[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: 26CFR301.7507-2]

[Page 554-555]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                          Judicial Proceedings
 
Sec. 301.7507-2  Scope of section generally.

    (a) Purpose. Section 7507 is intended to assist depositors of a bank 
which had ceased to do business by reason of insolvency to recover their 
deposits, by prohibiting collection of taxes of the bank which would 
diminish the assets necessary for payment of its depositors

[[Page 555]]

and also assist depositors of banks which are in financial difficulties 
but which, in certain conditions, continue in business.
    (b) Requisites of application. In order that section 7507 shall 
operate in a case where the bank continues business it is necessary that 
the depositors shall agree to accept, in lieu of all or a part of their 
deposit claims as such, claims against segregated assets, or a lien upon 
subsequent earnings of the bank, or both. When such an agreement exists, 
no tax diminishing such assets or earnings, or both, otherwise available 
and necessary for payment of depositors, may be collected therefrom. If, 
under such an agreement, the depositors have the right also to look to 
the unsegregated assets of the bank for recovery, in whole or in part, 
the unsegregated assets are likewise, until they exceed the amount of 
the depositors' claims chargeable thereto, unavailable for tax 
collection. Any tax of such a bank, or part of any tax, which is once 
uncollectible under section 7507, cannot thereafter be collected except 
from any residue of segregated assets remaining after claims of 
depositors against such assets have been paid.
    (c) Interest. For the purposes of section 7507, depositors' claims 
include bona fide interest, either on the deposits as such, or on the 
claims accepted in lieu of deposits as such.
    (d) Limitations on immunity. Section 7507 is not primarily intended 
for the relief of banks as such. It does not prevent tax collection, 
from assets not necessary, or not available, for payment of depositors, 
from a bank within section 7507(a), at any time within the statute of 
limitations. In other words, the immunity of such a bank is not 
complete, but ceases whenever, within the statutory period for 
collection, it becomes possible to make collection without diminishing 
assets necessary for payment of depositors. In the case of a bank within 
section 7507(b), any immunity to which the bank is entitled is absolute 
except as to segregated assets. Any tax coming within such immunity may 
never be collected. With respect to segregated assets, such a bank is 
subject to the same rule as a bank within section 7507(a), that is to 
say, after claims of depositors against segregated assets have been 
paid, any surplus is subject, within the statute of limitations, to 
collection of any tax, due at any time, the collection of which was 
suspended by the section. The section is not for the relief of creditors 
other than depositors, although it may incidentally operate for their 
benefit. See Sec. 301.7507-4 and paragraph (b) of Sec. 301.7507-9.