§7507 Exemption of Insolvent Banks From Tax

Summary

It stops taxes from being taken in a way that would reduce the money or property needed to pay depositors of a bank or trust company that mainly takes deposits and makes loans and has gone insolvent or bankrupt. If a national bank is found insolvent, the Comptroller can cancel those taxes. For banks or trust companies set up under state law, the Secretary can cancel taxes when the facts show the taxes would hurt depositors. The rule also covers cases where depositors accept a lien on future earnings, claims on assets set aside, or claims on assets transferred to a trustee or agent; “agent” includes a corporation acting as a liquidating agent. Any tax that was collected in violation of these rules is treated as wrongly collected and must be refunded under the usual tax-refund rules. Taxes that were blocked, canceled, or refunded can be assessed later if it becomes clear collecting them will not reduce assets needed to pay depositors. Taxes blocked because of liens or segregated/transferred assets can be reassessed after depositors are fully paid, up to the remaining segregated or transferred assets. The time limit for assessing or collecting the tax is paused during this period and for 90 days after. This whole rule does not apply to taxes under chapter 21 or chapter 23.