[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: 26CFR301.6343-1]

[Page 306-309]
 
                       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. 301.6343-1  Requirement to release levy and notice of release.

    (a) In general. A district director, service center director, or 
compliance center director (director) must promptly release a levy upon 
all, or part of, property or rights to property levied upon and must 
promptly notify the person upon whom the levy was made of such a 
release, if the director determines that any of the conditions in 
paragraph (b) of this section (conditions requiring release) exist. The 
director must make a determination whether any of the conditions 
requiring release exist if a taxpayer submits a request for release of 
levy in accordance with paragraph (c) or (d) of this section; however, 
the director may make this determination based upon information received 
from a source other than the taxpayer. The director may require any 
supporting documentation as is reasonably necessary to determine whether 
a condition requiring release exists.
    (b) Conditions requiring release. The director must release the levy 
upon all or a part of the property or rights to property levied upon if 
he or she determines that one of the following conditions exists--
    (1) Liability satisfied or unenforceable--(i) General rule. The 
liability for which the levy was made is satisfied or the period of 
limitations provided in section 6502 (and any period during which the 
period of limitations is suspended as provided by law) has lapsed. A 
levy is considered made on the date on which the notice of seizure 
provided in section 6335(a) is given. A levy that is made within the 
period of limitations provided in section 6502 does not become 
unenforceable simply because the person who receives the levy does not 
surrender the subject property within the period of limitations. In this 
case, the liability remains enforceable to the extent of the value of 
the levied upon property. However, a levy made outside the period of 
limitations (normally ten years without suspensions) must be released 
unless--
    (A) The taxpayer agreed in writing to extend the period of 
limitations as provided in section 6502(a)(2) and Sec. 301.6502-1; or
    (B) A proceeding in court to collect the liability has begun within 
the period of limitations.
    (ii) Special situations. A continuing levy on salary or wages made 
under section 6331(e) must be released at the end of the period of 
limitations in section 6502. However, a levy on a fixed and determinable 
right to payment which right includes payments to be made after the 
period of limitations expires does not become unenforceable upon the 
expiration of the period of limitations and will not be released under 
this condition unless the liability is satisfied.
    (2) Release will facilitate collection. The release of the levy will 
facilitate collection of the liability. A director has the discretion to 
release the levy in all situations, including those where the proceeds 
from the sale will not fully satisfy the tax liabilities of the 
taxpayer, under terms and conditions as he or she determines are 
warranted.
    (i) Example. The following example illustrates the provisions of 
this paragraph (b)(2):

    Example. A and B each own machines which, when used together, 
produce widgets. A owes delinquent federal taxes. A notice of federal 
tax lien is properly filed against all property or rights to property 
belonging to A. A's machine is seized to satisfy A's delinquent tax 
liability. The fair market value of A's property is greater than the 
expenses of seizure and sale, but less than the amount of A's tax 
liability. A and B find a buyer who wants to buy both machines together. 
The buyer will only buy the machines together. A's property has a 
greater value as part of the package than it does by itself. The larger 
value, as shown in the sale contract, is enough to pay A's tax liability 
in full. In this situation a release of the levy will facilitate 
collection because the sale of both machines can be completed and A's 
liability will be paid in full at the settlement.

    (ii) Compliance with other conditions. The director may find that 
collection will be facilitated by the taxpayer's compliance with 
conditions other than immediate payment, such as:
    (A) The delinquent taxpayer delivers a satisfactory arrangement, 
which is accepted by the director, for placing

[[Page 307]]

property in escrow to secure the payment of the liability (including the 
expenses of the levy) which is the basis of the levy.
    (B) The delinquent taxpayer delivers an acceptable bond to the 
director conditioned upon the payment of the liability (including the 
expenses of levy) which is the basis of the levy. This bond shall be in 
the form provided in section 7101 and Sec. 301.7101-1.
    (C) There is paid to the director an amount determined by the 
director to be equal to the interest of the United States in the seized 
property or the part of the seized property to be released.
    (D) The delinquent taxpayer executes an agreement to extend the 
statute of limitations in accordance with section 6502(a)(2) and Sec. 
301.6502-1.
    (iii) Expenses of sale exceed the government's interest. If the 
director determines that the value of the United States' interest in the 
seized property does not exceed the expenses of sale of the property, a 
release of the levy will be deemed to facilitate collection of the 
liability even though the fair market value of property which has been 
seized exceeds the expenses of seizure and sale.
    (3) Installment agreement. The taxpayer has entered into an 
agreement under section 6159 to satisfy the liability by means of 
installment payments, unless the agreement provides otherwise. However, 
the director is not required to release the levy under this condition if 
a release of the levy will jeopardize the secured creditor status of the 
United States, e.g., where there is an intervening judgment lien 
creditor and a notice of tax lien has not been filed.
    (4) Economic hardship--(i) General rule. The levy is creating an 
economic hardship due to the financial condition of an individual 
taxpayer. This condition applies if satisfaction of the levy in whole or 
in part will cause an individual taxpayer to be unable to pay his or her 
reasonable basic living expenses. The determination of a reasonable 
amount for basic living expenses will be made by the director and will 
vary according to the unique circumstances of the individual taxpayer. 
Unique circumstances, however, do not include the maintenance of an 
affluent or luxurious standard of living.
    (ii) Information from taxpayer. In determining a reasonable amount 
for basic living expenses the director will consider any information 
provided by the taxpayer including--
    (A) The taxpayer's age, employment status and history, ability to 
earn, number of dependents, and status as a dependent of someone else;
    (B) The amount reasonably necessary for food, clothing, housing 
(including utilities, home-owner insurance, home-owner dues, and the 
like), medical expenses (including health insurance), transportation, 
current tax payments (including federal, state, and local), alimony, 
child support, or other court-ordered payments, and expenses necessary 
to the taxpayer's production of income (such as dues for a trade union 
or professional organization, or child care payments which allow the 
taxpayer to be gainfully employed);
    (C) The cost of living in the geographic area in which the taxpayer 
resides;
    (D) The amount of property exempt from levy which is available to 
pay the taxpayer's expenses;
    (E) Any extraordinary circumstances such as special education 
expenses, a medical catastrophe, or natural disaster; and
    (F) Any other factor that the taxpayer claims bears on economic 
hardship and brings to the attention of the director.
    (iii) Good faith requirement. In addition, in order to obtain a 
release of a levy under this subparagraph, the taxpayer must act in good 
faith. Examples of failure to act in good faith include, but are not 
limited to, falsifying financial information, inflating actual expenses 
or costs, or failing to make full disclosure of assets.
    (5) Fair market value exceeds liability. The fair market value of 
the property exceeds the liability for which the levy was made and 
release of the levy on a part of the property can be made without 
hindering the collection of the liability. The following example 
illustrates the provisions of this paragraph (b)(5):


[[Page 308]]


    Example. The Internal Revenue Service levies upon ten widgets which 
belong to the taxpayer to satisfy the taxpayer's outstanding tax 
liabilities. Subsequent to the levy, the taxpayer establishes that 
market conditions have increased the aggregate fair market value of 
widgets so that the value of seven widgets equals the aggregate 
anticipated expenses of sale and seizure and the tax liabilities for 
which the levy was made. The director must release three widgets from 
the levy and return them to the taxpayer.

    (c) Request for release of levy--(1) Information to be submitted by 
taxpayer. A taxpayer who wishes to obtain a release of a levy must 
submit a request for release in writing or by telephone to the district 
director for the Internal Revenue district in which the levy was made. 
The taxpayer making the request must provide the following information--
    (i) The name, address, and taxpayer identification number of the 
taxpayer;
    (ii) A description of the property levied upon;
    (iii) The type of tax and the period for which the tax is due;
    (iv) The date of the levy and the originating Internal Revenue 
district, if known; and
    (v) A statement of the grounds upon which the request for release of 
the levy is based.
    (2) Time for submission. Except in extraordinary circumstances, a 
request for release of a levy must be made more than five days prior to 
a scheduled sale of the property to which the levy relates.
    (3) Determination by director--(i) When required. The director must 
promptly make a determination concerning release prior to sale in all 
cases where a request for release of a levy is made except those where 
the request for release is made five or fewer days prior to a scheduled 
sale of the property to which the levy relates.
    (ii) Time for making required determination. The determination will 
be made, generally, within 30 days of a request for release made 30 or 
more days prior to a scheduled sale of the property to which the levy 
relates. If a request for release is made less than 30 days prior to the 
scheduled sale but more than 5 days before the scheduled sale, a 
determination must be made prior to the scheduled sale. If necessary the 
director may postpone the scheduled sale in order to make this 
determination.
    (iii) Discretionary determination. The director has the discretion, 
but is not required, to make a determination concerning release prior to 
sale in cases where a request for release of a levy is made five or 
fewer days prior to a scheduled sale of the property to which the levy 
relates.
    (4) Notification to taxpayer of determination. The director must 
promptly notify the taxpayer if the levy is released. If the director 
determines that none of the conditions requiring release of the levy 
exist, the director must promptly notify the taxpayer of the decision 
not to release the levy and the reason why the levy is not being 
released.
    (d) Expedited determination with respect to certain business 
property--(1) General procedure--(i) Submission by taxpayer. If a levy 
is made on essential business property as is described in paragraph 
(d)(2) of this section, the taxpayer may obtain an expedited 
determination of whether any of the conditions requiring release of the 
levy exist. In order to obtain an expedited determination, the taxpayer 
must submit, within the time frame specified in paragraph (c)(2) of this 
section, the information required in paragraph (c)(1) of this section 
and include with the information an explanation of why the property 
levied upon qualifies for an expedited determination of whether a 
condition requiring release of the levy exists.
    (ii) Time for making required determination. The director must make 
such a determination by the later of 10 business days from the time the 
director receives the request for release, or 10 business days from the 
time the director receives any necessary supporting documentation, if 10 
or more business days remain before a scheduled sale of the property to 
which the levy relates. An expedited determination concerning release 
must be made prior to sale in all cases where a request for release of a 
levy is made within the time frame specified in paragraph (c)(2) of this 
section. If necessary the director may postpone the scheduled sale in 
order to make this determination.

[[Page 309]]

    (iii) Discretionary determination. The director has the discretion, 
but is not required, to make an expedited determination concerning 
release in cases where the taxpayer does not submit, within the time 
frame specified in paragraph (c)(2) of this section, the information 
required in paragraph (c)(1) of this section and include with the 
information an explanation of why the property levied upon qualifies for 
an expedited determination of whether a condition requiring release of 
the levy exists.
    (2) Essential business property defined. For purposes of this 
section, essential business property means tangible personal property 
used in carrying on the trade or business of the taxpayer which when 
levied upon prevents the taxpayer from continuing to carry on the trade 
or business.
    (3) Seizure of perishable goods. The provisions of this paragraph do 
not apply in the case of a seizure of perishable goods. Those seizures 
are governed by the provisions of section 6336 and Sec. 301.6336-1.
    (e) Effect of a release of levy. If property has not yet been 
surrendered to the director in response to a levy, a release of the levy 
under section 6343(a) will relieve the possessor of any obligation to 
surrender the property. Otherwise, a release of a levy under section 
6343(a) will cause the property to be returned to the custody of the 
person or persons legally entitled thereto. The release of a levy on any 
property under this section does not prevent any subsequent levy on the 
property. Section 301.6343-2, dealing with return of wrongfully levied 
upon property, is subject to section 6402 which prohibits the Internal 
Revenue Service from refunding a payment of money that has been 
deposited in the Treasury and credited to the taxpayer's liability 
unless there is an overpayment.
    (f) Effective date. This section is effective as of December 30, 
1994.

[T.D. 8587, 59 FR 35, Jan. 3, 1995]