[Federal Register Volume 59, Number 161 (Monday, August 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20221]


[[Page Unknown]]

[Federal Register: August 22, 1994]


                                                   VOL. 59, NO. 161

                                            Monday, August 22, 1994

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[GL-549-87]
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: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This document contains a proposed regulatory amendment 
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). These 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.

DATES: Written comments and requests for a public hearing must be 
received by October 21, 1994.

ADDRESSES: Send submissions to: Internal Revenue Service, Attn: 
CC:DOM:CORP:T:R (GL-549-87), room 5228, 1111 Constitution Avenue, NW, 
Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Robert A. Walker 202-622-4208 (not a 
toll-free call).

SUPPLEMENTARY INFORMATION:

Background

    This notice of proposed rulemaking contains proposed 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).

Explanation of Provisions

    Section 6311(a) of the Internal Revenue 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. 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 these changes in the statute and permit payment by guaranteed 
draft in any case in which the regulations under prior law permitted 
payment by certified, treasurer's, or cashier's check. In addition, the 
regulations provide a definition of ``financial institution.'' Since 
the Bureau of Alcohol, Tobacco, and Firearms now has its own separate 
regulations governing the receipt of payment for certain taxes by check 
or money order, which appear in 27 CFR, provisions of these regulations 
referring to the Bureau of Alcohol, Tobacco, and Firearms have been 
removed.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a Regulatory Impact Analysis 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, an initial 
Regulatory Flexibility Analysis is not required. Pursuant to section 
7805(f) of the Internal Revenue Code, these regulations will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact on small business.

Comments on Proposed Regulations

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments (a signed original 
and eight (8) copies) that are submitted timely to the IRS. All 
comments will be available for public inspection and copying. A public 
hearing may be scheduled if requested in writing by a person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time and place for the hearing will be published in 
the Federal Register.

Drafting Information

    The proposed regulations were developed in the General Litigation 
Division of the Office of Chief Counsel, IRS. However, other personnel 
from the IRS and Treasury participated in their development.

List of Subjects in 26 CFR Part 301

    Employment taxes, Estate tax, Excise taxes, Gift tax, Income taxes, 
Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 301 is proposed to be 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 * * *

    Paragraph 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).
    6. 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.
* * * * *
    (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 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 the 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 the check or draft upon all assets of the financial 
institution on which drawn, or for the amount of the 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)).
    (e) Effective date. The rules in this section are [proposed to be 
effective on August 19, 1994].
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 94-20221 Filed 8-19-94; 8:45 am]
BILLING CODE 4830-01-U