Ignoring debtor's request to sell seized stock costs the IRS.(TAX DEBTS)

Kiplinger Tax Letter, The, May, 2006

Ignoring a debtor's request to sell seized stock costs the IRS. The Service had seized the stock brokerage accounts of a couple who owed back taxes. The value of the accounts exceeded the tax debt. The two were worried that the value would fall, so they told the IRS it was OK to sell the stock. Unfortunately, the IRS dawdled for months before selling, and the stocks' value fell dramatically during that time.

The Service is penalized for the delay, the Tax Court says. The IRS must credit the couple's account with the value of the stock 60 days after they gave their approval to dispose of the shares. That was greater than the sales proceeds (Zapara, 126 TC No. 11).