The Internal Revenue Service (IRS) recently issued new regulations that overhaul the process of selling assets seized from taxpayers due to unpaid taxes, marking the first major update since the 1950s. These changes, finalized on November 4, 2024, aim to leverage modern technology, improve efficiency, and potentially increase proceeds from asset sales.
IRS seizure sales
Previously, IRS sales of seized property were conducted in person, following outdated guidelines under Code Sec. 6335, established in the Internal Revenue Code of 1954. With limited updates since, these regulations did not accommodate technological advances, limiting the IRS’s ability to maximize sales proceeds and streamline the asset disposal process. According to the Treasury, the final regulations will “better allow the IRS to maximize sale proceeds for the benefit of the taxpayer whose property the IRS has seized and the public fisc.”
Embracing technology and flexibility
A change under the new regulations is the IRS’s ability to hold sales online, which aims to attract more competitive bids and reach a broader audience of potential buyers. As the agency explained in the preamble of the proposed regs, online sales “can attract a wider range of potential purchasers, and thus potentially higher bids, while conserving IRS resources.” The IRS reasoned that to determine the time and place of sales, online sales generally are treated as occurring in the country where the property is seized.
The updated regulations also permit online advertising, and credit and debit card payments, and clarify how properties can be grouped for sale. Should the facts and circumstances of an online sale lead the IRS to believe otherwise, the sale can be conducted online via special order “when doing so would be more efficient or would likely result in more competitive bids.” As IRS representatives explained, grouping property assets or assigning specific employees to coordinate sales can streamline the process, enabling the IRS to choose strategies that yield the highest aggregate sales
Enhanced procedures for public auctions and bidding
Public auctions and sealed bids remain the preferred methods for sales, but the IRS has expanded options for organizing and setting minimum bid prices. Previously, setting a reserve price could delay sales or restrict bidding. Now, minimum prices can be disclosed only after the highest bid is received, promoting flexibility and competitive bidding.
Additionally, the IRS retains the authority to decide payment methods and timelines, allowing for part payments or installment options on an as-needed basis. For example, the new guidelines permit deferred payments of up to one month, whereas previous rules often mandated full upfront payment.
Effective date
These regulations apply to all sales of IRS-seized property starting November 5, 2024. By modernizing these processes, the IRS hopes to better serve taxpayers, increase transparency, and promote fairness in how seized properties are sold. This modernization aligns with broader trends within the Treasury to implement digital solutions and procedural efficiencies across tax collection processes
