Rev. Rul. 75-355

Advice has been requested whether the holding in Rev. Rul. 73-12, 1973-1 C.B. 601, that 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, is applicable to negotiable certificates of deposit.

Section 6331 of the Internal Revenue Code of 1954 provides that the outstanding liability of a taxpayer may be satisfied by levy on all property and rights to property (except that exempt under section 6334) belonging to the taxpayer.

Under section 301.6331-1 of the Regulations on Procedure and Administration, 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 including bank accounts and evidences of debts.

Rev. Rul. 73-12 points out that since the regulations under section 6331 of the Code do 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 distinction between the two and both are subject to levy.

In United States v. Bowery Savings Bank, 297 F. 2d 380 (2d Cir. 1961), the court noted that a maker of a negotiable note need not pay a creditor without surrender of the note, since he remains liable to pay any holder who duly presents it later on.

Accordingly, the holding in Rev. Rul. 73-12 is not applicable to negotiable certificates of deposit. A levy by the Government on funds represented by a negotiable certificate of deposit must be made by presentation of the negotiable certificate and the surrender of such certificate to the maker.

Rev. Rul. 73-12 is hereby modified.