Rule2024-25464
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
November 5, 2024
Effective
November 5, 2024
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
This document contains final regulations regarding the sale of a taxpayer's property that the IRS seizes by levy. The final regulations amend existing regulations to better allow the IRS to maximize sale proceeds for the benefit of the taxpayer whose property the IRS has seized and the public fisc. The final regulations affect all sales of property the IRS seizes by levy.
Full Text
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<title>Federal Register, Volume 89 Issue 214 (Tuesday, November 5, 2024)</title>
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[Federal Register Volume 89, Number 214 (Tuesday, November 5, 2024)]
[Rules and Regulations]
[Pages 87784-87787]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-25464]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 10011]
RIN 1545-BQ34
Modernizing Regulations on Sales of Seized Property
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulation.
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SUMMARY: This document contains final regulations regarding the sale of
a taxpayer's property that the IRS seizes by levy. The final
regulations amend existing regulations to better allow the IRS to
maximize sale proceeds for the benefit of the taxpayer whose property
the IRS has seized and the public fisc. The final regulations affect
all sales of property the IRS seizes by levy.
DATES:
Effective date: These regulations are effective November 5, 2024.
Applicability date: For date of applicability, see Sec. 301.6335-
1(f).
FOR FURTHER INFORMATION CONTACT: Micah A. Levy, (202) 317-6832 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Authority
This document contains amendments to the Procedure and
Administration Regulations (26 CFR part 301) issued by the Secretary of
the Treasury or her delegate (Secretary) under the authority granted by
sections 6335(e)(2) and 7805(a) of the Internal Revenue Code regarding
the sale of property that is seized by levy by the IRS (seized
property).
Section 6335(e)(2) provides an express delegation of authority,
stating that the Secretary shall by regulations prescribe the manner
and other conditions of the sale of property seized by levy. If one or
more alternative methods or conditions are permitted by regulations,
the Secretary shall select the alternatives applicable to the sale.
Sections 6335(e)(2)(A) through (F) expressly provide that such
regulations shall provide: (i) that the sale shall not be conducted in
any manner other than by public auction or by public sale under sealed
bids; (ii) in the case of the seizure of several items of property,
whether such items shall be offered separately, in groups, or in the
aggregate and whether such property shall be offered both separately
(or in groups) and in the aggregate, and sold under whichever method
produces the highest aggregate amount; (iii) whether the announcement
of the minimum price determined by the Secretary may be delayed until
the receipt of the highest bid; (iv) whether payment in full shall be
required at the time of acceptance of a bid, or whether a part of such
payment may be deferred for such period (not to exceed 1 month) as may
be determined by the Secretary to be appropriate; (v) the extent to
which methods (including advertising) in addition to those prescribed
in section 6335(b) may be used in giving notice of the sale; and (vi)
under what circumstances the Secretary may adjourn the sale from time
to time (but such adjournments shall not be for a period to exceed in
all 1 month).
Finally, section 7805(a) authorizes the Secretary to ``prescribe
all needful rules and regulations for the enforcement of [the Code],
including all rules and regulations as may be necessary by reason of
any alteration of law in relation to internal revenue.''
Background
On October 16, 2023, the Department of the Treasury (Treasury
Department) and the IRS published in the Federal Register (88 FR 71323)
a notice of proposed rulemaking (REG-127391-16) proposing amendments to
regulations under 26 CFR part 301 (proposed regulations). The proposed
regulations conformed the prescribed manner and conditions of sales of
seized property with modern practices. The proposed amendments included
changes to facilitate online sales, give greater flexibility in
grouping property and specifying terms of payment, and provide clarity
to the IRS in making decisions about which employees can be assigned to
conduct sales or perform related ministerial duties. See the
Explanation of Provisions section of REG-127391-16 at 88 FR 71324-71326
for a discussion of the proposed regulations.
The Treasury Department and the IRS received one comment in
response to the notice of proposed rulemaking, but the comment did not
address the proposed regulations. The comment is available at <a href="https://www.regulations.gov">https://www.regulations.gov</a> or upon request. No public hearing was requested or
held on the proposed regulations. These final regulations therefore
adopt the text of the proposed regulations with only minor,
nonsubstantive changes.
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
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it
is hereby certified that this regulation will not have a significant
economic impact on a substantial number of small entities. This
certification is based on the fact that the regulations solely conform
the prescribed manner and conditions of sales of seized property with
modern practices by making the sales process both more efficient and
more likely to produce higher sales prices.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding these regulations was submitted to the Chief
Counsel for the Office of Advocacy of the Small Business Administration
for comment on its impact on small business, and no comments were
received.
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. These final regulations do not include any Federal mandate
that may result in expenditures
[[Page 87785]]
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 final 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.
V. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Drafting Information
The principal author of these regulations is Micah A. Levy, Office
of the Associate Chief Counsel (Procedure and Administration). However,
other personnel from the Treasury Department and the IRS participated
in the development of the regulations.
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
Accordingly, the Treasury Department and the IRS amend 26 CFR part
301 as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
Paragraph 1. The authority citation for part 301 is amended by adding
an entry for Sec. 301.6335-1 in numerical order to read in part as
follows:
Authority: 26 U.S.C. 7805.
* * * * *
Section 301.6335-1 also issued under 26 U.S.C. 6335(e)(2).
* * * * *
0
Par. 2. Section 301.6335-1 is amended by:
0
1. Redesignating paragraphs (a) through (d) as paragraphs (b) through
(e), respectively;
0
2. Adding a new paragraph (a);
0
3. Revising newly designated paragraphs (b) and (c)(1) and (2);
0
4. Adding a subject heading to newly redesignated paragraph (c)(3);
0
5. Revising newly redesignated paragraphs (d)(1) and (2) and (d)(3)(i)
and (ii);
0
6. Removing newly redesignated paragraph (d)(3)(iii);
0
7. Revising newly redesignated paragraph (d)(4)(iii);
0
8. Removing newly redesignated paragraph (d)(4)(iv);
0
9. Revising newly redesignated paragraphs (d)(5)(i), (ii), and (iv) and
(d)(6), (7), and (9);
0
10. Adding paragraph (d)(11);
0
11. Revising newly redesignated paragraphs (e)(1) and (3); and
0
12. Adding paragraph (f).
The additions and revisions 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 10 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
[[Page 87786]]
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
(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
[[Page 87787]]
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 section 6335(b), (c), and (e) 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.
* * * * *
(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 November 5, 2024.
Douglas W. O'Donnell,
Deputy Commissioner.
Approved: October 15, 2024.
Aviva R. Aron-Dine,
Deputy Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2024-25464 Filed 11-4-24; 8:45 am]
BILLING CODE 4830-01-P
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</html>Indexed from Federal Register on November 5, 2024.
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