Modernizing Regulations on Sales of Seized Property

<RULE> DEPARTMENT OF THE TREASURY <SUBAGY>Internal Revenue Service</SUBAGY> <CFR>26 CFR Part 301</CFR> <DEPDOC>[TD 10011]</DEPDOC> <RIN>RIN 1545-BQ34</RIN> <SUBJECT>Modernizing Regulations on Sales of Seized Property</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Internal Revenue Service (IRS), Treasury. <HD SOURCE="HED">ACTION:</HD> Final regulation. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This document contains final regulations regarding the sale of a taxpayer's property that the IRS seizes by levy. The final regulations amend existing regulations to better allow the IRS to maximize sale proceeds for the benefit of the taxpayer whose property the IRS has seized and the public fisc. The final regulations affect all sales of property the IRS seizes by levy. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> These regulations are effective November 5, 2024. <E T="03">Applicability date:</E> For date of applicability, <E T="03">see</E> § 301.6335-1(f). </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Micah A. Levy, (202) 317-6832 (not a toll-free number). </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Authority</HD> This document contains amendments to the Procedure and Administration Regulations (26 CFR part 301) issued by the Secretary of the Treasury or her delegate (Secretary) under the authority granted by sections 6335(e)(2) and 7805(a) of the Internal Revenue Code regarding the sale of property that is seized by levy by the IRS (seized property). Section 6335(e)(2) provides an express delegation of authority, stating that the Secretary shall by regulations prescribe the manner and other conditions of the sale of property seized by levy. If one or more alternative methods or conditions are permitted by regulations, the Secretary shall select the alternatives applicable to the sale. Sections 6335(e)(2)(A) through (F) expressly provide that such regulations shall provide: (i) that the sale shall not be conducted in any manner other than by public auction or by public sale under sealed bids; (ii) in the case of the seizure of several items of property, whether such items shall be offered separately, in groups, or in the aggregate and whether such property shall be offered both separately (or in groups) and in the aggregate, and sold under whichever method produces the highest aggregate amount; (iii) whether the announcement of the minimum price determined by the Secretary may be delayed until the receipt of the highest bid; (iv) whether payment in full shall be required at the time of acceptance of a bid, or whether a part of such payment may be deferred for such period (not to exceed 1 month) as may be determined by the Secretary to be appropriate; (v) the extent to which methods (including advertising) in addition to those prescribed in section 6335(b) may be used in giving notice of the sale; and (vi) under what circumstances the Secretary may adjourn the sale from time to time (but such adjournments shall not be for a period to exceed in all 1 month). Finally, section 7805(a) authorizes the Secretary to “prescribe all needful rules and regulations for the enforcement of [the Code], including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.” <HD SOURCE="HD1">Background</HD> On October 16, 2023, the Department of the Treasury (Treasury Department) and the IRS published in the <E T="04">Federal Register</E> (88 FR 71323) a notice of proposed rulemaking (REG-127391-16) proposing amendments to regulations under 26 CFR part 301 (proposed regulations). The proposed regulations conformed the prescribed manner and conditions of sales of seized property with modern practices. The proposed amendments included changes to facilitate online sales, give greater flexibility in grouping property and specifying terms of payment, and provide clarity to the IRS in making decisions about which employees can be assigned to conduct sales or perform related ministerial duties. <E T="03">See</E> the Explanation of Provisions section of REG-127391-16 at 88 FR 71324-71326 for a discussion of the proposed regulations. The Treasury Department and the IRS received one comment in response to the notice of proposed rulemaking, but the comment did not address the proposed regulations. The comment is available at <E T="03">https://www.regulations.gov</E> or upon request. No public hearing was requested or held on the proposed regulations. These final regulations therefore adopt the text of the proposed regulations with only minor, nonsubstantive changes. <HD SOURCE="HD1">Special Analyses</HD> <HD SOURCE="HD2">I. Regulatory Planning and Review</HD> 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. <HD SOURCE="HD2">II. Regulatory Flexibility Act</HD> Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the regulations solely conform the prescribed manner and conditions of sales of seized property with modern practices by making the sales process both more efficient and more likely to produce higher sales prices. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received. <HD SOURCE="HD2">III. Unfunded Mandates Reform Act</HD> 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. These final regulations do 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. <HD SOURCE="HD2">IV. Executive Order 13132: Federalism</HD> 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 final 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. <HD SOURCE="HD2">V. Congressional Review Act</HD> Pursuant to the Congressional Review Act (5 U.S.C. 801 <E T="03">et seq.</E> ), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2). <HD SOURCE="HD1">Drafting Information</HD> The principal author of these regulations is Micah A. Levy, Office of the Associate Chief Counsel (Procedure and Administration). However, other personnel from the Treasury Department and the IRS participated in the development of the regulations. <LSTSUB> <HD SOURCE="HED">List of Subjects in 26 CFR Part 301</HD> Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements. </LSTSUB> <HD SOURCE="HD1">Adoption of Amendments to the Regulations</HD> Accordingly, the Treasury Department and the IRS amend 26 CFR part 301 as follows: <HD SOURCE="HED">PART 301—PROCEDURE AND ADMINISTRATION </HD> <REGTEXT TITLE="26" PART="301"> <E T="04">Paragraph 1.</E> The authority citation for part 301 is amended by adding an entry for § 301.6335-1 in numerical order to read in part as follows: <HD SOURCE="HED">Authority:</HD> 26 U.S.C. 7805. <EXTRACT> <STARS/> Section 301.6335-1 also issued under 26 U.S.C. 6335(e)(2). <STARS/> </EXTRACT> </REGTEXT> <REGTEXT TITLE="26" PART="301"> <E T="04">Par. 2.</E> Section 301.6335-1 is amended by: 1. Redesignating paragraphs (a) through (d) as paragraphs (b) through (e), respectively; 2. Adding a new paragraph (a); 3. Revising newly designated paragraphs (b) and (c)(1) and (2); 4. Adding a subject heading to newly redesignated paragraph (c)(3); 5. Revising newly redesignated paragraphs (d)(1) and (2) and (d)(3)(i) and (ii); 6. Removing newly redesignated paragraph (d)(3)(iii); 7. Revising newly redesignated paragraph (d)(4)(iii); 8. Removing newly redesignated paragraph (d)(4)(iv); 9. Revising newly redesignated paragraphs (d)(5)(i), (ii), and (iv) and (d)(6), (7), and (9); 10. Adding paragraph (d)(11); 11. Revising newly redesignated paragraphs (e)(1) and (3); and 12. Adding paragraph (f). The additions and revisions read as follows: <SECTION> <SECTNO>§ 301.6335-1</SECTNO> <SUBJECT>Sale of seized property.</SUBJECT> (a) <E T="03">In general.</E> 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) <E T="03">Notice of seizure</E> —(1) <E T="03">Issuance and delivery.</E> 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 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 24k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━