[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: 26CFR301.7101-1]

[Page 475-477]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                                  Bonds
 
Sec. 301.7101-1  Form of bond and security required.


    (a) In general. Any person required to furnish a bond under the 
provisions of the Code (other than section 6803(a)(1), relating to bonds 
required of certain postmasters before June 6, 1972, and section 7485, 
relating to bonds to stay assessment and collection of a deficiency 
pending review of a Tax Court decision), or under any rules or 
regulations prescribed under the Code, shall (except as provided in 
paragraph (d) of this section) execute such bond--
    (1) On the appropriate form prescribed by the Internal Revenue 
Service (which may be obtained from the district director), and
    (2) With satisfactory surety.

[[Page 476]]


For provisions as to what will be considered ``satisfactory surety'', 
see paragraph (b) of this section. The bonds referred to in this 
paragraph shall be drawn in favor of the United States.
    (b) Satisfactory surety--(1) Approved surety company or bonds or 
notes of the United States. For purposes of paragraph (a) of this 
section, a bond shall be considered executed with satisfactory surety 
if:
    (i) It is executed by a surety company holding a certificate of 
authority from the Secretary as an acceptable surety on Federal bonds; 
or
    (ii) It is secured by bonds or notes of the United States as 
provided in 6 U.S.C. 15 (see 31 CFR part 225).
    (2) Other surety acceptable in discretion of district director. 
Unless otherwise expressly provided in the Code, or the regulations 
thereunder, a bond may, in the discretion of the district director, be 
considered executed with satisfactory surety if, in lieu of being 
executed or secured as provided in subparagraph (1) of this paragraph 
(b), it is:
    (i) Executed by a corporate surety (other than a surety company) 
provided such corporate surety establishes that it is within its 
corporate powers to act as surety for another corporation or an 
individual;
    (ii) Executed by two or more individual sureties, provided such 
individual sureties meet the conditions contained in subparagraph (3) of 
this paragraph (b);
    (iii) Secured by a mortgage on real or personal property;
    (iv) Secured by a certified, cashier's, or treasurer's check drawn 
on any bank or trust company incorporated under the laws of the United 
States or any State, Territory, or possession of the United States, or 
by a U.S. postal, bank, express or telegraph money order;
    (v) Secured by corporate bonds or stocks, or by bonds issued by a 
State or political subdivision thereof, of recognized stability; or
    (vi) Secured by any other acceptable collateral. Collateral shall be 
deposited with the district director or, in his discretion, with a 
responsible financial institution acting as escrow agent.
    (3) Conditions to be met by individual sureties. If a bond is 
executed by two or more individual sureties, the following conditions 
must be met by each such individual surety:
    (i) He must reside within the State in which the principal place of 
business or legal residence of the primary obligor is located;
    (ii) He must have property subject to execution of a current market 
value, above all encumbrances, equal to at least the penalty of the 
bond;
    (iii) All real property which he offers as security must be located 
in the State in which the principal place of business or legal residence 
of the primary obligor is located;
    (iv) He must agree not to mortgage, or otherwise encumber, any 
property offered as security while the bond continues in effect without 
first securing the permission of the district director; and
    (v) He must file with the bond, and annually thereafter so long as 
the bond continues in effect, an affidavit as to the adequacy of his 
security, executed on the appropriate form furnished by the district 
director.

Partners may not act as sureties upon bonds of their partnership. 
Stockholders of a corporate principal may be accepted as sureties 
provided their qualifications as such are independent of their holdings 
of the stock of the corporation.
    (4) Adequacy of surety. No surety or security shall be accepted if 
it does not adequately protect the interest of the United States.
    (c) Bonds required by Internal Revenue Code of 1939. This section 
shall also apply in the case of bonds required under the Internal 
Revenue Code of 1939 (other than sections 1423(b) and 1145) or under the 
regulations under such Code.
    (d) Bonds required under subtitle E and chapter 75 of the Internal 
Revenue Code of 1954. Bonds required under subtitle E and chapter 75, 
subtitle F, of the Internal Revenue Code of 1954 (or under the 
corresponding provisions of the Internal Revenue Code of 1939) shall be 
in such form and with such surety or sureties as are prescribed in the 
regulations in subchapter E of this chapter

[[Page 477]]

(Alcohol, Tobacco, and Other Excise Taxes).

[32 FR 15241, Nov. 3, 1967, as amended by T.D. 7239, 37 FR 28628, Dec. 
28, 1972]