26 U.S.C. § 6332 — Surrender of property subject to levy

(a) Requirement Except as otherwise provided in this section, any person in possession of (or obligated about) property or rights to property subject to levy^* upon which a levy has been made must, upon demand of the Secretary^*, surrender that property or rights (or discharge that obligation) to the Secretary, except that part of the property or rights as is, at the time of that demand, subject to an attachment or execution under any judicial process. (b) Special rule for life insurance and endowment contracts (1) Generally A levy on an organization about a life insurance or endowment contract^* issued by that organization must, without necessity for the surrender of the contract document, constitute a demand by the Secretary for payment of the amount described in paragraph (2) and the exercise of the right of the person against whom the tax is assessed to the advance of that amount. that organization must pay over that amount 90 days after service of notice of levy. that notice must include a certification by the Secretary that a copy of that notice has been mailed to the person against whom the tax is assessed at his last known address. (2) Satisfaction of levy that levy must be deemed to be satisfied if that organization pays over to the Secretary the amount which the person against whom the tax is assessed could have had advanced to him by that organization on the date prescribed in paragraph (1) for the satisfaction of that levy, increased by the amount of any advance (including contractual interest thereon) made to that person on or after the date that organization had actual notice or knowledge (within the meaning of section 6323(i)(1)) of the existence of the lien about which that levy is made, other than an advance (including contractual interest thereon) made automatically to maintain that contract in force under an agreement entered into before that organization had that notice or knowledge. (3) Enforcement proceedings The satisfaction of a levy under paragraph (2) must be without prejudice to any civil action for the enforcement of any lien imposed by this title about that contract. (c) Special rule for banks Any bank (as defined in section 408(n)) must surrender (subject to an attachment or execution under judicial process) any deposits (including interest thereon) in that bank only after 21 days after service of levy. (d) Enforcement of levy (1) Extent of personal liability Any person who fails or refuses to surrender any property or rights to property, subject to levy, upon demand by the Secretary, must be liable in his own person and estate to the United States in a sum equal to the value of the property or rights not so surrendered, but not exceeding the amount of taxes for the collection of which that levy has been made, together with costs and interest on that sum at the underpayment rate established under section 6621 from the date of that levy (or, for a levy described in section 6331(d)(3), from the date that person would otherwise have been obligated to pay over that amounts to the taxpayer^*). Any amount (other than costs) recovered under this paragraph must be credited against the tax liability for the collection of which that levy was made. (2) Penalty for violation In addition to the personal liability imposed by paragraph (1), if any person required to surrender property or rights to property fails or refuses to surrender that property or rights to property without reasonable cause, that person must be liable for a penalty equal to 50 percent of the amount recoverable under paragraph (1). No part of that penalty must be credited against the tax liability for the collection of which that levy was made. (e) Effect of honoring levy Any person in possession of (or obligated about) property or rights to property subject to levy upon which a levy has been made who, upon demand by the Secretary, surrenders that property or rights to property (or discharges that obligation) to the Secretary (or who pays a liability under subsection (d)(1)) must be discharged from any obligation or liability to the delinquent taxpayer and any other person about that property or rights to property arising from that surrender or payment. (f) Person defined The term “person,” as used in subsection (a), includes an officer or employee^* of a corporation^* or a member or employee of a partnership^*, who as that officer, employee, or member is under a duty to surrender the property or rights to property, or to discharge the obligation.