Cases: United States v. Weintraub, 613 F.2d 612 (6th Cir. 1979); United States v. Sullivan, 333 F.2d 100 (3rd Cir. 1964); Texas Commerce Bank-Fort Worth, N.A. v. United States, 896 F.2d 152 (5th Cir. 1990)
Final rules 1
(a) Requirement Except as otherwise provided in this section, 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, surrender such property or rights (or discharge such obligation) to the Secretary, 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.
Amended 1966, 1976, 1988, 1990
- 1990 Pub. L. 101-508 Pub. L. 101–508 substituted “this section” for “subsections (b) and (c)”.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6236(e)(2)(A), substituted “subsections (b) and (c)” for “subsection (b)”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.
- 1966 Pub. L. 89-719 Pub. L. 89–719, § 104(b)(1), substituted “Except as otherwise provided in subsection (b), any person” for “Any person”.
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(b) Special rule for life insurance and endowment contracts
Amended 1966, 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.
- 1966 Pub. L. 89-719 Pub. L. 89–719, § 104(b)(2), added subsec. (b). Former subsec. (b) redesignated, with amendments, as subsec. (c)(1).
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(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 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 that a copy of such notice has been mailed to the person against whom the tax is assessed at his last known address.
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(2) Satisfaction of levy Such levy shall be deemed to be satisfied if such organization pays over to the Secretary 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.
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(3) Enforcement proceedings The satisfaction of a levy under paragraph (2) shall be without prejudice to any civil action for the enforcement of any lien imposed by this title with respect to such contract.
(c) Special rule for banks Any bank (as defined in section 408(n)) shall surrender (subject to an attachment or execution under judicial process) any deposits (including interest thereon) in such bank only after 21 days after service of levy.
Amended 1966, 1975, 1976, 1986, 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6236(e)(1), added subsec. (c). Former subsec. (c) redesignated (d).
- 1986 Pub. L. 99-514 Pub. L. 99–514 substituted “the underpayment rate established under section 6621” for “an annual rate established under section 6621”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1209(d)(3), 1906(b)(13)(A), inserted “(or, in the case of a levy described in section 6331(d)(3), from the date such person would otherwise have been obligated to pay over such amounts to the taxpayer)” after “date of such levy”, and struck out “or his delegate” after “Secretary”.
- 1975 Pub. L. 93-625 Pub. L. 93–625 substituted “an annual rate established under section 6621” for “the rate of 6 percent per annum”.
- 1966 Pub. L. 89-719 Pub. L. 89–719, § 104(b)(2)–(4), redesignated as par. (1) provisions formerly set out as subsec. (b), inserted provisions that any amount other than costs recovered under par. (1) shall be credited against the tax liability for the collection of which the levy was made, and added par. (2). Former subsec. (c) redesignated (e).
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(d) Enforcement of levy
Amended 1966, 1976, 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6236(e)(1), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e).
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1015(t)(1), inserted “and any other person” after “delinquent taxpayer” and struck out sentence at end providing that 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.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
- 1966 Pub. L. 89-719 Pub. L. 89–719, § 104(b)(4), added subsec. (d).
(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, 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 underpayment rate established under section 6621 from the date of such levy (or, in the case of a levy described in section 6331(d)(3), from the date such person would otherwise have been obligated to pay over such amounts to the taxpayer). 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.
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(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.
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(e) 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, surrenders such property or rights to property (or discharges such obligation) to the Secretary (or who pays a liability under subsection (d)(1)) shall be discharged from any obligation or liability to the delinquent taxpayer and any other person with respect to such property or rights to property arising from such surrender or payment.
Amended 1966, 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6236(e)(1), (2)(B), redesignated subsec. (d) as (e) and substituted “subsection (d)(1)” for “subsection (c)(1)”. Former subsec. (e) redesignated (f).
- 1966 Pub. L. 89-719 Pub. L. 89–719, § 104(b)(3), redesignated former subsec. (c) as (e).
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(f) 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.
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6236(e)(1), redesignated subsec. (e) as (f).