7 August 2001

See contents of full IRS Handbook of Criminal Investigation: http://cryptome.org/irs-ci/irs-ci.htm

## Part 9 Criminal Investigation Chapter 7 Asset Seizure and Forfeiture Section 5 Forfeiture Actions
### Contents 9.7.5 Forfeiture Actions 9.7.5.1 OVERVIEW 9.7.5.2 FINAL ORDER OF FORFEITURE 9.7.5.3 DECLARATION OF FORFEITURE FOR ADMINISTRATIVE FORFEITURES 9.7.5.3.1 Declaration of Forfeiture Procedure 9.7.5.4 SETTLEMENT (JUDICIAL FORFEITURES) 9.7.5.5 EXPEDITED FORFEITURE SETTLEMENT 9.7.5.6 FORFEITED PROPERTY ENCUMBERED BY LIENS 9.7.5.6.1 Payment of Liens And Mortgages on Forfeited Real Property 9.7.5.6.1.1 Processing Liens and Mortgages On Forfeited Real Property 9.7.5.6.2 Payments of Liens And Mortgages on Forfeited Personal Property 9.7.5.6.3 Payment of Liens on Personal Property Placed Into Federal Official Use 9.7.5.7 PAYMENT OF STATE AND LOCAL TAXES 9.7.5.8 REIMBURSEMENT AND PAYMENTS FROM THE TREASURY FORFEITURE FUND 9.7.5.8.1 Investigative Expenses Qualifying for Reimbursement 9.7.5.8.2 Investigative Costs Leading to Forfeiture 9.7.5.8.3 Limitations on Use of The Fund 9.7.5.9 PROPERTY DISPOSITION AFTER FORFEITURE Exhibit 9.7.5-1 Title Form 1570, Declaration of Forfeiture Exhibit 9.7.5-2 Notice of Pending Expedited Settlement Agreement Exhibit 9.7.5-3 Expedited Settlement Agreement
### 9.7.5.1 (04-30-1998) OVERVIEW
A forfeiture action is finalized through a Final Order of Forfeiture or a Declaration of Forfeiture. This section discusses both documents as well as settlements of judicial forfeitures and expedited forfeiture settlements. The topics in this section include: Final Order of Forfeiture Declaration of Forfeiture for Administrative Forfeitures Settlement (Judicial Forfeitures) Expedited Forfeiture Settlement Forfeited Property Encumbered by Liens Payment of State and Local Taxes Reimbursement and Payments from the Treasury Forfeiture Fund Property Disposition after Forfeiture
### 9.7.5.2 (11-17-2000) FINAL ORDER OF FORFEITURE
A "Final Order of Forfeiture" is a judgment of a court entered in writing declaring the subject property forfeited to the U.S. and disposed of in accordance with the law. This is the final court order of forfeiture issued in civil and criminal forfeiture actions including judicial Code forfeitures. In a criminal forfeiture, a "preliminary order of forfeiture" is entered after a defendant is convicted and upon the return of a special verdict finding that a defendant's property is subject to forfeiture. A Final Order of Forfeiture is entered after publication when no claim is filed, or if a claim is filed, after the conclusion of an ancillary hearing. An ancillary hearing allows for a judicial determination of the validity and priority of legal claims or interests of third parties in property subject to forfeiture. In an administrative forfeiture, the submission of a Petition for Remission or Mitigation of Forfeiture will not alter the forfeiture date and should not delay the signing of the Final Order of Forfeiture. A copy of the final order of forfeiture will be distributed as follows: Original--Seized Property File. Copy--Counsel. Copy to the seized property contractor when applicable.
### 9.7.5.3 (11-17-2000) DECLARATION OF FORFEITURE FOR ADMINISTRATIVE FORFEITURES
A Declaration of Forfeiture is analogous to a Judicial Order of Forfeiture, but issued by the seizing agency that administratively forfeited the property rather than by a court. The forfeiture date is 30 days after the final day of publication of the Notice of Seizure or 35 days after the mailing of Notice of Seizure , whichever occurs last. For an administrative forfeiture, the Special Agent in Charge (SAC), should forward the seizure package with the completed Form 1570, Declaration of Forfeiture (Exhibit 9.7.5-1), for the Director, Field Operations' signature on the forfeiture date. The submission of a Petition for Remission or Mitigation of Forfeiture will not alter the forfeiture date, and should not delay the signing of the Form 1570 or Final Order of Forfeiture.
### 9.7.5.3.1 (11-17-2000) Declaration of Forfeiture Procedure
The Asset Forfeiture Coordinator (AFC) will prepare a separate Declaration of Forfeiture, Form 1570, for administratively forfeited property for the Director, Field Operations' signature, under the authority of Delegation Order No. 158, on the forfeiture date noted in the forfeiture letter. See Exhibit 9.7. 5-1 as an example. Form 1570 should mirror the preparation of the Form 4008, i.e., a separate Form 1570 will be prepared for each separate vehicle, each separate aircraft, each separate vessel, and each separate lot of personal property at each separate seizure location. For property subject to a pending Petition for Remission or Mitigation of Forfeiture, Form 1570 will be signed on the scheduled forfeiture date, but will be retained in the Seized Property File awaiting final action on the petition and final disposition of the property. A timely Claim suspends all administrative forfeiture actions. When property is not the subject of a Claim, or if a pending petition had been accepted or denied, a copy of the executed Declaration of Forfeiture or court ordered forfeiture will be distributed as follows: Original--Seized Property File. Copy--Counsel. Copy to the seized property contractor. If the seizure action takes place in an area other than the initiating field operations area, either or both of the Director, Field Operations for the initiating area or the area where the seizure actually took place may serve as the forfeiting official(s). AFTRAK will be updated by preparing and sending an updated Form 4008S to the Headquarters AFTRAK Team.
### 9.7.5.4 (11-17-2000) SETTLEMENT (JUDICIAL FORFEITURES)
After a Claim is filed in an administrative seizure, or if the seizure is initially a civil judicial action, settlement of the forfeiture may be undertaken by the U.S. Attorney's Office in consultation with the Service. There must be a statutory basis for the forfeiture. Any settlement negotiated by the U.S. Attorney's Office should parallel Service guidelines, e.g., Service Mitigation Guidelines for seizures pertaining to violations of 31 U.S.C. Sections 5313 and 5324(a). The U.S. Attorney has authority to settle those judicial forfeiture actions involving property in his judicial area. However, in an administrative action where a Claim is filed, the matter is referred back to the Service if the Assistant U.S. Attorney (AUSA) negotiates a settlement where the claim is withdrawn but the forfeiture action is to proceed administratively. This requires that the SAC approve the negotiated settlement. See Treasury Executive Office of Asset Forfeiture (TEOAF) Directive 17. The government may initiate settlement of a civil forfeiture action in conjunction with the criminal charges against a defendant that provides the cause of action against the property. However, the government should not tie civil forfeiture to a reduction or dismissal of criminal charges just to gain the advantage of a civil forfeiture, or to be used as leverage in a criminal plea or vice versa. Such settlements must be in writing and include specific reference to the withdrawal of the claim, and should include appropriate exhibits, such as the warrant, affidavit, agreement, and other pertinent documents. The referral and associated paperwork will be forwarded to the SAC, for a decision whether to accept the negotiated settlement. If the property is to be forfeited administratively, the decision will then be forwarded to the Director, Field Operations for concurrence. If the SAC and/or Director, Field Operations does not agree with the settlement, the matter will be referred back to the U.S. Attorney for appropriate action. TEOAF Directive 17 specifically addresses Treasury Policy regarding plea bargaining and forfeiture by settlement.
### 9.7.5.5 (11-17-2000) EXPEDITED FORFEITURE SETTLEMENT
TEOAF Directive 14 contains specific information relating to expedited forfeiture settlement policy for mortgagees and lienholders for property seized, arrested, restrained, or charged in a civil or criminal forfeiture action. The policy applies only where the applicable forfeiture statute has a statutory innocent owner provision. The essence of Directive 14 is the guaranteed satisfaction, where settlement is reached, of unpaid principal and accrued interest to the lienholder or mortgagee upon entry of the Final Order of Forfeiture, regardless of when the property is sold or otherwise disposed of in some manner. However, IRS will provide a current appraisal to attempt to protect its interest. The policy is not binding upon any party who decides not to settle. The failure to reach expedited settlement does not preclude the lienholder from seeking other remedies in the judicial forfeiture action. The responsible U.S. Attorney is required to advise the SAC, of the denial of a request, by the government, for an Expedited Settlement Agreement involving a financial institution (as defined in 31 U.S.C. Section 5312) in real property cases. The SAC, shall request the U.S. Attorney forward such denial to TEOAF. The SAC, is responsible for promptly notifying TEOAF when there is a potential or pending Expedited Settlement Agreement. A potential or pending agreement means an agreement reduced to writing, and signed by the defendant. This notification is required to enable the Treasury Forfeiture Fund (FUND) to prepare a fiscal plan for the anticipated expedited settlement of fiscal liabilities. IRS shall use the "NOTICE OF PENDING EXPEDITED SETTLEMENT AGREEMENT" (Exhibit 9.7.5-2) to effect notification. The actual agreements will utilize the "EXPEDITED SETTLEMENT AGREEMENT" (Exhibit 9.7.5-3). Directive 14 contains further directions for processing these agreements.
### 9.7.5.6 (04-30-1998) FORFEITED PROPERTY ENCUMBERED BY LIENS
Subject to the discretion of the Secretary of the Treasury, valid liens and mortgages against property forfeited pursuant to any law enforced or administered by a Treasury enforcement organization, can be paid from the mandatory portion of the Fund. The validity of such liens must be verified, and any payment of a lien or mortgage with respect to a seizure or forfeiture of property shall not exceed the fair market value (FMV) of the property at the time of seizure.
### 9.7.5.6.1 (04-30-1998) Payment of Liens And Mortgages on Forfeited Real Property
Liens or mortgages on real property placed into federal official use or transferred to state or local agencies are not payable from the Fund unless expressly approved by the Director, TEOAF. Requests for payment of valid liens or mortgages should be submitted in writing to the Director. Liens and mortgages shall be satisfied after the sale of forfeited real property, except under the following conditions where payments may be made from the Fund prior to sale: Where payment prior to sale or other disposition will improve the government's ability to convey title to the property. Where the U.S. has substantial equity in forfeited real property and payment prior to sale will not result in a net loss to the U.S. Where the property is approved for placement into official use by an investigative agency and all necessary approvals have been obtained.
### 9.7.5.6.1.1 (11-17-2000) Processing Liens and Mortgages On Forfeited Real Property
Liens and mortgages on forfeited real property will be processed as follows: Upon obtaining a Final Order of Forfeiture, the AFC will transmit both pages of a completed Disposition Order for Assets Other Than Currency to TEOAF. This disposition order must identify all lienholders and must include a copy of the Final Order of Forfeiture. The AFC will forward the disposition order to the seized property contractor. The seized property contractor will conduct a title search on all real property and contact the AFC to obtain details regarding all liens and mortgages. This detail may include payoff statements, loan histories, or other documents. Property taxes on real property are only paid to the date of forfeiture, unless statements to the contrary are contained in the forfeiture order. If the Final Order of Forfeiture specifies lienholder priority or if any other specific conditions of payment exists, the AFC should ensure the seized property contractor is aware of such situations and is provided related documentation. After the asset is sold, the seized property contractor will send the sale information and lien package to the AFC for approval. The AFC must review the package to ensure that payments will be made in accordance with the Final Order of Forfeiture or approved petitions. Once satisfied, the AFC will sign the transmittal letter approving the package and return it to the seized property contractor. The AFC's review must be done in a timely manner. The seized property contractor will send a copy of this package to both TEOAF and the Customs Finance Center. If lien payments do not exceed net proceeds, the Customs Finance Center will issue the check(s) upon receipt of the package. If lien payments exceed net proceeds, the Customs Finance Center will not issue the check until it obtains approval from TEOAF.
### 9.7.5.6.2 (11-17-2000) Payments of Liens And Mortgages on Forfeited Personal Property
Liens and mortgages (chattel) on forfeited personal property (e.g., vehicles, vessels, or aircraft) should be processed as specified in this subsection. Upon obtaining a Final Order of Forfeiture or Declaration of Forfeiture, the AFC must verify that a valid title exists by checking that: A salvage title does not exist. All bona fide lienholders have been identified. The AFC must also run a National Law Enforcement Telecommunication System (NLETS) check to ensure the asset has not been reported stolen. The AFC will transmit both pages of a completed Disposition Order for Assets Other Than Currency to TEOAF. The order must identify all lienholders and must include a copy of the Final Order of Forfeiture. The AFC will forward the disposition order to the seized property contractor. Personal property taxes are only paid to the date of forfeiture unless statements to the contrary are contained in the Final Order of Forfeiture. If the Final Order of Forfeiture or Declaration of Forfeiture specifies lienholder priority or if any other specific conditions of payment exist, the AFC should ensure the seized property contractor is aware of such situations and is provided related documentation. After the asset is sold, the seized property contractor will send the sale information and lien package to the AFC for approval. The AFC must timely review the package to ensure that payments will be made in accordance with the Final Order of Forfeiture or approved petitions. Once satisfied, the AFC will sign the transmittal letter approving the package and return it to the seized property contractor. The seized property contractor will send a copy of this package to both TEOAF and the Customs Finance Center. If lien payments do not exceed net proceeds, the Customs Finance Center will issue the check(s) upon receipt of the package. If lien payments exceed net proceeds, the Customs Finance Center will not issue the check until it obtains approval from TEOAF.
### 9.7.5.6.3 (04-30-1998) Payment of Liens on Personal Property Placed Into Federal Official Use
Liens on personal property placed into official use by investigative agencies may be paid from the Fund provided that: There is an intent to place the property into official use for at least 1 year. The total amount to be paid from the Fund amounts to less than one-third the appraised value of the property. The total amount to be paid from the Fund is less than $25,000. Requests for exceptions may be submitted in writing to the Director, TEOAF. Subject to the discretion of TEOAF, valid liens and mortgages against forfeited property may be paid from the Fund. However, any payment of a lien or mortgage with respect to a seizure or forfeiture of property cannot exceed the FMV of the property at the time of seizure.
### 9.7.5.7 (04-30-1998) PAYMENT OF STATE AND LOCAL TAXES
TEOAF Directive 12, as amended, states the Fund shall pay state and local taxes on properties civilly or criminally forfeited where the local taxing authority established its innocent owner status prior to the entry of a final forfeiture order. Treasury will accept in a presumption of innocence in the absence of exceptional circumstances. Thus, the Fund, in both civil and criminal forfeitures, will pay standard ad valorem property taxes up to the date of entry of a Final Order of Forfeiture.
### 9.7.5.8 (04-30-1998) REIMBURSEMENT AND PAYMENTS FROM THE TREASURY FORFEITURE FUND
Subject to the discretion of the Secretary of the Treasury, valid liens and mortgages against property forfeited pursuant to any law enforced or administered by a Treasury enforcement organization, can be paid from the mandatory portion of the Fund. The validity of such liens must be verified, and any payment of a lien or mortgage with respect to a seizure or forfeiture of property shall not exceed the FMV of the property at the time of seizure. The Fund will reimburse the Service for certain expenses incurred in the process of seizing and forfeiting property under 18 U.S.C. Sections 981 and 982. The information in this section is based on policy contained in the Secretary of Treasury's Guidelines for Seized and Forfeited Property, dated October 1, 1993.
### 9.7.5.8.1 (11-17-2000) Investigative Expenses Qualifying for Reimbursement
Three conditions must be met before expenses related to seizure and forfeiture will qualify for reimbursement: The expense must be attributable to a particular seizure. The expense must be incurred prior to forfeiture. The expense must be such that it would not have been incurred but for the law enforcement activity leading to that seizure. NOTE: Investigative expenses may be claimed in joint investigations where a seizure is effected by another agency and CI files a sharing request (DAG71). In these situations, absent extraordinary circumstance, CI's investigative expenses should be minimal. A contract employee acting on behalf of the government can not bind the Service relative to investigative expenses. All expenses must be authorized by the AFC, SAC or other authorized official of the Service. A discussion of the types of reimbursable expenses follows.
### 9.7.5.8.2 (11-17-2000) Investigative Costs Leading to Forfeiture
Investigative costs leading to forfeiture are those costs incurred in connection with normal procedures undertaken to perfect the U.S. interest in the seized property. They include overtime payments for state and local law enforcement agency personnel as reflected by TEOAF Directive 18, travel, transportation of assets, rents, communications expenses, advertisement, translation/transcription expenses, supplies, and purchases of information or evidence. Costs for equipment are payable only to the extent they are necessitated by a particular operation and have no regular agency use. Costs for supplies are payable only to the extent they are necessitated by a particular operation and would not normally be procured except for the investigation. In addition, any payment for the purchase of evidence or information in excess of $250,000 must be approved by the Under Secretary of the Treasury (Enforcement). For purchases of evidence or information to be eligible for reimbursement, four additional conditions must be met: Pre-approval must be obtained from the Warrants and Forfeitures Section prior to commitment or agreement to pay an informant for evidence and/or information. Failure to obtain pre-approval may result in a field office not being reimbursed. The field office seizure file must contain detailed documentation describing the relationship between the seizure and the payment. Documentation must demonstrate the seizure/forfeiture could not have been accomplished without the purchase. The amount paid must bear a reasonable relationship to the value of the purchased evidence or information.
### 9.7.5.8.3 (12-16-1999) Limitations on Use of The Fund
The following items are specifically not payable from the Fund: Expenses in connection with an investigation where no seizure is effected. Purchase of real property, or any interest therein, except to acquire full title to or satisfy liens or mortgages on forfeited property. Payments to improve or equip any property transferred to federal agencies which are non-Fund members, or to state or local agencies. Expenses in connection with the seizure, detention, and disposition of property where the seizure was made for debt collection (i.e., welfare payments, student loans, etc.) or other non-forfeiture purpose. Reception and representation expenses such as refreshments, meals, gifts, or entertainment. Title 26 seizure/forfeiture actions. Unauthorized procurements or obligations incurred by contract employees. Investigative expenses related to seizures for evidence where there is no intent to forfeit.
### 9.7.5.9 (11-17-2000) PROPERTY DISPOSITION AFTER FORFEITURE
Property forfeited either administratively or judicially to the government, under 18 U.S.C. Section 981 (civil forfeiture), or under 18 U.S.C. Section 982 (criminal forfeiture), may be disposed of as follows: Deposited in the Fund (currency, negotiable instruments, proceeds of any financial account or proceeds from the sale of seized property). Equitably Shared through the Treasury Asset Forfeiture Program. Placed into official use. Transferred (real property only) under Weed and Seed Initiative (See TEOAF Directive 9). Returned to owner, claimant, or petitioner. Destroyed pursuant to court order. Property forfeited through abandonment procedures may be disposed of in the following ways: Placed in official use. Transferred to General Services Administration (GSA) for disposition. NOTE: Abandoned property cannot be shared with federal, state or local law enforcement agencies, or a foreign country. However, these agencies can apply for the property through GSA regulations 41 C.F.R., 101-48. The SAC, has the delegated authority to sign all deeds and titles relating to forfeited property, thereby effecting final disposition in any manner. See Chapter 10 of this Handbook concerning the disposition of forfeited property. Exhibit 9.7.5-1 (04-30-1998) Title Form 1570, Declaration of Forfeiture
Exhibit 9.7.5-2 (11-17-2000)
Notice of Pending Expedited Settlement Agreement

>
TREASURY FORFEITURE FUND NOTICE OF PENDING EXPEDITED SETTLEMENT AGREEMENT
This form must be faxed to the Treasury Executive Office for Asset Forfeiture upon the initiation of negotiations relative to an Expedited Settlement Agreement. Please use a separate form for each asset. TEOAF FAX: (202) 622-9610
Investigative Agency Case Number: _____
Investigative Agency Seizure Number: _____
SPMS Number: - | - - -
Approximate Date of Settlement Agreement: _________
Property Description:
Property Fair Market Value | $ _____
Anticipated Lien/Mortgage Liability: | $ _____
This information is provided to the Treasury Forfeiture Fund to enable the office to prepare a fiscal plan for the Expedited Settlement Fiscal Liabilities. The fair market values shown above agree with the values shown in the Seized Property Management System (SPMS).
Please Print
Name: _____
Title: _____
Agency: _____ Area: ____________
Phone: ________________________
Signature: _____
Date: _____
Version 1.2 | December 5, 1994
Exhibit 9.7.5-3 (11-17-2000)
Expedited Settlement Agreement

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EXPEDITED SETTLEMENT AGREEMENT
This form must be faxed to the Treasury Executive Office for Asset Forfeiture upon the completion of an Expedited Settlement Agreement TEOAF (202) 622-9610
Investigative Agency Case Number: _____
SPMS Number: - | - - -
1) Is the Forfeiture Order Attached? | Yes | No
2) Is the Settlement Agreement Attached | Yes | No
3) Are Lien Documents Attached? | Yes | No
4) Are Mortgage Documents Attached? | Yes | No
5) Are Payoff Statements Attached? | Yes | No
IF THE ANSWER TO ANY OF THE QUESTIONS IS NO, PLEASE EXPLAIN BELOW:
Payment Instructions--Please Print
Pay To: ________________________________________________
Amount: _____
Address: _____
Pay To: ________________________________________________
Amount: _____
Address: _____
Pay To: ________________________________________________
Amount: _____
Address: _____
Please Print
Name: _____
Title: _____
Agency: ________________ Area: ________________
Phone: __________________________
Signature: __________________________________________
Date: ______________
EOAF Review: ____________________________________
Date: _____________________
AFFM Review: ____________________________________
Date: _____________________
Version 1.1 | March 8, 1994
### Internal Revenue Manual | ### Part 9 Criminal Investigation Chap. 7 Asset Seizure and Forfeiture Sec. 5 Forfeiture Actions | ### (11-17-2000)

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