Rev. Proc. 55-7

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to prescribe instructions with respect to remittances acceptable in payment of taxes and stamps under the Internal Revenue Code of 1954.

SEC. 2. AUTHORITY.

Section 6311 of the 1954 Code authorizes the acceptance of checks or money orders in payment of internal revenue taxes, or in payment for internal revenue stamps, to the extent and under the conditions provided in regulations issued by the Secretary of the Treasury or his delegate.

SEC. 3. DEFINITION OF TERMS.

.01 As used herein, the term `money order' means:

1. A United States postal, bank, express, or telegraph money order;

2. A money order issued by a domestic building and loan association (as defined in section 7701(a)(19) of the Code) or by a similar association incorporated under the laws of a possession of the United States; or

3. A postal money order issued by a country with which the United States maintains direct exchange of money orders on a domestic basis. Such countries presently are: Antigua, The Bahamas, Barbados, Bermuda, British Guiana, British Honduras, British Virgin Islands, Canada, Canal Zone, Cuba, Dominica, Grenada, Jamaica, Montserrat, Nevis, St. Kitts, St. Lucia, St. Vincent, Trinidad and Tobago.

.02 The term `domestic building and loan association,' referred to above and as defined in section 7701(a)(19) of the Code, means `a domestic building and loan association, a domestic savings and loan association, and a Federal savings and loan association, substantially all the business of which is confined to making loans to members.'

SEC. 4. PAYMENT OF TAXES.

Pursuant to regulations, Treasury Decision 6119, C.B. 1955-1, -, which became effective on January 1, 1955, District Directors of Internal Revenue may accept personal checks, or money orders, drawn on any bank or trust company incorporated under the laws of the United States or under the laws of any State, Territory, or possession of the United States, in payment for internal revenue taxes, provided such checks or money orders are collectible in United States money at par (without any deduction for exchange or other charges). District Directors also may accept such checks or money orders in payment for internal revenue stamps, or for the prepayment of the taxes on wines, to the extent and under the conditions provided in section 5 below.

SEC. 5. PAYMENT FOR INTERNAL REVENUE STAMPS, OR PREPAYMENT OF WINE TAX

.01 District Directors may accept checks and money orders described in section 4-

1. Except in payment for internal revenue stamps for:

a. Taxes imposed under subchapter F of chapter 39 (relating to silver bullion),

b. Taxes imposed under chapter 34 (relating to documentary stamps),

c. Taxes on distilled spirits, including rectification tax, imposed under chapter 51,

d. Taxes imposed under chapter 52 (relating to tobacco and manufactures); and

2. Except in prepayment of the taxes on wines as authorized by Part 240, Title 26, Code of Federal Regulations.

The District Director shall, except as authorized in subsection .02 below, accept in payment for silver bullion, documentary, distilled spirits (including rectification), or tobacco stamps, or in prepayment of taxes on wines only cash; certified, cashiers' or treasurers' checks drawn on any bank or trust company incorporated under the laws of any State, Territory, or possession of the United States; and money orders described in section 3.

.02 A person desiring to tender personal checks for silver bullion, documentary, distilled spirits (including rectification), or tobacco stamps, or in prepayment of the taxes on wines, should make application in advance to the District Director, giving his name, address, firm name if any, and the approximate value of stamps (or amount of prepayment of taxes on wines) for with it is desired to tender personal checks per week or other period. In the case of silver bullion or documentary stamps, if deemed necessary the applicant may be required to furnish a financial statement as a basis for consideration of such request. In the case of distilled spirits and tobacco stamps, or prepayment of the taxes on wines, personal checks may be accepted in an amount not exceeding the amount of the bond; or, if an applicant wishes to tender personal checks in amounts exceeding his bond, he shall submit a financial statement, and personal checks may be accepted in an amount not exceeding the net worth shown on such statement. (The District Director may require a new financial statement once a year, or more frequently if deemed advisable.) When personal checks are outstanding in the full amount of the bond or net worth, sufficient time should be allowed for the outstanding checks to clear before accepting further personal checks.

.03 When applications pursuant to section 5.02 above are received from companies which operate in more than one district, and which desire to tender personal checks in excess of the bond, for distilled spirits (including rectification), or tobacco stamps, or in prepayment of the taxes on wines, it will be necessary that more detailed information be secured from the applicant. In such cases, the company should be requested to furnish information as to the total amount of personal checks proposed to be tendered during a given period in each district in which the company operates. This will enable each District Director to compare the total proposed purchases in all districts within a specified period with the total net worth of the company. In the case of distilled spirits, the financial statement must show the value of liquor in bond separately from other assets. In considering applications from such distilleries, attention should be given first to all assets exclusive of liquor in bond, and if the check or checks proposed to be tendered during a given period will approach the stated value of such assets, consideration should then be given as to the probable net amount which could be realized on the liquor in bond in event of seizure under levy.

SEC. 6. DISCRETION AS TO ACCEPTANCE OF PERSONAL CHECKS.

.01 Notwithstanding the provisions of section 5 above, the District Director, in his discretion, may refuse to accept any personal check in payment for internal revenue stamps or in prepayment of taxes on wines; also, checks tendered pursuant to a prior application as prescribed in section 5.02. The District Director may at any time terminate his authorization under section 5.02.

.02 In any case in which a taxpayer delinquent account includes a charge back of a returned check (for which reasonable cause is not established), District Directors are authorized to instruct collection officers to accept only cash; certified, cashiers' or treasurers' checks; or money orders in payment of the balance of such account. This policy should be extended to any other case where it is believed that acceptance of a personal check will delay or jeopardize ultimate collection of the liability.