CCA 1151023: Chief Counsel addresses pre-levy storage expenses

Plain-English summary

Chief Counsel advised that expenses of levy and sale under IRC § 6341 can arise only after the levy is served. The advice therefore concluded that a revenue officer lacked authority to agree with a landlord to rent space for the period before the levy notice was provided and the taxpayer's property was seized. The conclusion is based on the regulation and Internal Revenue Manual provisions concerning protection and preservation expenses after levy.

Ruling snapshot

• Question: May a revenue officer authorize rent for storage of seized property for a period before service of the levy?
• Outcome: Advice given.
• Key authorities: IRC § 6341; Treas. Reg. § 301.6341-1; IRM 5.17.3.6.5.1

Full text (IRS public release)

ID: CCA_2011112816420644 Number: 201151023
Release Date: 12/23/2011
Office: --------------
UILC: 6341.00-00

From: ----------------------
Sent: Monday, November 28, 2011 4:42:11 PM
To: --------------------
Cc: ---------------------
Subject: Request for Advice ------------------------

You asked our office to provide advice regarding whether a revenue officer has authority to contract with
a landlord to rent a building in which the taxpayer's personal property to be seized is located for a period
preceding the actual seizure.

IRC 6341 authorizes the Secretary to determine allowable expenses of levy and sale. Treasury
Regulation 301.6341-1 states that such expenses "include the expenses of protection and preservation of
the property during the period subsequent to the levy, as well as the actual expenses incurred in
connection with the sale thereof." IRM 5.17.3.6.5.1 states that the "expenses of levy and sale include
expenses or liabilities incurred to protect and preserve property during the period following service of a
levy (insurance, police and private guards, custodial or maintenance help, rent or storage, utilities,
trucking, etc.) as well as actual expenses incurred in connection with the sale." These authorities
establish that expenses of levy can only be generated following service of levy.

The ICS History Transcript you provided indicates that the notice of levy was not provided until
September 7, 2011. Thus, despite the revenue officer's oral agreement with the landlord to rent the --------
-------------- space for the period prior to providing the notice of levy and seizing the property, he lacks
authority to make such an agreement because that pre-levy rent is not an expense of sale contemplated
by 6341 and the accompanying regulations.

Please let me know if you have any questions or would like to further discuss this matter. Thanks.

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