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an extension of time for payment of one installment does not operate to procure an extension of time for payment of subsequent installments. Nor does an extension of time for filing a return operate to extend the time for payment of the tax or any part thereof. If an extension of time for payment of the tax or any installment is granted, the amount, time for payment of which is so extended, shall be paid on or before the expiration of the period of the extension, together with interest at the rate of 6 per cent per annum on such amount from the date when the payment should have been made if no extension had been granted until the expiration of the period of the extension. If an installment is not paid on the date fixed for its payment, either by the statute itself or by the Commissioner in accordance with the terms of an extension, the whole amount of the tax unpaid shall be paid upon notice and demand from the collector. For payment of taxes required to be withheld at the source see sections 221 and 237 of the statute and articles 371 and 601.

ART. 1202. Collection of tax by suit.-If any person liable to pay any tax fails to pay it on or before the date prescribed for its payment, such tax, with interest and additions thereto as prescribed in the Act, may be recovered in the name of the United States at any time after such tax becomes due by suit or proceeding in the district courts of the United States. Such suit or proceeding must be brought within the period prescribed for the institution of such suit or proceeding by sections 277 and 278 of the statute. See articles 1271-1273. A suit or proceeding may also be brought in the name of the United States for the recovery of fines, penalties, and forfeitures. For limitations on prosecutions, see section 1010 of the statute.

It is provided in section 3214 of the Revised Statutes that no such suit shall be commenced unless the Commissioner of Internal Revenue authorizes or sanctions the institution of the suit. Collectors are accordingly required to advise the Commissioner of any willful violation of the revenue laws that may come to their knowledge. See section 3164 of the Revised Statutes as amended by section 1317 of the Revenue Act of 1918 and reenacted without change by section 1018, of the Revenue Act of 1924, which provides:

SEC. 3164. It shall be the duty of every collector of internal revenue having knowledge of any willful violation of any law of the United States relating to the revenue, within thirty days after coming into possession of such knowledge, to file with the district attorney of the district in which any fine, penalty, or forfeiture may be incurred, a statement of all the facts and circumstances of the case within his knowledge, together with the names of the witnesses, setting forth the provisions of law believed to be so violated on which reliance may be had for condemnation or conviction.

See also sections 3212, 3213, 3215, and 3216 of the Revised Statutes, Regulations No. 2 (Revised) and Regulations No. 12 (Revised).

ART. 1203. Collection of tax by distraint.—If any person liable to pay any tax neglects or refuses to pay such tax within ten days after notice and demand, it shall be lawful for the collector or his deputy to collect such tax with any interest or additional amounts assessed in connection therewith, together with interest as provided by section 276 of the statute (see article 1261) by distraint and sale of the goods, chattels, or effects, including stocks, certificates, bank accounts, and evidences of debt, or other property or rights to property, of the person delinquent. When goods, chattels, or effects sufficient to satisfy the tax, interest, penalties, and additions to tax imposed upon any person are not found by the collector or deputy collector, he is authorized to collect such tax by seizure and sale of real estate. If the tax is not payable on notice and demand from the collector but on a date prescribed by the statute, the collector should nevertheless make notice and demand for the payment of such tax upon receipt from the Commissioner of the assessment list on which such tax appears, and if the tax is not paid within ten days from such notice. and demand, the collector should proceed to collect such tax by distraint, as outlined above. See sections 3184 and 3186 (as amended by the Act of March 3, 1913) of the Revised Statutes. The penalty and interest provided by section 3184 of the Revised Statutes in case of failure to pay the tax within ten days after notice and demand does not apply to income tax. For interest in the case of delinquency in payment of income tax, see section 276 of the statute and article 1261. See further sections 3187 (as amended by section 1016 of the Revenue Act of 1924), 3188-3194, 3195 (as amended by section 1031 of the Revenue Act of 1924), 3196, 3197 (as amended by the Act of March 1, 1879), 3198-3202, 3203 (as amended by the Act of March 1, 1879), 3204-3206, 3207 (as amended by section 1030 of the Revenue Act of 1924), 3208 (as amended by the Act of March 1, 1879), and 3209 of the Revised Statutes and Regulations No. 12 (Revised). Distraint may also be used against a delinquent collector. See section 3217 of the Revised Statutes.

ART. 1204. Liens and enforcement of tax liens by bill in equity.-In the event of nonpayment of a tax and penalties after demand, the amount becomes a lien in favor of the United States from the time when the assessment list was received by the collector upon all property and rights to property belonging to the taxpayer, except that the lien is not valid as against any bona fide mortgagee, purchaser, or judgment creditor until notice thereof is filed in the proper public office or offices on Form 668. The collector may file such notice of 206°-24-15

lien upon making demand for payment of the tax, unless payment is made immediately upon demand. What is immediate payment will depend upon the nature of the demand. Where the collector contemplates filing such notice of lien on demand, whenever practicable, the demand should be made upon the taxpayer in person. In any case where there has been refusal or neglect to pay the tax and it has become necessary to seize and sell real estate to satisfy it, a bill in equity may be filed in a district court of the United States to enforce the lien of the United States for tax upon any real estate in which the delinquent has any right, title, or interest subject to the lien. This remedy does not supersede distraint but is cumulative.

It is further provided where any person has a lien upon such real estate prior to the lien of the United States, that such person may request the Commissioner to file a bill in equity to enforce the lien of the United States, and in the event the Commissioner fails to file such bill within six months after the request, the person having such prior lien may petition the district court of the United States for the district in which such real estate is located for permission to file a bill. After a hearing on the petition, the court may in its discretion grant leave to the petitioner to file such a bill and upon the filing of the bill the court shall proceed to adjudicate all matters involved in the same manner as in cases where a bill is filed by the Commissioner. See section 3207 of the Revised Statutes, as amended by section 1030 of the Revenue Act of 1924.

ART. 1205. Compromise of tax cases.-The Commissioner, with the advice and consent of the Secretary of the Treasury, may compromise any civil or criminal case arising under the internal revenue laws instead of commencing suit thereon, and with the advice and consent of the Secretary and the recommendation of the Attorney General may compromise any such case after suit thereon has been commenced by the United States. Accordingly, the power to compromise extends to (a) civil and criminal cases; (b) cases whether before or after suit; and (c) taxes and penalties, except that taxes legally due from a solvent taxpayer may not be compromised. Refunds can not be made of accepted offers in compromise in cases where it is subsequently ascertained that no violation of law was involved. See further section 3229 of the Revised Statutes.

EXAMINATION OF RETURN AND DETERMINATION OF TAX

SEC. 271. As soon as practicable after the return is filed the Commissioner shall examine it and shall determine the correct amount of the tax.

ART. 1211. Examination of return and determination of tax by the Commissioner.-When the returns are received at the collectors' offices, they are given a summary examination and listed. These lists

and all returns, except returns made on Form 1040 A and such other returns as the collector is authorized by the Commissioner to audit, are then forwarded to the Commissioner. As soon as practicable thereafter, the returns are audited in the Income Tax Unit. If, as a result of such audit, it appears that a deficiency exists (see section 273 of the statute and article 1231) the taxpayer will be notified by a letter and will be afforded an opportunity to be heard within the Bureau prior to the final determination by the Commissioner. Thirty days from the mailing (not receipt) of the letter of notification will be given the taxpayer within which to present a protest against the assessment of the deficiency disclosed by the audit of the return in the Unit. If the taxpayer desires to enter a protest against the assessment of such deficiency, prior to final determination by the Commissioner, a letter must be addressed to the Commissioner of Internal Revenue, Washington, D. C., and must be filed in his office within 30 days from the mailing of the notice, but if it is mailed in time to be received by the Commissioner within such period in the ordinary course of the mail it will be considered as having been filed within such period. The letter of protest should contain (a) the name and address of the taxpayer (in the case of an individual the residence, and in the case of a corporation the principal office or place of business); (b) in the case of a corporation the name of the State of incorporation; (c) the designation by date and symbol of the letter advising of the tentative deficiency with respect to which the protest is made; (d) the designation of the year or years involved and a statement of the amount of tax in dispute for each year; (e) an itemized schedule of the findings of the Unit to which the taxpayer takes exception; (f) a summary statement of the grounds upon which the taxpayer relies in connection with each exception; and (g) in case the taxpayer desires a hearing, a statement to that effect. The letter of protest may be supported by additional evidence or a brief or both. Upon receipt of the letter of protest it will be referred to the Income Tax Unit in Washington. The taxpayer may in the letter of protest request a conference before the Income Tax Unit to be held within a period of 30 days after the time for filing the letter of protest. All data relied upon by the taxpayer in connection with the protest, including evidence as to facts and briefs of argument, must be filed with the Income Tax Unit five days prior to the date fixed for such conference; but if no such conference is requested, such data must be filed with the Income Tax Unit prior to the expiration of 25 days after the time for the filing of the letter of protest. Upon cause shown the taxpayer may obtain from the Income Tax

Unit a reasonable extension of time for holding such conference or filing such data beyond the periods of limitation herein specified. Any requests for such additional time must state specifically the reasons therefor. If pursuant to conference the Income Tax Unit and the taxpayer reach an agreement respecting the amount of such deficiency, such amount will be assessed and collected forthwith; and in case the Unit concedes upon examination, without conference, of the data submitted by the taxpayer that no additional tax is due, the taxpayer shall be so notified. If the Income Tax Unit and the taxpayer are unable to reach an agreement respecting the amount of the deficiency, or if the taxpayer files a protest but fails to request a conference before the Income Tax Unit, and the Unit, upon examination of the data submitted by the taxpayer, does not agree as to his contentions, the letter of protest, together with the files of the case, will be transmitted by the Income Tax Unit to the Solicitor of Internal Revenue for consideration. The files of the case will be accompanied by a letter of transmittal (of which a copy will be sent contemporaneously to the taxpayer) containing the following information and data: (a) A designation of the division of the Income Tax Unit from which the case is transferred; (b) the name and address of the taxpayer; (c) a designation of the taxable period or periods involved and of the additional assessment proposed for each such period; (d) a statement of such issues raised by the letter of protest as are not conceded by the Unit, together with a brief summary of the Unit's grounds for not conceding such issues, including a reference to the law, regulations, and rulings upon which the Unit relies in support of its position; and (e) a statement of the dates of any conferences between the Income Tax Unit and the taxpayer, and specifically a statement as to whether any conference was requested by and granted to the taxpayer subsequent to the letter advising of the deficiency. Opportunity for a hearing before the Solicitor of Internal Revenue or before such representative of his office as he may designate will be granted if requested in the letter of protest or within 20 days after the mailing of the copy of the letter of transmittal to the taxpayer. The Solicitor of Internal Revenue, after consideration of the case, will submit his recommendations to the Commissioner, and the taxpayer will be notified by registered mail of the Commissioner's final determination.

If the taxpayer presents no protest within 30 days from the date of the letter advising of the deficiency disclosed upon the audit of the return, final determination will be made and the taxpayer will be notified thereof by registered mail in accordance with the provisions of section 274(a) of the statute. See article 1232. If in any case the taxpayer acquiesces in the tentative or final determina