[Federal Register Volume 88, Number 198 (Monday, October 16, 2023)]
[Proposed Rules]
[Pages 71323-71329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22621]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 301

[REG-127391-16]
RIN 1545-BQ34


Modernizing Regulations on Sales of Seized Property

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed amendments to modernize 
regulations regarding the sale of a taxpayer's property that the IRS 
seizes by levy. The proposed amendments would allow the IRS to maximize 
sale proceeds for the benefit of the taxpayer whose property the IRS 
has seized and the public fisc. The proposed regulations would affect 
all sales of property the IRS seizes by levy.

DATES: Electronic or written comments and requests for a public hearing 
must be received by December 15, 2023.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically. Submit electronic submissions via the Federal 
eRulemaking Portal at www.regulations.gov (IRS REG-127391-16). Once 
submitted to the Federal eRulemaking Portal, comments cannot be edited 
or withdrawn. The Department of the Treasury (Treasury Department) and 
the IRS will publish any comments submitted electronically, and on 
paper, to the public docket. Paper submissions may be sent to: 
CC:PA:LPD:PR (REG-127391-16), Room 5203, Internal Revenue Service, P.O. 
Box 7604, Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Micah A. Levy, (202) 317-6832; concerning the submission of comments or 
requests for a public hearing, Vivian Hayes (202) 317-6901 (not toll-
free numbers) or by sending an email to [email protected].

SUPPLEMENTARY INFORMATION: 


Background

    This document contains proposed amendments to the Procedure and 
Administration Regulations (26 CFR part 301) under section 6335 of the 
Internal Revenue Code (Code) relating to the sale of property that is 
seized by levy (seized property).

I. Statutory Background

    Section 6335 of the Code governs how the IRS sells seized property. 
It was enacted as part of the Internal Revenue Code of 1954, Public Law 
83-591, ch. 736, 68A Stat. 3, 785-86 (1954), though many of its 
provisions date back to 1866. See Act of July 3, 1866, ch. 184, 14 
Stat. 106, 107-110 (1866).
    Section 6335(a) requires the Secretary of the Treasury or her 
delegate (Secretary), as soon as practicable after a seizure, to give 
written notice of the seizure to the owner of the property that was 
seized (or, in the case of personal property, to the property's 
possessor). The notice must specify the sum demanded and contain, in 
the case of personal property, an account of the property seized and, 
in the case of real property, a description with reasonable certainty 
of the seized property. Notice must be given to the owner (or 
possessor) either in person, by leaving it at the owner's (or 
possessor's) usual place of abode or business, or, in certain 
instances, by mail.
    Section 6335(b) requires the Secretary, as soon as practicable 
after a seizure, to give the property's owner written notice of the 
forthcoming sale. The notice must be provided in the same manner 
prescribed in section 6335(a) for the notice of seizure. Section 
6335(b) also requires that the Secretary publicize the sale to the 
general public by publishing notice ``in some newspaper published or 
generally circulated within the county wherein such seizure is made,'' 
or if such a newspaper does not exist, by posting ``notice at the post 
office nearest the place where the seizure is made and in not less than 
two other public places.'' The notice of sale must specify the property 
to be sold and the time, place, manner, and conditions of the sale.
    Section 6335(c) provides that if seized property is not divisible 
in a way that would allow for a sale of part of the property to fully 
satisfy the whole amount of the tax and expenses, the Secretary is to 
sell the whole property.
    Section 6335(d) requires that the time of sale be not less than 10 
days nor more than 40 days from the time public notice of the sale is 
provided under section 6335(b). The place of sale must be within the 
county in which the property is seized except by special order of the 
Secretary.
    Section 6335(e) specifies the manner and conditions of sale. 
Section 6335(e)(1) provides general rules about determinations relating 
to the minimum price, a sale being made to the highest bidder at or 
above the minimum price, the instances in which property will be deemed 
sold to the United States at the minimum price, and the instances in 
which the property will be released to the owner. Section 6335(e)(2) 
further directs the Secretary to prescribe by regulation the following 
additional rules applicable to the manner and other conditions of sale: 
requiring the sale not to be conducted in any manner other than by 
public auction or by public sale under sealed bids; in the case of the 
seizure of several items of property whether the property is to be 
offered separately, in groups, or in the aggregate, and sold under 
whichever method produces the highest aggregate amount; whether the 
announcement of the minimum price may be delayed until the receipt of 
the highest bid; whether payment in full is to be required at the time 
of acceptance of a bid or whether a part of such payment may be 
deferred for a period not to exceed one month; the extent to which 
additional methods (including advertising) may be used in giving notice 
of a sale; and under what circumstances the Secretary may adjourn a 
sale from time to time not to exceed in all one month. Congress 
delegated this authority to allow the IRS ``latitude to provide modern 
rules for selling property in the best manner possible.'' H.R. Rep. No. 
83-1337, at 410 (1954); S. Rep. No. 83-1622, at 578 (1954). Section 
6335(e)(3) specifies what

[[Page 71324]]

is to occur if a winning bidder fails to pay the bid amount.
    Section 6335(f) provides that the owner of seized property may 
request the Secretary to sell the property within 60 days after such 
request (or within a longer period as may be specified by the owner). 
The Secretary must comply with the request unless the Secretary 
determines (and thereafter notifies the owner within the period) that 
doing so would not be in the best interests of the United States.

II. Regulatory Background

    The current regulations implementing section 6335 are set forth in 
Sec.  301.6335-1. Section 301.6335-1, which dates to 1954, has not been 
revised except to incorporate minor statutory changes. See T.D. 6119, 
20 FR 28 (Jan. 4, 1955) (initial publication); T.D. 7180, 37 FR 7316 
(Apr. 13, 1972) (amending Sec.  301.6335-1(b) to conform to an 
amendment to section 6335(b) made by section 104(d) of the Federal Tax 
Lien Act of 1966, Public Law 89-719, 80 Stat. 1137 (1966), by expanding 
notice of sale publication to include newspapers that are ``generally 
circulated'' within the county); T.D. 8398, 57 FR 7545 (Mar. 3, 1992) 
(implementing section 6236(g) of Technical and Miscellaneous Revenue 
Act of 1988, Public Law 100-647, 102 Stat. 3342 (1988), which enacted 
section 6335(f), by adding Sec.  301.6335-1(d) to address the right of 
the owner of any seized property to request sale within 60 days); T.D. 
8691, 61 FR 66217 (Dec. 17, 1996) (revisions to reflect amendment of 
section 6335(e) concerning the setting of a minimum price for seized 
property made by section 1570 of the Tax Reform Act of 1986, Public Law 
99-514, 100 Stat. 2764 (1986)); and T.D. 8939, 66 FR 2821 (Jan. 12, 
2001) (adding a cross-reference in Sec.  301.6335-1(b) to Sec.  
301.6212-2 regarding the definition of ``last known address''). Some 
provisions of Sec.  301.6335-1 are dated, while others do not 
accommodate technological advances such as the advent of the internet 
and electronic payment processing. These proposed amendments would 
conform the prescribed manner and conditions of sales of seized 
property with modern practices. In comparison to the existing 
procedures, the proposed amendments would benefit taxpayers by making 
the sales process both more efficient and more likely to produce higher 
sales prices.

Explanation of Provisions

A. Place of Sale

    Section 6335(d) of the Internal Revenue Code (Code) requires that 
the place of sale be ``within the county'' in which the seizure of the 
subject property took place, ``except by special order of the 
Secretary.'' Section 301.6335-1(c)(1) currently requires that the place 
of sale be within the county in which the seizure took place unless 
``substantially higher bids'' can be obtained by holding the sale 
elsewhere, in which case the district director may order that the sale 
be held in that other place. Section 6335(d) and current Sec.  
301.6335-1(c)(1) do not expressly contemplate online sales. But online 
sales can attract a wider range of potential purchasers, and thus 
potentially higher bids, while conserving IRS resources. Given that 
section 6342(a) of the Code provides that money realized by the sale of 
seized property is applied against the expenses of the levy and sale 
before any remaining amount is made available to satisfy the liability 
of the taxpayer, taxpayers whose seized property is being sold benefit 
both when the IRS realizes more money from a sale and when the IRS 
incurs less expense in conducting the sale.
    Proposed Sec.  301.6335-1(d)(1) would provide that the sale will be 
held at the time and place stated in the notice of sale. Proposed Sec.  
301.6335-1(d)(1) would further provide that the place of an in-person 
sale must be within the county in which the property is seized, except 
the sale may be held in a different county if the IRS determines, by 
special order, that substantially higher bids may be obtained by 
holding the sale in that different county. For online sales, proposed 
Sec.  301.6335-1(d)(1) would provide that the place of sale will 
generally be within the county in which the property is seized such 
that a special order is not needed. For example, under the IRS's 
current practice for online sales (which uses the special-order 
process), bids are solicited from in-county bidders, there is in-county 
advertising, the property is stored in the county, inspection of the 
property (when permitted) occurs in the county, and the winning bidder 
must retrieve the property from within the county. Under the proposed 
regulations, the place of sale for such online sales would be 
considered to be within the county in which the property was seized, 
and no special order would be needed. However, in the unusual situation 
in which an online sale deviates from current practice, such as if the 
seized property is moved out of the county for storage and remains out 
of the county during any allowable period for pre-sale inspection or if 
the internet is not generally available within the county, then 
proposed Sec.  301.6335-1(d)(1) would require that such sale may be 
conducted on the internet only by special order when doing so would be 
more efficient or would likely result in more competitive bids.

B. Offering of Property

    In the case of the seizure of several items of property, section 
6335(e)(2)(B) of the Code allows the IRS to choose how to group the 
property for sale. In general, the property may be sold as separate 
items, as groups of items, or in the aggregate. Section 6335(e)(2)(B) 
of the Code also permits the IRS to offer property both separately (or 
in groups) and in the aggregate during the same sale, provided that the 
IRS sells the property ``under whichever method produces the highest 
aggregate amount.''
    Section 301.6335-1(c)(5) currently restricts the situations in 
which both real and personal property may be grouped. This limits the 
IRS's ability to determine on a case-by-case basis how to group 
property to produce the highest sale price. Proposed Sec.  301.6335-
1(d)(5) would provide that the IRS will choose the method of grouping 
property (or selling items separately) that will likely produce that 
highest overall sale amount and is most feasible.

C. Terms of Payment

    Section 6335(e)(2)(D) of the Code states that regulations are to 
provide whether payment in full is required at the time of acceptance 
of the bid, or whether a part of such payment may be deferred for a 
period, not to exceed one month, as may be determined by the Secretary 
to be appropriate. In section 301.6335-1, paragraphs (c)(5)(iv) and 
(c)(7) are proposed to be amended to allow for payment terms that may 
specifically accommodate the different types of property offerings and 
methods of sale. For example, in the context of an online sale, the 
notice of sale may specify the time period in which the winning bidder 
must submit payment after being notified of the bid's acceptance. 
Allowing such a period, which is consistent with the IRS's current 
sales practice, allows time for the winning bidder to be notified of 
the accepted bid and to remit payment.
    Currently, Sec.  301.6335-1(c)(5)(iv)(b) provides that if the 
aggregate price of all property purchased by a successful bidder at a 
sale is more than $200, the bidder must make an initial payment of $200 
or 20 percent of the purchase price, whichever is greater. These 
thresholds are not required by statute. To give the IRS greater 
flexibility to set the terms for payment, Sec.  301.6335-
1(c)(5)(iv)(b), which is proposed to be

[[Page 71325]]

redesignated as Sec.  301.6335-1(d)(5)(iv)(B), is proposed to be 
amended to remove the $200 or 20 percent requirements, and provide that 
the public notice of sale, or the instructions referenced in the 
notice, will specify the amount of the initial payment that must be 
made when full payment is not required upon acceptance of the bid.

D. Method of Sale

    Section 6335(e)(2)(A) of the Code specifies that sales of seized 
property cannot be conducted in any manner other than by public auction 
or by public sale under sealed bids. Sections 301.6335-1(c)(6)(i) and 
(ii) reiterate that rule. Section 301.6335-1(c)(6)(ii) provides 
procedures applicable to public sales under sealed bids. Some of those 
procedures apply to public auctions. For example, under current IRS 
practice, in a public auction sale, the IRS may accept mail-in bids, so 
long as the form of payment, the amount of the bid, and the location 
and time for a bid's submission comply with the terms in the public 
notice of sale. I.R.M. 5.10.4.4.1 (Aug. 29, 2017). Those rules closely 
align with the procedures for submitting bids for sealed bid sales. 
Accordingly, in Sec.  301.6335-1, paragraphs (c)(6)(i) and (ii) are 
proposed to be collapsed into one paragraph, proposed (d)(6), and, 
except where specifically noted, the provisions under Sec.  301.6335-
1(c)(6)(ii) are proposed to be revised (and redesignated as provisions 
under Sec.  301.6335-1(d)(6)) as follows to apply to all sales under 
section 6335 of the Code.
1. Form for Use by Bidders
    Section 301.6335-1(c)(6)(ii)(b) currently requires that bidders use 
the form provided by the IRS upon the bidder's request. The provision, 
which is proposed to be redesignated Sec.  301.6335-1(d)(6)(ii), is 
proposed to be amended to provide that the bidder should use the form 
or submission method specified in the notice of sale or in instructions 
referenced by the notice. For example, the notice of sale may direct 
bidders to a specific website for the form or method of bid submission.
2. Remittance and Payment Methods
    In section 301.6335-1, paragraphs (c)(6)(ii)(c) and (c)(7) 
currently specify how bid remittances and payments of bid prices are to 
be made. Those sections require that remittances and payments be made 
by check or money order. This requirement precludes other commercially 
acceptable payment options--such as electronic payments, credit or 
debit card payments, or any other commercially acceptable means 
authorized by the IRS--even though section 6335 of the Code does not 
limit the methods by which bidders can make remittances or pay the bid 
price. Section 301.6335-1(c)(6)(ii)(c), which is proposed to be 
redesignated Sec.  301.6335-1(d)(6)(iii), and Sec.  301.6335-1(c)(7), 
which is proposed to be redesignated Sec.  301.6335-1(d)(7), are thus 
proposed to be amended to provide that remittances and payments are to 
be made in the manner specified in the notice of sale or in 
instructions referenced by the notice. For example, the public notice 
of sale or its instructions could specify that all remittances or 
payments for a particular sale must be made by check, credit or debit 
card, or a particular form of electronic payment.
3. Amount of Remittance With Bid
    Section 301.6335-1(c)(6)(ii)(c) currently specifies the amount of 
money a bidder must remit with a sealed bid. Under that section, if the 
total bid is $200 or less, then the bidder must remit the full amount 
and, if the total bid is more than $200, then the bidder must remit the 
greater of $200 or 20 percent of the bid.
    Section 6335 of the Code does not specify any amount that must be 
remitted with a bid except where full payment is required. 
Additionally, as previously stated, the amounts currently required by 
Sec.  301.6335-1(c)(6)(ii)(c) have never been updated. To give the IRS 
flexibility to set the terms for bidding, Sec.  301.6335-
1(c)(6)(ii)(c), which is proposed to be redesignated Sec.  301.6335-
1(d)(6)(iii), is proposed to be amended by removing the specific $200 
threshold. This provision is proposed to provide that the public notice 
of sale, or instructions referenced in the notice, will specify the 
amount, if any, required as a remittance with a bid.
4. Method of Submitting and Withdrawing Bids
    Section 301.6335-1(c)(6)(ii)(d) specifies the manner for submitting 
sealed bids. The provision requires that sealed bids be submitted in a 
sealed envelope. That requirement precludes electronic submission of 
sealed bids. The provision also does not address how bidders in a 
public auction should submit bids. The provision, which is proposed to 
be redesignated Sec.  301.6335-1(d)(6)(iv), is proposed to provide that 
bids for a particular sale--whether public auction or public sale under 
sealed bids and whether online or not--be submitted in the manner 
prescribed by the IRS in the notice of sale or in instructions 
referenced by the notice.
    Section 301.6335-1(c)(6)(ii)(f) specifies that sealed bids may be 
withdrawn in writing or by telegraphic request before the time fixed 
for the opening of bids. To permit electronic bid withdrawals, the 
provision, which is proposed to be redesignated Sec.  301.6335-
1(d)(6)(vi), is proposed to be amended to provide that bid withdrawals 
may be made in any manner that is specified in the notice of sale or in 
instructions referenced by the notice.
5. Consideration of Bids
    Section 301.6335-1(c)(6)(ii)(e) currently provides that if, at a 
public sale under sealed bids, there is a tie amongst bids for the 
highest amount the IRS will determine the successful bidder by drawing 
lots. The provision, which is proposed to be redesignated Sec.  
301.6335-1(d)(6)(v), is proposed to be amended to provide that the IRS 
will reopen the bidding until a highest bid is submitted without any 
ties. This change is consistent with the IRS's current practice.

E. Personnel Involved in Sale

    Section 3443 of the Internal Revenue Service Restructuring and 
Reform Act (Act), Public Law 105-206, 112 Stat. 685, 762 (1998), 
requires the IRS to ``implement a uniform asset disposal mechanism for 
sales under section 6335'' that ``should be designed to remove any 
participation in such sales by revenue officers.'' Section 3443 of the 
Act does not apply to sales of perishable goods under section 6336 of 
the Code.
    To implement section 3443 of the Act, the IRS created the position 
of Property Appraisal and Liquidation Specialist (PALS). A PALS 
conducts sales of property seized under section 6335 of the Code. In 
doing so, they often receive assistance from other IRS employees in 
performing certain ministerial activities, such as delivering notices 
of sale and logging the receipt of sealed bids. Revenue officers have 
long been called on to assist an assigned PALS with those ministerial 
activities.
    In enacting section 3443 of the Act, Congress sought to address a 
lack of uniformity and fairness in the sales process, such as that 
caused by potential bias of the revenue officer who seized the property 
to be sold. In the Conference Report to the Restructuring and Reform 
Act, the conferees recognized that tax sales were ``often conducted by 
the revenue officer charged with collecting the tax liability.'' H.R. 
Rep. No. 105-559, at 284 (1998). Additionally, the Senate Report 
accompanying the Restructuring and Reform Act stated that the Finance 
Committee ``believes that it is important

[[Page 71326]]

for fairness and the appearance of propriety that the revenue officers 
charged with collecting unpaid tax liability are not personally 
involved with the sale of seized property.'' S. Rep. No. 105-174, at 85 
(1998). Those statements reflect the concern that the revenue officer 
who seized the property does not participate in the property's sale.
    New proposed Sec.  301.6335-1(d)(11) would address that concern by 
precluding any revenue officer who participated in the seizure of the 
property to be sold from participating in the sale. This proposed 
amendment is intended to provide clarity to the IRS in making decisions 
about which employees will be assigned to conduct sales or perform 
related ministerial duties and that the restriction on participation in 
sales does not apply to sales of perishable goods conducted under 
section 6336 of the Code.

F. Other Changes

    This proposed regulation would also make non-substantive updates 
throughout Sec.  301.6335-1. First, current Sec.  301.6335-1(a) is 
proposed to be redesignated and divided into two paragraphs, Sec.  
301.6335-1(b)(1) and (2). Second, current Sec.  301.6335-1(a) and 
(b)(1) use the term ``internal revenue district.'' The usage matches 
that in sections 6335(a) and (b) of the Code. But changes to the IRS's 
organizational structure following the Internal Revenue Service 
Restructuring and Reform Act eliminated ``internal revenue districts.'' 
See section 1001(a), 112 Stat. at 689; Grunsted v. Commissioner, 136 
T.C. 455, 461 (2011). The current analogous successor to an internal 
revenue district is a field collection territory. See I.R.M. 
1.1.16.3.1.1.1 (June 1, 2016); I.R.M. 5.10.3.9 (May 23, 2016); I.R.M. 
5.10.4.9 (Aug. 29, 2017). Proposed Sec.  301.6335-1(b)(1) would thus 
provide that the term ``internal revenue district'' includes a field 
collection territory or other successor IRS subdivision or office. 
Third, where the current regulation refers to various job titles within 
the IRS, some of which no longer exist, the references have been 
replaced with more general references to territories or to the IRS or 
to its employees. Fourth, where the current regulation, in Sec.  
301.6335-1(a) and (b), refers to giving a notice of seizure or sale to 
an individual (in their role as owner or possessor), the references are 
proposed to be replaced with references to the owner or possessor 
because an entity could also be an owner or possessor. Fifth, this 
proposed regulation would also eliminate Sec.  301.6335-1(c)(3)(iii) 
and (c)(4)(iv), which deal with effective dates of the current 
regulation for sales made after December 17, 1996. Since all sales 
going forward will occur after that date, those provisions are no 
longer necessary. Sixth, some four-level headings in the current 
regulation have differing capitalization in their numbering. Compare 
Sec.  301.6335-1(c)(3)(ii)(a) and (d)(2)(ii)(A). This proposed 
regulation would align the capitalization of those headings by, for 
example, redesignating Sec.  301.6335-1(c)(3)(ii)(a) as Sec.  301.6335-
1(d)(3)(ii)(A) and Sec.  301.6335-1(c)(5)(ii)(a) as Sec.  301.6335-
1(d)(5)(ii)(A). And seventh, cross-references to entries that are 
proposed to be redesignated would be revised to match the 
redesignations.

Proposed Applicability Date

    The proposed rules are proposed to apply to sales of property 
seized on or after the date of publication of the Treasury decision 
adopting the proposed rules as final regulations in the Federal 
Register.

Special Analyses

I. Regulatory Planning and Review

    Pursuant to the Memorandum of Agreement, Review of Treasury 
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory 
actions issued by the IRS are not subject to the requirements of 
section 6(b) of Executive Order 12866, as amended. Therefore, a 
regulatory impact assessment is not required.

II. Regulatory Flexibility Act

    It is hereby certified that these proposed regulations will not 
have a significant economic impact on a substantial number of small 
entities pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 
6). This certification is based on the fact that the proposed 
regulations solely conform the prescribed manner and conditions of 
sales of seized property with modern practices. In comparison to the 
existing procedures, the proposed regulations benefit taxpayers by 
making the sales process both more efficient and more likely to produce 
higher sales prices.
    Pursuant to section 7805(f) of the Internal Revenue Code, this 
notice of proposed rulemaking has been submitted to the Chief Counsel 
of the Office of Advocacy of the Small Business Administration for 
comment on its impact on small businesses.

III. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a final rule that includes any 
Federal mandate that may result in expenditures in any one year by a 
State, local, or Tribal government, in the aggregate, or by the private 
sector, of $100 million in 1995 dollars, updated annually for 
inflation. This rule does not include any Federal mandate that may 
result in expenditures by State, local, or Tribal governments, or by 
the private sector in excess of that threshold.

IV. Executive Order 13132: Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on State and local 
governments, and is not required by statute, or preempts State law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive Order. These proposed regulations do not 
have federalism implications and do not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive Order.

Comments and Requests for Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to comments that are submitted timely to 
the Treasury Department and the IRS as prescribed in the preamble under 
the ADDRESSES section. The Treasury Department and the IRS request 
comments on all aspects of the proposed regulations. Any electronic and 
paper comments submitted will be available at www.regulations.gov or 
upon request. A public hearing will be scheduled if requested in 
writing by any person that timely submits written comments. If a public 
hearing is scheduled, notice of the date, time, and place for the 
public hearing will be published in the Federal Register. Announcement 
2023-16, 2023-20 I.R.B. 854 (May 15, 2023), provides that public 
hearings will be conducted in person, although the IRS will continue to 
provide a telephonic option for individuals who wish to attend or 
testify at a hearing by telephone. Any telephonic hearing will be made 
accessible to people with disabilities.

Drafting Information

    The principal author of this regulation is Micah A. Levy, Office of 
the Associate Chief Counsel (Procedure and Administration). However, 
other personnel from the IRS and Treasury Department participated in 
the development of this regulation.

[[Page 71327]]

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, the Treasury Department and the IRS propose to amend 
26 CFR part 301 as follows:

PART 301--PROCEDURE AND ADMINISTRATION

0
1. The authority citation for part 301 continues to read in part as 
follows:

    Authority: 26 U.S.C. 7805.

0
2. Amend Sec.  301.6335-1 by:
0
a. Redesignating paragraphs (a) through (d) as paragraphs (b) through 
(e), respectively.
0
b. Adding a new paragraph (a);
0
c. Revising newly designated paragraphs (b) and (c)(1) and (2);
0
d. Adding a subject heading to newly redesignated paragraph (c)(3);
0
e. Revising newly redesignated paragraphs (d)(1) and (2) and (d)(3)(i) 
and (ii);
0
f. Removing newly redesignated paragraph (d)(3)(iii);
0
g. Revising newly redesignated paragraph (d)(4)(iii);
0
h. Removing newly redesignated paragraph (d)(4)(iv);
0
i. Revising newly redesignated paragraphs (d)(5)(i), (ii), and (iv), 
(d)(6), (7), and (9);
0
j. Adding paragraph (d)(11);
0
k. Revising newly redesignated paragraphs (e)(1) and (3); and
0
l. Adding paragraph (f).
    The revisions and addition read as follows:


Sec.  301.6335-1  Sale of seized property.

    (a) In general. Section 6335 of the Internal Revenue Code (Code) 
and this section provide the rules under which the Internal Revenue 
Service (IRS) conducts sales of property seized by levy.
    (b) Notice of seizure--(1) Issuance and delivery. As soon as 
practicable after seizure of property, the IRS must give written notice 
to the property's owner (or, in the case of personal property, to the 
property's possessor). The written notice must be delivered to the 
owner (or to the possessor, in the case of personal property) or left 
at the owner's usual place of abode or business if there is such within 
the internal revenue district in which the seizure is made. If the 
owner cannot be readily located or has no dwelling or place of business 
within such district, the notice may be mailed to the owner's last 
known address. For purposes of this section, the term internal revenue 
district means an internal revenue district within the meaning of 
section 7621 of the Code and includes an IRS field collection territory 
or other successor IRS subdivision or office.
    (2) Contents. The notice of seizure must specify the sum demanded 
and contain, in the case of personal property, a list sufficient to 
identify the property seized and, in the case of real property, a 
description with reasonable certainty of the property seized.
    (c) * * *
    (1) In general. As soon as practicable after seizure of the 
property, the IRS must give notice of sale in writing to the owner. 
Such notice will be delivered to the owner or left at the owner's usual 
place of abode or business if located within the internal revenue 
district in which the seizure is made. If the owner cannot be readily 
located or has no dwelling or place of business within such district, 
the notice may be mailed to the owner's last known address. For further 
guidance regarding the definition of last known address, see Sec.  
301.6212-2. The notice must specify the property to be sold, and the 
time, place, manner, and conditions of the sale thereof, and must 
expressly state that only the right, title, and interest of the 
delinquent taxpayer in and to such property is to be offered for sale. 
The notice will also be published in some newspaper published in the 
county wherein the seizure is made or in a newspaper generally 
circulated in that county. For example, if a newspaper of general 
circulation in a county but not published in that county will reach 
more potential bidders for the property to be sold than a newspaper 
published within the county, or if there is a newspaper of general 
circulation within the county but no newspaper published within the 
county, the IRS may publish the notice of sale in the newspaper of 
general circulation within the county. If there is no newspaper 
published or generally circulated in the county, the notice will be 
posted at the post office nearest the place where the seizure is made, 
to the extent authorized under law, and in not less than two other 
public places.
    (2) Alternative methods. The IRS may use other methods of giving 
notice of sale and of advertising seized property, in addition to those 
referred to in paragraph (c)(1) of this section, if the IRS believes 
that the nature of the seized property to be sold is such that a wider 
or more specialized advertising coverage will enhance the possibility 
of obtaining a higher price for the seized property.
    (3) Exception. * * *
    (d) * * *
    (1) Time and place of sale. The sale will be held at the time and 
place stated in the notice of sale. The time of sale will not be less 
than ten days nor more than 40 days from the time of giving public 
notice under section 6335(b) of the Code and paragraph (c) of this 
section. The place of an in-person sale will be within the county in 
which the property is seized, except such sale may be held at a place 
outside that county if the IRS determines, by special order of a 
delegated official, that substantially higher bids may be obtained for 
the property by holding the sale in such other county. The place of an 
online sale will generally be the county in which the property is 
seized. If, based on the facts and circumstances, the IRS determines 
that the place of an online sale is not within the county in which the 
property is seized, the sale may be conducted online by special order 
when doing so would be more efficient or would likely result in more 
competitive bids.
    (2) Adjournment of sale. When it appears that an adjournment of the 
sale will best serve the interest of the United States or that of the 
taxpayer, the IRS may adjourn the sale from time to time, but the date 
of the sale will not be later than one month after the date fixed in 
the original notice of sale.
    (3) * * *
    (i) Minimum price. Before the sale of property seized by levy, the 
IRS will determine a minimum price, taking into account the expenses of 
levy and sale, for which the property must be sold. The IRS will 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 will be made.
    (ii) Purchase by the United States. Before the sale of seized 
property, the IRS will determine whether the purchase of the 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 the 
property would be in the best interest of the United States, the IRS 
may consider all relevant facts and circumstances including, for 
example--
    (A) Marketability of 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

[[Page 71328]]

    (G) Other factors pertinent to the type of property.
* * * * *
    (4) * * *
    (iii) Release to owner. If the property is not declared to be sold 
under paragraph (d)(4)(i) or (ii) of this section, the property will be 
released to the owner of the property and the expense of the levy and 
sale will be added to the amount of tax for the collection of which the 
United States made the levy. Any property released under this paragraph 
(d)(4)(iii) will remain subject to any lien imposed by subchapter C of 
chapter 64 of subtitle F of the Code.
    (5) * * *
    (i) Sale of indivisible property. If any property levied upon is 
not divisible, so as to enable the IRS by sale of a part thereof to 
raise the whole amount of the tax and expenses of levy and sale, the 
whole of such property will be sold. For application of surplus 
proceeds of sale, see section 6342(b) of the Code.
    (ii) Separately, in groups, or in the aggregate. The IRS, in 
selecting how seized property will be offered for sale, will consider 
which method is likely to produce the highest total sales price as well 
as which method is most feasible. The seized property may be offered 
for sale--
    (A) As separate items,
    (B) As groups of items,
    (C) In the aggregate, or
    (D) Both as separate items (or in groups) and in the aggregate, in 
which case, the property will be sold under the method that produces 
the highest aggregate amount.
* * * * *
    (iv) Terms of payment. The property will be offered for sale in 
accordance with whichever of the following terms is fixed by the IRS in 
the public notice of sale:
    (A) Payment in full upon acceptance of the highest bid, or
    (B) An initial payment upon acceptance of the highest bid if the 
payment is in the amount (either the dollar amount or the percentage of 
the purchase price) specified in the notice of sale and followed by 
payment of the balance (including all costs incurred for the protection 
or preservation of the property subsequent to the sale and prior to 
final payment) within a specified period, not to exceed one month from 
the date of the sale.
* * * * *
    (6) Method of sale and sale procedures. The IRS will sell the 
property either at a public auction (at which open competitive bids 
will be received) or at a public sale under sealed bids.
    (i) Invitation to bidders. Bids will be solicited through a public 
notice of sale.
    (ii) Form for use by bidders. A bid must be submitted in the manner 
specified by the IRS in the notice of sale or in instructions 
referenced by that notice.
    (iii) Remittance with bid. The notice of sale, or instructions 
referenced in the notice, will specify the initial payment amount, 
acceptable forms of the remittance (such as check, credit or debit 
card, electronic payment, or other means), and the address (physical or 
online) at which the bid and remittance must be submitted.
    (iv) Time for receiving bids. A bid will not be considered unless 
it is received in the manner and before the time specified in the 
notice of sale, instructions referenced in the notice, or in the 
announcement of the adjournment of the sale.
    (v) Consideration of bids. The public notice of sale will specify 
whether the property is to be sold separately, by groups, or in the 
aggregate, or by a combination of these methods, as provided in 
paragraph (d)(5)(ii) of this section. If the notice, or instructions 
referenced in the notice, specifies an alternative method, bidders may 
submit bids under one or more of the alternatives. In case of error in 
computing the total price of a group of property in any bid, the unit 
price of each piece of property will control. The IRS has the right to 
waive any technical defects in a bid. A technical defect in a bid is 
deemed waived if the IRS treats it as the winning bid. In the event two 
or more highest bids are equal in amount, the IRS will reopen the 
bidding until a high bid is submitted without any ties. After the 
opening, examination, and consideration of all bids, the IRS will 
announce the amount of the highest bid or bids and the name of the 
successful bidder or bidders. Any remittance submitted in connection 
with an unsuccessful bid will be returned at the conclusion of the 
sale.
    (vi) Withdrawal of bids. A bid may be withdrawn only in the manner 
specified in the notice of sale or in instructions referenced in the 
notice. A technical defect in a bid confers no right on the bidder for 
the withdrawal of the bid after it has been opened or accepted.
    (7) Payment of bid price. All payments for property sold under this 
section must be made in the form and manner (whether by check, credit 
or debit card, electronic payment, or other means) specified by the IRS 
in the public notice of sale or in instructions referenced in the 
notice. If payment in full is required upon acceptance of the highest 
bid, the payment must be made at the time and in accordance with the 
terms specified in the notice of sale. If deferred payment is 
permitted, the initial payment must be made upon acceptance of the bid 
at the time and in accordance with the terms specified in the notice of 
sale, and the balance must be paid on or before the date fixed for 
payment thereof. Any remittance submitted with a successful bid will be 
applied toward the purchase price.
* * * * *
    (9) Default in payment. If payment in full is required upon 
acceptance of the bid and is not paid when due, the IRS will proceed 
again to sell the property in the manner provided in section 6335(e) of 
the Code and this section. If the conditions of the sale permit part of 
the payment to be deferred, and if such part is not paid within the 
prescribed period, suit may be instituted against the purchaser for the 
purchase price or such part thereof as has not been paid, together with 
interest at the rate of six percent per annum from the date of the 
sale; or, in the discretion of the IRS, the sale may be declared null 
and void for failure to make full payment of the purchase price and the 
property may again be advertised and sold as provided in subsections 
(b), (c), and (e) of section 6335 of the Code and this section. In the 
event of such readvertisement and sale, any new purchaser will receive 
such property or rights to property free and clear of any claim or 
right of the former defaulting purchaser, of any nature whatsoever, and 
the amount paid upon the bid price by such defaulting purchaser will be 
forfeited to the United States.
* * * * *
    (11) Participation in sale by revenue officers. No revenue officer 
who seized the property to be sold at a sale conducted under section 
6335 of the Code and this section may participate in the sale of that 
seized property. This restriction does not apply to sales of perishable 
goods conducted under section 6336 of the Code.
    (e) * * *
    (1) In general. The owner of any property seized by levy may 
request that the IRS sell such property within 60 days after such 
request, or within any longer period specified by the owner. The IRS 
must comply with such a request unless it determines that compliance 
with the request is not in its best interests. If the IRS decides not 
to comply with the request, it must notify the owner of the 
determination within the 60-day period, or any longer period specified 
by the owner.
* * * * *

[[Page 71329]]

    (3) Notification to owner. The IRS will respond in writing to a 
request for sale of seized property as soon as practicable after 
receipt of such request and in no event later than 60 days after 
receipt of the request, or, if later, the date specified by the owner 
for the sale.
    (f) Applicability date. The rules of this section apply to sales of 
property seized on or after [DATE OF PUBLICATION OF FINAL RULE].

Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2023-22621 Filed 10-13-23; 8:45 am]
BILLING CODE 4830-01-P