[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