[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: 26CFR301.7507-9]

[Page 558]
 
                       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. 301.7507-9  Termination of immunity.

    (a) In general. (1) In the case of a bank within section 7507(a), 
immunity will end whenever, and to the extent that, taxes may be 
assessed and collected, within the applicable limitation periods as 
extended by section 7507, without diminishing the assets available and 
necessary for payment of depositors. Immunity of a bank within section 
7507 (b) is terminated, as to segregated assets, whenever claims of 
depositors against such assets have been paid in full. See Sec. 
301.7507-3. As to segregated assets, the termination of immunity is 
complete, and any balance remaining after payment of depositors is 
available, within statutory limitations, for collection of tax due at 
any time. However, taxes of the bank will be collectible from segregated 
assets only to the extent that the bank has a legal or equitable 
interest therein. Assets as to which there has been a complete 
conveyance for benefit of depositors, and the bank has bonafide been 
divested of all legal and equitable interest, are not available for 
collection of the bank's tax liability.
    (2) As to unsegregated assets of a bank within section 7507(b), 
immunity terminates only as to taxes thereafter becoming due. When taxes 
are once immune from collection, the immunity as to unsegregated assets 
is absolute. But see paragraph (a) of Sec. 301.7507-4.
    (b) General creditors. While the immunity from tax collection is for 
protection of depositors, and not for benefit of general creditors, in 
some cases the immunity will not end until the assets are sufficient to 
cover indebtedness of creditors generally. This situation will exist 
where under applicable law the claims of general creditors are on a 
parity with those of depositors, so that to pay depositors in full it is 
necessary to pay all creditors in full.
    (c) Shareholder liability. In determining the sufficiency of the 
assets to satisfy the depositors' claims, shareholders' liability to the 
extent collectible shall be treated as available assets. See Sec. 
301.7507-7.
    (d) Deposit insurance. Deposit insurance payable to depositors shall 
not be treated as an asset of the bank and shall be disregarded in 
determining the sufficiency of the assets to meet the claims of 
depositors. For taxable years ending on or after April 22, 1992, deposit 
insurance does not include Federal Financial Assistance (as defined in 
section 597) and other payments described in section 597(a) prior to its 
amendment by the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 and, therefore, such payments must be taken into 
account to determine whether a bank's assets are sufficient to meet 
claims of depositors.
    (e) Notice by bank. A bank within section 7507(b), upon termination 
of immunity with respect to (1) earnings, (2) segregated or transferred 
assets, or (3) unsegregated assets, shall immediately notify the 
district director for the internal revenue district in which the 
taxpayer's returns were filed of such termination of immunity. See 
paragraph (b) of Sec. 301.7507-8.
    (f) Payment by bank. As immunity terminates with respect to any 
assets, it will be the duty of the bank, without notice from the 
district director, to make payment of taxes collectible from such 
assets.

[32 FR 15241, Nov. 3, 1967, as amended by T.D. 8641, 60 FR 66105, Dec. 
21, 1995]