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9 Tax L. Rev. 325 (1953-1954)
Liability of Life Insurance and Annuities for Unpaid Income Taxes of Living Insureds, Annuitants, and Beneficiaries (Second Installment)

handle is hein.journals/taxlr9 and id is 331 raw text is: Liability Of Life Insurance And Annuities
For Unpaid Income Taxes Of Living
Insureds, Annuitants, And
(Second Installment)*
THE District Director may conclude that the insurance company rather
than the taxpayer is in possession of property, or rights to property, sub-
ject to distraint and proceed against the company under the provisions
of section 3710. Subsection (a) of that section requires any person (in-
cluding a corporation) in possession of property or property rights
subject to distraint, upon which a levy has been made, to surrender the
same to the District Director upon demand, unless at the time of such
demand it is subject to an attachment or execution under any judicial
process. Subsection (b) provides a penalty for failure or refusal to sur-
render in an amount equal to their value (but not exceeding the taxes,
penalties, and interest for which levy has been made) plus costs and inter-
est from the date of levy. Most of the cases involving the question of
distraint in connection with insurance have arisen in actions at law brought
by the United States against insurance companies to recover this penalty
under section 3710(b). Such action must not, of course, be confused with
the civil action permitted by section 3678 (discussed supra) to foreclose
the tax lien against the delinquent taxpayer himself, and in which the in-
surance company may be named a party defendant. To-day the pecuniary
penalty provided in section 3710 (b) may be enforced by an action brought
* [The First Installment of this article appeared in the January, 1954 issue at 9 TAx
L. REv. 205 (1954)-Ed.]
9128 U.S.C.A. §1355 provides: The district courts shall have original jurisdiction, ex-
clusive of the conirts of the States, of any action or proceeding for the recovery or enforce-
ment of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act
of Congress. (italics supplied) Prior to the repeal of section 3745(c), Pub. L. No. 72,

Imaged with the Permission of N.Y.U. Tax Law Review

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