Annotations- Partnership
Property
6332 Annotations:
Partnership Property- Levy
Penalty for Failure
to Surrender Property: Partnership Property
Rev.
Rul. 73-24 1,
1973-1 CB 602
Section 6331.--Levy and Distraint
26 CFR 301.6331-1: Levy and distraint.
A partnership checking account in a bank is an asset and property of the
partnership and is not subject to levy to satisfy tax assessed against
an individual partner; I.T. 3356 superseded.
[Text]
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 parter, 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.
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[Footnotes] ----------
1
Prepared pursuant to Rev. Proc. 67-6, 1967-1 C.B. 576.
