Rev. Ruling 67-320

Advice has been requested whether vehicles seized for forfeiture purposes come within the purview of 26 CFR 172.30.

26 CFR 172.30 recognizes the need for the prompt handling and disposition of seized perishable goods and provides special procedures to enable and ensure such action. This action consists of returning the goods to the owner upon his presentation of a corporate surety bond in the amount of the appraised value of the property, or causing the sale of the property when the owner neglects or refuses to give such bond within a reasonable period of time. Perishable goods are defined in 26 CFR 172.30 as that property which is liable to perish or become greatly reduced in price or value by keeping, or which cannot be kept without great expense.

The Internal Revenue Service previously has taken the position that the provisions of 26 CFR 172.30 are not applicable to vehicles since such property normally could not be considered as perishable goods. Experience has disclosed that this position is valid regarding seized vehicles subject to administrative forfeiture. Seized property is subject to administrative forfeiture proceedings when it has an appraised value of $2,500 or less and a proper claim and cost bond are not filed to transfer the forfeiture proceedings to the United States District Court. Administrative forfeitures normally are perfected and the property involved disposed of within three months following the property's seizure. Consequently, seized vehicles subject to administrative forfeiture do not greatly depreciate in value and the cost of storage does not become excessive during the short period of time required to perfect their forfeiture and cause their disposition.

However, experience also has disclosed that a seized vehicle subject to judicial forfeiture (because it has been appraised at more than $2,500 or because a claim and cost bond have been filed) may be stored for a prolonged period, sometimes in excess of two years, awaiting forfeiture proceedings. Obviously during such an extended storage period a vehicle will depreciate greatly in value and the accumulated storage often results from the overcrowded condition of a court calendar.

Determination therefore is made that the elements (1) "become greatly reduced in price or value by keeping" and (2) "cannot be kept without great expense" are not involved in the keeping of a vehicle subject to administrative forfeiture, but that at least one, if not both, of these elements almost invariable is involved in the keeping of a vehicle subject to judicial forfeiture.

Accordingly, it is held that seized vehicles subject to judicial forfeiture may be considered as perishable property coming within the scope and intent of 26 CFR 172.30.

26 U.S.C. 7324; 26 CFR 172.30 (27 CFR 72.26)