Final Regs on Civil Actions by Third Parties

 [4830-01-u]

 ACTION: Final regulations.

 SUMMARY: This document contains final regulations adding language to the existing regulations regarding civil actions by persons other than taxpayers, to clarify language that is ambiguous or confusing. The final regulations provide that when the IRS levies on property that is in the custody of an agency of the Federal Government, a third party (i.e., someone other than the taxpayer) who is injured by such levy may have a cause of action against the Government for wrongful levy.

 EFFECTIVE DATE: These regulations are effective December 23, 1993.

 FOR FURTHER INFORMATION CONTACT: Jerome D. Sekula, (202) 622-3640 (not a toll-free call).

 SUPPLEMENTARY INFORMATION:

BACKGROUND

This document contains final regulations amending the Procedure and Administration Regulations (26 CFR part 301) under section 7426 of the Internal Revenue Code (Code). On December 23, 1993, a notice of proposed rulemaking relating to civil actions by persons other than taxpayers was published in the Federal Register (58 FR 68092). No written comments were received. No public hearing was requested or held. Because no comments were received, the proposed regulations under section 7426 are adopted without revision by this Treasury decision. The preamble to the notice of proposed rulemaking contains the explanation of the provisions of this Treasury decision.

SPECIAL ANALYSES

 It has been determined that this Treasury decision is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and, therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Small Business Administration for comment on its impact on small business.

DRAFTING INFORMATION

 The principal author of these regulations is Jerome D. Sekula, Office of the Assistant Chief Counsel (General Litigation), IRS. However, other personnel from the IRS and Treasury Department participated in their development.

LIST OF SUBJECTS IN 26 CFR PART 301

 Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.

Treasury Decision 8541

ADOPTION OF AMENDMENT TO THE REGULATIONS

Accordingly, 26 CFR is amended as follows:

Paragraph 1. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 301.7426-1 is amended as follows:

1. Paragraph (a)(1) is revised to read as set forth below.

2. Paragraph (c) is added to read as set forth below.

SECTION 301.7426-1 CIVIL ACTIONS BY PERSONS OTHER THAN TAXPAYERS.

(a) ACTIONS PERMITTED -- (1) WRONGFUL LEVY -- (i) IN GENERAL. If a levy has been made on property or property has been sold pursuant to a levy, any person (other than the person against whom is assessed the tax out of which such levy arose) may bring a civil action against the United States in a district court of the United States based upon such person's claim --

(A) That such person has an interest in, or lien on, such property which is senior to the interest of the United States; and

(B) That such property was wrongfully levied upon.

(ii) DEBT OWED BY ANOTHER FEDERAL AGENCY. Section 7426 and this paragraph (a) apply when a levy is made by the Internal Revenue Service on a debt owed to a taxpayer by another Federal agency. By contrast, section 7426 and this paragraph (a) do not apply if the Internal Revenue Service requests payment from another Federal agency pursuant to a request for setoff.

* * * * *

(c) EFFECTIVE DATE. Paragraph (a)(1) of this section is effective as of December 23, 1993.