[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 [www.gpo.gov]
[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 https://www.regulations.gov 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