Rev. Rul. 73-24

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the position set forth in I.T. 3356, 1940-1 C.B. 72.

The question presented is whether a partnership checking account in a bank is subject to levy to satisfy the unpaid tax of an individual partner.

Following service of a notice of levy on a bank covering unpaid income tax due from a taxpayer, it was discovered that the bank was not in possession of any property or rights to property belonging to the taxpayer individually. However, it was ascertained that a partnership of which the taxpayer was a member had a checking account in the bank as of the date levy was made.

Section 6331 of the Code provides that if any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and 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 receivables, bank accounts, evidences of debt, securities, and accrued salaries, wages, commissions, and other compensation.

Part II, Section 8 of the Uniform Partnership Act provides that all property originally brought into the partnership or subsequently acquired by purchase or otherwise, on account of the partnership is partnership property and that unless the contrary intention appears, property acquired with partnership funds is partnership property. Part V, Section (2)(c) of the Act provides that a partner's right in specific partnership property is not subject to attachment or execution, except on a claim against the partnership.

Accordingly, since a partnership checking account is an asset and property of the partnership and not an asset or property of the individual partner, a partnership checking account in a bank is not subject to levy to satisfy a tax assessed against an individual partner.

I.T. 3356 is superseded, since the position stated therein is restated under the current law in this Revenue Ruling.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.