[Federal Register Volume 60, Number 106 (Friday, June 2, 1995)]
[Rules and Regulations]
[Pages 28719-28720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13444]



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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[TD 8596]
RIN 1545-AL20


Payment of Excess Expenses Incurred by Purchaser in Connection 
With the Redemption of Real Property Under Internal Revenue Code 
Section 7425

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations regarding the payment 
of excess expenses incurred by a purchaser at a nonjudicial sale in 
connection with redemptions of real property by the United States. 
These regulations affect purchasers in connection with the redemption 
of real property.

EFFECTIVE DATE: June 2, 1995.

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

SUPPLEMENTARY INFORMATION:

Background

    These final regulations amend the Income Tax Regulations (26 CFR 
part 301) under section 7425 of the Internal Revenue Code (Code). The 
regulations 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.
    The IRS published a notice of proposed rulemaking in the Federal 
Register on May 23, 1994 (59 FR 26608) providing proposed rules under 
section 7425 of the Code. No public comments were received and 
accordingly, the final regulations adopt the proposed regulations with 
only technical changes.

Explanation of Provisions

    Section 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. These 
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 regulations establish a 15-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.

Special Analyses

    It has been determined that this Treasury decision 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, a Regulatory Flexibility Analysis is 
not required. Pursuant to section 7805(f) of the Internal Revenue Code, 
the notice of proposed rulemaking was submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on its 
impact on small business.

    Drafting Information. The principal author of these final 
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.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 301 is 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. In Sec. 301.7425-4, paragraph (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 15 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.
* * * * *
    Approved: April 27, 1995.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 95-13444 Filed 6-1-95; 8:45 am]
BILLING CODE 4830-01-U