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14.

United States Attorney General Opinion, March 7, 1935

38 U.S. Op. Atty. Gen. 194

COMPROMISE OF CASES INVOLVING THE FORFEITURE OF VEHICLES SEIZED FOR VIOLATION OF THE INTERNAL REVENUE LAWS

[194] The primary object of the Government in requiring a forfeiture of a vehicle for violation of its laws is to punish the violator by depriving him of his property, but the Government is also interested in obtaining the greatest amount possible in disposing of the vehicle.

In considering compromise offers submitted in cases involving the forfeiture of vehicles seized for violation of internal revenue laws, the inability of the Government to obtain from a sale of the vehicle, after deducting the expenses of forfeiture and sale, as much as the amount offered in compromise may be treated as uncertainty as to collection, within the meaning of that term as used in the opinions of the Attorney General to the Secretary of the Treasury dated October 24, 1933, and October 2, 1934.

TO THE SECRETARY OF THE TREASURY.

SIR:

I have the honor to acknowledge your letter of February 19, 1935, relating to your authority, under the provisions of Section 3229 of the Revised Statutes, to compromise cases involving the forfeiture of vehicles which have been seized for violation of the internal revenue laws.

You state that in cases of automobiles which have been seized for violation of the internal revenue laws, wherein there is usually no apparent uncertainty as to the liability of the automobiles to forfeiture, interested parties frequently offer in compromise amounts apparently larger than the net amounts which, after payment of storage and other charges, could be realized by the United States if the automobiles should be forfeited and sold at public auction. You further state that it has been the established practice of the Treasury Department for more than fifty years to compromise cases of this character on the basis above indicated.

In view of the conclusions reached in my opinions addressed to you on October 24, 1933 (38 Op. 94), and October 2, 1934 (38 Op. 98), to the effect that your power to compromise under the provisions of Section 3229 of the Revised Statutes of the United States, exists only in cases in which there is uncertainty as to liability or collection, you apparently entertain some doubt as to whether you may lawfully continue the above practice and request my opinion as to whether, in considering these offers in compromise, you may [195] lawfully treat the inability of the Government to obtain more from a sale of the vehicle than the amount offered in compromise as an 'uncertainty as to collection', within the meaning of that term as used in my opinions above mentioned.

Section 3229 of the Revised Statutes provides as follows:

'The Commissioner of Internal Revenue, with the advice and consent of the Secretary of the Treasury, may compromise any civil or criminal case arising under the internal-revenue laws instead of commencing suit thereon; and, with the advice and consent of the said Secretary and the recommendation of the Attorney-General, he may compromise any such case after a suit thereon has been commenced. Whenever a compromise is made in any case there shall be placed on file in the office of the Commissioner the opinion of the Solicitor of Internal Revenue, or of the officer acting as such, with his reasons therefor, with a statement of the amount of tax assessed, the amount of additional tax or penalty imposed by law in consequence of the neglect or delinquency of the person against whom the tax is assessed, and the amount actually paid in accordance with the terms of the compromise.'

The language of the above-quoted section is broad and authorizes the compromise of any civil or criminal case arising under the internal revenue laws. It clearly includes forfeiture cases arising under those laws.

The question whether uncertainty as to collection exists in the class of cases which you have presented is dependent upon the nature and extent of the Government's interest in a vehicle which has been seized and forfeited for violation of its laws. The primary object of the Government in forfeiting a vehicle is clearly to punish the violator by depriving him of his property. It is true that a forfeiture proceeding is in rem and that by a legal fiction the property is held guilty and condemned as though it were conscious instead of inanimate and insentient. See Various Items v. United States, 282 U. S. 577, 581. But that fiction, resorted to for the purpose of upholding the Government's right to forfeit the vehicle as against persons other than the violator, is not determinative of the question as to whether the Government's sole interest in forfeiting the vehicle is that of removing it from the possession of others or whether its interest is also of a fiscal nature.

[196] Under the laws and procedure governing the disposal of property forfeited under the laws of the United States, vehicles and other property, except that which is prohibited, must be sold at public sale, and after payment of the expenses of the forfeiture and sale, the remainder of the proceeds must be covered into the Treasury. These laws clearly demonstrate that the United States, notwithstanding any other interest, is interested in the value of forfeited vehicles. That is, it is interested in obtaining the greatest amount possible when it disposes of the vehicle.

There are various other laws which lend support to the view that the Government has a fiscal interest in forfeited property, among which is Section 3459 of the Revised Statutes, providing that perishable property seized for tax evasion may be sold before forfeiture if the claimant fails to give a bond and take delivery. This statute is designed to preserve the value of the property and clearly indicates that the United States has a financial interest therein. The Tariff laws are also analogous in that they provide for the release of seized property upon payment of the appraised value thereof or the giving of a substitute bond. Section 614, Tariff Act of 1930 [46 Stat. 757]; Section 938, Revised Statutes.

The United States having a fiscal interest in the vehicles seized, it necessarily follows that it is interested in the amount which it will be able to obtain from a sale of such vehicles. It is obvious, therefore, that it would be in the financial interest of the United States to accept an offer in compromise in any case which would bring into the Treasury more money than could be obtained from a sale of the vehicle after deducting the expenses attending the forfeiture and sale thereof.

In view of the conclusion I have reached that it would be clearly in the interest of the United States to accept offers in compromise in cases of the character and on the basis stated by you and in view of the long established practice of the Treasury Department in accepting offers in compromise on that basis I cannot, at this late date, advise you to disregard the apparent interests of the United States in deference to the principle that the interest of the Government [197] in the vehicle itself is paramount to its interest in the value thereof.

Accordingly, it is my opinion that in the consideration of offers in compromise submitted to you in cases involving the forfeiture of vehicles seized for violation of the internal revenue laws, the inability of the Government in any case to obtain from a sale of the vehicle, after deducting the expenses of forfeiture and sale, as much as the amount offered, may be properly treated by you as uncertainty as to collection within the meaning of that term as used in my opinions of October 24, 1933, and October 2, 1934, above mentioned. I assume, of course, that your request for my opinion does not relate to cases which have been referred to this Department for the institution of forfeiture proceedings or otherwise. Perhaps I should also state that I deal herein only with the question of power, the exercise of which is discretionary and may depend upon considerations other than monetary.

Respectfully,

HOMER CUMMINGS.