42-1202. Surrender of property subject to
levy; definition
A. Except as otherwise provided in subsection B of this section, any person in
possession of, or obligated with respect to, property or rights to property subject to
levy upon which a levy has been made shall, upon demand of the department, surrender such
property or rights to property or discharge such obligation to the department, except
such part of the property or rights to property as is, at the time of such demand,
subject to an attachment or execution under any judicial process.
B. A levy on an organization with respect to a life insurance or endowment contract
issued by such organization, without necessity for the surrender of the contract
document, constitutes a demand by the department for payment of the amount described in
this subsection and the exercise of the right of the person against whom the tax is
assessed to the advance of such amount. Such organization shall pay over the amount
within ninety days after service of notice of levy. The notice shall include a
certification by the department that a copy of the notice has been mailed to the person
against whom the tax is assessed at the person's last known address. The levy is deemed
to be satisfied if such organization pays over to the department the amount which the
person against whom the tax is assessed could have received from the organization on the
date prescribed in this subsection for the satisfaction of the levy, increased by the
amount of any advance, including contractual interest, made to such person on or after
the date the organization had actual notice or knowledge of the existence of the lien
with respect to which the levy is made, other than an advance, including contractual
interest, made automatically to maintain the contract in force under an agreement entered
into before the organization has such notice or knowledge. The satisfaction of a levy
under this subsection is without prejudice to any civil action for the enforcement of any
lien imposed by this chapter with respect to the contract.
C. A person who fails or refuses to surrender any property or rights to property,
subject to levy, upon demand by the department, is liable in person and estate to this
state in a sum equal to the value of the property or rights to property not so
surrendered, but not exceeding the amount of taxes for the collection of which such levy
has been made, with costs and interest on such sum at the rate determined pursuant to
section 42-1123 from the date of such levy, or, in the case of a levy described in
section 42-1201, subsection E or F, from the date such person would otherwise have been
obligated to pay such amounts to the taxpayer. Any amount, other than costs, recovered
under this subsection shall be credited against the tax liability for the collection of
which the levy was made.
D. A person in possession of or obligated with respect to property or rights to
property subject to levy upon which a levy has been made who, upon demand by the
department, surrenders the property or rights to property, or discharges the obligation,
to the department or who pays a liability under subsection C of this section is
discharged from any obligation or liability to the delinquent taxpayer with respect to
such property or rights to property arising from the surrender or payment. In the case
of a levy which is satisfied pursuant to subsection B of this section, the organization
is also discharged from any obligation or liability to any beneficiary arising from such
surrender or payment.
E. As used in this section, "person" includes an officer or employee of a
corporation, an officer, employee or elected official of this state or its political
subdivisions, or any agency or instrumentality of this state or its political
subdivisions, or a member or employee of a partnership, who as such officer, employee,
elected official or member is under a duty to surrender the property or rights to
property, or to discharge the obligation.
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