[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: 26CFR303.1-3]

[Page 754-755]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 303_TAXES UNDER THE TRADING WITH THE ENEMY ACT--Table of Contents
 
Sec. 303.1-3  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. 303.1-4. In such cases vested 
property shall not be returned 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 under section 9 of the 
Act, within a reasonable time after answer has been filed or after 
beginning of the trial of the case, the Attorney General shall, in 
writing, notify the Commissioner 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. At least 90 days prior to any return of 
vested property pursuant to section 32 of the Act the Attorney General 
shall in writing notify the Commissioner in the manner prescribed in 
subdivision (i) of this subparagraph.

[[Page 755]]

    (3) Return of property--(i) Without security. Vested property, the 
subject of a suit or proceeding pursuant to the Trading With the Enemy 
Act, may be returned without security prior to determination of 
applicable internal revenue taxes and prior to the judgment of the court 
or publication of the order of the Attorney General directing such 
return, to the following described claimants under the 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 return the property at any time without notice to the Commissioner 
of such return.
    (b) Nonresidents, etc. In the case of claimants who at the time of 
return are (1) individuals not permanently resident of the United States 
since December 7, 1941, or (2) nondomestic corporations or other 
nondomestic business 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 (a), 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.
    (ii) When security required. Except as provided in subdivision (i) 
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 release of the property or of the security shall not be 
unnecessarily delayed.
    (4) Security. Security when required shall be such of the following 
as shall, in the judgment of the Commissioner, be appropriate:
    (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.
    (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. Moneys, or if the moneys 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 under section 34 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 (a), 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 in respect of the debtor.