that sets forth (A) the
statutory provisions relating to the levy and sale of property,
(B) the procedures applicable to the levy and sale of property,
(C) the administrative appeals available to the taxpayer with
respect to levy and sale and the procedures relating to those
appeals, (D) the alternatives available to taxpayers that could
prevent levy on the property (including installment agreements),
(E) the statutory provisions relating to redemption of property
and the release of liens on property, and (F) the procedures
applicable to the redemption of property and the release of a lien
on property. The Notice of Intent to Levy must be given in person,
left at the taxpayer's dwelling or usual place of business, or
sent by registered or certified mail to the taxpayer's last known
address. Prior
to Section
6330 provides that, except when the Secretary finds that
collection of the tax is in jeopardy or a levy is issued to
collect State tax refunds due to the taxpayer, no levy may be made
on or after Except
when it determines that collection of the tax is in jeopardy or it
levies on State tax refunds, the In
order to implement the provisions of section 6330, the Under
the procedures the These
temporary regulations implement the provisions of section 6330 and
thus set forth the procedures the Explanation
of Provisions The
temporary regulations provide that, except in the case of jeopardy
levies or levies on State tax refunds, the Both
such notifications must (A) set forth the amount of unpaid tax,
(B) notify the taxpayer of the right to request a hearing within
the 30-day period that commences the day after the date of
notification, (C) indicate, as appropriate, that the Unless
the taxpayer withdraws the request that Appeals conduct a hearing
when the taxpayer has made a timely request for a collection due
process hearing, Appeals will hold one section 6330 collection due
process hearing (CDP hearing) with respect to the tax and tax
period or periods specified in the collection due process notice
(CDP Notice). The taxpayer is entitled to have a hearing conducted
by an Appeals officer who has had no prior involvement with the
unpaid tax that is the subject of the hearing. This requirement,
however, can be waived by the taxpayer in writing. A taxpayer may
seek judicial review of an Appeals determination issued with
respect to a CDP hearing. Hearings with respect to levies may be
held in conjunction with hearings under section 6320, involving
liens. If
the taxpayer timely requests a CDP hearing, the periods of
limitation relating to collection after assessment, relating to
criminal prosecution, and relating to suits are suspended until
the suspension ends as a result of the taxpayer's withdrawal of
the request for a CDP hearing or until the determination reached
at the CDP hearing becomes final by the expiration of the time for
seeking review or reconsideration before the appropriate court.
Prior to issuance of the Appeals determination, the Appeals
officer must verify that all legal and administrative requirements
pertaining to the proposed levy have been met. The temporary
regulations further discuss the types of issues that may or may
not be raised at the CDP hearing. The types of issues that may be
raised at the hearing include appropriate spousal defenses;
challenges to the appropriateness of collection actions;
collection alternatives; and challenges to the existence or amount
of the liability specified in the CDP Notice. An issue may not be
raised at the CDP hearing if the issue was raised and considered
at a previous hearing under section 6320 or any other previous
administrative or judicial proceeding in which the taxpayer
meaningfully participated. Challenges to the existence or amount
of the tax liability specified in the CDP Notice may be raised
only if the taxpayer did not receive a statutory notice of
deficiency for such liability or did not otherwise have an
opportunity to dispute such liability. Following
the CDP hearing, the Appeals officer will issue a Notice of
Determination, which can be appealed to the United States Tax
Court or a district court of the Lastly,
the temporary regulations provides rules and procedures with
respect to the administrative hearing (referred to as an
"equivalent hearing") the Special
Analyses It
has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has also
been determined that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does not apply to these
regulations. For the applicability of the Regulatory Flexibility
Act (5 U.S.C. chapter 6) refer to the Special Anayses section of
the preamble to the cross reference notice of proposed rulemaking
published in the Proposed Rules section of this issue of the Federal
Register. Pursuant to section 7805(f) of the Internal Revenue
Code, this temporary regulation will be submitted to the Chief
Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business. Drafting
Information The
principal author of this regulation is Jerome D. Sekula, Office of
Assistant Chief Counsel (General Litigation). However, other
personnel from the *
* * * * Employment
taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping requirements. Adoption
of Amendments to the Regulations Accordingly,
26 PART
301--PROCEDURE Paragraph
1. The authority citation for part 301 continues to read in part
as follows: Authority:
26 U.S.C. 7805 * * * Par.
2. Section §301.6330-IT
Notice and opportunity for hearing prior to levy (temporary). (a)
Notification--(1) In general. Except as specified in
paragraph (a)(2) of this section, the district directors,
directors of service centers, and the Assistant Commissioner
(International), or their successors, are required to provide
persons upon whose property or rights to property the (2)
(ii)
Jeopardy. Section 6330 does not require the (3)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (a) as follows: Q-A1.
Who is the "person" to be notified under section 6330? A-A1.
Under section 6330(a)(1), a pre-levy or post-levy CDP Notice is
only required to be given to the person whose property or right to
property is intended to be levied upon, or, in the case of a levy
made on a State tax refund or in the case of a jeopardy levy, the
person whose property or right to property was levied upon. The
person described in section 6330(a)(1) is the same person
described in section 6331(a). Pursuant to section 6331(a), notice
is to be given to the person liable to pay the tax due after
notice and demand who refuses or neglects to pay (hereinafter
referred to as the taxpayer). Q-A2.
Will the A-A2.
No. Such a person is not the person described in section 6331(a),
but such persons have other remedies. See A-B5 of this paragraph
(a)(3). Q-A3.
Will the A-A3.
Yes. The notification of intent to levy or of the issuance of a
jeopardy or State tax refund levy will specify each tax and tax
period that will be or was included in the levy. Q-A4.
Will the A-A4.
Yes. The Q-A5.
When will the A-A5.
Pursuant to section 6330(a)(1), beginning Q-A6.
What must the pre-levy CDP Notice include? A-A6.
Pursuant to section 6330(a)(3), the notification must include, in
simple and nontechnical terms: (i)
The amount of the unpaid tax. (ii)
Notification of the right to a hearing. (iii)
A statement that the (iv)
The taxpayer's rights with respect to the levy action, including a
brief statement that sets forth-- (A)
The statutory provisions relating to the levy and sale of
property; (B)
The procedures applicable to the levy and sale of property; (C)
The administrative appeals available to the taxpayer with respect
to levy and sale and the procedures relating to those appeals; (D)
The alternatives available to taxpayers that could prevent levy on
the property (including installment agreements); (E)
The statutory provisions relating to redemption of property and
the release of liens on property; and (F)
The procedures applicable to the redemption of property and the
release of liens on property. Q-A7.
What must the post-levy CDP Notice include? A-A7.
Pursuant to section 6330(a)(3), the notification must include, in
simple and nontechnical terms: (i)
The amount of the unpaid tax. (ii)
Notification of the right to a hearing. (iii)
A statement that the (iv)
The taxpayer's rights with respect to the levy action, including a
brief statement that sets forth-- (A)
The statutory provisions relating to the levy and sale of
property; (B)
The procedures applicable to the levy and sale of property; (C)
The administrative appeals available to the taxpayer with respect
to levy and sale and the procedures relating to those appeals; (D)
The alternatives available to taxpayers that could prevent any
further levies on the taxpayer's property (including installment
agreements); (E)
The statutory provisions relating to redemption of property and
the release of liens on property; and (F)
The procedures applicable to the redemption of property and the
release of liens on property. Q-A8.
How will this pre-levy or post-levy notification be accomplished? A-A8.
(i) The (A)
By delivering the notice personally to the taxpayer. (B)
By leaving the notice at the taxpayer's dwelling or usual place of
business. (C)
By mailing the notice to the taxpayer at the taxpayer's last known
address by certified or registered mail, return receipt requested. (ii)
The (A)
By delivering the notice personally to the taxpayer. (B)
By leaving the notice at the taxpayer's dwelling or usual place of
business. (C)
By mailing the notice to the taxpayer at the taxpayer's last known
address by certified or registered mail. Q-A9.
What are the consequences if the taxpayer does not receive or
accept the notification which was properly left at the taxpayer's
dwelling or usual place of business, or properly sent by certified
or registered mail, return receipt requested, to the taxpayer's
last known address? A-A9.
Notification properly sent to the taxpayer's last known address or
left at the taxpayer's dwelling or usual place of business is
sufficient to start the 30-day period within which the taxpayer
may request a CDP hearing. Actual receipt is not a prerequisite to
the validity of the notice. Q-A10.
What if the taxpayer does not receive the CDP Notice because the A-A10.
When the (4)
Examples. The following examples illustrate the principles
of this paragraph (a): Example 1.
Prior to Example 2.
The same facts as in Example 1, except the (b)
Entitlement to a CDP hearing--(1) In general. A
taxpayer is entitled to one CDP hearing with respect to the tax
and tax period covered by the pre-levy or post-levy CDP Notice
provided the taxpayer. The taxpayer must request such a hearing
within the 30-day period commencing on the day after the date of
the CDP Notice. (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (b) as follows: Q-B1.
Is the taxpayer entitled to a CDP hearing where a levy for State
tax refunds is served on or after A-B1.
Yes. The taxpayer is entitled to a CDP hearing under section 6330
for the tax and tax period set forth in such a levy issued on or
after Q-B2.
Is the taxpayer entitled to a CDP hearing when the A-B2.
No. Under section 6330, only the first pre-levy or post-levy
Notice with respect to liabilities for a tax and tax period
constitutes a CDP Notice. If the taxpayer does not timely. request
a CDP hearing with Appeals following that first notification, the
taxpayer foregoes the right to a CDP hearing with Appeals and
judicial review of Appeals's determination with respect to
collection activity relating to that tax and tax period. The Q-B3.
When the A-B3.
Yes. Unless the taxpayer provides the Q-B4.
If the A-B4.
No. The taxpayer is entitled to only one CDP hearing under section
6330 with respect to the tax and tax period. The taxpayer must
request the CDP hearing within 30 days of the date of the first
CDP Notice provided for that tax and tax period. Q-B5.
Will the A-B5.
No. Such person is not the person described in section 6331(a) and
is, therefore, not entitled to a CDP hearing or an equivalent
hearing (as discussed in paragraph (i) of this section). Such
person, however, may seek reconsideration by the (c)
Requesting a CDP hearing--(1) In general. Where a
taxpayer is entitled to a CDP hearing under section 6330, such a
hearing must be requested during the 30-day period that commences
that day after the date of the CDP Notice. (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (c) as follows: Q-C1.
What must a taxpayer do to obtain a CDP hearing? A-C1.
(i) The taxpayer must make a request in writing for a CDP hearing.
A written request in any form which requests a CDP hearing will be
acceptable. The request must include the taxpayer's name, address,
and daytime telephone number, and must be signed by the taxpayer
or the taxpayer's authorized representative and dated. Included
with the CDP Notice will be a Form 12153, Request for a Collection
Due Process Hearing, that can be used by the taxpayer in
requesting a CDP hearing. The Form 12153 requests the following
information: (A)
The taxpayer's name, address, daytime telephone number, and
taxpayer identification number ( (B)
The type of tax involved. (C)
The tax period at issue. (D)
A statement that the taxpayer requests a hearing with Appeals
concerning the proposed collection activity. (E)
The reason or reasons why the taxpayer disagrees with the proposed
collection action. (ii)
Taxpayers are encouraged to use a Form 12153 in requesting a CDP
hearing so that such a request can be readily identified and
forwarded to Appeals. Taxpayers may obtain a copy of Form 12153 by
contacting the Q-C2.
Must the request for the CDP hearing be in writing? A-C2.
Yes. There are several reasons why the request for a CDP hearing
must be in writing. First, the filing of a timely request for a
CDP hearing is the first step in what may result in a court
proceeding. A written request will provide proof that the CDP
hearing was requested and thus permit the court to verify that it
has jurisdiction over any subsequent appeal of the Notice of
Determination issued by Appeals. In addition, the receipt of the
written request will establish the date on which the periods of
limitation under section 6502 (relating to collection after
assessment), section 6531 (relating to criminal prosecutions), and
section 6532 (relating to suits) are suspended as a result of the
CDP hearing and any judicial appeal. Moreover, because the Q-C3.
When must a taxpayer request a CDP hearing with respect to a CDP
Notice issued under section 6330? A-C3.
A taxpayer must submit a written request for a CDP hearing with
respect to a CDP Notice issued under section 6330 within the
30-day period commencing the day after the date of the CDP Notice.
This period is slightly different from the period allowed
taxpayers to submit a written request for a CDP hearing with
respect to a CDP Notice issued under section 6320. For a CDP
Notice issued under section 6320, a taxpayer must submit a written
request for a CDP hearing within the 30-day period commencing the
day after the end of the five business day period following the
filing of the notice of federal tax lien (NFTL). Q-C4.
How will the timeliness of a taxpayer's written request for a CDP
hearing be determined? A-C4.
The rules under section 7502 and the regulations thereunder and
section 7503 and the regulations thereunder will apply to
determine the timeliness of the taxpayer's request for a CDP
hearing, if properly transmitted and addressed as provided in A-C6
of this paragraph (c)(2). Q-C5.
Is the 30-day period within which a taxpayer must make a request
for a CDP hearing extended because the taxpayer resides outside
the A-C5.
No. Section 6330 does not make provision for such a circumstance.
Accordingly, all taxpayers who want a CDP hearing under section
6330 must request such a hearing within the 30-day period
commencing the day after the date of the CDP Notice. Q-C6.
Where should the written request for a CDP hearing be sent? A-C6.
The written request for a CDP hearing should be filed with the Q-C7.
What will happen if the taxpayer does not request a section 6330
CDP hearing in writing within the 30-day period commencing on the
day after the date of the CDP Notice? A-C7.
If the taxpayer does not request a CDP hearing with Appeals within
the 30-day period commencing the day after the date of the CDP
Notice, the taxpayer will forego the right to a CDP hearing under
section 6330 with respect to the tax and tax period or periods
shown on the CDP Notice. In addition, the Q-C8.
When must a taxpayer request a CDP hearing with respect to a
substitute CDP Notice? A-C8.
A CDP hearing with respect to a substitute CDP Notice must be
requested in writing by the taxpayer prior to the end of the
30-day period commencing the day after the date of the substitute
CDP Notice. Q-C9.
Can taxpayers attempt to resolve the matter of the proposed levy
with an officer or employee of the A-C9.
Yes. Taxpayers are encouraged to discuss their concerns with the (d)
Conduct of CDP hearing--(1) In general. If a
taxpayer requests a CDP hearing under section 6330(a)(3)(B) (and
does not withdraw that request), the CDP hearing will be held with
Appeals. The taxpayer is entitled to only one CDP hearing under
section 6330 with respect to the tax and tax period or periods
shown on the CDP Notice. To the extent practicable, the CDP
hearing requested under section 6330 will be held in conjunction
with any CDP hearing the taxpayer requests under section 6320. A
CDP hearing will be conducted by an employee or officer of Appeals
who has had no involvement with respect to the tax for the tax
period or periods covered by the hearing prior to the first CDP
hearing under section 6320 or section 6330, unless the taxpayer
waives that requirement. (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (d) as follows: Q-D1.
Under what circumstances can a taxpayer receive more than one CDP
hearing with respect to a tax period? A-D1.
The taxpayer may receive more than one CDP hearing with respect to
a tax period where the tax involved is a different type of tax
(for example, an employment tax liability, where the original CDP
hearing for the tax period involved an income tax liability), or
where the same type of tax for the same period is involved, but
where the amount of the tax has changed as a result of an
additional assessment of tax for that period or an additional
accuracy-related or filing delinquency penalty has been assessed.
The taxpayer is not entitled to another CDP hearing if the
additional assessment represents accruals of interest or accruals
of penalties. Q-D2.
Will a CDP hearing with respect to one tax period be combined with
a CDP hearing with respect to another tax period? A-D2.
To the extent practicable, a hearing with respect to one tax
period shown on a CDP Notice will be combined with any and all
other hearings to which the taxpayer may be entitled with respect
to other tax periods shown on the CDP Notice. Q-D3.
Will a CDP hearing under section 6330 be combined with a CDP
hearing under section 6320? A-D3.
To the extent it is practicable, a CDP hearing under section 6330
will be held in conjunction with a CDP hearing under section 6320. Q-D4.
What is considered to be prior involvement by an employee or
officer of Appeals with respect to the tax and tax period or
periods involved in the hearing? A-D4.
Prior involvement by an employee or officer of Appeals includes
participation or involvement in an Appeals hearing (other than a
CDP hearing held under either section 6320 or section 6330) that
the taxpayer may have had with respect to the tax and tax period
shown on the CDP Notice. Q-D5.
How can a taxpayer waive the requirement that the officer or
employee of Appeals had no prior involvement with respect to the
tax and tax period or periods? A-D5.
The taxpayer must sign a written waiver. (e)
Matters considered at CDP hearing--(1) In general.
Appeals has the authority to determine the validity, sufficiency,
and timeliness of any CDP Notice given by the (2)
Spousal defenses. A taxpayer may raise any appropriate
spousal defenses at a CDP hearing. To claim a spousal defense
under section 6015, the taxpayer must do so in writing according
to rules prescribed by the Secretary. Spousal defenses raised
under section 6015 in a CDP hearing are governed in all respects
by the provisions of section 6015 and the procedures prescribed by
the Secretary thereunder. (3)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (e) as follows: Q-E1.
What factors will Appeals consider in making its determination? A-E1.
Appeals will consider the following matters in making its
determination: (i)
Whether the (ii)
Any issues appropriately raised by the taxpayer relating to the
unpaid tax. (iii)
Any appropriate spousal defenses raised by the taxpayer. (iv)
Any challenges made by the taxpayer to the appropriateness of the
proposed collection action. (v)
Any offers by the taxpayer for collection alternatives. (vi)
Whether the proposed collection action balances the need for the
efficient collection of taxes and the legitimate concern of the
taxpayer that any collection action be no more intrusive than
necessary. Q-E2.
When is a taxpayer entitled to challenge the existence or amount
of the tax liability specified in the CDP Notice? A-E2.
A taxpayer is entitled to challenge the existence or amount of the
tax liability specified in the CDP Notice if the taxpayer did not
receive a statutory notice of deficiency for such liability or did
not otherwise have an opportunity to dispute such liability.
Receipt of a statutory notice of deficiency for this purpose means
receipt in time to petition the Tax Court for a redetermination of
the deficiency asserted in the notice of deficiency. An
opportunity to dispute a liability includes a prior opportunity
for a conference with Appeals that was offered either before or
after the assessment of the liability. Q-E3.
Are spousal defenses subject to the limitations imposed under
section 6330(c)(2)(B) on a taxpayer's right to challenge the tax
liability specified in the CDP Notice at a CDP hearing? A-E3.
No. The limitations imposed under section 6330(c)(2)(B) do not
apply to spousal defenses. A spousal defense raised under section
6015 is governed by that section; therefore any limitations under
section 6015 will apply. Q-E4.
May a taxpayer raise at a CDP hearing a spousal defense under
section 6015 if that defense was raised and considered in a prior
judicial proceeding that has become final? A-E4.
No. A taxpayer is precluded by limitations under section 6015 from
raising a spousal defense under section 6015 in a CDP hearing
under these circumstances. Q-E5.
What collection alternatives are available to the taxpayer? A-E5.
Collection alternatives would include, for example, a proposal to
withhold the proposed or future collection action in circumstances
that will facilitate the collection of the tax liability, an
installment agreement, an offer-in-compromise, the posting of a
bond, or the substitution of other assets. Q-E6.
What issues may a taxpayer raise in a CDP hearing under section
6330 if he previously received a notice under section 6320 with
respect to the same tax and tax period and did not request a CDP
hearing with respect to that notice? A-E6.
The taxpayer may raise appropriate spousal defenses, challenges to
the appropriateness of the proposed collection action, and offers
of collection alternatives. The existence or amount of the tax
liability for the tax for the tax period shown in the CDP Notice
may be challenged only if the taxpayer did not already have an
opportunity to dispute that tax liability. Where the taxpayer
previously received a CDP Notice under section 6320 with respect
to the same tax and tax period and did not request a CDP hearing
with respect to that earlier CDP Notice, the taxpayer already had
an opportunity to dispute the existence or amount of the
underlying tax liability. Q-E7.
How will Appeals issue its determination? A-E7.
(i) Taxpayers will be sent a dated Notice of Determination by
certified or registered mail. The Notice of Determination will set
forth Appeals's findings and decisions: (A)
It will state whether the (B)
It will resolve any issues appropriately raised by the taxpayer
relating to the unpaid tax. (C)
It will include a decision on any appropriate spousal defenses
raised by the taxpayer. (D)
It will include a decision on any challenges made by the taxpayer
to the appropriateness of the collection action. (E)
It will respond to any offers by the taxpayer for collection
alternatives. (F)
It will address whether the proposed collection action represents
a balance between the need for the efficient collection of taxes
and the legitimate concern of the taxpayer that any collection
action be no more intrusive than necessary. (ii)
The Notice of Determination will also set forth any agreements
that Appeals reached with the taxpayer, any relief given the
taxpayer, and any actions the taxpayer and/or the (iii)
Because taxpayers are encouraged to discuss their concerns with
the Q-E8.
Is there a time limit on the CDP hearings or on when Appeals must
issue a Notice of Determination? A-E8.
No. Appeals will, however, attempt to conduct CDP hearings as
expeditiously as possible. Q-E9.
Why is the Notice of Determination and its date important? A-E9.
The Notice of Determination will set forth Appeals's findings and
decisions with respect to the matters set forth in A-E1 of this
paragraph (e)(3). The date of the Notice of Determination
establishes the beginning date of the 30-day period within which
the taxpayer is permitted to seek judicial review of Appeals's
determination. (4)
Examples. The following examples illustrate the principles
of this paragraph (e). Example 1.
The Example 2.
Same facts as in Example 1, except the taxpayer does not
receive the notice of deficiency in time to petition the Tax
Court. The taxpayer is not, therefore, precluded from challenging
the existence or amount of the tax liability in a subsequent CDP
hearing. Example 3.
The (f)
Judicial review of Notice of Determination--(1) In
general. Unless the taxpayer provides the (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (f) as follows: Q-F1.
What must a taxpayer do to obtain judicial review of a Notice of
Determination? A-F1.
Subject to the jurisdictional limitations described in A-F2 of
this paragraph (f)(2), the taxpayer must, within the 30-day period
commencing the day after the date of the Notice of Determination,
appeal Appeals's determination to the Tax Court or to a district
court of the Q-F2.
With respect to the relief available to the taxpayer under section
6015(b) or (c), what is the time frame within which a taxpayer may
seek Tax Court review of Appeals's determination following a CDP
hearing? A-F2.
If the taxpayer seeks Tax Court review not only of Appeals's
denial of relief under section 6015(b) or (c), but also of relief
with respect to other issues raised in the CDP hearing, the
taxpayer should request Tax Court review within the 30-day period
commencing the day after the date of the Notice of Determination.
If the taxpayer only wants Tax Court review of Appeals's denial of
relief under section 6015(b) or (c), the taxpayer should request
review by the Tax Court, as provided by section 6015(e), within 90
days of Appeals's determination. If a request for Tax Court review
is filed after the 30-day period for seeking judicial review under
section 6330, then only the taxpayer's section 6015(b) or (c)
claims may be reviewable by the Tax Court. Q-F3.
Where should a taxpayer direct a request for judicial review of a
Notice of Determination? A-F3.
If the Tax Court would have jurisdiction over the type of tax
specified in the CDP Notice (for example, income and estate
taxes), then the taxpayer must seek judicial review by the Tax
Court. If the tax liability arises from a type of tax over which
the Tax Court would not have jurisdiction, then the taxpayer must
seek judicial review by a district court of the Q-F4.
What happens if the taxpayer timely appeals Appeals's
determination to the incorrect court? A-F4.
If the court to which the taxpayer directed a timely appeal of the
Notice of Determination determines that the appeal was to the
incorrect court (because of jurisdictional, venue or other
reasons), the taxpayer will have 30 days after the court's
determination to that effect within which to file an appeal to the
correct court. Q-F5.
What issue or issues may the taxpayer raise before the Tax Court
or before a district court if the taxpayer disagrees with the
Notice of Determination? A-F5.
In seeking Tax Court or district court review of Appeals's Notice
of Determination, the taxpayer can only ask the court to consider
an issue that was raised in the taxpayer's CDP hearing. (g)
Effect of request for CDP hearing and judicial review on
periods of limitation--(1)In general. The periods of
limitation under section 6502 (relating to collection after
assessment), section 6531 (relating to criminal prosecutions), and
section 6532 (relating to suits) are suspended until the date the (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (g) as follows: Q-G1.
For what period of time will the periods of limitation under
section 6502, section 6531, and section 6532 remain suspended if
the taxpayer timely requests a CDP hearing concerning a pre-levy
or post-levy CDP Notice? A-G1.
The suspension period commences on the date the Q-G2.
For what period of time will the periods of limitation under
section 6502, section 6531, and section 6532 be suspended if the
taxpayer does not request a CDP hearing concerning the CDP Notice,
or the taxpayer requests a CDP hearing, but his request is not
timely? A-G2.
Under either of these circumstances, section 6330 does not provide
for a suspension of the periods of limitation. (3)
Examples. The following examples illustrate the principles
of this paragraph (g). Example 1.
The period of limitation under section 6502 with respect to the
taxpayer's tax period listed in the CDP Notice will expire on Example 2.
Same facts as in Example 1, except the taxpayer does not
seek judicial review of Appeals's determination. Because the
taxpayer requested the CDP hearing when fewer than 90 days
remained on the period of limitation, the period of limitation
will be extended to (h)
Retained jurisdiction of Appeals--(1) In general.
The Appeals office that makes a determination under section 6330
retains jurisdiction over that determination, including any
subsequent administrative hearings that may be requested by the
taxpayer regarding levies and any collection actions taken or
proposed with respect to Appeals's determination. Once a taxpayer
has exhausted his other remedies, Appeals's retained jurisdiction
permits it to consider whether a change in the taxpayer's
circumstances affects its original determination. Where a taxpayer
alleges a change in circumstances that affects Appeals's original
determination, Appeals may consider whether changed circumstances
warrant a change in its earlier determination. (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (h) as follows: Q-H1.
Are the periods of limitation suspended during the course of any
subsequent Appeals consideration of the matters raised by a
taxpayer when the taxpayer invokes the retained jurisdiction of
Appeals under section 6330(d)(2)(A) or (d)(2)(B)? A-H1.
No. Under section 6330(b)(2), a taxpayer is entitled to only one
section 6330 CDP hearing with respect to the tax and tax period or
periods to which the unpaid tax relates. Any subsequent
consideration by Appeals pursuant to its retained jurisdiction is
not a continuation of the original CDP hearing and does not
suspend the periods of limitation. Q-H2.
Is a decision of Appeals resulting from a subsequent hearing
appealable to the Tax Court or a district court? A-H2.
No. As discussed in A-H1, a taxpayer is entitled to only one
section 6330 CDP hearing with respect to the tax and tax period or
periods specified in the CDP Notice. Only determinations resulting
from CDP hearings are appealable to the Tax Court or a district
court. (i)
Equivalent hearing--(1) In general. A taxpayer who
fails to make a timely request for a CDP hearing is not entitled
to a CDP hearing. Such a taxpayer may nevertheless request an
administrative hearing with Appeals, which is referred to herein
as an "equivalent hearing." The equivalent hearing will
be held by Appeals and will generally follow Appeals procedures
for a CDP hearing. Appeals will not, however, issue a Notice of
Determination. Under such circumstances, Appeals will issue a
Decision Letter. (2)
Questions and answers. The questions and answers illustrate
the provisions of this paragraph (i) as follows: Q-I1.
What issues will Appeals consider at an equivalent hearing? A-I1.
In an equivalent hearing, Appeals will consider the same issues
that it would have considered at a CDP hearing on the same matter. Q-I2.
Are the periods of limitation under sections 6502, 6531, and 6532
suspended if the taxpayer does not timely request a CDP hearing
and is subsequently given an equivalent hearing? A-I2.
No. The suspension period provided for in section 6330(e) relates
only to hearings requested within the 30-day period that commences
the day following the date of the pre-levy or post-levy CDP
Notice, that is, CDP hearings. Q-I3.
Will collection action be suspended if a taxpayer requests and
receives an equivalent hearing? A-I3.
Collection action is not required to be suspended. Accordingly,
the decision to take collection action during the pendency of an
equivalent hearing will be determined on a case-by-case basis.
Appeals may request the Q-I4.
What will the Decision Letter state? A-I4.
The Decision Letter will generally contain the same information as
a Notice of Determination. Q-I5.
Will a taxpayer be able to obtain court review of a decision made
by Appeals with respect to an equivalent hearing? A-I5.
Section 6330 does not authorize a taxpayer to appeal the decision
of Appeals with respect to an equivalent hearing. A taxpayer may
under certain circumstances be able to seek Tax Court review of
Appeals's denial of relief under section 6015(b) or (c). Such
review must be sought within 90 days of the issuance of Appeals's
determination on those issues, as provided by section 6015(e). (j)
Effective date. This section is applicable with respect to
any levy which occurs on or after Robert
E. Wenzel, Treasury Decision
8558, filed with the Federal Register on
These
final regulations contain changes to §§301.6331-1 and The
TAMRA
increased the 10-day requirement for notification of intention to
levy to 30 days, required specific types of information to be
included in the notice, and expanded the reasons for releasing a
levy on salary or wages to include all the situations described in
section 6343(a). TAMRA also placed restrictions on levies that are
uneconomical or that are scheduled to be made on the day a person
is required to appear in response to a summons issued for the
purpose of collecting any underpayment of tax by that person. The
final regulations reflect these changes. In addition, the final
regulations change the existing regulations with respect to
levying on bank deposits to conform to section 6332(c), which was
enacted by TAMRA. The final regulations also reflect two
amendments to section 6331 made by the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA): extending to "other
property" of a taxpayer the requirement of notification of
intention to levy that exists for a levy on salary or wages; and
requiring that any mailing of that notice be done by certified or
registered mail. Finally, several stylistic changes were made to
clarify parts of the regulations that were not affected by the
statutory changes. Explanation of Provisions The
final regulations make a number of minor amendments to §§301.6331-1
and For
the most part, the amendments were made to reflect the additional
protections provided to taxpayers by the Taxpayer Bill of Rights
contained in TAMRA. Special Analyses It
has been determined that this Treasury Decision is not a
significant regulatory action as defined in EO 12866. Therefore, a
regulatory assessment is not required. It has also been determined
that section 553(b) of the Administrative Procedure Act (5 U.S.C.
chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6)
do not apply to these regulations, and, therefore, a Regulatory
Flexibility Analysis is not required. Pursuant to section 7805(f)
of the Internal Revenue Code, the notice of proposed rulemaking
preceding these regulations was submitted to the Small Business
Administration for comment on its impact on small business. Drafting Information The principal author of these regulations is Robert A.
Walker, Office of Assistant Chief Counsel, (General Litigation).
However, other personnel from the T.D. 7874, 1983-1 CB 344 On
Friday, This
document contains final regulations under section 6331 of the Code
relating to the authority of the Service to seize property by
levy. Under section 6331 of the Code the term "levy"
includes the power of distraint and seizure by any means.
Regulation §301.6331-1(a)(1) provides that a levy may be made by
serving a notice of levy on any person in possession of, or
obligated with respect to, property or rights to property subject
to levy. In
order to conserve resources, the Service has increased the number
of notices of levy served by mail in accordance with law and
longstanding administrative practice. Some persons upon whom
notices of levy are served have expressed concern that the
Service's longstanding practice has not been explicitly set forth
in the regulations. Consequently, the Department of the Treasury
has decided to amend the regulations to specify the procedures to
be followed by the Service in serving a notice of levy by mail.
The amendment will also permit persons having more than one office
within an Internal Revenue district to choose one office to which
notices of levy are to be mailed. A
public hearing was not requested. After consideration of all
comments regarding the proposed amendments, those amendments are
adopted as revised by this Treasury decision. SUMMARY OF PUBLIC COMMENTS The
proposed regulations authorized service of notice of levy by mail
and stated that the date the notice is delivered to the person
served is the date the levy is made. A number of comments were
received objecting to service by regular mail and suggesting
service by certified mail return receipt requested on the ground
that there is no way to establish the date that regular mail is
received and this creates a problem in determining priorities of
levies. Even if the recipient of the notice is required to
establish through normal business records the date of delivery,
accurate compliance is difficult. Commentators stated that this
area was ripe for factual dispute where delivery is made on a
Saturday or local legalholiday and the notice is not processed
until the next business day because substantial withdrawals could
have occurred on Saturday and Sunday through automatic teller
machines. Commentators stated that delivery by certified mail
return receiptrequested would eliminate this problem, because
there would be no delivery on Saturday or Sunday. The date on the
receipt would establish the date of delivery, and the Internal
Revenue Service would have a verifiable effective date in all
cases. While
the Service recognizes the problems that may arise as a result of
service of levy by regular mail, the Service has concluded that
most of these problems can be avoided if there is a presumption
that the time and date noted on the notice of levy by a person
having authority to act on behalf of the person served is the date
and time the levy is made. The Service retains the authority to
use certified mail return receipt requested when necessary.
However, a requirement of certified mail in all cases would be too
costly to the Service and has not been adopted. Most
commentators objected to the rule in the proposed regulations
which allowed delivery of a notice of levy to an branch office if
a person has more than one office within the Internal Revenue
district. Commentators stated a variety of reasons for their
objection such as: (1)
The rule does not comport with decisional substantive law relating
to private creditors, (2)
Many banks with significant branch networks do not have a central
file which can be accessed with name, address and social security
number of the taxpayer, so compliance with the proposed amendments
is operationally impossible, and (3)
The rule would impose an undue cost and administrative burden on
an innocent third party. The final regulations deleted this sentence because the issue
raised by the language is unrelated to the Service's authority to
serve notices of levy by mail. Thus, this deletion should not be
construed as a change of the Internal Revenue Services's position
that a levy on a branch bank may be effective at other branches.
The question turns on the facts and circumstances of each case See
Digitrex Inc. v. Johnson 491 F. Supp. 66 (1980); Therm-X-Chemical
& Oil Corp. v. Extebank, 84 A.D. 2d 787, 444 N.Y.S. 2d 26
(1981). Some
commentators expressed concern about the language in the proposed
regulation which required the concurrence of the district director
in order for a person to designate an office upon which the mailed
notice would be served. Because the option to designate a
particular office was added for the convenience of the person
levied upon, the final regulation has eliminated the requirement
that the district director concur with a person's designation of
the office to which the notices shall be mailed. One
commentator objected to the proposed regulations' concerning no
guidelines on what taxpayer identification information the notice
should contain. The commentator stated that the account data
system could not locate the taxpayer'sassets if only the
taxpayer's name and social security number were given. If was
suggested that the Internal Revenue Service be required to include
the taxpayer's account number. This comment was not incorporated
into the regulations because in many instances the Service does
not have access to the taxpayer's account number. EXECUTIVE ORDER 12291 The
Commissioner of Internal Revenue has determined that this final
rule is not a major rule as defined in Executive Order 12291.
Accordingly, a Regulatory Impact Analysis is not required. Although
this regulation was published as a notice of proposed rulemaking
that solicited public comment, the Internal Revenue Service
concluded when the notice was published that the regulations were
interpretative and that the noticeand public procedure
requirements of 5 U.S.C. 553 did not apply. Consequently, these
regulations do not constitute regulations subject to the
Regulatory Flexibility Act (5 U.S.C. chapter 6). DRAFTING INFORMATION The
principal author of these regulations is Annie R. Alexander of the
Legislation and Regulations Division of the Office of Chief
Council, Internal Revenue Service. However, personnel from other
offices of the Internal Revenue Service and Treasury Department
participated in developing the regulation, both on matters of
substance and style. * * * * * Accordingly,
26 Paragraph.
A new paragraph (c) is added to §301.633-1 to read as follows: §301.6331-1 Levy and distraint. * * * * * (c)
Service of notice of levy by mail. A notice of levy may be
served by mailing the notice to the person upon whom the service
of a notice of levy is authorized under paragraph (a)(1) of this
section. It such a case the date and time the notice is delivered
to the person to be served is the date and time the levy is made.
If the notice is sent by certified mail, return receipt requested,
the date of delivery on the receipt is treated as the date the
levy is made. If,after receipt of a notice of levy, an officer or
other person authorized to act on behalf of the person served
signs and notes the date and time of receipt of the notice of
levy, the date and time so noted will be presumed to be, in the
absence of proof to the contrary, the date and time of delivery.
Any person may, upon written notice to the district director
having audit jurisdiction over such person, have all notices of
levy by mail sent to one designated office. After such a notice is
received by the district director, notices of levy by mail will be
sent to the designated office until a written notice withdrawing
the request or a written notice designating a different office is
received by the district director. This
Treasury decision is issued under the authority contained in
section 7805 of the Internal Revenue Code of 1954 (68A Stat. 917;
26 U.S.C. 7805). Roscoe
L. Egger, Jr., T.D. 7620 1,
1979-1 CB 401 TITLE 26.--INTERNAL REVENUE.--CHAPTER 1, SUBCHAPTER D, PART
301.--PROCEDURE On
August 24, 1978, the Federal Register published proposed
amendments to the Income Tax Regulations (26 EXPLANATION OF REGULATIONS The
Tax Reform Act of 1976 amended section 6331 of the Internal
Revenue Code of 1954 to provide that a levy on wages or salary is
continuous from the date of the levy until the liability out of
which the levy arose is satisfied or becomes unenforceable by
lapse of time. These regulations reflect this amendment of section
6331 of the Code. The
legislation also amended section 6334 of the Code to provide that
certain amounts payable to a taxpayer as wages, salary, or other
income are exempt from levy. The regulations provide rules for
determining the taxpayer's payroll period and prescribed amounts
exempt from levy for each such period. Additionally, rules are
provided by which the taxpayer is to determine the number of
persons who are his dependents and by which he is to claim amounts
which are exempt for such dependents. ADDITIONAL CONSIDERATIONS These
regulations are needed in order to provide guidance to the public
as well as to government employees responsible for the
implementation of sections 6331, 6332, and 6334 of the Code.
Considering both the direct and indirect effects of these
regulations, it is believed that they satisfactorily implement
section 1209 of the Tax Reform Act of 1976. Evaluation of the
effectiveness of the regulations after issuance will be based upon
comments received from offices within the Internal Revenue Service
and the Treasury Department, other governmental agencies, and the
public. PUBLIC COMMENTS Several
comments were received in response to the proposed regulations.
One expressed concern that the proposed regulations are not
entirely clear as to whether the amount exempt from levy is an
employee's gross salary or net salary. It was decided that the
regulations do not need to be amended to reflect this comment
because it is the Service's policy not to levy on gross wages.
Another comment concerned the application of §301.6334-2(c)(1).
The writer questioned how an employer is to learn that an
employee's second source of income is equal to or exceeds the
amount of the exemption. Section DRAFTING INFORMATION The
principal author of this regulation is Kyllikki Kusma of the
Legislation and Regulations Division of the Office of Chief
Counsel, Internal Revenue Service. However, personnel from other
offices of the Internal Revenue Service and Treasury Department
participated in developing the regulation, both on matters of
substance and style. Adoption of amendments to the regulations Accordingly,
the following amendments to the regulations (26 Paragraph
1. Section Par.
2. Paragraph (a)(1) of §301.6331-1 is revised to read as follows: §301.6331-1 Levy and distraint. (a)
Authority to levy--(1) In general. If any person
liable to pay any tax neglects or refuses to pay the tax within 10
days after notice and demand, the district director to whom the
assessment is charged (or, upon his request, any other district
director) may proceed to collect the tax by levy. The district
director may levy upon any property, or rights to property,
whether real or personal, tangible or intangible, belonging to the
taxpayer. The district director may also levy upon property with
respect to which there is a lien provided by section 6321 or 6324
for the payment of the tax. For exemption of certain property from
levy, see section 6334 and the regulations thereunder. As used in
section 6331 and this section, the term "tax" includes
any interest, additional amount, addition to tax, or assessable
penalty, together with costs and expenses. Property subject to a
Federal tax lien which has been sold or otherwise transferred by
the taxpayer may be seized while in the hands of the transferee or
any subsequent transferee. However, see provisions under sections
6323 and 6324(a)(2) and (b) for protection of certain transferees
against a Federal tax lien. Levy may be made by serving a notice
of levy on any person in possession of, or obligated with respect
to, property or rights to property subject to levy, including
receivables, bank accounts, evidences of debt, securities, and
salaries, wages, commissions, or other compensation. Except as
provided in §301.6331-2(c) with regard to a levy on salary or
wages, a levy extends only to property possessed and obligations
which exist at the time of the levy. Obligations exist when the
liability of the obligor is fixed and determinable although the
right to receive payment thereof may be deferred until a later
date. For example, if on the first day of the month a delinquent
taxpayer sold personal property subject to an agreement that the
buyer remit the purchase price on the last day of the month, a
levy made on the buyer on the tenth day of the month would reach
the amount due on the sale, although the buyer need not satisfy
the levy by paying over the amount to the district director until
the last day of the month. Similarly, a levy only reaches property
in the possession of the person levied upon at the time the levy
is made. For example, a levy made on a bank with respect to the
account of a delinquent taxpayer is satisfied if the bank
surrenders the amount of the taxpayer's balance at the time the
levy is made. The levy has no effect upon any subsequent deposit
made in the bank by the taxpayer. Subsequent deposits may be
reached only by a subsequent levy on the bank. Par.
3. Paragraph (a)(4)(i), (ii) and (iii) of §301.6331-1 is amended
by striking out "accrued" each place it appears therein. Par.
4. Paragraph (c) of §301.6331-1 is deleted. Par.
5. A new §301.6331-2 is added immediately after §301.6331-1: §301.6331-2 Levy and distraint on salary and wages. (a)
Notice of intent to levy. Levy may be made upon the salary
or wages of a taxpayer for any unpaid tax only after the district
director or the director of the service center has notified the
taxpayer in writing of the intent to levy. The notice must be
given in person, left at the dwelling or usual place of business
of the taxpayer, or be sent by mail to the taxpayer's last known
address, no less than 10 days before the day of levy. The notice
of intent to levy is in addition to, and may be given at the same
time as, the notice and demand described in §301.6303-1. (b)
Jeopardy. Paragraph (a) of this section does not apply to a
levy if the district director or director of the service center
has made a finding under §301.6331-1(a)(2) that the collection of
tax is in jeopardy. (c)
Continuing effect of levy. A levy on salary or wages is
continuous from the time of the levy until the liability out of
which the levy arose is satisfied or becomes unenforceable by
reason of lapse of time. For this purpose, the term "salary
or wages" includes compensation for services paid in the form
of fees, commissions, bonuses and similar items. The levy attaches
to both salary or wages earned but not yet paid at the time of the
levy, and salary or wages earned and becoming payable (or paid in
the form of an advance) subsequent to the date of the levy, until
the levy is released pursuant to paragraph (d) of this section. In
general, salaries or wages that are the subject of a continuing
levy, if not exempt from levy under section 6334(a)(8) or (9),
become payable to the district director as the payor would
otherwise be obligated to pay over the money to the taxpayer. For
example, if a wage earner is paid on the Wednesday following the
close of each workweek, a levy made upon his employer on any
Monday would reach both his wages due for the prior workweek and
his wages for succeeding workweeks as such wages become payable.
In such a case the levy would be satisfied if the employer, on the
first Wednesday after the levy on each Wednesday thereafter, pays
over to the district director wages which would otherwise be paid
to the employee on such Wednesday, until the employer receives a
notice of release from levy described in paragraph (d) of this
section. See, however, §301.6334-5(d) for rules which permit a
delayed payment to the district director in certain cases where
amounts payable to the taxpayer are exempt from levy under section
6334(a)(9) and (d). (d)
Release and notice of release from levy. The district
director will promptly release a continuing levy on salary or
wages when the liability out of which the levy arose is satisfied
or becomes unenforceable by reason of lapse of time. The district
director will also promptly notify the person upon whom the levy
was made that it has been released. (e)
Effective dates. Paragraphs (a) and (b) of this section
apply to levies made after March 31, 1972. Paragraphs (c) and (d)
of this section apply to levies made after February 28, 1977. Par.
6. Section Par.
7. Paragraph (b)(1) of §301.6332-1 is amended to read as follows: §301.6332-1 Surrender of property subject to levy. * * * * * (b)
Enforcement of levy--(1) Extent of personal liability.
Any person who, upon demand of the district director, fails or
refuses to surrender any property or right to property subject to
levy is liable in his own person and estate in a sum equal to the
value of the property or rights not so surrendered, together with
costs and interest. The liability, however, may not exceed the
amount of the taxes for the collection of which the levy was made.
Interest is to be computed at the annual rate referred to in
regulations under section 6621 from the date of the levy, or, in
the case of a continuing levy on salary or wages (see section
6331(d)(3)), from the date the person would otherwise have been
obligated to pay over the wages or salary to the taxpayer. Any
amount recovered, other than costs, will be credited against the
tax liability for the collection of which the levy was made. Par.
8. Section Par.
9. Section Par.
10. Paragraph (a) of §301.6334-1 is amended by revising the
introductory sentence and the subparagraph heading of subparagraph
(8) and by adding a new subparagraph (9). These amended and added
provisions read as follows: §301.6334-1 Property exempt from levy. (a)
Enumeration. In addition to exemptions allowed as a matter
of Internal Revenue Service policy, there shall be exempt from
levy-- * * * * * (8)
Judgments for support of minor children. * * * (9)
Minimum exemption for wages, salary, and other income.
Amounts payable to or received by the taxpayer as wages or salary
for personal services, or as other income, to the extent provided
in §301.6334-2 through §301.6334-6. Par.
11. The following new sections are added immediately after §301.6334-1: §301.6334-2 Wages, salary and other income. (a)
In general. Under section 6334(a)(9) and (d) certain
amounts payable to or received by a taxpayer as wages, salary or
other income are exempt from levy. This section describes the
income of a taxpayer that is eligible for the exemption from levy
(paragraph (b)) and how exempt amounts are to be paid to the
taxpayer (paragraph (c)). Section (b)
Eligible taxpayer income. Only wages, salary or other
income payable to the taxpayer after the levy is made on the payor
may be exempt from levy under section 6334(a)(9). No amount of
wages, salary or other income which is paid to the taxpayer before
levy is made on the payor will be so exempt from levy. The
provisions of this subparagraph may be illustrated by the
following example: Example. Delinquent taxpayer A, an individual, is employed by the M
Corporation and is paid wages on the first and fifteenth day of
each month. Accordingly, A is paid wages on Monday, (c)
Payment of exempt amounts to taxpayer--(1) From wages,
salary or other income not subject to levy. In the case of a
taxpayer who has more than one source of wages, salary or other
income, the district director may elect to levy on only one or
more such sources while leaving other sources of income free from
levy. If these wages, salary or other income which the district
director leaves free from levy equal or exceed the amount to which
the taxpayer is entitled as an exemption from levy under
6334(a)(9) and (d) and §301.6334-3 (and are not otherwise
exempt), then no amount of the taxpayer's wages, salary or other
income on which the district director elects to levy is exempt
from levy. The district director shall notify the employer or
other person subject to the levy that no amount of the taxpayer's
wages, salary, or other income is exempt from levy. The
provisions of this subparagraph may be illustrated by the
following example: Example. Delinquent taxpayer C is a full-time employee of the X
corporation and is paid wages totaling $450 on the first and
fifteenth day of each month (semi-monthly). C also performs
services for the Y corporation and is paid a salary of $290 each
month. C has one dependent as defined in §301.6334-5. Levy is
served on the X corporation with respect to wages payable to C.
Levy is not served on the Y corporation. Under §301.6334-3(d), C
is entitled to an exemption from levy totaling $140.83 for each
semi-monthly pay period (or $281.66 per month). However, because
levy has not been made on C's salary paid by the Y corporation
($290 per month) and that salary exceeds the amount to which C is
entitled monthly as an exemption ($281.66), no amount of C's wages
paid by the X corporation is exempt from levy. (2)
From wages, salary or other income subject to levy. If the
taxpayer's income upon which the district director does not levy
is less than that amount to which the taxpayer is entitled as an
exemption, then an amount determined pursuant to §301.6334-3 is
to be paid to the taxpayer from those wages, salary or other
income which are subject to levy. The district director will
designate those wages, salary or other income subject to levy from
which such amount will be paid to the taxpayer. The district
director will generally make this designation by delivering to the
employer or other person levied upon the form upon which the
taxpayer is to claim any dependent exemption. The form will
accompany the notice of levy. The person receiving the form from
the district director must promptly deliver it to the taxpayer. In
the case of some employers having a large number of employees,
however, the district director will send the form upon which an
employee is to claim any dependent exemption directly to the
employee. In such a case, the notice of levy will indicate that
the form for claiming dependent exemptions has been sent to the
taxpayer. If a notice of levy is not accompanied by the form for
claiming dependent exemptions and does not indicate that the form
was sent directly to the taxpayer, then the person levied upon
must make payment to the district director without regard to
amounts prescribed by §301.6334-3 as exempt from levy. If a
notice of levy is accompanied by the form for claiming dependent
exemptions or indicates that the form was sent directly to the
taxpayer, then the person levied upon is to pay over to the
taxpayer amounts determined to be exempt from levy pursuant to §301.6334-3
and §301.6334-5(b) and (c) (relating to the requirement that the
taxpayer submit a claim for any dependent exemption). Amounts not
exempt from levy are to be paid to the district director in
accordance with the terms of the levy. §301.6334-3 Determination of exempt amount. Amounts
payable to the taxpayer as wages, salary, or other income for each
payroll period described in §301.6334-4 are exempt from levy as
follows: (a)
If the payroll period is daily: $10, plus $3 for each person who
is claimed as a dependent pursuant to §301.6334-5. (b)
If the payroll period is weekly: $50, plus $15 for each person who
is claimed as a dependent pursuant to §301.6334-5. (c)
If the payroll period is biweekly: $100, plus $30 for each person
who is claimed as a dependent pursuant to §301.6334-5. (d)
If the payroll period is semimonthly: $108.33, plus $32.50 for
each person who is claimed as a dependent pursuant to §301.6334-5. (e)
If the payroll period is monthly: $216.67, plus $65 for each
person who is claimed as a dependent pursuant to §301.6334-5. (f)
If the payroll period is not daily, weekly, biweekly, semimonthly
or monthly: a proportionate amount based upon the sum of an annual
exemption of $2,600 plus $780 for each person who is claimed as a
dependent pursuant to §301.5334-5. §301.6334-4 Determination of payroll period. For
purposes of determining the amount of wages, salary or other
income exempt from levy under section 6334(a)(9)-- (a)
Regularly used calendar periods. in the case of wages,
salary or other income paid to the taxpayer on the basis of an
established calendar period regularly used by the employer or
other person levied upon for payroll or payment purposes (e.g.,
daily, weekly, biweekly, semimonthly, or monthly), that period is
the taxpayer's payroll period. (b)
Amounts paid on recurrent but irregular basis. In the case
of wages, salary or other income paid to the taxpayer on a
recurrent but irregular basis, the first day of the taxpayer's
payroll period is that day following the day upon which the wages,
salary, or other income were last paid to the taxpayer. The last
day of the payroll period is that day upon which the current
payment becomes payable to him. However, in any case in which (1)
amounts are paid to the taxpayer on a recurrent but irregular
basis, and (2) the last payment was paid to the taxpayer more than
60 days before the current payment becomes payable, the current
payment will be deemed a one-time payment (see paragraph (c)). (c)
Nonrecurrent payments. In the case of wages, salary or
other income paid to the taxpayer on a one-time basis, the
taxpayer's payroll period is deemed to be weekly (i.e., the
one-week period ending on the day of payment). §301.6334-5 Dependent exemption. (a)
Dependent defined. For purposes of §§ (1)
Over half of that person's support for the payroll period was
received from the taxpayer, and (2)
The person is the taxpayer's spouse, or bears a relationship to
the taxpayer specified in section 152(a)(1) through (9) (relating
to definition of dependent) on the last day of the payroll period,
and (3)
The person is not the taxpayer's minor child with respect to whom
amounts are exempt from levy under section 6334(a)(8) (relating to
exemption from levy for judgments for support of minor children)
at any time during the payroll period. For purposes of subparagraph (2) of this paragraph
"payroll period" should be substituted for "taxable
year" each place it appears in section 152(a)(9). (b)
Claim for dependent exemption. No amount prescribed as
being exempt from levy for each person who is claimed as a
dependent will be so exempt unless a claim for dependent exemption
is submitted to the employer or other person levied upon. A claim
for dependent exemption shall be made by either-- (1)
Completion of the form provided for this purpose by the Internal
Revenue Service, or (2)
A written statement that (i) identifies by name and by
relationship to the taxpayer each person for whom a dependent
exemption is claimed, (ii) is signed by the taxpayer, and (iii)
contains a declaration that it is made under the penalties of
perjury. (c)
Submission of claim for dependent exemption. The taxpayer
must submit the claim for dependent exemption to the employer or
other person levied upon no later than the later of-- (1)
The third day before the last day of the payroll period for which
the exemption is claimed (that is, the third day before payday),
or (2)
If the district director delivers the form for claiming a
dependent exemption to the employer or other person levied upon
(see §301.6334-2(c)(2)), the second day after the date the
taxpayer receives the form. For purposes of subparagraphs (1) and (2) of this paragraph,
the term "day" does not include Saturday, Sunday or a
legal holiday within the meaning of section 7503. Failure on the
part of the taxpayer to submit a timely claim for dependent
exemption will result in the loss of the dependent exemption for
the applicable pay period, except that the employer or other
person levied upon may accept a claim for dependent exemption not
timely submitted in accordance with this paragraph, and may
prepare a disbursement to the taxpayer based upon a dependent
exemption claimed therein, if payment to the district director in
accordance with the levy is not thereby delayed. (d)
Payment of amounts not exempt from levy to district director--(1)
Delayed payment in certain case. In general, wages, salary
or other income the subject of a levy are payable to the district
director on the date the payor is otherwise obligated to pay the
taxpayer (see §301.6331-2(c)). If, however, as described in
paragraph (c)(2) of this section, the taxpayer may submit a claim
for dependent exemption after the third day before payday, amounts
payable to the taxpayer on that payday, to the extent not exempt
from levy, are payable to the district director on the third day
following the date on which the taxpayer may timely submit the
claim for dependent exemption under such paragraph (c)(2). For
purposes of this rule, the term "day" does not include
Saturday, Sunday or a legal holiday within the meaning of section
7503. (2)
Example. The provisions of this paragraph may be
illustrated by the following example: The taxpayer is paid wages on the Wednesday following the
close of each work week. Levy is made on his employer on Monday.
The form for claiming a dependent exemption, which accompanied the
notice of levy (see §301.6334-2(c)), is delivered to the taxpayer
by the employer on the following day, Tuesday. Under paragraph
(c)(2) of this section, the taxpayer may timely submit a claim for
dependent exemption as late as Thursday, the day after the first
payday to which the levy applies. Under this paragraph, wages
payable to the taxpayer on that first Wednesday payday, to the
extent not exempt from levy, are payable to the district director
on the following Tuesday. Thereafter, wages payable to the
employee on each Wednesday, to the extent not exempt from levy,
are payable to the district director on such Wednesday (see §301.6331-2(c)). §301.6334-6 Effective dates. Sections
§301.6334-7 Supersession of temporary regulations. Sections
This
Treasury decision is issued under the authority in section 6334(d)
and section 7805 of the Internal Revenue Code of 1954 (68A Stat.
917; 26 U.S.C. 7805). JEROME KURTZ, ----------
[Footnotes] ---------- 1 This publication of the Treasury Decision contains the full
text of the regulations. The individual instructions for modifying
the notice of proposed rulemaking have been omitted. Treasury Decision 7139 1,
1971-2 CB 408 26 In
order to provide revised rules regarding liens and levies upon
interests in certain lands held in trust by the United States for
noncompetent Indians, the Regulations on Procedure and
Administration (26 PARAGRAPH
1. Section §301.6321-1 Lien for taxes. If
any person liable to pay any tax neglects or refuses to pay the
same after demand, the amount (including any interest, additional
amount, addition to tax, or assessable penalty, together with any
costs that may accrue in addition thereto) shall be a lien in
favor of the United States upon all property and rights to
property, whether real or personal, tangible or intangible,
belonging to such person. The lien attaches to all property and
rights to property belonging to such person at any time during the
period of the lien, including any property or rights to property
acquired by such person after the lien arises. Solely for purposes
of sections 6321 and 6331, any interest in restricted land held in
trust by the United States for an individual noncompetent Indian
(and not for a tribe) shall not be deemed to be property, or a
right to property, belonging to such Indian. For the special lien
for estate and gift taxes, see section 6324 and §301.6324-1. §301.6331-1 Levy and distraint. (a)
Authority to levy * * * (5)
Noncompetent Indians. Solely for purposes of sections 6321
and 6331, any interest in restricted land held in trust by the
United States for an individual noncompetent Indian (and not for a
tribe) shall not be deemed to be property, or a right to property,
belonging to such Indian. * * * * * Because
this Treasury decision is of a clarifying nature, it is found that
it is unnecessary to issue to with notice and public procedure
thereon under subsection (b) of section 553 of title 5 of the
United States Code or subject to the effective date limitation of
subsection (d) of that section. (This
Treasury decision is issued under the authority contained in
section 7805 of the Internal Revenue Code of 1954 (68A Stat. 917;
26 U.S.C. 7805).) RANDOLPH W. THROWER, ----------
[Footnotes] ---------- 1 36 F.R. 15040. Treasury Decision 7180 1,
1972-1 CB 386 TITLE 26.--INTERNAL REVENUE.--CHAPTER 1, SUBCHAPTER F, PART
301.--PROCEDURE On
PARAGRAPH
1. Section §301.6331 Statutory provisions; levy and distraint. Sec.
6331. Levy and distraint. * * * (b)
Seizure and sale of property. The term "levy" as
used in this title includes the power of distraint and seizure by
any means. A levy shall extend only to property possessed and
obligations existing at the time thereof. In any case in which the
Secretary or his delegate may levy upon property or rights to
property, he may seize and sell such property or rights to
property (whether real or personal, tangible or intangible). * * * * * §301.6331-1 Levy and distraint. (a)
Authority to levy--(1) In general. If any person
liable to pay any tax neglects or refuses to pay such tax within
10 days after notice and demand, the district director to whom the
assessment is charged or, upon his request, any other district
director may proceed to collect the tax by levy upon any property,
or rights to property, whether real or personal, tangible or
intangible, either belonging to such person or with respect to
which there is a lien provided by section 6321 or 6324 (or the
corresponding provision of prior law) for the payment of such tax.
As used in section 6331 and this section, the term "tax"
includes any interest, additional amount, addition to tax, or
assessable penalty, together with any costs and expenses that may
accrue in addition thereto. For exemption of certain property from
levy, see section 6334 and the regulations thereunder. Property
subject to a Federal tax lien, which has been sold or otherwise
transferred by the taxpayer, may be seized while in the hands of
the transferee or of any subsequent transferee. However, see
provisions under sections 6323 and 6324(a)(2) and (b) for
protection of certain transferees against a Federal tax lien. Levy
may be made by serving a notice of levy on any person in
possession of, or obligated with respect to, property or rights to
property subject to levy including receivables, bank accounts,
evidences of debt, securities, and accrued salaries, wages,
commissions, and other compensation. A levy extends only to
property possessed and obligations which exist at the time of the
levy. Obligations exist when the liability of the obligor is fixed
and determinable although the right to receive payment thereof may
be deferred until a later date. For example, if a wage earner is
paid on the Wednesday following the close of each workweek, a levy
made upon his employer on Monday would reach his wages due for the
prior workweek, although the employer need not satisfy the levy by
paying over such amount to the district director until Wednesday.
Similarly, a levy only reaches property subject to levy in the
possession of the person levied upon at the time the levy is made.
If, for example, a levy is made on a bank with respect to the
account of a delinquent taxpayer and the bank surrenders to the
district director the amount of the taxpayer's balance at the time
the levy is made, the levy is satisfied. The levy has no effect
upon any subsequent deposit made in the bank by the taxpayer.
Subsequent deposits may be reached only by a subsequent levy on
the bank. * * * * * §301.6332 Statutory provisions; surrender of property
subject to levy. Sec.
6332. Surrender of property subject to levy--(a) Requirement.
Except as otherwise provided in subsection (b), any person in
possession of (or obligated with respect to) property or rights to
property subject to levy upon which a levy has been made shall,
upon demand of the Secretary or his delegate, surrender such
property or rights (or discharge such obligation) to the Secretary
or his delegate, except such part of the property or rights as is,
at the time of such demand, subject to an attachment or execution
under any judicial process. (b)
Special rule for life insurance and endowment contracts--(1)
In general. A levy on an organization with respect to a
life insurance or endowment contract issued by such organization
shall, without necessity for the surrender of the contract
document, constitute a demand by the Secretary or his delegate for
payment of the amount described in paragraph (2) and the exercise
of the right of the person against whom the tax is assessed to the
advance of such amount. Such organization shall pay over such
amount 90 days after service of notice of levy. Such notice shall
include a certification by the Secretary or his delegate that a
copy of such notice has been mailed to the person against whom the
tax is assessed at his last known address. (2)
Satisfaction of levy. Such levy shall be deemed to be
satisfied if such organization pays over to the Secretary or his
delegate the amount which the person against whom the tax is
assessed could have had advanced to him by such organization on
the date prescribed in paragraph (1) for the satisfaction of such
levy, increased by the amount of any advance (including
contractual interest thereon) made to such person on or after the
date such organization had actual notice or knowledge (within the
meaning of section 6323(i)(1)) of the existence of the lien with
respect to which such levy is made, other than an advance
(including contractual interest thereon) made automatically to
maintain such contract in force under an agreement entered into
before such organization had such notice or knowledge. (3)
Enforcement proceedings. The satisfaction of a levy under
paragraph (2) shall be without perjudice to any civil action for
the enforcement of any lien imposed by this title with respect to
such contract. (c)
Enforcement of levy--(1) Extent of personal liability.
Any person who fails or refuses to surrender any property or
rights to property, subject to levy, upon demand by the Secretary
or his delegate, shall be liable in his own person and estate to
the United States in a sum equal to the value of the property or
rights not so surrendered, but not exceeding the amount of taxes
for the collection of which such levy has been made, together with
costs and interest on such sum at the rate of 6 percent per annum
from the date of such levy. Any amount (other than costs)
recovered under this paragraph shall be credited against the tax
liability for the collection of which such levy was made. (2)
Penalty for violation. In addition to the personal
liability imposed by paragraph (1), if any person required to
surrender property or rights to property fails or refuses to
surrender such property or rights to property without reasonable
cause, such person shall be liable for a penalty equal to 50
percent of the amount recoverable under paragraph (1). No part of
such penalty shall be credited against the tax liability for the
collection of which such levy was made. (d)
Effect of honoring levy. Any person in possession of (or
obligated with respect to) property or rights to property subject
to levy upon which a levy has been made who, upon demand by the
Secretary or his delegate, surrenders such property or rights to
property (or discharges such obligation) to the Secretary or his
delegate (or who pays a libility under subsection (c)(1)) shall be
discharged from any obligation or liability to the delinquent
taxpayer with respect to such property or rights to property
arising from such surrender or payment. In the case of a levy
which is satisfied pursuant to subsection (b), such organization
shall also be discharged from any obligation or liability to any
beneficiary arising from such surrender or payment. (e)
Person defined. The term "person," as used in
subsection (a), includes an officer or employee of a corporation
or a member or employee of a partnership, who as such officer,
employee, or member is under a duty to surrender the property or
rights to property, or to discharge the obligation. [Sec. 6332 as amended by sec. 104(b), Federal Tax Lien Act of
1966 (80 Stat. 1135) [P.L. 89-719, C.B. 1966-2, 623]] §301.6332-1 Surrender of property subject to levy. (a)
Requirement--(1) In general. Except as otherwise
provided in §301.6332-2, relating to levy in the case of life
insurance and endowment contracts, any person in possession of (or
obligated with respect to) property or rights to property subject
to levy and upon which a levy has been made shall, upon demand of
the district director, surrender the property or rights (or
discharge the obligation) to the district director, except that
part of the property or rights (or obligation) which, at the time
of the demand, is actually or constructively under the
jurisdiction of a court because of an attachment or execution
under any judicial process. * * * * * (b)
Enforcement of levy--(1) Extent of personal liability.
Any person who, upon demand of the district director, fails or
refuses to surrender any property or right to property subject to
levy is liable under the provisions of section 6332(c)(1) in his
own person and estate to the United States in a sum equal to the
value of the property or rights not so surrendered, but not
exceeding the amount of the taxes for the collection of which the
levy has been made, together with costs and interest on such sum
at the rate of 6 percent per annum from the date of the levy. Any
amount, other than costs, recovered under section 6332(c)(1) shall
be credited against the tax liability for the collection of which
the levy was made. (2)
Penalty for violation. In addition to the personal
liability described in subparagraph (1) of this paragraph, any
person who is required to surrender property or rights to property
and who fails or refuses to surrender them without reasonable
cause is liable for a penalty equal to 50 percent of the amount
recoverable under section 6332(c)(1). No part of the penalty
described in this subparagraph shall be credited against the tax
liability for the collection of which the levy was made. The
penalty described in this subparagraph is not applicable in cases
where bona fide dispute exists concerning the amount of the
property to be surrendered pursuant to a levy or concerning the
legal effectiveness of the levy. However, if a court in a later
enforcement suit sustains the levy, then reasonable cause would
usually not exist to refuse to honor a later levy made under
similar circumstances. (c)
Effect of honoring levy. Any person in possession of, or
obligated with respect to, property or rights to property subject
to levy and upon which a levy has been made who, upon demand by
the district director, surrenders the property or rights to
property, or discharges the obligation, to the district director,
or who pays a liability described in paragraph (b)(1) of this
section, is discharged from any obligation or liability to the
delinquent taxpayer with respect to the property or rights to
property arising from the surrender or payment. If an insuring
organization satisfies a levy with respect to a life insurance or
endowment contract in accordance with §301.6332-2, the insuring
organization is discharged from any obligation or liability to any
beneficiaries of the contract arising from the surrender or
payment. Also, it is discharged from any obligation or liability
to the insured or other owner. Any person who mistakenly
surrenders to the United States property or rights to property not
properly subject to levy is not relieved from liability to a third
party who owns the property. The owners of mistakenly surrendered
property may, however, secure from the United States the
administrative relief provided for in section 6343(b) or may bring
suit to recover the property under section 7426. (d)
Person defined. The term "person," as used in
section 6332(a) and this section, includes an officer or employee
of a corporation or a member or employee of a partnership, who is
under a duty to surrender the property or rights to property or to
discharge the obligation. In the case of a levy upon the salary or
wages of an officer, employee, or elected or appointed official of
the United States, the District of Columbia, or any agency or
instrumentality of either, the term "person" includes
the officer or employee of the United States, of the District of
Columbia, or of such agency or instrumentality who is under a duty
to discharge the obligation. A to the officer or employee who is
under such duty, see paragraph (a)(4)(i) of §301.6331-1. §301.6332-2 Surrender of property subject to levy in the
case of life insurance and endowment contracts. (a)
In general. This section provides special rules relating to
the surrender of property subject to levy in the case of life
insurance and endowment contracts. The provisions of §301.6332-1
which relate generally to the surrender of property subject to
levy apply, to the extent not inconsistent with the special rules
set forth in this section, to a levy in the case of life insurance
and endowment contracts. (b)
Effect of service of notice of levy--(1) In general.
A notice of levy served by a district director on an insuring
organization with respect to a life insurance or endowment
contract issued by the organization shall constitute-- (i)
A demand by the district director for the payment of the cash loan
value of the contract adjusted in accordance with paragraph (c) of
this section, and (ii)
The exercise of the right of the person against whom the tax is
assessed to the advance of such cash loan value. It is unnecessary for the district director to surrender the
contract document to the insuring organization upon which the levy
is made. However, the notice of levy will include a certification
by the district director that a copy of the notice of levy has
been mailed to the person against whom the tax is assessed at his
last known address. At the time of service of the notice of levy,
the levy is effective with respect to the cash loan value of the
insurance contract, subject to the condition that if the levy is
not satisfied or released before the 90th day after the date of
service, the levy can be satisfied only by payment of the amount
described in paragraph (c) of this section. Other than
satisfaction or release of the levy, no event during the 90-day
period subsequent to the date of service of the notice of levy
shall release the cash loan value from the effect of the levy. For
example, the termination of the policy by the taxpayer or by the
death of the insured during such 90-day period shall not release
the levy. For the rules relating to the time when the insuring
organization is to pay over the required amount, see paragraph (c)
of this section. (2)
Notification of amount subject to levy--(i) Full payment
before the 90th day. In the event that the unpaid liability to
which the levy relates is satisfied at any time during the 90-day
period subsequent to the date of service of the notice of levy,
the district director will promptly give the insuring organization
written notification that the levy is released. (ii)
Notification after the 90th day. In the event that
notification is not given under subdivision (i) of this
subparagraph, the district director will, promptly following the
90th day after service of the notice of levy, give the insuring
organization written notification of the current status of all
accounts listed on the notice of levy, and of the total payments
received since service of the notice of levy. This notification
will be given to the insuring organization whether or not there
has been any change in the status of the accounts. (c)
Satisfaction of levy--(1) In general. The levy
described in paragraph (b) of this section with respect to a life
insurance or endowment contract shall be deemed to be satisfied if
the insuring organization pays over to the district director the
amount which the person against whom the tax is assessed could
have had advanced to him by the organization on the 90th day after
service of the notice of levy on the organization. However, this
amount is increased by the amount of any advance (including
contractual interest thereon), generally called a policy loan,
made to the person on or after the date the organization has
actual notice or knowledge, within the meaning of section
6323(i)(1), of the existence of the tax lien with respect to which
the levy is made. The insuring organization may, nevertheless,
make an advance (including contractual interest thereon),
generally called an automatic premium loan, made automatically to
maintain the contract in force under an agreement entered into
before the organization has such actual notice or knowledge. In
any event, the amount paid to the district director by the
insuring organization is not to exceed the amount of the unpaid
liability shown on the notification described in paragraph (b)(2)
of this section. The amount, determined in accordance with the
provisions of this section, subject to the levy shall be paid to
the district director by the insuring organization promptly after
receipt of the notification described in paragraph (b)(2). The
satisfaction of a levy with respect to a life insurance or
endowment contract will not discharge the contract from the tax
lien. However, see section 6323(b)(9)(C) and the regulations
thereunder concerning the liability of an insurance company after
satisfaction of a levy with respect to a life insurance or
endowment contract. If the person against whom the tax is assessed
so directs, the insuring organization, on a date before the 90th
day after service of the notice by levy, may satisfy the levy by
paying over an amount computed in accordance with the provisions
of this subparagraph substituting such date for the 90th day. In
the event of termination of the policy by the taxpayer or by the
death of the insured on a date before the 90th day after service
of the notice of levy, the amount to be paid over to the district
director by the insuring organization in satisfaction of the levy
shall be an amount computed in accordance with the provisions of
this subparagraph substituting the date of termination of the
policy or the date of death for the 90th day. (2)
Examples. The provisions of this section may be illustrated
by the following examples: Example (1).
On Example (2).
Assume the same facts as in example (1) except that on Example (3).
Assume the same facts as in example (1) except that the insurance
contract does not contain an automatic premium advance provision.
The contract does provide that, upon default in the payment of
premiums, the policy shall automatically be converted to paid-up
term insurance with no cash or loan value. A fails to make the
premium payment of $200 due on (d)
Other enforcement proceedings. The satisfaction of the levy
described in paragraph (b) of this section by an insuring
organization shall be without prejudice to any civil action for
the enforcement of any Federal tax lien with respect to a life
insurance or endowment contract. Thus, this levy procedure is not
the exclusive means of subjecting the life insurance and endowment
contracts of the person against whom a tax is assessed to the
collection of his unpaid assessment. The United States may choose
to foreclose the tax lien in any case where it is appropriate, as,
for example, to reach the cash surrender value (as distinguished
from the cash loan value) of a life insurance or endowment
contract. (e)
Cross references. (1) For provisions relating to priority
of certain advances with respect to a life insurance or endowment
contract after satisfaction of a levy pursuant to section 6332(b),
see section 6323(b)(9) and the regulations thereunder. (2)
For provisions relating to the issuance of a certificate of
discharge of a life insurance or endowment contract subject to a
tax lien, see section 6325(b) and the regulations thereunder. §301.6334 Statutory provisions; property exempt from levy. Sec.
6334. Property exempt from levy--(a) Enumeration. *
* * (4)
Unemployment benefits. Any amount payable to an individual
with respect to his unemployment (including any portion thereof
payable with respect to dependents) under an unemployment
compensation law of the United States, or any State, or of the
District of Columbia or of the Commonwealth of Puerto Rico. * * * * * (6)
Certain annuity and pension payments. Annuity or pension
payments under the Railroad Retirement Act, benefits under the
Railroad Unemployment Insurance Act, special pension payments
received by a person whose name has been entered on the Army,
Navy, Air Force, and Coast Guard Medal of Honor roll (38 U.S.C.
562), and annuities based on retired or retainer pay under chapter
73 of title 10 of the United States Code. (7)
Workmen's compensation. Any amount payable to an individual
as workmen's compensation (including any portion thereof payable
with respect to dependents) under a workmen's compensation law of
the United States, any State, the District of Columbia, or the
Commonwealth of Puerto Rico. * * * * * §301.6334-1 Property exempt from levy. (a)
Enumeration. * * * (2)
Fuel, provisions, furniture, and personal effects. If the
taxpayer is the head of a family, so much of the fuel, provisions,
furniture, and personal effects in his household, and of the arms
for personal use, livestock, and poultry of the taxpayer, as does
not exceed $500 in value. For purposes of this provision, an
individual who is the only remaining member of a family and who
lives alone is not the head of a family. (3)
Books and tools of a trade, business or profession. So many
of the books and tools necessary for the trade, business, or
profession of an individual taxpayer as do not exceed in the
aggregate $250 in value. (4)
Unemployment benefits. Any amount payable to an individual
with respect to his unemployment (including any portion thereof
payable with respect to dependents) under an unemployment
compensation law of the United States, of any State, or of the
District of Columbia or of the Commonwealth of Puerto Rico. * * * * * (6)
Certain annuity and pension payments. Annuity or pension
payments under the Railroad Retirement Act (45 U.S.C. ch. 9),
benefits under the Railroad Unemployment Insurance Act (45 U.S.C.
ch. 11), special pension payments received by a person whose name
has been entered on the Army, Navy, Air Force, and Coast Guard
Medal of Henor roll (38 U.S.C. 562), and annuities based on
retired or retainer pay under chapter 73 of title 10 of the United
States Code. (7)
Workmen's compensation. Any amount payable to an individual
as workmen's compensation (including any portion thereof payable
with respect to dependents) under a workmen's compensation law of
the United States, any State, the District of Columbia, or the
Commonwealth of Puerto Rico. * * * * * (c)
Other property. No other property or rights to property are
exempt from levy except the property specifically exempted by
section 6334(a). No provision of a State law may exempt property
or rights to property from levy for the collection of any Federal
tax. Thus, property exempt from execution under State personal or
homestead exemption laws is, nevertheless, subject to levy by the
United States for collection of its taxes. §301.6335 Statutory provisions; sale of seized property. Sec.
6335. Sale of seized property. * * * (b)
Notice of sale. The Secretary or his delegate shall as soon
as practicable after the seizure of the property give notice to
the owner, in the manner prescribed in subsection (a), and shall
cause a notification to be published in some newspaper published
or generally circulated within the county wherein such seizure is
made, or if there be no newspaper published or generally
circulated in such county, shall post such notice at the post
office nearest the place where the seizure is made, and in not
less than two other public places. Such notice shall specify the
property to be sold, and the time, place, manner, and conditions
of the sale thereof. Whenever levy is made without regard to the
10-day period provided in section 6331(a), public notice of sale
of the property seized shall not be made within such 10-day period
unless section 6336 (relating to sale of perishable goods) is
applicable. * * * * * §301.6335-1 Sale of seized property. * * * * * (b)
Notice of sale. (1) As soon as practicable after seizure of
the property, the district director shall give notice of sale in
writing to the owner. Such notice shall be delivered to the owner
or left at his usual place of abode or business if located within
the internal revenue district where the seizure is made. If the
owner cannot be readily located, or has no dwelling or place of
business within such district, the notice may be mailed to his
last known address. The notice shall specify the property to be
sold, and the time, place, manner, and conditions of the sale
thereof, and shall expressly state that only the right, title, and
interest of the delinquent taxpayer in and to such property is to
be offered for sale. The notice shall also be published in some
newspaper published in the county wherein the seizure is made or
in a newspaper generally circulated in that county. For example,
if a newspaper of general circulation in a county but not
published in that county will reach more potential bidders for the
property to be sold than a newspaper published within the county,
or if there is a newspaper of general circulation within the
county but no newspaper published within the county, the district
director may cause public notice of the sale to be given in the
newspaper of general circulation within the county. If there is no
newspaper published or generally circulated in the county, the
notice shall be posted at the post office nearest the place where
the seizure is made, and in not less than two other public places. * * * * * §301.6337 Statutory provisions; redemption of property. Sec.
6337. Redemption of property. * * * (b)
Redemption of real estate after sale--(1) Period.
The owners of any real property sold as provided in section 6335,
their heirs, executors, or administrators, or any person having
any interest therein, or a lien thereon, or any person in their
behalf, shall be permitted to redeem the property sold, or any
particular tract of such property, at any time within 120 days
after the sale thereof. * * * * * §301.6337-1 Redemption of property. * * * * * (b)
Redemption of real estate after sale--(1) Period.
The owner of any real estate sold as provided in section 6335, his
heirs, executors, or administrators, or any person having any
interest therein, or a lien thereon, or any person in their
behalf, shall be permitted to redeem the property sold, or any
particular tract of such property, at any time within 120 days
after the sale thereof. * * * * * §301.6338 Statutory provisions; certificate of sale; deed of
real property. Sec.
6338. Certificate of sale; deed of real property. * * * (c)
Real property purchased by United States. If real property
is declared purchased by the United States at a sale pursuant to
section 6335, the Secretary or his delegate shall at the proper
time execute a deed therefor, and without delay cause such deed to
be duly recorded in the proper registry of deeds. [Sec. 6338 as amended by sec. 78, Technical Amendments Act
1958 (72 Stat. 1662) [P.L. 85-866, C.B. 1958-3, 254]; sec. 104(f),
Federal Tax Lien Act of 1966 (80 Stat. 1137) [P.L. 89-719, C.B.
1966-2, 623]] §301.6338-1 Certificate of sale; deed of real property. * * * * * (c)
Deed to real property purchased by the United States. If
real property is declared purchased by the United States at a sale
pursuant to section 6335, the district director shall at the
proper time execute a deed therefor and shall, without delay,
cause the deed to be duly recorded in the proper registry of
deeds. §301.6339 Statutory provisions; legal effect of certificate
of sale of personal property and deed of real property. Sec.
6339. Legal effect of certificate of sale of personal property
and deed of real property. * * * (c)
Effect of junior encumbrances. A certificate of sale of
personal property given or a deed to real property executed
pursuant to section 6338 shall discharge such property from all
liens, encumbrances, and titles over which the lien of the United
States with respect to which the levy was made had priority. (d)
Cross references. (1) For distribution of surplus proceeds,
see section 6342(b). (2)
For judicial procedure with respect to surplus proceeds, see
section 7426(a)(2). [Sec. 6339 as amended by sec. 79, Technical Amendments Act
1958 (72 Stat. 1662) [P.L. 85-866, C.B. 1958-3, 254]; sec. 104(g),
Federal Tax Lien Act of 1966 (80 Stat. 1137) [P.L. 89-719, C.B.
1966-2, 623]] Par.
15. Section §301.6339-1 Legal effect of certificate of sale of personal
property and deed of real property. * * * * * (c)
Effect of junior encumbrances. A certificate of sale of
personal property given or a deed to real property executed
pursuant to section 6338 discharges the property from all liens,
encumbrances, and titles over which the lien of the United States,
with respect to which the levy was made, has executed after a
notice of a federal tax lien has been filed is extinguished when
the district director executes a deed to the real property to a
purchaser thereof at a sale pursuant to section 6335 following the
seizure of the property by the United States. The proceeds of such
a sale are distributed in accordance with priority of the liens,
encumbranches, or titles. See section 6342(b) and the regulations
thereunder for provisions relating to the distribution of surplus
proceeds. See section 7426(a)(2) and the regulations thereunder
for judicial procedures with respect to surplus proceeds. §301.6342 Statutory provisions; application of proceeds of
levy. Sec.
6342. Application of proceeds of levy--(a) Collection of
liability. Any money realized by proceedings under this
subchapter (whether by seizure, by surrender under section 6332
(except pursuant to subsection (c)(2) thereof), or by sale of
seized property) or by sale of property redeemed by the United
States (if the interest of the United States in such property was
a lien arising under the provisions of this title) shall be
applied as follows: (1)
Expense of levy and sale. First, against the expenses of
the proceedings; * * * * * (3)
Liability of delinquent taxpayer. The amount, if any,
remaining after applying paragraphs (1) and (2) shall then be
applied against the liability in respect of which the levy was
made or the sale was conducted. * * * * * §301.6342-1 Application of proceeds of levy. (a)
Collection of liability. Any money realized by proceedings
under subchapter D, chapter 64, of the Code or by sale of property
redeemed by the United States (if the interest of the United
States in the property was a lien arising under the provisions of
the Internal Revenue Code) is applied in the manner specified in
subparagraphs (1), (2), and (3) of this paragraph. Money realized
by proceedings under subchapter D, chapter 64, of the Code
includes money realized by seizure, by sale of seized property, or
by surrender under section 6332 (except money realized by the
imposition of a 50% penalty pursuant to section 6332(c)(2)). (1)
Expense of levy and sale. First, against the expenses of
the proceedings or sale, including expenses allowable under
section 6341 and amounts paid by the United States to redeem
property. * * * * * (3)
Liability of delinquent taxpayer. The amount, if any,
remaining after applying subparagraphs (1) and (2) of this
paragraph shall then be applied against the liability in respect
of which the levy was made or the sale of redeemed property was
conducted. * * * * * §301.6343 Statutory provisions; authority to release levy
and return property. Sec.
6343. Authority to release levy and return property--(a) Release
of levy. It shall be lawful for the Secretary or his delegate,
under regulations prescribed by the Secretary or his delegate, to
release the levy upon all or part of the property or rights to
property levied upon where the Secretary or his delegate
determines that such action will facilitate the collection of the
liability, but such release shall not operate to prevent any
subsequent levy. (b)
Return of property. If the Secretary or his delegate
determines that property has been wrongfully levied upon, it shall
be lawful for the Secretary or his delegate to return-- (1)
The specific property levied upon, (2)
An amount of money equal to the amount of money levied upon, or (3)
An amount of money equal to the amount of money received by the
United States from a sale of such property. Property may be returned at any time. An amount equal to the
amount of money levied upon or received from such sale may be
returned at any time before the expiration of 9 months from the
date of such levy. For purposes of paragraph (3), if property is
declared purchased by the United States at a sale pursuant to
section 6335(e) (relating to manner and conditions of sale), the
United States shall be treated as having received an amount of
money equal to the minimum price determined pursuant to such
section or (if larger) the amount received by the United States
from the resale of such property. §301.6343-1 Authority to release levy and return property. (a)
Release of levy--(1) Authority. The district
director may release the levy upon all or part of the property or
rights to property levied upon as provided in subparagraphs (2)
and (3) of this paragraph. A levy may be released under
subparagraph (2) of this paragraph only if the delinquent taxpayer
complies with such of the conditions thereunder as the district
director may require and if the district director determines that
such action will facilitate the collection of the liability. A
release pursuant to subparagraph (3) of this paragraph is
considered to facilitate the collection of the liability. The
release under this section shall not operate to prevent any
subsequent levy. (2)
Conditions for release. The district director may release
the levy as authorized under subparagraph (1) of this paragraph,
if-- (i)
Escrow arrangement. The delinquent taxpayer offers a
satisfactory arrangement, which is accepted by the district
director, for placing property in escrow to secure the payment of
the liability (including the expenses of levy) which is the basis
of the levy. (ii)
Bond. The delinquent taxpayer delivers an acceptable bond
to the district director conditioned upon the payment of the
liability (including the expenses of levy) which is the basis of
the levy. Such bond shall be in the form provided in section 7101
and §301.7101-1. (iii)
Payment of amount of U.S. interest in the property. There
is paid to the district director an amount determined by him to be
equal to the interest of the United States in the seized property
or the part of the seized property to be released. (iv)
Assignment of salaries and wages. The delinquent taxpayer
executes an agreement directing his employer to pay to the
district director amounts deducted from the employee's wages on a
regular, continuing, or periodic basis, in such manner and in such
amount as is agreed upon with the district director, until the
full amount of the liability is satisfied, and such agreement is
accepted by the employer. (v)
Installment payment arrangement. The delinquent taxpayer
makes satisfactory arrangements with the district director to pay
the amount of the liability in installments. (vi)
Extension of statute of limitations. The delinquent
taxpayer executes an agreement to extend the statute of
limitations in accordance with section 6502(a)(2) and §301.6502-1. (3)
Release where value of interest of United States is
insufficient to meet expenses of sale. The district director
may release the levy as authorized under subparagraph (1) of this
paragraph if he determines that the value of the interest of the
United States in the seized property, or in the part of the seized
property to be released, is insufficient to cover the expenses of
the sale of such property. (b)
Return of property--(1) General rule. If the
district director determines that property has been wrongfully
levied upon, the district director may return-- (i)
The specific property levied upon, (ii)
An amount of money equal to the amount of money levied upon
(without interest), or (iii)
An amount of money equal to the amount of money received by the
United States from a sale of the property (without interest). If
the United States is in possession of specific property, the
property may be returned at any time. An amount equal to the
amount of money levied upon or received from a sale of the
property may be returned at any time before the expiration of 9
months from the date of the levy. When a request described in
subparagraph (2) of this paragraph is filed for the return of
property before the expiration of 9 months from the date of levy,
an amount of money may be returned after a reasonable period of
time subsequent to the expiration of the 9-month period if
necessary for the investigation and processing of such request. In
cases where money is specifically identifiable, as in the case of
a coin collection which may be worth substantially more than its
face value, the money will be treated as specific property and,
whenever possible, this specific property will be returned. For
purposes of subparagraph (1)(iii) of this paragraph, if property
is declared purchased by the United States at a sale pursuant to
section 6335(e), the United States is treated as having received
an amount of money equal to the minimum price determined by the
district director before the sale or, if larger, the amount
received by the United States from the resale of the property. (2)
Request for return of property. A written request for the
return of property wrongfully levied upon shall be addressed to
the district director (marked for the attention of the chief,
special procedures staff) for the internal revenue district in
which the levy was made. The written request shall contain the
following information: (i)
The name and address of the person submitting the request, (ii)
A detailed description of the property levied upon, (iii)
A description of the claimant's basis for claiming an interest in
the property levied upon, and (iv)
The name and address of the taxpayer, the originating internal
revenue district, and the date of lien or levy as shown on the
Notice of Tax Lien (Form 668), Notice of Levy (Form 668-A), or
Levy (Form 668-B) or, in lieu thereof, a statement of the reasons
why such information cannot be furnished. (3)
Inadequate request. Any request made prior to (This
Treasury decision is issued under the authority contained in
section 7805 of the Internal Revenue Code of 1954 (68A Stat. 917;
26 U.S.C. 7805).) JOHNNIE M. WALTERS, ----------
[Footnotes] ---------- 1 The publication of this Treasury Decision in 37 F.R. 7316,
dated T.D. 7253, 1973-1 CB 600 On
Amendments to the Regulations In
order to provide regulations under section 6331(d) of the Internal
Revenue Code of 1954 as added by section 211 of the Revenue Act of
1971 (85 Stat. 520) [P.L. 92-178, 1972-1 C.B. 443], the
Regulations on Procedure and Administration (26 Paragraph
1. Section §301.6331 Statutory provisions; levy and distraint. Sec.
6331. Levy and distraint * * * (d)
Salary and wages--(1) In general. Levy may be made
under subsection (a) upon the salary or wages of an individual
with respect to any unpaid tax only after the Secretary or his
delegate has notified such individual in writing of his intention
to make such levy. Such notice shall be given in person, left at
the dwelling or usual place of business of such individual, or
shall be sent by mail to such individual's last known address, no
less than 10 days before the day of levy. No additional notice
shall be required in the case of successive levies with respect to
such tax. (2)
Jeopardy. Paragraph (1) shall not apply to a levy if the
Secretary or his delegate has made a finding under the last
sentence of subsection (a) that the collection of tax is in
jeopardy. (e)
Cross references. (1) For provisions relating to jeopardy,
see subchapter A of chapter 70. (2)
For proceedings applicable to sale of seized property, see section
6335. [Section 6331 as amended by sec. 104(a), Federal Tax Lien Act
1966 (80 Stat. 1135) [P.L. 89-719, 1966-2 C.B. 623]; sec. 211(a)
Revenue Act 1971 (85 Stat. 520)] Par.
2. Section §301.6331-1 Levy and distraint. * * * * * (C)
Notice of intent to levy on salary or wages--(1) In
general. Levy may be made under this section upon the salary
or wages of an individual with respect to any unpaid tax only
after the district director or the director of the service center
has notified such individual in writing of his intention to make
such levy. Such notice shall be given in person, left at the
dwelling or usual place of business of such individual, or shall
be sent by mail to such individual's last known address, no less
than ten days before the day of levy. If a notice has been given
under this paragraph with respect to an unpaid tax, no further
notice is required in the case of successive levies with respect
to such unpaid tax. The notice required to be given under this
paragraph is in addition to, and may be given at the same time as,
the notice and demand described in §301.6303-1. (2)
Jeopardy. Subparagraph (1) of this paragraph shall not
apply to a levy if the district director or director of the
service center has made a finding under paragraph (a)(2) of this
section that the collection of tax is in jeopardy. (3)
Effective date. This paragraph shall apply with respect to
levies made after (This
Treasury decision is issued under the authority contained in
section 7805 of the Internal Revenue Code of 1954 (68A Stat. 917;
26 U.S.C. 7805).) JOHNNIE
M. WALTERS, T.D. 8939 T.D. 8939 Deficiency: Notice of: Taxpayer's last known address. DEPARTMENT
OF THE TREASURY Applicability date: For dates of applicability, see §301.6212-2(d). FOR
FURTHER INFORMATION CONTACT: Charles A. Hall, This
document contains amendments to the Regulations on Procedure and
Administration (26 A
notice of proposed rulemaking ( Explanation
of Revisions Under
the proposed regulations, the The
procedures for updating taxpayer address records maintained in the
To
gain access to the NCOA database, the Beginning
in January 2001, the First,
the In
addition, the For
taxpayers who file joint income tax returns under section 6013,
the Summary
of Comments Commentators
also suggested that these regulations refer to section 6672(b)(1)
and section 4103. Because section 6672(b)(1) requires that the A
third commentator suggested that the The
commentator also asked what is the most recently filed return for
purposes of §301.6212-2(a) of the regulations, i.e., whether
different returns filed by the same taxpayer will update the
taxpayer's last known address. The rules provided in these
regulations do not in any way alter the existing rules for
updating a taxpayer's last known address from a filed return.
Section 5.01 of Rev. Proc. 90-18 provides which returns will
update a taxpayer's last known address under a social security
number or an employer identification number. Therefore, an amended
return filed on a Form 1040X with a different address from that
which appeared on the taxpayer's previously filed Form 1040 will
update the taxpayer's last known address of record with the Finally,
as mentioned above, the commentator noted that accessing the NCOA
database for Special
Analyses It
has been determined that this Treasury decision is not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It also has
been determined that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does not apply to these
regulations, and because these regulations do not impose a
collection of information on small entities, the Regulatory
Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to
section 7805(f) of the Internal Revenue Code, the notice of
proposed rulemaking preceding these regulations was submitted to
the Chief Counsel for Advocacy of the Small Business
Administration for comment on its impact on small business. Drafting
Information The
principal author of these regulations is Charles A. Hall of the
Office of Associate Chief Counsel, Procedure and Administration
(Administrative Provisions and Judicial Practice Division).
However, other personnel from the List
of Subjects Income
taxes, Reporting and recordkeeping requirements. 26
Employment
taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping requirements. Adoption
of Amendments to the Regulations Accordingly,
26 PART
1--INCOME TAXES Paragraph
1. The authority citation for part 1 continues to read in part as
follows: Authority:
26 U.S.C. 7805 * * * Par.
2. In §1.468A-5, paragraph (c)(1)(ii) is amended by adding a
sentence at the end of the paragraph to read as follows: §1.468A-5
Nuclear decommissioning fund qualification requirements;
prohibitions against self-dealing; disqualification of nuclear
decommissioning fund; termination of fund upon substantial
completion of decommissioning. (c)
* * * (1)
* * * (ii)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. *
* * * * Par.
3. In §1.503(a)-1, paragraph (c) concluding text is amended by
adding a sentence at the end of the paragraph to read as follows: §1.503(a)-1
Denial of exemption to certain organizations engaged in prohibited
transactions. (c)
* * * *
* * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. Par.
4. In §1.547-2, paragraph (b)(1)(v) is amended by adding a
sentence after the third sentence of the paragraph to read as
follows: §1.547-2
Requirements for deficiency dividends. (b)
* * * (1)
* * * (v)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. * * * *
* * * * Par.
5. In §1.856-6, paragraph (g)(5) is amended by adding a sentence
after the first sentence of the paragraph to read as follows: §1.856-6
Foreclosure property. (g)
* * * (5)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. * * * *
* * * * Par.
6. In §1.860-2, paragraph (b)(1)(ii) is amended by adding a
sentence after the fourth sentence of the paragraph to read as
follows: §1.860-2
Requirements for deficiency dividends. (b)
* * * (1)
* * * (ii)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. * * * *
* * * * Par.
7. In §1.963-6, paragraph (c)(5) is amended by adding a sentence
after the second sentence of the paragraph to read as follows: §1.963-6
Deficiency distribution. (c)
* * * (5)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. * * * *
* * * * Par.
8. In §1.992-3, paragraph (c)(3)(iv) is amended by adding a
sentence after the third sentence of the paragraph to read as
follows: §1.992-3
Deficiency distributions to meet qualification requirements. (c)
* * * (3)
* * * (iv)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. * * * *
* * * * Par.
9. In §1.6081-2, paragraph (f) is amended by adding a sentence at
the end of the paragraph to read as follows: §1.6081-2
Automatic extension of time to file partnership return of income. (f)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. *
* * * * Par.
10. In §1.6081-3, paragraph (d) is amended by adding a sentence
at the end of the paragraph to read as follows: §1.6081-3
Automatic extension of time for filing corporation income tax
returns. (d)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. *
* * * * Par.
11. In §1.6081-4, paragraph (c) is amended by adding a sentence
at the end of the paragraph to read as follows: §1.6081-4
Automatic extension of time for filing individual income tax
returns. (c)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. *
* * * * Par.
12. In §1.6081-6, paragraph (d) is amended by adding a sentence
at the end of the paragraph to read as follows: §1.6081-6
Automatic extension of time to file trust income tax return. (d)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. *
* * * * Par.
13. In §1.6081-7, paragraph (d) is amended by adding a sentence
at the end of the paragraph to read as follows: §1.6081-7
Automatic extension of time to file Real Estate Mortgage
Investment Conduit (REMIC) income tax return. (d)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2 of this chapter. *
* * * * Par.
14. The authority citation for part 301 continues to read in part
as follows: Authority:
26 U.S.C. 7805 * * * Par.
15. In §301.6110-4, paragraph (c)(3) is amended by adding a
sentence at the end of the paragraph to read as follows: §301.6110-4
Communications from third parties. (c)
* * * (3)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. *
* * * * Par.
16. In §301.6110-5, paragraph (b)(4) is amended by adding a
sentence at the end of the paragraph to read as follows: §301.6110-5
Notice and time requirements; actions to restrain disclosure;
actions to obtain additional disclosure. (b)
* * * (4)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. *
* * * * Par.
17. In §301.6110-6, paragraph (b)(2)(v) is amended by adding a
sentence at the end of the paragraph to read as follows: §301.6110-6
Written determinations issued in response to requests submitted
before (b)
* * * (2)
* * * (v)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. *
* * * * Par.
18. Section §301.6212-2
Definition of last known address. (a)
General rule. Except as provided in paragraph (b)(2) of
this section, a taxpayer's last known address is the address that
appears on the taxpayer's most recently filed and properly
processed Federal tax return, unless the Internal Revenue Service
( (b)
Address obtained from third party--(1) In general.
Except as provided in paragraph (b)(2) of this section, change of
address information that a taxpayer provides to a third party,
such as a payor or another government agency, is not clear and
concise notification of a different address for purposes of
determining a last known address under this section. (2)
Exception for address obtained from the United States Postal
Service--(i) Updating taxpayer addresses. The (ii)
Duration of address obtained from NCOA database. The
address obtained from the NCOA database under paragraph (b)(2)(i)
of this section is the taxpayer's last known address until one of
the following events occurs-- (A)
The taxpayer files and the (B)
The taxpayer provides the Internal Revenue Service with clear and
concise notification of a change of address, as defined in
procedures prescribed by the Commissioner, that is different from
the address obtained from the NCOA database. (3)
Examples. The following examples illustrate the rules of
paragraph (b)(2) of this section: Example 1.
(i) A is an unmarried taxpayer. The address on A's 1999 Form 1040,
U.S. Individual Income Tax Return, filed on (ii)
In June 2001 the Example 2.
(i) The facts are the same as in Example 1, except that
instead of determining a deficiency for A's 1999 tax year in June
2001, the (ii)
On Example 3.
(i) C and D are married taxpayers. The address on C and D's 2000
Form 1040, U.S. Individual Income Tax Return, filed on (ii)
In October 2002 the (c)
Last known address for all notices, statements, and documents.
The rules in paragraphs (a) and (b) of this section apply for
purposes of determining whether all notices, statements, or other
documents are mailed to a taxpayer's last known address whenever
the term last known address is used in the Internal Revenue
Code or the regulations thereunder. (d)
Effective Date--(1) In general. Except as provided
in paragraph (d)(2) of this section, this section is effective on (2)
Individual moves in the case of joint filers. In the case
of taxpayers who file joint returns under section 6013, if the
NCOA database contains change of address information for only one
spouse, paragraphs (b)(2) and (3) of this section will not apply
to notices, statements, and other documents mailed before the
processing of the taxpayers' 2000 joint return. Par.
19. In §301.6303-1, paragraph (a) is amended by adding a sentence
at the end of the paragraph to read as follows: §301.6303-1
Notice and demand for tax. (a)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. *
* * * * Par.
20. In §301.6305-1, paragraph (b)(2)(ii) is revised to read as
follows: §301.6305-1
Assessment and collection of certain liability. (b)
* * * (2)
* * * (ii)
The name, social security number, and last known address of the
individual owing the assessed amount. For further guidance
regarding the definition of last known address, see §301.6212-2; *
* * * * Par.
21. In §301.6320-1T, paragraph (a)(1) is amended by adding a
sentence at the end of the paragraph to read as follows: §301.6320-1T
Notice and opportunity for hearing upon filing of notice of
Federal tax lien (temporary). (a)
* * * (1) * * * For further guidance regarding the definition of
last known address, see §301.6212-2. *
* * * * Par.
22. In §301.6325-1, paragraph (f)(2)(ii)(a) is revised to
read as follows: §301.6325-1
Release of lien or discharge of property. (f)
* * * (2)
* * * (ii)
* * * (a)
Mailing notice of the revocation to the taxpayer at his last known
address (see §301.6212-2 for further guidance regarding the
definition of last known address); and *
* * * * Par.
23. In §301.6330-1T, paragraph (a)(1) is amended by adding a
sentence at the end of the paragraph to read as follows: §301.6330-1T
Notice and opportunity for hearing prior to levy (temporary). (a)
* * * (1) * * * For further guidance regarding the definition of
last known address, see §301.6212-2. *
* * * * Par.
24. In §301.6331-2, paragraph (a)(1) is amended by adding a
sentence after the second sentence of the paragraph to read as
follows: §301.6331-2
Procedures and restrictions on levies. (a)
* * * (1) * * * For further guidance regarding the definition of
last known address, see §301.6212-2. * * * *
* * * * Par.
25. Section 1.
Paragraphs (b)(1) introductory text, (b)(1)(i), and (b)(1)(ii) are
redesignated as paragraphs (b)(1)(i) introductory text,
(b)(1)(i)(A), and (b)(1)(i)(B), respectively. 2.
In newly designated paragraph (b)(1)(i)(B), the text beginning
with the second sentence is redesignated as paragraph (b)(1)(ii). 3.
Newly designated paragraph (b)(1)(ii) is amended by adding a
sentence after the second sentence of the paragraph. The
addition reads as follows: §301.6332-2
Surrender of property subject to levy in the case of life
insurance and endowment contracts. (b)
* * * (1) In general. (ii)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. * * * *
* * * * Par.
26. In §301.6335-1, paragraph (b)(1) is amended by adding a
sentence after the third sentence of the paragraph to read as
follows: §301.6335-1
Sale of seized property. (b)
* * * (1) * * * For further guidance regarding the definition of
last known address, see §301.6212-2. * * * *
* * * * Par.
27. In §301.6503(c)-1, paragraph (a) is amended by adding a
sentence at the end of the paragraph to read as follows: §301.6503(c)-1
Suspension of running of period of limitation; location of
property outside the United States or removal of property from the
United States; taxpayer outside of United States. (a)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. *
* * * * Par.
28. Section §301.6672-1
Failure to collect and pay over tax, or attempt to evade or defeat
tax. *
* * For further guidance regarding the determination of the proper
address for mailing the notice required under section 6672(b)(1),
see §301.6212-2. Par.
29. In §301.6903-1, paragraph (c) is amended by adding a sentence
after the first sentence of the paragraph to read as follows: §301.6903-1
Notice of fiduciary relationship. (c)
* * * For further guidance regarding the definition of last known
address, see §301.6212-2. * * * * * * * * Robert
E. Wenzel Deputy
Commissioner of Internal Revenue Approved: December 11, 2000 Jonathan
Talisman Acting Assistant Secretary of the Treasury T.D. 9027 December 18, 2002 |