The following summary was located on the  Tax Analysts Discussion Group

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A U.S. district court has held that a couple whose home was seized and sold by the IRS is entitled to the 180-day redemption period under section 6337(b), rejecting the government's contention that the IRS seized and sold only the couple's interest in a contract for deed, not real property.  John and Karen Seay entered into a contract for deed in 1993 regarding the purchase of a home in Texas from Eugene and Wanda Campbell. In 1997 the IRS began collection actions against the Seays to collect their 1987 tax liability. The Service levied on the contract for deed, and at the auction, the Campbells purchased the Seays' interest in it. The Campbells then obtained a writ of possession to eject the Seays.

The IRS treated the sale of the contract for deed as a sale of personal property and, thus, issued a certificate of sale after receiving the Campbells' payment, thereby denying the Seays any right of redemption. The IRS had informed the Campbells before the sale that the Seays would have no right of redemption, and the Seays had challenged the sale for that reason, but an appeals officer decided that the property could be sold without redemption rights. The Seays sued the government, arguing that the sale violated procedural requirements under section 6337(b). They also requested damages under section 7433.

Ruling in favor of the Seays on the redemption issue, District Judge Walter S. Smith Jr. explained that statutes permitting the public sale of a taxpayer's property, especially land, are strictly construed, whereas redemption statutes are liberally construed. The court concluded that the Seays interest was sufficiently similar to an interest in real estate to trigger the redemption rights of section 6337.

The court reasoned that the Seays had the right to the use and enjoyment of the realty, the obligation to pay real estate taxes, and the right to convey their interest in the property. And, Judge Smith noted that the Seays' interest in the property is recorded in the local records for property deeds.

Judge Smith dismissed the section 7433 claim, because the Seays didn't identify any IRS employee who intentionally or recklessly disregarded any statute or regulation. (For the full text of this decision, John A. Seay Jr., et ux. v. United States, et al., 82 AFTR2d Par. 98-5119, No. W-98-CA-145, see Doc 98-23273 (12 pages) or 98 TNT 154-13.)