26 U.S. Code § 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 (c)(2)  thereof), 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) shall be applied as follows:
(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 amount remaining after applying paragraph (1) shall then be applied against such tax liability (and, if such tax was not previously assessed, it shall then be assessed);
(b) Surplus proceeds
Any surplus proceeds remaining after the application of subsection (a) shall, upon application and satisfactory proof in support thereof, be credited or refunded by the Secretary to the person or persons legally entitled thereto.
 See References in Text note below.
Source(Aug. 16, 1954, ch. 736, 68A Stat. 789; Pub. L. 89–719, title I, § 104(h),Nov. 2, 1966, 80 Stat. 1137; Pub. L. 94–455, title XIX, § 1906(b)(13)(A),Oct. 4, 1976, 90 Stat. 1834.)
References in Text
Section 6332 (c), referred to in subsec. (a), was redesignated section 6332 (d) by Pub. L. 100–647, title VI, § 6236(e)(1),Nov. 10, 1988, 102 Stat. 3739.
1976—Pub. L. 94–455struck out “or his delegate” after “Secretary” wherever appearing.
1966—Subsec. (a). Pub. L. 89–719inserted in introductory provisions, references to an exception in the case of surrender under section 6332 (c)(2) and to 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, struck out “under this subchapter” after “proceedings” in par. (1), and inserted “or the sale was conducted” after “levy was made” in par. (3).
Effective Date of 1966 Amendment