§ 7507. — Exemption of insolvent banks from tax.
[Laws in effect as of January 7, 2003]
[Document not affected by Public Laws enacted between
January 7, 2003 and December 19, 2003]
[CITE: 26USC7507]
TITLE 26--INTERNAL REVENUE CODE
Subtitle F--Procedure and Administration
CHAPTER 77--MISCELLANEOUS PROVISIONS
Sec. 7507. Exemption of insolvent banks from tax
(a) Assets in general
Whenever and after any bank or trust company, a substantial portion
of the business of which consists of receiving deposits and making loans
and discounts, has ceased to do business by reason of insolvency or
bankruptcy, no tax shall be assessed or collected, or paid into the
Treasury of the United States, on account of such bank or trust company,
which shall diminish the assets thereof necessary for the full payment
of all its depositors; and such tax shall be abated from such national
banks as are found by the Comptroller of the Currency to be insolvent;
and the Secretary, when the facts shall appear to him, is authorized to
remit so much of the said tax against any such insolvent banks and trust
companies organized under State law as shall be found to affect the
claims of their depositors.
(b) Segregated assets; earnings
Whenever any bank or trust company, a substantial portion of the
business of which consists of receiving deposits and making loans and
discounts, has been released or discharged from its liability to its
depositors for any part of their claims against it, and such depositors
have accepted, in lieu thereof, a lien upon subsequent earnings of such
bank or trust company, or claims against assets segregated by such bank
or trust company or against assets transferred from it to an individual
or corporate trustee or agent, no tax shall be assessed or collected, or
paid into the Treasury of the United States, on account of such bank or
trust company, such individual or corporate trustee or such agent, which
shall diminish the assets thereof which are available for the payment of
such depositor claims and which are necessary for the full payment
thereof. The term ``agent'', as used in this subsection, shall be deemed
to include a corporation acting as a liquidating agent.
(c) Refund; reassessment; statutes of limitation
(1) Any such tax collected shall be deemed to be erroneously
collected, and shall be refunded subject to all provisions and
limitations of law, so far as applicable, relating to the refunding of
taxes.
(2) Any tax, the assessment, collection, or payment of which is
barred under subsection (a), or any such tax which has been abated or
remitted shall be assessed or reassessed whenever it shall appear that
payment of the tax will not diminish the assets as aforesaid.
(3) Any tax, the assessment, collection, or payment of which is
barred under subsection (b), or any such tax which has been refunded
shall be assessed or reassessed after full payment of such claims of
depositors to the extent of the remaining assets segregated or
transferred as described in subsection (b).
(4) The running of the statute of limitations on the making of
assessment and collection shall be suspended during, and for 90 days
beyond, the period for which, pursuant to this section, assessment or
collection may not be made, and a tax may be reassessed as provided in
paragraphs (2) and (3) of this subsection and collected, during the time
within which, had there been no abatement, collection might have been
made.
(d) Exception of employment taxes
This section shall not apply to any tax imposed by chapter 21 or
chapter 23.
(Aug. 16, 1954, ch. 736, 68A Stat. 897; Pub. L. 94-455, title XIX,
Sec. 1906(a)(50), (b)(13)(A), Oct. 4, 1976, 90 Stat. 1831, 1834.)
Amendments
1976--Subsec. (a). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
``or his delegate'' after ``Secretary''.
Subsec. (c). Pub. L. 94-455, Sec. 1906(a)(50), struck out ``after
May 28, 1938'' in par. (2) after ``or remitted'' and in par. (3) after
``been refunded''.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94-455 effective on first day of first month
which begins more than 90 days after Oct. 4, 1976, see section
1906(d)(1) of Pub. L. 94-455, set out as a note under section 6013 of
this title.
Section Referred to in Other Sections
This section is referred to in sections 6207, 6504 of this title.
