[Federal Register Volume 59, Number 98 (Monday, May 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12465]


[[Page Unknown]]

[Federal Register: May 23, 1994]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[GL-520-87]
RIN 1545-AL20

 

Payment of Excess Expenses Incurred by Purchaser in Connection 
With the Redemption of Real Property Under I.R.C. Sec. 7425

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: This document contains a proposed regulatory amendment 
relating to the payment of excess expenses incurred by a purchaser at a 
nonjudicial sale in connection with redemptions of real property by the 
United States under Internal Revenue Code section 7425. The existing 
regulations provide guidelines for submitting claims for excess 
expenses incurred by a purchaser, or his or her successor in interest, 
after a foreclosure sale and before redemption, but do not provide a 
cutoff date for submission of claims for excess expenses. The intent of 
the proposed regulations is to provide such a cutoff date. These 
proposed regulations provide that when requested by the district 
director, a purchaser at a nonjudicial foreclosure sale must submit a 
written claim for excess expenses within 30 days of the request for 
such claim to be considered. If, however, the purchaser does not submit 
a claim at that time, but does incur excess expenses, the purchaser may 
submit a claim within 30 days after the redemption. Failure to submit a 
claim within that time period forecloses the right to do so.

DATES: Written comments and requests for a public hearing must be 
received by July 22, 1994.

ADDRESSES: Send submissions to: CC:DOM:CORP:T:R (GL-520-87), room 5228, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. In the alternative, submissions may be hand delivered between 
the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:T:R (GL-520-87), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC.

FURTHER INFORMATION CONTACT: Robert A. Walker, (202) 622- 3640 (not a 
toll-free call).

SUPPLEMENTARY INFORMATION:

Background

    This document contains proposed regulations that would amend the 
Income Tax Regulations (26 CFR part 301) under section 7425 of the 
Internal Revenue Code (Code). The regulations would impose a time limit 
within which a purchaser of real property at a nonjudicial sale may 
submit a claim for excess expenses to the United States when it is 
redeeming such real property. The United States will not consider any 
claim made after expiration of the time limits.

Explanation of Provisions

    Treasury Regulation Sec. 301.7425-4(b)(3)(ii) does not provide a 
specific time period within which the purchaser at a nonjudicial 
foreclosure sale may submit a claim for excess expenses after the 
redemption. The proposed regulations clarify that claims for excess 
expenses must be submitted within the time periods specified in the 
regulations in order for the purchaser to be reimbursed.
    The proposed regulations establish a 30-day limit after a request 
is made by the district director for the purchaser at a nonjudicial 
sale or his or her successor in interest to furnish a written itemized 
statement of expenses in excess of income. Since excess expenses could 
be incurred after a district director's request, a purchaser who fails 
to submit a claim at this time may submit a claim within 30 days after 
the date of redemption. These limits will allow the purchaser a 
reasonable amount of time within which to determine the amount of any 
excess expenses and to submit a claim to the United States. After the 
expiration of the relevant time periods, the United States may 
distribute all surplus proceeds associated with the sale of the 
redeemed property unhindered by any possibility of a claim for excess 
expenses made in the future when the surplus proceeds of sale are no 
longer available to satisfy such a claim. Adding time limits will also 
expedite the handling of redemption sales by earlier disposition of 
surplus proceeds of sale. Disputes concerning properly submitted claims 
will still be resolved by the United States within a reasonable time 
after the redemption period. The Service solicits comments as to 
whether the 30-day period after the date of redemption for a purchaser 
to submit an itemized statement of excess expenses or to submit 
additional excess expenses is adequate.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in EO 12866. Therefore, 
a regulatory assessment is not required. It has also been determined 
that section 553(b) of the Administrative Procedure Act (5 U.S.C. 
chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do 
not apply to these regulations, and, therefore, an initial Regulatory 
Flexibility Analysis is not required. Pursuant to section 7805(f) of 
the Internal Revenue Code, this notice of proposed rulemaking will be 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written comments that are submitted 
timely (preferably a signed original and eight copies) to the IRS. All 
comments will be available for public inspection and copying. A public 
hearing may be scheduled if requested in writing by a person that 
timely submits written comments. If a public hearing is scheduled, 
notice of the date, time, and place for the hearing will be published 
in the Federal Register.

Drafting Information

    The principal author of these regulations is Robert A. Walker, 
Office of Assistant Chief Counsel (General Litigation). However, other 
personnel from the IRS and Treasury Department participated in their 
development.

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, 26 CFR part 301 is proposed to be amended as follows:

PART 301--PROCEDURE AND ADMINISTRATION

    Paragraph 1. The authority citation for part 301 continues to read 
in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Par. 2. Section 301.7425-4(b)(3)(ii) is amended by revising the 
third sentence and adding a fourth sentence to read as follows:


Sec. 301.7425-4  Discharge of liens; redemption by United States.

* * * * *
    (b) * * *
    (3) * * *
    (ii) * * * If a purchaser or his or her successor in interest has 
failed to furnish the written itemized statement within 30 days after 
the request therefor is made by the district director, or there is a 
disagreement as to the amount properly payable under paragraph 
(b)(1)(iii) of this section, or if there were additional excess 
expenses that were not claimed in the original itemized statement, the 
purchaser or his or her successor in interest may submit a written 
itemized statement to the district director within 30 days after the 
date of redemption. If the purchaser or his or her successor in 
interest fails to timely submit such a written itemized statement, no 
amount shall be payable for expenses in excess of income.
* * * * *
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 94-12465 Filed 5-20-94; 8:45 am]
BILLING CODE 4830-01-U