Rev. Proc. 67-25

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to set forth procedures under the requirements of section 7425(b) and (c) of the Internal Revenue Code of 1954, as added by section 109 of the Federal Tax Lien Act of 1966, Public Law 89-719, C.B. 1966-2, 623, under which a notice of sale must be given to the United States Government in certain foreclosure proceedings where the Government has a status of junior lienor.

SEC. 2. BACKGROUND.

.01 Section 7425(b) of the Code deals with the effect on the Government's interest in property in which the United States has or claims a Federal tax lien, or a title derived from the enforcement of a Federal tax lien, when a sale of property (other than in judicial proceedings) is made pursuant to:

(i) an instrument creating a lien on the property sold,

(ii) a confession of judgment on the obligation secured by an instrument creating a lien on the property sold, or

(iii) a statutory lien on the property sold.

.02 Section 7425(c)(1) of the Code provides that a notice of a sale described in section 7425(b) shall be given, in writing, by registered or certified mail or by personal service, not less than 25 days prior to such sale, to the Secretary of the Treasury or his delegate.

.03 In any situation where a notice of Federal tax lien has not been filed with respect to a taxpayer or has been filed less than 31 days before the scheduled sale, it is not necessary to notify the district director's office of a sale of the taxpayer's property under section 7425(c)(1) of the Code. In these situations, the rights of the United States are determined, in accordance with local law, in the same manner as the rights of any other claimant against the property.

SEC. 3. ADEQUACY OF NOTICE.

.01 In order to assist those persons who are planning these nonjudicial sales, a notice of sale will be considered adequate which contains the following:

1. Either a copy of each Notice of Federal Tax Lien (Form 668) or the following information shown on each filed Notice of Federal Tax Lien:

(a) The internal revenue district which originated the Notice of Federal Tax Lien.

(b) The serial number as shown on each notice.

(c) The name of the taxpayer as shown on each notice.

(d) The residence or place of business of the taxpayer as shown on each notice.

(e) The date and place of filing of each notice.

2. With respect to the property to be sold, the following information must appear on the notice of sale:

(a) In the case of real or personal property, an adequate description of the property.

(b) The time, place, and terms of the proposed sale of the property.

(c) In the case of a sale of perishable property described below, a description of the perishable nature of the property.

3. With respect to the interest of the person selling the property, show the present outstanding amount of his interest in the property.

.02 A notice of sale which does not contain the above information will not be considered adequate by the Internal Revenue Service. In addition, although not required, an abstract of title would be helpful, if available in the case of real property.

.03 This notice of sale is to be given in writing, by registered or certified mail or delivered by hand, not less than 25 days prior to the sale, to the Chief, Special Procedures Section, in the office of the district director for the internal revenue district where the sale is to be conducted. It is not necessary or advisable to send copies of the notice of sale to the Secretary of the Treasury, the Commissioner of Internal Revenue, or the United States attorney.

.04 Section 7425(c)(3) of the Code provides that, notwithstanding the notice requirements discussed above, a sale described in section 7425(b) of property liable to perish or become greatly reduced in value by keeping, or which cannot be kept without great expense, shall discharge or divest such property of the lien or title of the United States if written notice of the sale is given, in writing, by registered or certified mail, or by personal service to the district director's office before such sale. The proceeds (exclusive of costs) of the sale shall be held as a fund, for not less than 30 days after the date of the sale, subject to the liens and claims of the United States, in the same manner and with the same priority as the liens and claims of the United States had with respect to the property sold.

.05 In the case where a person is required to sell perishable goods before the issuance of regulations, the Service will accept a notice of the sale of perishable goods which contains the same information as that specified above with respect to a notice of sale under section 7425(b) of the Code. A notice of sale which does not contain all of the required information will not be considered adequate by the Service.

.06 This notice of sale of perishable goods is to be given in writing, by registered or certified mail or delivered in hand, before the sale to the Chief, Special Procedures Section, in the office of district director for the internal revenue district where the sale is to be conducted.

SEC. 4. EFFECTIVE DATE.

.01 The notice of sale provisions of section 7425(c)(1) of the Code and the perishable goods exception contained in section 7425(c)(3) of the Code do not apply to sales occurring after November 2, 1966 (the effective date of the Federal Tax Lien Act of 1966), if the seller of the property performed an act before the effective date which act at the time of performance was required and effective under local law with respect to the sale. A typical example of such an act is publication of notice of the sale in a local newspaper before November 3, 1966, if local law requires such publication before a sale and the publication was effective under local law. In such instances, it is not necessary to notify the district director of the sale under section 7425(c)(1) or (c)(3) of the Code.

.02 The Service will consider as adequate any notice of sale given before December 22, 1966, the date of issuance of Technical Information Release No. 873.

SEC. 5. RELATED MATTERS.

Pursuant to the consent to sale provisions contained in section 7425(c)(2) of the Code, the district director, for the district where the sale is conducted, is authorized, where he deems it appropriate, to consent to the sale of property free of the Federal tax lien even though timely or adequate notice is not given.

¹ Based on Technical Information Release 873, dated Dec. 22, 1966.