Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Rules and Regulations 33

163(e)(5), because the corporate partner

would deduct its distributive share of the

interest on obligations that would have been

deferred until paid or disallowed had the

corporation issued its share of the obligation

directly. Thus, under paragraph (e)(1) of this

section, PRS is properly treated as an

aggregate of its partners for purposes of

applying section 163(e)(5) (regardless of

whether any party had a tax avoidance

purpose in having PRS issue the obligation).

Each partner of PRS will therefore be treated

as issuing its share of the obligations for

purposes of determining the deductibility of

its distributive share of any interest on the

obligations. See also section 163(i)(5)(B).

Example 2. Aggregate treatment of

partnership appropriate to carry out purpose

of section 1059. (i) Corporations X and Y are

partners in partnership PRS, which for

several years has engaged in substantial bona

fide business activities. As part of these

business activities, PRS purchases 50 shares

of Corporation Z common stock. Six months

later, Corporation Z announces an

extraordinary dividend (within the meaning

of section 1059). Section 1059(a) generally

provides that if any corporation receives an

extraordinary dividend with respect to any

share of stock and the corporation has not

held the stock for more than two years before

the dividend announcement date, the basis in

the stock held by the corporation is reduced

by the nontaxed portion of the dividend.

PRS, X, and Y take the position that section

1059(a) is not applicable because PRS is a

partnership and not a corporation.

(ii) Section 1059(a) does not prescribe the

treatment of a partnership as an entity for

purposes of that section. The purpose of

section 1059(a) is to limit the benefits of the

dividends received deduction with respect to

extraordinary dividends. The treatment of

PRS as an entity could result in corporate

partners in the partnership receiving

dividends through partnerships in

circumvention of the intent of section 1059.

Thus, under paragraph (e)(1) of this section,

PRS is properly treated as an aggregate of its

partners for purposes of applying section

1059 (regardless of whether any party had a

tax avoidance purpose in acquiring the Z

stock through PRS). Each partner of PRS will

therefore be treated as owning its share of the

stock. Accordingly, PRS must make

appropriate adjustments to the basis of the

corporation Z stock, and the partners must

also make adjustments to the basis in their

respective interests in PRS under section

705(a)(2)(B). See also section 1059(g)(1).

Example 3. Prescribed entity treatment of

partnership; determination of CFC status

clearly contemplated. (i) X, a domestic

corporation, and Y, a foreign corporation,

intend to conduct a joint venture in foreign

Country A. They form PRS, a bona fide

domestic general partnership in which X

owns a 40% interest and Y owns a 60%

interest. PRS is properly classified as a

partnership under §§ 301.7701–2 and

301.7701–3. PRS holds 100% of the voting

stock of Z, a Country A entity that is

classified as an association taxable as a

corporation for federal tax purposes under

§ 301.7701–2. Z conducts its business

operations in Country A. By investing in Z

through a domestic partnership, X seeks to

obtain the benefit of the look-through rules

of section 904(d)(3) and, as a result,

maximize its ability to claim credits for its

proper share of Country A taxes expected to

be incurred by Z.

(ii) Pursuant to sections 957(c) and

7701(a)(30), PRS is a United States person.

Therefore, because it owns 10% or more of

the voting stock of Z, PRS satisfies the

definition of a U.S. shareholder under section

951(b). Under section 957(a), Z is a

controlled foreign corporation (CFC) because

more than 50% of the voting power or value

of its stock is owned by PRS. Consequently,

under section 904(d)(3), X qualifies for lookthrough treatment in computing its credit for

foreign taxes paid or accrued by Z. In

contrast, if X and Y owned their interests in

Z directly, Z would not be a CFC because

only 40% of its stock would be owned by

U.S. shareholders. X’s credit for foreign taxes

paid or accrued by Z in that case would be

subject to a separate foreign tax credit

limitation for dividends from Z, a

noncontrolled section 902 corporation. See

section 904(d)(1)(E) and § 1.904–4(g).

(iii) Sections 957(c) and 7701(a)(30)

prescribe the treatment of a domestic

partnership as an entity for purposes of

defining a U.S. shareholder, and thus, for

purposes of determining whether a foreign

corporation is a CFC. The CFC rules prevent

the deferral by U.S. shareholders of U.S.

taxation of certain earnings of the CFC and

reduce disparities that otherwise might occur

between the amount of income subject to a

particular foreign tax credit limitation when

a taxpayer earns income abroad directly

rather than indirectly through a CFC. The

application of the look-through rules for

foreign tax credit purposes is appropriately

tied to CFC status. See sections 904(d)(2)(E)

and 904(d)(3). This analysis confirms that

Congress clearly contemplated that taxpayers

could use a bona fide domestic partnership

to subject themselves to the CFC regime, and

the resulting application of the look-through

rules of section 904(d)(3). Accordingly, under

paragraph (e) of this section, the

Commissioner cannot treat PRS as an

aggregate of its partners for purposes of

determining X’s foreign tax credit limitation.

(g) Effective date. Paragraphs (a), (b),

(c), and (d) of this section are effective

for all transactions involving a

partnership that occur on or after May

12, 1994. Paragraphs (e) and (f) of this

section are effective for all transactions

involving a partnership that occur on or

after December 29, 1994.

(h) Application of nonstatutory

principles and other statutory

authorities. The Commissioner can

continue to assert and to rely upon

applicable nonstatutory principles and

other statutory and regulatory

authorities to challenge transactions.

This section does not limit the

applicability of those principles and

authorities.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: December 20, 1994.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 94–32331 Filed 12–29–94; 8:45 am]

BILLING CODE 4830–01–U

26 CFR Part 301

[TD 8587]

RIN 1545–AN48

Authority to Release Levy and Return

Property

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations regarding the authority to

release a levy and to return property.

The Technical and Miscellaneous

Revenue Act of 1988 sets forth certain

conditions under which the IRS must

release a levy. In addition, the Internal

Revenue Code was amended in 1979 to

provide for the payment of interest in

certain circumstances in which

wrongfully levied upon property is

returned. These final regulations

describe the conditions under which a

levy will be released and the procedures

for obtaining such a release. Lastly,

these final regulations also conform the

existing regulations regarding the return

of wrongfully levied upon property to

provide for the payment of interest in

certain circumstances.

EFFECTIVE DATE: These regulations are

effective December 30, 1994.

FOR FURTHER INFORMATION CONTACT:

Jerome D. Sekula, 202–622–3640 (not a

toll-free call).

SUPPLEMENTARY INFORMATION:

Background

This document contains final

regulations amending the Procedure and

Administration Regulations (26 CFR

part 301) under section 6343 of the

Internal Revenue Code. These

regulations reflect the amendment of

section 6343 by section 6236(f) of the

Technical and Miscellaneous Revenue

Act of 1988 (Pub. L. 100–647), section

4(a) of Act of Dec. 29, 1979 (Pub. L. 96–

167), and section 1511(c)(10) of the Tax

Reform Act of 1986 (Pub. L. 99–514).

On October 16, 1991 a notice of

proposed rulemaking concerning the

authority to release and return property

was published in the Federal Register

(56 FR 51857). Written comments
34 Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Rules and Regulations

responding to this notice were received.

No public hearing was requested or

held. After consideration of all the

comments, the proposed regulations

under section 6343 are adopted as

revised by this Treasury decision.

Explanation of Revisions and Summary

of Comments

The notice of proposed rulemaking

provided different rules with respect to

levies made prior to July 1, 1989, and

levies made on or after that date. It was

decided that separate rules concerning

levies made prior to July 1, 1989 are not

necessary. Accordingly, they have been

eliminated. These final regulations are

prospective in nature and are effective

as of December 30, 1994. In addition, for

ease of administration, it was decided

that the authority to release levies

should be extended by regulation to

service center and compliance center

directors. These final regulations has

been revised to confer this authority on

service center and compliance center

directors.

The written comments received made

several suggestions for changes to the

proposed regulations. The comments

suggested that the regulations provide

an appeal procedure for taxpayers when

a request for a release of levy is denied.

These final regulations do not adopt this

suggestion. A taxpayer who believes an

IRS employee is not properly applying

these regulations has the right to appeal

to that person’s supervisor. Thus, a

formal appeals procedure would add a

layer of bureaucracy to the process

while providing little or no benefit to

the taxpayer.

The comments also suggested revising

an example in the proposed regulations

governing when a levy may be released

to facilitate collection. The comment

suggested that the example provide that

a release of levy must be made if that

release would increase the fair market

value of the property (and, presumably,

the amount that would be bid) if the

taxpayer were to sell that property,

irrespective of whether the proceeds

from that sale would satisfy the

taxpayer’s outstanding federal tax

liabilities. This suggestion has been

adopted in modified form. The final

regulations provide that a levy may be

released even though the proceeds of

the sale would not fully satisfy the

taxpayer’s outstanding federal tax

liabilities, but only on a case by case

basis at the discretion of a district

director. The IRS is not required to

release a levy merely because a taxpayer

alleges that a sale by the taxpayer would

produce a higher bid than if the sale

were made by the IRS.

Another suggestion was that the

regulations provide an example of

situations where the fair market value of

the property exceeds the liability for

which the levy was made and the

release of levy can be made on only a

part of a taxpayer’s property without

hindering the collection of the liability.

This suggestion has been adopted in the

final regulations.

The comments suggested that an

example be given of ‘‘essential business

property’’ qualifying for expedited

determination of whether a levy should

be released. The issue of what

constitutes ‘‘essential business

property’’ will necessarily turn on the

unique facts of an individual case. An

item of property that may be essential to

the carrying on of one business may not

be essential in the carrying on of

another business. Thus, any example

given in the regulations could not

provide specific guidance as to what

specific items of property would be

considered essential in all cases.

Conversely, any example given in the

regulations could be erroneously

construed as requiring a certain fact

pattern or degree of effect on the

operation of a business that would not

be necessary in all cases in order for a

specific item of property to be

considered ‘‘essential business

property.’’ Accordingly, this suggestion

has not been adopted in these final

regulations.

The comments also suggested that the

final regulations require a district

director to return the specific property

levied upon if it is still in the possession

of the United States Government. This

suggestion was adopted in part. It is the

practice of the IRS, generally, to return

specific property still in its possession

to its rightful owner if the property has

been wrongfully seized. However, this

general rule is not appropriate in all

cases. For instance, the property seized

may be found to include items which

may be illegal under State or Federal

law. This type of property will not be

returned to its owner. The final

regulations indicate that the IRS will

normally return specific property in its

possession when that property has been

wrongfully levied upon.

Another suggestion was that the

proposed regulations be revised to

require the IRS to return property

within 10 days after it is determined

that such property was wrongfully

levied upon. This suggestion is not

adopted in these final regulations.

Although section 6343 does not

mandate a time period within which the

property must be returned, property is

normally returned as expeditiously as

possible. There do occur, however,

situations where conflicting claims are

made for the return of wrongfully levied

upon property. Cases where conflicting

claims to the property are received

require greater time and, in some

instances, litigation to resolve who is

rightfully entitled to the return of the

property. A requirement that the IRS

return property in 10 days in all cases

could adversely affect the rights of other

claimants to the property and would not

benefit either those claimants or the IRS.

The comments also suggested that

final regulations require a person

requesting the return of wrongfully

levied upon property to include a copy

of the levy itself if it is available. This

suggestion was not adopted in these

final regulations. Based on the

experience of the IRS, the actual

submission of a copy of the levy or

notice of levy has not been necessary.

Thus, the addition of a new requirement

for the submission of a copy of either of

those two forms in all cases could be

potentially burdensome for some

taxpayers and prove to be of no benefit

to the IRS.

It has also been suggested that the

proposed regulations be revised in order

to prevent a taxpayer from making a

request for a release of levy by

telephone because such requests lack

proper documentation and make it

difficult for the IRS to determine if the

taxpayer has complied with the

statutory provisions. The regulations

follow current IRS procedures and are

designed to provide the taxpayer with

the most expeditious method to initiate

a request for release. The regulations,

however, also provide that the IRS may

request any documentation necessary

before making a determination on

whether a condition requiring release

has been met. Thus, although the

request for a determination may be

made orally, the IRS is not required to

make the determination based on

insufficient information.

Another comment interpreted the

proposed regulations as creating an

inconsistency in that a request for

release of property, in ordinary

circumstances, could be made as little

as six days prior to a scheduled sale of

that property, while the IRS was

generally allowed up to 30 days to make

a determination concerning a request for

release. The commentator indicated its

belief that these two rules could be read

to allow a sale to take place without a

determination being made concerning a

request for release.

The commentator’s concern is

unfounded. The period between the

date of seizure and the date notice of

sale is given is used by the IRS to

determine whether the property seized
Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Rules and Regulations 35

should be sold or released. This

determination is made whether or not a

request for release has been received.

Because this initial determination

concerning sale or the possible release

of the levy is made prior to the issuance

of the notice of sale, a subsequent

determination in response to an actual

request for release of levy made by a

taxpayer can be accomplished, in most

of these cases, prior to the scheduled

sale date if at least five days remain

prior to the sale date. It is only in

unusual cases where a determination

cannot be made prior to the date of the

scheduled sale if a request for release is

made more than five days prior to the

scheduled sale date. In those cases, the

sale is postponed, but a determination is

normally made within 30 days of the

date of the request for release.

To clarify this issue, however, these

final regulations have been revised to

state that if a request for release is made

more than five days prior to a scheduled

sale, the IRS is to make a determination

on any request for release of property

before that property can be sold. In

addition, the final regulations state that

the IRS is not required to consider a

request for release or an expedited

determination made within five or fewer

days prior to a scheduled sale. The IRS

has the discretion, however, to consider

such requests.

In § 301.6343–1(b)(3) of these final

regulations, the phrase ‘‘there is an

intervening judgment lien creditor’’ has

been added to the example indicating

when the IRS is not required to release

a levy when an installment agreement

has been entered into if the release will

jeopardize the secured status of the

United States. The final regulations also

clarify that the lack of a filed notice of

federal tax lien does not by itself

warrant a finding that the secured status

of the United States is jeopardized in all

situations where no notice of such tax

lien has been filed. Finally, the final

regulations provide that, for the

purposes of determining a reasonable

amount for basic living expenses, a

taxpayer may furnish, and the IRS may

consider, information concerning his or

her current employment status, as well

as past employment history.

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 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 notice

of proposed rulemaking was submitted

to the Small Business Administration

for comment on its impact on small

business.

Drafting Information

The principal author of these final

regulations is Jerome D. Sekula, Office

of the Assistant Chief Counsel (General

Litigation), IRS. However, personnel

from other offices of the IRS and

Treasury Department participated in

their development.

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:

PART 301—PROCEDURE AND

ADMINISTRATION

Paragraph 1. The authority for part

301 is amended by adding entries to

read as follows:

Authority: 26 U.S.C. 7805 * * *

Section 301.6343–1 also issued under 26

U.S.C. 6343.

Section 301.6343–2 also issued under 26

U.S.C. 6343 * * *

Par. 2. Section 301.6343–1 is revised

to read as follows:

§ 301.6343–1 Requirement to release levy

and notice of release.

(a) In general. A district director,

service center director, or compliance

center director (director) must promptly

release a levy upon all, or part of,

property or rights to property levied

upon and must promptly notify the

person upon whom the levy was made

of such a release, if the director

determines that any of the conditions in

paragraph (b) of this section (conditions

requiring release) exist. The director

must make a determination whether any

of the conditions requiring release exist

if a taxpayer submits a request for

release of levy in accordance with

paragraph (c) or (d) of this section;

however, the director may make this

determination based upon information

received from a source other than the

taxpayer. The director may require any

supporting documentation as is

reasonably necessary to determine

whether a condition requiring release

exists.

(b) Conditions requiring release. The

director must release the levy upon all

or a part of the property or rights to

property levied upon if he or she

determines that one of the following

conditions exists—

(1) Liability satisfied or

unenforceable—(i) General rule. The

liability for which the levy was made is

satisfied or the period of limitations

provided in section 6502 (and any

period during which the period of

limitations is suspended as provided by

law) has lapsed. A levy is considered

made on the date on which the notice

of seizure provided in section 6335(a) is

given. A levy that is made within the

period of limitations provided in section

6502 does not become unenforceable

simply because the person who receives

the levy does not surrender the subject

property within the period of

limitations. In this case, the liability

remains enforceable to the extent of the

value of the levied upon property.

However, a levy made outside the

period of limitations (normally ten years

without suspensions) must be released

unless—

(A) The taxpayer agreed in writing to

extend the period of limitations as

provided in section 6502(a)(2) and

§ 301.6502–1; or

(B) A proceeding in court to collect

the liability has begun within the period

of limitations.

(ii) Special situations. A continuing

levy on salary or wages made under

section 6331(e) must be released at the

end of the period of limitations in

section 6502. However, a levy on a fixed

and determinable right to payment

which right includes payments to be

made after the period of limitations

expires does not become unenforceable

upon the expiration of the period of

limitations and will not be released

under this condition unless the liability

is satisfied.

(2) Release will facilitate collection.

The release of the levy will facilitate

collection of the liability. A director has

the discretion to release the levy in all

situations, including those where the

proceeds from the sale will not fully

satisfy the tax liabilities of the taxpayer,

under terms and conditions as he or she

determines are warranted.

(i) Example. The following example

illustrates the provisions of this

paragraph (b)(2):

Example. A and B each own machines

which, when used together, produce widgets.

A owes delinquent federal taxes. A notice of

federal tax lien is properly filed against all

property or rights to property belonging to A.

A’s machine is seized to satisfy A’s

delinquent tax liability. The fair market value

of A’s property is greater than the expenses

of seizure and sale, but less than the amount

of A’s tax liability. A and B find a buyer who
36 Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Rules and Regulations

wants to buy both machines together. The

buyer will only buy the machines together.

A’s property has a greater value as part of the

package than it does by itself. The larger

value, as shown in the sale contract, is

enough to pay A’s tax liability in full. In this

situation a release of the levy will facilitate

collection because the sale of both machines

can be completed and A’s liability will be

paid in full at the settlement.

(ii) Compliance with other conditions.

The director may find that collection

will be facilitated by the taxpayer’s

compliance with conditions other than

immediate payment, such as:

(A) The delinquent taxpayer delivers

a satisfactory arrangement, which is

accepted by the director, for placing

property in escrow to secure the

payment of the liability (including the

expenses of the levy) which is the basis

of the levy.

(B) The delinquent taxpayer delivers

an acceptable bond to the director

conditioned upon the payment of the

liability (including the expenses of levy)

which is the basis of the levy. This bond

shall be in the form provided in section

7101 and § 301.7101–1.

(C) There is paid to the director an

amount determined by the director to be

equal to the interest of the United States

in the seized property or the part of the

seized property to be released.

(D) The delinquent taxpayer executes

an agreement to extend the statute of

limitations in accordance with section

6502(a)(2) and § 301.6502–1.

(iii) Expenses of sale exceed the

government’s interest. If the director

determines that the value of the United

States’ interest in the seized property

does not exceed the expenses of sale of

the property, a release of the levy will

be deemed to facilitate collection of the

liability even though the fair market

value of property which has been seized

exceeds the expenses of seizure and

sale.

(3) Installment agreement. The

taxpayer has entered into an agreement

under section 6159 to satisfy the

liability by means of installment

payments, unless the agreement

provides otherwise. However, the

director is not required to release the

levy under this condition if a release of

the levy will jeopardize the secured

creditor status of the United States, e.g.,

where there is an intervening judgment

lien creditor and a notice of tax lien has

not been filed.

(4) Economic hardship—(i) General

rule. The levy is creating an economic

hardship due to the financial condition

of an individual taxpayer. This

condition applies if satisfaction of the

levy in whole or in part will cause an

individual taxpayer to be unable to pay

his or her reasonable basic living

expenses. The determination of a

reasonable amount for basic living

expenses will be made by the director

and will vary according to the unique

circumstances of the individual

taxpayer. Unique circumstances,

however, do not include the

maintenance of an affluent or luxurious

standard of living.

(ii) Information from taxpayer. In

determining a reasonable amount for

basic living expenses the director will

consider any information provided by

the taxpayer including—

(A) The taxpayer’s age, employment

status and history, ability to earn,

number of dependents, and status as a

dependent of someone else;

(B) The amount reasonably necessary

for food, clothing, housing (including

utilities, home-owner insurance, homeowner dues, and the like), medical

expenses (including health insurance),

transportation, current tax payments

(including federal, state, and local),

alimony, child support, or other courtordered payments, and expenses

necessary to the taxpayer’s production

of income (such as dues for a trade

union or professional organization, or

child care payments which allow the

taxpayer to be gainfully employed);

(C) The cost of living in the

geographic area in which the taxpayer

resides;

(D) The amount of property exempt

from levy which is available to pay the

taxpayer’s expenses;

(E) Any extraordinary circumstances

such as special education expenses, a

medical catastrophe, or natural disaster;

and

(F) Any other factor that the taxpayer

claims bears on economic hardship and

brings to the attention of the director.

(iii) Good faith requirement. In

addition, in order to obtain a release of

a levy under this subparagraph, the

taxpayer must act in good faith.

Examples of failure to act in good faith

include, but are not limited to, falsifying

financial information, inflating actual

expenses or costs, or failing to make full

disclosure of assets.

(5) Fair market value exceeds liability.

The fair market value of the property

exceeds the liability for which the levy

was made and release of the levy on a

part of the property can be made

without hindering the collection of the

liability. The following example

illustrates the provisions of this

paragraph (b)(5):

Example. The Internal Revenue Service

levies upon ten widgets which belong to the

taxpayer to satisfy the taxpayer’s outstanding

tax liabilities. Subsequent to the levy, the

taxpayer establishes that market conditions

have increased the aggregate fair market

value of widgets so that the value of seven

widgets equals the aggregate anticipated

expenses of sale and seizure and the tax

liabilities for which the levy was made. The

director must release three widgets from the

levy and return them to the taxpayer.

(c) Request for release of levy—(1)

Information to be submitted by

taxpayer. A taxpayer who wishes to

obtain a release of a levy must submit

a request for release in writing or by

telephone to the district director for the

Internal Revenue district in which the

levy was made. The taxpayer making

the request must provide the following

information—

(i) The name, address, and taxpayer

identification number of the taxpayer;

(ii) A description of the property

levied upon;

(iii) The type of tax and the period for

which the tax is due;

(iv) The date of the levy and the

originating Internal Revenue district, if

known; and

(v) A statement of the grounds upon

which the request for release of the levy

is based.

(2) Time for submission. Except in

extraordinary circumstances, a request

for release of a levy must be made more

than five days prior to a scheduled sale

of the property to which the levy relates.

(3) Determination by director—(i)

When required. The director must

promptly make a determination

concerning release prior to sale in all

cases where a request for release of a

levy is made except those where the

request for release is made five or fewer

days prior to a scheduled sale of the

property to which the levy relates.

(ii) Time for making required

determination. The determination will

be made, generally, within 30 days of a

request for release made 30 or more

days prior to a scheduled sale of the

property to which the levy relates. If a

request for release is made less than 30

days prior to the scheduled sale but

more than 5 days before the scheduled

sale, a determination must be made

prior to the scheduled sale. If necessary

the director may postpone the

scheduled sale in order to make this

determination.

(iii) Discretionary determination. The

director has the discretion, but is not

required, to make a determination

concerning release prior to sale in cases

where a request for release of a levy is

made five or fewer days prior to a

scheduled sale of the property to which

the levy relates.

(4) Notification to taxpayer of

determination. The director must

promptly notify the taxpayer if the levy

is released. If the director determines
Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Rules and Regulations 37

that none of the conditions requiring

release of the levy exist, the director

must promptly notify the taxpayer of the

decision not to release the levy and the

reason why the levy is not being

released.

(d) Expedited determination with

respect to certain business property—(1)

General procedure—(i) Submission by

taxpayer. If a levy is made on essential

business property as is described in

paragraph (d)(2) of this section, the

taxpayer may obtain an expedited

determination of whether any of the

conditions requiring release of the levy

exist. In order to obtain an expedited

determination, the taxpayer must

submit, within the time frame specified

in paragraph (c)(2) of this section, the

information required in paragraph (c)(1)

of this section and include with the

information an explanation of why the

property levied upon qualifies for an

expedited determination of whether a

condition requiring release of the levy

exists.

(ii) Time for making required

determination. The director must make

such a determination by the later of 10

business days from the time the director

receives the request for release, or 10

business days from the time the director

receives any necessary supporting

documentation, if 10 or more business

days remain before a scheduled sale of

the property to which the levy relates.

An expedited determination concerning

release must be made prior to sale in all

cases where a request for release of a

levy is made within the time frame

specified in paragraph (c)(2) of this

section. If necessary the director may

postpone the scheduled sale in order to

make this determination.

(iii) Discretionary determination. The

director has the discretion, but is not

required, to make an expedited

determination concerning release in

cases where the taxpayer does not

submit, within the time frame specified

in paragraph (c)(2) of this section, the

information required in paragraph (c)(1)

of this section and include with the

information an explanation of why the

property levied upon qualifies for an

expedited determination of whether a

condition requiring release of the levy

exists.

(2) Essential business property

defined. For purposes of this section,

essential business property means

tangible personal property used in

carrying on the trade or business of the

taxpayer which when levied upon

prevents the taxpayer from continuing

to carry on the trade or business.

(3) Seizure of perishable goods. The

provisions of this paragraph do not

apply in the case of a seizure of

perishable goods. Those seizures are

governed by the provisions of section

6336 and § 301.6336–1.

(e) Effect of a release of levy. If

property has not yet been surrendered to

the director in response to a levy, a

release of the levy under section 6343(a)

will relieve the possessor of any

obligation to surrender the property.

Otherwise, a release of a levy under

section 6343(a) will cause the property

to be returned to the custody of the

person or persons legally entitled

thereto. The release of a levy on any

property under this section does not

prevent any subsequent levy on the

property. Section 301.6343–2, dealing

with return of wrongfully levied upon

property, is subject to section 6402

which prohibits the Internal Revenue

Service from refunding a payment of

money that has been deposited in the

Treasury and credited to the taxpayer’s

liability unless there is an overpayment.

(f) Effective date. This section is

effective as of December 30, 1994.

Par. 3. Section 301.6343–2 is added to

read as follows:

§ 301.6343–2 Return of wrongfully levied

upon property.

(a) Return of property—(1) General

rule. If the district director, service

center director, or compliance center

director (the director) determines that

property has been wrongfully levied

upon, the director may return—

(i) The specific property levied upon;

(ii) An amount of money equal to the

amount of money levied upon; or

(iii) An amount of money equal to the

amount of money received by the

United States from a sale of the

property.

(2) Time of return. 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 paragraph (b) of

this section 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.

(3) Specific property. In general the

specific property levied upon will be

returned whenever possible. For this

purpose, money that is specifically

identifiable, as in the case of a coin

collection which may be worth

substantially more than its face value, is

treated as specific property.

(4) Purchase by United States. For

purposes of paragraph (a)(1)(iii) of this

section, 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 director before

the sale or, if larger, the amount

received by the United States from the

resale of the property.

(b) Request for return of property. A

written request for the return of

property wrongfully levied upon must

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 must contain

the following information—

(1) The name and address of the

person submitting the request;

(2) A detailed description of the

property levied upon;

(3) A description of the claimant’s

basis for claiming an interest in the

property levied upon; and

(4) The name and address of the

taxpayer, the originating Internal

Revenue district, and the date of the

levy as shown on the notice of levy

form, or levy form, or, in lieu thereof,

a statement of the reasons why such

information cannot be furnished.

(c) Inadequate request. A request for

the return of property wrongfully levied

upon will not be considered adequate

unless it is a written request containing

the information required by paragraph

(b) of this section. However, unless a

notification is mailed by the director to

the claimant within 30 days of receipt

of the request to inform the claimant of

the inadequacies, any written request

will be considered adequate. If the

director timely notifies the claimant of

the inadequacies of his request, the

claimant has 30 days from the receipt of

the notification of inadequacy to supply

in writing any omitted information.

Where the omitted information is so

supplied within the 30-day period, the

request will be considered to be

adequate from the time the original

request was made for purposes of

determining the applicable period of

limitation upon suit under section

6532(c).

(d) Payment of interest. Interest is

paid at the overpayment rate established

under section 6621—

(1) In the case of money returned

under paragraph (a)(1)(ii) of this section,

from the date the director received the

money to a date (to be determined by

the director) preceding the date of

return by not more than 30 days; or

(2) In the case of money returned

under paragraph (a)(1)(iii) of this
38 Federal Register / Vol. 60, No. 1 / Tuesday, January 3, 1995 / Rules and Regulations

section, from the date of the sale of the

property to a date (to be determined by

the director) preceding the date of

return by not more than 30 days.

(e) Effective date. This section is

effective as of December 30, 1994.

Approved: December 13, 1994.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 94–31665 Filed 12–30–94; 8:45 am]

BILLING CODE 4830–01–U

DEPARTMENT OF JUSTICE

Federal Bureau of Investigation

28 CFR Part 16

[A.G. Order No. 1943–94]

Fee for Production of Identification

Record

AGENCY: Federal Bureau of

Investigation, Department of Justice.

ACTION: Final rule.

SUMMARY: The cost for production of a

Federal Bureau of Investigation (FBI)

identification record has increased from

$17 to $18. This final rule will permit

the FBI to increase the fee from $17 to

$18 for the production of identification

records for the subjects of such records.

EFFECTIVE DATE: February 2, 1995.

FOR FURTHER INFORMATION CONTACT:

Bennie F. Brewer, FBI, Criminal Justice

Information Services Division, Programs

Support Section, Washington, D.C.

20535, telephone number (202) 324–

2607.

SUPPLEMENTARY INFORMATION: A

proposed rule to increase the fee for the

production of identification records to

the subjects of such records was

published for notice and comment in

the Federal Register on August 29, 1994

(59 FR 44383). Interested persons were

allowed 30 days to submit comments on

the proposal. No comments were

received.

Departmental Order 556–73 (38 FR

32806, November 28, 1973) directed that

the FBI publish rules for dissemination

of arrest and conviction records upon

request. That order resulted from a

determination that 28 U.S.C. 534 does

not prohibit the subjects of arrest and

conviction records from having access

to those records. In accordance with the

Attorney General’s directive, the FBI has

been releasing copies of identification

records to the subjects of such records

upon submission of a written request, a

set of rolled-inked fingerprint

impressions, and the appropriate

processing fee. Based on current cost

analysis, the cost for production of an

FBI identification record has increased

from $17 to $18.

This regulation has been drafted and

reviewed in accordance with Executive

Order No. 12866, Section 1(b),

Principles of Regulation. The Attorney

General has determined that this rule is

not a ‘‘significant regulatory action’’

under Executive Order 12866, Section

3(f), Regulatory Planning and Review,

and accordingly this rule has not been

reviewed by the Office of Management

and Budget.

The Attorney General, in accordance

with the Regulatory Flexibility Act, 5

U.S.C. 605(b), has reviewed this

regulation and by approving it certifies

that this regulation will not have a

significant economic impact on a

substantial number of small entities.

List of Subjects in 28 CFR Part 16

Administrative practice and

procedure, Courts, Freedom of

Information, Privacy, and Sunshine Act.

By virtue of the authority vested in

me as Attorney General, including 28

U.S.C. 509 and 510, and 5 U.S.C. 301,

Part 16 of Title 28 of the CFR is

amended as follows:

PART 16—[AMENDED]

1. The authority citation for Part 16

continues to read as follows:

Authority: 5 U.S.C. 301, 552, 552a, 552b(g),

553; 18 U.S.C. 4203(a)(1); 28 U.S.C. 509, 510,

534; 31 U.S.C. 3717, 9701.

2. Section 16.33 is revised to read as

follows:

§ 16.33 Fee for production of identification

record.

Each written request for production of

an identification record must be

accompanied by a fee of $18 in the form

of a certified check or money order,

payable to the Treasury of the United

States. This fee is established pursuant

to the provisions of 31 U.S.C. 9701 and

is based upon the clerical time beyond

the first quarter hour to be spent in

searching for, identifying, and

reproducing each identification record

requested as specified in § 16.10. Any

request for waiver of the fee shall

accompany the original request for the

identification record and shall include a

claim and proof of indigency.

Dated: December 20, 1994.

Janet Reno,

Attorney General.

[FR Doc. 94–32197 Filed 12–30–94; 8:45 am]

BILLING CODE 4410–01–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[CA 96–1–6799a FRL–5130–9]

Approval and Promulgation of

Implementation Plans; California State

Implementation Plan Revision, Mojave

Desert Air Quality Management District

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of direct final

rulemaking.

SUMMARY: EPA is taking direct final

action on revisions to the California

State Implementation Plan. The

revisions concern negative declarations

from the Mojave Desert Air Quality

Management District (MDAQMD) for

two source categories that emit volatile

organic compounds (VOC): Natural Gas

or Gasoline Processing Equipment and

Chemical Processing and

Manufacturing. The MDAQMD has

certified that these source categories are

not present in the District and this

information is being added to the

federally approved State

Implementation Plan. The intended

effect of approving these negative

declarations is to meet the requirements

of the Clean Air Act, as amended in

1990 (CAA or the Act). In addition, the

final action on these negative

declarations serves as a final

determination that the finding of

nonsubmittal for these source categories

has been corrected and that on the

effective date of this action, any Federal

Implementation Plan (FIP) clock is

stopped. Thus, EPA is finalizing the

approval of these revisions into the

California SIP under provisions of the

CAA regarding EPA action on SIP

submittals, SIPs for national primary

and secondary ambient air quality

standards and plan requirements for

nonattainment areas.

EFFECTIVE DATE: This action is effective

on March 6, 1995 unless adverse or

critical comments are received by

February 2, 1995. If the effective date is

delayed, a timely notice will be

published in the Federal Register.

ADDRESSES: Copies of the submitted

negative declarations are available for

public inspection at EPA’s Region IX

office and also at the following locations

during normal business hours.

Rulemaking Section (A–5–3), Air and

Toxics Division, U.S. Environmental

Protection Agency, Region IX, 75

Hawthorne Street, San Francisco, CA

94105