Printable Form 2026

IRS Form 12673 – Agreement to Bid

IRS Form 12673 – In the complex world of tax liens and property sales, IRS Form 12673 plays a crucial role for potential bidders interested in acquiring redeemed properties. Whether you’re a real estate investor, a prospective buyer, or simply researching IRS procedures, this comprehensive guide breaks down everything you need to know about the Agreement to Bid. We’ll cover its purpose, usage, completion process, and key requirements, drawing from official IRS resources to ensure accuracy and reliability.

What Is IRS Form 12673?

IRS Form 12673, officially titled “Agreement to Bid,” is a legal document used by the Internal Revenue Service (IRS) to secure commitments from potential buyers during property redemption sales. This form allows individuals or entities to formally agree to place a minimum bid on a specific property that the IRS has redeemed and is offering for public sale. It’s particularly relevant in scenarios involving tax-delinquent properties where the IRS exercises its right to redeem real estate sold at foreclosure to satisfy outstanding tax liabilities.

The form was last revised in August 2016, and it’s available for download directly from the IRS website. Unlike more common tax forms like W-2 or 1040, Form 12673 is specialized for IRS redemption investigations and sales, ensuring that the government can recover costs and protect its interests.

The Purpose of IRS Form 12673 in Property Redemptions

The primary purpose of Form 12673 is to facilitate the IRS’s property redemption process under Internal Revenue Code (IRC) Section 7425(d). When a property with an IRS tax lien is sold at a non-judicial foreclosure to satisfy junior liens, the IRS has the authority to redeem it within 120 days (or longer under state law) if it’s deemed in the government’s best interest.

Once redeemed, the IRS aims to sell the property quickly to recoup expenses, including the redemption amount, maintenance, and administrative costs. Form 12673 comes into play here: It secures a “guaranteed bidder” who agrees to bid at least a specified amount, helping the IRS determine if redemption is financially viable. Without at least one such agreement, the IRS generally won’t proceed with redemption unless approved by high-level officials.

This form protects both parties. For the bidder, it formalizes their intent and allows their deposit to be applied toward the purchase if they win. For the IRS, it mitigates risk by ensuring potential damages from a bidder’s default can be covered through the retained deposit.

When and Why Should You Use IRS Form 12673?

You should use Form 12673 if you’re interested in bidding on a property that the IRS is considering redeeming and reselling. This typically occurs in the following situations:

  • Tax Lien Foreclosures: Properties sold to pay off debts where the IRS holds a senior lien but opts to redeem to maximize recovery.
  • Redemption Investigations: During IRS investigations, potential buyers are solicited via letters (like Letter 1879) or limited advertising to submit bids.
  • Guaranteed Bids Required: The IRS requires at least one guaranteed bidder before recommending redemption, making this form essential for proceeding.

Using this form demonstrates serious intent and can position you as a preferred bidder. However, it’s not for casual inquiries—failure to follow through can result in forfeiting your deposit and potential liability for additional damages if the property doesn’t sell for the agreed minimum.

Step-by-Step Guide: How to Complete IRS Form 12673?

Filling out Form 12673 is straightforward but requires attention to detail to avoid errors. The form is a single page, and here’s a breakdown of the key sections:

  1. Bidder’s Agreement Statement: Start by entering your name (or the entity’s name) as the undersigned. Agree to bid at least a specified dollar amount on the described property if it’s offered for sale within a set number of days from the agreement date.
  2. Property Details:
    • Provide the legal property description (use attachments if needed for full details).
    • Include the property address.
  3. Deposit Authorization: Authorize a deposit (typically at least 20% of the bid amount) to be applied against the sale price if you’re the successful bidder. Specify the deposit amount.
  4. Consequences of Breach: Acknowledge that if you fail to bid the minimum and the property doesn’t sell for that amount within the timeframe, your deposit may be retained. You could also be liable for excess damages.
  5. Bidder Information:
    • Print or type your name.
    • Provide a telephone number.
    • Enter your street address, city, state, and ZIP code.
  6. Signature and Date: Sign and date the form to make it binding.

Tips for completion:

  • Use ink or type the information for clarity.
  • Attach additional pages for lengthy property descriptions.
  • Ensure the bid amount is reasonable and aligns with the property’s value, as it’s subject to IRS approval.

Key Requirements and Deposits for Form 12673

To submit Form 12673 effectively, meet these IRS requirements:

  • Deposit Minimum: A non-refundable deposit of at least 20% of the agreed bid amount is required, with a minimum of $1,000 in some cases. Lower deposits need managerial approval.
  • Acceptable Payment Methods: Certified checks, cashier’s checks, money orders, or approved certificates of deposit/letters of credit.
  • Bid Approval: The bid must be reasonable relative to redemption costs and doesn’t need to match the forced sale value.
  • Inspection Rights: Prospective bidders should inspect the property and review title details before committing.

If the property isn’t offered for sale within the agreed timeframe, the agreement voids automatically. Unsuccessful bidders get their deposits back after the sale.

Common Mistakes to Avoid with IRS Form 12673

  • Underestimating the Deposit: Always calculate 20% accurately to avoid rejection.
  • Incomplete Property Descriptions: Vague details can invalidate the form.
  • Ignoring Default Risks: Understand the financial implications of not bidding as agreed.
  • Missing Approvals: Bids require IRS managerial review; don’t assume automatic acceptance.

While Form 12673 stands alone for bid agreements, it often ties into other processes:

  • Form 4376: Report of Investigation for redemptions, which includes bid details.
  • Letter 1879: Sent to solicit interest from potential buyers.
  • For more on redemptions, consult IRS Internal Revenue Manual (IRM) Part 5.12.5.

Download the latest version from IRS.gov and consult a tax professional or attorney for personalized advice.

Conclusion: Navigating IRS Form 12673 with Confidence

IRS Form 12673 is a vital tool in the IRS’s arsenal for efficient property redemptions, ensuring taxpayer dollars are protected through guaranteed bids. By understanding its purpose, completing it accurately, and meeting deposit requirements, you can participate effectively in these sales. Remember, this guide is for informational purposes—always verify with official IRS sources or seek expert guidance for your specific situation.

For the most current information, visit the IRS website or contact your local IRS office. If you’re dealing with tax liens or property issues, professional assistance can help you avoid costly pitfalls.