An Act to amend the Internal Revenue Code of 1954 with respect to the priority and effect of Federal tax liens and levies, and for other purposes
PL 89-719 (H.R.11256), enacted 11/02/1966

Federal Tax 
Lien Act of 196f 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1125 
Public Law 89-719 
A N A C T 
November 2, 1966 
To amend the Internal Revenue Code of 1954 with respect to the priority and —CH. R. 11256]— 
effect of Federal tax liens and levies, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ 
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the "Federal Tax Lien 
Act of 1966". 
(b) AMENDMENT or 1954 CODE.—Except as otherwise expressly pro-
vided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1954. 
^SA stat. 3. 
^ 
26 use 1 et 
TITLE I—PRIORITY AND EFFECT OF TAX " 
LIENS AND LEVIES 
SEC. 101. PRIORITY OF LIENS. 
(a) AMENDMENT or SECTION 6323.—Section 6323 (relating to valid-
ity of tax liens against mortgagees, pledgees, purchasers, and judg-
ment creditors) is amended to read as follows: 
"SEC. 6323. VALIDITY AND PRIORITY AGAINST CERTAIN PERSONS. 
"(a) 
PURCHASES, HOLDERS or SECURITY INTERESTS. MECHANIC'S 
LIENORS, AND JUDGMENT LIEN CREDITORS.—The lien imposed by sec-
tion 6321 shall not be valid as against any purchaser, liolder of a 
security interest, mechanic's lienor, or judgment lien creditor until 
notice thereof which meets the requirements of subsection (f) has 
been filed by the Secretary or his delegate. 
"(b) PROTECTION FOR CERTAIN INTERESTS EVEN THOUGH NOTICE 
FILED.—Even though notice of a lien imposed by section 6321 has been 
filed, such lien shall not be valid— 
" (1) SECURITIES.—^With respect to a security (as defined in sub-
section (h) (4)) — 
"(A) as against a purchaser of such security who at the 
time of purchase did not have actual notice or knowledge 
of the existence of such lien; and 
"(B) as against a holder of a security interest in such 
security who, at the time such interest came into existence, 
did not have actual notice or knowledge of the existence of 
such lien. 
"(2) MOTOR VEHICLES.—With respect to a motor vehicle (as 
defined in subsection (h)(3)), as against a purchaser of such 
motor vehicle, if— 
"(A) at the time of the purchase such purchaser did not 
have actual notice or knowledge of the existence of such lien, 
and 
"(B) before the purchaser obtains such notice or knowl-
edge, he has acquired possession of such motor vehicle and has 
not thereafter relinquished possession of such motor vehicle 
to the seller or his agent. 
"(3) PERSONAL PROPERTY PURCHASED AT RETAIL.—With respect 
to tangible personal property purchased at retail, as against a 
purchaser in the ordinary course of the seller's trade or business, 
unless at the time of such purchase such purchaser intends such 
1126 
PUBLIC LAW89-719-NOV. 2, 1966 
[80 STAT. 
puivliase to (or knows siuli piii'cluise will) hinder, evade, or 
defeat the collection of any tax under thin title. 
"(4) 
PERSONAL I'KOI'KRTY PIRCHASED rx CASFAE SALK.—With 
respect to household gfoods, jjersonal effects, oi' other taujirihle pei-
leV'sc'eiii' 
sonal property described in section 6HH4(a) purchased (not foi-
resale) in a casual sale for less than $2.50, as ag'ainst the purchaser, 
but only if such purchaser does not have actual notice or knowl-
edge (A) of the existence of such lien, or (B) that this sale is one 
of a series of sales. 
"(5) 
PERSONAL PROPERTY SIBJECT TO I'OSSESSORY LIKN.—With 
respect to tangible personal property subject to a lien under local 
law securing the reasonable price of the repair or improvement of 
such property, as against a holder of such a lien, if such holder is, 
and has been, continuously in possession of such property frou) 
the time such lien arose. 
"(6) 
REAL PROPERTY TAX AND SPECIAL ASSESSMENT LIENS.—With 
respect to real property, as against a holder of a lien upon such 
property, if such lien is entitled under local law to priority over 
security interests in such property which are prior in time, and 
such lien secures payment of— 
"(A) a tax of general application levied by any taxing 
authority based upon the value of such property; 
"(B) a special assessment imposed directly upon such 
property by any taxing authority, if such assessment is 
imposed for the purpose of defraying the cost of any public, 
improvement; or 
"(C) charges for utilities or public services furnished to 
such property by the United States, a State or political sub-
division thereof, or an instrumentality of any one or more 
of the foregoing. 
"(7) 
RESIDENTIAL PROPERTY SUBJECT TO A MECHANIC'S LIEN FOR 
( ERTAIN REPAIRS AND IMPROVEMENTS.—With respect to real prop-
erty subject to a lien for repair or improvement of a personal 
residence (containing not more than four dwelling units) occupied 
by the owner of such residence, as against a mechanic's lienor, 
but only if the contract price on the contract with the owner is 
not more than $1,000. 
"(8) ATTORNEYS' LIENS.—With respect to a judgment or other 
amount in settlement of a claim or of a cause oi action, as against 
an attorney who, under local law, holds a lien upon or a contract 
enforcible against such judgment or amount, to the extent of his 
reasonable compensation for obtaining such judgment or procur-
ing such settlement, except that this paragraph shall not apply 
to any judgment or amount in settlement of a claim or of a cause 
of action against the United States to the extent that the United 
States offsets such judgment or amount against any liability of 
the taxpayer to the United States. 
"(9) CERTAIN INSURANCE CONTRACTS.—With respe<'t to a life 
insurance, endowment, or annuity contract, as against the orga-
nization which is the insurer under such contract, at any time— 
"(A) before such organization had actual notice or knowl-
edge of the existence of such lien; 
"(B) after such organization had such notice or knowl-
edge, with respect to advances required to be made automati-
cally to maintain such contract in force under an agreement 
entered into befoi-c such organization had such notice oi-
knowledge: or 
"(C) after satisfaction of a levy pui'suant to section 
Post, p. 1136. 
(i382(b), unless and until the Secretarv or his delegate 
80 STAT.] 
PUBLIC LAW 89-7 19-NOV. 2, 1966 
1127 
deliveis to such or^jinization a norice, executed afte)- ihe date 
of sucli satisfaction, of the existence of sucli lien. 
"(10) PASSBOOK U)ANS.—With respect to a savings deposit, 
share, or other account, evidenced by a passbook, witli an institu-
tion described in section oSl or 591, to the extent of any loan made 
26^ulc'*58^i°^' 
by such institution without actual notice or knowledge of the 591. 
existence of such lien, as apiinst such institution, if such loan is 
secured by such account and if such institution has been con-
tinuously ill possession of such passbook from the time the loan 
is made. 
"•(c) 
PROTPXTION FOR CKRTAIN COMMERCIAL TRANSACTIONS FINAN<-
JNO AOREEMENTS. E T C . — 
"(1) I N GENERAL.—To the extent provided in this subsection, 
even though notice of a lien imposed by section 6821 has been 
filed, such lien shall not be valid with respect to a security interest 
which came into existence after tax lien filing but which— 
''(A) is in qualified property covered by the terms of a 
written agreement entered into before tax lien filing and 
constituting— 
"(i) a commercial transactions financing agreement, 
"(ii) a real property construction or improvement 
financing agreement, or 
"(iii) an obligatory disbursement agreement, and 
"(B) 
is protected under local law against a judgment lien 
arising, as of the time of tax lien filing, out of an unsecured 
obligation. 
"•(2) COMMERCIAL TRANSACTIONS FINANCING? AGREEMENT.—For 
purposes of this subsection— 
"(A) DEFINITION.—The term 'commercial 
transactions 
financing agreement' means an agreement (entered into by a 
person in the course of his trade or business) — 
"(i) to make loans to the taxpayer to be secured by 
commercial financing security acquired by the taxpayer 
in the ordinary course of his trade or business, or 
"(ii) to purchase commercial financing security (other 
than inventory) acquired by the taxpayer in the ordinary 
course of his trade or business; 
but such an agreement shall be treated as coming within the 
term only to the extent that such loan or purchase is made 
before the 46th day after the date of tax lien filing or (if 
earlier) before the lender or purchaser had actual notice oi* 
knowledge of such tax lien filing. 
"(B) LIMITATION 
ON 
QUALIFIED PROPERTY.—The term 
'qualified property', when used with respect to a commercial 
transactions financing agreement, includes only commercial 
financing security acquired by the taxpayer before the 46th 
day after the date of tax lien filing. 
"(C) 
COMMERCIAL FINANCING 
SECURITY 
DEFINED.—The 
term 'commercial financing security' means (i) paper of a 
kind ordinarily arising in commercial transactions, (ii) 
accounts receivable, (iii) mortgages on real property, and 
(iv) inventory. 
"(D) 
PURCHASER TREATED AS ACQUIRING SECURITY INTER-
EST.—A person who satisfies subparagraph (A) by reason of 
clause (ii) thereof shall be treated as having acquired a secu-
rity interest in commercial financing security. 
•' (3) REAL PROPERTY CONSTRUCTION OR IMPROVEMENT FINANCING 
\<;REEMENT.—For purposes of this subsection— 
1128 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
"(A) DEFINITION.—The term 'real property construction 
or improvement financing agreement' means an agreement 
to make cash disbursements to finance— 
" (i) the construction or improvement of real property, 
"(ii) a contract to construct or improve real prop-
erty, or 
"(iii) the raising or harvesting of a farm crop or the 
raising of livestock or other animals. 
For purposes of clause (iii), the furnishing of goods and 
services shall be treated as the disbursement of cash. 
"(B) LIMITATION ON QUALIFIED PROPERTY.—The term 
•qualified property', when used with respect to a real prop-
erty construction or improvement 
financing 
agreement, 
includes only— 
"(i) in the case of subparagraph (A)(i), the real 
property with respect to which the construction or 
improvement has been or is to be made, 
"(ii) in the case of subparagraph (A)(ii), the pro-
ceeds of the contract described therein, and 
"(iii) in the case of subparagraph (A) (iii), prop-
68A Stat. 779. 
ertv subicct to the lien imposed by section 6321 at the 
time of tax lien filing and the crop or the livestock or 
other animals referred to in subparagraph (A) (iii). 
"(4) OBLIGATORY DISBURSEMENT AGREEMENT.—For purposes of 
this subsection— 
"(A) DEFINITION.—The term 'obligatory disbursement 
agreement' means an agreement (entered into by a person 
in the course of his trade or business) to make disbursements, 
but such an agreement shall be treated as coming within 
the term only to the extent of disbursements which are 
required to be made by reason of the intervention of the rights 
of a person other than the taxpayer. 
"(B) LIMITATION ON QUALIFIED PROPERTY.—The term 'quali-
fied property', when used with respect to an obligatory dis-
bursement agreement, means property subject to the lien 
imposed by section 6321 at the time of tax lien filing and (to 
the extent that the acquisition is directly traceable to the dis-
bursements referred to in subparagraph (A)) property 
acquired by the taxpayer after tax lien filing. 
"(C) SPECIAL RULES FOR SURETY AGREEMENTS.—Where the 
obligatory disbursement agreement is an agreement ensuring 
the performance of a contract between the taxpayer and an-
other person— 
"(i) the term 'qualified property' shall be treated as 
also including the proceeds of the contract the perform-
ance of which was ensured, and 
"(ii) if the contract the performance of which was 
ensured was a contract to construct or improve real prop-
erty, to produce goods, or to furnish services, the term 
'qualified property' shall be treated as also including any 
tangible personal property used by the taxpayer in the 
performance of such ensured contract. 
"(d) 45-DAY PERIOD FOR MAKING DISBURSEMENTS.—Even though 
notice of a lien imposed by section 6321 has been filed, such lien shall 
not be valid with respect to a security interest which came into exist-
ence after tax lien filing by reason of disbursements made before the 
46th day after the date of tax lien filing, or (if earlier) before the 
person making such disbursements had actual notice or knowledge of 
tax lien filing, but only if such security interest— 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1129 
••(I) is in pr<)j)erty (A) subject, at tJie time of tax lien filing, 
to file lien imposed by section 6321, and (B) covered by the terms 
of a written agreement entered into before tax lien filing, and 
"(2) is protected undei- local law against a judgment lien 
arising, as of the time of tax lien filing, out of an unsecured 
obligation. 
^'(e) PRIORITY OF INTEREST AND EXPENSES.—If the lien imposed by 
section 6321 is not valid as against a lien or security interest, the 
priority of such lien or security interest shall extend to— 
"(1) any interest or carrying charges upon the obligation 
secured, 
"(2) the reasomible charges and expenses of an indenture 
trustee or agent holding the security interest for the benefit of 
t he holder of the security interest, 
"(3) the reasonable expenses, including reasonable compensa-
ti(m for attorneys, actually incurred in collecting or enforcing 
the obligation secured, 
''(4) the I'easonable costs of insuring, preserving, or re})airing 
(he property to which the lien or security interest relates, 
"(5) the reasonable costs of insuring payment of the obligation 
secured, and 
''(6) airu)unts paid to satisfy any lien on the })ropei'ty to which 
the lien or security interest relates, but only if the hen so satisfied 
is entitled to priority over the lien imposed by section 6321, 
to tlie extent that, under local law, any such item has the same priority 
as the lien or security interest to which it relates. 
" (f) PLACE FOR FILING NOTK-E ; FORM.— 
"(1) PLAGE FOR FILINO.—The notice i-efen-ed to in subsection 
(a) shall be filed— 
'* {A) UNDER STATE LAWS.— 
*'(i) REAL PROPERTY.—In tlie case of real property, in 
one office within the State (or the county, or other gov-
ernmental subdivision), as designated by the laws of such 
State, in which the property subject to the lien is situ-
ated; and 
"(ii) PERSONAL PROPERTY.—In the case of personal 
property, whether tangible or intangible, in one office 
within the State (or the county, or other governmental 
subdivision), as designated by the laws of such State, in 
which the property subject to the lien is situated; or 
"(B) WiiTi CLERK OF DISTRICT COURT.—In the office of the 
clerk of the United States district court for the judicial dis-
trict in which the property subject to the lien is situated, 
whenever the State has not by law designated one office which 
meets the requirements of subparagraph (A); or 
"(C) 
W I T H RECORDER or DEEDS OF THE DISTRICT OF COLUM-
BIA.—In the office of the Recorder of Deeds of the District of 
Columbia, if the property subject to the lien is situated in the 
District of Columbia. 
"(2) 
SITUS OF PROPERTY SUBJECT TO LIEN.—For purposes of 
paragraph (1), property shall be deemed to be situated— 
"(A) REAL PROPERTY.—In the case of real property, at its 
physical location; or 
"(B) PERSONAL PROPERTY.—In the case of personal prop-
erty, whether tangible or intangible, at the residence of the 
taxpayer at the time the notice of lien is filed. 
F^or purposes of paragraph (2) (B), the residence of a corpora-
tion or partnership shall be deemed to be the place at which the 
68A Stat. 779. 
26 u s e 6321. 
1130 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
principal executive office of the business is located, and the resi-
dence of a taxpayer whose residence is without the United States 
shall be deemed to be in the District of Columbia. 
"(3) FORM.—The form and content of the notice referred to in 
subsection (a) shall be prescribed by the Secretary or his dele-
gate. 
Such notice shall be valid notwithstanding any other 
provision of law regarding the form or content of a notice of lieii. 
"(g) REFILING OF NOTICE.—For purposes of this section— 
" (1) GENERAL RULE.—Unless notice of lien is refiled in the man-
ner prescribed in paragraph (2) during the required refiling 
period, such notice of lien shall be treated as filed on the date on 
which it is filed (in accordance with subsection (f)) after the 
expiration of such refiling period. 
"(2) PLACE FOR FILING.—A notice of lien refiled during the 
required refiling period shall be effective only— 
'"(A) if such notice of lien is refiled in the office in which 
the prior notice of lien was filed; and 
"(B) in any case in which, 90 days or more prior to the 
date of a refiling of notice of lien under subparagraph (A), 
the Secretary or his delegate received written information 
(in the manner prescribed in regulations issued by the Secre-
tary or his delegate) concerning a change in the taxpayer's 
residence, if a notice of such lien is also filed in accordance 
with subsection (f) in the State in which such residence is 
located. 
"(3) RrxiuiRED REFILING PERIOD.—In the case of any notice of 
lien, the term 'required refiling period' means— 
"(A) the one-year period ending 30 days after the expira-
tion of 6 years after the date of the assessment of the tax, and 
"(B) the one-year period ending with the expiration of 6 
years after the close of the preceding required refiling period 
for such notice of lien. 
"(4) TRANSITIONAL RULE.—Notwithstanding paragraph 
(3), 
if the assessment of the tax was made before January 1, 1962, the 
first required refiling period shall be the calendar year 1967. 
Post, p. 1132. 
^'{h) DEFINITIONS.—For purposes of this section and section 6324— 
"(1) SECURITY INTEREST.—The term 'security interest' means 
any interest in property acquired by contract for the purpose of 
securing payment or performance of an obligation or indemnify-
ing against loss or liability. A security interest exists at any time 
(A) if, at such time, the property is in existence and the interest 
has become protected under local law against a subsequent judg-
ment lien arising out of an unsecured obligation, and (B) to the 
extent that, at such time, the holder has parted with money or 
money's worth. 
" (2) MECHANIC'S LIENOR.—The term "mechanic's lienor' means 
any person who under local law has a lien on real property (or on 
the proceeds of a contract relating to real property) for services, 
labor, or materials furnished in connection with the construction 
or improvement of such property. For purposes of the preceding 
sentence, a person has a lien on the earliest date such lien becomes 
valid under local law against subsequent purchasers without 
actual notice, but not before he begins to furnish the services, 
labor, or materials. 
"(3) MOTOR VEHICLE.—The term 'motor vehicle' means a self-
propelled vehicle which is registered for highway use under the 
laws of any State or foreign country. 
"(4) SECURITY.—The term 'security' means any bond, deben-
ture, note, or certificate or other evidence of indebtedness, issued 
80 STAT.] 
PUBLIC LAW 89-7 19-NOV. 2, 1966 
1131 
by a corporation or a o-overnnieiit oi- political siilxlivisioii thereof, 
with interest coupons or in registered form, share of stock, voting 
trust certificate, or any certificate of intei'est or participation in, 
certificate of deposit or receipt for, temporary or interim certifi-
cate for, or warrant or right to subscribe to or purchase, any of 
the foregoing; negotiable instrument; or money. 
"(5) TAX LIKN FILING.—The term 'tax lien filing" means the 
filing of notice (referred to in subsection (a)) of the lien imposed 
by section ()32L 
• 
'. 
, 
ll%lr6,'2\': 
"(6) PURCHASER.—The term 'purcliaser means a person AVJIO, 
for adequate and full consideration in money or money's worth, 
acquires an interest (other than a lien or security interest) in 
property which is valid under local law against subsequent pur-
chasers without actual notice. 
In applying the preceding sen-
tence for purposes of subsection (a) of this section, and foi' ])ur-
poses of section 6824— 
^°^'' "• ^^^2. 
"(A) a lease of property, 
•'( B) a written executoi-y contract to |)urchase oi" lease 
property, 
"(C) an option to purchase oi- lease property or any inter-
est therein, or 
"(I>) an option to renew or extend a lease of i)roperty, 
which is not a lien or security interest shall be treated as an 
hiterest in property. 
**(i) SPECIAL RULES.— 
"(1) ACTUAL NOTICE OR KNOWLEIXIE.—For purposes of this sub-
chapter, an organization shall be deemed for purposes of a par-
ticular transaction to have actual notice or knowledge of any 
fact from the time such fact is brought to the attention of the 
individual conducting such transaction, and in any event from 
the time such fact would have been brought to such individual's 
attention if the organization had exercised due diligence. 
An 
organization exercises due diligence if it maintains reasonable 
routines for communicating significant information to the person 
conducting the transaction and there is reasonable compliance 
with the routine. Due diligence does not require an individual 
acting for the organization to communicate information unless 
such communication is part of his regular duties or unless he has 
reason to know of the transaction and that the transaction would 
be materially affected by the information. 
"(2) SUBROGATION.—Where, under local law, one person is sub-
rogated to the rights of another with respect to a lien or interest, 
such person shall be subrogated to such rights for purposes of any 
lien imposed by section 6321 or 6324. 
"(3) 
DISCLOSURE OF AMOUNT OF OUTSTANDING LIEN.—If a notice 
of lien has been filed pursuant to subsection (f), the Secretary or 
his delegate is authorized to provide by regulations the extent to 
which, and the conditions under which, information as to the 
amount of the outstanding obligation secured by the lien may be 
disclosed." 
(b) CLERICAL AMENDMENTS.— 
(1) The table of sections for subchapter C of chapter 64 is 
amended by striking out 
'•Sec. 6323. Validity against mortgageef<, ]>ledgees, pnrcliasers, and 
judgment creditors," 
and inserting in lieu thereof 
"Sec. 6323. Validity and priority against certain i)ersons." 
2209. 
1132 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
68A Stat. 189. 
(2) Sectloii 545(b)(9) is amended by striking out "section 
^'^^' 
6323(a) (1), (2), or (3)" and inserting in lieu thereof "section 
6323(f)". 
SEC. 102. SPECIAL LIENS FOR ESTATE AND GIFT TAXES. 
Section 6324 (relating to special liens for estate and gift taxes) is 
amended to read as follows: 
"SEC. 6324. SPECIAL LIENS FOR ESTATE AND GIFT TAXES. 
"(a) LIENS FOR ESTATE TAX.—Except as otherwise provided in sub-
section (c)— 
"(1) UPON GROSS ESTATE.—Unless the estate tax imposed by 
9
n
Q ^^^ ^°°^' 
chapter 11 is sooner paid in full, or becomes unenforceable by rea-
son of lapse of time, it shall be a lien upon the gross estate of 
the decedent for 10 years from the date of death, except that such 
part of the gross estate as is used for the payment of charges 
against the estate and expenses of its administration, allowed by 
any court having jurisdiction thereof, shall be divested of such 
lien, 
"(2) LIABILITY OF TRANSFEREES AND OTHERS.—If the estate tax 
imposed by chapter 11 is not paid when due, then the spouse, 
transferee, trustee (except the trustee of an employees' trust which 
meets the requirements of section 401(a)), surviving tenant, per-
son in possession of the property by reason of the exercise, non-
exercise, or release of a power of appointment, or beneficiary, 
who receives, or has on the date of the decedent's death, property 
included in the gross estate under sections 2034 to 2042, inclusive, 
to the extent of the value, at the time of the decedent's death, 
of such property, shall be personally liable for such tax. Any 
part of such properly transferred by (or transferred by a trans-
feree of) such spouse, transferee, trustee, surviving tenant, per-
son in possession, or beneficiary, to a purchaser or holder of a 
security interest shall be divested of the lien provided in para-
graph (1) and a like lien shall then attach to all the property 
of such spouse, transferee, trustee, surviving tenant, person in 
possession, or beneficiary, or transferee of any such person, 
except any part transferred to a purchaser or a holder of a security 
interest. 
"(3) CONTINUANCE AFTER DISCHARGE or EXECUTOR.—The provi-
sions of section 2204 (relating to discharge of executor from per-
sonal liability) shall not operate as a release of any part of the 
gross estate from the lien for any deficiency that may thereafter 
be determined to be due, unless such part of the gross estate (or 
any interest therein) has been transferred to a purchaser or a 
holder of a security interest, in which case such part (or such 
interest) shall not be subject to a lien or to any claim or demand 
for any such deficiency, but the lien shall attach to the considera-
tion received from such purchaser or holder of a security interest, 
by the heirs, legatees, devisees, or distributees. 
"(b) LIEN FOR GIFT TAX.—Except as otherwise provided in sub-
25^24"^*^ 2^°^" 
section (c), unless the gift tax imposed by chapter 12 is sooner paid 
in full or becomes unenforceable by reason of lapse of time, such tax 
shall be a lien upon all gifts made during the calendar year, for 10 
years from the date the gifts are made. If the tax is not paid when 
due, the donee of any gift shall be personally liable for such tax to the 
extent of the value of such gift. Any part of the property comprised 
in the gift transferred by the donee (or by a transferee of the donee) to 
a purchaser or holder of a security interest shall be divested of the lien 
imposed by this subsection and such lien, to the extent of the value of 
such gift, shall attach to all the property (including after-acquired 
Ante, p. 1125. 
80 STAT.] 
PUBLIC LAW 89-7 1 9 - N O V . 2, 1966 
1133 
property) of the donee (or the transferee) except any part transferred 
to a purchaser or holder of a security interest. 
"(c) EXCEPTIONS.— 
"(1) The lien imposed by subsection (a) or (b) shall not be 
valid as against a mechanic's lienor and, subject to the conditions 
provided by section 6328 (b) (relating to protection for certain 
interests even though noticed filed), shall not be valid with respect 
to any lien or interest described in section 6323 (b). 
"(2) If a lien imposed by subsection (a) or (b) is not valid as 
against a lien or security interest, the priority of such lien or 
security interest shall extend to any item described in section 6323 
(e) (relating to priority of interest and expenses) to the extent 
that, under local law, such item has the same i^riority as the lien or 
security interest to which it relates." 
SEC. 103. CERTIFICATES RELATING TO LIENS. 
(a) AMENDMENT or SECTION 6325.—Section 6325 (relating to release 
of lien or partial discharge of property) is amended to read as follows: 
"SEC. 6325. RELEASE OF LIEN OR DISCHARGE OF PROPERTY. 
"(a) RELEASE OF LIEN.—Subject to such regulations as the Secre-
I ary or his delegate may prescribe, the Secretary or his delegate may 
issue a certificate of release of any lien imposed with respect to any 
internal revenue tax if— 
"(1) LIABILITY SATISFIED OR UNENFORCEABLE.—The Secretary 
or his delegate finds that the liability for the amount assessed, 
together with all interest in respect thereof, has been fully satis-
fied or has become legally unenforceable; or 
"(2) BOND ACCEPTED.—There is furnished to the Secretary or 
his delegate and accepted by him a bond that is conditioned upon 
the payment of the amount assessed, together with all interest in 
respect thereof, within the time prescribed by law (including any 
extension of such time), and that is in accordance with such 
requirements relating to terms, conditions, and form of the bond 
and sureties thereon, as may be specified by such regulations. 
"(b) DISCHARGE or PROPERTY.— 
" (1) PROPERTY DOUBLE THE AMOUNT OF THE LIABILITY.—Subject 
to such regulations as the Secretary or his delegate may prescribe, 
the Secretary or his delegate may issue a certificate of discharge 
of any part of the property subject to any lien imposed under this 
chapter if the Secretary or his delegate finds that the fair market 
value of that part of such property remaining subject to the lien 
is at least double the amount of the unsatisfied liability secured 
by such lien and the amount of all other liens upon such property 
which have priority over such lien. 
"(2) PART PAYMENT; INTEREST OF UNITED STATES VALUELESS.— 
Subject to such regulations as the Secretary or his delegate may 
prescribe, the Secretary or his delegate may issue a certificate of 
discharge of any part of the property subject to the lien if— 
"(A) there is paid over to the Secretary or his delegate in 
partial satisfaction of the liability secured by the lien an 
amount determined by the Secretary or his delegate, which 
shall not be less than the value, as determined by the Secretary 
or his delegate, of the interest of the United States in the part 
to be so discharged, or 
"(B) the Secretary or his delegate determines at any time 
that the interest of the United States in the part to be so dis-
charged has no value. 
65-300 0-67—74 
68A Stat. 781. 
26 u s e 6325. 
1134 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
In determining the value of the mterest of the United States 
in the part to be so discharged, the Secretary or his delegate shall 
give consideration to the value of such part and to such liens 
thereon as have priority over the lien of the United States. 
" (3) SUBSTITUTION or PROCEEDS or SALE.—Subject to such regu-
lations as the Secretary or his delegate may prescribe, the Secretary 
or his delegate may issue a certificate of discharge of any part of 
the property subject to the lien if such part of the property is 
sold and, pursuant to an agreement with the Secretary or his dele-
gate, the proceeds of such sale are to be held, as a fund subject to 
the liens and claims of the United States, in the same manner and 
with the same priority as such liens and claims had with respect 
to the discharged property. 
"(c) ESTATE OR GIFT TAX.—Subject to such regulations as the Secre-
tary or his delegate may prescribe, the Secretary or his delegate may 
issue a certificate of discharge of any or all of the property subject 
Ante, p. 1132. 
IQ a^y j^eu Imposcd by section 6324 if the Secretary or his delegate 
finds that the liability secured by such lien has been fully satisfied or 
provided for. 
"(d) SUBORDINATION OF LIEN.—Subject to such regulations as the 
Secretary or his delegate may prescribe, the Secretary or his delegate 
may issue a certificate of subordination of any lien imposed by this 
chapter upon any part of the property subject to such lien if— 
"(1) there is paid over to the Secretary or his delegate an 
amount equal to the amount of the lien or interest to which the cer-
tificate subordinates the lien of the United States, or 
"(2) the Secretary or his delegate believes that the amount 
realizable by the United States from the property to which the 
certificate relates, or from any other property subject to the lien, 
will ultimately be increased by reason of the issuance of such cer-
tificate and that the ultimate collection of the tax liability will be 
facilitated by such subordination. 
"(e) NONATTACIIMENT OF LIEN.—If the Secretary or his delegate 
determines that, because of confusion of names or otherwise, any per-
son (other than the person against whom the tax was assessed) is or 
may be injured by the appearance that a notice of lien filed under sec-
Ante. p. 1125. 
tiou 6323 refers to such person, the Secretary or his delegate may issue 
a certificate that the lien does not attach to the property of such person. 
"(f) 
EFFECT OF CERTIFICATE.— 
"(1) CONCLUSIVENESS.—Except as provided in paragraphs (2) 
and (3), if a certificate is issued pursuant to this section by the 
Secretary or his delegate and is filed in the same office as the notice 
of lien to which it relates (if such notice of lien has been filed) 
such certificate shall have the following effect: 
"(A) in the case of a certificate of release, such certificate 
shall be conclusive that the lien referred to in such certificate 
is extinguished; 
"(B) in the case of a certificate of discharge, such certifi-
cate shall be conclusive that the property covered by such 
certificate is discharged from the lien; 
"(C) in the case of a certificate of subordination, such 
certificate shall be conclusive that the lien or interest to which 
the lien of the United States is subordinated is superior to 
the lien of the United States; and 
"(D) in the case of a certificate of nonattachment, such 
certificate shall be conclusive that the lien of the United 
States does not attach to the property of the person referred 
to in such certificate. 
26 u s e 6321. 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1135 
"(2) REVOCATION OF CERTIFICATE OF RELEASE OR NONATTACH-
MENT.—If the Secretary or his delegate determines that a certifi-
cate of release or nonattachment of a lien imposed by section 6321 
^^^,^'^^^;7Jf • 
was issued erroneously or improvidently, or if a certificate of 
release of such lien was issued pursuant to a collateral agreement 
entered into in connection with a compromise under section 7122 
which has been breached, and if the period of limitation on col-
lection after assessment has not expired, the Secretary or his 
delegate may revoke such certificate and reinstate the lien— 
"(A) by mailing notice of such revocation to the person 
against whom the tax was assessed at his last known address, 
and 
"(B) by filing notice of such revocation in the same office 
in which the notice of lien to which it relates was filed (if such 
notice of lien had been filed). 
Such reinstated lien (i) shall be effective on the date notice of 
revocation is mailed to the taxpayer in accordance with the pro-
visions of subparagraph (A), but not earlier than the date on 
which any required filing of notice of revocation is filed in accord-
ance with the provisions of subparagraph (B), and (ii) shall have 
the same force and effect (as of such date), until the expiration 
of the period of limitation on collection after assessment, as a 
lien imposed by section 6321 (relating to lien for taxes). 
"(3) CERTIFICATES VOID UNDER CERTAIN CONDITIONS.—Notwith-
standing any other provision of this subtitle, any lien imposed 
by this chapter shall attach to any property with respect to which 
a certificate of discharge has been issued if the person liable for 
the tax reacquires such property after such certificate has been 
issued. 
" (g) FILING OF CERTIFICATES AND NOTICES.—If a certificate or notice 
issued pursuant to this section may not be filed in the office designated 
by State law in which the notice of lien imposed by section 6321 is 
filed, such certificate or notice shall be effective if filed in the office of 
the clerk of the United States district court for the judicial district 
in which such office is situated. 
"(h) CROSS REFERENCE.— 
"For provisions relating to bonds, see chapter 73 (sec. 7101 and 
following).** 
(b) CLERICAL AMENDMENT.—The table of sections for subchapter 
C of chapter 64 is amended by striking out 
"Sec. 6325. Release of lien or partial discharge of property." 
and inserting in lieu thereof 
"Sec. 6325. Release of lien or discharge of property." 
SEC. 104. SEIZURE OF PROPERTY FOR COLLECTION OF TAXES. 
(a) EFFECT OF LEVY.—Section 6331(b) (relating to seizure and 
sale of property by levy and distraint) is amended by inserting after 
the first sentence the following new sentence: "A levy shall extend 
only to property possessed and obligations existing at the time 
thereof." 
(b) SURRENDER OF PROPERTY SUBJECT TO LEVY.—Section 6332 relat-
ing to surrender of property subject to levy) is amended— 
(1) by striking out "Any person" in subsection (a) and insert-
ing in lieu thereof "Except as otherwise provided in subsection 
(b), any person"; 
Ante, p. 1131. 
1136 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
(2) by amending subsection (b) to read as follows: 
"(b) SPECIAL 
RULE 
FOR LIFE 
INSURANCE AND ENDOWMENT 
CONTRACTS.— 
"(1) I N GENERAL.—A levy on an organization wdth respect to a 
life insurance or endowment contract issued by such organization 
shall, without necessity for the surrender of the contract docu-
ment, constitute a demand by the Secretary or his delegate for 
payment of the amount described in paragraph (2) and the exer-
cise of the right of the person against w^iom the tax is assessed to 
the advance of such amount. Such organization shall pay over 
such amount 90 days after service of notice of levy. Such notice 
shall include a certification by the Secretary or his delegate that a 
copy of such notice has been mailed to the person against whom 
the tax is assessed at his last known address. 
"(2) SATISFACTION or LEVY,—Such levy shall be deemed to be 
satisfied if such organization pays over to the Secretary or his 
delegate the amount which the person against whom the tax is 
assessed could have had advanced to him by such organization on 
the date prescribed in paragraph (1) for the satisfaction of such 
levy, increased by the amount of any advance (including con-
tractual interest thereon) made to such person on or after the date 
such organization had actual notice or knowledge (within the 
meaning of section 6323 (i) (1)) of the existence of the lien with 
respect to which such levy is made, other than an advance (includ-
ing contractual interest thereon) made automatically to maintain 
such contract in force under an agreement entered into before such 
organization had such notice or knowledge. 
"(3) ENFORCEMENT PROCEEDINGS.—The satisfaction of a levy 
under paragraph (2) shall be without prejudice to any civil action 
for the enforcement of any lien imposed by this title with respect 
to such contract."; 
(3) by redesignating subsection (c) as subsection (e) ; and 
(4) by inserting after subsection (b) the following new sub-
sections : 
"(c) ENFORCEMENT OF LEVY.— 
"(1) EXTENT OF PERSONAL LIABILITY.—Any person who fails or 
refuses to surrender any property or rights to property, subject 
to levy, upon demand by the Secretary or his delegate, shall be 
liable in his own person and estate to the United States in a sum 
equal to the value of the property or rights not so surrendered, 
but not exceeding the amount of taxes for the collection of which 
such levy has been made, together with costs and interest on such 
sum at the rate of 6 percent per annum from the date of such 
levy. Any amount (other than costs) recovered under this para-
graph shall be credited against the tax liability for the collection 
of which such levy was made. 
"(2) 
PENALTY FOR VIOLATION.—In addition to the personal 
liability imposed by paragraph (1), if any person required to 
surrender property or rights to property fails or refuses to 
surrender such pi'operty or rights to property without reasonable 
cause, such person shall be liable for a penalty equal to 50 percent 
of the amount recoverable under paragraph (1). No part of 
such penalty shall be credited against the tax liability for the 
collection of which such levy was made. 
"(d) EFFECT OF HONORING LEVY.—Any person in possession of (or 
obligated with respect to) property or rights to property subject to 
levy upon which a levy has been made who, upon demand by the Sec-
retary or his delegate, surrenders such property or rights to property 
(or discharges such obligation) to the Secretary or his delegate (or 
70A Stat. 108. 
10 use 1431. 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1137 
who pays a liability under subsection (c)(1)) shall be discharged 
from any obligation or liability to the delinquent taxpayer with 
respect to such property or rights to property arising from such sur-
render or payment. In the case of a levy which is satisfied pursuant 
to subsection (b), such organization shall also be discharged from any 
obligation or liability to any beneficiary arising from such surrender 
or payment." 
(c) PROPERTY EXEMPT FROM LEVY.—Section 6334(a) (relating to 7 2^|^f*io4?^'*' 
enumeration of property exempt from levy) is amended— 
79 stat! 170.' 
(1) by striking out "or Territory" in paragraph (4) ; and 
26 use 6334. 
(2) by adding at the end thereof the following new para-
graphs : 
"(6) 
CERTAIN ANNUITY AND PENSION PAYMENTS.—Annuity or 
pension payments under the Railroad Retirement Act, benefits ^Q^^*^^ ^307°^^' 
under the Railroad Unemployment Insurance Act, special pension 
45 use 228a-
payments received by a person whose name has been entered on 228S-2. 
the Army, Navy, Air Force, and Coast Guard Medal of Honor 
45 use" 367. ' 
roll (38 U.S.C. 562), and annuities based on retired or retainer 
72 stat. ii4o 
pay under chapter 73 of title 10 of the United States Code. 
"(7) WORKMEN'S COMPENSATION.—Any amount payable to an 
individual as workmen's compensation (including any portion 
thereof payable with respect to dependents) under a workmen's 
"compensation law of the LTnited States, any State, the District of 
Columbia, or the Commonwealth of Puerto Rico." 
(d) PUBLICATION OF NOTICE or SALE.—The first sentence of section 
6e335 (b) (relating to notice of sale of seized property) is amended to 
read as follows: "The Secretary or his delegate shall as soon as prac-
ticable after the seizure of the property give notice to the owner, in 
the manner prescribed in subsection (a), and shall cause a notification 
to be published in some newspaper published or generally circulated 
within the county wherein such seizure is made, or if there be no news-
paper published or generally circulated in such county, shall post such 
notice at the post office nearest the place where the seizure is made, and 
in not less than two other public places." 
(e) REDEMPTION PERIOD.—Paragraph (1) of section 6337(b) (relat-
ing to period of redemption of real estate after sale) is amended by 
striking out "1 year" and inserting in lieu thereof "120 days". 
(f) PREPARATION OF DEED.—Section 6338(c) (relating to real prop-
erty purchased by United States) is amended to read as follows: 
" (c) REAL PROPERTY PURCHASED BY UNITED STATES.—If real prop-
erty is declared purchased by the United States at a sale pursuant to 
section 6335, the Secretary or his delegate shall at the proper time 
execute a deed therefor, and without delay cause such deed to be duly 
recorded in the proper registry of deeds." 
(g) DISCHARGE OF JUNIOR ENCUMBRANCES.—Section 6339 (relating 
to legal effect of certificate of sale of personal property and deed of 
real property) is amended by adding at the end thereof the following 
new subsections: 
"(c) EFFECT OF JUNIOR ENCUMBRANCES.—A certificate of sale of 
personal property given or a deed to real property executed pursuant 
to section 6338 shall discharge such property from all liens, encum-
brances, and titles over which the lien of the United States with 
respect to which the levy was made had priority. 
"(d) 
CROSS REFERENCES.— 
"(1) For distribution of surplus proceeds, see section 6342(b). 
"(2) For judicial procedure with respect to surplus proceeds, see 
section 7426(a)(2)." 
(h) APPLICATION OF PROCEEDS OF LEVY AND SALE.—Subsection (a) 
of section 6342 (relating to collection of liability) is amended— 
1138 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
(1) by striking out so much thereof as precedes paragraph (1) 
and inserting in lieu thereof 
"(a) COLLECTION or LIABILITY.—^Any money realized by proceed-
ings under this subchapter (whether by seizure, by surrender under 
Ante. p. 1136. 
sectiou 6332 (except pursuant to subsection (c) (2) thereof), or by sale 
of seized property) or by sale of property redeemed by the United 
States (if the interest of the United States in such property was a lien 
arising under the provisions of this title) shall be applied as follows:"; 
(2) by striking out "under this subchapter" in paragraph (1); 
and 
(3) by adding "or the sale was conducted" after "levy was 
made" in paragraph (3). 
68A Stat. 789* 
(i) RETURN OF PROPERTY.—Sectiou 6343 (relating to authority to 
release levy) is amended— 
(1) by striking out the heading of such section and inserting in 
lieu thereof the following: 
"SEC. 6343. AUTHORITY TO RELEASE LEVY AND RETURN PROPERTY."; 
(2) by striking out "It shall be" and inserting in lieu thereof 
" (a) RELEASE or LEVY.—It shall be"; and 
(3) by adding at the end thereof the following new subsection: 
"(b) RETURN OF PROPERTY.—If the Secretary or his delegate deter-
mines that property has been wrongfully levied upon, it shall be law-
ful for the Secretary or his delegate to return— 
" (1) the specific property levied upon, 
" (2) an amount of money equal to the amount of money levied 
upon, or 
"(3) an amount of money equal to the amount of money 
received by the United States from a sale of such property. 
Property may be returned at any time. An amount equal to the 
amount of money levied upon or received from such sale may be 
returned at any time before the expiration of 9 months from the date 
of such levy. For purposes of paragraph (3), if property is declared 
purchased by the United States at a sale pursuant to section 6335(e) 
(relating to manner and conditions of sale), the United States shall be 
treated as having received an amount of money equal to the minimum 
price determined pursuant to such section or (if larger) the amount 
received by the United States from the resale of such property." 
(j) CLERICAL AMENDMENT.—The table of sections for subchapter 
D of chapter 64 is amended by striking out— 
"Sec. 6343. Authority to release levy." 
and inserting in lieu thereof 
"Sec. 6343. Authority to release levy and return property." 
SEC. 105. LIABILITY FOR WITHHELD TAXES. 
3^26 use 3501- 
^^^ 
EFFECT O
N THIRD PARTIES.—Chapter 25 (relating to general 
provisions relating to employment taxes) is amended by adding at the 
end thereof the following new section: 
"SEC. 3505. LIABILITY OF THIRD PARTIES PAYING OR PROVIDING FOR 
WAGES. 
"(a) DIRECT PAYMENT BY THIRD PARTIES.—For purposes of sec-
tions 3102, 3202, 3402, and 3403, if a lender, surety, or other person, 
who is not an employer under such sections with respect to an employee 
or group of employees, pays wages directly to such an employee or 
group of employees, employed by one or more employers, or to an 
Ante, p. 1131. 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1139 
agent on belialf of such employee or employees, such lender, surety, 
or other person shall be liable in his own person and estate to the 
TTnited States in a sum equal to the taxes (together with interest) 
required to be deducted and withheld from such wages by such 
employer. 
"(b) PERSONAL LIABILITY WHERE FUNDS ARE SUPPLIED.—If a 
lender, surety, or other person supplies funds to or for the account 
of an employer for the specific purpose of paying wages of the employ-
ees of such employer, with actual notice or knowledge (within the 
meaning of section 6323 (i) (1)) that such employer does not intend 
to or will not be able to make timely payment or deposit of the 
amounts of tax required by this subtitle to be deducted and withheld 
by such employer from such wages, such lender, surety, or other per-
son shall be liable in his own person and estate to the Ignited States 
in a sum equal to the taxes (together with interest) which are not 
paid over to the United States by such employer with respect to 
such wages. However, the liability of such lender, surety, or other 
person shall be limited to an amount equal to 25 percent of the amount 
so supplied to or for the account of such employer for such purpose. 
"(c) EFFECT OF PAYMENT.—Any amounts paid to the United States 
pursuant to this section shall be credited against the liability of the 
employer." 
(b) PERFORMANCE BONDS OF CONTRACTORS FOR PUBLIC BUILDINGS 
OR WORKS.—The first section of the Act entitled "An Act requiring 
contracts for the construction, alteration, and repair of any public 
building or public work of the United States to be accompanied by 
a performance bond protecting the United States and by an additional 
bond for the protection of persons furnishing material and labor for 
the construction, alteration, or repair of said public buildings or 
public work", approved August 24, 1935 (49 Stat. Y93; 40 U.S.C. 
270a), is amended by adding at the end thereof the following new 
subsection: 
"(d) Every performance bond required under this section shall spe-
cifically provide coverage for taxes imposed by the United States which 
are collected, deducted, or withheld from wages paid by the contractor 
in carrying out the contract with respect to Avhicli such bond is fur-
nished. However, the Ignited States shall give the surety or sureties 
on such bond written notice, with respect to any such unpaid taxes 
attributable to any period, within ninety days after the date when such 
contractor files a return for such period, except that no such notice 
shall be given more than one hundred and eighty days from the date 
when a return for the period was required to be filed under the Inter-
nal Revenue Code of 1954. No suit on such bond for such taxes shall 
be commenced by the United States unless notice is given as provided 
in the preceding sentence, and no such suit shall be commenced after 
rhe expiration of one year after the day on which such notice is given." 
(c) CLERICAL AMENDMENT.—The table of sections for chapter 25 is 
amended by adding at the end thereof the following: 
''See. 3505. Liability of third parties paying or providing for wages." 
SEC. 106. SUSPENSION OF RUNNING OF PERIOD OF LIMITATION. 
(a) ASSETS OF ESTATE OF DECEDENT OR INCOMPETENT.—Section 
6503 (b) (relating to assets of taxpayer in control or custody of court) 
26'uscf esoT' 
is amended by striking out " (other than the estate of a decedent or of 
an incompetent)" and "or Territory". 
(b) COLLECTION HINDERED BY ABSENCE OF TAXPAYER.—Section 
6503(c) (relating to location of property outside the United States or 
1140 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
removal of property from the United States) is amended to read as 
follows: 
"(c) TAXPAYER OUTSIDE UNITED STATES.—The running of the 
period of limitations on collection after assessment prescribed in 
26 uscr6502^' 
section 6502 shall be suspended for the period during which the tax-
payer is outside the United States if such period of absence is for a 
continuous period of at least 6 months. If the preceding sentence 
applies and at the time of the taxpayer's return to the United States 
the period of limitations on collection after assessment prescribed in 
section C502 would expire before the expiration of 6 months from the 
date of his return, such period shall not expire before the expiration 
of such 6 months." 
(c) WRONGFUL SEIZURE OF PROPERTY OF THIRD PARTIES.—Section 
70 Stat. 1075; 
6503 (relating to suspension of running of period of limitation) is 
^' ^' 
• 
amended by redesignating subsection (g) as subsection (h) and by 
inserting after subsection (f) the following new subsection: 
"(g) WRONGFUL SEIZURE OF PROPERTY OF THIRD PARTY.—The run-
ning of the period of limitations on collection after assessment pre-
scribed in section 6502 shall be suspended for a period equal to the 
period from the date property (including money) of a third party is 
wrongfully seized or received by the Secretary or his delegate to the 
date the Secretary or his delegate returns property pursuant to section 
Ante, p. 1138. 
6343(b) Or the date on which a judgment secured pursuant to section 
Post, p. 1143. 
7426 with respect to such property becomes final, and for 30 days 
thereafter. 
The running of the period of limitations on collection 
after assessment shall be suspended under this subsection only with 
respect to the amount of such assessment equal to the amount of money 
or the value of specific property returned." 
SEC. 107. PROCEEDINGS WHERE UNITED STATES HAS TITLE TO 
PROPERTY. 
(a) ACTION To QUIET TITLE.—Section 7402 (relating to jurisdic-
tion of district courts) is amended by redesignating subsection (e) as 
subsection (f) and by inserting after subsection (d) the following new 
subsection: 
"(e) To QUIET TITLE.—The United States district courts shall have 
jurisdiction of any action brought by the United States to quiet title 
to property if the title claimed by the United States to such prop-
erty was derived from enforcement of a lien under this title." 
(b) SALE BIDS.—Section 7403(c) (relating to adjudication and 
decree) is amended by adding at the end thereof the following new 
sentence: "If the property is sold to satisfy a first lien held by the 
United States, the United States may bid at the sale such sum, not 
exceeding the amount of such lien with expenses of sale, as the Sec-
retary or his delegate directs." 
SEC. 1
0
8
. 
INTERVENTION 
BY 
UNITED 
STATES. 
26 use 7424. 
Sectlou 724 (relating to civil action to clear title to property) is 
amended to read as follows: 
"SEC. 7424. INTERVENTION. 
"If the United States is not a party to a civil action or suit, the 
United States may intervene in such action or suit to assert any lien 
arising under this title on the property which is the subject of such 
action or suit. The provisions of section 2410 of title 28 of the United 
Post, p. 1147. 
States Code (except subsection (b)) and of section 1444 of title 28 of 
62 Stat. 938. 
the United States Code shall apply in any case in which the United 
States intervenes as if the United States had originally been named 
a defendant in such action or suit. In any case in which the applica-
tion of the United States to intervene is denied, the adjudication in 
such civil action or suit shall have no effect upon such lien." 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1141 
SEC. 109. DISCHARGE OF LIENS HELD BY UNITED STATES. 
Subchapter B of chapter 76 (relating to proceedings by taxpayers) 
^^^ ^*^t- s^^. 
is amended by redesignating section 7425 as section 7427 and by insert- 7/2^5."^*^ '^'*^^' 
ing after section 7424 the following new section: 
"SEC. 7425. DISCHARGE OF LIENS. 
"'(a) JUDICIAL PROCEEDINGS.—If the United States is not joined as 
a party, a judgment in any civil action or suit described in subsec-
tion (a) of section'2410 of title 28 of the LTnited States Code, or a 
P°st,p. 1147. 
judicial sale pursuant to such a judgment, with respect to property 
on which the LTnited States has or claims a lien under the provisions 
of this title— 
"(1) shall be made subject to and without disturbing the 
lien of the United States, if notice of such lien has been filed in 
the place provided by law for such hling at the time such action 
or suit is commenced, or 
"(2) shall have the same effect with respect to the discharge or 
divestment of such lien of the United States as may be provided 
with respect to such matters by the local law of the place where 
such property is situated, if no notice of such lien has been filed in 
the place provided by law for such filing at the time such action 
or suit is commenced or if the law makes no provision for such 
filing. 
If a judicial sale of property pursuant to a judgment in any civil 
action or suit to which the United States is not a party discharges a 
lien of the United States arising under the provisions of this title, the 
United States may claim, with the same priority as its lien had 
against the property sold, the proceeds (exclusive of costs) of such 
sale at any time before the distribution of such proceeds is ordered. 
"(b) 
OTHER SALES.—Notwithstanding subsection (a) a sale of 
property on which the United States has or claims a lien, or a title 
derived from enforcement of a lien, under the provisions of this title, 
made pursuant to an instrument creating a lien on such property, 
pursuant to a confession of judgment on the obligation secured by 
such an instrument, or pursuant to a nonjudicial sale under a statutory 
lien on such property— 
"(1) shall, except as otherwise provided, be made subject to 
and without disturbing such lien or title, if notice of such lien 
was filed or such title recorded in the place provided by law for 
such filing or recording more than 30 days before such sale and 
the United States is not given notice of such sale in the manner 
prescribed in subsection (c) (1); or 
"(2) shall have the same effect with respect to the discharge or 
divestment of such lien or such title of the United States, as may 
be provided with respect to such matters by the local law of the 
place where such property is situated, if— 
" (A) notice of such lien or such title was not filed or recorded 
in the place provided by law for such filing more than 30 days 
before such sale, 
"(B) the law makes no provision for such filing, or 
"(C) notice of such sale is given in the manner prescribed 
in subsection (c) (1). 
"(c) 
SPECIAL RULES.— 
" (1) NOTICE OF SALE.—Notice of a sale to which subsection (b) 
applies shall be given (in accordance with regulations prescribed 
by the Secretary or his delegate) in writing, by registered or certi-
fied mail or by personal service, not less than 25 days prior to 
such sale, to the Secretary or his delegate. 
"(2) CONSENT TO SALE.—Notwithstanding the notice require-
ment of subsection (b)(2)(C),a sale described in subsection (b) of 
1142 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
property shall discharge or divest such property of the lien or title 
of the United States if the United States consents to the sale of 
such property free of such lien or title. 
"(3) SALE OF PERISHABLE GOODS.—Notwithstanding the notice 
requirement of subsection (b) (2) (C), a sale described in subsec-
tion (b) of property liable to perish or become greatly reduced 
in price or value by keeping, or which cannot be kept without 
great expense, shall discharge or divest such property of the lien 
or title of the United States if notice of such sale is given (in 
accordance with regulations prescribed by the Secretary or his 
delegate) in writing, by registered or certified mail or by personal 
service, to the Secretary or his delegate before such sale. The 
proceeds (exclusive of costs) of such sale shall be held as a fund 
subject to the liens and claims of the United States, in the same 
manner and with the same priority as such liens and claims had 
with respect to the property sold, for not less than 30 days after 
the date of such sale, 
"(d) REDEMPTION BY LTNITED STATES.— 
"(1) RIGHT TO REDEEM.—In the case of a sale of real property 
to which subsection (b) applies to satisfy a lien prior to that of 
the United States, the Secretary or his delegate may redeem such 
property within the period of 120 days from the date of such sale 
or the period allowable for redemption under local law, whichever 
is longer. 
"(2) AMOUNT TO BE PAID.—In any case in which the United 
States redeems real property pursuant to paragraph (1), the 
amount to be paid for such property shall be the amount pre-
scribed by subsection (d) of section 2410 of title 28 of the United 
Post.p.ius. 
States Code. 
"(3) CERTIFICATE or REDEMPTION.— 
"(A) I N GENERAL.—In any case in which real property is 
redeemed by the United States pursuant to this subsection, 
the Secretary or his delegate shall apply to the officer desig-
nated by local law, if any, for the documents necessary to 
evidence the fact of redemption and to record title to such 
property in the name of the LTnited States. If no such officer 
is designated by local law or if such officer fails to issue such 
documents, the Secretary or his delegate shall execute a cer-
tificate of redemption therefor. 
"(B) FILING.—The Secretary or his delegate shall, with-
out delay, cause such documents or certificate to be duly-
recorded in the proper registry of deeds. If the State in 
which the real property redeemed by the United States is situ-
ated has not by law designated an office in which such certifi-
cate may be recorded, the Secretary or his delegate shall file 
such certificate in the office of the clerk of the United States 
district court for the judicial district in which such property 
is situated. 
"(C) EFFECT.—A certificate of redemption executed by 
the Secretary or his delegate shall constitute prima facie 
evidence of the regularity of such redemption and shall, when 
recorded, transfer to the United States all the rights, title, 
and interest in and to such property acquired by the person 
from whom the United States redeems such property by vir-
tue of the sale of such property." 
SEC. 110. PROCEEDINGS BY THIRD PARTIES AGAINST THE UNITED 
STATES. 
(a) ACTIONS BY THIRD PARTIES.—Subchapter B of chapter Y6 
(relating to proceedings by taxpayers) is amended by inserting after 
Ante, p. 1133. 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1143 
section 7425 (as added by section 109 of this Act) the following new 
section: 
"SEC. 7426. CIVIL ACTIONS BY PERSONS OTHER THAN TAXPAYERS. 
" ( a ) 
ACTIONS PERMITTED.— 
"(1) WRONGFUL, LEVY.—If a levy has been made on property 
or property has been sold pursuant to a levy, any person (other 
than the person against whom is assessed the tax out of which 
such levy arose) who claims an interest in or lien on such property 
and that such property was wrongfully levied upon may bring 
a civil action against the United States in a district court of the 
United States. 
Such action may be brought without regard 
to whether such property has been surrendered to or sold by the 
Secretary or his delegate. 
"(2) SURPLUS FROCEEDS.—If property has been sold pursuant 
to a levy, any person (other than the person against whom is 
assessed the tax out of which such levy arose) who claims an 
interest in or lien on such property junior to that of the United 
States and to be legally entitled to the surplus proceeds of such 
sale may bring a civil action against the United States in a district 
court of the United States. 
"(3) SUBSTITUTED SALE PROCEEDS.—If property has been sold 
pursuant to an agreement described in section 6325(b) (3) (relat-
ing to substitution of proceeds of sale), any person who claims to 
be legally entitled to all or any part of the amount held as a fund 
pursuant to such agreement may bring a civil action against the 
United States in a district court of the United States. 
"(b) ADJUDICATION.—The district court shall have jurisdiction to 
grant only such of the following forms of relief as may be appropriate 
in the circumstances: 
"(1) INJUNCTION.—If a levy or sale would irreparably injure 
rights in property which the court determines to be superior to 
rights of the United States in such property, the court may grant 
an injunction to prohibit the enforcement of such levy or to pro-
hibit such sale. 
" (2) RECOVERY OF PROPERTY.—If the court determines that such 
property has been wrongfully levied upon, the court may— 
"(A) order the return of specific property if the United 
States is in possession of such property; 
"(B) grant a judgment for the amount of money levied 
upon; or 
"(C) grant a judgment for an amount not exceeding the 
amount received by the United States from the sale of such 
property. 
For the purposes of subparagraph (C), if the property was 
declared purchased by the United States at a sale pursuant to 
section 6335(e) (relating to manner and conditions of sale), the 
United States shall be treated as having received an amount equal 
to the minimum price determined pursuant to such section or (if 
larger) the amount received by the United States from the resale 
of such property. 
" (3) SURPLUS PROCEEDS.—If the court determines that the inter-
est or lien of any party to an action under this section was trans-
ferred to the proceeds of a sale of such property, the court may 
grant a judgment in an amount equal to all or any part of the 
amount of the surplus proceeds of such sale. 
" (4) SUBSTITUTED SALE PROCEEDS.—If the court determines that 
a party has an interest in or lien on the amount held as a fund 
pursuant to an agreement described in section 6325(b) (3) (relat-
68A Stat. 785. 
26 u s e 6335. 
1144 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
ing to substitution of proceeds of sale), the court may grant a 
judgment in an amount equal to all or any part of the amount of 
such fund. 
"(c) VALIDITY OF ASSESSMENT.—For purposes of an adjudication 
under this section, the assessment of tax upon which the interest or 
lien of the United States is based shall be conclusively presumed to 
be valid. 
"(d) LIMITATION ON RIGHTS OF ACTION.—No action may be main-
tained against any officer or employee of the United States (or former 
officer or employee) or his personal representative with respect to any 
acts for which an action could be maintained under this section. 
"(e) 
SUBSTITUTION OF UNITED STATES AS PARTY.—If an action, 
which could be brought against the United States under this section, 
is improperly brought against any officer or employee of the LTnited 
States (or former officer or employee) or his personal representative, 
the court shall order, upon such terms as are just, that the pleadings 
be amended to substitute the United States as a party for such officer 
or employee as of the time such action was commenced upon proper 
' service of process on the United States. 
26'us*c 74^2^' 
"(•^'1 PROVISION INAPPLICABLE.—The provisions of section 7422(a) 
(relating to prohibition of suit prior to filing claim for refund) shall 
not apply to actions under this section. 
"(g) INTEREST.—Interest shall be allowed at the rate of 6 percent 
per annum— 
"(1) in the case of a judgment pursuant to subsection (b) (2) 
(B), from the date the Secretary or his delegate receives the 
money wrongfully levied upon to the date of payment of such 
judgment; and 
"(2) in the case of a judgment pursuant to subsection (b) (2) 
(C), from the date of the sale of the property wrongfully levied 
upon to the date of payment of such judgment. 
"(h) 
CROSS REFERENCE.— 
"For period of limitation, see section 6532(c)." 
(b) PERIOD OF LIMITATION ON SUIT.—Section 6532 (relating to 
period of limitation on suits) is amended by adding at the end thereof 
the following new subsection: 
"(c) 
SUITS BY PERSONS OTHER THAN TAXPAYERS.— 
"(1) GENERAL RULE.—Except as provided by paragraph (2), 
Ante, p. 1143. 
no suit or proceeding under section 7426 shall be begun alter the 
expiration of 9 months from the date of the levy or agreement 
giving rise to such action. 
" (2) PERIOD WHEN CLAIM IS FILED.—If a request is made for the 
Ante, p. 1138. 
retum of property described in section 6343(b), the 9-month 
period prescribed in paragraph (1) shall be extended for a period 
of 12 months from the date of filing of such request or for a period 
of 6 months from the date of mailing by registered or certified 
mail by the Secretary or his delegate to the person making such 
request of a notice of disallowance of the part of the request to 
which the action relates, whichever is shorter." 
(c) 
PROHIBITION OF SUITS To RESTRAIN ASSESSMENT OR COLLEC-
TION.—Section 7421(a) (relating to prohibition of suits to restrain 
assessment or collection of tax) is amended to read as follows: 
"(a) TAx.^Except as provided in sections 6212 (a) and (c), 
6213(a), and 7426 (a) and (b) (1), no suit for the purpose of restrain-
ing the assessment or collection of any tax shall be maintained in any 
court by any person, whether or not such person is the person against 
whom such tax was assessed." 
80 STAT. ] 
PUBLIC LAW 89-719-NOV. 2, 1966 
1145 
(d) 
CLERICAL A M E N D M E N T S . — 
(1) The heading of subchapter B of chapter 76 is amended to 
read as follows: 
"Subchapter B—Proceedings by Taxpayers and Third 
Parties" 
(2) The table of sections for subchapter B of chapter 76 is 
amended by striking out 
"Sec. 7424. Civil action to clear title to property. 
"Sec. 7425. Cross references." 
and inserting in lieu thereof 
"Sec. 7424, Intervention. 
"Sec. 7425. Discharge of liens. 
"Sec. 7426. Civil actions by persons other than taxpayers. 
"Sec. 7427. Cross references." 
(3) The table of subchapters for chapter 76 is amended by 
striking out 
"SUBCHAPTER B. Proceedings by Taxpayers." 
and inserting in lieu thereof 
"SUBCHAPTER B. Proceedings by Taxpayers and Third Parties." 
SEC. 111. SALE OF PROPERTY ACQUIRED BY UNITED STATES. 
(a) 
PERSONAL PROPERTY ACQUIRED.—Section 7505(a) (relating to 
26'usc^'7505^' 
sale of personal property purchased by the United States) is amended 
by striking out "purchased by the United States under the authority 
of section 6335(e) (relating to purchase for the account of the United 
States of property sold under levy)" and inserting in lieu thereof 
"acquired by the United States in payment of or as security for debts 
arising under the internal revenue laws". 
(b) 
KEAL PROPERTY REDEEMED.—Section 7506(a) (relating to per-
son charged with administration of real estate acquired by the United 
States) is amended by striking out "for the payment of such debts," 
and inserting in lieu thereof "for the payment of such debts, or which 
has been redeemed by the United States,". 
(c) CLERICAL A M E N D M E N T S . — 
(1) The heading of section 7505 is amended by striking out 
"PURCHASED" and inserting in lieu thereof "ACQUIRED"; 
(2) The table of sections for chapter 77 is amended by striking 
out 
"Sec. 7505. Sale of personal property purchased by the United 
States." 
and inserting in lieu thereof 
"Sec. 7505. Sale of personal property acquired by the United States." 
SEC. 112. FUND FOR REDEMPTION OF REAL PROPERTY BY UNITED 
STATES. 
(a) 
CREATION or F U N D FOR REDEMPTION or R E A L PROPERTY.—Sub-
chapter A of chapter 80 (relating to application of internal revenue ^gno^^^ ^^°^' 
laws) is amended by adding at the end thereof the following new 
section: 
"SEC. 7810. REVOLVING FUND FOR REDEMPTION OF REAL PROPERTY. 
" ( a ) 
ESTABLISHMENT or F U N D . — T h e r e is established a revolving 
fund, under the control of the Secretary or his delegate, which shall 
be available without fiscal year limitation for all expenses necessary 
for the redemption (by the Secretary or his delegate) of real property 
7809. 
1146 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
Ante, p. 1141. 
as provided in section 7425(d) and section 2410 of title 28 of the 
Post, p. 1147. 
United States Code. There are authorized to be appropriated from 
time to time such sums (not to exceed $1,000,000 in the aggregate) as 
may be necessary to carry out the purposes of this section. 
"(b) REIMBURSEMENT or FUND.—The fund shall be reimbursed 
from the proceeds of a subsequent sale of real property redeemed by 
the United States in an amount equal to the amount expended out of 
such fund for such redemption. 
"(c) SYSTEM OF ACCOUNTS.—The Secretary or his delegate shall 
maintain an adequate system of accounts for such fund and prepare 
annual reports on the basis of such accounts." 
68A Stat. 918. 
(^b) DEPOSIT OF MoNEY RECEIVED.—Scctiou 7809 (relating to deposit 
of collections) is amended by striking out "and 7654," in subsection 
(a) and inserting in lieu thereof "7654, and 7810,"; and by amending 
subsection (b) — 
(1) by striking out "and" at the end of paragraph (2), 
(2) by striking out the period at the end of paragraph (3) and 
inserting in lieu thereof "; and", and 
(3) by inserting after paragraph (3) the following new para-
graph : 
" (4) SURPLUS PROCEEDS IN SALES OF REDEEMED PROPERTY.—Sur-
plus proceeds in any sale under section 7506 of real property 
redeemed by the United States, after making allowance for the 
amount of the tax, interest, penalties, and additions thereto, and 
for the costs of sale." 
(c) CLERICAL AMENDMENT.—The table of sections for subchapter A 
of chapter 80 is amended by adding at the end thereof the following: 
"Sec. 7810. Revolving fund for redemption of real property." 
SEC. 113. EFFECT OF JUDGMENT ON TAX LIEN AND LEVY. 
(a) LIEN NOT MERGED IN JUDGMENT.—Section 6322 (relating to 
period of lien) is amended by inserting after "liability for the aihount 
so assessed" the following: " (or a judgment against the taxpayer aris-
ing out of such liability)". 
(b) LEVY.—Section 6502(a) (relating to length of period for col-
lection after assessment) is amended by adding at the end thereof the 
following new sentence: "The period provided by this subsection dur-
ing which a tax may be collected by levy shall not be extended or cur-
tailed by reason of a judgment against the taxpayer." 
SEC, 114. EFFECTIVE DATE. 
(a) GENERAL RULE.—Except as otherwise provided, the amend-
ments made by this title shall apply after the date of enactment of this 
Act, regardless of when a lien or a title of the United States arose or 
when the lien or interest of any other person was acquired. 
(b) EXCEPTIONS.—The amendments made by this title shall not 
apply in any case— 
(1) in which a lien or a title derived from enforcement of a lien 
held by the United States has been enforced by a civil action or 
suit which has become final by judgment, sale, or agreement before 
the date of enactment of this Act; or 
(2) in which such amendments would— 
(A) impair a priority enjoyed by any person (other than 
the United States) holding a lien or interest prior to the date 
of enactment of this Act; 
80 STAT.] 
PUBLIC LAW 8 9 - 7 1 9 - N O V . 2, 1966 
1147 
(B) operate to incref^se the liability of any sucli person; or 
(C) shorten the time for bringing suit with respect to 
transactions occurring before the date of enactment of this 
Act. 
(c) 
LIABILITY FOR WITHHELD TAXES.— 
(1) The amendments made by section 105(a) (relating to effect 
on third parties) shall apply only with respect to wages paid on or 
after January 1,1967. 
(2) The amendments made by section 105(b) (relating to per-
formance bonds of contractors for public buildings or works) 
shall apply to contracts entered into pursuant to invitations for 
bids issued after June 30,1967. 
(d) CIVIL ACTION To CLEAR TITLE TO PROPERTY.—If, before the date 
of enactment of this Act, any person has commenced a civil action to 
clear title to property pursuant to section 7424 of the Internal Revenue 
Code of 1954 as in effect immediately before the enactment of this Act, 
26'^sc^V/2V" 
such action shall be determined in accordance with section 7424 of 
such Code as in effect immediately before the enactment of this Act. 
TITLE II—CONSENT OF UNITED STATES 
TO BE SUED IN ACTIONS AFFECTING 
PROPERTY IN WHICH IT HAS A LIEN OR 
INTEREST 
SEC. 201. JOINDER OF UNITED STATES IN CERTAIN PROCEEDINGS. 
Section 2410 of title 28 of the United States Code is amended by 
^^ stat. 972. 
redesignating subsection (d) as subsection (e) and by striking out sub-
sections (a), (b), and (c) and inserting in lieu thereof the following 
new subsections: 
"(a) Under the conditions prescribed in this section and section 
1444 of this title for the protection of the United States, the United 
States may be named a party in any civil action or suit in any district 
court, or in any State court having jurisdiction of the subject matter— 
"(1) to quiet title to, 
" (2) to foreclose a mortgage or other lien upon, 
"(3) to partition, 
"(4) to condemn, or 
"(5) of interpleader or in the nature of interpleader with 
respect to, 
real or personal property on which the United States has or claims 
a mortgage or other lien. 
"(b) The complaint or pleading shall set forth with particularity 
the nature of the interest or lien of the United States. In actions or 
suits involving liens arising under the internal revenue laws, the com-
plaint or pleading shall include the name and address of the taxpayer 
whose liability created the lien and, if a notice of the tax lien was 
filed, the identity of the internal revenue office which filed the notice, 
and the date and place such notice of lien was filed. In actions in 
the State courts service upon the United States shall be made by 
serving the process of the court with a copy of the complaint upon 
the United States attorney for the district in which the action is 
brought or upon an assistant United States attorney or clerical 
employee designated by the United States attorney in writing filed 
with the clerk of the court in which the action is brought and by 
64 Stat. 81. 
1148 
PUBLIC LAW 89-719-NOV. 2, 1966 
[80 STAT. 
sending copies of the process and complaint, by registered mail, or by 
certified mail, to the Attorney General of the United States at "Wash-
ington, District of Columbia. In such actions the United States may 
appear and answer, plead or demur within sixty days after such 
service or such further time as the court may allow. 
"(c) A judgment or decree in such action or suit shall have the same 
effect respecting the discharge of the property from the mortgage or 
other lien held by the United States as may be provided with respect 
to such matters by the local law of the place where the court is situ-
ated. However, an action to foreclose a mortgage or other lien, naming 
the United States as a party under this section, must seek judicial sale. 
A sale to satisfy a lien inferior to one of the United States shall be 
made subject to and without disturbing the lien of the United States, 
unless the United States consents that the property may be sold free 
of its lien and the proceeds divided as the parties may be entitled. 
Where a sale of real estate is made to satisfy a lien prior to that of the 
United States, the United States shall have one year from the date of 
sale within which to redeem, except that with respect to a lien arising 
under the internal revenue laws the period shall be 120 days or the 
period allowable for redemption under State law, whichever is longer, 
and in any case in which, under the provisions of section 505 of the 
Housing Act of 1950, as amended (12 LT.S.C. 1701k), and subsection 
72 Stat. 1213. 
(d) of scctiou 1820 of title 38 of the United States Code, the right to 
redeem does not arise, there shall be no right of redemption. In any 
case where the debt owing the United States is due, the United States 
may ask, by way of affirmative relief, for the foreclosure of its own lien 
and where property is sold to satisfy a first lien held by the United 
States, the United States may bid at the sale such sum, not exceeding 
the amount of its claim with expenses of sale, as may be directed by 
the head (or his delegate) of the department or agency of the United 
States which has charge of the administration of the laws in respect to 
which the claim of the United States arises. 
"(d) In any case in which the United States redeems real property 
under this section or section 7425 of the Internal Revenue Code of 
Ante. p. 1141. 
1954, thc amouut to be paid for such property shall be the sum of— 
"(1) the actual amount paid by the purchaser at such sale 
(which, in the case of a purchaser who is the holder of the lien 
being foreclosed, shall include the amount of the obligation 
secured by such lien to the extent satisfied by reason of such sale), 
"(2) interest on the amount paid (as determined under para-
graph (1)) at 6 percent per annum from the date of such sale, 
and 
"(3) the amount (if any) equal to the excess of (A) the 
expenses necessarily incurred in connection with such property, 
over (B) the income from such property plus (to the extent such 
property is used by the purchaser) a reasonable rental value of 
such property." 
SEC. 202. JURISDICTION AND VENUE IN CERTAIN ACTIONS AGAINST 
UNITED STATES. 
(a) JURISDICTION IN PROCEEDINGS BROUGHT BY THIRD PARTIES.— 
6 2 Stat. 9 33. 
Section 1346 of title 28 of the United States Code is amended by add-
ing at the end thereof the following new subsection: 
"(e) The district courts shall have original jurisdiction of any civil 
action against the United States provided in section 7426 of the Inter-
Ante. p. 1143. nal Revenue Code of 1954." 
80 STAT. ] 
PUBLIC LAW 89-720-NOV. 2, 1966 
1149 
(b) 
VENUE IN PROCEEDINGS BROUGHT BY THIRD PARTIES.—Section 
1402 of title 28 of the United States Code is amended by adding at the 
end thereof the following new subsection: 
"(c) Any civil action against the United States under subsection 
(e) of section 1346 of this title may be prosecuted only in the judicial 
district where the property is situated at the time of levy, or if no levy 
is made, in the judicial district in which the event occurred which 
gave rise to the cause of action." 
SEC. 203. EFFECTIVE DATE. 
The amendments made by this title shall apply after the date of the 
enactment of this Act. 
Approved November 2, 1966. 
62 Stat. 937. 
Ante, p. 1148. 
Public Law 89-720 
AN ACT 
November 2, 1966 
To provide for the control or elimination of jellyfish and other such pests in the 
[H. R. 11475] 
coastal waters of the United States, and for other purposes. 
Be it enacted hy the Sennte and House of Representatives 
of the 
United States of Amerlea in Congress assembled^ That, for the pur-
poses of conserving and protecting the fish and shellfish resources in 
the coastal waters of the LTnited States and the Commonwealth of 
Puerto Rico, and promoting and safeguarding water-based recreation 
for present and future generations in these waters, the Secretary of 
the Interior is authorized to cooperate with, and provide assistance to, 
the States in controlling and eliminating jellyfish, commonly referred 
to as "sea nettles"', and other such pests and in conducting research 
for the purposes of controlling floating seaweed in such waters. 
SEC. 2. In carrying out the purposes of this Act, the Secretary, in 
cooperation with the States and the Commonwealth of Puerto Rico, is 
authorized (1) to conduct, directly or by contract, such studies, re-
search, and investigations, as he deems desirable, to determine the 
abundance and distribution of jellyfish and other such pests and their 
effects on fish and shellfish and water-based recreation, (2) to conduct 
studies of control measures of such pests and of floating seaweed, (3) 
to carry out, based on studies made pursuant to this Act, a program 
of controlling or eliminating such pests and such seaweed, and (4) to 
take such other actions as the Secretary deems desirable: Provided^ 
That tlie costs of such actions shall be borne equally by the Federal 
Government and by the States and the Commonwealth of Puerto Rico, 
acthig jointly or severally. 
SEC. 3. There is authorized to be appropriated not to exceed $500,000 
for the fiscal year ending June 30, lO^eS, $750,000 for the fiscal year 
ending June 30, 1969, and $1,(X)0,000 for the fiscal year ending tfune 
30, 1970. 
SEC. 4. The Congress consents to any compact or agreement between 
any two or more States for the purpose of carrying out a program of 
research, study, investigation, and control of jellyfish and other such 
pests in the coastal waters of the Lf^nited States. The right to alter, 
amend, or repeal this section or the consent granted herein is expressly 
reserved. 
SEC. 5. Nothing in this Act shall be construed to alter, amend, repeal, 
modify, or diminish the present general authority of the Secretary of 
the Interior to conduct studies, research, and investigations related to 
the mission of the Department of the Interior. 
Approved November 2, 1966. 
Jellyfish. 
Control or elim-
ination in coastal 
waters. 
Studies. 
Appropriation. 
Compacts. 
65-300 0-67—75