§6342 — Title 26 Internal Revenue Code | U.S. Code

Summary

Money taken from tax enforcement actions — like seizures, surrenders (some exceptions apply), sales of seized items, or sales of property the government redeemed because of a tax lien — must be used in a set order. First pay the costs of the action. Next pay any unpaid tax that applies to the property, and if that tax hasn’t been officially charged yet, it will be charged then. After that, apply any remaining funds to the tax debt that led to the seizure or sale. If money is left over after those steps, the government must return it to whoever is legally entitled to it once they apply and provide proof.

Title 26, §6342

Internal Revenue Code — Source: USLM XML via OLRC

(a)Any money realized by proceedings under this subchapter (whether by seizure, by surrender under section 6332 (except pursuant to subsection (d)(2) thereof), or by sale of seized property) or by sale of property redeemed by the United States (if the interest of the United States in such property was a lien arising under the provisions of this title) shall be applied as follows:

(1)First, against the expenses of the proceedings;

(2)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 paragraph (1) shall then be applied against such tax liability (and, if such tax was not previously assessed, it shall then be assessed);

(3)The amount, if any, remaining after applying paragraphs (1) and (2) shall then be applied against the liability in respect of which the levy was made or the sale was conducted.

(b)Any surplus proceeds remaining after the application of subsection (a) shall, upon application and satisfactory proof in support thereof, be credited or refunded by the Secretary to the person or persons legally entitled thereto.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Subsec. (a). Pub. L. 115–141 substituted “subsection (d)(2)” for “subsection (c)(2)” in introductory provisions. 1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing. 1966—Subsec. (a). Pub. L. 89–719 inserted in introductory provisions, references to an exception in the case of surrender under section 6332(c)(2) and to sale of property redeemed by the United States if the interest of the United States in such property was a lien arising under the provisions of this title, struck out “under this subchapter” after “proceedings” in par. (1), and inserted “or the sale was conducted” after “levy was made” in par. (3).

Statutory Notes and Related Subsidiaries

Effective Date

of 1966 AmendmentAmendment by Pub. L. 89–719 applicable after Nov. 2, 1966, regardless of when title or lien of United States arose or when lien or interest of another person was acquired, with certain exceptions, see section 114(a)–(c) of Pub. L. 89–719, set out as a note under section 6323 of this title.

§6342 Application of Proceeds of Levy