Return of Property in Certain Cases, 40669-40672 [05-13801]
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40669
Federal Register / Vol. 70, No. 134 / Thursday, July 14, 2005 / Rules and Regulations
country designated by the Secretary of State
as a place where living conditions are
extremely difficult, notably unhealthy, or
where excessive physical hardships exist and
for which a post differential of 15 percent or
more would be provided under section
5925(b) of Title 5 of the U.S. Code to any
officer or employee of the U.S. government
present at that place. Corp N has a policy of
paying its employees a $65 premium per day
for each day worked in countries so
designated. The $65 premium per day does
not exceed the maximum amount that the U.
S. government would pay its officers or
employees stationed in Country Y. Because A
performed services in Country Y for 30 days,
she earned additional compensation of
$1,950. The $1,950 is considered a hazardous
duty or hardship pay fringe benefit and is
sourced under paragraphs (b)(2)(ii)(B) and
(D)(5) of this section based on the location of
the hazardous or hardship duty zone,
Country Y. Accordingly, A included the
amount of the hazardous duty or hardship
pay fringe benefit ($1,950) in her gross
income as income from sources without the
United States.
Example 5. (i) During 2006 and 2007, Corp
P, a domestic corporation, employed four
United States citizens, E, F, G, and H to work
in its manufacturing plant in Country V. As
part of his or her compensation package, each
employee arranged for local transportation
unrelated to Corp P’s business needs. None
of the local transportation fringe benefit is
excluded from the employee’s gross income
as a qualified transportation fringe benefit
under section 132(a)(5) and (f).
(ii) Under the terms of the compensation
package that E negotiated with Corp P, Corp
P permitted E to use an automobile owned
by Corp P. In addition, Corp P agreed to
reimburse E for all expenses incurred by E in
maintaining and operating the automobile,
including gas and parking. Provided that the
local transportation fringe benefit meets the
requirements of paragraph (b)(2)(ii)(D)(3) of
this section, E’s compensation with respect to
the fair rental value of the automobile and
reimbursement for the expenses E incurred is
sourced under paragraphs (b)(2)(ii)(B) and
(D)(3) of this section based on E’s principal
place of work in Country V. Thus, the local
transportation fringe benefit will be included
in E’s gross income as income from sources
without the United States.
(iii) Under the terms of the compensation
package that F negotiated with Corp P, Corp
P let F use an automobile owned by Corp P.
However, Corp P did not agree to reimburse
F for any expenses incurred by F in
maintaining and operating the automobile.
Provided that the local transportation fringe
benefit meets the requirements of paragraph
(b)(2)(ii)(D)(3) of this section, F’s
compensation with respect to the fair rental
value of the automobile is sourced under
paragraphs (b)(2)(ii)(B) and (D)(3) of this
section based on F’s principal place of work
in Country V. Thus, the local transportation
fringe benefit will be included in F’s gross
income as income from sources without the
United States.
(iv) Under the terms of the compensation
package that G negotiated with Corp P, Corp
P agreed to reimburse G for the purchase
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price of an automobile that G purchased in
Country V. Corp P did not agree to reimburse
G for any expenses incurred by G in
maintaining and operating the automobile.
Because the cost to purchase an automobile
is not a local transportation fringe benefit as
defined in paragraph (b)(2)(ii)(D)(3) of this
section, the source of the compensation to G
will be determined pursuant to paragraph
(b)(2)(ii)(A) or (C) of this section.
(v) Under the terms of the compensation
package that H negotiated with Corp P, Corp
P agreed to reimburse H for the expenses that
H incurred in maintaining and operating an
automobile, including gas and parking,
which H purchased in Country V. Provided
that the local transportation fringe benefit
meets the requirements of paragraph
(b)(2)(ii)(D)(3) of this section, H’s
compensation with respect to the
reimbursement for the expenses H incurred
is sourced under paragraphs (b)(2)(ii)(B) and
(D)(3) of this section based on H’s principal
place of work in Country V. Thus, the local
transportation fringe benefit will be included
in H’s gross income as income from sources
without the United States.
Example 6. (i) On January 1, 2006,
Company Q compensates employee J with a
grant of options to which section 421 does
not apply that do not have a readily
ascertainable fair market value when granted.
The stock options permit J to purchase 100
shares of Company Q stock for $5 per share.
The stock options do not become exercisable
unless and until J performs services for
Company Q (or a related company) for 5
years. J works for Company Q for the 5 years
required by the stock option grant. In years
2006–08, J performs all of his services for
Company Q within the United States. In
2009, J performs 1⁄2 of his services for
Company Q within the United States and 1⁄2
of his services for Company Q without the
United States. In year 2010, J performs his
services entirely without the United States.
On December 31, 2012, J exercises the
options when the stock is worth $10 per
share. J recognizes $500 in taxable
compensation (($10¥$5) × 100) in 2012.
(ii) Under the facts and circumstances, the
applicable period is the 5-year period
between the date of grant (January 1, 2006)
and the date the stock options become
exercisable (December 31, 2010). On the date
the stock options become exercisable, J
performs all services necessary to obtain the
compensation from Company Q.
Accordingly, the services performed after the
date the stock options become exercisable are
not taken into account in sourcing the
compensation from the stock options.
Therefore, pursuant to paragraph (b)(2)(ii)(A),
since J performs 31⁄2 years of services for
Company Q within the United States and 11⁄2
years of services for Company Q without the
United States during the 5-year period, 7/10
of the $500 of compensation (or $350)
recognized in 2012 is income from sources
within the United States and the remaining
3/10 of the compensation (or $150) is income
from sources without the United States.
*
*
*
*
*
(d) Effective date. * * * Paragraph (b)
and the first sentence of paragraph (a)(1)
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of this section apply to taxable years
beginning on or after July 14, 2005.
PART 602—OMB CONTROL NUMBERS
UNDER THE PAPERWORK
REDUCTION ACT
I Par. 3. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 4. In § 602.101, paragraph (b) is
amended by adding an entry for § 1.861–
4 in numerical order to the table to read
as follows:
I
§ 602.101
*
OMB Control numbers.
*
*
(b) * * *
*
*
Current
OMB control
No.
CFR part or section
where Identified and described
*
*
*
*
*
1.861–4 .....................................
1545–1900
*
*
*
*
*
Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement.
Approved: July 5, 2005.
Eric Solomon,
Acting Deputy Assistant Secretary for Tax
Policy.
[FR Doc. 05–13681 Filed 7–13–05; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9213]
RIN 1545–AV01
Return of Property in Certain Cases
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulation.
AGENCY:
SUMMARY: This document contains final
regulations that amend regulations
under section 6343 of the Internal
Revenue Code (Code) relating to the
return of property in certain cases. The
regulations reflect changes made to
section 6343 of the Code by the
Taxpayer Bill of Rights 2. The
regulations also reflect changes affecting
levies enacted by the Internal Revenue
Service Restructuring and Reform Act of
1998. The regulations affect taxpayers
seeking the return of levied property
from the Internal Revenue Service (IRS).
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Federal Register / Vol. 70, No. 134 / Thursday, July 14, 2005 / Rules and Regulations
Effective Date: These regulations
are effective July 14, 2005.
Applicability Date: For dates of
applicability, see § 301.6343–3(k).
FOR FURTHER INFORMATION CONTACT:
Kevin B. Connelly, (202) 622–3630 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
DATES:
Background
This document contains amendments
to the Procedure and Administration
Regulations (26 CFR part 301) relating to
the return of property under section
6343 of the Code. Section 501(b) of the
Taxpayer Bill of Rights 2 (TBOR2),
Public Law 104–168 (110 Stat. 1452),
amended section 6343 to authorize the
IRS to return levied property in certain
cases. The purpose of this provision is,
to the extent possible, to return the
taxpayer to the position the taxpayer
would have been in had the levy not
been issued. No interest shall be paid
with respect to property returned to the
taxpayer under this provision. These
final regulations reflect the amendments
made by section 501(b) of TBOR2.
These regulations also reflect
amendments made by the Internal
Revenue Service Restructuring and
Reform Act (RRA 1998), Public Law
105–206 (112 Stat. 685), which added
new sections 6331(i) and (j) to the Code
to provide that no levy may be made
during the pendency of proceedings for
refund of divisible taxes or prior to
completion of an investigation of the
status of property that is to be sold
under section 6335. RRA 1998 also
added section 6331(k) to the Code,
which provides that no levy may be
made during the period an offer-incompromise or an installment
agreement is pending or in effect. In
addition, RRA 1998 added section 6330,
which provides in certain circumstances
for notice and an opportunity for a
hearing before a levy can be made.
Explanation of Provisions
On February 14, 2001, a notice of
proposed rulemaking (REG–101520–97)
reflecting these changes was published
in the Federal Register (66 FR 10249).
No written comments were received in
response to the notice of proposed
rulemaking and no public hearing was
requested, scheduled or held. These
final regulations adopt the provisions of
the notice of proposed rulemaking
without change.
Comments on the Proposed Regulation
None.
Modifications of Proposed Regulation
None.
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Special Analyses
It has been determined that this final
regulation 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) 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 Code, the
preceding notice of proposed
rulemaking 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 Kevin B. Connelly, Office
of Associate Chief Counsel (Procedure
and Administration), Collection
Bankruptcy & Summons Division,
CC:PA:CBS, IRS.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes,
Excise taxes, Gift taxes, Income taxes,
Penalties, Reporting and recordkeeping
requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 301 is
amended as follows:
I
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read, in part, as
follows:
I
Authority: 26 U.S.C. 7805 * * *
I Par. 2. Section 301.6343–3 is added to
read as follows:
§ 301.6343–3
cases.
Return of property in certain
(a) In general. If money has been
levied upon and applied toward the
taxpayer’s liability, or property has been
levied upon and sold, and the receipts
have been applied toward the taxpayer’s
liability, or property has been levied
upon and purchased by the United
States and the United States still
possesses the property, and the
Commissioner determines that any of
the conditions in paragraph (c) of this
section exist, the Commissioner may
return—
(1) An amount of money equal to the
amount of money levied upon;
(2) An amount of money equal to the
amount of money received by the
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United States from a sale of the
property; or
(3) The specific property levied upon
and purchased by the United States.
(b) Return of levied upon property in
possession of the Internal Revenue
Service (IRS) pending sale under section
6335. Other than as provided in
§ 301.6343–1(b) or in paragraph (d) of
this section, the Commissioner, in his or
her discretion, may return levied upon
property that is in the possession of the
United States pending sale under
section 6335.
(c) Conditions authorizing the return
of property. The Commissioner may
return property upon determining that
one of the following conditions exist:
(1) Premature or not in accordance
with administrative procedures. The
levy was premature or otherwise not in
accordance with the administrative
procedures of the Secretary.
(2) Installment agreement. Subsequent
to the levy, the taxpayer enters into an
agreement under section 6159 to satisfy
the liability for which the levy was
made by means of installment
payments. If, however, the agreement
specifically provides that already levied
upon property will not be returned
under section 6343(d), the
Commissioner may not grant a request
for return of property under this
paragraph (c)(2).
(3) Facilitate collection. The return of
property will facilitate the collection of
the tax liability for which the levy was
made.
(4) Best interests of the United States
and the taxpayer—(i) In general. The
taxpayer or the National Taxpayer
Advocate (or his or her delegate) has
consented to the return of property, and
the return of property would be in the
best interest of the taxpayer, as
determined by the National Taxpayer
Advocate (or his or her delegate), and in
the best interest of the United States, as
determined by the Commissioner.
(ii) Best interest of the taxpayer. The
National Taxpayer Advocate (or his or
her delegate) generally will determine
whether the return of property is in the
best interest of the taxpayer. If, however,
a taxpayer requests the Commissioner to
return property and has not specifically
requested the National Taxpayer
Advocate (or his or her delegate) to
determine the taxpayer’s best interest, a
finding by the Commissioner that the
return of property is in the best interest
of the taxpayer will be sufficient to
support the return of property. Only the
National Taxpayer Advocate (or his or
her delegate) may determine that a
return of property is not in the best
interest of the taxpayer.
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Federal Register / Vol. 70, No. 134 / Thursday, July 14, 2005 / Rules and Regulations
(5) Examples. The following examples
illustrate the provisions of this
paragraph (c):
Example 1. A owes $1,000 in Federal
income taxes. The IRS levies on a broker with
respect to a money market account belonging
to the taxpayer and receives payment from
the broker which it applies to the taxpayer’s
outstanding liability. However, the IRS failed
to follow procedure provided by the Internal
Revenue Manual (but not required by statute)
with regard to managerial approval prior to
the making of the levy. The Commissioner
may return an amount of money equal to the
amount of money the IRS levied upon and
applied toward the taxpayer’s tax liability.
Example 2. B owes $1,000 in Federal
income taxes. The IRS levies on a bank with
respect to a savings account belonging to the
taxpayer and receives funds from the bank,
which it applies to the taxpayer’s liability.
Subsequent to the levy, B enters into an
installment agreement, under which B will
pay timely installments to satisfy the entire
liability. The installment agreement does not
by its terms preclude the return of levied
upon property. The revenue officer verifies
that B is financially capable of paying the
entire liability, including accruals, in the
agreed-upon installment payments. The
Commissioner may return an amount of
money equal to the amount of money levied
upon and applied toward the taxpayer’s
liability.
Example 3. C owns a house that is
deteriorating and in unsalable condition. C is
in the process of renovating the house for
sale when the IRS levies upon C’s bank
account for the payment of a $20,000
outstanding Federal tax liability and receives
funds in the amount of $3,000, which it
applies toward C’s liability. A notice of
federal tax lien is the only lien
encumbrancing the house. C requests that an
amount of money equal to the amount seized
from the bank account be returned so that C
can complete the renovations on the house.
Without the funds, C will be unable to
complete the renovations and sell the house.
Upon examination, the Commissioner
determines that the IRS will be able to collect
the entire tax liability if C’s house is restored
to salable condition. If the National Taxpayer
Advocate, or the Commissioner in lieu of the
National Taxpayer Advocate, determines that
the return of the seized money is in the
taxpayer’s best interest, the Commissioner
may return an amount of money equal to the
amount seized from the bank account, in the
best interest of the taxpayer and the United
States.
(d) Best Interests of the United States
and the taxpayer to release levy and
return of property where levy made in
violation of law—(1) In general. If the
IRS makes a levy in violation of the law,
it is in the best interests of the United
States and the taxpayer to release the
levy and the IRS will return to the
taxpayer any property obtained
pursuant to the levy. For example, the
IRS will release the levy and return the
taxpayer’s property if the levy was
made—
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(i) Without giving the requisite thirtyday notice of the right to a hearing
under section 6330;
(ii) During the pendency of a
proceeding for refund of divisible tax in
violation of section 6331(i);
(iii) Before investigation of the status
of levied upon property in violation of
section 6331(j);
(iv) During the pendency of an offerin-compromise in violation of section
6331(k)(1); or
(v) During the period an offer to enter
into an installment agreement is
pending (or for 30 days following the
rejection of an offer, or, if the rejection
is timely appealed, during the period
that the appeal is pending) or during the
period an installment agreement is in
effect (or during the 30 days following
a termination or, if a timely appeal of
termination is filed, during the period
the appeal is pending) in violation of
section 6331(k)(2).
(2) Property may not be credited to
outstanding liability without the
taxpayer’s permission. When the release
of a levy and the return of property are
required under this paragraph (d), the
property or the proceeds from the sale
of the property received by the IRS
pursuant to the levy must be returned to
the taxpayer unless the taxpayer
requests otherwise. The property or
proceeds of sale may not be credited to
any outstanding tax liability of the
taxpayer, including the one with respect
to which the IRS made the levy, without
the written permission of the taxpayer.
(e) Time of return. Levied upon
property in possession of the IRS (other
than money) may be returned under
paragraphs (c) and (d) of this section at
any time. An amount of money equal to
the amount of money levied upon or
received from a sale of property may be
returned at any time before the
expiration of 9 months from the date of
the levy. When a request for the return
of money filed in accordance with
paragraph (h) of this section is filed
before the expiration of the 9-month
period, or a determination to return an
amount of money is made before the
expiration of the 9-month period, the
money may be returned within a
reasonable period of time after the
expiration of the 9-month period if
additional time is necessary for
investigation or processing.
(f) Purchase by the United States. For
purposes of paragraph (a)(2) of this
section, if property is declared
purchased by the United States at a sale
pursuant to section 6335(e)(1)(C), the
United States will be treated as having
received an amount of money equal to
the minimum price determined by the
Commissioner before the sale.
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40671
(g) Determinations by the
Commissioner. The Commissioner must
determine whether any of the
conditions authorizing the return of
property exists if a taxpayer submits a
request for the return of property in
accordance with paragraph (h) of this
section. The Commissioner also may
make this determination independently.
If the Commissioner determines that
conditions authorizing the return of
property are not present, the
Commissioner may not authorize the
return of property. If the Commissioner
determines that conditions authorizing
the return of property are present, the
Commissioner may (but is not required
to, unless the reason for the return of
property is that the levy was made in
violation of law and is governed by
paragraph (d) of this section) authorize
the return of property. If the
Commissioner decides independently to
return property under paragraph (c)(4)
of this section based on the best
interests of the taxpayer and the United
States, the taxpayer or the National
Taxpayer Advocate (or his or her
delegate) must consent to the return of
property.
(h) Procedures for request for the
return of property—(1) Manner. A
request for the return of property must
be made in writing to the address on the
levy form.
(2) Form. The written request must
include the following information—
(i) The name, current address, and
taxpayer identification number of the
person requesting the return of money
(or property purchased by the United
States);
(ii) A description of the property
levied upon;
(iii) The date of the levy; and
(iv) A statement of the grounds upon
which the return of money is being
requested (or property purchased by the
United States).
(i) No interest. No interest will be paid
on any money returned under this
section.
(j) Administrative collection upon
default. If the Commissioner returns
property under this section, and the
taxpayer fails to pay the previously
assessed liability for which the levy was
made on the returned property, the
Commissioner may administratively
collect the liability. Collection may
include levying again on the returned
property as long as statutory and
administrative requirements are
followed.
(k) Effective date. This section is
applicable on July 14, 2005.
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Federal Register / Vol. 70, No. 134 / Thursday, July 14, 2005 / Rules and Regulations
Approved: June 30, 2005.
Mark E. Matthews,
Deputy Commissioner for Services and
Enforcement.
Eric Solomon,
Acting Deputy Assistant Secretary of the
Treasury (Tax Policy).
[FR Doc. 05–13801 Filed 7–13–05; 8:45 am]
ACTION:
Final rule; amendments.
SUMMARY: EPA is amending the national
emission standards for hazardous air
pollutants (NESHAP) for primary
copper smelting to correct the
monitoring requirements for control
systems other than baghouses and
venturi wet scrubbers.
DATES: Effective July 14, 2005.
ADDRESSES: The EPA has established a
docket for this action under Docket ID
No. OAR–2003–0185. All documents in
the docket are listed in the EDOCKET
index at https://www.epa.gov/edocket.
Although listed in the index, some
information is not publicly available,
i.e., confidential business information or
other information whose disclosure is
restricted by statute. Certain other
information, such as copyrighted
materials, is not placed on the Internet
and will be publicly available only in
hard copy form. Publicly available
BILLING CODE 4830–01–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR PART 63
[OAR–2003–0185; FRL–7938–5]
RIN 2060–AE46
National Emission Standards for
Hazardous Air Pollutants for Primary
Copper Smelting
Environmental Protection
Agency (EPA).
AGENCY:
docket materials are available either
electronically in EDOCKET or in hard
copy form at the Air and Radiation
Docket, Docket ID No. OAR–2003–0185,
EPA/DC, EPA West, Room B102, 1301
Constitution Ave., NW., Washington,
DC. The Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding legal
holidays. The telephone number for the
Public Reading Room is (202) 566–1744,
and the telephone number for the Air
and Radiation Docket is (202) 566–1742.
FOR FURTHER INFORMATION CONTACT: Mr.
Steve Fruh, Emission Standards
Division (C439–02), Office of Air
Quality Planning and Standards, U.S.
EPA, Research Triangle Park, NC 27711,
telephone number (919) 541–2837, email address: fruh.steve@epa.gov.
SUPPLEMENTARY INFORMATION: Regulated
Entities. Categories and entities
potentially regulated by this action
include:
Category
NAICS code 1
Examples of regulated
entities
Industry ..................................................................................................................................................
Federal government ..............................................................................................................................
State/local/tribal government .................................................................................................................
331411
..........................
..........................
Primary copper smelters.
Not affected.
Not affected.
1 North
American Industry Classification System.
This table is not intended to be
exhaustive, but rather provides a guide
for readers regarding entities likely to be
regulated by this action. To determine
whether your facility is regulated by this
action, you should examine the
applicability criteria in 40 CFR 63.1441
of the NESHAP for primary copper
smelting. If you have any questions
regarding the applicability of this action
to a particular entity, consult the person
listed in the preceding FOR FURTHER
INFORMATION CONTACT section.
World Wide Web (WWW). In addition
to being available in the docket, an
electronic copy of today’s final
amendments will also be available on
the World Wide Web (WWW) through
the Technology Transfer Network
(TTN). A copy of the final amendments
will be placed on the TTN’s policy and
guidance page for newly proposed or
promulgated rules at https://
www.epa.gov/ttn/oarpg. The TTN
provides information and technology
exchange in various areas of air
pollution control.
I. Background
We promulgated the NESHAP for
primary copper smelting (40 CFR 63,
subpart QQQ) on June 12, 2002 (68 FR
40478). The final rule establishes
emissions limitations and work practice
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standards for primary copper smelters
that use batch copper converters and are
a major source of hazardous air
pollutant (HAP) emissions. We received
a petition (included in the docket for
today’s final amendments) asking us to
review the requirements for specific
operating parameters that must be
monitored when an owner or operator
uses a control device other than a
baghouse (fabric filter) or a venturi wet
scrubber to comply with the rule. Upon
review of the monitoring requirements
in subpart QQQ, we discovered an error
in the regulatory language for the final
rule that references the operating
parameters to be monitored when a
control device other than a baghouse or
a venturi wet scrubber is used.
If an owner or operator of a primary
copper smelter elects to use a control
device other than a baghouse or venturi
wet scrubber for an emissions source
subject to a particulate emissions limit
under the final rule (e.g., use an
electrostatic precipitator), the rule
requires that the owner or operator
continuously monitor and record
appropriate operating parameters for the
type of control device used to
demonstrate compliance with the
applicable emissions standard. In such
cases, the final rule does not specify the
individual operating parameters that
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must be monitored. Instead, the owner
or operator is required to select specific
operating parameters appropriate for the
control device design that the owner or
operator determines to be a
representative and reliable indicator of
the control device performance. During
the initial performance test that the
owner or operator conducts to
demonstrate compliance with the
applicable emissions standard,
operating limits for each of the selected
operating parameters are established on
a site-specific basis using the actual
operating values for the control device
recorded while the performance test is
conducted. Continuous compliance
with the emissions standard is
demonstrated by maintaining the
selected operating parameters within
the operating limits established during
the performance test.
Under the monitoring requirements
for control devices other than baghouses
or venturi wet scrubbers in 40 CFR
63.1452(d) and 40 CFR 63.1453(e),
language referencing the operating
parameters for venturi wet scrubbers
(i.e., hourly average pressure drop and
water flow) was incorrectly included in
these paragraphs. In place of the
reference to venturi wet scrubbers, the
rule language in 40 CFR 63.1452(d) and
40 CFR 63.1453(e) should implement
E:\FR\FM\14JYR1.SGM
14JYR1
]]>Agencies
[Federal Register Volume 70, Number 134 (Thursday, July 14, 2005)]
[Rules and Regulations]
[Pages 40669-40672]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-13801]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9213]
RIN 1545-AV01
Return of Property in Certain Cases
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulation.
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SUMMARY: This document contains final regulations that amend
regulations under section 6343 of the Internal Revenue Code (Code)
relating to the return of property in certain cases. The regulations
reflect changes made to section 6343 of the Code by the Taxpayer Bill
of Rights 2. The regulations also reflect changes affecting levies
enacted by the Internal Revenue Service Restructuring and Reform Act of
1998. The regulations affect taxpayers seeking the return of levied
property from the Internal Revenue Service (IRS).
[[Page 40670]]
DATES: Effective Date: These regulations are effective July 14, 2005.
Applicability Date: For dates of applicability, see Sec. 301.6343-
3(k).
FOR FURTHER INFORMATION CONTACT: Kevin B. Connelly, (202) 622-3630 (not
a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Procedure and
Administration Regulations (26 CFR part 301) relating to the return of
property under section 6343 of the Code. Section 501(b) of the Taxpayer
Bill of Rights 2 (TBOR2), Public Law 104-168 (110 Stat. 1452), amended
section 6343 to authorize the IRS to return levied property in certain
cases. The purpose of this provision is, to the extent possible, to
return the taxpayer to the position the taxpayer would have been in had
the levy not been issued. No interest shall be paid with respect to
property returned to the taxpayer under this provision. These final
regulations reflect the amendments made by section 501(b) of TBOR2.
These regulations also reflect amendments made by the Internal
Revenue Service Restructuring and Reform Act (RRA 1998), Public Law
105-206 (112 Stat. 685), which added new sections 6331(i) and (j) to
the Code to provide that no levy may be made during the pendency of
proceedings for refund of divisible taxes or prior to completion of an
investigation of the status of property that is to be sold under
section 6335. RRA 1998 also added section 6331(k) to the Code, which
provides that no levy may be made during the period an offer-in-
compromise or an installment agreement is pending or in effect. In
addition, RRA 1998 added section 6330, which provides in certain
circumstances for notice and an opportunity for a hearing before a levy
can be made.
Explanation of Provisions
On February 14, 2001, a notice of proposed rulemaking (REG-101520-
97) reflecting these changes was published in the Federal Register (66
FR 10249). No written comments were received in response to the notice
of proposed rulemaking and no public hearing was requested, scheduled
or held. These final regulations adopt the provisions of the notice of
proposed rulemaking without change.
Comments on the Proposed Regulation
None.
Modifications of Proposed Regulation
None.
Special Analyses
It has been determined that this final regulation 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) 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 Code, the preceding notice of proposed rulemaking 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 Kevin B. Connelly,
Office of Associate Chief Counsel (Procedure and Administration),
Collection Bankruptcy & Summons Division, CC:PA:CBS, IRS.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 301 is amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
Paragraph 1. The authority citation for part 301 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 301.6343-3 is added to read as follows:
Sec. 301.6343-3 Return of property in certain cases.
(a) In general. If money has been levied upon and applied toward
the taxpayer's liability, or property has been levied upon and sold,
and the receipts have been applied toward the taxpayer's liability, or
property has been levied upon and purchased by the United States and
the United States still possesses the property, and the Commissioner
determines that any of the conditions in paragraph (c) of this section
exist, the Commissioner may return--
(1) An amount of money equal to the amount of money levied upon;
(2) An amount of money equal to the amount of money received by the
United States from a sale of the property; or
(3) The specific property levied upon and purchased by the United
States.
(b) Return of levied upon property in possession of the Internal
Revenue Service (IRS) pending sale under section 6335. Other than as
provided in Sec. 301.6343-1(b) or in paragraph (d) of this section,
the Commissioner, in his or her discretion, may return levied upon
property that is in the possession of the United States pending sale
under section 6335.
(c) Conditions authorizing the return of property. The Commissioner
may return property upon determining that one of the following
conditions exist:
(1) Premature or not in accordance with administrative procedures.
The levy was premature or otherwise not in accordance with the
administrative procedures of the Secretary.
(2) Installment agreement. Subsequent to the levy, the taxpayer
enters into an agreement under section 6159 to satisfy the liability
for which the levy was made by means of installment payments. If,
however, the agreement specifically provides that already levied upon
property will not be returned under section 6343(d), the Commissioner
may not grant a request for return of property under this paragraph
(c)(2).
(3) Facilitate collection. The return of property will facilitate
the collection of the tax liability for which the levy was made.
(4) Best interests of the United States and the taxpayer--(i) In
general. The taxpayer or the National Taxpayer Advocate (or his or her
delegate) has consented to the return of property, and the return of
property would be in the best interest of the taxpayer, as determined
by the National Taxpayer Advocate (or his or her delegate), and in the
best interest of the United States, as determined by the Commissioner.
(ii) Best interest of the taxpayer. The National Taxpayer Advocate
(or his or her delegate) generally will determine whether the return of
property is in the best interest of the taxpayer. If, however, a
taxpayer requests the Commissioner to return property and has not
specifically requested the National Taxpayer Advocate (or his or her
delegate) to determine the taxpayer's best interest, a finding by the
Commissioner that the return of property is in the best interest of the
taxpayer will be sufficient to support the return of property. Only the
National Taxpayer Advocate (or his or her delegate) may determine that
a return of property is not in the best interest of the taxpayer.
[[Page 40671]]
(5) Examples. The following examples illustrate the provisions of
this paragraph (c):
Example 1. A owes $1,000 in Federal income taxes. The IRS levies
on a broker with respect to a money market account belonging to the
taxpayer and receives payment from the broker which it applies to
the taxpayer's outstanding liability. However, the IRS failed to
follow procedure provided by the Internal Revenue Manual (but not
required by statute) with regard to managerial approval prior to the
making of the levy. The Commissioner may return an amount of money
equal to the amount of money the IRS levied upon and applied toward
the taxpayer's tax liability.
Example 2. B owes $1,000 in Federal income taxes. The IRS levies
on a bank with respect to a savings account belonging to the
taxpayer and receives funds from the bank, which it applies to the
taxpayer's liability. Subsequent to the levy, B enters into an
installment agreement, under which B will pay timely installments to
satisfy the entire liability. The installment agreement does not by
its terms preclude the return of levied upon property. The revenue
officer verifies that B is financially capable of paying the entire
liability, including accruals, in the agreed-upon installment
payments. The Commissioner may return an amount of money equal to
the amount of money levied upon and applied toward the taxpayer's
liability.
Example 3. C owns a house that is deteriorating and in unsalable
condition. C is in the process of renovating the house for sale when
the IRS levies upon C's bank account for the payment of a $20,000
outstanding Federal tax liability and receives funds in the amount
of $3,000, which it applies toward C's liability. A notice of
federal tax lien is the only lien encumbrancing the house. C
requests that an amount of money equal to the amount seized from the
bank account be returned so that C can complete the renovations on
the house. Without the funds, C will be unable to complete the
renovations and sell the house. Upon examination, the Commissioner
determines that the IRS will be able to collect the entire tax
liability if C's house is restored to salable condition. If the
National Taxpayer Advocate, or the Commissioner in lieu of the
National Taxpayer Advocate, determines that the return of the seized
money is in the taxpayer's best interest, the Commissioner may
return an amount of money equal to the amount seized from the bank
account, in the best interest of the taxpayer and the United States.
(d) Best Interests of the United States and the taxpayer to release
levy and return of property where levy made in violation of law--(1) In
general. If the IRS makes a levy in violation of the law, it is in the
best interests of the United States and the taxpayer to release the
levy and the IRS will return to the taxpayer any property obtained
pursuant to the levy. For example, the IRS will release the levy and
return the taxpayer's property if the levy was made--
(i) Without giving the requisite thirty-day notice of the right to
a hearing under section 6330;
(ii) During the pendency of a proceeding for refund of divisible
tax in violation of section 6331(i);
(iii) Before investigation of the status of levied upon property in
violation of section 6331(j);
(iv) During the pendency of an offer-in-compromise in violation of
section 6331(k)(1); or
(v) During the period an offer to enter into an installment
agreement is pending (or for 30 days following the rejection of an
offer, or, if the rejection is timely appealed, during the period that
the appeal is pending) or during the period an installment agreement is
in effect (or during the 30 days following a termination or, if a
timely appeal of termination is filed, during the period the appeal is
pending) in violation of section 6331(k)(2).
(2) Property may not be credited to outstanding liability without
the taxpayer's permission. When the release of a levy and the return of
property are required under this paragraph (d), the property or the
proceeds from the sale of the property received by the IRS pursuant to
the levy must be returned to the taxpayer unless the taxpayer requests
otherwise. The property or proceeds of sale may not be credited to any
outstanding tax liability of the taxpayer, including the one with
respect to which the IRS made the levy, without the written permission
of the taxpayer.
(e) Time of return. Levied upon property in possession of the IRS
(other than money) may be returned under paragraphs (c) and (d) of this
section at any time. An amount of money equal to the amount of money
levied upon or received from a sale of property may be returned at any
time before the expiration of 9 months from the date of the levy. When
a request for the return of money filed in accordance with paragraph
(h) of this section is filed before the expiration of the 9-month
period, or a determination to return an amount of money is made before
the expiration of the 9-month period, the money may be returned within
a reasonable period of time after the expiration of the 9-month period
if additional time is necessary for investigation or processing.
(f) Purchase by the United States. For purposes of paragraph (a)(2)
of this section, if property is declared purchased by the United States
at a sale pursuant to section 6335(e)(1)(C), the United States will be
treated as having received an amount of money equal to the minimum
price determined by the Commissioner before the sale.
(g) Determinations by the Commissioner. The Commissioner must
determine whether any of the conditions authorizing the return of
property exists if a taxpayer submits a request for the return of
property in accordance with paragraph (h) of this section. The
Commissioner also may make this determination independently. If the
Commissioner determines that conditions authorizing the return of
property are not present, the Commissioner may not authorize the return
of property. If the Commissioner determines that conditions authorizing
the return of property are present, the Commissioner may (but is not
required to, unless the reason for the return of property is that the
levy was made in violation of law and is governed by paragraph (d) of
this section) authorize the return of property. If the Commissioner
decides independently to return property under paragraph (c)(4) of this
section based on the best interests of the taxpayer and the United
States, the taxpayer or the National Taxpayer Advocate (or his or her
delegate) must consent to the return of property.
(h) Procedures for request for the return of property--(1) Manner.
A request for the return of property must be made in writing to the
address on the levy form.
(2) Form. The written request must include the following
information--
(i) The name, current address, and taxpayer identification number
of the person requesting the return of money (or property purchased by
the United States);
(ii) A description of the property levied upon;
(iii) The date of the levy; and
(iv) A statement of the grounds upon which the return of money is
being requested (or property purchased by the United States).
(i) No interest. No interest will be paid on any money returned
under this section.
(j) Administrative collection upon default. If the Commissioner
returns property under this section, and the taxpayer fails to pay the
previously assessed liability for which the levy was made on the
returned property, the Commissioner may administratively collect the
liability. Collection may include levying again on the returned
property as long as statutory and administrative requirements are
followed.
(k) Effective date. This section is applicable on July 14, 2005.
[[Page 40672]]
Approved: June 30, 2005.
Mark E. Matthews,
Deputy Commissioner for Services and Enforcement.
Eric Solomon,
Acting Deputy Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 05-13801 Filed 7-13-05; 8:45 am]
BILLING CODE 4830-01-P
