CHAPTER 36-COLLECTION

SUBCHAPTER A-GENERAL PROVISIONS

SEC. 3650. COLLECTION DISTRICTS.

(a) ESTABLISHMENT AND ALTERATION. For the purpose of assessing, levying, and collecting the taxes provided by the internal revenue laws, the President may establish convenient collection districts, and may from time to time alter said districts.

(b) NUMBER.-The whole number of collection districts for the collection of internal revenue shall not exceed 65.

(c) BOUNDARIES.

(1) HAWAII.-The Territory of Hawaii shall constitute a district for the collection of the internal revenue of the United States, with a collector, whose office shall be at Honolulu, and deputy collectors at such other places in the several islands as the Secretary shall direct.

(2) ELSEWHERE. For the purpose mentioned in subsection (a), the President may subdivide any State, Territory, or the District of Columbia, or may unite two or more States or Territories into one district.

SEC. 3651. COLLECTION AUTHORITY.

(a) IN GENERAL.

(1) WITHIN DISTRICT.-It shall be the duty of the collectors or their deputies, in their respective districts, and they are authorized, to collect all the taxes imposed by law, however the same may be designated.

(2) OUTSIDE DISTRICT.—

For authority of collector or deputy to collect taxes by distraint outside his own collection district, but within the State, see section 3713. (b) TRANSFERRED ASSESSMENTS.-Whenever a collector has on any list duly returned to him the name of any person not within his collection district who is liable to tax, or of any person so liable who has, in the collection district in which he resides, no sufficient property subject to seizure or distraint, from which the money due for tax can be collected, such collector shall transmit a statement containing the name of the person liable to such tax, with the amount and nature thereof, duly certified under his hand, to the collector of any district to which said person shall have removed, or in which he shall have property, real or personal, liable to be seized and sold for tax. And the collector to whom the said certified statement is transmitted shall proceed to collect the said tax in the same way as if the name of the person and objects of tax contained in the said certified statement were on any list of his own collection district; and he shall, upon receiving said certified statement as aforesaid, transmit his receipt for it to the collector sending the same to him.

SEC. 3652. ESTABLISHMENT BY REGULATION OF MODE OR TIME OF COLLECTION.

Whenever the mode or time of collecting any tax which is imposed is not provided for, the Commissioner may establish the same by regulation.

SEC. 3653. PROHIBITION OF SUITS TO RESTRAIN ASSESSMENT OR COLLECTION.

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(a) TAX.-Except as provided in sections 272 (a) * * * suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court.

(b) LIABILITY OF TRANSFEREE OR FIDUCIARY. -No suit shall be maintained in any court for the purpose of restraining the assessment or collection of (1) the amount of the liability, at law or in equity, of a transferee of property of a taxpayer in respect of any income

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tax, or (3) the amount of the liability of a fiduciary under section 3467 of the Revised Statutes (U. S. C., Title 31, § 192) in respect of any such tax.

[For section 3467 of the Revised Statutes, see the note following section 311 (a).]

SEC. 3654. GENERAL POWERS AND DUTIES RELATING TO COLLEC

TION.

(a) COLLECTORS.-Every collector within his collection district shall see that all laws and regulations relating to the collection of internal revenue taxes are faithfully executed and complied with, and shall aid in the prevention, detection, and punishment of any frauds in relation thereto. For such purposes, he shall have power to examine all persons, books, papers, accounts, and premises, to administer oaths, and to summon any person to produce books and papers, or to appear and testify under oath before him, and to compel compliance with such summons in the same manner as provided in section 3615.

(b) DEPUTY COLLECTORS.-Every deputy collector shall have the like authority in every respect to collect the taxes levied or assessed within the portion of the district assigned to him which is by law vested in the collector himself; but each collector shall, in every respect, be responsible, both to the United States and to individuals, as the case may be, for all moneys collected, and for every act done or neglected to be done, by any of his deputies while acting as such.

(c) INTERNAL REVENUE AGENTS.-Every internal revenue agent shall see that all laws and regulations relating to the collection of internal revenue taxes are faithfully executed and complied with, and shall aid in the prevention, detection, and punishment of any frauds in relation thereto.

SEC. 3655. NOTICE AND DEMAND FOR TAX.

(a) DELIVERY.-Where it is not otherwise provided, the collector shall in person or by deputy, within ten days after receiving any list of taxes from the Commissioner, give notice to each person liable to pay any taxes stated therein, to be left at his dwelling or usual place of business, or to be sent by mail, stating the amount of such taxes and demanding payment thereof.

(b) ADDITION TO TAX FOR NONPAYMENT. If such person does not pay the taxes, within ten days after the service or the sending by mail

of such notice, it shall be the duty of the collector or his deputy to collect the said taxes with a penalty of * * * except that in the taxes, such penalties shall not apply and the interest for nonpayment of tax shall be such as is specifically provided by law with respect to such taxes.

case of income

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For additions to tax for nonpayment after notice and demand in case of

Income taxes, see sections 294 (b) and 297.

SEC. 3656. PAYMENT BY CHECK AND MONEY ORDER.

(a) CERTIFIED, CASHIERS', AND TREASURERS' CHECKS AND MONEY ORDERS.

(1) AUTHORITY TO RECEIVE.—It shall be lawful for collectors to receive for internal revenue taxes * * * certified, cashiers', and treasurers' checks drawn on National and State banks and trust companies, and United States postal, bank, express, and telegraph money orders, during such time and under such regulations as the Commissioner, with the approval of the Secretary, may prescribe.

(2) DISCHARGE OF LIABILITY.

(A) CHECK DULY PAID. -No person who may be indebted to the United States on account of internal revenue taxes * * * who shall have tendered a certified, cashier's, or treasurer's check or money order as provisional payment therefor, in accordance with the terms of this subsection, shall be released from the obligation to make ultimate payment thereof until such certified, cashier's, or treasurer's check or money order so received has been duly paid.

(B) CHECK UNPAID. If any such check or money order so received is not duly paid, the United States shall, in addition to its right to exact payment from the party originally indebted therefor, have a lien for the amount of such check upon all the assets of the bank on which drawn or for the amount of such money order upon all the assets of the issuer thereof; and such amount shall be paid out of its assets in preference to any or all other claims whatsoever against said. bank 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 bank.

(b) OTHER CHECKS.

taxes

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(1) AUTHORITY TO RECEIVE.--Collectors may receive checks in addition to those specified in subsection (a) in payment of during such time and under such rules and regulations as the Commissioner, with the approval of the Secretary, shall prescribe.

(2) ULTIMATE LIABILITY.-If a check so received is not paid by the bank on which it is drawn the person by whom such check has been tendered shall remain liable for the payment of the tax and for all legal penalties and additions to the same extent as if such check had not been tendered.

SEC. 3657. PAYMENT BY UNITED STATES NOTES AND CERTIFICATES OF INDEBTEDNESS.

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Collectors may receive, at par with an adjustment for accrued interest, notes or certificates of indebtedness issued by the United States in payment of income taxes, * during such time and under such rules and regulations as the Commissioner, with the approval of the Secretary, shall prescribe.

[Section 20 (b) of the Second Liberty Bond Act, as amended by the Public Debt Act of 1942 (56 Stat. 189 § 3), reads as follows:

"(b) Any obligations authorized by this Act and redeemable upon demand of the owner or holder may, under such regulations and upon such terms and conditions as the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury may prescribe, be receivable by the United States in payment of any taxes imposed by the United States."]

SEC. 3661. ENFORCEMENT OF LIABILITY FOR TAXES COLLECTED. Whenever any person is required to collect or withhold any internal-revenue tax from any other person and to pay such tax over to the United States, the amount of tax so collected or withheld shall be held to be a special fund in trust for the United States. The amount of such fund shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including penalties) as are applicable with respect to the taxes from which such fund arose.

SUBCHAPTER B-LIEN FOR TAXES

SEC. 3670. PROPERTY SUBJECT TO LIEN.

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, penalty, additional amount, or addition to such tax, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

SEC. 3671. PERIOD OF LIEN.

Unless another date is specifically fixed by law, the lien shall arise at the time the assessment list was received by the collector and shall continue until the liability for such amount is satisfied or becomes unenforceable by reason of lapse of time.

SEC. 3672. VALIDITY AGAINST MORTGAGEES, PLEDGEES,

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CHASERS, AND JUDGMENT CREDITORS. (a) INVALIDITY OF LIEN WITHOUT NOTICE.-Such lien shall not be valid as against any mortgagee, pledgee, purchaser, or judgment creditor until notice thereof has been filed by the collector

(1) UNDER STATE OR TERRITORIAL LAWS.—In the office in which the filing of such notice is authorized by the law of the State or Territory in which the property subject to the lien is situated, whenever the State or Territory has by law authorized the filing of such notice in an office within the State or Territory; or

(2) WITH CLERK OF DISTRICT COURT.-In the office of the clerk of the United States district court for the judicial district in which the property subject to the lien is situated, whenever the State or Territory has not by law authorized the filing of such notice in an office within the State or Territory; or

(3) WITH CLERK OF DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF COLUMBIA.—In the office of the clerk of the District Court of the United States for the District of Columbia, if the property subject to the lien is situated in the District of Columbia.

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(b) (1) EXCEPTION IN CASE OF SECURITIES.-Even though notice of a lien provided in section 3670 has been filed in the manner prescribed in subsection (a) of this section, the lien shall not be valid with respect to a security, as defined in paragraph (2) of this. subsection, as against any mortgagee, pledgee, or purchaser, of such security, for an adequate and full consideration in money or money's. worth, if at the time of such mortgage, pledge, or purchase such mortgagee, pledgee, or purchaser is without notice or knowledge of the existence of such lien.

(2) DEFINITION OF SECURITY.-As used in this subsection the term "security" means any bond, debenture, note, or certificate, or other evidence of indebtedness, issued by any corporation (including one issued by a government or political subdivision thereof), with interest coupons or in registered form, share of stock, voting trust certificate, or any certificate of interest or participation in, certificate of deposit or receipt for, temporary or interim certificate for, or warrant or right to subscribe to or purchase, any of the foregoing; negotiable instrument; or money.

(3) APPLICABILITY OF SUBSECTION. * * * this subsection shall apply regardless of the time when the mortgage, pledge, or purchase was made or the lien arose.

SEC. 3673. RELEASE OF LIEN.

Subject to such regulations as the Commissioner, with the approval of the Secretary, may prescribe, the collector charged with an assessment in respect of any tax may issue a certificate of release of the lien if

(a) LIABILITY SATISFIED OR UNENFORCEABLE.-The collector finds that the liability for the amount assessed, together with all interest in respect thereof, has been satisfied or has become unenforceable by reason of lapse of time; or

(b) BOND ACCEPTED.--There is furnished to the collector 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 in the regulations.

[For single bond covering release of lien and payment of income-tax deficiency, see section 3676.

For applicability of section 3673 to all liens imposed in respect of internal-revenue taxes, see section 3677.]

SEC. 3674. PARTIAL DISCHARGE OF PROPERTY.

(a) PROPERTY DOUBLE THE AMOUNT OF THE LIABILITY.-Subject to such regulations as the Commissioner, with the approval of the Secretary, may prescribe, the collector charged with an assessment in respect of any tax may issue a certificate of partial discharge of any part of the property subject to the lien if the collector finds that the