IRS Proposes Modernizing Rules for Seized Property Sales
Last Friday, the IRS and the U.S. Treasury Department unveiled a set of draft regulations aimed at updating the rules surrounding the sale of property confiscated by the IRS. These proposed changes, filed under REG-127391-16, seek to bring the existing guidelines in line with today’s technological landscape.
Long-Overdue Revisions
Originally established in 1954, Section 6335 of the IRS code has not undergone significant changes aside from minor statutory updates. As a result, many of its guidelines, particularly those under Regulation Section 301.6335-1, are outdated. One glaring issue is that the current rules don’t account for the rise of electronic transactions, including online bidding and payment methods.
Going Digital: Online Sales
The current regulations only refer to in-person sales and require these sales to happen within the county where the property was seized. The new proposals are more flexible, allowing sales to occur wherever specified in the notice of sale, including online platforms. This change aims to attract a broader audience of potential buyers and boost bid amounts, all while optimizing IRS resources.
Diverse Payment Options
As of now, Regulation Sections 301.6335-1(c)(6) and (7) limit payment options to checks or money orders. However, the proposed changes would permit a wider range of payment methods, as outlined in the notice of sale. This could include electronic funds transfers, credit/debit card payments, or any other method deemed acceptable and approved by the IRS.
Updates on Sealed Bids and Minimum Payments
The draft also touches on the minimum bid amounts that must accompany a sealed bid. The current rule sets a rigid $200 floor for bids below that amount or mandates at least 20% of the bid for higher amounts. Under the new rules, the minimum bid requirement would be made more flexible and could be dictated by the public notice of sale. Additionally, sealed bids would no longer need to be submitted in physical “envelopes,” opening the door for electronic submissions.
Additional Revisions
Further proposals include streamlining the process for grouping items for sale, establishing guidelines for determining winners in the event of tied bids, and specifying which IRS personnel may be involved in the sales process.
Effective Dates
Once finalized, these modernized regulations would apply to all properties seized for sale after their publication date.
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