IRM 5.10.3 – How IRS Conducts a Seizure of  Property

• 5.10.3.1   General
• 5.10.3.2   Conducting the Seizure — Securing Consent
• 5.10.3.3   Exigent Circumstances
• 5.10.3.4   Writ Procedures
• 5.10.3.5   Seizing the Property
• 5.10.3.6   Protecting the Property After Seizure
• 5.10.3.7   Payment to Vendors for Services Less Than or Equal to $2,500
• 5.10.3.8   "Not to Exceed" and Actual Costs
• 5.10.3.9   Notice of Seizure Form 2433 — Preparation
• 5.10.3.10   Alcoholic Beverages
• 5.10.3.11   Cash Register Contents
• 5.10.3.12   Safe Deposit Boxes
• 5.10.3.13   United States Savings Bonds
• 5.10.3.14   United States Marketable Securities
• 5.10.3.15   Patents and Pending Applications for Patents
• 5.10.3.16   Controlled Substances
• 5.10.3.17   Contacting Technical Services for Seizure Numbers
• 5.10.3.18   Notice of Seizure Form 2433 — Delivery
• 5.10.3.19   Property that is Tampered With, Rescued, or Stolen
• 5.10.3.20   Transfer of Custody to PALS
• Exhibit 5.10.3-1   Form P–576, Consent to Enter Private Premises Reference: 5.10.3.2
• Exhibit 5.10.3-2   P–577, Affidavit of Revenue Officer Reference: 5.10.3.4
• Exhibit 5.10.3-3   P–584, Data Sheet Reference: 5.10.3.4
• Exhibit 5.10.3-4   "Indemnification of Locksmiths/Tow Truck Operators " Reference: 5.10.3.7.1(2)
• Exhibit 5.10.3-5   Form 2433 — Notice of Seizure Reference: 5.10.3.9
• Exhibit 5.10.3-6   Letter 2293(P), Letter Transmitting Seized Food Stamps Reference: 5.10.3.11.2(4)
• Exhibit 5.10.3-7   Letter P–336, Transmittal of Non-Marketable Securities to Bureau of Public Debt Reference: 5.10.3.13(1) and 5.10.3.14.2(3)
• Exhibit 5.10.3-8   Letter P–337, Transmittal of Matured Securities to Federal Reserve Bank Reference 5.10.3.14.2(2)
• Exhibit 5.10.3-9   Letter P–415, Transmittal of Form 2433 to Patent Office Reference 5.10.3.15(3)
• Exhibit 5.10.3-10   Taxpayer/Responsible Officer's Acknowledgment of Opportunity to Download Computer Information Reference 5.10.3.6.4(3)
• Exhibit 5.10.3-11   Form 2433 - Estimated Equity Reference 5.10.3.18.1(2)

5.10.3.1  (10-01-2004)
General

1.       After approval has been secured and all pre-seizure preparations have been completed, the revenue officer should conduct the seizure. Coordination with the PALS is essential before, during, and after the seizure. The PALS must be contacted prior to the seizure date to resolve any logistical issues and to ensure an orderly transfer of property after the seizure has been conducted in order to maximize the proceeds from the sale.

2.       The revenue officer must check IDRS prior to conducting the seizure to confirm that there have been no changes to the status of the taxpayer's account, such as bankruptcy filings, adjustments, or credits that would cause the seizure action to no longer be allowable or warranted.

3.       The revenue officer and assisting employee(s) should enter the public portion of the premises, identify themselves by presenting their credentials, and speak with the rightful occupant. The revenue officer should explain that the purpose of the visit is to seize that taxpayer's assets located on the premises. The revenue officer should take the time to address any questions the taxpayer has regarding his or her rights.

5.10.3.2  (10-01-2004)
Conducting the Seizure — Securing Consent

1.       Either the premise's rightful occupant's (as defined in 5.10.3.2(3)) written consent or a Writ of Entry is required if the property to be seized is located on private premises. The request for consent should be explained to the rightful occupant. Pattern Letter P–576, Consent to Enter Private Premises (Exhibit 5.10.3–1), will be used to prepare the appropriate written consent. The revenue officer should explain that:

A.      Written consent is required for the revenue officer to conduct the seizure.

B.      The consent is only permission to enter the private area of the property — the public area can be entered and property seized without consent.

C.      The rightful occupant's permission is not required to seize, only to enter the private areas.

D.      The rightful occupant can refuse consent, but should be informed that a Writ of Entry is the next probable step.

E.      If consent is given and the rightful occupant allows the property to be stored and sold on the premises, there is usually a reduction in expenses and an increase in net sale proceeds.

2.       The revenue officer may accompany the rightful occupant onto the private premises to discuss the matter. This cannot be considered a consent to enter a private area for the purpose of conducting the seizure.

3.       A written consent from the rightful occupant is required. The rightful occupant can be defined as the party with a legal right to be in possession of the premises. This may vary from state to state. In many cases the taxpayer will be the rightful occupant. However, other parties may be the rightful occupant. In addition to the taxpayer, two examples of rightful occupants who can sign a Consent include:

·         Landlords who have advised the taxpayer that their lease is in default and have the right to lock the taxpayer out

·         Shop owners who have the taxpayer's goods on consignment for sale at their place of business

4.       When it is not possible to request consent in person, the rightful occupant (e.g., the taxpayer) should be requested by mail or telephone to come to the revenue officer's office to give consent. The Consent must be signed by the rightful occupant or authorized representative to be valid.

5.       In most instances the seizure will be made immediately after the Consent is signed. As a general rule, the seizure should be made not more than 7 working days from the date of consent. If the seizure is to be later than 7 days, a new Consent should be requested.

6.       A copy of the Consent will be provided to the person who signed it, the original will be forwarded to Technical Services through the group manager within 5 workdays after the seizure, a copy will be retained with the case file, and a copy will be forwarded to the PALS when custody of the property is transferred (see IRM 5.10.3.20).

7.       In no case is a signed Consent to be maintained as a measure to guarantee performance of an installment agreement, timely filing, or other action.

5.10.3.2.1  (10-01-2004)
Conducting the Seizure — Consent Denied

1.       Consent may be refused in person, by mail, or by telephone. Consents are voluntary and may be revoked at any time by the person giving consent.

2.       If consent to enter is denied, the revenue officer will explain that a Writ of Entry to seize the assets is the next probable step.

3.       Under normal circumstances, if consent is denied, within 2 workdays of the denial the revenue officer will initiate the process to secure a writ. (See IRM 5.10.3.4, Writ Procedures.) If the revenue officer decides not to pursue a writ or is unable to meet the 2-day time frame, he or she will document the reason in the case history.

5.10.3.2.2  (10-01-2004)
Seizure of Both Public and Private Premises

1.       If the assets located in the public area are not sufficient to satisfy the tax liability, and consent to enter to seize the assets on the private premises has been refused, the revenue officer must decide whether to seize the assets in the public area, or to wait until a writ is received permitting him/her to seize assets in both the public and private areas.

2.       Generally, the revenue officer will wait until the writ is secured; however, if a valid reason exists for the revenue officer to proceed with the seizure of the assets on the public portion the revenue officer will advise the taxpayer or person in charge that the contents of the public area are being seized. The revenue officer will further advise the taxpayer that although the Service has seized the assets in the public area neither seizure, entry, nor inventory will be made of the private portion of the premises until a writ is obtained. The assets that are being seized should be removed to a location where they can be protected.

5.10.3.3  (10-01-2004)
Exigent Circumstances

1.       If the revenue officer observes situations that can be described as "exigent circumstances," the private portion of the premises can be entered without a Writ of Entry.

2.       A seizure under exigent circumstances may be defined as a seizure that must be made immediately because there is not ample time to secure the necessary Writ of Entry to prevent the taxpayer from putting property beyond the reach of the Service. Removal of property from the taxpayer's premises in the ordinary course of business, such as delivery of merchandise sold to customers, is not an exigent circumstance.

3.       Extreme caution must be exercised when determining exigent circumstances. The revenue officer should obtain instructions from his or her manager about how to proceed, and extensive documentation in the case history about the procedure is necessary. A jeopardy determination or assessment by itself is not sufficient to satisfy the exigent circumstances exception.

4.       In cases where exigent circumstances exist, the revenue officer:

·         Must be certain that the taxpayer is attempting to put property beyond the reach of the Service

·         Will secure written approval from the territory manager, unless the type of seizure requires the approval of the area director

·         Will secure and document the advice of area counsel

·         May immediately enter private premises, from which property is being removed, without waiting for the Writ of Entry in order to protect the interests of the government

·         Will document the case file with the facts that led to a determination that "exigent circumstances" existed — this documentation must include the efforts to explain to the taxpayer his/her rights prior to seizure

5.10.3.4  (10-01-2004)
Writ Procedures

1.       When a Writ of Entry is required, the revenue officer will prepare:

·         An affidavit (Pattern Letter P–577, Affidavit of Revenue Officer, Exhibit 5.10.3–2)

·         A Data Sheet (Pattern Letter P–584, Exhibit 5.10.3–3)

2.       Since affidavits are testimony under oath of the one giving the affidavit, the revenue officer must ensure that the information presented is accurate as to the facts of the case. Extraneous information and subjective opinions should not be included in the affidavit.

3.       The data sheet should include all pertinent information necessary to provide a complete background on the case, as the sheet may be used to answer questions that the Judge or Magistrate might have regarding the request for a Writ of Entry.

4.       The data sheet will include:

·         Employee information

·         Taxpayer information

·         Notice, balance, and assessment dates

·         Summary of actions taken on the case

·         Rightful occupant information, if the taxpayer is not the rightful occupant

·         Date consent was refused

·         Description of the property to be seized

·         An explanation of how the revenue officer knows the above information

5.       If the description of the property is unknown, use a general description, such as "all of the property of (name of taxpayer) located on the premises of (complete street address)" .

6.       The completed affidavit and data sheet will be forwarded through the group manager to Technical Services and then to area counsel for review as soon as possible. After review, area counsel will refer the matter to the U.S. Attorney for handling. Area counsel will advise the revenue officer or group manager of the place and time of the appointment with the district court Judge or Magistrate. The revenue officer or group manager may be present in order to answer questions the Judge or Magistrate may ask concerning the seizure.

7.       As soon as the Writ of Entry is received, the revenue officer will notify the PALS and proceed with the seizure.

Note:

The revenue officer should check IDRS after the writ has been secured in order to confirm that there have been no changes to the status of the taxpayer's account, such as bankruptcy filings, adjustments, or credits that would cause the seizure action to no longer be allowable or warranted.

8.       Generally, writs are in effect for ten days, but a Judge or Magistrate may impose specific restrictions to limit or increase such time factors.

9.       Once the seizure is made, the revenue officer should forward a copy of the Writ of Entry to Technical Services through the group manager within 5 workdays after the seizure, retain a copy for the case file, send a copy to area counsel, and give a copy to the PALS at the time the transfer of custody of the seized assets is completed.

5.10.3.4.1  (10-01-2004)
Writ Denied

1.       If the Writ of Entry is denied and it is determined that a seizure, limited to property located in a public access area, is appropriate, area counsel will be consulted to determine that such action will not conflict with the basis for the denial of the Writ of Entry for the private premises. If area counsel agrees to the seizure, the property will be seized and stored as appropriate.

5.10.3.5  (10-01-2004)
Seizing the Property

1.       The revenue officer will proceed with the seizure once the Consent is signed or the court order is received, when applicable. If a Writ of Entry was secured, the taxpayer will be given the original copy of the writ at the seizure site. If the taxpayer is not present, the Writ of Entry will be provided to the taxpayer as soon as possible. If a third party is in possession of the property, the revenue officer should give a copy of the Writ of Entry to them at the time of the seizure.

2.       The revenue officer should then deliver Form 668–B to the taxpayer and read the statement on the form to the taxpayer or permit him or her to read it. The revenue officer should answer any questions the taxpayer may have regarding the seizure.

3.       If the revenue officer arrives at the seizure site and a taxpayer's employee is in charge of the property to be seized, the revenue officer should advise him/her to call the taxpayer. If the taxpayer is not available and a writ of entry was secured, the revenue officer should conduct the seizure, and the seizure documents should be left in a sealed envelope addressed to the taxpayer at the taxpayer's residence or place of business.

4.       Seizure of property should be timed in a manner to prevent entrance or interference of employees or customers as much as possible. There are situations where a seizure is made and the taxpayer's employees and customers are present. In this situation the revenue officer should:

A.      Request the taxpayer or the taxpayer's employee in charge of the property to ask the employees and customers to leave.

B.      Ask everyone to leave if the taxpayer or the taxpayer's employee in charge of the property will not ask them to do so.

C.      Secure the site and proceed with the seizure.

5.       The seizure should be discontinued if the taxpayer makes:

·         Full payment of the assessment plus all additions or is prepared to do so immediately

·         Some other satisfactory arrangement regarding the tax liability

6.       If the taxpayer states that a bankruptcy petition was filed, secure the appropriate bankruptcy petition information and contact Technical Services for additional instructions.

7.       If the taxpayer claims hardship, the revenue officer should determine, based on the particular circumstances if the actual seizure action should be discontinued. See IRM 5.10.3.5.1(6) for the procedures to follow if the taxpayer does claim hardship and the revenue officer will not or cannot provide the relief requested. Any further enforcement action will be withheld during the Taxpayer Advocate's review.

8.       A revenue officer is not authorized to use force in the seizure of property. If the taxpayer or any other person bars the path or approach of the revenue officer and clearly indicates that he or she will use force in attempting to prevent the seizure, the revenue officer should withdraw and report the matter to the group manager.

9.       If the revenue officer is in the process of actually seizing the property and is physically attacked, he or she may use such force as is necessary to protect himself or herself to stop the attack. The seizure should be discontinued and the assault reported to TIGTA (see IRM 5.17.3.3.4.2).

10.   Part 3 of Form 668–B must be:

·         Personally provided to the taxpayer,

·         Left at his or her residence or business if he or she has such within the territory where the seizure was made, or

·         Mailed to the taxpayer's last known address within two business days of the seizure only if the taxpayer cannot be readily located, or has no dwelling or place of business within the territory where the seizure was conducted

Note:

If the taxpayer's address is known and is located in the territory where the seizure was made, the documents must be left at the place of abode or business if the taxpayer is not available for personal delivery. The revenue officer may mail the documents in addition to leaving them at the place of abode or business, but they cannot only be mailed in these situations.

11.   Parts 1 and 2 of Form 668–B contain two statements concerning the taxpayer's presence during inventory. At the time of the seizure, the revenue officer will complete and sign the first statement, which indicates that the taxpayer or taxpayer's representative (if available) was asked to be present during inventory. When the inventory is taken, the revenue officer will complete the second statement, which indicates whether the taxpayer or the taxpayer's representative was present. Part 1 will be forwarded to Technical Services within 5 work days after the seizure is conducted.

12.   When property belonging to the taxpayer is in the custody of a third party, Part 4 of Form 668–B should be given to the third party in possession of the property. Form 668–A (Notice of Levy) must also be used since the property is in the possession of a third party. Examples of this include automobiles on a private parking lot, securities in the hand of a stockbroker, or a safe deposit box at a bank.

13.   If a vehicle is parked in a "park and lock" facility, and the attendant is not in possession of the keys to the vehicle, provide the person having custody of the vehicle with Part 4 of Form 668–B. If the attendant is in possession of the key to the vehicle, serve Forms 668–B and 668–A on the attendant and ask the attendant to surrender the keys. If the third party fails to surrender the keys, and/or denies access to the vehicle, the revenue officer will follow the procedures in IRM 5.11.2.1.8, "Refusal to Comply with a Levy."

5.10.3.5.1  (10-01-2004)
Management Review Process and Taxpayer Appeal Rights

1.       Taxpayers whose business assets have been seized, and who request it, are entitled to an expedited case review by management. The seized assets must be tangible personal property essential in carrying on the trade or business of the taxpayer. The purpose of the management review is to determine whether the levy meets the release requirements of IRC 6343 and, in particular, whether the levy has created an economic hardship by preventing the taxpayer from carrying on such trade or business.

2.       The management review will consist of one level only and will be conducted at the territory level. In those cases where the levy action is sustained (levy is not released) by the appropriate compliance manager, the taxpayer will be advised about the Taxpayer Advocate and/or the Collection Appeal Program ( CAP ).

3.       Seizures involving perishable goods require immediate management attention. Local management will provide for an accelerated review process based on the merits of each case.

4.       Once a seizure action is taken, the taxpayer has 10 business days from the date the Notice of Seizure is provided to the taxpayer or left at his or her usual abode or place of business to appeal the seizure action through the CAP process ( IRM 5.10.1.5.3). The taxpayer will use Form 9423, Collection Appeals Request, to request a CAP hearing.

5.       Taxpayer Advocate Service (TAS) cases and Applications for Taxpayer Assistance Orders may be initiated because of Compliance seizure actions. If the taxpayer claims hardship as a result of a seizure or proposed seizure action, the revenue officer should determine if the seizure action should continue.

6.       If the revenue officer cannot or will not initiate action to resolve the taxpayer's inquiry or to provide the relief requested by the taxpayer, the revenue officer must assist the taxpayer in preparing Form 911, Application for Taxpayer Assistance Order (ATAO). Form 911 must state the hardship and/or problem, and it must document the resolution and/or relief requested. The revenue officer must document the reason why the requested action was not taken. Form 911 will be forwarded to the TAS within 1 workday of identifying that the contact potentially meets TAS criteria.

7.       Further collection actions are suspended until the hardship is resolved by the Advocate's Office. See IRM 13.1.7 for TAS criteria and procedures.

5.10.3.6  (10-01-2004)
Protecting the Property After Seizure

1.       After the 668–B has been served, the revenue officer and/or PALS should sign the appropriate warning notices (Forms 12911, 12912, or 12913) and attach them to the property being seized for identification. The name and phone number of the PALS who will conduct the sale and the revenue officer who conducted the seizure should both be included on the warning notices.

2.       Prior contact with vendors should have been made so that the vendor is available on the day of the seizure. It is inappropriate for the vendor to arrive before the revenue officer makes the seizure and secures the property. This is necessary to avoid unnecessary expenses in case a problem occurs with the seizure or if the taxpayer pays the liability. After the 668–B has been delivered, the revenue officer should contact the vendor. If available, a cell phone should be used so the revenue officer does not have to leave the seizure site. See IRM 5.10.3.7 and 5.10.3.8 for instructions regarding payments to vendors.

3.       Unless the real estate housing the seized assets has also been seized, neither padlocking nor placing seizure warning tags on the premises is appropriate. See IRM 5.10.1.3.3.1(7) and (8) for the procedures that should be followed in order to make the appropriate arrangements in these situations.

4.       When real estate alone is seized, neither padlocking the premises nor changing the locks is appropriate, as possession of the real property remains with the owner or tenant until sale or redemption occurs. If the seizure involves unimproved real estate, a warning notice is not required to be posted.

5.       If the taxpayer's entire business with many assets is being seized, warning notices should be attached to clearly identify the property under seizure.

6.       While the procedures outlined above apply in the typical situation involving seizure of business property, there is no need to post a warning notice on any seizure when that action would increase the prospects of violence or, for other reasons, would be imprudent. Non-posting of the warning notice in such instances has no effect on the legitimacy of the seizure action taken. The reasons for non-posting will be documented in the case file.

7.       The taxpayer's employees are allowed to remove their personal property and the taxpayer may remove business books and records without revenue officer inspection. If examination of the books and records is necessary in a particular case, the revenue officer should consult area counsel to determine whether the issuance of an administrative summons is desirable.

8.       If a taxpayer seeks personal items in a seized vehicle or business premises, advise the taxpayer that re-entering the seized property to recover the personal items is not permitted. The revenue officer and witnessing employee should personally remove the items and return them to the taxpayer after the taxpayer signs Form 668–E, Release of Levy. The provisions in IRM 5.10.4.5(11) are to be followed when the taxpayer refuses to sign Form 668–E.

9.       After attaching the warning notices, the revenue officer should begin to inventory the property under seizure. The PALS may assist with the inventory of the property but may not assist in the actual seizure.

10.   When guards have been hired ( IRM 5.10.1.3.3.1(10)), they should be apprised of the possibility of harassment or violence. In the majority of cases however, satisfactory protection can be ensured by notifying the local police of the seizure and requesting their cooperation in protecting the property. Revenue officers and PALS may also conduct periodic visits to the seizure location to ensure the security of the assets and to determine if any assets have been lost, stolen, or tampered with.

11.   The aid of the taxpayer should be requested to take all necessary precautions (e.g., turn off water pumps, non-essential equipment, motors, etc.) to secure the property. If the premises must be checked periodically to protect the property, the revenue officer or PALS should make such arrangements.

5.10.3.6.1  (10-01-2004)
Controlling Seized Property Stored in IRS Offices

1.       When seized items are stored in an IRS office, the revenue officer or PALS will prepare a signed memorandum to his or her manager identifying the property. It will state the determined value of the property and the approximate amount of time the property is to be stored.

2.       The revenue officer or PALS and another Service employee designated by the territory manager will both sign a certification on this memorandum to the effect that the property was placed in a safe or cabinet with the name or number and location.

3.       When custody of the property is transferred to the PALS, a copy of this memorandum (if prepared by the revenue officer) should be provided to the PALS.

4.       Seized property must be safeguarded in facilities commensurate with the standards in IRM 1.16.15, Minimum Protection Standards. Local procedures for safeguarding such property should include periodic verification checks of the property in the container by a designated official.

5.       When the property is disposed of, the revenue officer or PALS will update the memorandum referred to in (1) above with date of disposition, manner of disposition, etc. The manager will concur by initialing the memorandum and will forward the memorandum to Technical Services for inclusion in the seizure file.

5.10.3.6.2  (10-01-2004)
Service and Repair Establishments

1.       Business establishments, such as dry cleaners, laundries, and repair shops, contain property belonging to customers. Revenue officers conducting such seizures must make arrangements for customers to claim their property.

2.       A notice should be posted on the front door of the business indicating the hours the premises will be open for customers to claim their property. The establishment should be opened for sufficient periods so that third parties are not overly inconvenienced.

3.       The revenue officer, with the group manager's concurrence, will determine the hours the business will be open based on such factors as amount of property to be claimed, location of the business and the usual hours the business was open to the public. If the taxpayer's business hours extended beyond normal IRS work hours, the establishment should be opened some portions of the non- IRS work hours. For example, if Saturday operation was customary, consideration should be given to providing at least some Saturday hours.

4.       Revenue officers should make reasonable attempts to contact customers on any item with customer identifying information if the item is not claimed. In no event should items clearly identified as a customer's property be sold.

5.       The revenue officer and the PALS should coordinate the transfer of custody of the assets so customers have adequate time to claim their assets.

5.10.3.6.3  (10-01-2004)
Records of Attorneys, Physicians, and Accountants

1.       Records maintained by attorneys, physicians, and accountants concerning professional services performed for clients are usually of little intrinsic value and possess minimum sale value.

2.       Questions of confidential or privileged information contained in these records may cause complications if the records are seized. Additionally, the case files of the professional person are frequently the property of the client, and therefore are not subject to seizure.

3.       Accordingly, it is not desirable to seize case files or records for payment of the taxpayer's tax liabilities. When office facilities or office equipment of attorneys, physicians, or public accountants are seized for payment of taxes, case files and related files in seized office facilities or office equipment of such persons will not be personally examined by the revenue officer, and the taxpayer should be asked to promptly remove all case files.

4.       If it is believed that the storage facilities, such as file cabinets, contain valuable property in addition to case files, the contents may also be seized but, as soon as possible, the case files should be released to the taxpayer. The revenue officer should be present when the taxpayer segregates the files so that other property of value is not taken by the taxpayer.

5.       A supplemental notice of seizure should be issued describing the contents that remain under seizure. Form 668–E should be issued for any property released back to the taxpayer. After the contents have been removed, the storage facilities (cabinets, etc.) may be sold at public sale in accordance with regular sale procedures.

6.       If the taxpayer does not remove the files as requested, the case files will be removed intact by the revenue officer. Another Service employee should also be present at time of removal. Under no circumstances will case files be examined. The files will be placed in boxes and securely bound. Each box will be identified by name of taxpayer and date removed from files. The boxes will be left on the business premises if the premises are not also under seizure. If the business premises are under seizure, the boxes will be removed for storage at the local IRS Office.

7.       When files are removed for storage, the revenue officer should take the appropriate steps to ensure the security of the case files, and if possible, the files should be maintained in locked facilities. The revenue officer will document the fact that the case files were not examined and this statement will also be signed by the other employee who was present at the time the files were removed. If case file boxes are removed for storage, the taxpayer should be notified within 48 hours, by certified mail, return receipt requested, that the files must be claimed within 30 days from date of notice. If not claimed within the prescribed period, area counsel should be asked to provide instructions.

5.10.3.6.4  (10-01-2004)
Seizures Involving Computer Equipment

1.       IRM 5.10.1.3.3.5 contains the pre-seizure guidelines that should be followed when determining whether to seize computer equipment. All taxpayer data that is on the hard drive must be removed prior to selling the equipment at public auction.

2.       Once the property is seized, the taxpayer must be given an opportunity to download the data from the hard drive before it is eliminated by the PALS prior to sale. The taxpayer should also be advised that the Service will remove all of the information from the hard drive, even if the taxpayer does not download the data.

3.       Document the case history when you advise the taxpayer of the need to download the information. The revenue officer or PALS (or both employees) may make this request. Exhibit 5.10.3–10, Taxpayer/Responsible Officer's Acknowledgment of Opportunity to Download Computer Information, should be used to document the fact that the taxpayer was given the opportunity to download the information. A copy of this document should be maintained in the seizure file.

4.       The PALS should:

·         Ensure that the taxpayer has been given the opportunity to download the information

·         Take the appropriate action to eliminate all of the information from the hard drive as close to the scheduled sale date as possible

Note:

This should allow the taxpayer to receive the equipment back in the same condition as it was when it was seized if the property is released or redeemed prior to sale.

5.       Only the PALS are authorized to use the WipeDisk to remove all of the material from the hard drive. Licensed software that can be sold with the computer should be reloaded to the hard drive whenever possible so that the value of the equipment is preserved. Consult with area counsel on any software licensing questions.

5.10.3.7  (10-01-2004)
Payment to Vendors for Services Less Than or Equal to $2,500

1.       For purchases less than or equal to $2,500.00, payment must be made under one of the following methods:

·         Government BankCard ( IRM 5.10.3.7.1)

·         Convenience Checks (PALS use only)

·         Form 6888, U.S. Government Purchase Order — Invoice Voucher ( IRM 5.10.3.7.2)

2.       Federal procurement regulations require written confirmation of the cost of a service.

3.       Services that exceed $2,500.00 require a purchase order through procurement channels and the request must be submitted through the Requisition Tracking System (RTS) for funding by the local budget office. IRM section 5.10.2.18 contains the procedures to follow when services will exceed the authorized limit.

4.       Prior to incurring any expense, the revenue officer or PALS must ensure that there are sufficient funds available to satisfy the expected expenses. If the expenses are expected to exceed the available amount, additional funding should be secured prior to incurring the expense.

5.10.3.7.1  (10-01-2004)
Government BankCard and Convenience Checks

1.       The preferred method for procuring seizure and related services under $2,500.00 is through the use of the Government BankCard. Each local area budget office has entered a bulk commitment into the RTS for estimated BankCard services.

2.       If the revenue officer or PALS uses the Government BankCard or convenience checks, he or she must provide a copy of the indemnification clause (Exhibit 5.10.3–4) to the vendor at the time of purchase. The " Indemnification of Locksmiths and/or Tow Truck Operators" clause is only applicable to orders for locksmith and tow truck services.

3.       When the revenue officer or PALS makes a purchase with the U.S. Government BankCard or convenience checks, he or she will receive a monthly statement of account for reconciliation and certification. After receiving the statement, the revenue officer or PALS will take the following actions:

A.      Reconcile expenditure receipts to the statement.

B.      Annotate the statement with the seizure number, type of service or item purchased, and the vendor's TIN .

C.      Sign and date the statement.

D.      Forward to the approving manager within 5 calendar days to ensure prompt payment of vendors.

4.       The appropriate CQ document identification number for each spending office should be referenced on all BankCard statements. This number can be found in the Management and Finance Handbook — Financial Operating Policies and Guidelines.

5.       Additional information on the use of the Government BankCard can be found in Document Number 9185, Purchase Card Guide.

6.       For services procured by the Government BankCard or convenience checks, the RO or PALS will submit a copy of the vendor's bill for each service rendered as part of the closing documents submitted to Technical Services.

5.10.3.7.2  (10-01-2004)
Form 6888 Procedures

1.       Area compliance management is responsible for controlling and issuing Form 6888, U.S. Government Purchase Order-Invoice-Voucher to revenue officers and PALS. The books contain instructions for completing and processing the appropriate parts. Additionally, the book contains a "record of purchases" which must be completed every time a Form 6888 is issued. The revenue officer or PALS must ensure that the Form 6888 is properly completed so that it can be processed for payment.

2.       Care must be taken in completing the Form 6888 to ensure that the writing is legible. Enough pressure must be used to ensure that the necessary information can be read on all of the copies.

3.       The "Taxpayer Identification Number" and " Indemnification of Locksmiths and/or Tow Truck Operators" clauses are shown on the reverse side of the Form 6888 and should be pointed out to the contractor when services are required. The "Taxpayer Identification Number" ( TIN ) clause requires the contractor to include his or her Social Security Number (for individuals) or employer identification number (for other entities) on invoices. Contractors who furnish services must include their TIN in the block entitled "Payee" on the front side of Form 6888.

4.       The following information should be entered on Form 6888:

·         Date of Order — Date that you ordered the goods/services

·         Order Number — Number with which to identify the vendor's invoice

·         Payee — Vendor's full name, address, and TIN

·         Furnish Supplies or Services To — Name, address, and telephone number of the employee contracting for the services (revenue officer or PALS)

·         Supplies or Services Description — Description of the goods/services; date the goods/services were received; quantity, unit price, amount; enter the requisition document ID (provided for bulk estimate of 6888's) on the last line of this block

·         Total and Discount Terms — Total to be paid and any applicable discount terms; the total is the amount the employee is authorizing to be paid

·         IRS Billing Address:
Internal Revenue Service
Beckley Finance Center
P. O. Box 9002
Beckley , WV 25802–9002

·         Ordered By — the revenue officer or PALS must print his or her name clearly in addition to signing the document

·         Accounting Data — Seizure number, spending office code and program activity code

·         Date Invoice Received — Actual date the invoice was received in the office (must be entered on all Forms 6888 that are received in the office)

5.       The signature of the revenue officer or PALS serves as both the procurement official and as the receiving person for goods and services received.

6.       Parts 1 and 2 should be provided to the vendor.

7.       The contractor has the option of either submitting Part 1, Form 6888, as their original invoice or attaching their own itemized invoice. If Form 6888 is submitted without an invoice attached, the contractor must sign and date the payment request box and annotate the amount requested. This section does not have to be completed by the vendor if he or she is submitting a separate invoice, but Form 6888 must be completed with all other information and must accompany the vendor's invoice. Vendors should be informed to mail Part 1 of Form 6888 (and any applicable invoices) to the Beckley Finance Center at the address shown above.

8.       The Prompt Payment Act requires interest to be paid on government obligations that are not paid within 30 days of acceptance of goods or services or the date of receipt of a proper invoice, whichever is later. The invoice receipt date must be clearly documented on the Form 6888 and/or vendor's invoice.After the services have been rendered, the revenue officer or PALS should process Form 6888 expeditiously to avoid delay in payment. Part 3 of Form 6888 must be submitted to the Beckley Finance Center within five calendar days of the date the goods/services were received. The revenue officer or PALS is responsible for providing receipt and acceptance by signing Part 3 of Form 6888 and providing the actual date the goods/services were received. Proper acceptance dates are as follows:

·         Advertising — last date the ad ran in the paper

·         Towing — date of the actual towing

·         Storage — last date of actual service

·         Locksmith — date of actual service

·         Utilities — last date of billing period

·         Miscellaneous Expenses — the date of the actual service or last date of billing period

9.       For services procured by Form 6888, the revenue officer or PALS will submit to Technical Services a copy of the vendor's bill (if available) and Part 5 of Form 6888 for each service rendered as part of the closing documents. Revenue officers and PALS must request input of TC 360 to the balance due account for all expenses of seizure and sale that are not paid directly by the taxpayer. See IRM 5.10.6.2(1) for guidelines on the input of TC 360.

5.10.3.8  (10-01-2004)
"Not to Exceed" and Actual Costs

1.       If the Form 6888 cannot be issued to the vendor the day the service is performed (storage of a vehicle and the bill will not be submitted until the service is completed), the cost of the service and a "not-to-exceed " amount must be entered on the Form 6888 under the " supplies and services" section; for example, "$10 per day storage fee for 30 days, not to exceed $300."

2.       In these situations, the vendor's copies of the Form 6888 will be retained by the revenue officer or PALS until the service is completed. When the service is completed, note the Form 6888 with the actual cost; for example " actual cost of $200 ($10 per day for 20 days)."

3.       If the actual cost exceeds the original "not to exceed " amount, void the original Form 6888 and issue a new one as long as the total does not exceed $2,500.

4.       If there is a need to extend the service which results in the total cost exceeding the "not to exceed" amount on the Form 6888 and the new amount will be greater than $2,500, the Form 6888 cannot be used for payment. It should be marked "void" and placed in the seizure file. The revenue officer or PALS must submit a requisition to the field budget officer in sufficient time to allow for the establishment of a new procurement instrument prior to expiration of the service as specified in the original Form 6888.

5.       If emergency conditions exist and it is not possible to promptly submit a requisition, the revenue officer or PALS will:

·         Obtain telephonic approval from the contracting officer to continue the service

·         Submit a requisition within three workdays to the field budget officer, who will issue a confirming order, which will cite the date and scope of the agreement, including costs and the new completion date, to the vendor

6.       If it is not possible for the revenue officer or PALS to contact the contracting officer, he/she may extend the required service for a limited duration. A requisition must then be submitted to the field budget officer within three workdays, and must include all the required documentation necessary to enable the contracting officer to ratify the commitment. Commitments over $2,500 which require approval by the Assistant Secretary of the Treasury for Management, should be avoided. In addition to providing funds for the limited extension of services acquired by the revenue officer or PALS, the requisition should also provide for further coverage which may be required, thereby enabling the contracting officer to appropriately contract for the full scope of work.

5.10.3.9  (10-01-2004)
Notice of Seizure Form 2433 — Preparation

1.       Form 2433, Notice of Seizure, will be prepared by the revenue officer in all cases in which property has been seized. The inventory must be completed as soon as possible. Form 2433, Notice of Seizure, should be prepared as shown in Exhibit 5.10.3–5.

2.       Form 2433 is an eight-part snap-out assembly which contains parts:

·         For the taxpayer and owner, Technical Services, and Accounting Control/Services

·         To release property in appropriate cases

·         To report sale proceeds and the disposition of the property

3.       The items of property seized should be described and identified with reasonable certainty in an inventory listed on the form or in an attachment to it. It is highly recommended that the PALS be involved with the inventory after the seizure is made for cases with a large number of lots. IRM sections 5.10.3.10 through 5.10.3.16 include additional instructions which must be followed when any of the following assets are seized:

·         Alcoholic Beverages

·         Cash Register Contents

·         Checks and Money Orders

·         Food Stamps

·         Safe Deposit Boxes

·         U.S. Savings Bonds

·         U.S. Marketable Securities

·         "Letter Stock" or " Restricted Stock"

·         Securities Acquired through Form 668–A

·         Funds located in Brokerage Accounts

·         Patents and Pending Applications for Patents

·         Controlled Substances

4.       For real property, the current legal description should be secured from the deed. Also, the address (or street location if available), type of structure, approximate size of building, intended usage, and any other information as is required to properly describe the property should be included on the Notice of Seizure. If the use of a derivation clause is customary, it should be updated with the last transaction information.

5.       For personal property the description should include, to the extent possible:

·         Type of property

·         Brand name

·         Model description

·         Serial number

·         Quantities (where applicable)

·         Intended usage

·         Any other relevant information, such as the condition of the asset

6.       When a motor vehicle is seized, in addition to the description of the vehicle (make, type, model, year, odometer reading, etc.,) the inventory should include a listing of optional equipment such as radio, tape player, or air conditioner unit. Any damage such as dents or missing hubcaps, although not included in the description to be advertised, should be noted on Parts 5, 6, and 7 of Form 2433. The trunk and glove compartment should be opened and examined. Any contents should be described in the inventory. However, if the vehicle contains an item that demonstrates an expectation of privacy, such as a locked briefcase or locked luggage, the item may be seized but not opened without a Consent or Writ authorizing entry into that particular article or item. See IRM 5.10.2.7(3) for the procedures to follow when firearms are found in a vehicle that is being seized.

7.       Form 2433 should reflect the most accurate fair market value possible. The fair market value should be based on the pre-seizure investigation unless the taxpayer provides additional information regarding the fair market value during the seizure. The case history should be documented if there is a change to the estimated fair market value of the asset.

8.       The detailed description of individual "grocery" type items and certain retail merchandise inventories (hardware, drugstore, etc.,) may be waived for groupings of like items reasonably described.

9.       Generally, the same description should appear on any subsequent forms completed in relation to the seizure and sale, i.e., Forms 2434, 2434–A, 2435, etc. The reason for any change in description should be fully explained on the corrected document or by routing slip.

5.10.3.9.1  (10-01-2004)
Notice of Seizure Form 2433 — Multiple Forms

1.       Revenue officers may encounter situations where multiple Forms 2433 may be needed. The use of multiple Forms 2433 is usually the result of the seizure of multiple assets from a single taxpayer. In these cases, a determination should be made regarding when to consider the seizures as separate actions requiring separate seizure numbers and when to consider them subsets (using alpha suffixes) of a single seizure. Cases assigned distinct seizure numbers (001,002, 003) will require separate Forms 668-B and complete paperwork for each separate seizure number issued. For cases where alpha suffixes were issued, a complete set of paperwork is not required for each sub-seizure file; the forms that can be combined will depend on the facts of the case.

2.       Seizures conducted for a single taxpayer on different dates must be assigned separate seizure numbers.

3.       When multiple Forms 2433 are issued for the same seizure (one Form 668–B), alpha suffixes (001A, 001B, 001C) may be necessary. Seizures lettered with an alpha suffix will count as one seizure for reporting purposes.

4.       The use of alpha suffixes should be determined based on the facts of the case. Alpha suffixes are most commonly used in the following types of situations:

·         Different types of property seized (cash register contents, perishable goods, personal property, real property) where the use of alpha suffixes would be beneficial (due to different types of dispositions, separate sales, redemption periods, possible litigation on some assets, etc.)

·         Multiple pieces of real estate seized

·         Assets seized on the same date from the same taxpayer but at different locations

Note:

If these assets are in the custody of different parties, then the seizures will be assigned separate seizure numbers, not alpha suffixes.

5.10.3.9.2  (10-01-2004)
Notice of Seizure Form 2433 — Supplemental

1.       In some instances it may be desirable to issue a Notice of Seizure before a detailed inventory is taken. This procedure, however, should only be used when it appears:

·         The work involved in taking the detailed inventory would be unwarranted because of the probability of prompt redemption or release

·         The delay may jeopardize the Government's priority claim due to impending bankruptcy or other insolvency proceedings

·         Large numbers of assets are involved and there is insufficient time to prepare a detailed inventory at the time the Notice of Seizure is issued

Note:

It is highly recommended that the PALS be involved with these types of inventories so there is a smooth transition from seizure to sale on these cases.

2.       Under these conditions, a Notice of Seizure may be issued by showing as complete a description as can conveniently be included at that time:

A.      List the most valuable and readily ascertainable items in as much detail as practicable.

B.      Identify the rest of the property generally and give its specific location.

3.       The general description should be along these lines " and all other property of (name of taxpayer) seized on the premises of (complete address) on (date and time). A supplemental Notice of Seizure providing a detailed itemization of this property will be given as soon as a detailed inventory is completed."

4.       The revenue officer should prepare the supplemental notice as soon as possible, identifying only the items of property not previously identified. This notice should be marked "Supplemental" and should not be referred to as a "revised" or "amended " notice since it might imply that the original notice was improper or legally inadequate.

5.10.3.10  (10-01-2004)
Alcoholic Beverages

1.       If personal property is being seized that includes an inventory of beer, wine or distilled spirits, the revenue officer should exclude any opened bottle or containers from the seizure and should advise the taxpayer that these items are left for his/her disposal. A bottle is considered opened if the seal has been broken.

2.       If it is necessary to move the alcoholic beverages, the revenue officer or PALS will:

A.      Arrange for transportation and storage.

B.      Take precautions to ensure that during transportation responsibility for theft and breakage is assumed by the carrier.

C.      Secure a receipt and evidence of acceptance for responsibility from the storage concern.

3.       If the beverage was acquired by the taxpayer through a state, county or municipal store:

A.      Contact the liquor control authorities and arrange for an inventory.

B.      Furnish a copy of Form 668–B to the liquor control representative.

C.      Jointly take an inventory on a form provided by the representative.

D.      Retain a copy of the inventory in the case file.

4.       In areas restricting the sale of liquor to a state, county, or municipal store system, contact area counsel for assistance in conducting the sale. In some situations, state law restricts the sale of liquor to the public, but sale may be made to anyone holding a liquor license.

5.       As soon as possible, a determination should be made as to the prospective redemption or release of any alcoholic beverages. The revenue officer should advise the taxpayer that he or she may make preliminary arrangements for returning the inventory to the wholesalers for a payment in amount equal to the wholesale value. The arrangement should provide that the proceeds will be paid directly to the revenue officer for credit to the tax liability, and the taxpayer should be requested to notify the revenue officer when arrangements are made.

6.       If the alcoholic beverages are redeemed, Form 668–E will be prepared and the taxpayer will be requested to sign the release on the reverse. In states having a state, county, or municipal store system, a copy of Form 668–E will also be supplied to the proper authorities with a memorandum explaining the action provided the inventory mentioned in (2) above was taken. Arrangements for transportation of the inventory from the place of storage to the licensed premises should be left to the taxpayer.

7.       If the seizure is not in an area that has a state, county, or municipal store system, or if the state or county stores are prohibited from taking back liquor for any reason, a public sale will be held in accordance with regular sale procedures. However, to avoid any problems, the PALS should check with local authorities regarding the method of sale to determine if the sale must comply with any special restrictions.

5.10.3.11  (10-01-2004)
Cash Register Contents

1.       Seizures of cash registers or their contents require either a taxpayer's written consent or a Writ of Entry.

2.       The term "cash register," includes cash register, safe, vault, cash box or any other type of cash receptacle. The contents of a cash register are subject to levy. Since levy action may result in the seizure of assets other than cash or in the actual seizure of the cash register itself, a notice of lien should be filed prior to seizure.

3.       Prior to conducting a seizure of a cash register consider notifying local law enforcement authorities in order to avoid any potential problems.

4.       After securing a signed Consent or a writ and providing the taxpayer with the Form 668–B, the revenue officer will tag the cash register with the appropriate warning notice:

A.      Form 12913 will be used when the contents are to be immediately removed.

B.      Form 12912 will be used if removal of the contents is to be delayed — it should be affixed so that the cash register cannot be opened without removing, tearing or destroying the seal.

5.       The taxpayer, or the person in possession of the property, should be requested to voluntarily open the cash register in the presence of the revenue officer and the assisting employee.

6.       If the request is refused, proceed to open the cash register provided it can be opened without using force. In most instances this may be done by pressing the "No Sale" key. If it can be opened by the revenue officer without using force, the seal should not be removed, but should be loosened sufficiently to permit opening of the register and access to the contents.

7.       The taxpayer, or person in possession of the register, should be asked to observe the actual counting of any money removed from the register.

8.       A Form 809 receipt should be issued for the amount of cash that has been seized. Across the top of Form 809 should be written " Contents of cash register seized."

9.       Only sufficient cash should be removed from the register to satisfy the amount of the levy. The remaining contents of the cash register should not be disturbed, and items in the cash register other than cash should not be seized unless there is insufficient cash to satisfy the levy.

10.   Seized credit card drafts (e.g. Visa, MasterCard, etc.) may be disposed of by presenting them for payment to the issuing financial institution with an attached Form 668–A, Notice of Levy. When the drafts have been itemized on Form 2433 and are later converted to cash through the use of Form 668–A, they must be accounted for by removing them from the seizure inventory through a release of levy (Form 668–E).

11.   Cash should be inventoried by coin and bill denomination. Checks should be listed individually, specifying the bank name, date of check, check number and the amount. See IRM 5.10.3.11.1 for additional information regarding checks and money orders.

12.   United States securities and any other assets removed from the cash register should be described precisely on the Form 2433, Notice of Seizure. See IRM 5.10.3.13 and 5.10.3.14 for disposition of savings bonds and securities.

13.   Before leaving the premises, the revenue officer will remove the warning notices and seizure tags and will prepare the Notice of Seizure, Form 2433.

14.   If the cash register is not voluntarily opened or cannot be opened without using force:

A.      Prepare a notice of seizure describing the property as "cash register (description by number and trade name) and contents thereof" .

B.      If the cash register is movable, it should be removed from the premises, placed in storage, and arrangements made to have it opened.

C.      If the cash register cannot be removed from the premises, the taxpayer should be advised of the penalties for forcible rescue, dispossession, or attempt to rescue or dispossess any property that has been seized. (U.S. Code, Title 18, Chapter 109, Section 2233 provides for a fine or imprisonment of not more than 5 years or both).

D.      A locksmith or similar mechanic should be engaged to open the cash register in order that it will not be damaged.

15.   The cash register should be opened in the presence of two Service employees and the taxpayer should be notified in advance so that he/she may be present if he/she desires. The contents of the cash register should be removed and the cash counted. If there is not sufficient cash in the register to liquidate the account, the cash register and any other assets seized that are of sufficient value to warrant sale may be advertised and sold. If any of the seized property is returned, a release of levy should be issued.

5.10.3.11.1  (10-01-2004)
Checks and Money Orders

1.       If checks or money orders payable to the taxpayer are seized, the following endorsement should be used: "This check (money order) and the proceeds thereof have been seized under authority of Title 26, United States Code, Section 6331, for application on the unpaid tax liability of (name of the taxpayer), and is herewith deposited to the credit of the Treasurer of the United States, (name of the area director), Area Director of Internal Revenue Service (Area Number)."

2.       This endorsement may be typed or rubber-stamped on the reverse of the check. If a seized check is returned because a personal endorsement is missing, even though the check is endorsed as above, telephone the bank and alert them to the Service's authority and re-deposit the check.

3.       These checks and money orders will be applied directly to the account. If the check fails to clear the depository, it will be returned with a debit advice to the Technical Services Territory Manager for the area specified in the endorsement. Technical Services will forward the returned check to the appropriate revenue officer for release (Form 668–E) back to the taxpayer. No returned check penalty will be asserted.

5.10.3.11.2  (10-01-2004)
Seized Food Stamps

1.       Approved retailers accepting food stamps (coupons) are able to redeem them at face value. Every approved retailer is assigned an authorization number.

2.       A separate Form 2433 should be prepared to inventory seized food stamps, listing the number of stamps by denomination. Seizures are restricted to retailers and wholesalers.

3.       Form 2433, Parts 8A and 8B, may be disposed of without entry.

4.       When food stamps that have been seized are to be redeemed for money, prepare a letter to transmit seized food stamps to USDA (Exhibit 5.10.3–6). Mail the letter by registered mail and enclose a self-addressed return envelope.

5.       The contents of the letter should include the following information:

·         Name, address and taxpayer identification number

·         Trade name and address of retail outlet from whom food stamps were seized

·         Authorization number assigned by USDA

·         Number of stamps of each denomination and total value

·         Date seizure was made

6.       Retain Part 7B until a check is received from USDA. Complete Part 7B and check " U.S. received its interest" block and forward to Accounting Control/Services through Technical Services.

7.       All other parts of Form 2433 are to be processed in accordance with existing procedures.

5.10.3.12  (10-01-2004)
Safe Deposit Boxes

1.       A notice of levy, Form 668–A, with a copy of the notice of lien attached, should be served on an officer of the bank or trust company and request made for surrender of the contents of the box. The revenue officer will also provide part 4 of Form 668–B to the official as authority to seize the taxpayer's assets. The bank or trust company should then be advised not to permit the box to be opened except in the presence of a revenue officer.

2.       Ordinarily two keys are used to open a safe deposit box: a master key held by the company which owns the box and an individual key in the possession of the person who rents the box. A bank or trust company will not open a safe deposit box without the consent of the lessee of the box unless protected by a court order. Under these circumstances the government must prevent the taxpayer from having access to the box, or it must obtain a court order directing that the box be opened, usually by a locksmith.

3.       At the time that a safe deposit box is secured, Form 12912, Seal for Securing Safe Deposit Boxes, will be signed by the revenue officer and affixed over the locks for security while the box remains under seizure.

4.       Form 2433, Notice of Seizure, will be prepared while the revenue officer is still on the premises, or as soon as possible after leaving the premises. The notice, addressed to the bank or trust company, should specify the amount demanded and describe the property as "contents of safe deposit box." The box should be identified as accurately as possible which would usually be by box number and name of the institution.

5.       Part 2 of Form 2433 will be personally delivered to an official of the bank or trust company. Part 1 will be delivered to the taxpayer according to the procedures in IRM 5.10.3.18.

6.       Usually, taxpayers who have been reluctant to cooperate will eventually find it necessary to open their boxes, and will only be able to do so in the presence of a revenue officer. At that time, the revenue officer, with Form 668–B in his/her possession, will be in a position to seize any property in the box.

7.       When the rental period of the safe deposit box expires and is not renewed, a bank or trust company usually has the right and power to open the box. The revenue officer should attempt to determine if this is the situation in any given case, and if the right and power exists, should try to take advantage of this opportunity to seize the contents of the box.

8.       If the revenue officer is unsuccessful in securing the taxpayer's consent or cooperation in opening the box, a Writ of Entry may then be sought or a suit requested to authorize entry into the safe deposit box ( IRM 5.10.3.12.1). Securing the taxpayer's consent or cooperation is preferable as it gives the taxpayer every opportunity to comply before resorting to a court order.

9.       When the deposit box is opened at a later date, either voluntarily or involuntarily, and the deposit box contains assets which are seized, a Supplemental Notice of Seizure (see IRM 5.10.3.9.2, Notice of Seizure Form 2433 - Supplemental), will be prepared describing the assets.

10.   When the box is eventually opened, all residue from the seal should be removed by the revenue officer, or the bank official in the revenue officer's presence with isopropyl alcohol or a similar solvent. The seal will dissolve when saturated with alcohol and rubbed with a cloth.

5.10.3.12.1  (10-01-2004)
Court Order to Open a Safe Deposit Box

1.       Occasionally, the procedures outlined in IRM 5.10.3.12, will not be satisfactory and immediate action to open the safe deposit box may be desirable or necessary. For instance, the statute of limitations may be about to expire, the taxpayer may have disappeared or be in concealment, or the taxpayer or bank officials may refuse cooperation and deny access to a safe deposit box.

2.       Under these circumstances a Summons, Form 2039, should be prepared and served on the taxpayer/box-holder in an attempt to secure information as to the contents of the box and to gain access. If this action does not accomplish the desired results, a Writ of Entry should be sought or a suit requested to open the safe deposit box (see IRM 5.17.4 and 5.17.12).

3.       Writ of entry procedures may be used, in many situations, to obtain access to the contents of a safe deposit box. (See IRM 5.10.3.4, Writ Procedures). Area counsel should be contacted, through Technical Services, for advice on whether a writ or suit is appropriate.

4.       When a writ is requested the revenue officer's affidavit should state the need to enter the safe deposit box for the purpose of seizing the contents belonging to the taxpayer. After the writ is issued, a copy will be given to both the taxpayer and a representative of the financial institution where the safe deposit box is located.

5.       The following information and documents should be provided in triplicate when a suit is requested:

·         Copies of each notice and demand issued to the taxpayer — if a copy of a notice and demand is unavailable, prepare a statement stating the evidence that exists to prove notice and demand was prepared and issued

·         Copies of all notices of tax lien filed, showing the date, time, and place of filing

·         Copies of the Notice of Levy (668–A), Levy (668–B), and Notice of Seizure (2433)

·         Copies of the summons issued and a statement, if known, as to why the summons did not produce desired results

·         A statement as to what is believed will be accomplished by gaining access to the contents of the box

6.       Jurisdiction and authority of the district court to grant an order to open a safe deposit box is in IRC 7402(a). If a safe deposit box is opened as the result of a court order, the revenue officer will then follow the procedures in IRM 5.10.3.12(9) and (10).

5.10.3.13  (10-01-2004)
United States Savings Bonds

1.       United States Savings Bonds are nonmarketable securities which are nonnegotiable and are payable only to, and may not be transferred by, registered owners during their lifetimes. Series EE and Series I bonds can be issued in either certificated or uncertificated form. Series HH are issued in certificated form. The following instructions are applicable to certificated savings bonds.

2.       If certificated savings bonds are levied upon, they should be transmitted to the Technical Services Territory Manager, together with a copy of the related levy or notice of levy for subsequent transmittal, over the signature of the territory manager or, at his/her option, the Technical Services Territory Manager's signature, to the Bureau of the Public Debt as provided in Exhibit 5.10.3–7.

3.       The Bureau of the Public Debt will forward a check payable to the area director. Balance due accounts should not be credited until the check or credit advice is received.

4.       If a registered owner or a co-owner wishes to redeem savings bonds and turn over the proceeds to the area director, he/she should sign the request for payment in the presence of an authorized certifying officer and direct that the check be sent to the area director. The revenue officer should request the owner to sign an authorizing power of attorney to the area director in order that the redemption check may be deposited. Standard Form 231, Power of Attorney by Individual for the Collection of Checks Drawn on the Treasurer of the United States , should be used for this purpose. The bonds may be submitted to any Federal Reserve Bank or branch thereof or to the Bureau of the Public Debt at Chicago , Illinois .

5.10.3.14  (10-01-2004)
United States Marketable Securities

1.       Marketable United States securities are in the form of:

·         Treasury bonds

·         Treasury notes

·         Treasury certificates of indebtedness

·         Treasury bills

Note:

U.S. marketable securities are generally no longer issued in certificated form. The following instructions apply to seizures of these securities that were issued in certificated form.

2.       The primary difference in the securities is the length of time before maturity. Bonds are long-term issues, notes are medium-term issues, and certificates and bills are short-term issues.

3.       Treasury bonds are issued in either coupon (bearer) or registered form. Coupon bonds are payable to bearer, and title passes by delivery, without endorsement and without notice to the Department of the Treasury. Interest on this type of bond is payable semiannually upon presentation of the coupon, which is attached to the bond, to any recognized bank.

4.       A registered bond is payable to the registered owner, whose name is inscribed on the bond, or to his/her registered assigns, and may be transferred only by an assignment executed by the registered owner or his/her authorized representative. Interest is paid semiannually by a check issued by the Treasury to the owner of record. Notes, certificates, and bills are issued in coupon (or bearer) form only. Since securities of the coupon (or bearer) form are freely transferable and may be disposed of by any person who comes into possession of the securities, appropriate safeguards are necessary.

5.       The disposition of United States securities, either in coupon or registered form, will depend upon whether the securities are matured (or called) or unmatured. The maturity date is shown on the face of the security and, if callable before maturity, that date is also shown immediately before the maturity date.

5.10.3.14.1  (10-01-2004)
Unmatured Securities

1.       Unmatured coupon type securities will normally be offered for sale as soon as possible under the law, in the same manner as any other seized property. The minimum bid price will be established as prescribed in IRM 5.10.4.6. However, if the securities will mature within a relatively short period, they may be held to maturity and disposed of as provided by IRM 5.10.3.14.2, Matured Securities. If securities are declared purchased for the United States as a result of the sale, the procedures in IRM 5.10.7.9, Disposition of Acquired Securities, will be followed. Unmatured registered securities will not be offered for sale but a request should be made to the Director, Payment Compliance, Attention: SE:S:C:CP:PC for advice as to the action that may be taken. The request should identify the security, including the maturity date.

5.10.3.14.2  (10-01-2004)
Matured Securities

1.       Matured (or called) securities, or those which will mature within a reasonably short period after seizure, will not be offered for sale since they are or will shortly become the equivalent of cash and are redeemable only for the amount of the par value. Thus, if the securities were offered for sale, they could not be expected to sell for an amount in excess of the par value.

2.       Matured securities in coupon (or bearer) form should be personally delivered or transmitted by registered mail to the nearest Federal Reserve Bank for redemption. A letter (in duplicate) similar to the sample provided in Exhibit 5.10.3–8 should be used to transmit these securities.

3.       Matured or called Treasury bonds in registered form will be transmitted to the Technical Services Territory Manager, together with a copy of the related levy and/or notice of levy for subsequent transmittal to the Bureau of the Public Debt. The letter of transmittal (in duplicate) to the Bureau of the Public Debt should be prepared as provided in Exhibit 5.10.3–7.

5.10.3.14.3  (10-01-2004)
"Letter Stock" and "Restricted " Securities

1.       Securities offered through the mail or through interstate commerce, according to the Securities Act of 1933, unless exempted by that Act, must be registered with the Securities Exchange Commission ( SEC ). A registration statement requires an issuer of securities to disclose certain information to protect the public.

2.       Restricted stocks may or may not be identified by a statement stamped somewhere on the certificate to the effect that the stock has not been registered under the Securities Act.

3.       On September 3, 1997 the SEC issued a No-Action Letter that allows the Service to sell seized restricted securities at IRC 6335 sales. In the past the Service was unable to sell seized restricted securities because of the constraints imposed on the resale of such securities by the Securities Act of 1993.

4.       Prior to seizure of these securities, revenue officers should consult with the PALS and Technical Services for further guidance on the appropriateness of the sale. If appropriate, counsel advice can be obtained for specific procedures. The Service may sell restricted securities by public sale under the provisions of IRC 6335, subject to the restrictions outlined in 5.10.3.14.3(5) through (9) below.

5.       The restricted securities of any one issuer may be sold to only one purchaser as a block.

6.       All publicly available financial and other information concerning any issuer that the Service may by law provide to the purchaser, other than returns or return information made confidential under IRC section 6103, will be made available to any prospective purchaser.

7.       Sales will be made only to purchasers who are financially sophisticated and can afford the risk of investment.

8.       Each purchaser of restricted securities will be required to represent that the restricted securities are being acquired for the purchaser's own account and not with a view to the sale or distribution thereof, and that the restricted securities will not be resold unless pursuant to an effective registration statement under the Act or under a valid exemption from such registration.

9.       The purchaser of the restricted securities at the tax sale would be required to acknowledge and represent to the Service (or the Service shall certify it if it is the purchaser) in writing to the effect that:

A.      The purchaser (either alone or with such purchaser's attorneys, accountants, or other advisors) possesses the requisite business and investment knowledge and experience to effectively evaluate the potential risks and merits of the investment.

B.      The purchaser has sufficient financial ability and net worth to bear the economic risk of the investment.

C.      The purchaser is aware of the fact that the restricted securities have not been registered under the Act or applicable state securities law.

D.      The restricted securities are being acquired as an investment for the purchaser's own account and not with a view to the sale or distribution thereof.

E.      The restricted securities will not be resold unless they are registered under the Act and applicable state securities laws or there exist valid exemptions from such registration requirements.

F.      Certificates evidencing the restricted securities to be received by the purchaser will bear a legend to the effect that such securities represented thereby are not registered under the Act or under any state securities laws and may not be resold or transferred without registration under the Act and applicable state securities laws or the availability of valid exemptions from such registration requirements.

5.10.3.14.4  (10-01-2004)
Money Market Funds, Mutual Funds, Securities, and Negotiable Instruments Received Through Form 668–A, Notice of Levy

1.       Taxpayers may have accounts or own stock without certificates. These securities are not represented by certificates but rather are held electronically. Securities that are not represented by certificates are subject to normal levy procedures ( IRM 5.11).

2.       Taxpayers may also have interests that are represented by negotiable certificates. The negotiable certificates represent personal property and cannot be redeemed by the revenue officer for cash. Therefore, the negotiable certificates are subject to the sale provisions of the Code.

3.       Compliance Services Collection Operations ( CSCO ) sometimes receives certificates in response to ACS -issued Forms 668–A, Notice of Levy. Since CSCO and ACS are unable to properly dispose of these negotiable certificates, the negotiable certificates will be transmitted to the appropriate area for disposition.

4.       The revenue officer who receives the certificates must decide whether to return them or whether to follow the seizure procedures in IRM 5.10, Seizure and Sale Handbook. The case file will be documented to reflect the background levy action. All appropriate documents will be prepared and copies provided to the taxpayer.

Note:

If stock certificates are received in response to a Form 668-A, make a determination within 10 days whether the stock certificates will be returned or if the seizure procedures will be followed. If they are to be returned, return them as soon as the determination is made. If they will be seized, begin preparation of the seizure documents and submit the case for approval as expeditiously as possible. The certificates should be maintained with the same security precautions as seized property ( IRM 5.10.3.6.1).

5.10.3.14.5  (10-01-2004)
Securities and Negotiable Instruments Seized Directly From the Taxpayer

1.       When certificated securities are received directly from the taxpayer, the issuing agent is not aware that the securities have been seized. In order to prevent the taxpayer from contacting the issuing agent to have the stocks re-issued so they can be sold by the taxpayer, part 2 of Form 2433 should be sent to the issuing agent.

2.       A letter should accompany Form 2433 advising that the stocks have been seized and should not be re-issued until the seizure and sale is resolved.

3.       A copy of the Notice of Sale may be sent to the issuing agent as well.

5.10.3.15  (10-01-2004)
Patents and Pending Applications for Patents

1.       A patent is a grant made by the government to an inventor, his or her assignee, or heirs, conveying and securing to the person the right to exclude others from making, using, or selling the invention for a term of, generally, 20 years. Because of the exclusive nature, the patent may have value.

2.       The law provides for the recordation of applications and issued patents in the Patent Office. Certain non-tax liens against patents may be filed with that office. However, notices of Federal tax lien cannot be filed for recordation with the Patent Office because they are exparte legal documents. Part 2, Form 2433, Notice of Seizure, should be sent to the Patent Office to be placed in the taxpayer's file so that the IRS can be notified of any action to be taken on the patent.

3.       A letter (in duplicate) similar to the specimen provided in Exhibit 5.10.3–9 should be used to transmit Part 2, Form 2433, to the Patent Office. In addition, a recording fee should be enclosed in the transmittal letter. Since the recording fee is subject to change, the Recording Officer at the Patent Office should be contacted by phone for information regarding the appropriate amount and to whom the money order should be made payable. The recording fee should be debited to the taxpayer's account through a TC 360.

4.       Issued patents are subject to normal seizure and sale procedures except as stated in this subsection. Since title to the patent can be passed without possession of such documents, actual physical seizure of the letters of patent is not essential if they are not readily available. However, the Notice of Seizure and the Notice of Sale should clearly identify the patent. The Certificate of Sale should identify the patent by number. The certificate may be presented by the purchaser to the Patent Office for recordation.

5.       A pending application for patent should not be seized because the application may be rejected by the Patent Office or may be abandoned by the applicant. However, suit may be recommended to institute a lien foreclosure and to request the appointment of a receiver. A court appointed receiver will be entitled to prosecute a pending application or seek to have an abandoned application reinstated.

6.       Information concerning the ownership and identification of issued patents may be secured by writing to the Commissioner of Patents, Attention: Solicitor of Patents, Washington , D.C. 20231 . Information on pending applications for patents may also be obtained from that office. However, since details of pending applications for patents are not of public record, the request, on official area director letterhead, must specify that information necessary to file a lien foreclosure is sought for official business purposes in connection with the collection of a named taxpayer's assessed tax liability. The Patent Office should be requested to furnish the following information with respect to a pending application:

·         The patent application number

·         Date of the application

·         Name and address of any party other than the taxpayer who has an interest in the application

5.10.3.16  (10-01-2004)
Controlled Substances

1.       As soon as possible after seizure and inventory, all controlled substances (i.e., narcotics, stimulants, depressants, tranquilizers, and hallucinogenic drugs) should be separated from the other assets and placed in a location to ensure proper safeguarding and reduce the possibility of theft or commingling the controlled substances with other drugs, or selling them to an unauthorized person. Most commercial containers of controlled substances can be identified by the letter "C" and a Roman numeral (I, II, Ill , IV, V) imprinted in the upper right corner of the label. Older commercial containers may have, in lieu of the "C" and the Roman numeral, one of the following symbols printed on the label: "A" , "B" , "X" , or "M" (all narcotics) or "CRx" (non-narcotics).

2.       The taxpayer, the revenue officer making the seizure, or the PALS must also request the Regional Director of Drug Enforcement Administration (DEA) in the region in which the taxpayer is located for authority and instructions to dispose of such substance. The request should be made as follows:

A.      If the taxpayer is a registrant required to make reports pursuant to 21 CFR Part 1304, he/she shall list the controlled substance or substances which he/she desires to dispose of on the "b" subpart of the report normally filed by him/her, and submit three copies of that subpart to the Regional Director of DEA in his/her region.

B.      If the taxpayer is a registrant not required to make reports pursuant to 21 CFR Part 1304, he/she shall list the controlled substance or substances which he/she desires to dispose of on DEA Form 41, and Submit three copies of that form to the Regional Director in his/her region.

C.      If the taxpayer is not a registrant, he/she shall submit to the Regional Director a letter stating: The name and address of the taxpayer; the name and quantity of each controlled substance to be disposed of; how the taxpayer obtained the substance, if known; and the name, address, and registration number, if known, of the person who possessed the controlled substances prior to the taxpayer, if known.

3.       Once the request is received by DEA, the Regional Director shall authorize the disposition of the controlled substances in one of the following ways:

·         By transfer to person registered under the Federal Controlled Substances Act and authorized to possess such substance

·         By delivery to an agent of DEA or to the nearest office of DEA

·         By destruction in the presence of an agent of DEA or other authorized person

·         By such other means as the Regional Director may determine to assure that the substance does not become available to unauthorized persons

4.       The controlled substances must be disposed of in accordance with the instruction of the Regional Director of the DEA. It is possible in certain cases that the regional director will not permit sale to another person.

5.       The taxpayer should also be requested to notify the revenue officer or PALS if preliminary arrangements to sell the controlled substances are made. The arrangements should provide that the proceeds will be paid directly to the revenue officer or PALS for credit to the tax liability. If the revenue officer or PALS approves the arrangements, he or she will release the property involved and request the taxpayer to sign a completed Form 668–E, Release of Levy, covering these items.

6.       If a public sale is held, the controlled substances will be offered only as a separate item and will not be offered in the aggregate. The controlled substances should be listed as a separate item on the Notice of Sale. The notice should also state that the controlled substances will be sold only to persons or organizations registered under the Federal Controlled Substances Act (see (10) below). In addition, the notice should state that the purchaser must present a completed (in triplicate) preaddressed DEA Form 222c (Federal Order Form) for all controlled substances listed on Schedules I and II of the Controlled Substances Act and a valid DEA registration number.

7.       Copy 1 and Copy 2 of DEA Form 222c should be given to the PALS and Copy 3 retained by the purchaser. The PALS shall attach the original to Form 2436, Seized Property Sale Report, and will mail Copy 2 to the nearest Regional Office of the Drug Enforcement Administration. A Certificate of Sale will be issued to the purchaser.

8.       In the event that no authorized person offers the minimum price determined for the controlled substances, the controlled substances should be declared purchased for the United States . If the controlled substances are not sold when offered for resale as prescribed in IRM 5.10.7, Acquired Property, the drugs should be delivered to the nearest Regional Office of the Drug Enforcement Administration for disposal. See 21 CFR 1307.21. The PALS should secure a receipt for the controlled substances from the Drug Enforcement Administration and attach it to the memorandum report of disposition of acquired property.

9.       A qualified purchaser must be registered with a valid DEA registration number (or, in the case of certain government officials, exempted from registration) by the Drug Enforcement Administration at the location where he/she will receive the controlled substances being purchased and in all the schedules of the controlled substances being purchased (e.g., Schedule II narcotics, Schedule II non-narcotics, Schedule Ill narcotics, Schedule Ill non-narcotics, Schedule IV or Schedule V). See 21 CFR 1307.21.

5.10.3.17  (10-01-2004)
Contacting Technical Services for Seizure Numbers

1.       As soon as possible after the seizure has been conducted, the revenue officer should submit the seizure data to Technical Services by fax or by telephone. Technical Services will assign a seizure number(s) that will be used on all documents related to the seizure. A suffix of " CS" will be used to identify courtesy seizures made for another territory or area. One Technical Services office in each area should be responsible for assigning seizure serial numbers and should maintain a permanent serial number control register for all seizures conducted within the area. Effective October 1, 2002 the format for the seizure numbers will be as follows: 03–01–01–001A (two digit fiscal year — two digit area number — two digit Technical Services group number — three digit sequential number with alpha sequence if needed). The Technical Services group number should be the number for the Technical Services group that is controlling the seizure file. See IRM 5.10.3.9.1 for information on the use of multiple seizure numbers and/or alpha suffixes. After the seizure number has been secured, enter the appropriate seizure information into the ICS seizure application.

2.       All seizure and sale related documents from the revenue officer must be forwarded to Technical Services within 5 workdays after the related action. Because the PALS are usually conducting the sales outside of their local offices, their sale related documents should be forwarded to Technical Services within 10 workdays of the related action. If there will be a delay, the revenue officer or PALS should submit a memo through their manager explaining the delay and providing the anticipated date of submission. Each document will be reviewed by Technical Services upon receipt. Form 13361, Post-Seizure Review Checksheet, must be used by Technical Services when completing the post-seizure review. The checksheet contains a list of the necessary forms and actions when a seizure has been conducted. The completed review sheet must be included in the seizure case file maintained in Technical Services.

3.       Upon request for a seizure serial number or upon receipt of the opening seizure documents, Technical Services will establish an "Open Seizure" file. The opening date will be the date of the seizure. Form 13361 should be initiated when the opening documents are received.

4.       For courtesy seizures, the initiating revenue officer will inform the initiating office's Technical Services, by memorandum, that the seizure was conducted. This is for information purposes only.

5.10.3.18  (10-01-2004)
Notice of Seizure Form 2433 — Delivery

1.       The owner is entitled to Notice of Seizure at the earliest possible time after the seizure. See Exhibit 5.10.3–5 for information on the appropriate distribution of the parts.

2.       If the owner of the property (or the possessor of the property for personal property) has his/her usual place of abode or place of business in the territory where the seizure was made, the Notice of Seizure is required to be:

·         Delivered personally or

·         Left at that individual's usual place of abode or business by affixing the notice, enclosed in an envelope, on the door if that individual is not available

Caution:

Delivery to the POA alone does not constitute proper service since attempted personal delivery to the owner is required under IRC 6335(a).

3.       The notice must be sent by both certified mail, return receipt requested, and regular mail to the owner's last known address if either of the following conditions exist:

·         The owner has no dwelling or place of business within the territory where the seizure was conducted

·         The owner cannot be readily located

Reminder:

If the address is known and can be located within the territory where the seizure was conducted, personal contact must be attempted and the documents must be left at the place of abode or business if the individual is not available. The documents may also be mailed in addition to being left at the place of abode or business, but they may not be solely delivered by mail in these situations. See IRM 5.10.2.16.4 for situations when an armed escort may be required.

4.       The revenue officer must provide Publication 1660, Collection Appeal Rights, to the taxpayer with Form 2433 to ensure the taxpayer is aware of the 10 day limitation on appealing the seizure action. Document how the taxpayer received Publication 1660 and Form 2433.

5.       A copy of Form 2433 must be provided to all senior lienholders who were identified during the public records search.

6.       The same distribution procedures for the original notice should be followed for distribution of any supplemental notices.

5.10.3.18.1  (10-01-2004)
Form 2433 — Additional Documentation and Distribution

1.       After delivering parts 1 and 2 of Form 2433, the revenue officer will make the following additional entries on Parts 5, 6, 7, and 8 as shown in Exhibit 5.10.3–5:

·         Enter the assigned seizure serial number secured from Technical Services in the appropriate spaces (Item 9)

·         Enter the total of all estimated expenses of the seizure and sale in the space provided (Item 10) on parts 5 through 8

·         Enter the inventory value opposite each unit (item or group) of seized property and total (Item 11) on parts 5 through 7

·         Enter the taxpayer's estimated equity (Item 14) on Parts 5 through 7 - If the estimated equity exceeds the taxpayer's liability, the liability should be shown as the estimated equity.

·         Follow the procedures in (2) below when multiple property types are involved

2.       When there are multiple property types listed on one or several Forms 2433, the revenue officer must determine the estimated value and taxpayer equity for each property type. This must be done whether the property types are encumbered individually or together. Determine which of the designated property types best describes the seized asset(s) and assign a value to each property type. Subtract any known encumbrances from the total estimated value of that type of property whether it is one piece or multiple pieces of that particular type of property. If the property types are encumbered together (see Exhibit 5.10.3–11), the encumbrance must be allocated for each property type. The property types should be listed as follows:

3.       The purpose of establishing the value of seized property is to comply with the United States Code, which requires a monetary accounting control of seized property by all government agencies and to set a base for establishing the minimum bid.

4.       When Form 2433 is issued before a full inventory is completed, the inventory value of the items specifically described will be shown. The inventory value for the property described as "general" will be shown as "unknown" . The actual inventory values must be included on the "Supplemental" Form 2433.

5.       When safe deposit boxes or cash registers are seized and sealed for contents only and will not be opened until a later date, the inventory value of the property will not be known. In such cases "Unknown" will be entered on Form 2433 opposite the description of the safe deposit box or cash register. A second Form 2433 should be completed at the time the box or register is opened, and marked supplemental. The serial number of the original Form 2433 should be used for the supplemental form. See IRM 5.10.3.11, Cash Register Contents and IRM 5.10.3.12, Safe Deposit Boxes for additional instructions.

6.       Enter the location of the property in the space provided below the description of property on Form 2433, Parts 5 and 6. For real property, show the complete street address with city, state, and zip if available. For personal property, show the address where property is stored, including a company/vendor name, contact name, and telephone number.

7.       The revenue officer conducting the seizure, as well as the accompanying Service employee, will sign Form 2433.

5.10.3.18.2  (10-01-2004)
Disposition of Notice of Seizure and Opening Documents for the Seizure

1.       After taking the above actions, the revenue officer will:

·         Retain Parts 3, 4, 7B, and 8A pending disposition of the property (these parts will be transmitted to the PALS if custody is transferred)

·         Attach Part 5 to the Bal Due file

·         Transmit the opening documents through the group manager to Technical Services within 5 workdays after the seizure

2.       The opening seizure documents include:

·         The pre-seizure checksheet

·         Form 668–B (and 668-A if applicable)

·         Parts 6, 7A, and 8B, of Form 2433

·         Copy of the Writ or Consent as appropriate

·         Copy of the current deed for real property

·         Preliminary copy of Form 2434-B

3.       Technical Services will retain Part 6 in the "Open Seizure " file and will forward part 7A to Accounting Control/Services for establishment of the necessary accounting controls.

5.10.3.19  (10-01-2004)
Property that is Tampered With, Rescued, or Stolen

1.       If seized property is tampered with, rescued, or stolen:

·         Discuss the facts with the territory manager and document the case history with the facts

·         Notify Criminal Investigation as soon as possible

·         Prepare a detailed written report of the facts and include a copy in the case file

·         Submit the report through the group manager to the territory manager for transmittal to the Special Agent in Charge (local procedures may require the report to go through the Collection Fraud Group)

·         Report losses of property under seizure to the director of the compliance center where the accounting control is maintained

2.       As a general rule, taxpayers are not entitled to receive any credit for the value of their property which has been stolen after the property was seized and prior to its sale by IRS .

5.10.3.20  (10-01-2004)
Transfer of Custody to PALS

1.       The revenue officer will transfer custody of the property to the PALS after:

·         The seizure is made

·         The assets are secured

·         The inventory is completed

·         Form 2433 is delivered with Publication 1660

2.       Prior to conducting the seizure, the revenue officer and the PALS should have coordinated the timing of the seizure so that the transfer of custody of the seized assets can be made in a timely manner (see IRM 5.10.3.1). The revenue officer will contact the PALS in order to make arrangements to transfer custody of the property. The PALS will then create an OI in order to handle all actions pertaining to the sale of seized property. The transfer of custody of seized property should be made as quickly and efficiently as possible in order to keep expenses from reducing the net proceeds. Reasons for delays in transferring custody of seized assets to the PALS should be documented in the case history. The revenue officer may not be involved in any of the aspects of a sale under IRC 6335 including, but not limited to:

·         Preparation and delivery of the minimum bid

·         Preparation and delivery of the notice of sale

·         Advertising

·         Conducting the sale ( IRM 5.10.5.1(3))

3.       There will be situations when the transfer of custody should be delayed. Delays of transfer may take place if there are challenges to the seizure, such as:

·         A request for release and return of seized property

·         A wrongful levy claim

·         Litigation

·         Bankruptcy

4.       If the taxpayer indicates that the property will be redeemed ( IRM 5.10.4.2) within a short time period and the revenue officer reasonably believes that the taxpayer will take the action, or if one of the conditions for release is present ( IRM 5.10.4.3) then custody of the property should not be transferred. In order to prevent unnecessary accrual of expenses, delays in transfers of custody should be limited to situations where the revenue officer has a reasonable expectation that the seizure will be released in a short time period.

5.       To provide for an accurate transfer of property from the revenue officer to the PALS, the PALS should confirm that all of the property shown on Form 2433 is accounted for. Based on the type of property involved, such as real estate or a vehicle located in a storage lot, the transfer may be accomplished by fax; however, in some cases because of the nature and amount of the property involved, it will be necessary for both employees to meet at the site where the seized property is located. The PALS should sign and date Form 2433 on Part 5 under the property location block when custody is transferred. All seizure related forms must be provided to the PALS when custody of the property is transferred. The revenue officer should retain copies of all documents for the case file. These documents include:

·         Form 2433, Parts 7B and 8A

·         Form 668-B

·         Form 2434-B

·         Draft Form 4585

·         Writ of Entry or Consent (if applicable)

·         Copy of Deed to Real Property

·         Any other relevant information, such as title searches, verification of encumbrances, and copies of expense documents

6.       If the PALS is not located close to the storage site, which will frequently be the case, the revenue officer should also maintain a key to the locked property. The revenue officer should conduct periodic drive-bys and inspections, but should only enter the property if there is an emergency or if there is a release or redemption of the property. If the PALS has already taken custody of the assets and the revenue officer will be releasing the property under release or redemption procedures ( IRM 5.10.4.2 and 5.10.4.3), the PALS should fax part 5 of Form 2433 to the revenue officer who will initial and date the storage block indicating that they are taking custody of the assets. This part should then be faxed back to the PALS for inclusion in the file. Any entries made into the storage site by either the PALS or the revenue officer should be documented in the case history.

7.       Form 13360, Seizure and Sale Checklist, is a two-part checklist that must be used by revenue officers and PALS when conducting a seizure and sale. Part 1 will be completed by the revenue officer and part 2 will be completed by the PALS after custody of the asset is transferred. The checklist contains a step by step listing of seizure and sale procedures with the appropriate manual references so that all required guidelines are followed during the seizure and sale. The completed checklist will be included in the seizure case file maintained in Technical Services.

8.       The revenue officer should continue to remain in contact with the taxpayer in order to continue to resolve the case and to determine if the property should be released if the taxpayer submits an offer in compromise, wants to enter into an installment agreement, offers to pay less than the full liability, etc. Generally, the balance due file will not be closed until the seizure is resolved. When the balance due file is closed, the case file must be transmitted to Technical Services for association with the seizure file ( IRM 5.10.6.13).

Exhibit 5.10.3-1  (10-01-2004)
Form P–576, Consent to Enter Private Premises Reference: 5.10.3.2

Exhibit 5.10.3-2  (10-01-2004)
P–577, Affidavit of Revenue Officer Reference: 5.10.3.4

Exhibit 5.10.3-3  (10-01-2004)
P–584, Data Sheet Reference: 5.10.3.4

Exhibit 5.10.3-4  (10-01-2004)
"Indemnification of Locksmiths/Tow Truck Operators " Reference: 5.10.3.7.1(2)

Exhibit 5.10.3-5  (10-01-2004)
Form 2433 — Notice of Seizure Reference: 5.10.3.9

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Exhibit 5.10.3-6  (07-26-2000)
Letter 2293(P), Letter Transmitting Seized Food Stamps Reference: 5.10.3.11.2(4)

Exhibit 5.10.3-7  (10-01-2004)
Letter P–336, Transmittal of Non-Marketable Securities to Bureau of Public Debt Reference: 5.10.3.13(1) and 5.10.3.14.2(3)

Exhibit 5.10.3-8  (10-01-2004)
Letter P–337, Transmittal of Matured Securities to Federal Reserve Bank Reference 5.10.3.14.2(2)

Exhibit 5.10.3-9  (10-01-2004)
Letter P–415, Transmittal of Form 2433 to Patent Office Reference 5.10.3.15(3)

Exhibit 5.10.3-10  (10-01-2004)
Taxpayer/Responsible Officer's Acknowledgment of Opportunity to Download Computer Information Reference 5.10.3.6.4(3)

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Exhibit 5.10.3-11  (10-01-2004)
Form 2433 - Estimated Equity Reference 5.10.3.18.1(2)

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In this example, there is a balance of $720 remaining on the loan recorded on the vehicle and a balance of $800 remaining on the financing statement recorded on the inventory and equipment.

The first step is to determine the percentage of the encumbrance that is applicable to each property type. Since the vehicle is encumbered separately, the total encumbrance of $720 is deducted from the FMV for an estimated equity amount of $2,800.

Since the other assets are covered by the same encumbrance, you must first determine what percentage each of the two property types contributes toward the combined fair market value of $2,950 for the two property types:

The next step is to multiply these percentages by the total encumbrance to determine the amount of the encumbrance applicable to each property type:

The final step is to deduct the encumbrance from the fair market value in order to determine the estimated equity for each property type: