Rev. Rul. 73-12

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in I.T. 2504, VIII-2 C.B. 260 (1929).

The question presented is whether money on deposit in a bank represented by certificates of deposit in the hands of a delinquent taxpayer is within the scope of a bank account and subject to levy.

Section 6331 of the Internal Revenue Code of 1954 provides that if any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice or demand, it shall be lawful for the Secretary or his delegate to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax.

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 and evidences of debts.

The above noted regulation does not differentiate between moneys held by a bank subject to outstanding certificates of deposit and moneys held by a bank subject to withdrawal. There is no essential difference between the two forms of deposit. The only distinction between the two is that generally moneys held by a bank subject to outstanding certificates of deposit cannot be withdrawn except in accordance with the terms and conditions of the certificate, whereas money held by a bank in a depositor's checking account can be drawn upon at the election of the depositor. Although a certificate of deposit ordinarily bears interest, this does not affect the character of the deposit.

Regardless of the form of deposit, the depositor receives from the bank an acknowledgment in writing of the sum deposited by him. A certificate of deposit is no more than this, for it is a written statement from the bank that the party named therein has deposited with it the amount of money specified in the instrument, and that the same is held for him subject to the terms thereof.

Accordingly, money on deposit in a bank represented by certificates of deposit in the hands of a delinquent taxpayer is within the scope of a bank account and subject to levy.

I.T. 2504 is superseded, since the position stated therein is restated under the current law in this Revenue Ruling.

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