[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6342-1]

[Page 305-306]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
               Seizure of Property for Collection of Taxes
 
Sec. 301.6342-1  Application of proceeds of levy.

    (a) Collection of liability. Any money realized by proceedings under 
subchapter D, chapter 64, of the Code or by sale of property redeemed by 
the United States (if the interest of the United States in the property 
was a lien arising under the provisions of the Internal Revenue Code), 
is applied in the manner specified in subparagraphs (1), (2), and (3) of 
this paragraph (a). Money realized by proceedings under subchapter D, 
chapter 64, of the Code includes money realized by seizure, by sale of 
seized property, or by surrender under section 6332 (except money 
realized by the imposition of a 50 percent penalty pursuant to section 
6332(c)(2)).
    (1) Expense of levy and sale. First, against the expenses of the 
proceedings or sale, including expenses allowable under section 6341 and 
amounts paid by the United States to redeem property.
    (2) Specific tax liability on seized property. If the property 
seized and sold is subject to a tax imposed by any internal revenue law 
which has not been paid, the amount remaining after applying 
subparagraph (1) of this paragraph (a), shall then be applied against 
such tax liability (and, if such tax was not previously assessed, it 
shall then be assessed);
    (3) Liability of delinquent taxpayer. The amount, if any, remaining 
after applying subparagraphs (1) and (2) of this paragraph (a), shall 
then be applied against the liability in respect of which the levy was 
made or the sale of redeemed property was conducted.
    (b) Surplus proceeds. Any surplus proceeds remaining after the 
application of paragraph (a) of this section shall, upon application and 
satisfactory proof in support thereof, be credited or refunded by the 
district director to the person or persons legally entitled thereto. The 
delinquent taxpayer is the person entitled to the surplus proceeds

[[Page 306]]

unless another person establishes a superior claim thereto.

[32 FR 15241, Nov. 3, 1967, as amended by T.D. 7180, 37 FR 7320, Apr. 
13, 1972]