Final Regs Provide Procedures for Requesting Sale of Property Seized by the IRS

 DEPARTMENT OF TREASURY

 ACTION: Final Regulation.

 SUMMARY: This document contains final regulations that provide guidance relating to requests for the sale of seized property under section 6335(f) of the Internal Revenue Code (the "Code"). Section 6236(g) of the Technical and Miscellaneous Revenue Act of 1988 amended section 6335 of the Code by inserting subsection (f), which allows the owner of any property seized by levy to request that the Service sell the property within 60 days, or within any longer period specified by the owner. The regulations set forth the person to whom a request for sale of property should be addressed and what information should be included in a request.

 DATES: These regulations are effective April 1, 1992 and apply to requests made on or after April 1, 1992. However, any reasonable request for the sale of seized property made on or after January 1, 1989, and before the effective date of these regulations will be honored by the Internal Revenue Service.

 FOR FURTHER INFORMATION CONTACT: Kevin B. Connelly, (202) 535-9682 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

BACKGROUND

This document contains final regulations amending the Procedure and Administration Regulations (26 CFR part 301) pursuant to section 6335 of the Code. The regulations reflect the amendment of section 6335 by section 6236(g) of the Technical and Miscellaneous Revenue Act of 1988 (Pub. L. No. 100-647, 102 Stat. 3342).

EXPLANATION OF PROVISIONS

 The Internal Revenue Service published a notice of proposed rulemaking in the Federal Register on October 9, 1991 (56 FR 50831). Prior to publication of the notice, the Internal Revenue Service gave the Small Business Administration the opportunity to comment.

 The Internal Revenue Service received public comments on the proposed regulation from just one party. The issues raised by that party were considered prior to the publication of the notice of proposed rulemaking and are noted below. No changes have been made to the final regulations.

 Section 6236(g) of the Technical and Miscellaneous Revenue Act of 1988 amended section 6335 of the Internal Revenue Code by inserting new subsection (f), which allows the owner of any property seized by levy to request that the Service sell the property within 60 days, or within any longer period specified by the owner. The Secretary must comply with such a request unless a determination is made that compliance would not be in the best interests of the United States, and the owner of the property is notified within the 60-day period (or longer period, as specified by the owner) that such a determination has been made.

 The regulations provide that a request for the sale of property must be made in writing to the group manager of the revenue officer whose signature is on Levy Form 668-B. Often, the taxpayer will know this information through prior communication with the Internal Revenue Service. If the owner does not know the group manager's name or address, the owner may send the request to the revenue officer, marked for the attention of his or her group manager. The request must include: (1) the name, current address, current home and work telephone numbers and any convenient times to be contacted, and the taxpayer identification number of the owner making the request; (2) a description of the seized property that is the subject of the request; (3) a copy of the notice of seizure, if available; (4) the period within which the owner is requesting that the property be sold; and (5) the signature of the owner or duly authorized representative.

 The regulations also provide that the group manager shall respond in writing to a request for the sale of seized property as soon as practicable after receipt of such request and in any event within 60 days after receipt of the request or, if later, the date specified by the owner for the sale.

 The party who submitted public comments has suggested that the period within which the Internal Revenue Service must respond to a request for sale of seized property should be shortened so that if the group manager determines that it would not be in the Internal Revenue Service's best interests to comply with the owner's request, the owner will have sufficient time to appeal the group manager's decision prior to the date by which the owner has requested the sale.

 Section 6335 provides that if the Secretary determines that compliance with an owner's request for sale of seized property would not be in the best interests of the United States, the owner must be notified of such determination within the period within which the owner has requested sale, i.e., 60 days or any longer period specified by the owner. The regulations simply implement the language of the statute with the added provision that the group manager should respond to the owner's request as soon as practicable after receipt of the request.

 The commenter also has suggested that the regulation should provide formal appeal procedures for the owner in the event the group manager denies the owner's request. The group manager and the revenue officer are in the best position to determine whether complying with a taxpayer's request to sell seized property within 60 days or any longer period specified by the taxpayer would not be in the best interests of the taxpayer. Because of their general duties seizing and selling property as well as their involvement in specific cases, the group manager and the revenue officer are most familiar with the various factors, such as market conditions, that must be considered by the person responsible for determining whether compliance with a request to sell property is not in the Service's best interest. In essence, the determination of whether to comply with a taxpayer's request is just an extension of the group manager's and the revenue officer's current duties. An appeal of the group manager's decision to an independent office outside of the collection function, e.g., the Office of Appeals, would give someone with no expertise in the area the job of second guessing the person with the most expertise in the area. In addition, a formal appeal to another function in Collection is unnecessary because a taxpayer always has the right to ask a revenue officer's or group manager's supervisor to review a decision. A formal appeal process would just prolong the final decision.

SPECIAL ANALYSES

 It has been determined that these rules are not major rules as defined in Executive Order 12291. It also has been determined that section 553(b) of the Administrative Procedures 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, an initial Regulatory Flexibility Analysis is not required.

DRAFTING INFORMATION

 The principal author of these regulations is Kevin B. Connelly, Office of the Assistant Chief Counsel (General Litigation), Internal Revenue Service. However, personnel from other offices of the Internal Revenue Service and the Treasury Department participated in their development.

LIST OF SUBJECTS

26 CFR Part 301

 Administrative practice and procedure, Alimony, Bankruptcy, Child support, Continental shelf, Courts, Crime, Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Investigations, Law enforcement, Oil pollution, Penalties, Pensions, Reporting and recordkeeping requirements, Statistics, Taxes.

Treasury Decision 8398

ADOPTION OF AMENDMENT TO THE REGULATIONS

Accordingly, title 26, part 301 of the Code of Federal Regulations is amended as follows:

Paragraph 1. The authority citation for part 301 continues to read in part:

Authority: Sec. 7805, I.R.C. 1954; 68A Stat. 917; 26 U.S.C. 7805 * * *

Par. 2. Section 301.6335-1 is amended by adding a new paragraph (d) to read as follows:

SECTION 301.6335-1 SALE OF SEIZED PROPERTY.

* * * * *

(d) RIGHT TO REQUEST THE SALE OF SEIZED PROPERTY -- (1) IN GENERAL. The owner of any property seized by levy may request that the district director sell such property within 60 days after such request, or within any longer period specified by the owner. The district director must comply with such a request unless the district director determines that compliance with the request is not in the best interests of the Internal Revenue Service and notifies the owner of such determination within the 60 day period, or any longer period specified by the owner.

(2) PROCEDURES TO REQUEST THE SALE OF SEIZED PROPERTY -- (i) MANNER. A request for the sale of seized property shall be made in writing to the group manager of the revenue officer whose signature is on Levy Form 668-B. If the owner does not know the group manager's name or address, the owner may send the request to the revenue officer, marked for the attention of his or her group manager.

(ii) FORM. The request for sale of seized property within 60 days, or such longer period specified by the owner, shall include:

(A) The name, current address, current home and work telephone numbers and any convenient times to be contacted, and taxpayer identification number of the owner making the request;

(B) A description of the seized property that is the subject of the request;

(C) A copy of the notice of seizure, if available;

(D) The period within which the owner is requesting that the property be sold; and

(E) The signature of the owner or duly authorized representative. For purposes of these regulations, a duly authorized representative is any attorney, certified public accountant, enrolled actuary, or any other person permitted to represent the owner before the Internal Revenue Service who is not disbarred or suspended from practice before the Internal Revenue Service and who has a written power of attorney executed by the owner.

(3) NOTIFICATION TO OWNER. The group manager shall 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.