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Part 34. Litigation in District Court, Bankruptcy Court, Court of Federal Claims, and State Court

Chapter 12. Litigation Exhibits

Section 1. Litigation Exhibits

34.12.1  Litigation Exhibits

34.12.1.1  (08-11-2004)
Supplementary Material

  1. This section provides sample documents and other material used in Counsel’s litigation practice as described in CCDM 34.1 through CCDM 34.11. These exhibits have been consolidated into a single chapter for ease of use.

Exhibit 34.12.1-1  (08-11-2004)
Notice of Acceptance or Rejection of Plan of Reorganization

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Exhibit 34.12.1-2  (08-11-2004)
Supplemental Provisions

PURPOSE. This exhibit suggests provisions for which Field attorneys may wish to negotiate with respect to supplemental provisions that can be used in proposed plans of reorganization under chapter 11 of the Bankruptcy Code.

PROVISIONS. The following provisions may be used:

  1. The amount of the Internal Revenue Service’s claim for unpaid taxes, as set forth in its proof of claim and as approved by the bankruptcy court, together with interest at a rate of ___ per cent per annum or such higher rate as may be hereafter established under the Internal Revenue Code, plus statutory interest on the unpaid tax liability which will have accrued between the date of the petition and the date of confirmation, plus prepetition and post-petition penalties, will be paid in monthly installments of $ ___per month. Interest will be computed from the date of confirmation to the date of each monthly payment; the first such installment shall be due on the ___day of the first month following confirmation of the plan of arrangement and on the ___day of each month thereafter until such time as the amount of said claim plus interest has been fully paid. No other unsecured claims, except administration claims in this proceeding, will be paid until the claim of the Internal Revenue Service, together with interest, has been paid in full.

  2. Any unpaid federal tax liabilities of the debtor arising between the filing of the petition in this case, and confirmation of the plan of reorganization will be paid in full upon confirmation.

  3. To the extent that any federal tax lien attached to any property owned by the debtor as of the date of the filing of the petition in this case, such property shall remain subject to such federal tax lien until such time as the amount of such lien has been fully satisfied.

  4. All installment payments made pursuant to this agreement shall be made to the Internal Revenue Service, for the attention of the Chief, Insolvency Group. The Insolvency Group may apply each installment payment to the claim for unpaid taxes, penalties, or interest as they, in their sole discretion, may determine. During the pendency of this agreement, the debtor agrees to timely file all required federal tax returns.

  5. The debtor, after confirmation, shall segregate and hold separate and apart from all other funds all moneys withheld from employees or collected from others for taxes under any internal revenue laws of the United States and shall deposit the moneys so withheld and collected in a separate bank account in trust for the United States not later than within the calendar week next after such collecting or withholding. At the time of making such deposit in such separate bank account, the debtor will notify the Chief, Insolvency Group, or his/her delegate, of the date and place of deposit and the amount of money deposited with respect to each such item of federal tax. The debtor will pay from said bank account to the Insolvency Manager or his/her delegate the proper amounts at the time and in the manner prescribed by applicable internal revenue laws.

  6. Default.

    1. If the debtor fails to make any installment payment required under this agreement within 21 days after the due date of such installments; or if the debtor fails to make any deposit of any currently accruing employment tax liability to the separate bank account as provided above or fails to make any payment of any tax to the Internal Revenue Service within 10 days of the due date of such deposit or payment; or if the debtor fails to file any required federal tax return by the due date of such return, or if the debtor violates any other provisions of this agreement, the Insolvency Manager or his/her delegate, may, in his/her sole discretion, declare the debtor is in default of this agreement. Failure to declare that the debtor is in default does not constitute a waiver by the Insolvency Manager or his/her delegate of the right to declare that the debtor is in default.

    2. If the Insolvency Manager declares the debtor to be in default of its obligations under this agreement, the entire unpaid liability under the installment agreement, together with any unpaid current liabilities, shall upon demand in writing become immediately due and payable upon any officer or director of the debtor.

    3. If full payment is not made within 21 days of such demand, the Internal Revenue Service may collect any unpaid liabilities through the administrative collection provisions of the Internal Revenue Code or by any other procedure authorized by law.

    4. So long as any part of the Internal Revenue Service’s claim which is subject to this agreement remains unpaid or so long as any tax liabilities accruing during the pendency of this proceeding or while this agreement is in effect, remain unpaid:

      1. No lien, mortgage, or other security interest shall be created to provide a priority as to payment equal to or superior to that of the United States under the plan;

      2. No increase in management fees or compensation (except with the express consent of the Insolvency Group) shall be made in favor of any administrative or executive officer or official of the debtor (including any director of the debtor) or any other business organized or made use of in effectuating this plan; and

      3. No dividends shall be paid or allowed to stockholders of the debtor or of any concern organized or made use of in effectuating this plan.

    5. All statutes of limitation on the collection of any federal taxes due from the debtor or involved in this plan are suspended during the pendency of this plan and for such further time as any part of the aforementioned taxes remain unpaid, and for one year thereafter.

    6. Any refunds or other credits to which the debtor may become entitled for any reason before completion of the payment of the federal taxes under this plan may be credited to apply to the last payment or payments required to be made under this plan.

    7. In the event that additional outstanding federal taxes not covered by proofs of claim are determined to be due from the debtor, such additional items shall be paid by continuing the installment payments so long as necessary but in no event shall the period of any installment payments exceed six years; in the event that the allowance of claims for such additional liabilities shall cause the period for installment payments, including interest, to extend beyond six years, the amount of each monthly installment payment shall be increased in a sufficient amount so that the period for full payment shall not exceed six years.

    8. If by the carryover of any net operating loss or any credit including but not limited to investment tax credit, the debtor becomes entitled to a reduction in taxes it would otherwise be required to pay, an amount equivalent to the tax savings will be paid and applied to the unpaid portion of the claim of the Internal Revenue Service or to any tax liabilities accruing during the pendency of this proceeding.

Exhibit 34.12.1-3  (08-11-2004)
Large Case Bankruptcy Letter

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Exhibit 34.12.1-4  (08-11-2004)
Immediate Assessment Under Section 6871 Letter

      [Letterhead]      
             
Date:         Person to Contact:
Contact Telephone Number:
             
The deficiency in tax is being assessed against you under the provisions of section 6871 of the Internal Revenue Code. Accordingly, no petition for the redetermination of the deficiency may be filed with the United States Tax Court as prescribed by that section. If, after a conference, you are still not in agreement with the findings, the deficiency and such interest, additional amounts, and additions to the tax may be presented for adjudication in accordance with law to the court before which the bankruptcy or receivership proceeding is pending.
Attention is called to the rights and priorities of the United States under applicable provisions of the Bankruptcy Act or Bankruptcy Reform Act of 1978 and under 31 U.S.C. § 3713(a). Except with respect to a trustee acting in accordance with the provisions of the Bankruptcy Reform Act of 1978, 31 U.S.C. § 3713(b) imposes personal liability upon every executor, administrator, assignee, or other person who, in paying debts of the person or estate for whom or for which he or she acts, fails to observe the priority in payment prescribed by law in favor of the United States.
The Area Director is authorized to file proof of claim for any tax liability in proceedings under the Bankruptcy Reform Act and in receivership cases. The filing of proof of claim will not prejudice an application to this office for reconsideration of the above-mentioned tax. If the bankruptcy was filed under the Bankruptcy Act and you do not agree with the findings shown in the attached statement, you may file a written protest within 30 days from the date of this letter and send it to our address shown on this letter. The protest should be declared true under penalties of perjury which may be done by adding the following declaration:
  "Under penalties of perjury, I declare that I have examined this protest and any accompanying schedules and statements, and, to the best of my knowledge and, to the best of my knowledge and belief, it is true, correct, and complete."
We will transfer your protest and case to the Appeals office nearest you. They will contact you to arrange a conference.
If, after a conference, you are still not in agreement with the findings, the deficiency and such interest, additional amounts, and additions to the tax may be presented for adjudication in accordance with law to the court before which the bankruptcy or receivership proceeding is pending.
If the bankruptcy was filed under the Bankruptcy Reform Act of 1978 and you do not agree with the findings shown in the attached statement, you are not entitled to an Appeals conference. Instead, you should ask the bankruptcy court to determine the amount of any unpaid liability.
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
             
        [Signature block]
             
Enclosure:          
  Statement        

Exhibit 34.12.1-5  (08-11-2004)
Basic Checklist for Analyzing Revenue Officer Report-Federal Tax

1. Name and type of taxpayer (corporation, individual, joint).
2. Type of tax (e.g., income, employment tax, excise tax).
3. Assessment:
  a. Date of assessment, by type and period of tax.
  b. Was assessment timely made?
  c. Balance due as of recent date.
4. Notice of federal tax lien:
  a. Date(s) of filing.
  b. Place(s) of filing.
(The use of a table is recommended for all cases which include the above items)
5. Seizure:
  a. Date of notice before levy - section 6331(d)
  b. Any letters, publications sent to the taxpayer required under sections 6320 and 6330 (Collection Due Process) and notices sent and any hearing conducted in connection with the above.
  c. Date of notice of seizure.
  d. Date of sale if any.
6. Suspension of statute of limitations:
  a. Dates and terms of consensual waivers.
  b. Copies of installment agreements and offers-in-compromise.
  c. Dates and term of pendency of court proceedings (special rule for bankruptcy cases).

Exhibit 34.12.1-6  (08-11-2004)
Basic Checklist, Things to Know Re: Security Interest Date

SECURITY INTEREST — PERSONALTY
1. Security agreement:
  a. Date of execution.
  b. Description of collateral.
  c. Amount and description of loan.
2. Financing statement:
  a. Information in 1 (above) for Financing Statement.
  b. Date executed and filed.
  c. Place(s) of filing.
3. Amount of loan(s) described in note and whether to be disbursed in installments.
4. Date(s) loaned money disbursed to debtor.
5. Balance due on note:
  a. Time of filing of notice of federal tax lien.
  b. 45 days after N.F.T.L. filing.
  c. At time of actual knowledge of creditor of taxes.
6. Date creditor received actual knowledge or notice of federal taxes.
7. Was collateral in existence at date of filing of notice of federal tax lien (or 45 days thereafter), or at date of levy?
8. Possession of collateral—who had it and when (constructive possession?).

Exhibit 34.12.1-7  (08-11-2004)
Basic Checklist, Things to Know Re Security Interest — Realty

SECURITY INTEREST — REALTY
1. Type of interest conveyed ( e.g., fee simple, lease, executory real estate contract).
2. Date of recording of instrument conveying property to taxpayer.
3. Date of execution and recording of mortgage, deed of trust, or other notice of lien.
4. Place(s) of recording of mortgage, deed of trust, or other notice of lien.
5. Who took possession and when (constructive possession?).
6. Property description:
  a. If by metes and bounds, does description make an enclosed area?
  b. County and state of location.
7. Minerals—realty versus personalty.
8. Mechanic lien rights accrued but not yet perfected by recording?

Exhibit 34.12.1-8  (08-11-2004)
Preparation of Suit Letters — Checklist

( Note : This checklist is to be used as a supplement to, not a substitute for, official directives.)
1. General and Specific Requirements for Suits
  (a) Tax Data. Is it set forth completely? Is the Form 4340 complete and current? Each item of tax and penalty specifically identified?
  (b) Periods of Limitation on Assessment and Collection. Was tax assessed over three years from the date return was due? Has the normal ten-year period for collection after assessment expired? Explain extensions of and exceptions to these periods. Are deadline dates set forth clearly for DJ? Are there special periods applicable to estate and gift taxes? Waivers? Is proof submitted?
  (c) Penalties. What evidence can DJ present to the court to show why and how each penalty was incurred? Are I.R.C. sections cited?
  (d) Administrative Remedies. Specifically, what efforts were made by the Area Director to effect collection? Were they exhausted?
  (e) Field Counsel Collection Efforts. Are they described in the letter to DJ?
  (f) Refiling of Notice of Lien. If applicable, set forth in the DJ letter.
  (g) Recommendation to DJ. Is the letter specific as to the action we want DJ to take?
  (h) Taxpayer TIN. Is the taxpayer’s TIN (prefixed by SSN: or EIN: as appropriate) in the caption following the taxpayer’s name?
  (i) Collection Due Process. If there have been any prior proceedings under sections 6320 or 6330, include an issue preclusion analysis.
2. Foreclosure of the Tax Lien
  (a) Administrative efforts?
  (b) Will assets be dissipated or concealed?
  (c) Property description. Is it adequate?
  (d) Competing lienors. Is there a discussion of the merits of their claims and are addresses included?
  (e) Reducing the Tax Claim to Judgment in the same action. DJ wants a recommendation, pro or con, in every foreclosure letter.
  (f) Receiver. Is one needed? The certificate for a receiver is not sent by the DJ letter. It is supplied by letter transmittal but is sent with a proposed letter to Assistant Chief Counsel (CBS).
  (g) Principal Residence. If the property at issue is a principal residence, has the approval of the Area Director been obtained?
3. Section 6334(e)(1) proceeding
  (a) Property Description. If the property at issue is the principal residence of the taxpayer’s spouse, former spouse, or minor child, include the name of that person or persons.
  (b) Status Investigation. Has an investigation been made pursuant to section 6331(j)?
  (c) Collection Due Process. If there have been any prior proceedings under sections 6320 or 6330, include an issue preclusion analysis.
  (d) Approval. The written approval of the Area Director should be included with the suit letter.
4. Reducing the Tax Claim to Judgment.
  (a) Does the letter describe collection efforts since assessment and how we can reasonably expect DJ to collect after the judgment is obtained?
  (b) What assets do we expect to be available later?
  (c) Is section 7401 cited?
5. Transferee Liability and Fraudulent Conveyance. There are three methods by which to proceed.
  (a) Is state law adequately discussed?
6. Enforcing the Levy. Has foreclosure of the tax lien been considered and discussed?
7. Intervention
  (a) Jurisdiction. Are the facts and applicable law set forth?
  (b) State Courts. Will the Government’s right be protected? Would an alternative action, such as removal, be more effective?
  (c) Timeliness
8. Construction Contracts
  (a) Amount Subject to Lien. Does it represent progress payments or retained fund?
  (b) Progress payment. Did we serve a levy?
  (c) Competing lienors. Are they and the priority of their claims described?
  (d) Laborers and materialmen. Does the tax lien arise from labor paid under the contract? Does it encumber payments due to unpaid laborers and materialmen under the same contract?
  (e) Priority. Did any of the federal tax liens arise prior to the contract?
  (f) State Law. Does it provide a statutory trust fund designating the Government as a beneficiary?
  (g) Government Contracts. Can we effect a setoff?
  (h) Miller Act. Performance Surety Bond, 40 U.S.C. § 270a. Can we collect under this statute?
  (i) Third party liability. Did third parties pay wages or supply funds so as to be liable for withheld taxes under section 3505?
9. Trust Fund Recovery Penalty Cases (section 6672). Does the file show financial status of primary obligor and the possibility of collecting from other officers, partners or employees? Are " responsibility" and "willfulness" set forth in the file?
10. Miscellaneous
  (a) Signature of Chief Counsel. Letter should be signed by Field Counsel.
  (b) Sensitive Cases. Could this case cause notoriety?
  (c) Coordination. Should we contact other divisions of the Office of Chief Counsel or National Office of the Service?
  (d) Fraud. Can the Government carry the burden of proof?
  (e) Constitutional questions, tainted evidence and illegal evidence. Discussion adequate?
  (f) SOP Procedures. Have SOP procedures been complied with?

Exhibit 34.12.1-9  (08-11-2004)
Memorandum from Chief Counsel to General Counsel, Treasury Department, Re: Appointing Agent (where tax lien is not senior lien)

  Office of Chief Counsel
Internal Revenue Service
m e m o r a n d u m
date:  
to: THE GENERAL COUNSEL
TREASURY DEPARTMENT
from: Chief Counsel
Internal Revenue Service
subject: Request for Appointment of Agent in United States v. [Name]
Civil No. [case no. and citation]
  ACTION FORCING EVENT: The Department of Justice, Tax Division, has requested appointment of an agent to purchase [#] properties at a judicial foreclosure sale in the event no purchasers offer the required minimum bid. [#] of the properties are encumbered only by federal tax liens. The purchase of these properties [and/or] appointment of the agent may be authorized by the Deputy Commissioner, Internal Revenue Service. [However, on the third property, the federal tax liens are junior to a mortgage. In such cases the General Counsel (through delegation from the Secretary) has the authority to authorize the purchase of the property and appointment of the agent. Thus, we are simultaneously requesting that the General Counsel authorize our agent to purchase this third property]
  RECOMMENDATION: I recommend that you sign the attached appointment document authorizing agent [name] to purchase the subject property.
  BACKGROUND AND ANALYSIS: This action was commenced by the United States to reduce to judgment assessments of outstanding income tax, penalties, and interest against [name(s)] (taxpayers) and to foreclose federal tax liens against [#] properties equitably owned by the taxpayers, [but held by [name] as nominee]. The properties are: [property addresses]. [Describe properties, e.g., the properties are rental apartment residences; are vacant, the tenants having been evicted by the United States Marshals Service; are subject to a mortgage, which has priority over the filed federal tax liens].
  On [date], the District Court found the taxpayers liable for numerous assessments and that the Government was entitled to foreclose upon the [#] subject properties, because the taxpayers’ transfer of the [#] properties to [name] was a fraudulent conveyance under [State] law. On appeal, the [#] Circuit upheld the foreclosure, but reversed the District Court’s finding that the taxpayers were liable for civil penalties under I.R.C. § 6702 for certain tax years. The District Court amended final judgment, dated [date], indicates that [name] is liable for penalties and taxes totaling $ [amount] and [name 2] is liable for taxes totaling $ [amount] (copy attached). The amended judgment decrees that the tax liens of the United States are foreclosed and the property sold with the proceeds of the sale to be paid over to the United States, after the loan amount secured by a mortgage on the [property] is paid in full. As of [date], the loan balance owed is $ [amount].
  A judicial sale of the [properties] was conducted by the Marshals Service on [date]. At that sale, [describe particular incidents of the sale, and also why the United States should purchase the property (e.g., disruptive taxpayers, refusal of court to grant other relief, lack of other collection alternatives)].
  The statutes and delegations provide that under 31 U.S.C. § 3715, the Secretary is authorized to purchase real property upon which the United States has a lien at a judicial foreclosure sale. Section 7403(c) of the Internal Revenue Code grants similar authority, limited to purchase of property upon which the United States has a first lien. You have been delegated authority under 31 U.S.C. § 3715. Treasury Order 101-05 (January 7, 1999), paragraph 9 (delegating authority to General Counsel to perform any function the Secretary of the Treasury is authorized to perform). Similarly, the Commissioner has been delegated authority under I.R.C. § 7403(c). Treasury Order 150-10 (delegating to Commissioner the Secretary’s authority to enforce and administer the internal revenue laws). The Commissioner has further delegated that authority to the Deputy Commissioner. Delegation Order 193 (Rev. 6). Appointment of an agent is necessary because currently there is no delegation of authority from the General Counsel or the Deputy Commissioner to any Service officer or employee to purchase property at a judicial foreclosure sale pursuant to I.R.C. § 7403(c) or 31 U.S.C. § 3715.
  Because the Secretary’s delegation to the Commissioner is limited to the authority found in I.R.C. § 7403(c), to purchase property on which the United States has a first lien, appointment of an agent by you under 31 U.S.C. § 3715 is necessary to purchase the [property], on which the United States is the junior lienor. A request for appointment of an agent to purchase the [#] other properties on which the United States has a first lien is being submitted to the Deputy Commissioner.
  Agent [name], Internal Revenue Service Property Appraisal and Liquidation Specialist (PALS), who is familiar with the properties and with the proceedings, has agreed to act as agent on behalf of the United States. [PALS name] estimates the fair market value and the minimum bid for the [property] to be $ [amount] and $[amount], respectively. We recommend that, pursuant to the provisions of 31 U.S.C. § 3715, you appoint [PALS name], IRS PALS to act as agent of the United States with authority to bid on the interests of the taxpayers in the [property], but not to bid higher than the minimum bid amount. If the United States purchases the property, the Marshals Service will be required by the judgment to pay approximately $[amount] to [mortgagor]. The remainder of the purchase price will be credited to reduce the judgment amount and the taxpayers’ liabilities. [PALS name] will then sell the property in a private sale, at which he expects to receive at least $[amount], the forced sale value. This should result in net revenue of at least $[amount].
  If you agree with my recommendation, please sign the attached appointment of agent. We will inform [PALS name] of his appointment and advise the Department of Justice.
  Attachments (2)
  cc: Assistant Chief Counsel (CBS)

Exhibit 34.12.1-10  (08-11-2004)
Document Executed by General Counsel Appointing the Agent (where tax lien is not senior lien)

[Memorandum]
date:  
to: [Appointed Agent]
from: General Counsel
U.S. Department of Treasury
subject: United States v. [name]
Civil No. [case no. and court]
Pursuant to my authority to act for the Secretary of the Treasury, as granted under Treasury Order 101-05, and pursuant to 31 U.S.C. §  3715, I appoint you, [PALS name], Property Appraisal and Liquidation Specialist, to act as agent for the Secretary of the Treasury at the forthcoming sale of the interest of [taxpayers] in the [improved] real property located at [address], upon the judgment rendered in favor of the United States against [name], in the case of [name of case], Civil No. [case no.] in the United States District Court for the [location].
As agent of the Secretary of the Treasury, you shall exercise the authority vested in you in accordance with 31 U.S.C. § 3715 but not to bid higher than the minimum bid (approximately $[amount]) for the [improved] real property located at [address].

Exhibit 34.12.1-11  (08-11-2004)
Memorandum from Chief Counsel to Commissioner of the Internal Revenue – Re: Appointing Agent (where tax lien is senior lien)

  Office of Chief Counsel
Internal Revenue Service
m e m o r a n d u m
date:  
to: COMMISSIONER OF THE INTERNAL REVENUE
from: Chief Counsel
Internal Revenue Service
subject: Request for Appointment of Agent in United States v. [Name]
Civil No. [case no. and citation]
  ACTION FORCING EVENT: The Department of Justice, Tax Division, has requested appointment of an agent to purchase [#] properties at a judicial foreclosure sale in the event no purchasers offer the required minimum bid. [#] of the properties are encumbered only by federal tax liens. You may authorize the purchase of these properties or the appointment of the agent where the United States has a first lien. [However, on the third property, the federal tax liens are junior to a mortgage. In such cases the General Counsel (through delegation from the Secretary) has the authority to authorize the purchase of the property and appointment of the agent. Thus, we are simultaneously requesting that the General Counsel authorize our agent to purchase this third property]
  RECOMMENDATION: I recommend that you appoint an agent to purchase the subject property.
  BACKGROUND AND ANALYSIS: This action was commenced by the United States to reduce to judgment assessments of outstanding income tax, penalties, and interest against [name(s)] (taxpayers) and to foreclose federal tax liens against [#] properties equitably owned by the taxpayers, [but held by [name] as nominee]. The properties are: [property addresses]. [Describe properties, e.g., the properties are rental apartment residences; are vacant, the tenants having been evicted by the United States Marshals Service; is subject to a mortgage, which has priority over the filed federal tax liens].
  On [date], the District Court found the taxpayers liable for numerous assessments and that the Government was entitled to foreclose upon the [#] subject properties, because the taxpayers’ transfer of the [#] properties to [name] was a fraudulent conveyance under [State] law. On appeal, the [#] Circuit upheld the foreclosure, but reversed the District Court’s finding that the taxpayers were liable for civil penalties under I.R.C. § 6702 for certain tax years. The District Court amended final judgment, dated [date], indicates that [name] is liable for penalties and taxes totaling $ [amount] and [name 2] is liable for taxes totaling $ [amount] (copy attached). The amended judgment decrees that the tax liens of the United States are foreclosed and the property sold with the proceeds of the sale to be paid over to the United States, after the loan amount secured by a mortgage on the [property] is paid in full. As of [date], the loan balance owed is $ [amount].
  A judicial sale of the [properties] was conducted by the Marshals Service on [date]. At that sale, [describe particular incidents of the sale, and also why the United States should purchase the property (e.g., disruptive taxpayers, refusal of court to grant other relief, lack of other collection alternatives)].
  The statutes and delegations provide that under 31 U.S.C. § 3715, the Secretary is authorized to purchase real property upon which the United States has a lien at a judicial foreclosure sale. Section 7403(c) of the Internal Revenue Code grants similar authority, limited to purchase of property upon which the United States has a first lien. You have been delegated authority under 31 U.S.C. § 3715. Treasury Order 101-05 (January 7, 1999), paragraph 9 (delegating authority to General Counsel to perform any function the Secretary of the Treasury is authorized to perform). Similarly, the Commissioner has been delegated authority under I.R.C. § 7403(c). Treasury Order 150-10 (delegating to Commissioner the Secretary’s authority to enforce and administer the internal revenue laws). The Commissioner has further delegated that authority to the Deputy Commissioner. Delegation Order 193 (Rev. 6). Appointment of an agent is necessary because currently there is no delegation of authority from the General Counsel or the Deputy Commissioner to any Service officer or employee to purchase property at a judicial foreclosure sale pursuant to I.R.C. § 7403(c) or 31 U.S.C. § 3715.
  Because the Secretary’s delegation to the Commissioner is limited to the authority found in I.R.C. § 7403(c), to purchase property on which the United States has a first lien, appointment of an agent by the General Counsel under 31 U.S.C. § 3715 is necessary to purchase the [property], on which the United States is a junior lienor. A request for appointment of an agent to purchase the [property] is being submitted to the General Counsel. Since the United States has first liens on the [properties], you are authorized to appoint an agent under section 7403(c) to purchase these properties, pursuant to the Commissioner’s delegation of authority to you under Delegation Order 193 (Rev. 6).
  Agent [name], Property Appraisal and Liquidation Specialist (PALS), who is familiar with the properties and with the proceedings, has agreed to act as agent on behalf of the United States. [PALS name] estimates the fair market values and the minimum bids for the [properties] as follows:
    [property]: fair market value $ [amount]; minimum bid $ [amount].
[property]: fair market value $[amount]; minimum bid $ [amount].
  In view of the request of the Department of Justice, it is recommended that, pursuant to I.R.C. § 7403(c), you appoint Agent [name], IRS PALS to act as agent of the United States with authority to bid on the interests of the taxpayers in the [properties], but not to bid higher than the minimum bid amounts.
  If you agree with my recommendation, please sign the attached appointment of agent. We will inform [PALS name] of [his/her] appointment and advise DJ.
  Attachments (2)
  cc: Assistant Chief Counsel (CBS)

Exhibit 34.12.1-12  (08-11-2004)
Document Executed by Commissioner of the Internal Revenue Appointing Agent (where tax lien is senior lien)

[Memorandum]
date:  
to: [Appointed Agent]
from: General Counsel
U.S. Department of Treasury
subject: United States v. [name]
Civil No. [case no. and court]
Pursuant to my authority to act for the Secretary of the Treasury, as granted under Treasury Order 150-10, and Delegation Order 193 (Rev. 6), and pursuant to I.R.C. § 7403(c), I appoint you, [PALS name], Property Appraisal and Liquidation Specialist, to act as agent for the Secretary of the Treasury at the forthcoming sale of the interest of [taxpayers] in the [improved] real property located at [address], upon the judgment rendered in favor of the United States against [name], in the case of [name of case], Civil No. [case no.] in the United States District Court for the [location].
As agent of the Secretary of the Treasury, you shall exercise the authority vested in you in accordance with I.R.C. § 7403(c) but not to bid higher than the minimum bid (approximately $ [amount]) for the [improved] real property located at [address].

Exhibit 34.12.1-13  (08-11-2004)
Letter to Agent Advising of Appointment

[Letterhead]
Agent [name]
Property Appraisal and Liquidation Specialist
Internal Revenue Service
[address]