IRM
5.10.7 – LEVIED PROPERTY ACQUIRED
IRS
AND
DISPOSLITION OF LEVIED PROPERTY
5.10.7.1 (10-01-2004)
General
1.
For
personal property, acquired property means any property obtained
by the
United States
in payment of, or as security for, debts arising under the
internal revenue laws.
2.
For real
property, acquired property means any property which is, or shall
become property of the
United States
under the following conditions:
·
By judgment
of forfeiture under the internal revenue laws
·
By
redemption by the Government under IRC 7425
·
By
assignment, set off, conveyance by purchase, or otherwise to the
United States
in payment of debts or penalties arising under the laws relating
to internal revenue
·
Vested in
the
United States
by mortgage or other security for the payment of such debts
·
Declared
purchased for the
United States
under IRC 6335(e)
3.
Authority
to sell acquired property is contained in IRC 7505 (personal
property) and IRC 7506 (real property). Either a property
appraisal and liquidation specialist (PALS) or a revenue officer
may conduct a sale of acquired property; however, since the PALS
is a specialist in the sale process, it is recommended that the
PALS conduct these sales whenever possible. The administration and
disposition of personal property is the responsibility of the area
director of the area in which the property became the property of
the
United States
. The administration and disposition of real property is the
responsibility of the area director of the area in which the real
property is situated. For real property, the Commissioner Small
Business/Self-Employed (or his/her delegate) may, if deemed
advisable, take charge of and assume responsibility for the
administration and disposition of the property by giving written
notice to the area director.
4.
If real
property, consisting of a single parcel, is situated in more than
one internal revenue area, the responsibility for the
administration and disposition of the property will be that of the
area director under whose direction the property was declared
purchased or under whose direction the property otherwise became
the property of the United States. If there is doubt as to which
area director is to have charge of the property, the pertinent
facts should be reported to the Director, Payment Compliance,
Attn: SE:S:C:CP:PC, so that a designation may be made.
5.
In order
that a current record of all acquired property will be available
for reference and follow-up purposes, Technical Services will
maintain a control of such property. This control will include
real and personal property acquired through levy and sales under
IRC 6335(e) and also property acquired through other circumstances
stated in (1) and (2) above.
6.
Property
acquired under IRC 6335(e) will be reported to Accounting
Control/Services on Form 2433, Notice of Seizure and Form 2436,
Seized Property Sale Report. However, if property is acquired
through other circumstances, Technical Services will inform
Accounting Control/Services by memorandum, in duplicate. To enable
the compliance center to enter acquired property on the accounting
records, the value of the property must be provided. When the
exact value of the property cannot be determined, the memorandum
should be noted with the estimated value and the basis for
computing it.
Note:
Property acquired by the Service through
the exercise of redemption rights under the Federal tax lien does
not require a memorandum to Accounting Control/Services.
Additional information about the administration of redeemed
property can be found in
IRM
5.12.5.5.
7.
The
Technical Services Territory Manager will periodically request
from the office involved the current status of acquired
properties. In the case of real property, a status report should
not be requested until six months after the right of redemption
period has expired. A brief notation of the follow-up actions will
be entered on the control. After the property is disposed of, the
control will be closed.
8.
The PALS or
the revenue officer will see that acquired property located within
the jurisdiction of the office is maintained as determined
necessary. Ordinary and necessary expenses may be incurred in the
preservation of the property. These expenses may include rent for
storage of personal property if rent-free facilities are not
available, or the cost of minor repairs to real property, if
deemed necessary for its preservation. The procedures in
IRM
5.10.3.6, Protection of Property During a Seizure, are also
applicable to acquired property.
9.
Estimated
expenses expected to be incurred in connection with the
preservation or sale of the property should be reported to the
field budget officer per their instructions, or if applicable to
the Chief, HQ Financial Management (Execution), so that necessary
funds may be obligated. Identify the property and provide the
estimated amount of expenses.
10.
The sale
procedures in the sections that follow are applicable to both real
and personal property unless otherwise indicated. For disposition
of acquired securities, see
IRM
5.10.7.9, Disposition of Acquired Securities.
11.
Unless the
property was acquired as a result of a redemption, a case should
not be opened on ICS under the original taxpayer's name and
TIN
, since they were credited for a related amount at the time the
property became acquired property. An ICS file under an assigned
identification number should be maintained.
12.
Since
property acquired other than as a result of redemption is sold
exclusively for the benefit of the government with no benefit to
the original taxpayer, third party contact reporting requirements
are not relevant for this type of sale.
13.
Where
property has been acquired other than as a result of redemption,
if it is determined that it is in the best interest of the Service
to transfer ownership of the property for any reason to another
federal government agency, such as the Department of the Interior,
National Park Service, or U.S. Forestry Service, etc., this can be
done with agreement by the other federal agency without offering
the property for sale under sections 7505 or 7506. This cannot be
done with a non-federal agency, such as a state or local
government agency. Approval for this transfer is obtained from the
Technical Services Territory Manager. The PALS will prepare a memo
for routing through the PALS manager to the Technical Services
Territory Manager requesting approval to transfer the asset to
another agency. The memo should provide sufficient information
regarding the acquisition and recommended transfer of the
property.
5.10.7.2 (10-01-2004)
Income From Acquired Property
1.
For real
property acquired under the provisions of IRC 6335, there is a 180
day right of redemption period during which the government cannot
dispose of the property.
2.
The right
to any income from real property during this period of redemption
depends upon the state law where the property is located. Area
counsel should be consulted to determine the disposition to be
made of income during this period. If it is determined that the
taxpayer is entitled to the income, levy procedures may be used
and the proceeds applied to the outstanding accounts of the
taxpayer.
3.
The
taxpayer has no right to redeem, nor any right to any income
derived from, personal property after it has been declared
purchased for the
United States
.
4.
Income
received from the acquired property will be forwarded through
Submission Processing with a Form 2433, Part 8–A, Notice of
Seizure, or a memorandum posting document in duplicate indicating
the following:
·
Name of
person from whom the income was received
·
Nature of
income, such as rent, dividends, etc.
·
Brief
description of property, such as " Real property — Building
located at (address)," " Personal property — General
Motors Stock," etc.
·
Period
covered by the payment if applicable
·
Name of
taxpayer from whom the property was seized and sold
·
Amount of
remittance
·
A statement
that the remittance should be deposited as a courtesy deposit for
credit to Miscellaneous Receipts of the Treasury
5.
Cash
remittances must be converted before transmittal to Submission
Processing.
5.10.7.2.1 (10-01-2004)
Lease of Real Property
1.
Real
property may be leased if it is determined that it will be in the
possession of the area director over an extended period of time
and that the government's interest will best be served by such
action. Factors to be considered are:
·
Depreciation
of the property
·
Whether the
property can be immediately sold for a reasonable amount
·
Cost of
maintenance, etc.
2.
The initial
determination will be made by the Technical Services Group
Manager, based upon the circumstances, including any
recommendation of the area office involved. The final decision
rests with the Technical Service Territory Manager whose approval
must be secured before the property is offered since he/she must
sign the lease.
3.
If acquired
property will be leased and a prospective lessee has been secured,
the Technical Services Group Manager should request area counsel
to prepare a lease agreement in duplicate. The terms of the lease
should generally not be more than a year and should not contain
any provision which would prevent selling the property, subject to
the lease, at any time a suitable purchaser is found. The lease
agreement should specify that payments be made by check or money
order made payable to the United States Treasury and sent directly
to the Technical Services Group Manager.
4.
The
following information should be furnished to area counsel:
·
Name and
address of the lessee
·
Area
involved
·
Description
and location of property
·
How
property was acquired by the
United States
·
Period of
the lease
·
Terms of
payment (amount, manner, due date and place of payment)
·
Any special
provisions to be contained in the lease, such as maintenance of
property, authorized alterations, improvements, etc.
5.
Upon
receipt of the proposed lease agreement from area counsel, the
Technical Services Group Manager will review the lease to see that
it conforms to the intent of the parties involved and will forward
the original and duplicate to the Technical Service Territory
Manager for his or her signature.
6.
After the
Technical Service Territory Manager has signed the lease
agreement, both copies will be returned to the Technical Services
Group Manager who will:
A.
Prepare a control card showing the name and
address of the lessee, payment due and amount of payment.
B.
Secure the signature of the lessee on the
original lease agreement.
C.
Furnish duplicate lease agreement to the lessee
which may be considered authority for the lessee to have
possession of the property in accordance with terms of the
agreement.
D.
File original lease agreement in the related
Disposition of Seized Property case file.
E.
File control card chronologically by payment due
date in a "lease control card file."
7.
Upon
receipt of payments under the lease agreement, Technical Services
will note the control card as to date payment is received and
prepare and process a memorandum posting document in duplicate in
accordance with
IRM
5.10.7.2(4).
8.
If a
payment is not received within a reasonable time after the due
date, the Technical Services Group Manager should contact the
lessee to secure payment. If payment is not received, area counsel
should be consulted as to the legal action required.
5.10.7.3 (10-01-2004)
Preparations for
Sale
1.
When it
appears that offering the acquired property for sale will yield a
reasonable price, a memorandum recommending sale should be
submitted through Technical Services for further processing. This
memorandum will ordinarily be prepared by the PALS or the revenue
officer since he/she is more likely to secure potential
purchasers. However, in some instances the memorandum may be
originated by an advisor in Technical Services. The memorandum
should be prepared in duplicate and include the following:
·
Brief
description and location of property
·
Condition
of property
·
Expected
sale price
·
Government's
cost, if any (bid-in price if the property was declared purchased
under IRC 6335)
·
Reason it
is believed that the property can be sold for a reasonable price
(if an agreement to bid has been secured, furnish details)
·
Any other
pertinent information
Note:
This memorandum is not required for
redeemed property.
2.
Technical
Services will send the original memorandum to the Technical
Services Territory Manager for approval of the sale and retain the
duplicate in a suspense file pending action by the approving
official.
3.
The
Technical Services Territory Manager will indicate his/her
approval or disapproval by so stating on the memorandum and return
it to Technical Services. The local office will then be notified
of the action to be taken.
5.10.7.3.1 (10-01-2004)
Agreements to Bid
1.
Regulations
provide that offers to bid at least a specified amount may be
solicited from prospective bidders before giving a notice of sale
of acquired property. Although this procedure is not a statutory
requirement, it is desirable since it encourages more sincere
bidding and practically ensures that the property will be sold
when offered for sale. Ordinarily offers to bid will be the result
of solicitation by the PALS or the revenue officer since they will
be in the best position to contact prospective bidders. However,
in some instances the agreement to bid may be secured by other
Service personnel. The agreement to bid should be similar to the
example in Exhibit 5.10.7–1.
2.
A deposit
to secure performance of the agreement to bid may also be required
and ordinarily is desirable. When a deposit is required, it should
be the full amount of the offer to bid if the bid is $200 or less.
If the amount of the offer to bid is more than $200, the deposit
should be 20 percent of the bid or $200, whichever is greater.
3.
If a
deposit is required with the agreement to bid, it should be made
by a 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, territory, or possession of the
United States
, or by a postal, bank, express, or telegraph money order.
4.
Certificates
of Deposit and irrevocable letters of credit are also acceptable
if approved in advance by area counsel. However, care should be
exercised in accepting and monitoring such instruments because the
period of time in which they are negotiable is generally limited.
5.
Upon
receipt of a bid deposit, prepare Form 2276, Collateral Deposit
Record (
IRM
Exhibit 5.10.7–2) identifying the remittance as an
"agreement to bid deposit." The remittance and Form 2276
will be submitted to Technical Services for review and
safekeeping.
5.10.7.3.2 (10-01-2004)
Time and Place of
Sale
1.
Personal
property may be sold any time after it is acquired and a notice of
sale given (
IRM
5.10.7.3.5(2)). However, sufficient time should be allowed to
permit adequate publicity of the sale so that the maximum amount
may be obtained for the property at the sale. Ordinarily, the sale
of personal property should be held in the area where the property
was declared purchased for the
United States
. If the sale is to be held in another area, the area director
should advise the director of the other area.
2.
Real
property acquired under the provisions of IRC 6335(e) may be sold
after the period of redemption expires and a public notice of sale
has been given (
IRM
5.10.7.3.5(2)). The notice must have been given not less than 20
days before holding the sale. Ordinarily, when real property is
involved, the taxpayer or other persons with an interest in the
property, or a person on their behalf, have a right to redeem the
property within the prescribed period. In some instances, such as
in the case of real property acquired by forfeiture, the right to
redeem may not exist. When real property is acquired by an action
other than a sale under provisions of IRC 6335(e), consult area
counsel to determine whether redemption rights exist.
3.
When real
property is redeemed under 28
USC
2410 or IRC 7425, the PALS should arrange to sell it as soon as
possible after proper notice of sale is given and the terms of
agreements to bid permit. The property may not be sold less than
20 days after notice is given.
4.
Ordinarily,
the place of sale of real property should be within the county
where the property is situated. However, if it is believed that a
substantially higher price may be obtained, the area director or
Technical Services Territory Manager may authorize the sale to be
held outside such county. If this move causes the sale to be held
in another area office, the area director should be notified by
the approving official in the area where the property is situated.
5.10.7.3.3 (10-01-2004)
Adjournment of
Sale
1.
Regulations
provide that the employee conducting the sale may adjourn the sale
if an adjournment will best serve the interest of the
United States
. However, if the sale is adjourned for more than 30 days in the
aggregate, a new notice of sale is required.
2.
When a sale
is to be adjourned for any purpose, the employee conducting the
sale should appear at the time and place originally established
for the sale and make a public announcement of the adjournment
and, if possible, inform those present of the new date and time of
sale.
5.10.7.3.4 (10-01-2004)
Offering of Property
1.
Acquired
property may be sold either by public auction or by sealed bids.
The method used will depend upon the facts and circumstances
surrounding the property, such as type of property, location,
condition of property, etc. The method selected should be the one
which is expected to produce the maximum amount for the property.
2.
Acquired
property may be sold, if divisible, in parcels or piecemeal, or it
may be combined with other acquired property and offered for sale.
There are no restrictions relative to the grouping of the property
for sale. It may be offered as separate items, as groups of items,
in the aggregate, or both as separate items (or in groups) and in
the aggregate. If the property is to be offered in groups, the
groups should be segregated on the notice of sale.
5.10.7.3.5 (10-01-2004)
Notice of
Sale
1.
Regulations
require that a notice of sale be publicly given. The notice of
sale should be prepared as appropriate:
·
Notice of
Public Auction (for redeemed property), Exhibit 5.10.7–3,
P–637
·
Notice of
Sealed Bid Sale (for redeemed property), Exhibit 5.10.7–4,
P–1627
·
Notice of
Public Auction Sale, (other than redeemed property), Exhibit
5.10.7–5, P–339
·
Notice of
Sealed Bid Sale, (other than redeemed property), Exhibit
5.10.7–6, P–340
2.
If
residential real property is being sold, the notice of sale should
also contain a statement that the property is being sold on an
open occupancy basis or nondiscriminatory basis. The notice of
sale should be reproduced in a manner that will provide sufficient
copies to satisfy the needs of the particular sale. For real
property, the notice of sale must be published in a newspaper
published or generally circulated within the county where the
property is situated. If there is no newspaper published or
circulated within the county, the notice will be posted at the
post office nearest the place of sale and in at least two other
public places. For personal property, newspaper advertising may
also be authorized but is not required. A copy of the notice of
sale should also be retained by the PALS for submitting with the
report of sale. A copy will be forwarded to Technical Services.
3.
Other
methods of giving public notice of sale and of advertising, such
as radio or television spot announcements, posting on the Treasury
Web Site (Internet), and trade journal advertising, may be used,
in addition to those required by regulations, when it is believed
that wider or more specialized advertising coverage will enhance
the possibility of obtaining a higher price for the property. If
commercial advertising is used, the procedure prescribed in
IRM
5.10.4.12.1 should be followed.
5.10.7.4 (10-01-2004)
Release or Redemption of Real Property to Debtor
1.
IRC 6337
provides that the owner of any real estate sold as provided in IRC
6335, or any person having interest therein, or a lien thereon, or
any person in their behalf, shall be permitted to redeem the
property sold, or any particular tract of the property at any time
within 180 days afte | 
