CCA 1024063: A chose in action may be levied, but it should not be listed on a Notice of Seizure

Plain-English summary

The Office of Chief Counsel advised that a chose in action, which is a right to property or a right to payment, is intangible property. The IRS may levy on it under IRC § 6331(a), but it is not the type of tangible property that should be listed on a Notice of Seizure. The memo distinguishes a levy from a seizure and explains that seizures are limited to physical property that can be reduced to possession and control. It also cites IRS Manual provisions on levies and the distinction between tangible and intangible property.

Ruling snapshot

• Question: Should a chose in action be listed as property on a Notice of Seizure?
• Outcome: Advice given
• Key authorities: IRC § 6331(a); IRM §§ 5.17.3.5.3.2 and 5.17.3.9.5; Freeman v. Mayer, 152 F. Supp. 383 (D.N.J. 1957)

Full text (IRS public release)

ID: CCA_2010051416170054 Number: 201024063
Release Date: 6/18/2010
Office: -------------
UILC: 6331.18-00

From: ---------------------------
Sent: Friday, May 14, 2010 4:17:01 PM
To: ---------------------
Cc: ----------------------------------------
Subject: RE: Request for Informal Advice (Chose of Action and Notice of Seizure)

This is our response to your request for informal advice regarding a Notice of Seizure and
a "chose in action."

While a "chose in action" is property or a right to property upon which the Service can
levy pursuant to section 6331(a), it is not the type of property that should be listed on a
Notice of Seizure. Although a seizure is a form of a levy, not all levies are seizures.
Seizures are limited to tangible property, i.e. physical items that you can touch and that
must be reduced to possession and control (actual or constructive) as described in
Freeman v. Mayer, 152 F. Supp. 383 (D.N.J. 1957). Intangible property, on the other
hand, cannot be generally viewed, touched, or physically seized. IRM 5.17.3.5.3.2
generally describes the differences between tangible and intangible property, and the
difference between levy of intangible property and seizure of tangible property. A chose
of action is the epitome of intangible property, i.e. property that lacks a physical
representation, because it is only the right to bring suit for payment of a debt. A chose of
action may be levied upon as described in IRM 5.17.3.9.5, but as intangible property that
lacks physical form, is not the type of property that can be seized. Accordingly, a Notice
of Seizure would not be used to describe a chose in action, and it should not be listed on
such a form.