In Chief Counsel Advice 201818015, the IRS has determined that an internet domain name is "intangible personal property" for purposes of the procedural levy protections afforded to certain property used by a taxpayer in his or her trade or business.
After a tax has been assessed, IRS must, within 60 days, deliver or mail to the taxpayer a notice of the amount due and demand its payment before collection proceedings can be started. (Code Sec. 6303(a)). Any federal tax that has been assessed and that the taxpayer neglects or refuses to pay after demand becomes a lien in favor of the U.S. on all property and rights to property, whether real or personal, belonging to the taxpayer. (Code Sec. 6321).
If a taxpayer who is liable to pay any tax, neglects or refuses to pay it within ten days after notice and demand, IRS may collect the tax by levy upon all property and rights to property (except exempt property) belonging to the taxpayer or on which there is a federal tax lien for payment of the tax. (Code Sec. 6331(a)).
Code Sec. 6334 sets out various categories of property that are exempt from levy, including, among other things, certain "tangible personal property or real property…used in the trade or business of an individual taxpayer." (Code Sec. 6334(a)(13)(B)(ii)).
However, the Code Sec. 6334(a)(13)(B) exemption for certain business assets does not apply if:
- An IRS director or assistant district director determines the taxpayer's other assets subject to collection are insufficient and personally approves a levy of such property in writing, or
- IRS finds that the collection of tax is in jeopardy. (Code Sec. 6334(e)(2)).
CCA 201818015 concluded that an internet domain name is intangible personal property for purposes of Code Sec. 6334(a)(13)(B)(ii) and Code Sec. 6334(e)(2). Therefore, it's generally exempt from levy, unless one of the requirements set out above (involving director approval or a finding that collection is in jeopardy) is met.
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