[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6363-2]

[Page 334-335]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
               Seizure of Property for Collection of Taxes
 
Sec. 301.6363-2  Withdrawal from State agreements.

    (a) By notification. If a State which has entered into a State 
agreement desires to withdraw from the agreement, its Governor shall 
file a notice of withdrawal with the Secretary or his delegate. A notice 
of withdrawal shall include the following documents:
    (1) Request by the Governor. A request by the Governor of the State 
that the State agreement cease to be effective with respect to taxable 
years beginning on or after a specified January 1, except as provided in 
paragraph (b)(2) of Sec. 301.6365-2 with respect to withholding in the 
case of fiscal year taxpayers.
    (2) Legislative approval of withdrawal. A certified copy of an act 
or Resolution of the legislature of the State in which the legislature 
affirmatively expresses its approval of the State's withdrawal from the 
State agreement.
    (3) Identification of State official. A written identification of 
the State official or officials with whom the Secretary or his delegate 
should coordinate in connection with the State's withdrawal from the 
State agreement.
    (b) By change in State law. If any law of a State which has entered 
into a State agreement is enacted pertaining to individual income taxes 
(including

[[Page 335]]

the collection or administration of such taxes, and the prosecution of 
alleged civil or criminal violations with respect to such taxes), and if 
the Secretary or his delegate determines that as a result of such law 
the State no longer has a qualified tax, then such change in the State 
law shall be treated as a notification of withdrawal from the agreement. 
The Secretary shall notify the Governor in writing when a change is to 
be so treated. Such notification shall have the same effect as if, on 
the effective date of the disqualifying change in the law, the Governor 
had filed with the Secretary or his delegate a valid and sufficient 
notice of withdrawal requesting that the State agreement cease to be 
effective with respect to taxable years beginning on or after the first 
January 1 which is more than 6 months thereafter, subject to the 
exception with respect to withholding in the case of fiscal-year 
taxpayers. However, the cessation of effectiveness may be deferred to a 
subsequent January 1 if the Governor so requests and if the Secretary or 
his delegate in his discretion determines that the date of cessation 
provided in the preceding sentence would subject the State or its 
taxpayers to undue hardship. In addition, the Governor may request the 
Secretary or his delegate to permit the State's early withdrawal from 
the agreement, pursuant to paragraph (c)(2) of this section. Until the 
date of cessation of effectiveness of the State agreement, the change in 
State law which was treated as a notification of withdrawal, and any 
other such subsequent change that would be similarly treated, shall not 
be given effect for purposes of the Federal collection and 
administration of the State taxes. Similarly, such changes shall not be 
given effect for such purposes during the period of litigation if the 
State seeks judicial review of the action of the Secretary or his 
delegate pursuant to section 6363(d) or Sec. 301.6363-4, even if such 
changes are ultimately found by the court not to disqualify the State's 
qualified tax. However, a change in State law which would be treated as 
a notice of withdrawal in the absence of this sentence shall not be so 
treated if, prior to the last November 1 preceding the January 1 on 
which the cessation of effectiveness of the State agreement is to occur, 
either such change in State law is retroactively repealed, or the State 
law is retroactively modified and the Secretary or his delegate 
determines that with such modification the State has a qualified tax.
    (c) Rules relating to time of withdrawal--(1) General rule. Except 
as provided in subparagraph (2) of this paragraph (c), a notice of 
withdrawal shall not be valid unless the January 1 specified therein is 
not earlier than the first January 1 which is more than 6 months 
subsequent to the date on which the notice is received by the Secretary 
or his delegate. Thus, for example, if the notice specifies January 1, 
1980, for withdrawal, the notice must be received no later than June 30, 
1979.
    (2) Early withdrawal. The Secretary or his delegate may, in his 
discretion and upon written request by a Governor of a State who has 
filed a notice of withdrawal, waive the 6-months requirement of section 
6363(b)(1) and subparagraph (1) of this paragraph (c), if the Secretary 
determines that:
    (i) The State will suffer a hardship if required to meet such 
requirement, and
    (ii) The early withdrawal requested by the Governor would be 
practicable from the standpoint of orderly collection of the qualified 
tax and administration of the State law by the Federal Government.

[T.D. 7577, 43 FR 59374, Dec. 20, 1978]