[Federal Register Volume 61, Number 115 (Thursday, June 13, 1996)]
[Proposed Rules]
[Pages 30012-30013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14123]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[GL-007-96]
RIN 1545-AU13
Sale of Seized Property
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations relating to the
sale of seized property. The proposed regulations reflect changes
concerning the setting of a minimum price for seized property by the
Tax Reform Act of 1986. The proposed regulations affect all sales of
seized property.
DATES: Written comments and requests for a public hearing must be
received by September 11, 1996.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (GL-007-96), room 5228,
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington,
DC 20044. In the alternative, submissions may be hand delivered to:
CC:DOM:CORP:R (GL-007-96), room 5228, Internal Revenue Service, 1111
Constitution Avenue NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Kevin B.
Connelly, (202) 622-3640 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to the Procedure and
Administration Regulations (26 CFR part 301) relating to the sale of
seized property under section 6335 of the Internal Revenue Code (Code).
The Tax Reform Act of 1986 amended section 6335(e), relating to the
manner and conditions of sale, to authorize the Secretary to determine
whether it would be in the best interest of the United States to buy
seized property at the minimum price set by the Secretary. These
proposed regulations reflect this change.
Explanation of Provisions
Section 1570 of the Tax Reform Act of 1986 amended section 6335(e)
of the Code to require the Secretary to determine before the sale of
seized property whether it would be in the best interest of the United
States to purchase such property at the minimum price set by the
Secretary. The best interest determination is to be based on criteria
prescribed by the Secretary. If, at the sale, one or more persons offer
at least the minimum price, the property shall be sold to the highest
bidder. If no one offers at least the minimum price and the Secretary
has determined that it would be in the best interest of the United
States to purchase the property for the minimum price, the property
will be declared sold to the United States for the minimum price. If no
one offers the minimum price and the Secretary has not determined that
it would be in the best interest of the United States to purchase the
property for the minimum price, the property shall be released to the
owner of the property and the expense of the levy and sale shall be
added to the amount of tax for the collection of which the United
States made the levy. Any property released shall remain subject to any
lien imposed by subchapter C of chapter 64 of subtitle F of the Code.
The proposed regulations reflect the changes made by the Tax Reform
Act of 1986. The regulations propose to authorize district directors to
make the required determination whether it would be in the best
interest of the United States to purchase seized property for the
minimum price. In addition, the regulations propose to set forth
factors the district director may consider when determining the best
interest of the United States. The district director may consider all
relevant facts and circumstances including for example: (1)
marketability of the property; (2) cost of maintaining the property;
(3) cost of repairing or restoring the property; (4) cost of
transporting the property; (5) cost of safeguarding the property; (6)
cost of potential toxic waste cleanup; and (7) other factors pertinent
to the type of property.
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
[[Page 30013]]
assessment is not required. It also has 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,
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 (8) 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 Kevin B. Connelly, Office of Assistant Chief Counsel (General
Litigation) CC:EL:GL, IRS. 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 301.6335-1 is amended as follows:
1. Paragraph (c)(3) is revised.
2. Paragraphs (c)(4) through (c)(9) are redesignated as paragraphs
(c)(5) through (c)(10).
3. New paragraph (c)(4) is added.
The additions and revision read as follows:
Sec. 301.6335-1 Sale of seized property.
* * * * *
(c) * * *
(3) Determinations relating to minimum price--(i) Minimum price.
Before the sale of property seized by levy, the district director shall
determine a minimum price, taking into account the expenses of levy and
sale, for which the property shall be sold. The internal revenue
officer conducting the sale may 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 shall be made.
(ii) Purchase by the United States. Before the sale of property
seized by levy, the district director shall determine whether the
purchase of 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 property would be in the best interest of the United
States, the district director may consider all relevant facts and
circumstances including for example--
(a) Marketability of the 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.
(iii) Effective date. This paragraph (c)(3) applies to
determinations relating to minimum price made on or after [date final
regulations are published in the Federal Register].
(4) Disposition of property at sale--(i) Sale to highest bidder at
or above minimum price. If one or more persons offer to buy the
property for at least the amount of the minimum price, the property
shall be sold to the highest bidder.
(ii) Property deemed sold to United States at minimum price. If no
one offers at least the amount of the minimum price for the property
and the Secretary has determined that it would be in the best interest
of the United States to purchase the property for the minimum price,
the property shall be declared to be sold to the United States for the
minimum price.
(iii) Release to owner. If the property is not declared to be sold
under paragraph (c)(4)(i) or (ii) of this section, the property shall
be released to the owner of the property and the expense of the levy
and sale shall be added to the amount of tax for the collection of
which the United States made the levy. Any property released under this
paragraph (c)(4)(iii) shall remain subject to any lien imposed by
subchapter C of chapter 64 of subtitle F of the Internal Revenue Code.
(iv) Effective date. This paragraph (c)(4) applies to dispositions
of property at sale made on or after [date final regulations are
published in the Federal Register].
* * * * *
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 96-14123 Filed 6-12-96; 8:45 am]
BILLING CODE 4830-01-U