26 U.S.C. § 6342 — Application of proceeds of levy

(a) Collection of liability Any money realized by proceedings under this subchapter (whether by seizure, by surrender under section 6332 (except pursuant to subsection (d)(2) of it), or by sale of seized property) or by sale of property redeemed by the United States (if the interest of the United States in such property was a lien arising under the provisions of this title) must be applied as follows: (1) Expense of levy^* and sale First, against the expenses of the proceedings; (2) Specific tax liability on seized property If the property seized and sold is subject to a tax imposed by any internal revenue law which has not been paid, the money left after applying paragraph (1) must then be applied against such tax liability (and, if such tax was not previously assessed, it must then be assessed); (3) Liability of delinquent taxpayer^* The amount, if any, remaining after applying paragraphs (1) and (2) must then be applied against the liability in respect of which the levy was made or the sale was conducted. (b) Surplus proceeds Any surplus proceeds remaining after the application of subsection (a) must, upon application and satisfactory proof in support of it, be credited or refunded by the Secretary^* to the person or people legally entitled thereto.