26 U.S.C. § 6342

Application of proceeds of levy

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(a) Collection of liabilityAny 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) Expense of levy and sale

First, against the expenses of the proceedings;

(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 paragraph (1) 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 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) Surplus proceeds

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.

(Aug. 16, 1954, ch. 736, 68A Stat. 789; Pub. L. 89–719, title I, § 104(h), Nov. 2, 1966, 80 Stat. 1137; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 115–141, div. U, title IV, § 401(a)(284), Mar. 23, 2018, 132 Stat. 1198.)Editorial NotesAmendments

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 SubsidiariesEffective Date of 1966 Amendment

Amendment 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.

Notes of Decisions

Cited in 42 cases (3 in the last 5 years), 1961–2023 · leading case: United States v. Rodgers, 461 U.S. 677 (1983).

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United States v. Rodgers, 461 U.S. 677 (1983). · cites it 2× “26 U. S. C. § 6342 . We are not entirely unmoved by the force of the basic intuition underlying the Court of Appeals' view of § 7403 that the Government, though it has the "right to pursue the property *697 of the [delinquent] taxpayer with all the force and fury at its…”

United States v. Whiting Pools, Inc., 462 U.S. 198 (1983). “26 U. S. C. § 6342 (b). Ownership of the property is transferred only when the property is sold to a bona fide purchaser at a tax sale.”

Brown v. Evanston Bank (In Re Brown), 126 B.R. 767 (N.D. Ill. 1991). · cites it 3× “§ 6337 , 6 or “sold” as contemplated in 26 U.S.C. § 6342 . 7 Because the property interests which survive a levy upon saleable property do not exist when the levied-upon property is cash or a cash equivalent, the notice and sale provisions of 26 U.”

Sarah M. Harris v. United States, 764 F.2d 1126 (5th Cir. 1985). · cites it 2× “See 26 U.S.C. § 6342 (1982). The IRS was also entitled to the remainder interest in the property at the termination of Sarah’s life estate.”

Gouveia v. Internal Revenue Serv. of the United States (In Re Quality Health Care), 215 B.R. 543 (Bankr. N.D. Ind. 1997). · cites it 2× “26 U.S.C. § 6342 (b). Ownership of the property is transferred only when the property is sold to a bona fide purchaser at a tax sale.”

In Re Avery Health Ctr., Inc., 8 B.R. 1016 (W.D.N.Y. 1981). · cites it 2× “The adjunct bankruptcy courts will exercise in personam jurisdiction as well as in rem jurisdiction in order that they may handle everyting that arises in a bankruptcy case.”

United States v. Homer Pittman, Helen Jakob, & L. C. Christensen, 449 F.2d 623 (7th Cir. 1971). · cites it 2× “See 26 U.S.C. § 6342 . He contends that the sale of Parcel No.”

United States v. S. M. Sage, Tr. in Bankr. for Guy O. Foss, Nat'l Bank of Com. of Seattle & John Maddex, 566 F.2d 1114 (9th Cir. 1977). · cites it 2× “The district court found for the purchaser Maddex. We reverse.”

Zapara v. Comm'r, 652 F.3d 1042 (9th Cir. 2011). “See 26 U.S.C. § 6342 . As such, the award does not constitute “damages” as used in § 7433.”

Chevron, U.S.A., Inc. v. United States, 705 F.2d 1487 (9th Cir. 1983). “§ 6337 (b) to redeem the property within 120 days of the sale; and the right under 26 U.S.C. § 6342 to receive any surplus remaining after the cost of the sale and the sum due the IRS have been subtracted from the proceeds of the sale.”

Prof'l Technical Servs., Inc. v. Internal Revenue Serv. (In Re Prof'l Technical Servs., Inc.), 71 B.R. 946 (Bankr. E.D. Mo. 1987). “§ 6337 ); and (2) the Debtor’s right to any surplus received upon the sale of property ( 26 U.S.C. § 6342 ). Whiting Pools, Inc., 462 U.”

Alpa Corp. v. Internal Revenue Serv. (In Re Alpa Corp.), 11 B.R. 281 (Bankr. D. Utah 1981). “26 U.S.C. § 6342 requires that the taxpayer receive any surplus generated from the sale of the property over and above the taxes due.”

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