[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 533-534]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.6851-1  Termination assessments of income tax.

    (a) Authority for making--(1) In general. This section applies to 
assessments authorized by a district director under section 6851(a) 
(hereinafter referred to as termination assessments). The district 
director shall immediately authorize a termination assessment of the 
income tax for the current or preceding taxable year if the district 
director finds that a taxpayer designs to do an act which would tend to 
prejudice proceedings to collect the income tax for such year or years 
unless such proceedings are brought without delay. In addition, the 
district director shall immediately authorize such a termination 
assessment if the district director determines that the taxpayer designs 
to do any act which would tend to render such proceedings wholly or 
patially ineffective unless brought without delay. A termination 
assessment will be made if collection is determined to be in jeopardy 
because at least one of the following conditions exists.
    (i) The taxpayer is or appears to be designing quickly to depart 
from the United States or to conceal himself or herself.
    (ii) The taxpayer is or appears to be designing quickly to place 
his, her, or its property beyond the reach of the Government either by 
removing it from the United States, by concealing it, by dissipating it, 
or by transferring it to other persons.
    (iii) The taxpayer's financial solvency is or appears to be 
imperiled.

Paragraph (a)(1)(iii) of this section does not include cases where the 
taxpayer becomes insolvent by virtue of the accrual of the proposed 
assessment of tax, and penalty, if any. A tax assessed under this 
section shall become immediately due and payable and the district 
director shall serve upon such taxpayer notice and demand for immediate 
payment of such tax.
    (2) Computation of tax. If a termination assessment of the income 
tax for the current year is made, the income tax for such year shall be 
computed for the period beginning on the first day of such year and 
ending on the day of the assessment. A credit shall be allowed for any 
tax for the taxable year previously assessed under section 6851. The 
taxpayer is entitled to a deduction for the personal exemptions (as 
limited in the case of certain non-resident aliens) without any 
proration for or because of the short taxable period.
    (3) Taxable year not affected by termination. Notwithstanding any 
termination assessment a taxpayer shall file a return in accordance with 
section 6012 and the regulations thereunder for the taxpayer's full 
taxable year. The term ``full taxable year'' means the taxpayer's usual 
annual accounting period determined without regard to any action under 
section 6851 and this section. The return shall show all items of gross 
income, deductions, and credits for such taxable year. Any tax collected 
as a result of a termination assessment will be applied against the tax 
due for the taxpayer's full taxable year. Except as provided in Sec.  
1.6851-2 (relating to departing aliens), no return is required to be 
filed for a terminated period other than a full taxable year.

[[Page 534]]

    (4) Evidence of compliance with income tax obligations. Citizens of 
the United States or of possessions of the United States departing from 
the United States or its possessions will not be required to procure 
certificates of compliance or to present any other evidence of 
compliance with income tax obligations. However, for the rules relating 
to the furnishing of evidence of compliance with the income tax 
obligations by certain departing aliens, see Sec.  1.6851-2.
    (5) Section 6851 inapplicable where section 6861 applies. No 
termination assessment for the preceding taxable year shall be made 
after the due date of the taxpayer's return for such year (determined 
with regard to extensions of time to file such return).
    (b) Notice of deficiency. Where notice and demand for payment 
(following a termination assessment) takes place after February 28, 
1977, the district director shall, within 60 days after the later of:
    (1) The date the taxpayer files a return for the full taxable year; 
or
    (2) The due date of such return (determined with regard to 
extensions); send the taxpayer a notice of deficiency under section 
6212(a). The amount of the deficiency shall be computed in accordance 
with section 6211 and the regulations thereunder. In applying section 
6211, the tax imposed and the amount shown upon the return shall be 
determined on the basis of the taxpayer's full taxable year. Thus, for 
example assume that on November 1, 1979, a termination assessment 
against A, a calendar year taxpayer, is made in the amount of $18,000. 
The termination assessment is for the period from January 1, 1979 
through November 1, 1979. Further assume that on or before April 15, 
1980, A files a form 1040 showing an income tax liability for the full 
year 1979 of $10,000. If the district director determines A's liability 
for tax for 1979 is $16,000, a notice of deficiency for $6,000 shall be 
sent to A on or before June 14, 1980. Assuming that the district 
director had collected the $18,000 assessed, $2,000 shall be refunded.
    (c) Immediate payment. The district director shall make demand for 
immediate payment of the amount of the termination assessment, and the 
taxpayer shall immediately pay such amount or shall immediately file the 
bond provided in section 6863.
    (d) Abatement. The provisions of Sec. Sec.  301.6861-1(e) and 
301.6861-1(f) relating to the abatement of jeopardy assessments, shall 
apply to assessments made under section 6851.

[T.D. 7575, 43 FR 58816, Dec. 18, 1978]