LEVY PROHIBITED DURING PENDENCY OF REFUND PROCEEDINGS.

SEC. 3433. LEVY PROHIBITED DURING PENDENCY OF REFUND PROCEEDINGS. (a) In General.— Section 6331 (relating to levy and distraint) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: “(i) No Levy During Pendency of Proceedings for Refund of Divisible Tax.— “(1) In general.— No levy may be made under subsection (a) on the property or rights to property of any person with respect to any unpaid divisible tax during the pendency of any proceeding brought by such person in a proper Federal trial court for the recovery of any portion of such divisible tax which was paid by such person if— “(A) the decision in such proceeding would be res judicata with respect to such unpaid tax; or “(B) such person would be collaterally estopped from contesting such unpaid tax by reason of such proceeding. “(2) Divisible tax.— For purposes of paragraph (1), the term ‘divisible tax’ means— “(A) any tax imposed by subtitle C; and “(B) the penalty imposed by section 6672 with respect to any such tax. “(3) Exceptions.— “(A) Certain unpaid taxes.— This subsection shall not apply with respect to any unpaid tax if— “(i) the taxpayer files a written notice with the Secretary which waives the restriction imposed by this subsection on levy with respect to such tax; or “(ii) the Secretary finds that the collection of such tax is in jeopardy. “(B) Certain levies.— This subsection shall not apply to— “(i) any levy to carry out an offset under section 6402; and “(ii) any levy which was first made before the date that the applicable proceeding under this subsection commenced. “(4) Limitation on collection activity; authority to enjoin collection.— “(A) Limitation on collection.— No proceeding in court for the collection of any unpaid tax to which paragraph (1) applies shall be begun by the Secretary during the pendency of a proceeding under such paragraph. This subparagraph shall not apply to—112 STAT. 760 “(i) any counterclaim in a proceeding under such paragraph; or “(ii) any proceeding relating to a proceeding under such paragraph. “(B) Authority to enjoin.— Notwithstanding section 7421(a), a levy or collection proceeding prohibited by this subsection may be enjoined (during the period such prohibition is in force) by the court in which the proceeding under paragraph (1) is brought. “(5) Suspension of statute of limitations on collection.— The period of limitations under section 6502 shall be suspended for the period during which the Secretary is prohibited under this subsection from making a levy. “(6) Pendency of proceeding.— For purposes of this subsection, a proceeding is pending beginning on the date such proceeding commences and ending on the date that a final order or judgment from which an appeal may be taken is entered in such proceeding.”. (b) Effective Date.— The amendment made by this section shall apply to unpaid tax attributable to taxable periods beginning after December 31, 1998.