Paragraph 1. The authority citation for part 301 continues to
read, in part, as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6334-1 is amended as follows:
1. Paragraphs (a)(2), (a)(3), (a)(8), (a)(13), (d), (e), and
(f) are revised.
2. Paragraphs (g) and (h) are added.
Property exempt from levy.
(a) * * *
(2) Fuel, provisions, furniture,
and personal effects. So much of the fuel,
provisions, furniture, and personal effects in the taxpayer’s
household, and of the arms for personal use, livestock, and
poultry of the taxpayer, that does not exceed $6,250 in value.
(3) Books and tools of a trade,
business or profession. So many of the books and
tools necessary for the trade, business, or profession of an
individual taxpayer as do not exceed in the aggregate $3,125 in
* * * * *
(8) Judgments for support of minor
children. If the taxpayer is required under any type
of order or decree (including an interlocutory decree or a
decree of support pendente lite) of a court of competent
jurisdiction, entered prior to the date of levy, to contribute
to the support of that taxpayer’s minor children, so much of
that taxpayer’s salary, wages, or other income as is necessary
to comply with such order or decree. The taxpayer must establish
the amount necessary to comply with the order or decree. The
Service is not required to release a levy until such time as it
is established that the amount to be released from levy actually
will be applied in satisfaction of the support obligation. The
Service may make arrangements with a delinquent taxpayer to
establish a specific amount of such taxpayer’s salary, wage,
or other income for each pay period that shall be exempt from
levy, for purposes of complying with a support obligation. If
the taxpayer has more than one source of income sufficient to
satisfy the support obligation imposed by the order or decree,
the amount exempt from levy, at the discretion of the Service,
may be allocated entirely to one salary, wage or source of other
income or be apportioned between the several salaries, wages, or
other sources of income.
* * * * *
(13) Residences exempt in small
deficiency cases and principal residences and certain business
assets exempt in absence of certain approval or jeopardy—(i)
Residences in small deficiency cases. If the amount of the levy
does not exceed $5,000, any real property used as a residence of
the taxpayer or any real property of the taxpayer (other than
real property which is rented) used by any other individual as a
(ii) Principal residences and
certain business assets. Except to the extent
provided in section 6334(e), the principal residence (within the
meaning of section 121) of the taxpayer and tangible personal
property or real property (other than real property which is
rented) used in the trade or business of an individual taxpayer.
* * * * *
(d) Levy allowed on principal
residence. The Service will seek approval, in
writing, by a judge or magistrate of a district court of the
United States prior to levy of property that is owned by the
taxpayer and used as the principal residence of the taxpayer,
the taxpayer’s spouse, the taxpayer’s former spouse, or the
taxpayer’s minor child.
(1) Nature of judicial proceeding.
The Government will initiate a proceeding for judicial approval
of levy on a principal residence by filing a petition with the
appropriate United States District Court demonstrating that the
underlying liability has not been satisfied, the requirements of
any applicable law or administrative procedure relevant to the
levy have been met, and no reasonable alternative for collection
of the taxpayer’s debt exists. The petition will ask the court
to issue to the taxpayer an order to show cause why the
principal residence property should not be levied and will also
ask the court to issue a notice of hearing.
(2) The taxpayer will be granted a hearing to rebut the
Government’s prima facie
case if the taxpayer files an objection within the time period
required by the court raising a genuine issue of material fact
demonstrating that the underlying tax liability has been
satisfied, that the taxpayer has other assets from which the
liability can be satisfied, or that the Service did not follow
the applicable laws or procedures pertaining to the levy. The
taxpayer is not permitted to challenge the merits underlying the
tax liability in the proceeding. Unless the taxpayer files a
timely and appropriate objection, the court would be expected to
enter an order approving the levy of the principal residence
(3) Notice letter to be issued to
certain family members. If the property to be levied
is owned by the taxpayer but is used as the principal residence
of the taxpayer’s spouse, the taxpayer’s former spouse, or
the taxpayer’s minor child, the Government will send a letter
to each such person providing notice of the commencement of the
proceeding. The letter will be addressed in the name of the
taxpayer’s spouse or ex-spouse, individually or on behalf of
any minor children. If it is unclear who is living in the
principal residence property and/or what such person’s
relationship is to the taxpayer, a letter will be addressed to
“Occupant”. The purpose of the letter is to provide notice
to the family members that the property may be levied. The
family members may not be joined as parties to the judicial
proceeding because the levy attaches only to the taxpayer’s
legal interest in the subject property and the family members
have no legal standing to contest the proposed levy.
(e) Levy allowed on certain
business assets. The property described in section
6334(a)(13)(B)(ii) shall not be exempt from levy if—
(1) An Area Director of the Service personally approves (in
writing) the levy of such property; or
(2) The Secretary finds that the collection of tax is in
jeopardy. An Area Director may not approve a levy under
paragraph (e)(1) unless the Area Director determines that the
taxpayer’s other assets subject to collection are insufficient
to pay the amount due, together with expenses of the proceeding.
When other assets of an individual taxpayer include permits
issued by a State and required under State law for the harvest
of fish or wildlife in the taxpayer’s trade or business, the
taxpayer’s other assets also include future income that may be
derived by such taxpayer from the commercial sale of fish or
wildlife under such permit.
(f) Levy allowed on certain
specified payments. Any payment described in section
6331(h)(2)(B) or (C) shall not be exempt from levy if the
Secretary approves the levy thereon under section 6331(h).
(g) Inflation adjustment.
For any calendar year beginning after 1999, each dollar amount
referred to in paragraphs (a)(2) and (3) of this section will be
increased by an amount equal to the dollar amount multiplied by
the cost-of-living adjustment determined under section 1(f)(3)
for the calendar year (using the language “calendar year
1998” instead of “calendar year 1992” in section
1(f)(3)(B)). If any dollar amount as adjusted is not a multiple
of $10, the dollar amount will be rounded to the nearest
multiple of $10 (rounding up if the amount is a multiple of $5).
(h) Effective date.
This section is generally effective with respect to levies made
on or after July 1, 1989. However, any reasonable attempt by a
taxpayer to comply with the statutory amendments addressed by
the regulations in this section prior to February 21, 1995, will
be considered as meeting the requirements of the regulations in
this section. In addition, paragraph (a)(11)(i) of this section
is applicable with respect to levies issued after December 31,
1996. Paragraphs (a)(2), (a)(3), (a)(8), (a)(13), (d), (e), (f),
(g) and (h) of this section apply as of March 7, 2005.
Mark E. Matthews,
Services and Enforcement.
Approved February 15, 2005.
Deputy Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on March 4,
2005, 8:45 a.m., and published in the issue of the Federal
Register for March 7, 2005, 70 F.R. 10885)