Rule: Release of Lien or Discharge of Property

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Federal Register / Vol. 73, No.

21 / Thursday, January 31, 2008 / Rules and Regulations 5741

authority of the FAA Administrator. DEPARTMENT OF THE TREASURY property was published in the Federal
Subtitle VII, Aviation Programs, Register (72 FR 1301–03). No comments
describes in more detail the scope of the Internal Revenue Service were received and no public hearing
agency’s authority. was requested or held. Accordingly, the
This rulemaking is promulgated 26 CFR Parts 301 and 401 proposed regulations are adopted as
under the authority described in amended by this Treasury decision.
[TD 9378]
Subtitle VII, Part A, Subpart I, Section These final regulations generally retain
40103. Under that section, the FAA is RIN 1545–BE35 the provisions of the proposed
charged with prescribing regulations to regulations but include one
assign the use of airspace necessary to Release of Lien or Discharge of modification as explained in more detail
ensure the safety of aircraft and the Property below.
efficient use of airspace. This regulation AGENCY: Internal Revenue Service (IRS),
is within the scope of that authority as Explanation of Modification
Treasury.
it establishes controlled airspace serving The final regulations differ
ACTION: Final regulations and removal of
the Evangelical Community Hospital substantively in one respect from the
temporary regulations. version of the regulations set forth in the
East in Lewisburg, PA.
SUMMARY: This document contains final notice of proposed rulemaking. The
Lists of Subjects in 14 CFR Part 71 proposed regulations interpret section
regulations related to release of lien and
Airspace, Incorporation by reference, discharge of property under sections 6325(b)(4)(D), which states that section
Navigation (Air). 6325, 6503, and 7426 of the Internal 6325(b)(4)(A) is inapplicable ‘‘if the
Adoption of the Amendment Revenue Code (Code). These regulations owner of the property is the person
update existing regulations and contain whose unsatisfied liability gave rise to
■ In consideration of the foregoing, the procedures for processing a request the lien,’’ as indicating that the
Federal Aviation Administration made by a property owner for discharge procedures for obtaining a discharge of
amends 14 CFR part 71 as follows: of a Federal tax lien from his property a Federal tax lien under section
under section 6325(b)(4). The 6325(b)(4) are not available to a person
PART 71—DESIGNATION OF CLASS A, who owns the subject property with the
B, C, D, AND E AIRSPACE AREAS; AIR regulations also clarify the impact of
these procedures on sections 6503(f)(2) person whose tax liability gave rise to
TRAFFIC SERVICE ROUTES; AND the lien (the taxpayer). Upon further
REPORTING POINTS and 7426(a)(4) and (b)(5). These
regulations reflect the enactment of consideration of this issue, it was
■ 1. The authority citation for part 71 sections 6325(b)(4), 6503(f)(2), and decided that section 6235(b)(4)(D)
continues to read as follows: 7426(a)(4) by the IRS Restructuring and should not be so interpreted, as that
Reform Act of 1998. interpretation would unfairly leave
Authority: 49 U.S.C. 106(g); 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959– some third-party property owners
DATES: Effective Date: These regulations
1963 Comp., p. 389. without a means to discharge Federal
are effective January 31, 2008.
tax liens from their properties.
§ 71.1 [Amended] Applicability Date: These regulations
Accordingly, the final regulations reflect
apply to any release of lien or discharge
■ 2. The incorporation by reference in an interpretation of section
of property that is requested after
14 CFR 71.1 of Federal Aviation 6325(b)(4)(D) that makes the section
January 31, 2008.
Administration Order 7400.9R, Airspace 6325(b)(4) procedures available to a
FOR FURTHER INFORMATION CONTACT:
Designations and Reporting Points, person who co-owns property with the
Debra A. Kohn, (202) 622–7985 (not a taxpayer.
signed August 15, 2007, effective
toll-free number).
September 15, 2007, is amended as Special Analyses
follows: SUPPLEMENTARY INFORMATION:
It has been determined that this
Paragraph 6005 Class E Airspace Areas Background
Treasury decision is not a significant
Extending Upward From 700 Feet or More This document contains final regulatory action as defined in
Above the Surface of the Earth. regulations that amend the Procedure Executive Order 12866. Therefore, a
* * * * * and Administration Regulations (26 CFR regulatory assessment is not required. It
AEA PA E5 Lewisburg, PA [New] part 301) under sections 6325, 6503, and also has been determined that section
Evangelical Community Hospital East 7426 of the Code. The IRS Restructuring 553(b) of the Administrative Procedure
Heliport and Reform Act of 1998, Public Law Act (5 U.S.C. chapter 5) does not apply
(lat. 40°58′47″ N., long. 76°53′08″ W.) 105–206 (112 Stat. 685) (RRA 1998), to these regulations, and because these
Point in Space Coordinates enacted sections 6325(b)(4), 6503(f)(2), regulations do not impose collection of
(lat. 40°58′09″ N., long. 76°52′58″ W.) 7426(a)(4), and 7426(a)(5) to provide a information on small entities, the
That airspace extending upward from 700 statutory mechanism for a person other Regulatory Flexibility Act (5 U.S.C.
feet above the surface of the Earth within a than the person against whom the chapter 6) does not apply. Pursuant to
6-mile radius of the Point in Space underlying tax was assessed, upon section 7805(f) of the Code, the notice
coordinates (lat. 40°58′09″ N., long. 76°52′58″ furnishing a deposit or bond, to obtain
W.) serving the Evangelical Community of proposed rulemaking preceding these
Hospital East Heliport. a discharge of the Federal tax lien from regulations was submitted to the Chief
property owned by him, and for the IRS Counsel for Advocacy of the Small
* * * * * or the courts to determine the Business Administration for comment
Issued in College Park, Georgia, on disposition of the deposit or bond on its impact on small business.
December 17, 2007. amount. RRA 1998 thereby necessitated
Drafting Information
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Mark D. Ward, changes to the rules under sections


Manager, System Support Group, Eastern 6325, 6503, and 7426. The principal author of these
Service Center. On January 11, 2007, a notice of regulations is Debra A. Kohn of the
[FR Doc. 08–349 Filed 1–30–08; 8:45 am] proposed rulemaking (REG–159444–04) Office of the Associate Chief Counsel
BILLING CODE 4910–13–M relating to release of lien or discharge of (Procedure and Administration).

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5742 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Rules and Regulations

List of Subjects language ‘‘district director’’ and adding 7102 and §§ 301.7101–1 and 301.7102–
the language ‘‘appropriate official’’ in its 1.
26 CFR Part 301
place, wherever it appears. (3) Certificate of release for a lien
Employment taxes, Estate taxes, ■ 9. Paragraphs (d)(3) and (d)(4) are
Excise taxes, Gift taxes, Income taxes, which has become legally
amended by removing the language unenforceable. The appropriate official
Penalties, Reporting and recordkeeping ‘‘district director’’ and adding the
requirements. shall have the authority to file a notice
language ‘‘appropriate official’’ in its
of Federal tax lien which also contains
26 CFR Part 401 place, wherever it appears.
a certificate of release pertaining to
■ 10. The first sentence of paragraph (e)
Reporting and recordkeeping those liens which become legally
is amended by removing the language ‘‘a
requirements, Taxes. unenforceable. Such release will
district director’’ and adding the
become effective as a release as of a date
Adoption of Amendments to the language ‘‘the appropriate official’’ in its
Regulations prescribed in the document containing
place, and by removing the language
‘‘the district director’’ and adding the the notice of Federal tax lien and
■ Accordingly, under the authority of 26 certificate of release.
language ‘‘the appropriate official’’ in its
U.S.C. 7805, 26 CFR parts 301 and 401
place. The third and fourth sentences (4) Satisfaction of tax liability. For
are amended as follows:
are amended by removing the language purposes of paragraph (a)(1) of this
PART 301—PROCEDURE AND ‘‘district director’’ and adding the section, satisfaction of the tax liability
ADMINISTRATION language ‘‘appropriate official’’ in its occurs when—
place.
■ Paragraph 1. The authority citation (i) The appropriate official determines
■ 11. Paragraphs (f)(1) and (f)(2)(i) are
for part 301 continues to read, in part, that the entire tax liability listed in a
amended by removing the language ‘‘a
as follows: notice of Federal tax lien has been fully
district director’’ and adding the
satisfied. Such determination will be
Authority: 26 U.S.C. 7805 * * * language ‘‘the appropriate official’’ in its
made as soon as practicable after tender
place, paragraph (f)(2)(i)(b) is amended
■ Par. 2. Section 301.6325–1 is
by removing the language ‘‘the district of payment; or
amended as follows: director’’ and adding the language ‘‘the (ii) The taxpayer provides the
■ 1. Paragraphs (a) and (b)(1)(i), (b)(2)(i),
appropriate official’’ in its place, and appropriate official with proof of full
and (b)(2)(ii) and (b)(3) are revised. paragraph (f)(3) is amended by removing payment (as defined in paragraph (a)(5)
■ 2. Paragraph (b)(2)(iii) is redesignated
the word ‘‘Code’’ and adding the of this section) with respect to the entire
as paragraph (b)(6) and revised.
language ‘‘Internal Revenue Code’’ in its tax liability listed in a notice of Federal
■ 3. Paragraph (b)(4) is redesignated as
place. tax lien together with the information
paragraph (b)(5) and revised.
■ 12. Paragraphs (h) and (i) are added. and documents set forth in paragraph
■ 4. A new paragraph (b)(4) is added.
■ 5. Paragraphs (c)(1) and (c)(2) are The revisions and additions read as (a)(7) of this section. See paragraph
amended by removing the language follows: (a)(6) of this section if more than one tax
‘‘district director’’ and adding the liability is listed in a notice of Federal
§ 301.6325–1 Release of lien or discharge tax lien.
language ‘‘appropriate official’’ in its of property.
place, wherever it appears. (5) Proof of full payment. As used in
■ 6. The first sentence of paragraph
(a) Release of lien—(1) Liability
satisfied or unenforceable. The paragraph (a)(4)(ii) of this section, the
(d)(1) is amended by removing the term proof of full payment means—
language ‘‘A district director’’ and appropriate official shall issue a
adding the language ‘‘The appropriate certificate of release for a filed notice of (i) An internal revenue cashier’s
official’’ in its place, by removing the Federal tax lien, no later than 30 days receipt reflecting full payment of the tax
word ‘‘Code’’ and adding the language after the date on which he finds that the liability in question;
‘‘Internal Revenue Code’’ in its place, entire tax liability listed in such notice
(ii) A canceled check in an amount
and by removing the language ‘‘the of Federal tax lien either has been fully
sufficient to satisfy the tax liability for
district director’’ and adding the satisfied (as defined in paragraph (a)(4)
which the release is being sought;
language ‘‘the appropriate official’’ in its of this section) or has become legally
place. The third sentence is amended by unenforceable. In all cases, the liability (iii) A record, made in accordance
removing the language ‘‘a district for the payment of the tax continues with procedures prescribed by the
director’’ and adding the language ‘‘the until satisfaction of the tax in full or Commissioner, of proper payment of the
appropriate official’’ in its place, and until the expiration of the statutory tax liability by credit or debit card or by
removing the language ‘‘the district period for collection, including such electronic funds transfer; or
director’’ and adding ‘‘the appropriate extension of the period for collection as (iv) Any other manner of proof
official’’ in its place. is agreed to. acceptable to the appropriate official.
■ 7. Paragraph (d)(2)(i) is amended by (2) Bond accepted. The appropriate
removing the language ‘‘A district official shall issue a certificate of release (6) Notice of a Federal tax lien which
director’’ and adding the language ‘‘The of any tax lien if he is furnished and lists multiple liabilities. When a notice
appropriate official’’ in its place, by accepts a bond that is conditioned upon of Federal tax lien lists multiple tax
removing the word ‘‘Code’’ and adding the payment of the amount assessed liabilities, the appropriate official shall
the language ‘‘Internal Revenue Code’’ (together with all interest in respect issue a certificate of release when all of
in its place, and by removing the thereof), within the time agreed upon in the tax liabilities listed in the notice of
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language ‘‘the district director’’ and the bond, but not later than 6 months Federal tax lien have been fully satisfied
adding the language ‘‘the appropriate before the expiration of the statutory or have become legally unenforceable.
official’’ in its place. period for collection, including any In addition, if the taxpayer requests that
■ 8. Paragraph (d)(2)(ii), Examples 1 agreed upon extensions. For provisions a certificate of release be issued with
through 4, are amended by removing the relating to bonds, see sections 7101 and respect to one or more tax liabilities

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Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Rules and Regulations 5743

listed in the notice of Federal tax lien in his discretion, issue a certificate of is less than the prior determination of
and such liability has been fully discharge of any part of the property such value. The appropriate official
satisfied or has become legally subject to the Federal tax lien if he shall refund the amount deposited with
unenforceable, the appropriate official determines that the interest of the interest at the overpayment rate
shall issue a certificate of release. For United States in the property to be so determined under section 6621 or
example, if a notice of Federal tax lien discharged has no value. release the bond furnished to the extent
lists two separate liabilities and one of (3) Discharge of property by that he makes this determination.
the liabilities is satisfied, the taxpayer substitution of proceeds of sale. The (iii) Refund request. If a property
may request the issuance of a certificate appropriate official may, in his owner desires an administrative refund
of release with respect to the satisfied discretion, issue a certificate of of his deposit or release of the bond, the
tax liability and the appropriate official discharge of any part of the property owner shall file a request in writing
shall issue a release. subject to a Federal tax lien imposed with the appropriate official. The
(7) Taxpayer requests. A request for a under chapter 64 of the Internal request shall contain such information
certificate of release with respect to a Revenue Code if such part of the as the appropriate IRS Publication may
notice of Federal tax lien shall be property is sold and, pursuant to a require. The request must be filed
submitted in writing to the appropriate written agreement with the appropriate within 120 days after the date the
official. The request shall contain the official, the proceeds of the sale are certificate of discharge is issued. A
information required in the appropriate held, as a fund subject to the Federal tax refund request made under this
IRS Publication. liens and claims of the United States, in paragraph neither is required nor is
(b) Discharge of specific property from the same manner and with the same effective to extend the period for filing
the lien—(1) Property double the priority as the Federal tax liens or an action in court under section
amount of the liability. (i) The claims had with respect to the 7426(a)(4).
appropriate official may, in his discharged property. This paragraph (iv) Internal Revenue Service’s use of
discretion, issue a certificate of does not apply unless the sale divests deposit if court action not filed. If no
discharge of any part of the property the taxpayer of all right, title, and action is filed under section 7426(a)(4)
subject to a Federal tax lien imposed interest in the property sought to be
for refund of the deposit or release of
under chapter 64 of the Internal discharged. Any reasonable and
the bond within the 120-day period
Revenue Code if he determines that the necessary expenses incurred in
specified therein, the appropriate
fair market value of that part of the connection with the sale of the property
official shall, within 60 days after the
property remaining subject to the and the administration of the sale
expiration of the 120-day period, apply
Federal tax lien is at least double the proceeds shall be paid by the applicant
the amount deposited or collect on such
sum of the amount of the unsatisfied or from the proceeds of the sale before
bond to the extent necessary to satisfy
liability secured by the Federal tax lien satisfaction of any Federal tax liens or
the liability listed on the notice of
and of the amount of all other liens claims of the United States.
(4) Right of substitution of value—(i) Federal tax lien, and shall refund, with
upon the property which have priority interest at the overpayment rate
Issuance of certificate of discharge to
over the Federal tax lien. In general, fair determined under section 6621, any
property owner who is not the taxpayer.
market value is that amount which one portion of the amount deposited that is
If an owner of property subject to a
ready and willing but not compelled to not used to satisfy the liability. If the
Federal tax lien imposed under chapter
buy would pay to another ready and appropriate official has not completed
64 of the Internal Revenue Code submits
willing but not compelled to sell the the application of the deposit to the
an application for a certificate of
property. discharge pursuant to paragraph (b)(5) unsatisfied liability before the end of the
* * * * * of this section, the appropriate official 60-day period, the deposit will be
(2) Part payment; interest of United shall issue a certificate of discharge of deemed to have been applied to the
States valueless—(i) Part payment. The such property after the owner either unsatisfied liability as of the 60th day.
appropriate official may, in his deposits with the appropriate official an (5) Application for certificate of
discretion, issue a certificate of amount equal to the value of the interest discharge. Any person desiring a
discharge of any part of the property of the United States in the property, as certificate of discharge under this
subject to a Federal tax lien imposed determined by the appropriate official paragraph (b) shall submit an
under chapter 64 of the Internal pursuant to paragraph (b)(6) of this application in writing to the appropriate
Revenue Code if there is paid over to section, or furnishes an acceptable bond official. The application shall contain
him in partial satisfaction of the liability in a like amount. This paragraph does the information required by the
secured by the Federal tax lien an not apply if the person seeking the appropriate IRS Publication. For
amount determined by him to be not discharge is the person whose purposes of this paragraph (b), any
less than the value of the interest of the unsatisfied liability gave rise to the application for certificate of discharge
United States in the property to be so Federal tax lien. Thus, if the property is made by a property owner who is not
discharged. In determining the amount owned by both the taxpayer and another the taxpayer, and any amount submitted
to be paid, the appropriate official will person, the other person may obtain a pursuant to the application, will be
take into consideration all the facts and certificate of discharge of the property treated as an application for discharge
circumstances of the case, including the under this paragraph, but the taxpayer and a deposit under section 6325(b)(4)
expenses to which the government has may not. unless the owner of the property
been put into the matter. In no case (ii) Refund of deposit and release of submits a statement, in writing, that the
shall the amount to be paid be less than bond. The appropriate official may, in application is being submitted under
the value of the interest of the United his discretion, determine that either the another paragraph of section 6325 and
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States in the property with respect to entire unsatisfied tax liability listed on not under section 6325(b)(4), and the
which the certificate of discharge is to the notice of Federal tax lien can be owner in writing waives the rights
be issued. satisfied from a source other than the afforded under paragraph (b)(4),
(ii) Interest of the United States property sought to be discharged, or the including the right to seek judicial
valueless. The appropriate official may, value of the interest in the United States review.

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5744 Federal Register / Vol. 73, No. 21 / Thursday, January 31, 2008 / Rules and Regulations

(6) Valuation of interest of United tax lien shall be suspended for a period PART 401—[REMOVED]
States. For purposes of paragraphs (b)(2) equal to the period beginning on the
and (b)(4) of this section, in determining date the appropriate official receives a ■ Par. 5. Part 401 is removed.
the value of the interest of the United deposit or bond in the amount specified Linda E. Stiff,
States in the property, or any part in § 301.6325–1(b)(4)(i) and ending on
Deputy Commissioner for Services and
thereof, with respect to which the the date that is 30 days after the earlier Enforcement.
certificate of discharge is to be issued, of—
Approved: January 9, 2008.
the appropriate official shall give (1) The date the appropriate official
consideration to the value of the Eric Solomon,
no longer holds, or is deemed to no
property and the amount of all liens and Assistant Secretary of the Treasury (Tax
longer hold, within the meaning of Policy).
encumbrances thereon having priority paragraph (b)(4)(iv) of this section, any
over the Federal tax lien. In determining [FR Doc. E8–1569 Filed 1–30–08; 8:45 am]
amount as a deposit or bond by reason
the value of the property, the of taking such actions as prescribed in BILLING CODE 4830–01–P
appropriate official may, in his sections 6325(b)(4)(B) and (C); or
discretion, give consideration to the
(2) The date the judgment secured
forced sale value of the property in DEPARTMENT OF HOMELAND
under section 7426(b)(5) becomes final.
appropriate cases. SECURITY
(c) As used in this section, the term
* * * * *
(h) As used in this section, the term appropriate official means either the Coast Guard
appropriate official means either the official or office identified in the
official or office identified in the relevant IRS Publication or, if such 33 CFR Part 110
relevant IRS Publication or, if such official or office is not so identified, the
[Docket No. USCG–2008–0041 formerly
official or office is not so identified, the Secretary or his delegate.
published under CGD05–06–064]
Secretary or his delegate. (d) Effective/applicability date. This
section applies to any request for a RIN 1625–AA01
(i) Effective/applicability date. This
section applies to any release of lien or certificate of discharge made after
Anchorage Grounds, Hampton Roads,
discharge of property that is requested January 31, 2008.
VA
after January 31, 2008. ■ Par. 4. In § 301.7426–1, paragraphs
■ Par. 3. Section 301.6503(f)–1 is (a)(4), (b)(5), and (d) are added. AGENCY: Coast Guard, DHS.
amended as follows: ACTION: Final rule.
■ 1. The section heading is revised. § 301.7426–1 Civil actions by persons
■ 2. The undesignated paragraph is other than taxpayers. SUMMARY: The Coast Guard is updating
designated as paragraph (a), a paragraph (a) * * * the coordinates of the boundaries of the
heading is added, and a new sentence anchorages listed below from the former
(4) Substitution of value. A person
is added immediately prior to the North American Datum 1927 (NAD 27)
who obtains a certificate of discharge
Example. standard to the current North American
under section 6325(b)(4) with respect to
■ 3. In newly designated paragraph (a), Datum 1983 (NAD 83) standard. These
any property may, within 120 days after
the language ‘‘a district director’’ is changes will not affect the locations or
the day on which the certificate is
removed and the language ‘‘the size of the anchorages on the NOAA
issued, bring a civil action against the
appropriate official’’ is added in its charts as published by NOAA. The
United States in a district court of the
place, the language ‘‘the district change simply updates the anchorage
United States for a determination of
director’’ is removed and the language positions in our regulations to match the
whether the value of the interest of the
‘‘the appropriate official’’ is added in its current datum in use on the applicable
United States (if any) in such property
place, and in the Example the language charts, which are NAD 83.
is less than the value determined by the
‘‘district director’’ is removed and the DATES: This rule is effective March 3,
appropriate official. A civil action under
language ‘‘appropriate official’’ is added 2008.
this provision shall be the exclusive
in its place, wherever it appears.
■ 4. Paragraphs (b), (c), and (d) are
judicial remedy for a person other than ADDRESSES: Documents indicated in this
added. the taxpayer who obtains a certificate of preamble as being available in the
The revisions and additions read as discharge for a filed notice of Federal docket are part of docket USCG–2008–
follows: tax lien. 0041 formerly published under CGD05–
(b) * * * 06–064 and are available for copying or
§ 301.6503(f)–1 Suspension of running of inspection at the Fifth Coast Guard
period of limitation; wrongful seizure of (5) Substitution of value. If the court
determines that the determination by District (dpw), 431 Crawford Street,
property of third-party owner and discharge
the appropriate official of the value of Room 100, Portsmouth, VA 23704–5004,
of lien for substitution of value.
the interest of the United States in the between 9 a.m. and 3 p.m., Monday
(a) Wrongful seizure. * * * The through Friday, except Federal
following example illustrates the property exceeds the actual value of
such interest, the court may grant a Holidays.
principles of this section:
judgment ordering a refund of the FOR FURTHER INFORMATION CONTACT: Mr.
* * * * *
(b) Discharge of wrongful lien for amount deposited, or a release of the Albert Grimes, Fifth Coast Guard
substitution of value. If a person other bond, to the extent that the aggregate of District Prevention and Waterways,
than the taxpayer submits a request in those amounts exceeds the value as (757) 398–6360, E-mail:
writing for a certificate of discharge for determined by the court. Albert.L.Grimes@uscg.mil.
* * * * *
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a filed Federal tax lien under section SUPPLEMENTARY INFORMATION:


6325(b)(4), the running of the period of (d) Paragraphs (a)(4) and (b)(5) of this
limitations on collection after section apply to any request for a Regulatory Information
assessment under section 6502 for any certificate of discharge made after On March 8, 2007, we published a
liability listed in such notice of Federal January 31, 2008. notice of proposed rulemaking (NPRM)

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