4.4.17  Jeopardy Assessments/Termination Assessments/Transferor-Transferee Assessments

Manual Transmittal

July 15, 2011

Purpose

(1) This transmits revised IRM 4.4.17, AIMS Procedures and Processing Instructions, Jeopardy Assessments/Termination Assessments/Transferor-Transferee Assessments.

Material Changes

(1) Editorial changes were made and text was changed throughout to replace Case Processing Support to Centralized Case Processing (CCP).

(2) References to LMSB were changed to LB&I (Large Business and International).

(3) IRM 4.4.17.2.1 - Changed section title "Processing Procedures" to "Types of Jeopardy Assessments."

(4) IRM 4.4.17.2.2 - Defined area procedures and moved possessor of certain cash instructions to IRM 4.4.17.2.5.

(5) IRM 4.4.17.2.3 - Changed section title from "Confirmation" to "FORT Procedures" and edited original content for clarity.

(6) IRM 4.4.17.2.4 - Changed section title from "Follow-up" to "CIRSC Procedures" and edited original content for clarity.

(7) IRM 4.4.17.2.5 - Moved possessor of certain cash instructions from IRM 4.4.17.2.2 to this section.

(8) IRM 4.4.17.3.1 - Changed section title from "Processing Procedures" to "Types of Termination Assessments."

(9) IRM 4.4.17.3.1.1 - Clarified instructions in this area.

(10) IRM 4.4.17.3.1.2 - Added specific actions required.

(11) IRM 4.4.17.3.2 - Moved and changed section title from "Types of Assessments" to "General Processing."

(12) IRM 4.4.17.3.2.1 - Changed section title from "Against TP's Correct TIN" to "Termination Assessment" and moved original content to IRM 4.4.17.3.1.1.

(13) IRM 4.4.17.3.2.2 - Changed section title from "Possessor of Certain Cash" to "Post Termination" and moved original content to IRM 4.4.17.3.1.2.

(14) IRM 4.4.17.3.3 - Changed section title from "Establishing Full Year" to "Processing the Full Year."

(15) IRM 4.4.17.3.5 - Deleted this section.

(16) IRM 4.4.17.4.1 - Changed section title from "Procedures" to "General Instructions."

(17) IRM 4.4.17.4.1.1 - Moved Form 5344/5403, Closing, to IRM 4.4.17.4.3.

(18) IRM 4.4.17.4.1.2 - Deleted NMF assessment procedures. Added content to the various closing instructions within IRM 4.4.17.4 for clarity.

(19) IRM 4.4.17.4.1.3 - Deleted Form 1296 and made edits to this section for clarity.

(20) IRM 4.4.17.4.2 - Moved instructions for limited liability involving multiple years to from this section to IRM 4.4.17.4.4.

(21) IRM 4.4.17.4.2.1 - Added closing instructions.

(22) IRM 4.4.17.4.2.2 - Added instructions for closing agreed cases.

(23) IRM 4.4.17.4.2.3 - Added instructions for closing protested to Appeals/Docketed cases for Tax Court.

(24) IRM 4.4.17.4.2.4 - Added instructions for closing defaulted cases from 90-Day.

(25) IRM 4.4.17.4.3 - Moved IRC 6901(a)(2) to IRM 4.4.17.4.5 and replaced the content with instructions for completing Form 5344.

(26) IRM 4.4.17.4.4 - Added instructions for limited liability cases involving multiple years moved from IRM 4.4.17.4.2.

(27) IRM 4.4.17.4.5 - Added IRC 6901(a)(2) content moved from IRM 4.4.17.4.3.

(28) IRM 4.4.17.4.5.1 - Added processing instructions for IRC 6901(a)(2).

(29) IRM 4.4.17.5 - Added additional resources.

(30) Exhibit 4.4.17-1 - Updated text.

Effect on Other Documents

IRM 4.4.17 dated 08-01-2001 is superseded.

Audience

Large Business and International, (LB&I), Wage and Investment (W&I) and Small Business and Self-Employed (SB/SE) employees.

Effective Date

(07-15-2011)

Signed by
Charlestine D. Hardy
Director, Examination Planning and Delivery
Small Business Self Employed

4.4.17.1  (07-15-2011)
Introduction

  1. This chapter covers special types of assessments that require special handling and processing:

    1. Jeopardy Assessment instructions can be found in IRM 4.4.17.2.

    2. Termination Assessment instructions can be found in IRM 4.4.17.3.

    3. Transferor/Transferee Assessment instructions can be found in IRM 4.4.17.4.

4.4.17.2  (07-15-2011)
Jeopardy Assessments

  1. Jeopardy assessments are made in situations where prior to the assessment of a deficiency or tax, it is determined that collection of such deficiency or tax, would be endangered if regular assessment and collection procedures are followed.

  2. A jeopardy assessment must be approved by the Area Director and Area Counsel AND be made within 24 hours of the Area Director’s approval. See IRM 4.15.2.4.1.5, Securing Approval of the Package.

    Reminder:

    Written Approval by Area Counsel is required under the provisions of the IRS Restructuring and Reform Act of 1998. Failure to do so will result in the abatement of any assessment made under IRC 6201.

  3. Jeopardy assessments are made on Master File.

4.4.17.2.1  (07-15-2011)
Types of Jeopardy Assessments

  1. There are two types of Jeopardy assessments:

    1. Against the Taxpayer's Correct Taxpayer Identification Number (TIN) and

    2. Possessor of Certain Cash

4.4.17.2.2  (07-15-2011)
Area Procedures
Against the Taxpayer's Correct TIN

  1. The Area office must provide notice, by E-mail or telephone, to the Centralized Case Processing (CCP) Field Office Resource Team (FORT) manager or the Field Liaison as soon as it is known that a jeopardy assessment is being made (preferably within 48 hours before assessment).

  2. Fax all preliminary paperwork to FORT manager or Field Liaison.

    1. Form 2644, Recommendation for Jeopardy/Termination Assessment, with the Area Director's signature;

    2. Area Counsel's Approval Memorandum;

    3. Completed Form 3198, Special Handling Notice for Examination Case Processing, for each year;

    4. Completed Form 5344, Examination Closing Record, for each year;

    5. Form 4549, Income Tax Examination Changes, with all schedules for all years, and

    6. Specific written instructions stating to whom the FORT manager should fax the completed Form 3552, Prompt Assessment Billing Assembly, once the assessment is made.

    Note:

    Typically the Technical Services Manager and the Collection Officer are designated to receive the faxed Form 3552.

  3. The original Form 2644 will be sent to the FORT manager via express mail.

4.4.17.2.3  (07-15-2011)
FORT Procedures

  1. Upon receipt of the faxed package listed in IRM 4.4.17.2.2, the following information must be provided to the Cincinnati Internal Revenue Service Campus (CIRSC) Accounting Operation to advise them that a jeopardy assessment is being faxed:

    • Taxpayer's name, address and TIN;

    • Taxable period;

    • Type of tax;

    • Amount of tax, penalty (with appropriate transaction codes), interest to be assessed (computed by the examiner to the likely assessment date) and credit adjustments and/or credit reference numbers;

    • Amount of payment, if any;

    • Balance due and

    • Document Locator Number (DLN) and 23c date.

      Note:

      If the jeopardy assessment is for a delinquent return or a terminated period, it must be shown separately and called to the attention of the assessment officer.

  2. Either the FORT Manager or employees will prepare Form 2859, Request for Quick or Prompt Assessment, by year, using the information provided by the Area and approved by the Area Director, referenced in IRM 4.4.17.2.2 (2).

    Note:

    Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), will be used for Trust Fund assessments.

  3. The 23c date must be the date Form 2644 was signed by the Area Director.

  4. "JEOPARDY ASSESSMENT" will be notated across the top of Form 3210 and include faxing instructions (as determined in IRM 4.4.17.2.2 (2) for the confirmation Form 3552.

  5. Fax all forms received from the Area plus the Form 2859 to CIRSC Accounting Control/Service Operations.

  6. Within one day of the assessment, the following will be faxed to the Campus Accounting Operation, Accounting Control System, Journal and Ledger Unit:

    1. The original and one copy of Form 2644;

    2. Form 3198;

    3. Form 5344 for each year;

    4. Form 4549 and

    5. Copy of narrative and pattern letter (with attached tax computation)

  7. A package of the above documents listed in paragraph (6) should be mailed to the attention of the assessment officer (CIRSC) previously contacted for verification that the correct assessment has been made.

4.4.17.2.4  (07-15-2011)
CIRSC Procedures

  1. CIRSC Accounting Control Assessment Team will make the assessment and prepare Form 3552.

    Reminder:

    It is critical that the tax, penalties and interest on Form 3552 match the tax, penalties and interest on the Form 2644 signed by the Area Director. Form 3552 also contains the assessment date and account number. A separate Form 3552 is prepared for each year in which a jeopardy assessment is being made.

  2. The assessment officer will telephone the Technical Services Manager and the Collection Officer to acknowledge the assessment has been made.

  3. After processing, a confirmation copy of Form 3552 and Form 2859 is faxed to both the Technical Services Manager and the Collection Officer (per the original instructions) and must be associated with the control copy in CCP.

  4. Additional resource: IRM 3.71.244.2.4, Manual Assessments.

4.4.17.2.5  (07-15-2011)
Possessor of Certain Cash

  1. Jeopardy Assessments made under IRC 6867 require a new taxable entity be created for the person who is in physical possession of the cash.

  2. The procedures for this type of jeopardy assessment are the same as those for an assessment made under the taxpayer's correct TIN except the assessment is made under a temporary TIN obtained from the campus Entity function. See IRM 3.13.5.24.1.8, Assignment of an IRS Number for Termination/Jeopardy Assessment.

  3. The TIN is established on Master File.

  4. The use of a temporary TIN enables separate tax liability treatment for the possessed cash and avoids any effect on the possessor’s personal individual tax liability which remains separate and apart from the IRC 6867 assessment.

  5. All documents requiring entity information must use "(Possessor’s Name) as Possessor of Certain Cash" in the name line.

4.4.17.3  (07-15-2011)
Termination Assessments

  1. A termination assessment is made when it is found that a taxpayer would act to prejudice, or to render wholly or partially ineffectual, the collection of income taxes for a current or immediately preceding taxable year, unless collection proceedings are brought without delay.

  2. Each termination assessment must be approved by the Area Director (or delegate) and Area Chief Counsel (or delegate).

4.4.17.3.1  (07-15-2011)
Types of Termination Assessments

  1. There are two types of Termination Assessments:

    1. Against the Taxpayer's Correct TIN (IRC 6851) and

    2. Possessor of Certain Cash (IRC 6867)

4.4.17.3.1.1  (07-15-2011)
Against the Taxpayer's Correct TIN

  1. Termination applies if a return is not yet due (including extensions) and can be a partial year.

  2. Since a return is not yet due, the case is controlled on Non-Master File (NMF), using Form 5354, Examination Request Non-Master File.

  3. An immediate assessment is made on the termination year.

  4. After the assessment is made, the case is held in suspense pending action by the taxpayer.

  5. A Transaction Code (TC) 914 is placed on the Master File account and should not be removed until a return is filed or a return is due and not filed and Master File controls are needed.

4.4.17.3.1.2  (07-15-2011)
Possessor of Certain Cash

  1. All documents requiring entity information must use "(Possessor's Name) as Possessor of Certain Cash" in the name line

  2. The assessment will be made using a temporary TIN obtained by contacting the Campus Entity function. See IRM 3.13.5.24.1.8, Assignment of an IRSN for Termination/Jeopardy Assessment.

  3. The TIN is established on NMF.

  4. At the time the "Possessor of Certain Cash" termination assessment is transferred to Master File, it must NEVER be merged under the taxpayer's correct TIN.

4.4.17.3.2  (07-15-2011)
General Processing

  1. A termination assessment consists of two parts:

    1. Assessment of the short tax period (the termination period) and

    2. Assessment of the full tax period (the taxpayer's normal tax year).

4.4.17.3.2.1  (07-15-2011)
Termination Assessment

  1. When the assessment involves the termination of a taxpayer's year, the liability for the terminated tax period is handled as a jeopardy assessment at the time of termination. See IRM 4.4.17.2.

  2. The package sent to the FORT by the Area is the same as described for Jeopardy Assessments IRM 4.4.17.2.2 except Form 5344 is not prepared.

  3. The termination assessment is made as a short period NMF assessment.

  4. To prevent possible forfeiture of lien rights, the original short period assessment must not at any time (prior to determination of the tax liability for the full year) be reduced to an amount less than the current tax liability for the full year.

  5. When the case is received by Processing for assessment of the full period, the termination NMF assessment will be transferred to Master File.

4.4.17.3.2.2  (07-15-2011)
Post Termination

  1. After the termination assessment, a file prepared by the examiner containing the following information is forwarded to PSP Support Manager:

    1. Form 13496, IRC Section 6020(b) Certification;

    2. Substitute for Return (SFR) if one is present, or if no SFR, use a transcript of account (printed the day of the certification or just before);

    3. Form 4549;

    4. Form 886-A, Explanation of Items;

    5. Pattern Letter 1583(P);

    6. Form 5345-D, Examination Request-ERCS Users or Form 5345-B, Examination Request Non-ERCS Users; and

    7. Form 4135, Criminal Investigation Control Notice.

      Note:

      Form 4135 is not used for jeopardy. This will keep any filed return from posting to master file and result in the return being forwarded to the examiner.

  2. The PSP Support Manager will assign the file to the Termination Coordinator (IRM 4.15.7, Planning and Special Programs Procedures), who monitors the case until the due date of the full return and then initiates the appropriate post termination process. Possible actions may be:

    If Then
    Taxpayer files an extension to file the suspense period is changed to the extension date for future consideration.
    Taxpayer files a return the termination follow-up file is forwarded to Technical Services where the return and termination assessment are considered to determine the appropriate amount of the deficiency and for issuance of the notice.
    Taxpayer does not file a return or extension initiate the process to move the termination assessment to the full year master file account and forward the file to Technical Services for issuance of the notice.

  3. A SFR may also be necessary for the full year return if the taxpayer fails to file in termination follow-up.

  4. The SFR will be controlled on Master File using normal procedures.

  5. The PSP Termination Coordinator (TC) should initiate the SFR process before the case file is forwarded to Technical Services. The SFR record may not be fully established on AIMS when the case is transferred to Technical Services, so the module should be monitored and transferred when fully established on AIMS.

  6. The PSP TC should also facilitate the release of the Criminal Investigation (CI) freeze code, if any.

4.4.17.3.3  (07-15-2011)
Processing the Full Year

  1. After the termination follow-up file has been reviewed by Technical Services, the case has three potential outcomes:

    1. Agreed,

    2. Petitioned to Appeals/Docketed for Tax Court or

    3. Defaulted.

  2. The Petitioned/Docketed for Tax Court case will be forwarded to Appeals.

  3. The Agreed/Defaulted cases will be closed to the FORT for the closure of the full tax year.

  4. The tax period for the full year should be established on Master File at the time the temporary TIN is to be merged with the Master File account.

4.4.17.3.4  (07-15-2011)
Final Closure of Full Year

  1. When the case is ready for final closure on the full year, process the case as follows:

    1. After ensuring the TC 914 (Active Criminal Investigation) has been released, input TC 570 using Form 3177, Notice of Action for Entity on Master File.

    2. Request the assessment done by Service Center Accounting on the NMF short period (termination assessment) be transferred to Master File using Form 3465, Adjustment Request.

      • The transfer will be with a TC 290 and will maintain the 23c date (used to officially assess tax liabilities). The 23c date is the TC 150 posting date of the original termination assessment.

      • If the combined termination period and full period credits exceed the combined debts, request that Accounting transfer the credits with a secondary TC 570 for $0 to hold the credits until the TC 300 posts.

4.4.17.4  (07-15-2011)
Transferor/Transferee Cases

  1. A transferor is one who created the tax liability and transferred assets that could potentially satisfy the tax liability to another party or multiple parties.

  2. The transferor may be a corporation, an individual or an estate.

  3. A transferee is the person(s) or entity(ies) who received the assets for less than full, fair and adequate consideration and who is additionally liable for the tax due to this transfer.

  4. A transferee may be a corporation, an individual, an estate or an executor or administrator of an estate or a fiduciary or a combination of these entities.

  5. If multiple transferees exist, each transferee is controlled separately.

  6. The transferee individual/entity will have the title "Transferee" after the transferee's name.

4.4.17.4.1  (07-15-2011)
General Instructions

  1. IRM 4.11.52.6 (3), Administration Procedures, instructs the Field to establish a transferee case as a DUMMY record.

    1. ERCS will not allow both a Master File and a Non-Master File (NMF) control for the same person/entity.

    2. AIMS will not allow a Social Security Number (SSN) with a Business Master File (BMF) Master File Transaction (MFT) code.

    3. A DUMMY file must be established for the transferee case using the transferee's TIN with "-D" (dummy) and "Transferee" after the name to indicate transferee status.

    4. Using the "-D" eliminates the other dashes in the TINS so both ERCS and AIMS will accept the number with the NMF MFT of the transferor.

      Example:

      Smith, John, Transferee, 123456789-D, MFT 80, or Big Trucks, Transferee, 123456789-D, MFT 80.

4.4.17.4.2  (07-15-2011)
General Processing Procedures

  1. Forward the case to Technical Services when the amount of tax of the transferor and the appropriate tax liability of the transferee has been determined (may not be the full amount of the tax due).

  2. Ideally, the transferor and transferee cases will be closed together. However, due to statute considerations and other circumstances, this is not always possible.

4.4.17.4.2.1  (07-15-2011)
Closing Instructions

  1. Transferee cases can result in three different closures from Technical Services:

    1. Agreed,

    2. Petitioned to Appeals/Docketed for Tax Court, or

    3. Defaulted.

4.4.17.4.2.2  (07-15-2011)
Closing Agreed Cases

  1. Technical Services will:

    1. Prepare Form 1296 for the transferee reflecting the transferee's TIN using the "N" format:

      • For individual transferees: nnn-nn-nnnnN

      • For non-individual transferees: nn-nnnnnnnN

      Note:

      If the transferee has limited liability, Form 1296 will be annotated with the date(s) the interest should begin and the amount of tax associated with each date.

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEROR" or "TRANSFEREE" notated across the top. Clearly note on the Form 3198 that both the transferor and transferee files are included.

    4. Close the transferor master file record and the transferee "N" record(s) on ERCS to CCP Status Code 51 with Disposal Code 03, 04 or 09, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    5. Prepare Form 10904, Request for Record Deletion from AIMS, for the -D record to be deleted from AIMS. Forward to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND.

  2. If the transferor case has been previously closed and the transferee case is to be closed:

    1. Prepare Form 1296 for the transferee reflecting the transferee's TIN using the "N" format as instructed in text IRM 4.4.17.4.2.2 (1) (a).

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEREE" across the top.

    4. Prepare a copy of the transferee administrative file to be associated with the transferor file under the TC 421 DLN of the transferor TIN.

    5. Close the transferee NMF "N" records on ERCS to CCP Status Code 51 with Disposal Code 03, 04 or 09, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    6. Prepare Form 10904 for the "-D" record to be deleted from AIMS. Forward the Form 10904 to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND. Include a copy of the administrative file to be associated with the transferor file.

    7. The AIMS/ERCS unit will process the Form 10904 and will forward the transferee administrative file to the campus to be associated with the transferor file using the TC 421 DLN found on Master File.

  3. CCP will:

    1. Prepare Form 2859 to process the adjustment per Form 1296.

    2. Forward Form 2859 to CIRSC Accounting Control/Service Operations. The adjustment will be reflected under the "N" TIN.

      Note:

      This assessment may be mailed, telephoned, or faxed to Accounting.

4.4.17.4.2.3  (07-15-2011)
Closing Protested to Appeals or Petitioned to Tax Court

  1. Technical Services will:

    1. Prepare the package including the transferor and transferee administrative files for Appeals.

    2. Prepare and input Form 5354 to provide NMF controls on AIMS reflecting the transferee's TIN using the "N" and formatted as instructed in IRM 4.4.17.4.2.2 (1) (a).

    3. Prepare Form 3198 with "TRANSFEROR" or "TRANSFEREE" across the top. Clearly note on the Form 3198 that both the transferor and the transferee files are included.

    4. Close the transferor master file record and any transferee NMF "N" records on AIMS using Disposal Code 07 or 11 as appropriate.

    5. Close the ERCS records to Status Code 81 after AIMS is closed in order to generate a Form 3210. Verify that the transferor and all related transferee cases are listed on the Form 3210.

    6. Prepare Form 10904 for the "-D" record to be deleted from AIMS. Forward the Form 10904 to the local AIMS/ERCS staff for processing, using Disposal Code 28 or AMNOND because the "-D" record cannot be closed to Appeals on AIMS.

4.4.17.4.2.4  (07-15-2011)
Closing Defaulted from 90-Day

  1. Technical Services will:

    1. Prepare Form 1296 for the transferee reflecting the transferee's TIN using the "N" and formatted as instructed in IRM 4.4.17.4.1 (1) (1). Also, if the transferee has limited liability annotate the Form 1296 as stated in IRM 4.4.17.4.2.2 (1) (a).

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEROR" or "TRANSFEREE" across the top. Clearly note on the Form 3198 that both of the transferor and transferee files are included.

    4. Close the transferor master file record and the transferee NMF "N" record(s) on ERCS to CCP Status Code 51 with Disposal Code 10 or 13, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    5. Prepare Form 10904 for the "-D" record to be deleted from AIMS. Forward to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND.

  2. If the transferor case has been previously closed and the transferee case is to be closed:

    1. Prepare Form 1296 for the transferee reflecting the transferee's TIN using the "N" format as instructed in IRM 4.4.17.4.2.2 (1) (a). If the transferee has limited liability see the note in IRM 4.4.17.4.2.2 (1) (a).

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEREE" across the top.

    4. Prepare a copy of the transferee administrative file to be associated with the transferor file under the TC 421 DLN of the transferor TIN.

    5. Close the transferee NMF "N" record(s) on ERCS to CCP Status Code 51 with Disposal Code 10 or 13, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    6. Prepare the Form 10904 for the "-D" record to be deleted from AIMS. Forward the Form 10904 to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND. Include the copy of the transferee administrative file to be associated with the transferor file.

    7. The AIMS/ERCS unit will process the Form 10904 and will forward the transferee administrative file to the campus to be associated with the transferor file using the TC 421 DLN found on Master File.

  3. CCP will:

    1. Prepare Form 2859 based on information on Form 1296.

    2. Forward Form 2859 to CIRSC Accounting Control/Service Operations for assessment. The adjustment will be reflected under the "N" TIN.

      Note:

      This assessment may be mailed, telephoned or faxed to Accounting.

4.4.17.4.3  (07-15-2011)
Form 5344

  1. Work the transferor case file as a unit following normal procedures using the appropriate disposal code on Form 5344.

    Note:

    The transferor whipsaw indicator will be "K" .

  2. The transferee Form 5344 is completed as follows:

    1. Item 13: the disposal code must be an examined disposal code. It cannot be Disposal Code 28, non-master file closings.

    2. Item 35: must include the adjustment amount from Form 2859.

    3. Item 401: must reflect the whipsaw indicator "R" .

4.4.17.4.4  (07-15-2011)
Limited Liability Involving Multiple Years

  1. The assessment may be made against the transferor, as well as one or more transferees.

  2. The assessment against the transferee may be for the full amount due by the transferor or may be a lesser amount (limited liability).

  3. If liability is limited and more than one year is involved, one assessment will be made for the multiple years.

  4. List on Form 1296 the total amount to be assessed and amounts for each transferee. See the note at IRM 4.4.17.4.2.2 (1) (1).

4.4.17.4.5  (07-15-2011)
IRC 6901(a)(2)

  1. Under IRC 6901(a)(2) assessment may be made of the liability of a transferee for excise and employment taxes incurred under the 1954 Code if the transferee liability arises from the liquidation of a partnership or a corporation or a reorganization within the meaning of IRC 368(a).

  2. In such a case, if the transferee agrees to pay the tax due, the examining officer will prepare a supplemental return for the taxpayer or collecting agency involved. The transferee will evidence his or her agreement by signing the return as transferee under IRC 6901(a)(2).

4.4.17.4.5.1  (07-15-2011)
Processing Instructions for 6901(a)(2)

  1. Do not process the supplemental return prepared by the revenue agent.

  2. Prepare Form 1296 as the assessment document.

  3. Examination or Appeals will complete the following items:

    • The type of tax;

    • Transferor name, address, TIN, taxable year or period and Code section;

    • Transferee name, address, TIN, taxable year or period and Code section; and

    • The amount of and type of transferee tax and penalty.

  4. Specify the type of tax as "Other Tax" .

  5. If an Appeals hearing is requested, transfer the case to the Appeals Office prior to assessment.

4.4.17.5  (07-15-2011)
Additional Resources

  1. Appeals Case Routing Web Page: http://appeals.web.irs.gov/APS/caserouting.htm

  2. IRM 3.17.63, Redesign Revenue Accounting Control System, and IRM 3.17.46, Automated Non-Master File Accounting, provide additional information on the actual processing of the jeopardy assessment.

Exhibit 4.4.17-1 
Form 1296— Assessment Against Transferee or Fiduciary

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