[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR53.4961-2]

[Page 238-239]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 53_FOUNDATION AND SIMILAR EXCISE TAXES--Table of Contents
 
                   Subpart K_Second Tier Excise Taxes
 
Sec. 53.4961-2  Court proceedings to determine liability for second tier 
tax.

    (a) Introduction. Under section 4961 (b) and (c), the period of 
limitations on collection may be suspended and assessment or collection 
of first or second tier tax may be prohibited during the pendency of 
administrative and judicial proceedings conducted to determine a 
taxpayer's liability for second tier tax. This section provides rules 
relating to the suspension of the limitations period and the 
prohibitions on assessment and collection. In addition, this section 
describes the administrative and judicial proceedings to which these 
rules apply.
    (b) Initial proceeding--(1) Defined. For purposes of subpart K, an 
initial proceeding means a proceeding described in subparagraph (2) or 
(3).
    (2) Tax Court proceeding before assessment. A proceeding is 
described in this subparagraph (2) if it is a proceeding with respect to 
the taxpayer's liability for second tier tax and is commenced in 
accordance with section 6213 (a).

[[Page 239]]

    (3) Refund proceeding commenced before correction period ends. A 
proceeding is described in this subparagraph (3) if it is a proceeding 
commenced under section 7422, in accordance with the provisions of Sec. 
53.4963-1(e) (4) and (5) (relating to prerequisites to extension of the 
correction period during certain refund proceedings), and with respect 
to the taxpayer's liability for second tier tax.
    (c) Supplemental proceeding--(1) Jurisdiction. If a determination in 
an initial proceeding that a taxpayer is liable for a second tier tax 
has become final, the court in which the initial proceeding was 
commenced shall have jurisdiction to conduct any necessary supplemental 
proceeding to determine whether the taxable event was corrected during 
the correction period.
    (2) Time for beginning proceeding. The time for beginning a 
supplemental proceeding begins on the day after a determination in an 
initial proceeding becomes final and ends on the 90th day after the last 
day of the correction period.
    (d) Restriction on assessment during Tax Court proceeding. If a 
supplemental proceeding described in section 4961 (b) and Sec. 53.4961-
2(c) is commenced in the Tax Court, the provisions of the second and 
third sentences of section 6213(a) and the first and third sentences of 
Sec. 301.6213-1(a)(2) apply with respect to a deficiency in second tier 
tax until the decision of the Tax Court in the supplemental proceeding 
is final.
    (e) Suspension of period of collection for second tier tax--(1) 
Scope. Except as provided in subparagraph (6), this paragraph (e) 
applies to the second tier tax assessed with respect to a taxable event 
if a claim described in subparagraph (2) is filed.
    (2) Claim for refund. A claim for refund is described in this 
subparagraph (2) if, no later than 90 days after the day on which the 
second tier tax is assessed with respect to a taxable event, the 
taxpayer--
    (i) Pays the full amount of first tier tax for the taxable period, 
and
    (ii) Files a claim for refund of the amount paid.
    (3) Collection prohibited. No levy or proceeding in court for the 
collection of the second tier tax shall be made, begun, or prosecuted 
until the end of the collection prohibition period described in 
subparagraph (5). Notwithstanding section 7421(a), the collection by 
levy or proceeding may be enjoined during the collection prohibition 
period by a proceeding in the proper court.
    (4) Suspension of running of period of limitations on collection. 
With respect to a second tier tax to which this paragraph (e) applies, 
the running of the period of limitations provided in section 6502 
(relating to collection of tax by levy or by a proceeding in court) 
shall be suspended for the collection prohibition period described in 
subparagraph (5).
    (5) Collection prohibition period. The collection prohibition period 
begins on the day the second tier tax is assessed and ends on the latest 
of:
    (i) The day a decision in a refund proceeding commenced before the 
91st day after denial of the claim described in subparagraph (2) of this 
paragraph (including any supplemental proceeding under Sec. 53.4961-
2(c)) becomes final;
    (ii) The 90th day after the claim referred to in subparagraph (2) is 
denied; or
    (iii) The 90th day after the second tier tax is assessed.
    (6) Jeopardy collection. If the Secretary makes a finding that the 
collection of the second tier tax is in jeopardy, nothing in this 
paragraph (e) shall prevent the immediate collection of such tax.
    (f) Finality--(1) Tax Court proceeding. For purposes of this subpart 
K, section 7481 applies in determining when a decision in a Tax Court 
proceeding becomes final.
    (2) Refund proceeding. For purposes of this subpart K, Sec. 
301.7422-1 applies in determining when a decision in a refund proceeding 
becomes final.