Final Regs Reflect Longer Limitation Periods for Collecting Taxes

 [4830-01]

 ACTION: Final Regulations

 SUMMARY: This document contains regulatory amendments regarding the statute of limitations on collection after assessment and collection after the commencement of judicial proceedings. The existing regulations provide that a proceeding in court to collect an assessable tax may be begun, or a levy for the collection of an assessable tax may be made, within six years after the timely assessment of such tax. The Omnibus Budget Reconciliation Act of 1990 amended the Internal Revenue Code by extending the statute of limitations on collection after assessment from six to ten years. The existing regulations also provide that the period during which a tax liability may be collected by levy shall not be extended or curtailed by reason of a judgment against the taxpayer. The Technical and Miscellaneous Revenue Act of 1988 amended the Internal Revenue Code to provide that if a timely proceeding in court for the collection of a tax is commenced, the period during which the tax may be collected by levy shall be extended until the liability or a judgment arising out of the liability is satisfied or becomes unenforceable. The regulations amend the existing regulations to conform them to the present law.

 EFFECTIVE DATES: The amendment concerning section 301.6502-1(a)(1) and (2)(i) (the statute of limitations on collection after assessment) is effective for taxes assessed after November 5, 1990, and for taxes assessed on or before November 5, 1990, if the period prescribed in section 6502 of the Internal Revenue Code of 1986 (determined without regard to the amendments made by the Omnibus Budget Reconciliation Act of 1990) for the collection of such taxes had not expired as of November 5, 1990. The amendment concerning section 301.6502-1(a)(3) (collection after commencement of judicial proceedings) is effective for levies issued after November 10, 1988. The amendment concerning section 301.6502-1(c) is effective February 11, 1992.

 FOR FURTHER INFORMATION CONTACT: Kevin B. Connelly, 202-535-9682 (not a toll-free call).

SUPPLEMENTARY INFORMATION:

BACKGROUND

This document contains regulations amending the Procedure and Administration Regulations (26 CFR part 301) under section 6502 of the Internal Revenue Code. The regulations reflect the amendment of section 6502 by section 11317 of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. No. 101-5080), by section 1015(u)(1) of the Technical and Miscellaneous Revenue Act of 1988 (Pub. L. No. 100-647), and by section 7811(k)(2) of the Omnibus Budget Reconciliation Act of 1989 (Pub. L. No. 101-239).

EXPLANATION OF PROVISIONS

 The Internal Revenue Service published a notice of proposed rulemaking in the Federal Register on June 18, 1991 [56 F.R. 27928]. Prior to publication of the notice, the Internal Revenue Service gave the Small Business Administration the opportunity to comment.

 The Internal Revenue Service has not received any public comments on the proposed regulation. The proposed regulation, therefore, is adopted in the final regulation.

 Section 11317 of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. No. 101-508, 104 Stat. 1388) amended section 6502(a) of the Internal Revenue Code by extending the statute of limitations on collection after assessment from six years to ten years. The regulation conforms the existing regulations to section 6502(a) in its present form.

 Section 1015(u)(1) of the Technical and Miscellaneous Revenue Act of 1988 (TAMRA) (Pub. L. No. 100-647, 102 Stat. 3573) amended section 6502 of the Internal Revenue Code to provide that if a timely proceeding in court for the collection of a tax is commenced, the period during which the tax may be collected by levy shall be extended until the tax liability or a judgment against the taxpayer arising from the liability is satisfied or becomes "enforceable."

 The word "enforceable" appeared in the statute through a clerical error. The error was corrected by section 7811(k)(2) of the Omnibus Budget Reconciliation Act of 1989 (Pub. L. No. 101-239, 103 Stat. 2412), which changed the word "enforceable" to "unenforceable." The existing regulations under section 6502(a) of the Internal Revenue Code provide that the period for collection by levy after an assessment shall not be extended or curtailed by reason of a judgment against a taxpayer. This is now an incorrect statement of the law, in view of the TAMRA amendment. The regulations would conform the existing regulations to section 6502(a) in its present form.

SPECIAL ANALYSES

 It has been determined that these rules are not major rules as defined in Executive Order 12291. Therefore, a Regulatory Impact Analysis 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, an initial Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, a copy of these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comments on their impact on small business.

DRAFTING INFORMATION

 The principal authors of these proposed regulations are Kevin B. Connelly and Anne P. Rosselot, Office of the Assistant Chief Counsel (General Litigation), Internal Revenue Service. However, personnel from other offices of the Internal Revenue Service and Treasury Department participated in their development.

LIST OF SUBJECTS

26 CFR Part 301

 Administrative practice and procedure, Alimony, Bankruptcy, Child Support, Continental shelf, Courts, Crime, Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Investigations, Law enforcement, Oil pollution, Penalties, Pensions, Reporting and recordkeeping requirements, Statistics, Taxes.

Treasury Decision 8391

ADOPTION OF AMENDMENTS TO THE REGULATIONS

Accordingly, title 26, part 301 of the Code of Federal Regulations is amended as follows:

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

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

Par. 2. Section 301.6502-1 is amended as follows:

1. Paragraph (a)(1) is amended by removing the words "6 years" and adding the words "10 years" in their place.

2. Paragraph (a)(2)(i) is amended by removing the words "6-year period of limitation" and adding "10-year period of limitation" in their place.

3. Paragraph (a)(3) is revised to read as set forth below.

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

SECTION 301.6502-1 COLLECTION AFTER ASSESSMENT.

(a) * * *

(3) If a proceeding in court for the collection of a tax is begun within the period provided in paragraph (a)(1) of this section (or within any extended period as provided in paragraph (a)(2) of this section), the period during which the tax may be collected by levy is extended until the liability for the tax or for a judgment against the taxpayer arising from the liability is satisfied or becomes unenforceable.

* * * * *

(c) EFFECTIVE DATES. (1) Paragraph (a)(1) of this section shall apply to --

(i) Taxes assessed after November 5, 1990; and

(ii) Taxes assessed on or before November 5, 1990, if the period prescribed in section 6502 of the Internal Revenue Code of 1986 (determined without regard to the amendments made by the Omnibus Budget Reconciliation Act of 1990) for the collection of such taxes has not expired as of such date.

(2) Paragraph (a)(3) of this section shall apply to levies issued after November 10, 1988.