[Federal Register Volume 60, Number 82 (Friday, April 28, 1995)]
[Rules and Regulations]
[Pages 20899-20900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10410]



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DEPARTMENT OF THE TREASURY
26 CFR Part 301

[TD 8595]
RIN 1545-AI24


Payment of Internal Revenue Tax by Check or Money Order and 
Liability of Financial Institutions for Unpaid Taxes

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations regarding payments 
with respect to internal revenue taxes and internal revenue stamps by 
check or money order. Changes to the applicable tax law were made by 
the Tax Reform Act of 1984 (TRA). The amendments, which are intended to 
conform the regulations to the change in the statute, apply to persons 
making payments with respect to internal revenue taxes or stamps by 
check or money order and to financial institutions that issue or 
guarantee payment of checks or money orders.

EFFECTIVE DATE: August 19, 1994.

FOR FURTHER INFORMATION CONTACT: Robert A. Walker, 202-622-3640 (not a 
toll-free call).

SUPPLEMENTARY INFORMATION:

Background

    These final regulations contain changes to Sec. 301.6311-1 to 
reflect amendments made to section 6311 by section 448(a) of the Tax 
Reform Act of 1984, Pub. L. 98-369 (TRA). The IRS published a notice of 
proposed rulemaking in the Federal Register on August 22, 1994, (59 FR 
43073) providing proposed rules under section 6311 of the Internal 
Revenue Code (Code). No public comments were received, and the final 
regulations are identical to the proposed regulations.

Explanation of Provisions

    Section 6311(a) of the Code provides that the IRS may receive for 
internal revenue taxes, or in payment for internal revenue stamps, 
checks or money orders, to the extent and under the conditions 
specified in the regulations. The regulations relating to payment by 
check refer only to checks drawn on a domestic bank or trust company.
    If money orders or certain kinds of checks tendered in payment are 
not duly paid, then section 6311(b)(2) provides the United States with 
a lien against all the assets of the drawee or issuer for the amount of 
the check or money order. Before its amendment, this rule applied, in 
the case of checks, only with respect to certified, treasurer's or 
cashier's checks drawn on a bank or trust company. Section 448(a) of 
TRA expanded section 6311(b)(2) to include guaranteed drafts drawn on 
financial institutions other than banks and trust companies.
    The amendments to the regulations reflect the TRA change and 
clarify that payment may be made by check or draft drawn on any 
domestic financial institution. In addition, the regulations provide a 
definition of ``financial institution.'' Since the Bureau of Alcohol, 
Tobacco, and Firearms has issued, under 27 CFR, its own separate 
regulations governing payment by check or money order, provisions of 
these regulations referring to the Bureau of Alcohol, Tobacco, and 
Firearms have been removed.

Special Analyses

    It has been determined that this Treasury Decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It has also been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to 
these regulations, and, therefore, a Regulatory Flexibility Analysis is 
not required. Pursuant to section 7805(f) of the Internal Revenue Code, 
the notice of proposed rulemaking 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 final regulations is Robert A. 
Walker, Office of Assistant Chief Counsel (General Litigation). 
However, other personnel from 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 citation for part 301 continues to read 
in part as follows:

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

    Par. 2. Section 301.6311-1 is amended by:

1. Revising the first, second, and last sentences of paragraph 
(a)(1)(i).
2. Revising paragraph (a)(2).
3. Removing paragraph (a)(3).
4. Revising paragraph (b).
5. Adding paragraphs (d) and (e).

    The additions and revisions read as follows:


Sec. 301.6311-1  Payment by check or money order.

    (a) * * *
    (1) * * *
    (i) District directors, Service Center directors, and Compliance 
Center directors (director) may accept checks or drafts drawn on any 
financial institution incorporated under the laws of the United States 
or under the laws of any State, the District of Columbia, or any 
possession of the United States, or money orders in payment for 
internal revenue taxes, provided the checks, drafts, or money orders 
are collectible in United States currency at par, and subject to the 
further provisions contained in this section. The director may accept 
the checks, drafts, or money orders in payment for internal revenue 
stamps to the extent and under the conditions prescribed in paragraph 
(a)(2) of this section. * * * However, the director may refuse to 
accept any personal check whenever he or she has good reason to believe 
that such check will not be honored upon presentment.
* * * * * [[Page 20900]] 
    (2) Payment for internal revenue stamps. The director may accept 
checks, drafts, and money orders described in paragraph (a)(1) of this 
section in payment for internal revenue stamps. However, the director 
may refuse to accept any personal check whenever he or she has good 
reason to believe that such check will not be honored upon presentment.
    (b) Checks or money orders not paid--(1) Ultimate liability. The 
person who tenders any check (whether certified or uncertified, 
cashier's, treasurer's, or other form of check or draft) or money order 
in payment for taxes or stamps is not released from his or her 
liability until the check, draft, or money order is paid; and, if the 
check, draft, or money order is not duly paid, the person shall also be 
liable for all legal penalties and additions, to the same extent as if 
such check, draft, or money order had not been tendered.
    (2) Liability of financial institutions and others. If any 
certified, treasurer's, or cashier's check, or other guaranteed draft, 
or money order, is not duly paid, the United States shall have a lien 
for the amount of such check or draft upon all assets of the financial 
institution on which drawn, or for the amount of such money order upon 
the assets of the issuer thereof. The unpaid amount shall be paid out 
of such assets in preference to any other claims against such financial 
institution or issuer except the necessary costs and expenses of 
administration and the reimbursement of the United States for the 
amount expended in the redemption of the circulating notes of such 
financial institution. In addition, the Government has the right to 
exact payment from the person required to make the payment.
* * * * *
    (d) Financial institution. For purposes of section 6311 and this 
section, financial institution includes but is not limited to--
    (1) A bank or trust company (as defined in section 581);
    (2) A domestic building and loan association (as defined in section 
7701(a)(19));
    (3) A mutual savings bank (including but not limited to a mutual 
savings bank as defined in section 591(b));
    (4) A credit union (including both state and federal credit unions, 
and including but not limited to a credit union as defined in section 
501(c)(14)); and
    (5) A regulated investment company (as defined in section 851(a)).
Margaret Milner Richardson,
Commissioner of Internal Revenue.

    Approved: April 5, 1995.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 95-10410 Filed 4-27-95; 8:45 am]
BILLING CODE 4830-01-U