Proposed Rule2023-22621
Modernizing Regulations on Sales of Seized Property
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 16, 2023
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document contains proposed amendments to modernize regulations regarding the sale of a taxpayer's property that the IRS seizes by levy. The proposed amendments would allow the IRS to maximize sale proceeds for the benefit of the taxpayer whose property the IRS has seized and the public fisc. The proposed regulations would affect all sales of property the IRS seizes by levy.
Full Text
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<title>Federal Register, Volume 88 Issue 198 (Monday, October 16, 2023)</title>
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[Federal Register Volume 88, Number 198 (Monday, October 16, 2023)]
[Proposed Rules]
[Pages 71323-71329]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-22621]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[REG-127391-16]
RIN 1545-BQ34
Modernizing Regulations on Sales of Seized Property
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed amendments to modernize
regulations regarding the sale of a taxpayer's property that the IRS
seizes by levy. The proposed amendments would allow the IRS to maximize
sale proceeds for the benefit of the taxpayer whose property the IRS
has seized and the public fisc. The proposed regulations would affect
all sales of property the IRS seizes by levy.
DATES: Electronic or written comments and requests for a public hearing
must be received by December 15, 2023.
ADDRESSES: Commenters are strongly encouraged to submit public comments
electronically. Submit electronic submissions via the Federal
eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a> (IRS REG-127391-16). Once
submitted to the Federal eRulemaking Portal, comments cannot be edited
or withdrawn. The Department of the Treasury (Treasury Department) and
the IRS will publish any comments submitted electronically, and on
paper, to the public docket. Paper submissions may be sent to:
CC:PA:LPD:PR (REG-127391-16), Room 5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station, Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Micah A. Levy, (202) 317-6832; concerning the submission of comments or
requests for a public hearing, Vivian Hayes (202) 317-6901 (not toll-
free numbers) or by sending an email to <a href="/cdn-cgi/l/email-protection#08787d6a64616b606d697a61666f7b48617a7b266f677e"><span class="__cf_email__" data-cfemail="d3a3a6b1bfbab0bbb6b2a1babdb4a093baa1a0fdb4bca5">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to the Procedure and
Administration Regulations (26 CFR part 301) under section 6335 of the
Internal Revenue Code (Code) relating to the sale of property that is
seized by levy (seized property).
I. Statutory Background
Section 6335 of the Code governs how the IRS sells seized property.
It was enacted as part of the Internal Revenue Code of 1954, Public Law
83-591, ch. 736, 68A Stat. 3, 785-86 (1954), though many of its
provisions date back to 1866. See Act of July 3, 1866, ch. 184, 14
Stat. 106, 107-110 (1866).
Section 6335(a) requires the Secretary of the Treasury or her
delegate (Secretary), as soon as practicable after a seizure, to give
written notice of the seizure to the owner of the property that was
seized (or, in the case of personal property, to the property's
possessor). The notice must specify the sum demanded and contain, in
the case of personal property, an account of the property seized and,
in the case of real property, a description with reasonable certainty
of the seized property. Notice must be given to the owner (or
possessor) either in person, by leaving it at the owner's (or
possessor's) usual place of abode or business, or, in certain
instances, by mail.
Section 6335(b) requires the Secretary, as soon as practicable
after a seizure, to give the property's owner written notice of the
forthcoming sale. The notice must be provided in the same manner
prescribed in section 6335(a) for the notice of seizure. Section
6335(b) also requires that the Secretary publicize the sale to the
general public by publishing notice ``in some newspaper published or
generally circulated within the county wherein such seizure is made,''
or if such a newspaper does not exist, by posting ``notice at the post
office nearest the place where the seizure is made and in not less than
two other public places.'' The notice of sale must specify the property
to be sold and the time, place, manner, and conditions of the sale.
Section 6335(c) provides that if seized property is not divisible
in a way that would allow for a sale of part of the property to fully
satisfy the whole amount of the tax and expenses, the Secretary is to
sell the whole property.
Section 6335(d) requires that the time of sale be not less than 10
days nor more than 40 days from the time public notice of the sale is
provided under section 6335(b). The place of sale must be within the
county in which the property is seized except by special order of the
Secretary.
Section 6335(e) specifies the manner and conditions of sale.
Section 6335(e)(1) provides general rules about determinations relating
to the minimum price, a sale being made to the highest bidder at or
above the minimum price, the instances in which property will be deemed
sold to the United States at the minimum price, and the instances in
which the property will be released to the owner. Section 6335(e)(2)
further directs the Secretary to prescribe by regulation the following
additional rules applicable to the manner and other conditions of sale:
requiring the sale not to be conducted in any manner other than by
public auction or by public sale under sealed bids; in the case of the
seizure of several items of property whether the property is to be
offered separately, in groups, or in the aggregate, and sold under
whichever method produces the highest aggregate amount; whether the
announcement of the minimum price may be delayed until the receipt of
the highest bid; whether payment in full is to be required at the time
of acceptance of a bid or whether a part of such payment may be
deferred for a period not to exceed one month; the extent to which
additional methods (including advertising) may be used in giving notice
of a sale; and under what circumstances the Secretary may adjourn a
sale from time to time not to exceed in all one month. Congress
delegated this authority to allow the IRS ``latitude to provide modern
rules for selling property in the best manner possible.'' H.R. Rep. No.
83-1337, at 410 (1954); S. Rep. No. 83-1622, at 578 (1954). Section
6335(e)(3) specifies what
[[Page 71324]]
is to occur if a winning bidder fails to pay the bid amount.
Section 6335(f) provides that the owner of seized property may
request the Secretary to sell the property within 60 days after such
request (or within a longer period as may be specified by the owner).
The Secretary must comply with the request unless the Secretary
determines (and thereafter notifies the owner within the period) that
doing so would not be in the best interests of the United States.
II. Regulatory Background
The current regulations implementing section 6335 are set forth in
Sec. 301.6335-1. Section 301.6335-1, which dates to 1954, has not been
revised except to incorporate minor statutory changes. See T.D. 6119,
20 FR 28 (Jan. 4, 1955) (initial publication); T.D. 7180, 37 FR 7316
(Apr. 13, 1972) (amending Sec. 301.6335-1(b) to conform to an
amendment to section 6335(b) made by section 104(d) of the Federal Tax
Lien Act of 1966, Public Law 89-719, 80 Stat. 1137 (1966), by expanding
notice of sale publication to include newspapers that are ``generally
circulated'' within the county); T.D. 8398, 57 FR 7545 (Mar. 3, 1992)
(implementing section 6236(g) of Technical and Miscellaneous Revenue
Act of 1988, Public Law 100-647, 102 Stat. 3342 (1988), which enacted
section 6335(f), by adding Sec. 301.6335-1(d) to address the right of
the owner of any seized property to request sale within 60 days); T.D.
8691, 61 FR 66217 (Dec. 17, 1996) (revisions to reflect amendment of
section 6335(e) concerning the setting of a minimum price for seized
property made by section 1570 of the Tax Reform Act of 1986, Public Law
99-514, 100 Stat. 2764 (1986)); and T.D. 8939, 66 FR 2821 (Jan. 12,
2001) (adding a cross-reference in Sec. 301.6335-1(b) to Sec.
301.6212-2 regarding the definition of ``last known address''). Some
provisions of Sec. 301.6335-1 are dated, while others do not
accommodate technological advances such as the advent of the internet
and electronic payment processing. These proposed amendments would
conform the prescribed manner and conditions of sales of seized
property with modern practices. In comparison to the existing
procedures, the proposed amendments would benefit taxpayers by making
the sales process both more efficient and more likely to produce higher
sales prices.
Explanation of Provisions
A. Place of Sale
Section 6335(d) of the Internal Revenue Code (Code) requires that
the place of sale be ``within the county'' in which the seizure of the
subject property took place, ``except by special order of the
Secretary.'' Section 301.6335-1(c)(1) currently requires that the place
of sale be within the county in which the seizure took place unless
``substantially higher bids'' can be obtained by holding the sale
elsewhere, in which case the district director may order that the sale
be held in that other place. Section 6335(d) and current Sec.
301.6335-1(c)(1) do not expressly contemplate online sales. But online
sales can attract a wider range of potential purchasers, and thus
potentially higher bids, while conserving IRS resources. Given that
section 6342(a) of the Code provides that money realized by the sale of
seized property is applied against the expenses of the levy and sale
before any remaining amount is made available to satisfy the liability
of the taxpayer, taxpayers whose seized property is being sold benefit
both when the IRS realizes more money from a sale and when the IRS
incurs less expense in conducting the sale.
Proposed Sec. 301.6335-1(d)(1) would provide that the sale will be
held at the time and place stated in the notice of sale. Proposed Sec.
301.6335-1(d)(1) would further provide that the place of an in-person
sale must be within the county in which the property is seized, except
the sale may be held in a different county if the IRS determines, by
special order, that substantially higher bids may be obtained by
holding the sale in that different county. For online sales, proposed
Sec. 301.6335-1(d)(1) would provide that the place of sale will
generally be within the county in which the property is seized such
that a special order is not needed. For example, under the IRS's
current practice for online sales (which uses the special-order
process), bids are solicited from in-county bidders, there is in-county
advertising, the property is stored in the county, inspection of the
property (when permitted) occurs in the county, and the winning bidder
must retrieve the property from within the county. Under the proposed
regulations, the place of sale for such online sales would be
considered to be within the county in which the property was seized,
and no special order would be needed. However, in the unusual situation
in which an online sale deviates from current practice, such as if the
seized property is moved out of the county for storage and remains out
of the county during any allowable period for pre-sale inspection or if
the internet is not generally available within the county, then
proposed Sec. 301.6335-1(d)(1) would require that such sale may be
conducted on the internet only by special order when doing so would be
more efficient or would likely result in more competitive bids.
B. Offering of Property
In the case of the seizure of several items of property, section
6335(e)(2)(B) of the Code allows the IRS to choose how to group the
property for sale. In general, the property may be sold as separate
items, as groups of items, or in the aggregate. Section 6335(e)(2)(B)
of the Code also permits the IRS to offer property both separately (or
in groups) and in the aggregate during the same sale, provided that the
IRS sells the property ``under whichever method produces the highest
aggregate amount.''
Section 301.6335-1(c)(5) currently restricts the situations in
which both real and personal property may be grouped. This limits the
IRS's ability to determine on a case-by-case basis how to group
property to produce the highest sale price. Proposed Sec. 301.6335-
1(d)(5) would provide that the IRS will choose the method of grouping
property (or selling items separately) that will likely produce that
highest overall sale amount and is most feasible.
C. Terms of Payment
Section 6335(e)(2)(D) of the Code states that regulations are to
provide whether payment in full is required at the time of acceptance
of the bid, or whether a part of such payment may be deferred for a
period, not to exceed one month, as may be determined by the Secretary
to be appropriate. In section 301.6335-1, paragraphs (c)(5)(iv) and
(c)(7) are proposed to be amended to allow for payment terms that may
specifically accommodate the different types of property offerings and
methods of sale. For example, in the context of an online sale, the
notice of sale may specify the time period in which the winning bidder
must submit payment after being notified of the bid's acceptance.
Allowing such a period, which is consistent with the IRS's current
sales practice, allows time for the winning bidder to be notified of
the accepted bid and to remit payment.
Currently, Sec. 301.6335-1(c)(5)(iv)(b) provides that if the
aggregate price of all property purchased by a successful bidder at a
sale is more than $200, the bidder must make an initial payment of $200
or 20 percent of the purchase price, whichever is greater. These
thresholds are not required by statute. To give the IRS greater
flexibility to set the terms for payment, Sec. 301.6335-
1(c)(5)(iv)(b), which is proposed to be
[[Page 71325]]
redesignated as Sec. 301.6335-1(d)(5)(iv)(B), is proposed to be
amended to remove the $200 or 20 percent requirements, and provide that
the public notice of sale, or the instructions referenced in the
notice, will specify the amount of the initial payment that must be
made when full payment is not required upon acceptance of the bid.
D. Method of Sale
Section 6335(e)(2)(A) of the Code specifies that sales of seized
property cannot be conducted in any manner other than by public auction
or by public sale under sealed bids. Sections 301.6335-1(c)(6)(i) and
(ii) reiterate that rule. Section 301.6335-1(c)(6)(ii) provides
procedures applicable to public sales under sealed bids. Some of those
procedures apply to public auctions. For example, under current IRS
practice, in a public auction sale, the IRS may accept mail-in bids, so
long as the form of payment, the amount of the bid, and the location
and time for a bid's submission comply with the terms in the public
notice of sale. I.R.M. 5.10.4.4.1 (Aug. 29, 2017). Those rules closely
align with the procedures for submitting bids for sealed bid sales.
Accordingly, in Sec. 301.6335-1, paragraphs (c)(6)(i) and (ii) are
proposed to be collapsed into one paragraph, proposed (d)(6), and,
except where specifically noted, the provisions under Sec. 301.6335-
1(c)(6)(ii) are proposed to be revised (and redesignated as provisions
under Sec. 301.6335-1(d)(6)) as follows to apply to all sales under
section 6335 of the Code.
1. Form for Use by Bidders
Section 301.6335-1(c)(6)(ii)(b) currently requires that bidders use
the form provided by the IRS upon the bidder's request. The provision,
which is proposed to be redesignated Sec. 301.6335-1(d)(6)(ii), is
proposed to be amended to provide that the bidder should use the form
or submission method specified in the notice of sale or in instructions
referenced by the notice. For example, the notice of sale may direct
bidders to a specific website for the form or method of bid submission.
2. Remittance and Payment Methods
In section 301.6335-1, paragraphs (c)(6)(ii)(c) and (c)(7)
currently specify how bid remittances and payments of bid prices are to
be made. Those sections require that remittances and payments be made
by check or money order. This requirement precludes other commercially
acceptable payment options--such as electronic payments, credit or
debit card payments, or any other commercially acceptable means
authorized by the IRS--even though section 6335 of the Code does not
limit the methods by which bidders can make remittances or pay the bid
price. Section 301.6335-1(c)(6)(ii)(c), which is proposed to be
redesignated Sec. 301.6335-1(d)(6)(iii), and Sec. 301.6335-1(c)(7),
which is proposed to be redesignated Sec. 301.6335-1(d)(7), are thus
proposed to be amended to provide that remittances and payments are to
be made in the manner specified in the notice of sale or in
instructions referenced by the notice. For example, the public notice
of sale or its instructions could specify that all remittances or
payments for a particular sale must be made by check, credit or debit
card, or a particular form of electronic payment.
3. Amount of Remittance With Bid
Section 301.6335-1(c)(6)(ii)(c) currently specifies the amount of
money a bidder must remit with a sealed bid. Under that section, if the
total bid is $200 or less, then the bidder must remit the full amount
and, if the total bid is more than $200, then the bidder must remit the
greater of $200 or 20 percent of the bid.
Section 6335 of the Code does not specify any amount that must be
remitted with a bid except where full payment is required.
Additionally, as previously stated, the amounts currently required by
Sec. 301.6335-1(c)(6)(ii)(c) have never been updated. To give the IRS
flexibility to set the terms for bidding, Sec. 301.6335-
1(c)(6)(ii)(c), which is proposed to be redesignated Sec. 301.6335-
1(d)(6)(iii), is proposed to be amended by removing the specific $200
threshold. This provision is proposed to provide that the public notice
of sale, or instructions referenced in the notice, will specify the
amount, if any, required as a remittance with a bid.
4. Method of Submitting and Withdrawing Bids
Section 301.6335-1(c)(6)(ii)(d) specifies the manner for submitting
sealed bids. The provision requires that sealed bids be submitted in a
sealed envelope. That requirement precludes electronic submission of
sealed bids. The provision also does not address how bidders in a
public auction should submit bids. The provision, which is proposed to
be redesignated Sec. 301.6335-1(d)(6)(iv), is proposed to provide that
bids for a particular sale--whether public auction or public sale under
sealed bids and whether online or not--be submitted in the manner
prescribed by the IRS in the notice of sale or in instructions
referenced by the notice.
Section 301.6335-1(c)(6)(ii)(f) specifies that sealed bids may be
withdrawn in writing or by telegraphic request before the time fixed
for the opening of bids. To permit electronic bid withdrawals, the
provision, which is proposed to be redesignated Sec. 301.6335-
1(d)(6)(vi), is proposed to be amended to provide that bid withdrawals
may be made in any manner that is specified in the notice of sale or in
instructions referenced by the notice.
5. Consideration of Bids
Section 301.6335-1(c)(6)(ii)(e) currently provides that if, at a
public sale under sealed bids, there is a tie amongst bids for the
highest amount the IRS will determine the successful bidder by drawing
lots. The provision, which is proposed to be redesignated Sec.
301.6335-1(d)(6)(v), is proposed to be amended to provide that the IRS
will reopen the bidding until a highest bid is submitted without any
ties. This change is consistent with the IRS's current practice.
E. Personnel Involved in Sale
Section 3443 of the Internal Revenue Service Restructuring and
Reform Act (Act), Public Law 105-206, 112 Stat. 685, 762 (1998),
requires the IRS to ``implement a uniform asset disposal mechanism for
sales under section 6335'' that ``should be designed to remove any
participation in such sales by revenue officers.'' Section 3443 of the
Act does not apply to sales of perishable goods under section 6336 of
the Code.
To implement section 3443 of the Act, the IRS created the position
of Property Appraisal and Liquidation Specialist (PALS). A PALS
conducts sales of property seized under section 6335 of the Code. In
doing so, they often receive assistance from other IRS employees in
performing certain ministerial activities, such as delivering notices
of sale and logging the receipt of sealed bids. Revenue officers have
long been called on to assist an assigned PALS with those ministerial
activities.
In enacting section 3443 of the Act, Congress sought to address a
lack of uniformity and fairness in the sales process, such as that
caused by potential bias of the revenue officer who seized the property
to be sold. In the Conference Report to the Restructuring and Reform
Act, the conferees recognized that tax sales were ``often conducted by
the revenue officer charged with collecting the tax liability.'' H.R.
Rep. No. 105-559, at 284 (1998). Additionally, the Senate Report
accompanying the Restructuring and Reform Act stated that the Finance
Committee ``believes that it is important
[[Page 71326]]
for fairness and the appearance of propriety that the revenue officers
charged with collecting unpaid tax liability are not personally
involved with the sale of seized property.'' S. Rep. No. 105-174, at 85
(1998). Those statements reflect the concern that the revenue officer
who seized the property does not participate in the property's sale.
New proposed Sec. 301.6335-1(d)(11) would address that concern by
precluding any revenue officer who participated in the seizure of the
property to be sold from participating in the sale. This proposed
amendment is intended to provide clarity to the IRS in making decisions
about which employees will be assigned to conduct sales or perform
related ministerial duties and that the restriction on participation in
sales does not apply to sales of perishable goods conducted under
section 6336 of the Code.
F. Other Changes
This proposed regulation would also make non-substantive updates
throughout Sec. 301.6335-1. First, current Sec. 301.6335-1(a) is
proposed to be redesignated and divided into two paragraphs, Sec.
301.6335-1(b)(1) and (2). Second, current Sec. 301.6335-1(a) and
(b)(1) use the term ``internal revenue district.'' The usage matches
that in sections 6335(a) and (b) of the Code. But changes to the IRS's
organizational structure following the Internal Revenue Service
Restructuring and Reform Act eliminated ``internal revenue districts.''
See section 1001(a), 112 Stat. at 689; Grunsted v. Commissioner, 136
T.C. 455, 461 (2011). The current analogous successor to an internal
revenue district is a field collection territory. See I.R.M.
1.1.16.3.1.1.1 (June 1, 2016); I.R.M. 5.10.3.9 (May 23, 2016); I.R.M.
5.10.4.9 (Aug. 29, 2017). Proposed Sec. 301.6335-1(b)(1) would thus
provide that the term ``internal revenue district'' includes a field
collection territory or other successor IRS subdivision or office.
Third, where the current regulation refers to various job titles within
the IRS, some of which no longer exist, the references have been
replaced with more general references to territories or to the IRS or
to its employees. Fourth, where the current regulation, in Sec.
301.6335-1(a) and (b), refers to giving a notice of seizure or sale to
an individual (in their role as owner or possessor), the references are
proposed to be replaced with references to the owner or possessor
because an entity could also be an owner or possessor. Fifth, this
proposed regulation would also eliminate Sec. 301.6335-1(c)(3)(iii)
and (c)(4)(iv), which deal with effective dates of the current
regulation for sales made after December 17, 1996. Since all sales
going forward will occur after that date, those provisions are no
longer necessary. Sixth, some four-level headings in the current
regulation have differing capitalization in their numbering. Compare
Sec. 301.6335-1(c)(3)(ii)(a) and (d)(2)(ii)(A). This proposed
regulation would align the capitalization of those headings by, for
example, redesignating Sec. 301.6335-1(c)(3)(ii)(a) as Sec. 301.6335-
1(d)(3)(ii)(A) and Sec. 301.6335-1(c)(5)(ii)(a) as Sec. 301.6335-
1(d)(5)(ii)(A). And seventh, cross-references to entries that are
proposed to be redesignated would be revised to match the
redesignations.
Proposed Applicability Date
The proposed rules are proposed to apply to sales of property
seized on or after the date of publication of the Treasury decision
adopting the proposed rules as final regulations in the Federal
Register.
Special Analyses
I. Regulatory Planning and Review
Pursuant to the Memorandum of Agreement, Review of Treasury
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject to the requirements of
section 6(b) of Executive Order 12866, as amended. Therefore, a
regulatory impact assessment is not required.
II. Regulatory Flexibility Act
It is hereby certified that these proposed regulations will not
have a significant economic impact on a substantial number of small
entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter
6). This certification is based on the fact that the proposed
regulations solely conform the prescribed manner and conditions of
sales of seized property with modern practices. In comparison to the
existing procedures, the proposed regulations benefit taxpayers by
making the sales process both more efficient and more likely to produce
higher sales prices.
Pursuant to section 7805(f) of the Internal Revenue Code, this
notice of proposed rulemaking has been submitted to the Chief Counsel
of the Office of Advocacy of the Small Business Administration for
comment on its impact on small businesses.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
State, local, or Tribal government, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. This rule does not include any Federal mandate that may
result in expenditures by State, local, or Tribal governments, or by
the private sector in excess of that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on State and local
governments, and is not required by statute, or preempts State law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive Order. These proposed regulations do not
have federalism implications and do not impose substantial direct
compliance costs on State and local governments or preempt State law
within the meaning of the Executive Order.
Comments and Requests for Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to comments that are submitted timely to
the Treasury Department and the IRS as prescribed in the preamble under
the ADDRESSES section. The Treasury Department and the IRS request
comments on all aspects of the proposed regulations. Any electronic and
paper comments submitted will be available at <a href="http://www.regulations.gov">www.regulations.gov</a> or
upon request. A public hearing will be scheduled if requested in
writing by any person that timely submits written comments. If a public
hearing is scheduled, notice of the date, time, and place for the
public hearing will be published in the Federal Register. Announcement
2023-16, 2023-20 I.R.B. 854 (May 15, 2023), provides that public
hearings will be conducted in person, although the IRS will continue to
provide a telephonic option for individuals who wish to attend or
testify at a hearing by telephone. Any telephonic hearing will be made
accessible to people with disabilities.
Drafting Information
The principal author of this regulation is Micah A. Levy, Office of
the Associate Chief Counsel (Procedure and Administration). However,
other personnel from the IRS and Treasury Department participated in
the development of this regulation.
[[Page 71327]]
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, the Treasury Department and the IRS propose to amend
26 CFR part 301 as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
1. The authority citation for part 301 continues to read in part as
follows:
Authority: 26 U.S.C. 7805.
0
2. Amend Sec. 301.6335-1 by:
0
a. Redesignating paragraphs (a) through (d) as paragraphs (b) through
(e), respectively.
0
b. Adding a new paragraph (a);
0
c. Revising newly designated paragraphs (b) and (c)(1) and (2);
0
d. Adding a subject heading to newly redesignated paragraph (c)(3);
0
e. Revising newly redesignated paragraphs (d)(1) and (2) and (d)(3)(i)
and (ii);
0
f. Removing newly redesignated paragraph (d)(3)(iii);
0
g. Revising newly redesignated paragraph (d)(4)(iii);
0
h. Removing newly redesignated paragraph (d)(4)(iv);
0
i. Revising newly redesignated paragraphs (d)(5)(i), (ii), and (iv),
(d)(6), (7), and (9);
0
j. Adding paragraph (d)(11);
0
k. Revising newly redesignated paragraphs (e)(1) and (3); and
0
l. Adding paragraph (f).
The revisions and addition read as follows:
Sec. 301.6335-1 Sale of seized property.
(a) In general. Section 6335 of the Internal Revenue Code (Code)
and this section provide the rules under which the Internal Revenue
Service (IRS) conducts sales of property seized by levy.
(b) Notice of seizure--(1) Issuance and delivery. As soon as
practicable after seizure of property, the IRS must give written notice
to the property's owner (or, in the case of personal property, to the
property's possessor). The written notice must be delivered to the
owner (or to the possessor, in the case of personal property) or left
at the owner's usual place of abode or business if there is such within
the internal revenue district in which the seizure is made. If the
owner cannot be readily located or has no dwelling or place of business
within such district, the notice may be mailed to the owner's last
known address. For purposes of this section, the term internal revenue
district means an internal revenue district within the meaning of
section 7621 of the Code and includes an IRS field collection territory
or other successor IRS subdivision or office.
(2) Contents. The notice of seizure must specify the sum demanded
and contain, in the case of personal property, a list sufficient to
identify the property seized and, in the case of real property, a
description with reasonable certainty of the property seized.
(c) * * *
(1) In general. As soon as practicable after seizure of the
property, the IRS must give notice of sale in writing to the owner.
Such notice will be delivered to the owner or left at the owner's usual
place of abode or business if located within the internal revenue
district in which the seizure is made. If the owner cannot be readily
located or has no dwelling or place of business within such district,
the notice may be mailed to the owner's last known address. For further
guidance regarding the definition of last known address, see Sec.
301.6212-2. The notice must specify the property to be sold, and the
time, place, manner, and conditions of the sale thereof, and must
expressly state that only the right, title, and interest of the
delinquent taxpayer in and to such property is to be offered for sale.
The notice will also be published in some newspaper published in the
county wherein the seizure is made or in a newspaper generally
circulated in that county. For example, if a newspaper of general
circulation in a county but not published in that county will reach
more potential bidders for the property to be sold than a newspaper
published within the county, or if there is a newspaper of general
circulation within the county but no newspaper published within the
county, the IRS may publish the notice of sale in the newspaper of
general circulation within the county. If there is no newspaper
published or generally circulated in the county, the notice will be
posted at the post office nearest the place where the seizure is made,
to the extent authorized under law, and in not less than two other
public places.
(2) Alternative methods. The IRS may use other methods of giving
notice of sale and of advertising seized property, in addition to those
referred to in paragraph (c)(1) of this section, if the IRS believes
that the nature of the seized property to be sold is such that a wider
or more specialized advertising coverage will enhance the possibility
of obtaining a higher price for the seized property.
(3) Exception. * * *
(d) * * *
(1) Time and place of sale. The sale will be held at the time and
place stated in the notice of sale. The time of sale will not be less
than ten days nor more than 40 days from the time of giving public
notice under section 6335(b) of the Code and paragraph (c) of this
section. The place of an in-person sale will be within the county in
which the property is seized, except such sale may be held at a place
outside that county if the IRS determines, by special order of a
delegated official, that substantially higher bids may be obtained for
the property by holding the sale in such other county. The place of an
online sale will generally be the county in which the property is
seized. If, based on the facts and circumstances, the IRS determines
that the place of an online sale is not within the county in which the
property is seized, the sale may be conducted online by special order
when doing so would be more efficient or would likely result in more
competitive bids.
(2) Adjournment of sale. When it appears that an adjournment of the
sale will best serve the interest of the United States or that of the
taxpayer, the IRS may adjourn the sale from time to time, but the date
of the sale will not be later than one month after the date fixed in
the original notice of sale.
(3) * * *
(i) Minimum price. Before the sale of property seized by levy, the
IRS will determine a minimum price, taking into account the expenses of
levy and sale, for which the property must be sold. The IRS will either
announce the minimum price before the sale begins or defer announcement
of the minimum price until after the receipt of the highest bid, in
which case, if the highest bid is greater than the minimum price, no
announcement of the minimum price will be made.
(ii) Purchase by the United States. Before the sale of seized
property, the IRS will determine whether the purchase of the property
by the United States at the minimum price would be in the best interest
of the United States. In determining whether the purchase of the
property would be in the best interest of the United States, the IRS
may consider all relevant facts and circumstances including, for
example--
(A) Marketability of property;
(B) Cost of maintaining the property;
(C) Cost of repairing or restoring the property;
(D) Cost of transporting the property;
(E) Cost of safeguarding the property;
(F) Cost of potential toxic waste cleanup; and
[[Page 71328]]
(G) Other factors pertinent to the type of property.
* * * * *
(4) * * *
(iii) Release to owner. If the property is not declared to be sold
under paragraph (d)(4)(i) or (ii) of this section, the property will be
released to the owner of the property and the expense of the levy and
sale will be added to the amount of tax for the collection of which the
United States made the levy. Any property released under this paragraph
(d)(4)(iii) will remain subject to any lien imposed by subchapter C of
chapter 64 of subtitle F of the Code.
(5) * * *
(i) Sale of indivisible property. If any property levied upon is
not divisible, so as to enable the IRS by sale of a part thereof to
raise the whole amount of the tax and expenses of levy and sale, the
whole of such property will be sold. For application of surplus
proceeds of sale, see section 6342(b) of the Code.
(ii) Separately, in groups, or in the aggregate. The IRS, in
selecting how seized property will be offered for sale, will consider
which method is likely to produce the highest total sales price as well
as which method is most feasible. The seized property may be offered
for sale--
(A) As separate items,
(B) As groups of items,
(C) In the aggregate, or
(D) Both as separate items (or in groups) and in the aggregate, in
which case, the property will be sold under the method that produces
the highest aggregate amount.
* * * * *
(iv) Terms of payment. The property will be offered for sale in
accordance with whichever of the following terms is fixed by the IRS in
the public notice of sale:
(A) Payment in full upon acceptance of the highest bid, or
(B) An initial payment upon acceptance of the highest bid if the
payment is in the amount (either the dollar amount or the percentage of
the purchase price) specified in the notice of sale and followed by
payment of the balance (including all costs incurred for the protection
or preservation of the property subsequent to the sale and prior to
final payment) within a specified period, not to exceed one month from
the date of the sale.
* * * * *
(6) Method of sale and sale procedures. The IRS will sell the
property either at a public auction (at which open competitive bids
will be received) or at a public sale under sealed bids.
(i) Invitation to bidders. Bids will be solicited through a public
notice of sale.
(ii) Form for use by bidders. A bid must be submitted in the manner
specified by the IRS in the notice of sale or in instructions
referenced by that notice.
(iii) Remittance with bid. The notice of sale, or instructions
referenced in the notice, will specify the initial payment amount,
acceptable forms of the remittance (such as check, credit or debit
card, electronic payment, or other means), and the address (physical or
online) at which the bid and remittance must be submitted.
(iv) Time for receiving bids. A bid will not be considered unless
it is received in the manner and before the time specified in the
notice of sale, instructions referenced in the notice, or in the
announcement of the adjournment of the sale.
(v) Consideration of bids. The public notice of sale will specify
whether the property is to be sold separately, by groups, or in the
aggregate, or by a combination of these methods, as provided in
paragraph (d)(5)(ii) of this section. If the notice, or instructions
referenced in the notice, specifies an alternative method, bidders may
submit bids under one or more of the alternatives. In case of error in
computing the total price of a group of property in any bid, the unit
price of each piece of property will control. The IRS has the right to
waive any technical defects in a bid. A technical defect in a bid is
deemed waived if the IRS treats it as the winning bid. In the event two
or more highest bids are equal in amount, the IRS will reopen the
bidding until a high bid is submitted without any ties. After the
opening, examination, and consideration of all bids, the IRS will
announce the amount of the highest bid or bids and the name of the
successful bidder or bidders. Any remittance submitted in connection
with an unsuccessful bid will be returned at the conclusion of the
sale.
(vi) Withdrawal of bids. A bid may be withdrawn only in the manner
specified in the notice of sale or in instructions referenced in the
notice. A technical defect in a bid confers no right on the bidder for
the withdrawal of the bid after it has been opened or accepted.
(7) Payment of bid price. All payments for property sold under this
section must be made in the form and manner (whether by check, credit
or debit card, electronic payment, or other means) specified by the IRS
in the public notice of sale or in instructions referenced in the
notice. If payment in full is required upon acceptance of the highest
bid, the payment must be made at the time and in accordance with the
terms specified in the notice of sale. If deferred payment is
permitted, the initial payment must be made upon acceptance of the bid
at the time and in accordance with the terms specified in the notice of
sale, and the balance must be paid on or before the date fixed for
payment thereof. Any remittance submitted with a successful bid will be
applied toward the purchase price.
* * * * *
(9) Default in payment. If payment in full is required upon
acceptance of the bid and is not paid when due, the IRS will proceed
again to sell the property in the manner provided in section 6335(e) of
the Code and this section. If the conditions of the sale permit part of
the payment to be deferred, and if such part is not paid within the
prescribed period, suit may be instituted against the purchaser for the
purchase price or such part thereof as has not been paid, together with
interest at the rate of six percent per annum from the date of the
sale; or, in the discretion of the IRS, the sale may be declared null
and void for failure to make full payment of the purchase price and the
property may again be advertised and sold as provided in subsections
(b), (c), and (e) of section 6335 of the Code and this section. In the
event of such readvertisement and sale, any new purchaser will receive
such property or rights to property free and clear of any claim or
right of the former defaulting purchaser, of any nature whatsoever, and
the amount paid upon the bid price by such defaulting purchaser will be
forfeited to the United States.
* * * * *
(11) Participation in sale by revenue officers. No revenue officer
who seized the property to be sold at a sale conducted under section
6335 of the Code and this section may participate in the sale of that
seized property. This restriction does not apply to sales of perishable
goods conducted under section 6336 of the Code.
(e) * * *
(1) In general. The owner of any property seized by levy may
request that the IRS sell such property within 60 days after such
request, or within any longer period specified by the owner. The IRS
must comply with such a request unless it determines that compliance
with the request is not in its best interests. If the IRS decides not
to comply with the request, it must notify the owner of the
determination within the 60-day period, or any longer period specified
by the owner.
* * * * *
[[Page 71329]]
(3) Notification to owner. The IRS will respond in writing to a
request for sale of seized property as soon as practicable after
receipt of such request and in no event later than 60 days after
receipt of the request, or, if later, the date specified by the owner
for the sale.
(f) Applicability date. The rules of this section apply to sales of
property seized on or after [DATE OF PUBLICATION OF FINAL RULE].
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2023-22621 Filed 10-13-23; 8:45 am]
BILLING CODE 4830-01-P
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</html>Indexed from Federal Register on October 16, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.