IRM 5.10.5 – IRS SEIZURE SALE PROCEDURES

• 5.10.5.1   General
• 5.10.5.2   Employee Self-Disqualification
• 5.10.5.3   Adjournment Procedures
• 5.10.5.4   Public Auction — General
• 5.10.5.5   Condition of Title and of Property
• 5.10.5.6   Statement by Lienholders
• 5.10.5.7   Statement by Taxpayers
• 5.10.5.8   Conducting a Public Auction
• 5.10.5.9   Property Offered Under Only One Method
• 5.10.5.10   Property Offered For Sale by More than One Method
• 5.10.5.11   Sealed Bid Sale — General
• 5.10.5.12   Payment of Purchase Price
• 5.10.5.13   Default on Payment — Cash Sales
• 5.10.5.14   Default on Payment — Deferred Payment Sale
• 5.10.5.15   Certificate of Sale
• 5.10.5.16   Delivery and Removal of Personal Property
• 5.10.5.17   Cash Conversion
• Exhibit 5.10.5-1   Form 2435 — Certificate of Sale of Seized Property Reference: 5.10.5.15
• Exhibit 5.10.5-2   Letter 2274(P), Materials to Assist in the Sale of Documented Vessels Reference: 5.10.5.15.4(2)
• Exhibit 5.10.5-3   SF 215-A, Deposit Ticket Reference: IRM 5.10.5.17(4)
• Exhibit 5.10.5-4   Form 1963, Collection Register Reference: IRM 5.10.5.17(4)
• Exhibit 5.10.5-5   Form 2679, Cash Reconciliation Report Reference: IRM 5.10.5.17(4)
• Exhibit 5.10.5-6   Log for SF 215-A, Deposit Ticket Reference: IRM 5.10.5.17(6)

5.10.5.1  (10-01-2004)
General

1.       If the property has not been released or redeemed prior to sale, the sale should take place at the time and place as indicated in the Notice of Sale. The revenue officer should advise the PALS if the taxpayer files bankruptcy or if a resolution is reached prior to the scheduled sale.

Note:

Prior to conducting the sale, the PALS should check IDRS and contact the revenue officer to verify that no changes have been made to the account, such as bankruptcy filing or an alternative resolution, that would prohibit the sale of the seized property. This contact should generally be made within 2 days of the sale date. Employees may also consider contacting Technical Services to have the Public Access to Court Electronic Records (PACER) system researched if there is an indication the taxpayer may have filed bankruptcy.

2.       The PALS will conduct the sale, but an employee who has the authority to make a case decision regarding a proposed alternative, usually the seizing revenue officer and/or the group manager, may be present at the sale site in order to discuss possible case resolution alternatives with the taxpayer. If this employee is not present at the sale, he or she must be available to both the taxpayer and the PALS by phone on the day of the sale so the taxpayer can discuss any alternatives to the sale. If the taxpayer and this employee agree that an alternative resolution is appropriate, the employee will advise the PALS that circumstances exist which warrant adjournment of the sale and/or release of the levy and return of the seized property.

Note:

The statutory provision, section 6331 of the IRC, as amended by RRA 98, does not prohibit the sale of property that was seized before an offer or an installment agreement became pending. To determine when an offer or installment agreement is considered pending, see IRM 5.8.3 and IRM 5.14.1.3, respectively.

3.       Neither the seizing revenue officer nor any other revenue officer may be involved with any aspect of the actual sale under IRC 6335, including, but not limited to:

·         Grouping and lotting of property prior to sale after the Form 2433 has been completed

·         Registering bidders

·         Tabulating bids

·         Assisting in the collection of money

·         Issuing certificates of sale

·         Answering sale related questions

·         Any other sale related activity involving interaction with anyone attending or conducting the sale

Note:

Revenue officers may conduct or participate in sales of perishable goods since these sales do not take place under IRC 6335.

4.       Any person whose property has been seized can redeem the property ( IRM 5.10.4.2), or the property may be released ( IRM 5.10.4.3) at any time before the PALS declares the property sold to the highest bidder.

5.10.5.2  (10-01-2004)
Employee Self-Disqualification

1.       Any Service employee, regardless of his/her function at the sale, must be disqualified from the sale if a member of the employee's household is present as a bidder.

2.       When a Service employee involved in a sale becomes aware of a relative, close friend, or close associate offering to bid, that employee should usually self-disqualify and, if necessary, have the PALS adjourn the sale when their personal association with taxpayers or bidders could give the appearance of partiality in the proceedings. Any action taken in this respect should be well documented and made part of the seizure file (see 5 CFR 3101, Standards of Ethical Conduct). The adjournment will be for a period of time sufficient to permit a disinterested employee to be made available for continuation of the sale; however it must not exceed one month. Information on adjournment procedures is contained in IRM 5.10.5.3.

3.       If the PALS believes there are enough bidders to preclude any allegations of collusion, the sale may be continued without self-disqualification. The PALS must document in the case history the circumstances surrounding the determination not to self-disqualify, and will prepare a memorandum explaining the situation and will forward the memorandum through the manager for inclusion in the Technical Services seizure file.

5.10.5.3  (10-01-2004)
Adjournment Procedures

1.       Pursuant to Anderson v. United States, 44 F.3d 795 (9th Cir. 1995), the Service may adjourn, but not postpone, a sale of seized property (see IRM 5.17.3.3.7.2.3). The sale of seized property may not be delayed beyond the statutory time periods of IRC 6335(d). The sale must be held not less than 10 days, nor more than 40 days from the date public notice of sale is given, unless it is adjourned for a period not to exceed one month. A sale may be temporarily enjoined by a court order, in which case the actual period of suspension should not be included in computing the time for sale under the code.

Note:

If the taxpayer files bankruptcy after the notice of sale has been given, then the automatic stay prohibits the Service from conducting the sale as scheduled. Since the sale is cancelled, not adjourned, the time limitations in IRC 6335(e)(2)(F) do not apply. Since the sale never takes place, IRC 6335(e)(1)(D) is also inapplicable and the property does not have to be released. Although the property does not have to be released, consider releasing the property and re-seizing after there is no longer a bankruptcy preclusion when such action would present minimal additional harm or expense to the Service--i.e., the subject property is real property. Contact Technical Services and local counsel for additional information on how to proceed. Any subsequent sale of the seized property, including giving a new notice of sale, must take place following the statutory guidelines in IRC 6335(d).

2.       All adjournment(s) are limited to a new date not later than one month after the date fixed in the original public notice of sale (not including the time period for which the sale is enjoined by a court order). The announcement of adjournment should:

·         Be made in the presence of the prospective bidders

·         Include the date and time to which the sale is adjourned, if possible

3.       A sale may be adjourned at any time after the sale has commenced, including after the pre-established minimum price has been reached, until the property is declared sold. For sales with multiple minimum bids, portions of the property can be declared sold when the minimum bid is reached and the sale adjourned on the remaining items.

4.       Notice of the adjourned sale should be given to the taxpayer in the same manner as the original notice of sale ( IRM 5.10.4.11).

5.       It is not necessary to re-advertise the sale when the new sale date is set within the allowable time period; however, in some cases it may be advisable to re-advertise the sale if it is believed it would generate higher sale proceeds.

6.       Adjournments must be in the best interest of the government or the taxpayer.

7.       If facts are disclosed that indicate a basis for adjusting or re-determining the minimum bid, the PALS may adjourn the sale to re-evaluate the minimum bid so it will more realistically reflect the forced sale value of the seized property in light of the existing conditions. The re-evaluation will not be made for the express purpose of adjusting the minimum bid downward to facilitate the purchase of the property by the United States or to guarantee a sale to a third party.

8.       If the minimum bid is revised, managerial concurrence and taxpayer notification are still required. If time is a factor, managerial concurrence can be secured over the phone. If the taxpayer is willing to waive his/her right to the 10-day waiting period, the taxpayer should indicate his/her concurrence by signing the revised Form 4585. Taxpayer concurrence is only required if the revised minimum bid is used before the 10-day waiting period expires. A copy of the taxpayer's concurrence, when required, will be forwarded to Technical Services to be included in the seizure file.

9.       If, after the sale has commenced, conditions indicate that seizure should be released ( IRM 5.10.4.3), the PALS should adjourn the sale and if applicable, release the levy. The reason for the adjournment should be documented in the case history.

10.   If, after commencement, it is learned that the taxpayer filed bankruptcy, adjourn the sale and consult with Technical Services.

11.   If the new sale date for an adjourned sale is beyond the one month time period allowed for adjournments, the property must be released. There are no provisions that prevent the same asset from immediately being seized again unless circumstances have changed so that the seizure is now prohibited (collection statute expired, etc.).

Note:

If property must be seized again due to the time constraints related to an adjournment, all required approvals must be obtained prior to the second seizure.

12.   There is no statutory basis for the Service to rescind a sale after the Service becomes aware of a defect in the sale procedures. Where the taxpayer, owner of the property, or purchaser make a complaint, consult IRM 5.10.6.15 and 5.10.6.16 and confer with area counsel.

5.10.5.4  (10-01-2004)
Public Auction — General

1.       With the exception of perishable goods sales, the PALS will conduct the sale and at least one other Service employee, who may not be in the GS-1169 Revenue Officer series, must assist with the sale.

2.       The PALS must determine the number of personnel that will be required to assist with the sale. The complexity of the sale will influence the number of assisting employees that will be required. The assisting employees may be other PALS, revenue agents, secretaries, or any other service employee not in the revenue officer series. Some of the normal sales responsibilities for which assistance may be needed include:

·         Helping to group and lot the property prior to sale

·         Helping to organize the sale area prior to sale

·         Signing in bidders, assigning bidder numbers, and issuing bidder cards

·         Helping spot bids and recording bid amounts

·         Assisting in collecting or counting money

·         Meeting and greeting bidders, monitoring the crowd, answering questions or directing prospective bidders to the appropriate person

·         Assisting in the preparation of Form 2435, Certificate of Sale of Seized Property

·         Matching Form 2435 against property removed after the sale

3.       The PALS should be present at the place of the sale before the announced time so that he or she will be available to answer questions concerning the property, the conditions of the sale, or terms of payment. If there are changes to the payment terms, these should be announced prior to the commencement of the sale.

4.       The PALS should make no statements other than those prescribed by the instructions in IRM 5.10.5.5 at any time prior to the sale or when conducting the sale.

5.10.5.5  (10-01-2004)
Condition of Title and of Property

1.       The PALS will offer:

·         Only the right, title, and interest of the taxpayer in and to the property seized, subject to any outstanding mortgages, encumbrances, or other liens in favor of third parties which are valid against the taxpayer and are superior to the lien of the United States

·         The property "as is" and "where is" and without recourse against the United States

·         No guaranty or warranty, express or implied, on the condition of any of the property, or its fitness for any use or purpose

2.       Form 2434–B, Notice of Encumbrances Against or Interests in Property Offered for Sale (Exhibit 5.10.1–1), will be supplied, when requested, to provide prospective bidders with any information the Service has learned relating to encumbrances and interests of record. Most requests for such information will usually be received prior to the date of the sale; however, the PALS should have enough completed copies of Form 2434–B available at the sale to give a copy to prospective bidders.

3.       Form 2434–B should include all encumbrances and interests of record of which the Service became aware during the course of its investigation prior to seizure and sale (See IRM 5.10.1.3.3, Equity Determination). Advise recipients that the Service does not certify in any way how accurate or current this information is. Form 2434–B contains a statement advising bidders to verify for themselves the validity, priority, and amount of encumbrances against the property that is offered for sale.

4.       In situations where no encumbrances or interests of record other than the NFTL are reflected on Form 2434–B, if a potential bidder asks what encumbrances or interests the Service has learned about, the PALS may state that the Service is not aware of any others beside the NFTLs.

5.       Consult local counsel for the procedures to follow when there are questions as to the validity of a recorded lien.

6.       Since the sale of real property under IRC 6335 gives a 180 day right of redemption period after the sale, bidders should be advised that they cannot assume control of the property until this redemption period lapses, or the persons who have rights of redemption convey them to the successful bidder. See IRM 5.10.5.7(3) through (5). If, during this allowable redemption period, the successful bidder incurs any expenses to conserve, maintain, repair, or improve the real property and the property is later redeemed, the purchaser has no claim against the government or against the redemption proceeds to recover these expenses. Any claim for recovery must be made against the taxpayer/owner under appropriate state law.

5.10.5.6  (10-01-2004)
Statement by Lienholders

1.       In some cases involving personal property subject to a senior chattel lien, the lienholders are deprived of their security interests in the property as a result of the distraint sale. This occurs because the purchaser at the sale receives possession of the property immediately upon payment of the bid price. In some instances, the senior lienor cannot locate the purchaser or the property. In an effort to minimize the possibilities of losses of this type, senior chattel lienors who have established lien priority will be permitted to make an announcement concerning their liens prior to sale and to conduct a foreclosure sale immediately after the tax sale.

2.       Senior lienors should, however, be advised that the Service has no authority to withhold release of the property to the successful bidder. Thus, notwithstanding the announcement by the senior lienor, the PALS will give the purchaser a certificate of sale upon full payment of the bid price and will take no action to prevent removal of the property by the purchaser.

5.10.5.7  (10-01-2004)
Statement by Taxpayers

1.       The taxpayer may be allowed to explain the condition of his or her title to the prospective bidders. If, after the taxpayer's explanation, it is apparent that a greater sum may be realized by giving the bidders an opportunity to further investigate the condition of the title to the property, the sale may be adjourned at the discretion of the PALS. Any adjournment must follow the procedures in 5.10.5.3.

2.       When real property is seized, the following individuals have the right, under IRC 6337, to redeem the property at any time within 180 days after the sale:

·         The owner

·         His or her heirs, executors, or administrators

·         Any person having an interest in the property

·         Any person having a lien on the property

·         Any person on their behalf

3.       The right to redeem is conveyable, and the taxpayer and other parties possessing the right to redeem may be advised of their right to waive or sell the right to the successful bidder at the sale. If the parties having the right to redeem do not agree to convey this privilege, the validity of the sale is not affected.

4.       If the taxpayer and other parties having the right to redeem agree to convey this right, a greater amount may be realized from the sale. If the party possessing the right to redeem agrees to the sale of this right, the bidders should be informed and the party should announce the price of the right of redemption before bids are taken.

5.       Even though all parties convey the right to redeem to the successful bidder, a deed cannot be issued prior to expiration of the 180-day period for redemption.

5.10.5.8  (10-01-2004)
Conducting a Public Auction

1.       At the time and place set for the sale, the PALS should call the prospective bidders to order and announce the conditions under which the property will be offered. The statement provided on the reverse of Form 2434, Notice of Public Auction Sale, may be used and can be altered as necessary to fit any conditions peculiar to a particular sale. Since Form 2434 is made available to the public prior to the sale, it is not necessary that the opening statement be read aloud. However, a clear announcement directing the bidders to the statement must be made by the PALS.

2.       If the services of a professional auctioneer are used, the PALS is still responsible for reading the initial legal notice regarding right, title and interest, the condition of property, and no express or implied guarantee about the fitness of the property or for making the announcement directing the bidders to the statement on Form 2434.

3.       The terms of payment should have been determined at the time the Notice of Sale was prepared ( IRM 5.10.4.10.3), and these terms should be indicated on Form 2434. Any change in the terms of payment should be announced prior to the commencement of bidding.

4.       The manner in which the property is being offered for sale should also have been previously determined ( IRM 5.10.4.10.2). If the property is being offered for sale under only one method, the procedures in 5.10.5.9 should be followed. If the property is being offered for sale under more than one method, the procedures in 5.10.5.10 should be followed.

5.10.5.9  (10-01-2004)
Property Offered Under Only One Method

1.       The PALS will open the bidding. If it has been determined to announce the minimum price before the sale, the PALS will open the bidding by requesting that bids start with $___, identifying such as the minimum bid price.

2.       If mail-in bids have been received, they should be opened at the start of the bidding for each of the lots for which they were submitted.

3.       When a sale consists of two or more parcels being sold as separate items, the assisting employee should prepare a tabulation of the tentative high bids received. Form 4425, Public Sale Bid Tabulation, or a similar form, may be used for tabulating purposes. A running total of the tentative high bids should be maintained so it can easily be determined when the minimum bid has been reached. Any records pertaining to the tentative high bids received will be retained and submitted by the PALS with the report of the proceedings on Form 2436, Seized Property Sale Report, as provided in IRM 5.10.6.5.

4.       If sufficient parcels are sold (or tentatively sold) to satisfy the entire liability plus the costs of the proceedings, the PALS should end the sale and release the remaining parcels to the taxpayer.

5.       After the highest bid(s) have been determined and if the minimum bid has been reached, the PALS will announce the name of the successful bidder(s) and make a statement similar to the following: "In accordance with the provisions of section 6335 of the Internal Revenue Code, I hereby declare this property sold to the highest bidder for the sum of $___ ." If two or more highest mail-in bids are equal, determine the successful bidder by drawing lots.

6.       IRM 5.10.5.9.1 contains the provisions to follow if the minimum bid is not reached at the sale.

7.       If mail-in bids were received which were not the successful bid, the deposits should be returned by mail and the appropriate section of the mail-in bid form should be completed.

5.10.5.9.1  (10-01-2004)
Minimum Bid Not Reached

1.       If the minimum bid price is not reached,

A.      The property may be declared purchased at the minimum bid price for the United States .

B.      The property may be released to the taxpayer.

C.      The sale may be adjourned if it is in the best interest of the government or the taxpayer ( IRM 5.10.5.3).

2.       The decision whether or not to bid in the property for the government must have been made prior to the scheduled sale and documented in the case file (See IRM 5.10.4.6.1)

3.       If the property is bid in for the government, the PALS will make a statement similar to the following: "In accordance with the provisions of section 6335 of the Internal Revenue Code, I hereby declare this property purchased for the United States for the sum of $___ ."

5.10.5.10  (10-01-2004)
Property Offered For Sale by More than One Method

1.       When property is offered for sale by more than one method (see IRM 5.10.4.10.2 on the grouping of property), it should be offered first in the aggregate and then as individual lots. This should ensure that the amount offered for the aggregate is the maximum amount a bidder is willing to offer rather than an amount only slightly higher than the total amount of the bids received on all of the individual lots. The property will be declared sold under the method that produces the highest total amount, as long as the minimum bid is met.

2.       The PALS will open the bidding. If mail-in bids were received, the procedures contained in IRM 5.10.5.9 for integrating the mail-in bids into the auction and processing unsuccessful mail-in bids should also be followed when the property is offered for sale by more than one method.

3.       The assisting employee should prepare a tabulation of the tentative high bids received. Form 4425, Public Sale Bid Tabulation, or a similar form may be used for tabulating purposes. Any records pertaining to the tentative high bids received will be retained and submitted by the PALS with the report of the proceedings on Form 2436, Seized Property Sale Report ( IRM 5.10.6.5).

4.       The sale should be recessed at the conclusion of the first bidding period long enough to tabulate the tentative high bids received. After completing a verification of this tabulation, the names of the tentative high bidder(s) should be announced. The property should then be offered for sale under the other method of sale.

5.       It may be desirable, depending upon the circumstances, to secure a payment from the tentative high bidder(s) pending the outcome of the bidding by the other method of sale. This may prevent the high bidder(s) at the initial sale from reneging on a bid. If payment is required, a tentative Form 2435, Certificate of Sale, should be issued for any cash received. The certificate should be marked "Public Auction Sale—Tentative High Bid" , and the amount received should be shown on the tentative certificate. A memorandum signed by the tentative high bidder and the PALS can also be used for this purpose.

6.       If the second method of sale consists of two or more parcels being sold as separate lots, a tabulation of bids will be maintained on Form 4425, Public Sale Bid Tabulation or similar form. A running total of the high bids for each lot should be maintained so it can be easily determined when the minimum bid has been met or if the aggregate bid has been surpassed.

7.       If sufficient parcels are sold (or tentatively sold) to satisfy the entire liability plus the costs of the proceedings, the PALS should end the sale and release the remaining parcels to the taxpayer. The successful bidder(s) will be those who bid on the individual lots, regardless of the amount bid for the aggregate. This will allow the taxpayer to retain some of his property while still satisfying the entire liability.

8.       After the method that produces the highest bid has been determined and if the minimum bid has been reached, the PALS will make a statement similar to the following: "In accordance with the provisions of section 6335 of the Internal Revenue Code, I hereby declare this property sold to the highest bidder(s) for the sum of $___. "

9.       If the tentative high bidder is declared the actual high bidder, retrieve any tentative certificates and issue the actual Form 2435 at this time ( IRM 5.10.5.15).

10.   If no one offers the minimum price under either method, follow the procedures under IRM 5.10.5.9.1, Minimum Bid Not Reached.

5.10.5.11  (10-01-2004)
Sealed Bid Sale — General

1.       Form 2222, Sealed Bid for Purchase of Seized Property, will be used for submission of sealed bid bids. All instructions to bidders necessary for the proper completion and submission of sealed bids are included on the back of Form 2222.

2.       If a potential bidder requests information concerning encumbrances against the property, Form 2434–B, Notice of Encumbrances Against or Interests in Property Offered for Sale (Exhibit 5.10.1–1), should be provided. Form 2434–B should include all encumbrances and interests of record of which the Service became aware during the course of its investigation prior to seizure and sale (See IRM 5.10.1.3.3, Equity Determination). Advise recipients that the Service does not certify in any way how accurate or current this information is. Form 2434–B contains a statement advising bidders to verify for themselves the validity, priority, and amount of encumbrances against the property that is offered for sale.

3.       The Notice of Sealed Bid Sale, Form 2434–A, specifies the address where the sealed bids must be submitted. If the place of sale is the local IRS office rather than the office where the PALS is located, the address where the sealed bids should be delivered will be the local office. Since the PALS will usually be travelling to the sale location, this will ensure that all bids are received at one location prior to the time of sale. A preaddressed envelope should be provided for returning sealed bids.

4.       Bidders will submit their bids in a securely sealed envelope with their name, address, and the time and place of sale on the upper left corner of the envelope. The envelope should be annotated with the name and identification number of the appropriate PALS and the statement " SEALED BID - TO BE OPENED BY ADDRESSEE ONLY" .

5.       If the sale is to be held in the office where the PALS is located, the PALS or an employee in the office where the PALS is located will document the bidders' name, address, and the date the bid was received for all sealed bids as they are received. Section C of Form 4425, Public Sale Bid Tabulation, or a similar form should be used for this purpose. If the sale is being held at a local IRS office, the PALS should coordinate with the local office to have an employee, preferably not a revenue officer, document on Form 4425 the bidders' name, address, and the date the bid was received for all sealed bids as they are received.

6.       Sealed bids should not be opened for any reason prior to the time set for opening the bids. All sealed bids received will be retained for safekeeping in a government facility providing protection commensurate with the standards in IRM 1.16.15, Minimum Protection Standards Handbook.

7.       A bid should not be considered unless it is received at the sale location prior to the time fixed for the opening of the bids.

8.       Bids may be withdrawn upon written request received from the bidder provided the request is received by the PALS conducting the sale prior to the time fixed for opening of the bids. If a request is received, the sealed bid will be returned to the bidder unopened. The date of withdrawal should be noted on Form 4425 and the written request should be attached to the form.

5.10.5.11.1  (10-01-2004)
Consideration of Sealed Bids and Sale of Property

1.       At the appointed time and place scheduled for the opening of bids, the PALS conducting the sale will call the gathering to order. If bidders are present, the PALS will state: "The sealed bids received as a result of notice of sale of property seized from (taxpayer's name), which was published (insert names of publication and dates of insertions therein), will now be opened" . Form 2434–A contains the authority and effect of sale formerly used as the opening statement. Since the form is available to the public, it is not necessary to read the statement prior to commencing the sale.

2.       The PALS should then proceed with the opening of bids, checking each bid against the tabulation previously prepared to make certain that each bid is considered in determining the successful bidder(s). The opening of bids should be done in the presence of those persons who submitted bids and the taxpayer, if such persons are present. The PALS may announce the minimum price before the sale, but is not required to do so.

3.       Any sealed bid which is not accompanied by the required remittance will not be considered.

4.       The PALS has the right to waive any technical defect in a bid. However, a technical defect in a bid does not give the bidder the right to withdraw the bid after it has been opened.

5.10.5.11.2  (10-01-2004)
Successful Sealed Bid

1.       After the opening, examination, and consideration of all bids (including any consideration necessary because the property was offered by more than one method), the PALS will announce the amount of the highest bid or bids and the name of the successful bidder or bidders.

2.       All Forms 2222 will be retained by the PALS and will be forwarded with the report of the proceedings on Form 2436. The applicable items of the successful bidder section of Form 2222 submitted by successful bidders will be completed.

5.10.5.11.3  (07-26-2000)
Unsuccessful Sealed Bids

1.       At the conclusion of the sale, remittances submitted with unsuccessful bids will be returned. In no event will any remittance received with an unsuccessful bid be deposited as Internal Revenue collections or in the deposit fund account, nor will unsuccessful bidders be required to submit an application for a refund.

2.       Remittances should be returned to unsuccessful bidders if they are present at the sale. Otherwise, the remittances will be returned by mail. In either case, the applicable items of the "Return of Remittance to Unsuccessful Bidder" section of the related Form 2222 should be completed.

3.       Although there is no statutory requirement to make such announcement, if requested, the PALS may divulge the respective names and amount bid by unsuccessful bidders.

5.10.5.12  (10-01-2004)
Payment of Purchase Price

1.       All payment for property sold must be in the form of:

·         Cash

·         Certified, cashier's, or treasurer's check drawn on any bank or trust company incorporated under the laws of the United States or under the laws of any State or possession of the United States

·         United States postal, bank, express, or telegraph money order

2.       If full payment is required upon acceptance of the highest bid, the payment should be made at that time or a reasonable period thereafter, to be established by the PALS.

3.       If deferred payment is permitted, the initial payment will be made upon acceptance of the bid, and the balance paid on or before the date specified on Form 2434, Notice of Public Auction Sale.

4.       In the case of sealed bids, the initial payment will be the remittance required to be submitted with the sealed bid. Payment terms for the balance due are indicated on Form 2434–A, Notice of Sealed Bid Sale.

5.       If the highest bidder is the result of a mail-in bid, the PALS should notify the successful bidder as soon as possible so the balance of the bid price can be secured. The appropriate section at the bottom of the mail-in bid form should be completed.

6.       Although Form 809, Receipt for Payment of Taxes, is normally issued for all cash payments, it should not be issued to purchasers upon full payment in cash of the purchase price. Instead, if full payment is received in cash, Form 2435, Certificate of Sale, will be issued.

7.       Under the following conditions the PALS will prepare a record of receipt to provide to the purchaser:

·         If deferment of the purchase price is permitted, and an initial or interim payment is received in cash

·         The purchaser requests a receipt for a non-cash payment

8.       A copy of the record of receipt should be submitted on Form 3210, Document Transmittal. Form 3210 should include the taxpayer's identification number as well as the seizure number and should be marked "Partial Proceeds from the Sale of Seized Property" . A copy of Part 8A of Form 2433 marked "Partial Proceeds from the Sale of Seized Property " should also be included to ensure proper handling of the proceeds. The payment will be applied to the appropriate module when Form 2436 is submitted. The record of receipt should include the following information:

·         Identity of purchaser

·         Amount of payment

·         Date of payment

·         Description of item purchased

·         Remaining balance due

·         Date remaining balance is due

·         Address to submit balance due

·         Signature of PALS

9.       If a non-cash deferred payment is made and a receipt is not requested, the remittance should be submitted with a copy of Part 8A of Form 2433 marked "Partial Proceeds from the Sale of Seized Property" . The documents should be transmitted via Form 3210, Document Transmittal. Form 3210 should include the taxpayer's identification number as well as the seizure number, and should state "Partial Proceeds from the Sale of Seized Property " .

5.10.5.13  (10-01-2004)
Default on Payment — Cash Sales

1.       If payment in full is required upon the acceptance of the bid (or a reasonable period thereafter) and the successful bidder fails to make the payment, the PALS conducting the sale "... shall forthwith proceed to again sell the property..." (IRC 6335(e)(3)). As a general rule, this can be accomplished by voiding the defaulted high bid and announcing the next highest bid as the successful bidder. The reason for the change or correction should be explained on the corrected document (e.g., Form 4425) or by routing slip.

2.       Ordinarily the deposit made by purchasers at cash sales will not be subject to forfeiture upon failure to pay the purchase price. However, since it may be possible in some cases to retain the deposit made by purchasers at cash sales or to bring an action against them for the damages caused by their default, the advice of area counsel should be sought when action against a defaulting purchaser at a cash sale is being considered.

5.10.5.14  (10-01-2004)
Default on Payment — Deferred Payment Sale

1.       If the conditions of sale permit part of the payment to be deferred, and if it is not paid within the prescribed period, the following actions may be taken:

A.      Recommend suit ( IRM 5.17.4 - Suits by the United States ) against the purchaser for the unpaid bid price, including interest at an annual rate established under IRC section 6335(3).

B.      Declare the sale void for failure to make full payment and again advertise and offer the property for sale (see IRM 5.10.5.13(1) and IRM 5.17.3.3.7.3.3).

Note:

Since the original sale is being declared void, the time periods related to adjourned sales ( IRM 5.10.5.3) do not apply. The new sale date should be advertised and the sale conducted within the appropriate timeframes ( IRM 5.10.4.10.1) based on the new date of public notice.

2.       The new purchaser will receive the property or rights to property free and clear of any claim or right of the defaulting purchaser. The amount paid upon the bid price by the defaulting purchaser will be forfeited. The forfeited amount will be disposed of in accordance with IRM 5.10.6.5(2).

5.10.5.15  (10-01-2004)
Certificate of Sale

1.       As soon as possible after the receipt of the full purchase price, the PALS will give the purchaser a Form 2435, Certificate of Sale of Seized Property, prepared as shown in Exhibit 5.10.5–1.

2.       If the property listed on Form 2435 includes a motor vehicle, airplane, or boat, the reverse of Form 2435 must be completed.

3.       After the certificate is prepared, give parts 1 and 2 to the purchaser. Part 3 should be submitted with Form 2436, Seized Property Sale Report ( IRM 5.10.6.5). If property is declared purchased for the United States , the Certificate of Sale will be placed in the seizure file.

5.10.5.15.1  (10-01-2004)
Legal Effect of Certificate of Sale of Personal Property

1.       IRC 6339(a) and regulations thereunder provide that for the sale of personal property under distraint proceedings, the Certificate of Sale issued to the purchaser will:

·         Be prima facie evidence of the right of the PALS to make such sale

·         Be conclusive evidence of the regularity of the proceedings in making the sale

·         Transfer to the purchaser all right, title, and interest of the taxpayer in and to the property sold

·         Discharge the property from all liens, encumbrances and title over which the tax lien had priority

2.       Part 2 of Form 2435 provides pertinent citations from the Code.

5.10.5.15.2  (10-01-2004)
Legal Effect of Certificate of Sale on Corporate Stocks and Securities

1.       If the property is corporate stocks, the Certificate of Sale will be notice, when received, to any corporation, company, or association of the transfer, and will be the authority to the corporation, company or association to record the transfer on its books and records in the same manner as if the stocks were transferred or assigned by the party holding the stock certificate, in lieu of any original or prior certificate, which shall be void, whether canceled or not.

2.       If the subject of sale is securities or other evidences of debt, the certificate of sale will be good and valid receipt to the person holding the certificate of sale as against any person holding or claiming to hold possession of such securities or other evidences of debt.

5.10.5.15.3  (10-01-2004)
Legal Effect of Certificate of Sale on Vehicles

1.       If the property is a motor vehicle, the Certificate of Sale will be notice, when received, to any public official charged with the registration of title to motor vehicles, of the transfer. It will also be the authority to that official to record the transfer on his/her books and records in the same manner as if the certificate of title to the motor vehicle was transferred or assigned by the party holding the certificate of title, in lieu of any original or prior certificate, which shall be null and void, whether canceled or not.

5.10.5.15.4  (10-01-2004)
Legal Effect of Certificate of Sale on Documented Vessels

1.       When a documented vessel (registered, enrolled, or licensed) is seized, the U.S. Coast Guard office with whom the vessel has been documented must be requested to furnish a copy of the last document issued for the vessel (See IRM 5.10.1.3.3.4, Equity Determination — Documented Vessels) for use as proper identification on seizure and sale papers. When the vessel is sold, Form 2435, Certificate of Sale of Seized Property, will be issued as the Certificate of Sale.

2.       Although Form 2435 passes title to purchasers under the Internal Revenue Code, the U.S. Coast Guard imposes additional requirements. The United States Coast Guard has indicated that, in most instances, it will grant a request for waiver of the additional requirements. The PALS will prepare a letter to be attached to Form 2435 (Exhibit 5.10.5–2). The purchaser should be instructed to present the copy of Form 2435 and the letter to the U.S. Coast Guard to accomplish the title transfer. Local jurisdictions of the U.S. Coast Guard have been advised that, in most instances, it is appropriate to accept Form 2435 as adequate to pass title when accompanied by the waiver letter.

5.10.5.15.5  (10-01-2004)
Recording Certificate of Sale in Real Estate Cases

1.       Circumstances may arise when a purchaser of real estate may be advised to record the Certificate of Sale. See IRM 5.17.2.7.3(4) for situations when this may be advisable.

2.       In jurisdictions which have not adopted the Uniform Federal Tax Lien Registration Act, the PALS may need to consult with area counsel (through Technical Services) for legal recording instructions.

5.10.5.16  (10-01-2004)
Delivery and Removal of Personal Property

1.       Responsibility of the United States for the protection or preservation of seized personal property ceases immediately upon payment of the highest bid. The risk of loss is on the purchaser of personal property upon payment of his/her bid. Personal property should not be delivered to the purchaser until the purchase price has been paid in full.

Note:

Even if all appropriate precautions were taken to protect the property, situations may arise where property is damaged or is found missing after the sale. If the successful bidder breaks or damages the property, that bidder remains responsible for the item and for full payment of the purchase price. Contact the PALS manager, Technical Services, or Counsel for the appropriate procedures to follow in all other cases. The case file must be fully documented with all actions taken regarding the missing or damaged property.

2.       If payment of part of the purchase price for personal property is deferred, the property will be retained until the balance of the purchase price has been paid. The PALS should see that the property is protected in facilities commensurate with the standards in IRM 1.16.15, Minimum Protection Standards, until the purchase price has been paid in full or the sale is declared null and void for failure to make full payment of the purchase price. All charges and expenses incurred in caring for the property after the acceptance of the bid will be the responsibility of the purchaser. The successful bidder should be advised of this at the sale.

5.10.5.17  (10-01-2004)
Cash Conversion

1.       Immediately after the sale the PALS should take the necessary action to convert or deposit any cash payments received as proceeds from the sale of seized or acquired property. Arrangements to convert or deposit cash should have been planned prior to the sale ( IRM 5.10.4.14)

2.       To minimize risk of loss and to ensure employee safety, cash should be converted or deposited by the close of the business day on which it was received, or as soon as possible on the next business day with the bank identified by the Treasury's General Account Management Team, Federal Reserve Bank - St. Louis at the nearest depository.

3.       Prior to depositing or converting the cash, use necessary precautions to safeguard the cash while in the field (while driving secure money in a locked compartment in the vehicle, for overnight storage attempt to secure in a local IRS office in a safe or locking cabinet, etc.). PALS employees and managers should become familiar with IRM 3.0.167, Losses and Shortages.

4.       Prior to making the deposit, prepare the following documents:

·         SF 215-A, Deposit Ticket (Exhibit 5.10.5–3)

Note:

No corrections may be made to this form; if an error is made, complete a new form and record the voided form on the deposit ticket log ( IRM 5.10.5.17(6))

·         Form 1963, Collection Register (Exhibit 5.10.5–4)

·         Form 2679, Cash Reconciliation Report (Exhibit 5.10.5–5)

Note:

Instructions for submitting these documents are contained in IRM 5.10.6.3.

5.       Once the deposit is made, the bank employee will verify the amount and sign block 8 of the SF 215-A Deposit Ticket. The bank will retain the Original Copy and the Depository Copy. The bank will return to the PALS the Memorandum Copy, Agency Copy, and Confirmed Copy.

6.       The PALS employee will maintain a log (Exhibit 5.10.5-6) for the SF 215-A Deposit Tickets. The log will include:

·         Deposit Number

·         Date of Deposit

·         Amount of Deposit

·         Seizure Control Number

·         Unique Identifying Number

·         Any voided SF 215-A Deposit Tickets

Exhibit 5.10.5-1  (10-01-2004)
Form 2435 — Certificate of Sale of Seized Property Reference: 5.10.5.15

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Taxpayer's name.

Address where sale was held.

Description of property covered by Certificate of Sale. This should conform to description stated on Form 2433, except for real property as the legal description is sufficient. Any unused space should be ruled out as shown.

Purchaser's name.

Exhibit 5.10.5-2  (10-01-2004)
Letter 2274(P), Materials to Assist in the Sale of Documented Vessels Reference: 5.10.5.15.4(2)

Exhibit 5.10.5-3  (01-01-2003)
SF 215-A, Deposit Ticket Reference: IRM 5.10.5.17(4)

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Exhibit 5.10.5-4  (01-01-2003)
Form 1963, Collection Register Reference: IRM 5.10.5.17(4)

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Exhibit 5.10.5-5  (01-01-2003)
Form 2679, Cash Reconciliation Report Reference: IRM 5.10.5.17(4)

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Exhibit 5.10.5-6  (01-01-2003)
Log for SF 215-A, Deposit Ticket Reference: IRM 5.10.5.17(6)