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###### Department of the Treasury

###### Internal Revenue Service

          - 26 CFR Part 301
          - [TD 10011]
          - RIN 1545-BQ34

# AGENCY:

Internal Revenue Service (IRS), Treasury.

# ACTION:

Final regulation.

# 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*                         § 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                           ( print 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 

**Paragraph 1.**                         The authority citation for part 301 is amended by adding an entry for § 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).

* * * * *

**Par. 2.**                         Section 301.6335-1 is amended by:                    

1. Redesignating paragraphs (a) through (d) as paragraphs (b) through (e), respectively; 

2. Adding a new paragraph (a); 

3. Revising newly designated paragraphs (b) and (c)(1) and (2); 

4. Adding a subject heading to newly redesignated paragraph (c)(3); 

5. Revising newly redesignated paragraphs (d)(1) and (2) and (d)(3)(i) and (ii); 

6. Removing newly redesignated paragraph (d)(3)(iii); 

7. Revising newly redesignated paragraph (d)(4)(iii); 

8. Removing newly redesignated paragraph (d)(4)(iv); 

9. Revising newly redesignated paragraphs (d)(5)(i), (ii), and (iv) and (d)(6), (7), and (9); 

10. Adding paragraph (d)(11); 

11. Revising newly redesignated paragraphs (e)(1) and (3); and 

12. Adding paragraph (f). 

The additions and revisions read as follows:

§ 301.6335-1

                            (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*                             § 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                                   ( print 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                                   ( print 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