Congress should include a subsection within IRC 6331 to read as follows:

    At the time any levy is made, the Secretary will make written
    notification to the person whose property is being levied of the
    right to redemption of such property under section 6337 and of
    the right to release of such property under section 6343 and the
    regulations pursuant thereof.

Reasons for Change:

Revenue officers and other collection employees are not required by any Code provision, any regulation, or any Manual directive to notify the taxpayer of IRC Section 6343, or even IRC Section 6337.

During a seizure, revenue officers will usually tell a taxpayer that the seizure will be redeemed (or released to the taxpayer) when full payment of the tax and all additions are paid, per IRC Section 6337. The IRM requires the revenue officer to demand full payment prior to seizure and by virtue of any direction to the contrary, compels revenue officers not to release the seized property for anything less than full payment. The Seizure and Sale Reference Guide (IRM Exhibit 5300-49 and IRS Form 4426) does not require the revenue officer to inform the taxpayer of the right to redeem per IRC 6337 or the opportunity of release per IRC Section 6343. It is possible, then, for taxpayers to assume that a seizure is a final act without any recourse, and that seized property is "lost property."

Revenue officers frequently play a game with taxpayers whose property is under seizure by demanding full payment for release and deliberately not informing them of the other release provisions for less than full payment. For example, a taxpayer owing $2,000 in tax and additions who has an automobile with forced sale equity of $50O, may be told that $2,O00 will bring about a release of the car, which otherwise may be sold to an anonymous third party for only $500. Usually the taxpayer is only informed of the other release provisions when it is evident to the revenue officer that he may have to sell the property. If the revenue officer has experienced a lot of problems with the taxpayer or has some type of vendetta or grudge against him, the revenue officer may not even inform the taxpayer of the release regulations and may let the property go to sale at forced sale equity in the absence of full payment.

The regulations pursuant to IRC 6343 state that the IRS "may release the levy" but do not require the release of the levy. This is more significant than a question of terminology. It means the IRS recognizes the redemption under IRC 6337 as a "right" of a taxpayer, but the release conditions as a "privilege." To emphasize this point, the section of Taxpayer and Third Party Rights (53(10)0), which spells out the "rights" a taxpayer has relative to levies, follows. Notice that the right of release of seized property per conditions specified in the regulations pursuant to IRC 6343 is absent. Only the "right to redeem" is listed.

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TAXPAYER AND THIRD PARTY RIGHTS:

GENERAL

Service employees have the dual responsibility of protecting the interests of the Service while at the same time guarding the rights of taxpayers and third parties. Although the procedures in Chapter 5300 contain the information required to fulfill the responsibility, this section is designed to highlight the rights of taxpayers and third parties as they pertain to specific levy and sale actions.

RIGHT TO APPEAL

(1) Taxpayers who reach an impasse when dealing with a collection employee have the right to have their case reviewed by a supervisory official. The name and location of the immediate supervisor should always be provided in such circumstances.

(2) In addition to supervisory review within the collection function, the taxpayer should be advised of the availability of the district Problem Resolution Officer.

(3) When an impasse occurs, the taxpayer should be advised of the appeal availability even though a higher level review is not requested.

DETERMINATION OF PROPERTY EXEMPT FROM LEVY

(1) Certain property of taxpayers is partially exempted from levy by Section 6334(a) of the Internal Revenue Code. When collection employees levy on those items subject to exclusions, they are required to appraise and set aside that property which qualifies for exemption.

(2) If the taxpayer objects at the time of levy to the valuation of the property excluded by the Service' the assistance of three disinterested parties will be secured to determine the value of the property. Scc IRM 5314.1:(4) for further information.

ERRONEOUS, WRONGFUL, AND EXCESSIVE LEVY ACTIONS

(1) When it is determined that a notice of levy has been served in error, a copy of the release of levy and Pattern Letter P-548 (letter of apology) will be sent to the injured party. See IRM 5329:1(1)(a).

(2) In cases of wrongful levy, the property levied upon will be returned to its rightful owner or a refund made under the provisions of IRC 6343. See IRM 5347.4.

(3) In instances where improper levy action results in excessive collection, immediate steps will be taken for the initiation of the manual refund. See IRM 5374.5.

RIGHT TO REFUSE ENTRY

Taxpayers have the right to refuse Service personnel entry onto the private areas of their personal or business premises. See IRM 5342.

RIGHT TO REDEEM

(1) Taxpayers have the right to redeem levied property any time prior to sale by paying the full amount of tax and additions thereto, along with any expenses or costs in connection with the seizure and contemplated sale. See IRM 5345.2.

(2) Owners of any real estate sold, their heirs, executors, or administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf is permitted to redeem the property sold, or any particular tract of such property at any time within 120 days after the sale. See IRM 5372 for computation of the 120 day period and the redemption amount.

RIGHT TO FILE A CLAIM FOR REFUND OR CREDIT

(1) Taxpayers have the right to file a claim for refund or credit if they believe their tax bill is erroneous or excessive.

(2) The claim can be initiated by the submission of Form 1040X, Form 1120X, Form 843, or such other form as is appropriate for the type of refund claimed.

(3) If a claim for refund or credit is rejected or no determination is made within six months, the taxpayer has the right to file a suit for refund in a U.S. District Court or in the U.S. Court of Claims.

(4) Additional details of filing claims for refund or credit are contained in IRM 5374.4 and 5374.5.

RIGHT TO FILE A CLAIM FOR SURPLUS PROCEEDS

(1) The taxpayer is entitled to surplus proceeds from the sale of seized property unless another person establishes a superior claim.

(2) All claimants. including the taxpayer must submit an affidavit to be considered in the distribution of the surplus proceeds.

(3) See IRM 5374.3 for instructions on the disposition of surplus proceeds.

STAY OF SALE

Property seized in connection with jeopardy or termination assessments may not be sold until expiration of the petition filing period with the U.S. Tax Court or until a final determination has been rendered by the Tax Court. See IRM 5213.25 and 5351 for exceptions and additional details.

RIGHT TO REQUEST REAPPRAISAL OF MINIMUM BID PRICE

A taxpayer is provided the minimum bid price prior to sale. If not in agreement, a Service evaluation engineer or a professional appraiser may be requested to assist the revenue officer in reevaluating the price. See IRM 5361.1 for minimum bid price procedures.