[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: 26CFR302.1-3]

[Page 748-749]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 302_TAXES UNDER THE INTERNATIONAL CLAIMS SETTLEMENT ACT, AS AMENDED 
AUGUST 9, 1955--Table of Contents
 
Sec. 302.1-3  Protection of internal revenue prior to tax determination.

    (a) Suits and claims for return of vested property--(1) General. The 
provisions of this paragraph apply in cases where there has been neither 
a final nor a tentative determination of internal revenue tax liability. 
See paragraphs (e) and (f) of Sec. 302.1-4. In such cases vested 
property (including property vested pursuant to section 202(a) of the 
Act which is subject to divestment by reason of its ownership by a 
natural person) shall not be returned or divested except in accordance 
with this paragraph.
    (2) Notice to Commissioner--(i) Suits for recovery. Where suit for 
the return of vested property has been instituted pursuant to section 
207(a) of the Act, the Attorney General shall within a reasonable time 
after answer has been filed or after beginning of the trial of the case 
notify the Commissioner in writing of the property involved and the 
name, address, citizenship, residence, and business organization of the 
claimant, and any other pertinent information.
    (ii) Return without suit. Where the Attorney General has determined 
that pursuant to section 207(b) of the Act vested property is to be 
returned to the claimant, the Attorney General shall notify the 
Commissioner in writing in the manner prescribed in subdivision (i) of 
this subparagraph at least 90 days prior to any return of such property.
    (3) Return of property--(i) By divestment. Where the Attorney 
General has determined that property vested pursuant to section 202(a) 
of the Act was directly owned by a natural person, the Attorney General 
shall not divest himself of such property and restore it to its blocked 
status prior to vesting unless there has been a determination of tax 
liability pursuant to Sec. 302.1-4 and a payment of such tax pursuant 
to Sec. 302.1-5.
    (ii) Without security. Where vested property is the subject of a 
suit or proceeding pursuant to the Act, it may be returned without 
security prior to determination of applicable internal revenue taxes and 
prior to the judgment of the court or to the publication of the order of 
the Attorney General directing such return to the following described 
claimants under conditions hereinafter stated:
    (a) Residents and domestic enterprises. In the case of claimants who 
at the time of return are (1) individuals permanently resident in the 
United States since December 7, 1941, or (2) corporations or other 
business enterprises organized under the laws of the United States, or 
any State, Territory, or possession thereof, or the District of 
Columbia, or doing business in the United States, the Attorney General 
may without notice to the Commissioner return the property at any time.
    (b) Non-residents, etc. In the case of claimants who at the time of 
return are (1) individuals not permanently resident in the United States 
since December 7, 1941, or (2) nondomestic corporations or other 
nondomestic enterprises not doing business within the United States, the 
property may be returned not less than 90 days after notice by the 
Attorney General to the Commissioner in a case within subparagraph 
(2)(i) of this paragraph, or not less than 60 days after notice in a 
case within subparagraph (2)(ii) of this paragraph (a), unless within 
such time the Attorney General is advised otherwise by the Commissioner.
    (iii) When security required. Except as provided in subdivisions (i) 
and (ii) of this subparagraph, vested property shall not be released 
prior to determination of tax liability without security satisfactory to 
the Commissioner, but determination of tax liability will be expedited 
in order that the release of the property or of the security shall not 
be unnecessarily delayed.
    (4) Security. When security is required under subparagraph (3)(iii) 
of this paragraph (a), it shall be such of the following as the 
Commissioner considers necessary:
    (i) Bond. A bond of the claimant conditioned upon payment of the 
full amount of internal revenue taxes determined to be due, filed with 
the district director in such amount, and with such sureties, as the 
Commissioner deems necessary. Only surety companies holding a 
certificate of authority from the Secretary of the Treasury may be used.

[[Page 749]]

    (ii) Collateral security. Collateral authorized by law deposited by 
the claimant in lieu of surety conditioned upon the payment of the full 
amount of internal revenue taxes determined to be due.
    (iii) Reservation of assets. Monies, or if the monies are 
insufficient, so much of the other property involved, to be reserved by 
the Attorney General, as will be sufficient in the judgment of the 
Attorney General to cover any internal revenue tax liability determined 
by the Commissioner.
    (b) Vested property subject to debt claims--(1) Notice to 
Commissioner. With respect to vested property available for the payment 
of debt claims pursuant to section 208 of the Act, and with respect to 
which debt claims have been filed, prior to the allowance of any such 
claims the Attorney General shall in writing notify the Commissioner of 
the property involved, the citizenship, residence, business organization 
and other necessary information concerning the debtor and the aggregate 
of debt claims filed in respect thereof.
    (2) Action by Commissioner. Upon receipt of the notice provided in 
subparagraph (1) of this paragraph (b), the Commissioner shall, as soon 
as practicable and not later than 120 days after receipt of notice, 
unless the time is extended by the Commissioner after notice to the 
Attorney General, (i) determine the taxes payable by the Attorney 
General in respect of the debtor, or (ii) advise the Attorney General of 
the provision, if any, to be made by him for payment of taxes with 
respect of the debtor.