The IRS has issued final regs designed to modernize the rules governing sales of taxpayer property seized by the IRS by levy. (TD 10011, 11/4/2024)
Generally, sales of property the IRS seized through the levy process are governed by Code Sec. 6335 pursuant to the Internal Revenue Code of 1954 (P.L. 83-591). But the rules went without substantial revisions to reflect modern-day technological advancements until the IRS issued proposed regulations in October 2023.
According to the IRS, there was only one response submitted during the open comment period, which was disregarded for not directly addressing the proposed regs. Thus, the regs were adopted and finalized November 4 with only minor tweaks and no substantive changes.
Promulgated under the regulatory authority set forth in Code Sec. 6335(e)(2) and Code Sec. 7805(a), the regs will “better allow the IRS to maximize sale proceeds for the benefit of the taxpayer whose property the IRS has seized and the public fisc,” according to Treasury.
Modernized amendments were necessary, said the IRS, to support online sales and allow more options with forms of payment and how properties are grouped. This flexibility permits the IRS to consider methods that will produce the highest aggregate amounts from sales of seized property. As the IRS noted, such sales are held at public auctions or under sealed bids. The regs clarify various aspects of bidding and remittance, such as the form used by bidders, time and consideration of bids, and bid withdrawls.
The regs also expand on how the IRS makes decisions on assigning employees to conduct sales or related ministerial work.
As the agency explained in the preamble of the proposed regs, online sales “can attract a wider range of potential purchasers, and thus potentially higher bids, while conserving IRS resources.” The IRS reasoned that for the purpose of determining the time and place of sales, online sales generally are treated as occurring in the country in which the property is seized.
Should the facts and circumstances of an online sale lead the IRS to believe otherwise, the sale can be conducted online via special order “when doing so would be more efficient or would likely result in more competitive bids.”
Effective date. The final regs apply to all sales of property seized by the IRS, effective November 5, 2024.
For more information regarding the procedure to sell seized property, see Checkpoint’s Federal Tax Coordinator ¶ V-5300.
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