[Federal Register Volume 61, Number 243 (Tuesday, December 17, 1996)]
[Rules and Regulations]
[Pages 66216-66217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31770]


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DEPARTMENT OF THE TREASURY
26 CFR Part 301

[TD 8691]
RIN 1545-AU13


Sale of Seized Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the sale 
of seized property. The final regulations reflect changes concerning 
the setting of a minimum price for seized property by the Tax Reform 
Act of 1986. The regulations affect all sales of seized property.

EFFECTIVE DATE: December 17, 1996.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Kevin B. 
Connelly, (202) 622-3640 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    This document contains 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 require 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. On June 13, 
1996, a notice of proposed rulemaking reflecting this change was 
published in the Federal Register (61 FR 30012). No comments responding 
to the notice of proposed rulemaking were received, and no public 
hearing was requested or held. The final regulations are adopted as 
proposed.

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

[[Page 66217]]

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 regulations reflect the changes made by the Tax Reform Act of 
1986. The regulations 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 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 Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory 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, 
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 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.

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. 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), respectively.
    3. New paragraph (c)(4) is added.
    The addition 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 December 17, 
1996.
    (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 December 17, 1996.
Margaret Milner Richardson,
Commissioner of Internal Revenue.

    Approved: November 19, 1996.
Donald C. Lubick,
Acting Assistant Secretary of the Treasury.
[FR Doc. 96-31770 Filed 12-16-96; 8:45 am]
BILLING CODE 4830-01-U