Appeal from the United States District Court for the Northern District of California. D.C. No. CV-92-20143-WAI. William A. Ingram, District Judge, Presiding.
Before: Hug, Canby and Kleinfeld, Circuit Judges. Opinion by Judge Kleinfeld
KLEINFELD, Circuit Judge:
The Internal Revenue Service ("IRS"), in an internal manual, has created a means of delaying the sale of seized property beyond what the statute, 26 U.S.C. § 6335, and associated regulations allow. The additional delay is impermissible.
The IRS assessed Mr. Anderson in 1984 for unpaid income taxes for tax years 1978 and 1979. It did not proceed with the collection efforts at issue in this case until the statute of limitations was about to run, in 1990. On October 24, 1990, five days before the limitations period would have expired on the assessments, the IRS seized a five acre parcel of land in California in which Mr. Anderson apparently owned the beneficial interest. The revenue officer was unable to locate the property, a remote parcel in the Santa Cruz mountains, so he accomplished the seizure by filing a notice of lien and mailing notices of levy and seizure. The IRS did not attempt to sell the property until almost a year later.
On August 21, 1991, the assigned revenue officer established that the minimum acceptable bid would be $61,807.43, much less than fair market value of the land. Title was clouded because Mr. Anderson had conveyed the land to his companion after receiving his assessment in 1984, and she had conveyed it in a revocable trust to the Zeitgeist Company. The IRS regarded Mr. Anderson, who lived on the land and payed the mortgage and taxes, as the true owner despite bare legal title in Zeitgeist.
On September 29, 1991, the IRS advertised that the property would be sold at auction on October 16, 1991. Thirty-seven prospective bidders came to the sale, but none of them had with them the necessary 20 percent cash or equivalent down payment. The revenue officer decided not to buy the property for the government, and announced that the sale would be postponed until November 14, 1991. The new sale was advertised on October 25, 1991, but no prospective bidders except for the revenue agent came. The revenue officer again decided to postpone the auction rather than bid-in the property for the government. The second postponement was until March 11, 1992. The revenue officer took the position that he had never "commenced a sale," which he understood to mean "gathering people around and announcing that the sale is beginning."
Mr. Anderson filed suit to enjoin the March sale. The district court granted summary judgment to the IRS, but the government has agreed to cancel the sale until this litigation is over. Mr. Anderson appeals.
All that the parties have put at issue is whether the second postponement of the sale was authorized by law and, if not, whether the property must be released.*fn1 Mr. Anderson argues that because the sale did not take place within 40 days of the public notice, or a month thereafter, the government was bound to release it back to him. He is right. That is what the law says. 26 U.S.C. § 6335(d) & (e).
Here are the relevant portions of the statute governing the sale of seized property, highlighting the portions necessary to understand the required order of events:
(a) Notice of Seizure. As soon as practicable after seizure of property, notice in writing shall be given by the Secretary to the owner of the property (or, in the case of personal property, the possessor thereof), or shall be left at his usual place of abode or business if he has such within the internal revenue district where the seizure is made. If the owner cannot be readily located, or has no dwelling or place of business within such district, notice may be mailed to his last known address. Such notice shall specify the sum demanded and shall contain, in the case of personal property, an account of the property seized and, in the case of real property, a description with reasonable certainty of the property seized.
(b) Notice of sale. The Secretary shall as soon as practicable after seizure of the property give notice to the owner, in the manner prescribed in subsection (a), and shall cause a notification to be published in some newspaper published or generally circulated within the county wherein such seizure is made, or, if there be no newspaper published or generally circulated in such county, shall post such notice at the post office nearest the place where the seizure is made, and in not less than two other public places. Such notice shall specify the property to be sold, and the time, place, manner, and conditions of the sale thereof. Whenever levy is made without regard to the 10-day period provided in ...