Subpart G-Disposal of Forfeited or Abandoned Property

172.65 Authority for destruction.

AUTHORITY: The provisions of this Part 172, issued under sec. 7, 52 Stat. 1252, sec. 8, 53 Stat. 1293, sec. 1, 62 Stat. 761, as amended, sec. 7805, 68A Stat. 917; 15 U.S.C. 907, 49 U.S.C. 788, 18 U.S.C. 1261, 26 U.S.C. 7805, unless otherwise noted.

SOURCE: The provisions of this Part 172 appear at 21 F.R. 8356, Nov. 1, 1956, unless otherwise noted.

Subpart A-Scope of Regulations § 172.1

Procedures relating to personal property and carriers.

Regulations in this part shall relate to personal property and carriers seized by officers of the Internal Revenue Service as subject to forfeiture as being used, or intended to be used, as the case may be, to violate Federal laws.

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965]

§ 172.2 Forms prescribed.

The Director, Alcohol and Tobacco Tax Division, is authorized to prescribe all forms required by this part, or necessary for its administration. Information called for shall be furnished in accordance with the instructions on the forms or issued with respect thereto. Subpart B-Definitions

"Carrier" shall mean a vessel, vehicle or aircraft seized under title 49 U.S.C., chapter 11 for having been used to transport, carry or conceal a contraband firearm. Vessels, vehicles or aircraft seized under other provisions of applicable laws shall be considered personal property. [T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.9 Commercial crimes.

"Commercial crimes" shall be deemed to mean any of the following types of crimes (Federal or State): Offenses against the revenue laws; burglary; counterfeiting; forgery; kidnapping; larceny; robbery; illegal sale or possession of deadly weapons; prostitution (including soliciting, procuring, pandering, white slaving, keeping house of ill fame, and like offenses); extortion; swindling and confidence games; offenses involving gambling or wagering; and attempting to commit, conspiring or commit, compounding or aiding, abetting, counselling, commanding, inducing or procuring the commission of any of the foregoing crimes. Addiction to narcotic drugs and use of marihuana will be treated as if such were commercial crime.

[21 F.R. 8356, Nov. 1, 1956, as amended by T.D. 6482, 25 F.R. 6757, July 16, 1960] § 172.10 Commissioner.

"Commissioner" shall mean the Commissioner of Internal Revenue.

§ 172.11 Contraband firearm.

"Contraband firearm" shall mean a firearm with respect to which there has been committed a violation of the National Firearms Act (I. R. C., chapter 53) or any regulation issued thereunder. § 172.12

Director, Alcohol and Tobacco Tax Division.

"Director, Alcohol and Tobacco Tax Division" shall mean the Director, Alcohol and Tobacco Tax Divison, Internal Revenue Service, Treasury Department, Washington, D. C.

§ 172.13 I.R.C.

"I.R.C." shall mean the Internal Revenue Code of 1954.

§ 172.14 Person.

"Person" shall mean and include an individual, trust, estate, partnership, association, company or a corporation. § 172.15 Re-appraisal.

The term "re-appraisal" shall mean an up-to-date statutory appraisal to determine the present value of the property or carrier involved in a petition for remission or mitigation of forfeiture made in the same manner as the original appraisal, and performed at the specified request of the petitioner whose petition in regard to the property or carrier has been allowed and who, for reasonable cause, is not satisfied that the original appraisal represents the present value of the property or carrier.

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.16

Equity.

The term "equity", as used in administrative action on petitions for remission or mitigation of forfeitures, shall mean that interest which a petitioner has in the personal property or carrier petitioned for at the time of final administrative action on the petition, but such interest shall not be considered to include any unearned finance charges from the date of seizure or the date of default, if later; any amount rebatable on account of paid insurance premiums; attorney's fees for collection; any amount identified as dealer's reserve; or any amount in the nature of liquidated damages that may have been agreed upon by the buyer and the petitioner. [T.D. 6482, 25 F.R. 6757, July 16, 1960]

"Region" shall mean the area designated by the Secretary, or his delegate, comprising the geographical jurisdiction of a regional commissioner of internal revenue.

§ 172.18 Regional Commissioner.

"Regional Commissioner" shall mean the Regional Commissioner of Internal Revenue of an internal revenue region. § 172.19 Supervisor in Charge.

"Supervisor in Charge" shall mean the Supervisor in Charge, Alcohol and Tobacco Tax, Internal Revenue Service, who is responsible to, and functions under the direction and supervision of, the Assistant Regional Commissioner, Alcohol and Tobacco Tax.

"U.S.C." shall mean the United States Code of 1952.

Subpart C-Seizures and Forfeitures § 172.25 Personal property and carriers subject to seizure.

Personal property may be seized by duly authorized officers of the Internal Revenue Service for forfeiture to the United States when used or intended to be used, in violation of the internal revenue laws, and certain other laws of the United States which such officers are empowered to enforce, including title 18 U.S.C., chapters 59, 229 (liquor); title 27 U.S.C., section 206 (liquor); title 15 U.S.C., chapter 18 (firearms). Carriers, as defined in § 172.8, similarly may be seized when used or intended to be used in violation of title 49 U.S.C., chapter 11 (transportation et cetera of contraband firearms).

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965] § 172.26 Forfeiture of seized personal property and carriers.

(1)

(a) Administrative forfeiture. Personal property seized as subject to forfeiture under the internal revenue laws which has an appraised value of $2,500.00 or less, and any carrier appraised by the seizing officer at $2,500.00 or less under the custom laws, shall be forfeited to the United States in administrative or summary forfeiture proceedings.

(2) In respect of personal property seized as subject to forfeiture under the internal revenue laws which, in the opinion of the seizing officer, has an appraised value of $2,500.00 or less, such officer shall cause a list containing a particular description of the seized property to be prepared and an appraisement thereof to be made by three sworn appraisers, selected by the seizing officer, who shall be respectable and disinterested citizens of the United States residing within the internal revenue district wherein the seizure was made. Such list and appraisement shall be properly attested to by the seizing officer and such appraisers.

(3) In respect of personal property seized as subject to forfeiture under the internal revenue laws and found by the appraisers to have a value of $2,500.00 or less, the Supervisor in Charge shall publish a notice once a week for three consecutive weeks, in some newspaper of the judicial district where the seizure was

made, describing the articles and stating the time, place, and cause of their seizure, and requiring any person claiming them to make such claim within 30 days from the date of the first publication of such notice.

(4) In respect of carriers seized as subject to forfeiture under the custom laws which, in the opinion of the seizing officer, have an appraised value of $2,500.00 or less, such officer shall cause a list containing a particular description of the seized carriers to be prepared and the seizing officer shall make the appraisement thereof. Such list and appraisement shall be property attested to by the seizing officer.

(5) In respect of carriers seized as subject to forfeiture under the custom laws and appraised by the seizing officer as having a value of $2,500.00 or less, the Supervisor in Charge shall publish a notice of seizure in the same manner as required by subparagraph (3) of this paragraph; provided that the time for making claim shall be within 20 days from the date of first publication. (19 U.S.C. 1608)

(6) Any person claiming the personal property or carrier so seized, within the time specified in the notice, may file with the Supervisor in Charge a claim, stating his interest in the articles or carrier seized, and may execute a bond to the United States in the penal sum of $250.00, conditioned that, in case of condemnation of the articles or carrier so seized, the obligors shall pay all the costs and expenses of the proceedings to obtain such condemnation. Both the claim and the cost bond should be executed in quadruplicate.

(b) Judicial condemnation. (1) The Regional Counsel, Internal Revenue Service, shall authorize institution of libel proceedings in those instances where the appraised value of the seized personal property or carrier exceeds $2,500.00, or where a claim and cost bond are filed as provided above.

[T.D. 6866, 30 F.R. 14791, Nov. 30, 1965]

§ 172.27 Type and conditions of cost bond.

The cost bond delivered by a claimant to effect removal of the forfeiture status of the property or carrier claimed to the jurisdiction of the Federal court for adjudication shall be a corporate surety bond: Provided, however, That upon a showing to the satisfaction of the Supervisor in Charge that the claim

ant is unable to furnish a corporate surety bond such claimant may deliver a cost bond with individual sureties acceptable to the Supervisor in Charge; provided, further, that in lieu of a cost bond with corporate or individual sureties the claimant may deposit collateral as provided in § 172.29. The cost bond shall be conditioned that in the case of the condemnation of the property the obligors shall pay all costs and expenses of the proceedings to obtain such condemnation.

§ 172.28 Corporate surety bonds.

Corporate surety bonds may be given only with surety companies holding certificates of authority from the Secretary of the Treasury as acceptable sureties on Federal bonds, subject to the limitations prescribed by Treasury Department Circular 570, and subject to such amendments as may be issued from time to time.

(Sec. 6, 61 Stat. 648, as amended, 68A Stat. 847; 6 U.S.C. 6, 26 U.S.C. 7101) 30 F.R. 14792, Nov. 30, 1965]

[T.D. 6866,

§ 172.29 Deposit of collateral.

Bonds or notes of the United States, or other obligations which are unconditionally guaranteed as to both interest and principal by the United States, may be pledged and deposited by claimants as collateral security in lieu of corporate sureties in accordance with the provisions of Department Circular No. 154, revised (31 CFR Part 225): Provided, That United States Savings Bonds, Defense Savings Bonds and War Savings Bonds issued under the authority of section 22 of the Second Liberty Bond Act, as amended, and other bonds and notes of the United States, which are nontransferable or the hypothecation of which Iwill not be recognized by the Treasury Department, may not be pledged and deposited as security in lieu of corporate sureties; Provided further, That cash, postal money orders, and certified or cashiers' or treasurers' checks may be furnished by claimants as collateral security in lieu of corporate sureties.

(Sec. 15, 61 Stat. 650, 68A Stat. 847; 6 U. S. C. 15, 26 U. S. C. 7101)

§ 172.30 Bond for return of seized personal goods.

The proceedings to enforce forfeiture of perishable goods shall be in the nature of a proceeding in rem in the district court of the United States for the district wherein such seizure is made.

Whenever such property is liable to perish or become greatly reduced in price or value by keeping, or when it cannot be kept without great expense, the Supervisor in Charge shall advise the owner, when known, of the seizure thereof. The owner may apply to the Supervisor in Charge to have the property examined any time prior to referral of the property to the U.S. Marshal for disposition, and if in the opinion of the Supervisor in Charge, it shall be necessary to sell such property to prevent waste or expense, the Supervisor in Charge shall cause the property to be appraised. Thereupon the owner shall have the property returned to him upon giving a corporate surety bond (see § 172.28) in an amount equal to the appraised value of the property, which bond shall be conditioned to abide the final order, decree, or judgment of the court having cognizance of the case, and to pay the amount of the appraised value to the Supervisor in Charge, the U.S. Marshal, or otherwise, as may be ordered and directed by the court, which bond shall be filed by the Supervisor in Charge with the U.S. Attorney for the district in which the proceedings may be commenced. If the owner of such property neglects or refuses to give such bond within a reasonable time considering the condition of the property the Supervisor in Charge shall request the U.S. Marshal to proceed to sell the property at public sale as soon as practicable and to pay the proceeds of sale, less reasonable costs of the seizure and sale, to the court to abide its final order, decree, or judgment.

(68A Stat. 869, 870; 26 U.S.C. 7322, 7323, 7324) [T.D. 6866, 30 F.R. 14792, Nov. 30, 1965]

Subpart D-Remission or Mitigation of Forfeitures Laws applicable.

§ 172.35

Remission or mitigation of forfeitures shall be governed by the applicable customs laws.

(Sec. 613, 618, 46 Stat. 756, as amended, 757, as amended, sec. 4, 53 Stat. 1292, sec. 7327, 68A Stat. 871; 19 U. S. C. 1613, 1618, 49 U. S. C. 784, 26 U. S. C. 7327)

§ 172.36 Interest claimed.

Any person claiming an interest in property, including carriers, seized by internal revenue officers as subject to administrative forfeiture may file a petition addressed to the Director, Alcohol

and Tobacco Tax Division, for remission or mitigation of the forfeiture of such property.

[T.D. 6866, 30 F.R. 14792, Nov. 30, 1965] § 172.37 Form of the petition.

There is no set or standardized form provided or required by the Department for use in filing a petition for remission or mitigation of forfeiture. However, it is preferable that the petition be typewritten on legal size paper; and it is necessary that the petition be executed under oath, prepared in triplicate and addressed to the Director, Alcohol and Tobacco Tax Division, and that all copies of original documents submitted as exhibits in support of allegations of the petition be certified as true and accurate copies of originals. Each copy of the petition must contain a complete set of exhibits.

§ 172.38

Contents of the petition.

(a) Description of the property. The petition should contain such a description of the property or carrier and such facts of the seizure as will enable the officers of the Internal Revenue Service concerned to identify the property or carrier.

(b) Statement regarding knowledge of seizure. In the event the petition is filed for the restoration of the proceeds derived from sale of the property or carrier pursuant to summary forfeiture, it should also contain, or be supported by, satisfactory proof that the petitioner did not know of the seizure prior to the declaration or condemnation of forfeiture, and that he was in such circumstances as prevented him from knowing of the same. (See also § 172.39.)

(c) Interest of petitioner. The petitioner should state in clear and concise terms the nature and amount of the present interest of the petitioner in the property or carrier, and the facts relied upon to show that the forfeiture was incurred without willful negligence or without any intention upon the part of the petitioner to defraud the revenue or to violate the law, or such other mitigating circumstances as, in the opinion of the petitioner, would justify the remission or mitigation of the forfeiture.

(d) Petitioner innocent party. If the petitioner is not the one who in person committed the act which caused the seizure the petition should state how the property or carrier came into the possession of such other person, and that

the petitioner had no knowledge or reason to believe, if such be the fact, that the property or carrier would be used in violation of law.

(e) Results of investigation. The petition should also state what investigation, if any, was made of such other person, through principal Federal, State, or local law enforcement officers, to determine whether such other person had either a record or a reputation, or both, as a liquor law violator in a case involving a seizure for violation of the internal revenue laws relating to liquor; or as a violator in the field of commercial crime in all other types of seizures. The petition should further state the information obtained from said investigation, and whether such information was received before the petitioner acquired his interest in the property or carrier, or such other person acquired his right in the property or carrier, whichever occurred later.

(f) Documents supporting claim. The petition should also be accompanied by copies, certified by the petitioner under oath as correct, of contracts, bills of sale, chattel mortgages, reports of investigators or credit reporting agencies, affidavits, and any other papers or documents that would tend to support the claims made in the petition.

(g) Costs. The petition should also contain an undertaking to pay the costs, if costs are assessed as a condition of allowance of the petition. Costs shall include all the expenses incurred in seizing and storing the property or carrier; the costs borne or to be borne by the United States; the taxes, if any, payable by the petitioner or imposed in respect of the property or carrier to which the petition relates; the penalty, if any, asserted by the Director, Alcohol and Tobacco Tax Division; and, if the property or carrier has been sold, or is in the course of being sold, the expenses so incurred. [T.D. 6482, 25 F.R. 6757, July 16, 1960, as amended by T.D. 6866, 30 F.R. 14792, Nov. 30, 1965]

§ 172.41

Discontinuance of administrative proceedings.

If the petition is filed prior to administrative sale or retention for official use, proceedings to effect such sale or retention will be discontinued.

[T.D. 6482, 25 F.R. 6757, July 16, 1960]

§ 172.42 Return of defective petition.

If the petition is defective in some correctable respect, the original of the petition will be returned by letter to the petitioner for his submission of a corrected petition, in triplicate, within a reasonable time.

[T.D. 6812, 30 F.R. 4198, Mar. 31, 1965] § 172.43 Final action.

(a) Petitions for remission or mitigation of ferfeiture. (1) The Director, Alcohol and Tobacco Tax Division, shall take final action on any petition filed pursuant to these regulations. Such final action shall consist either of the allowance or denial of the petition. In the case of allowance, the Director shall state the conditions of the allowance.

(2) In the case of an allowed petition, the Director, Alcohol and Tobacco Tax Division, may order the property or carrier returned to the petitioner, sold for the account of the petitioner, or pursuant to agreement, acquired for official use.

(3) The Assistant Regional Commissioner shall notify the petitioner of the allowance or denial of the petition and, in the case of allowance, the conditions under which the Director, Alcohol and Tobacco Tax Division, allowed the petition.

(b) Offers in compromise of liability to forfeiture. (1) The Assistant Regional Commissioner shall take final action on any offer in compromise of the