IRS modernizes regulations on sales of seized property

The Internal Revenue Service and the Treasury Department released final regulations on the sale of property seized by the IRS through a levy for nonpayment of taxes, providing a long overdue update to rules that had been in place since at least the 1950s, and even the 19th century.

“The final regulations amend existing regulations to better allow the IRS to maximize sale proceeds for the benefit of the taxpayer whose property the IRS has seized and the public fisc,” said the rules. “The final regulations affect all sales of property the IRS seizes by levy.”

The IRS issued proposed regulations in October 2023, noting that the original regulations had been enacted as part of the Internal Revenue Code of 1954, and many of the provisions date back to 1866. The rules allow for use of modern technology such as online advertising and electronic credit and debit card payments.

The final regulations provide an express delegation of authority to the Treasury to set regulations prescribing the manner and other conditions of the sale of property seized by levy. The sale needs to be by public auction or by public sale under sealed bids. In the case of the seizure of several items of property, the regulations also deal with whether the items should be offered separately, in groups, or in the aggregate and whether the announcement of the minimum price determined by the Treasury can be delayed until the receipt of the highest bid.

Other issues involve whether payment in full should be required at the time of acceptance of a bid, or whether part of the payment can be deferred for up to one month. Other sections detail the extent to which methods such as advertising can be used in giving notice of the sale; and under what circumstances the sale can be adjourned for up to one month. The Treasury can also issue additional rules and regulations in the event of any alteration of the tax laws.