Rev. Rul. 73-310

The purpose of this Revenue Ruling is to update and restate under the current statute and regulations the position set forth in G.C.M. 4783, VII-2 C.B. 183 (1928).

The question presented is whether, under the circumstances described below, a bank is required to pay over to the District Director of Internal Revenue the amount it acknowledged it was holding when a levy was made on a delinquent taxpayer's account or the amount that was actually in the taxpayer's bank account when the levy was served.

In the process of collecting taxes due from a taxpayer, a levy was made on his bank account. The bank accepted the levy, and a statement that $100.00 was in the taxpayer's bank account as of the day the levy was served was acknowledged on the notice of levy and signed by the assistant cashier of the bank. The bank later notified the Internal Revenue Service that on the same day that the levy was served, but prior to the service of levy, the taxpayer had withdrawn $90.00 leaving a balance of $10.00 which was being held subject to the levy.

Section 301.6331-1 of the Regulations on Procedure and Administration provides that levy may be made by serving a notice of levy on any person in possession of, or obligated with respect to, property or rights to property subject to levy, including bank accounts. A levy extends only to property possessed and obligations which exist at the time of the levy. The regulation further provides that if a levy is made on a bank with respect to the account of a delinquent taxpayer and the bank surrenders to the District Director the amount of the taxpayer's balance at the time the levy is made, the levy is satisfied.

Section 6332(a) of the Internal Revenue Code of 1954 provides that any person in possession of property or rights to property subject to levy upon which a levy has been made shall, upon demand of the District Director, surrender such property or rights to the District Director.

In view of the specific provisions of the regulations cited above, the liability of a bank is limited by the amount of funds on hand at the time the levy was made and is not determined by the amount indicated in the acknowledgment of service. Thus the bank is required to pay over only the $10.00 it held at the time of the service of levy.

G.C.M. 4783 is hereby superseded, since the position stated therein is set forth under the current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, 1967-1 C.B. 576.