4.23.11  Prompt Action in Deficiency and Overassessment Cases

4.23.11.1  (10-19-2010)
Overview

  1. This section details the steps for prompt action in deficiency and overassessment cases.

  2. In accordance with the Service’s continuing effort to reduce the Accounts Receivable Dollar Inventory (ARDI) and Currently Not Collectible (CNC) Accounts, managers must strive for quality assessments and promote an increased emphasis on early collections. It is the general practice of the Service to invite advance payments on agreed adjustments to employment tax returns and delinquent returns secured. Managers will also provide information and assistance on the collection processing in all deficiency cases.

  3. If a taxpayer is bankrupt ("B" code on Form 5546) or is currently working with Collection on payment of taxes previously assessed ("C" code on Form 5546 or Collection status 26), Collection will be consulted before proposing additional deficiencies. See IRM 4.20.1.2, "Examiner’s Responsibilities," for examiner responsibilities.

  4. At the time a tax deficiency is proposed or a delinquent return is solicited, the examiner will furnish a calculation of the tax, projected interest, penalties due, the current interest rate on underpayments and an explanation of the advantages of making an advance payment. Publication 1, Your Rights as a Taxpayer, provided at the start of the examination, should again be discussed with the taxpayer. In addition, Publication 594, The IRS Collection Process, will also be furnished to provide an opportunity for the taxpayer to discuss the IRS collection process and ask any questions.

  5. An examiner can accept payment by check or money order, or cash (currency or coin). If a taxpayer desires to make payment by cash, Collection assistance in accepting the payment should be requested through the manager. Also, office locations that have Wage and Investment Division Field Assistance groups are able to assist in processing cash payments.

  6. If the taxpayer is unable to pay, the examiner will review payment plans with the taxpayer. The examiner will explain the interest provisions to the taxpayer. See IRM 4.23.8.3, "Interest-Free Adjustments," and subsequent sections for further information and examples of the interest-free provision.

  7. The taxpayer's ability to pay is determined using a "tiered interview." The "tiered interview" consists of the questions:

    1. Can you pay today?

    2. How much can you pay today?

    3. Can you pay at first notice?

    4. Can you borrow to pay the first notice?

    In each instance, the examiner should attempt to secure full payment. However, if the taxpayer is able to pay the amount due within 120 days from the date of first notice, no other action is taken by the examiner.

  8. If the taxpayer is not able to pay in full within 120 days of the first notice, consideration should be given to an installment agreement. This should be coordinated with Collection, as set forth in IRM 4.20.3, "Examination Collectibility - Soliciting Payment."

4.23.11.2  (10-19-2010)
Preparation and Acceptance of Waiver Form

  1. A waiver will be accepted only when it discloses the type of tax, period or periods involved, the amount of deficiencies and / or overassessments (and penalties, if any), and is properly signed by the taxpayer. Form 2504, Form 2504-S, and Form 2504-WC fulfill these requirements.

    1. Service personnel may not alter a waiver completed by a taxpayer or request that a taxpayer execute a blank waiver.

    2. A timely-filed waiver form is considered a valid claim for refund when a taxpayer agrees to an overassessment determined by the Service.

  2. If an error was made in computing the deficiency, overassessment, or penalty shown on a waiver signed by a taxpayer, it is not necessary to obtain a new waiver if correction of the error is in favor of the taxpayer (less tax due or higher refund due). In such a case, the correct deficiency or penalty should be assessed, or the correct overassessment scheduled for refund.

  3. If the correction of an error is not in favor of the taxpayer (more tax due or less refund), the case may be processed for the amount of deficiency, overassessment, or penalty shown by the original waiver under the following circumstances:

    1. As a general rule, the correction of the error will not require approval if the difference does not exceed $50.

    2. All Area Examination Type Cases - An error over $50 may be processed when approved by the Technical Services Manager, the Field Territory Manager, or the Area Director as established by local procedures. The dollar amount of the error in relation to the total corrected deficiency should be considered when determining whether the error should be waived.

    3. See IRM 4.10.8.12, "Corrected Reports," for additional guidelines. Also see SB/SE Delegation Order 4.41, "Error Tolerance Levels."

  4. When the correction of an error results in the increase of a deficiency not processed under (3) above for any period shown on a waiver, a supplemental waiver will be secured for the difference between the deficiency or penalty, as corrected, and the amount shown on the original waiver. The supplemental waiver will be clearly identified as such and stapled on top of the original waiver, and the case will be processed in the usual manner. If the correction of an error results in the decrease of an overassessment not processed under (3) above, a new waiver will be secured for the amount of the corrected overassessment.

  5. When a waiver covers multiple periods, the rules in (2) through (4) above must be applied separately to each period involved and not to the net effect of the waiver. For example, if a waiver shows additional taxes for each of two periods, but corrections result in a substantial tax increase for one period and a substantial tax reduction for the other period, a new waiver should be solicited even though the net effect of the corrections may favor the taxpayer.

4.23.11.3  (05-13-2008)
Advance Payments

  1. Advance payments are defined as payments intended for application to anticipated, pending, or proposed deficiencies or additional assessments, including any payments received as a result of invitations to pay by examiners. Advance payments do not include payments received with delinquent returns obtained by the examiners.

  2. Payments tendered before the deficiency is assessed, e.g., unagreed cases, will be treated by the Service as a cash bond for the payment of taxes. Election by the taxpayer to allow the Service to retain the deposit as a cash bond will not stop the taxpayer from contesting the Service position in court.

  3. In agreed field and office examination cases the examiner will solicit payment of the deficiency.

  4. An examiner will not solicit payment from a taxpayer until the examination is completed and an agreement is secured. If, however, the taxpayer offers payment prior to this point as a means of stopping the running of interest, such payment will be accepted, since the accrual of interest will terminate as of the date of payment.

  5. When a case involves restricted interest, the examiner will not solicit the interest due. If the taxpayer desires to make full payment of the balance due the examiner will check the "Restricted Interest" box on the Form 3198 or Form 9231. At this time, advise the taxpayer that the restricted interest provisions apply and cannot be computed at this time, but that the Service will bill later for this amount or will be computed at closing by Technical Services. See IRM 20.2.8, "Interest - Restricted Interest."

  6. The responsible employee who accepts the advance payment will classify it either as:

    • one tendered after the deficiency has been determined and an agreement has been secured from the taxpayer and before the mailing of a statutory notice, or

    • one tendered before the deficiency has been determined and before an agreement has been secured from the taxpayer.

  7. All employees who receive remittances must transmit them no later than the next workday after receipt to the teller unit at the appropriate Campus for deposit.

4.23.11.4  (05-13-2008)
Form 3244–A, Payment Posting Voucher—Examination

  1. Upon acceptance of an advance payment (tendered before or after a deficiency has been determined and an agreement has been secured from the taxpayer), the responsible examiner will complete a separate Form 3244-A, Payment Posting Voucher - Examination, for each tax period and class of tax involved, as follows:

    1. SSN / EIN - Enter the taxpayer identification number.

    2. Form No. / MFT - Form numbers and MFT codes are found in Document 6209, IRS Processing Codes and Information.

    3. Tax Period - Enter "YYYYMM" , e.g., - quarterly return ending June 30, 2008 is shown as "200806" .

    4. Transaction / Received Date - Enter the date the remittance was received by the responsible examiner, e.g., July 30, 2009 is shown 07–30–2009.

    5. Taxpayer - Enter the taxpayer’s full name, address, and ZIP code.

    6. Transaction Data - Enter the total amount of the payment opposite the Transaction Code (any breakdown is entered in Remarks).

4.23.11.4.1  (05-13-2008)
Form 3244–A, Remarks

  1. Indicate the pertinent information regarding the transaction, including:

    1. The check number of the check submitted by the taxpayer.

    2. The amount of payment allocated for tax, penalty, and interest, as well as any special instructions.

    3. If examination has no record of ever having the case file, the remarks section must indicate that fact.

    4. If the date of an agreement precedes the date of the advance payment by more than 30 days, enter the agreement date.

    5. If the first payment is not for full amount of deficiency, enter "Part Payment" ; or if part payment is other than the first payment, designate the payment, e.g., "2nd Payment."

    6. Note restricted interest cases. See IRM 4.23.11.7.

    7. Cash Bond - Check block only for advance payments accepted before the deficiency can be determined (i.e., unagreed cases).

    8. If a payment received applies to more than one period, indicate "split remittance" in the remarks section of Form 3244–A.

    9. Prepared By - Enter the preparer's two-digit area office code, office symbol, name, and telephone number (including area code).

4.23.11.4.2  (05-13-2008)
Forwarding Form 3244–A

  1. Each compliance function has developed its own set of guidelines for processing Form 3244–A. Those guidelines are to be followed if they differ from the following processing steps:

    1. Part 1 of Form 3244-A and the taxpayer's remittance will be forwarded to applicable Servicing Campus on the same day, or following day, of receipt. Use Form 3210, Document Transmittal, to transmit the form and payment.

    2. Parts 1 and 3 of Form 3210 are forwarded to the appropriate Campus with the Form 3244–A. Part 4 of Form 3210 will be retained by the originator for control purposes; Part 2 may be discarded.

    3. Part 2 of Form 3244–A is attached to the face of the appropriate tax return or IDRS print, so that it will remain in a prominent spot as processing continues on the case.

    4. If the remittance is a cash bond, follow the same steps above.

4.23.11.5  (05-13-2008)
Processing Advance Payments

  1. Managers are responsible for ensuring timely remittance processing by employees under their supervision. If a Form 5919, Teller’s Error Advice, indicating late remittance processing is received, it is the manager’s responsibility to initiate corrective and/or disciplinary action as appropriate.

  2. All employees who receive remittances must transmit them as soon as possible to ensure receipt in the remittance processing function within 24 hours.

4.23.11.5.1  (05-13-2008)
Payments Of $100,000 Or More

  1. All employees must alert their manager upon receipt of a remittance of $100,000 or more. The manager will determine what extraordinary steps are necessary to ensure at least next day delivery to the applicable Campus after receipt. Measures may include, but are not limited to:

    1. Express Mail - To ensure next day delivery either by use of previously arranged express mail service or hand delivery to the post office for this service. See IRM 1.22, "Mail and Transportation Management Handbook."

    2. Private Delivery Service; within 300 miles; (Examples: United Parcel Service, Purolator, etc.); over 300 miles; (Examples: Emory, Airborne, etc.).

  2. Contact with Facilities Management’s Administrative Mail Coordinator should be made to determine which of the above is most cost-effective.

  3. Ensure the cost of transportation of the remittance is commensurate with the interest to be gained by expeditious deposit.

4.23.11.6  (05-13-2008)
Subsequent Payments

  1. When a remittance is received for a delinquent return or for a deficiency case, either of which was already released to the appropriate Campus, prepare Form 3244–A. Enter the amount of the total payment opposite Code 670 and enter a zero opposite Code 570. The TC 570 will prevent the payment from refunding until the examination deficiency has posted.

  2. Forward the remittance and Part 1 of Form 3244–A to the appropriate Campus using Form 3210. Retain Part 2 of Form 3244–A with Part 4 of Form 3210, Document Transmittal. When the acknowledgement Form 3210 is received, destroy both Part 2 of Form 3244–A and Part 4 of Form 3210.

4.23.11.7  (05-13-2008)
Restricted Interest Cases

  1. The Code provides that, under certain conditions, interest on deficiencies and overassessments of tax is prohibited or limited to specific accrual periods. These special interest accrual periods are shorter than those that would result if the deficiencies and overassessments were subject to the regular interest provisions of IRC 6601, Interest on Underpayment, Nonpayment, or Extensions of Time for Payment, of Tax, and IRC 6611, Interest on Overpayments. These prohibitions give rise to the term "restricted interest."

  2. Generally, interest is paid on a tax overpayment for the period of time that the Government has use of the taxpayer’s money. Interest is collected, similarly, for the period of time that the taxpayer has use of the Government’s money. The underlying objective is to determine in a given situation whose money it is and for how long the other person had use of it.

  3. In all employment tax cases which involve a restriction on the payment of interest, Form 3198, Special Handling Notice for Examination Case Processing, will be attached to the outside of the case jacket. This form will serve as a notification of the interest restriction.

  4. The examiner completes the checkbox and enters the interest start date on Form 3198, "6205 Interest-Free Adjustment date."

  5. The section of the Code which authorizes the restriction of interest is IRC 6205(a) or IRC 6413(a) and (d).

  6. See IRM 4.23.8.3, "Interest-Free Adjustments," and subsequent subsections for more information.

4.23.11.8  (10-19-2010)
Assessments

  1. The assessment of a deficiency or an additional tax (except in bankruptcy and receivership proceedings) falls within the following categories:

    1. Quick Assessment - a quick assessment is made if the statutory period for assessing an additional tax or an agreed deficiency is about to expire.

    2. Prompt Assessment - a prompt assessment is made if collection appears to be at risk and the intention is to protect the government’s interest and revenue.

      Note:

      For more information on Quick/Prompt Assessments, refer to IRM 4.4.25, "AIMS/Processing Handbook - Quick Assessments."

    3. Jeopardy Assessment - a jeopardy assessment is 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.

      Note:

      For more information on Jeopardy/Termination Assessments, refer to IRM 4.4.17, "AIMS/Processing Handbook - Jeopardy Assessments/Terminations."

    4. Termination Assessment - a termination assessment is made when it is found that a taxpayer plans to do any act that would tend 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. Under IRC 6851, a termination assessment with respect to an income tax can be made any time prior to the expiring of the due date for filing such return (determined with regard to extensions).

      Note:

      Termination assessments do not apply to employment taxes.

    5. Regular Assessment - a regular assessment includes all assessments not processed as (a), (b), (c), or (d) above.

  2. There are three IRC sections authorizing jeopardy assessments:

    • IRC 6861, Jeopardy Assessments of Income, Estate, Gift and certain Excise Taxes,

    • IRC 6862, Jeopardy Assessments of Taxes other than Income, Estate, Gift and certain Excise Taxes, and

    • IRC 6867, Presumptions where Owner of Large Amount of Cash is not Identified.

    Only one, IRC 6862, applies to employment taxes. IRC 6862 grants the Service the authority for making jeopardy assessments where any tax other than an income, estate, or gift tax is jeopardized. The assessment can be made even if the due date for filing the tax return has not expired.

  3. The difference between a jeopardy assessment and a termination assessment is that a jeopardy assessment, is made for a prior year where the filing date, including extensions, has passed. A termination assessment is made for the current taxable year, or the immediately preceding taxable year, or both. Such assessments may not be made once the date (determined with regard to extensions) for filing a full year return has passed. See IRC 6851(a)(4).

4.23.11.9  (10-19-2010)
Quick Assessments

  1. Requests for quick assessments are made by telephone or facsimile when statute or bar date expiration is within 30 days. Refer to IRM 4.23.10.16.1, "Partial Assessment/Quick Assessment Processing," for general procedures. See IRM 4.23.11.9.4.

  2. Form 5344, Examination Closing Record, Form 5599, TE/GE Examined Closing Record, or Form 8278, Computation and Assessment of Miscellaneous Penalties, are used to request quick assessments. In addition, Form 2859, Request for Quick or Prompt Assessment, is used in situations (a) – (d) below, or when the statute or bar date expiration is more than 30 but less than 60 days. A Quick Assessment is necessary if:

    1. The statute of limitations will expire within 60 days, or it is determined that terminal closing (Command Code AMLOC) and assessment processing (Command Code ADJ47) actions cannot be completed before the 60-day period,

    2. There are additional and/or delinquent taxes due in certain bankruptcy cases. Quick assessment procedures generally DO NOT apply to bankruptcy petitions filed after October 1, 1979. Note, however, that the bankruptcy stay does not prohibit the making of an assessment, and therefore, does not toll the assessment statute for bankruptcy cases filed on or after October 22, 1994.

    3. There are deficiencies involving bankruptcy and receivership cases under IRC 6871, Claims for Income, Estate, Gift, and Certain Excise Taxes in Receivership Proceedings, etc., or

    4. An amended return is received and the statute will expire within 120 days.

  3. Generally, quick assessment action is pursued if the assessment statute expires in 90 days or less. Telephonic requests for quick assessment are made if the assessment statute expires in 30 days or less.

  4. A quick assessment does not provide authority to take immediate collection action for payment of the tax liability assessed. The taxpayer is allowed the statutory ten-day period in which to pay; however, if the taxpayer is in a receivership or probate proceeding, an immediate proof of claim may be filed.

  5. Quick assessment procedures do not change (update) the existing Master File entity information. If entity information on any return being processed differs from that shown on IDRS using command code ENMOD, a Form 2363, Master File Entity Change, must be prepared to change the Master File entity to agree with the information on that return.

  6. To eliminate unpostable conditions, a transcript of the module involved is researched to determine whether:

    1. The module is established on Master File,

    2. TIN and name lines agree with the Form 2859, Request for Quick or Prompt Assessment, information,

    3. The period was not previously assessed,

    4. No freeze codes exist, and

    5. The proper transaction codes are being input and are not duplications.

  7. If an account contains a TC 520/521 and/or a "right-V" freeze, making an assessment generally is allowed while the taxpayer is in bankruptcy status. The examiner should (following local procedure) contact the Examination Bankruptcy Coordinator or Technical Services for direction. Examiners should explain that they have a case for quick assessment but research indicates the taxpayer is in bankruptcy. If advised to make the assessment, the examiner should note the name and title of the person authorizing the assessment as well as the reason this assessment may be made in the "Remarks" section of Form 2859. Forward a copy of Form 2859 to Technical Services. If the examiner is advised the taxpayer is in bankruptcy and not to make an assessment, forward the case file to the Examination Bankruptcy Coordinator, with a Form 3198, Special Handling Notice for E xamination Case Processing, attached to the outside of the case file with the information about the bankruptcy and the name and title of the person in Technical Services providing the information in the "Remarks" section of the Form 2859.

4.23.11.9.1  (10-19-2010)
Quick Assessments on Trust Fund Recovery Penalty and IRC 6020(b) Cases

  1. A quick assessment of a proposed Trust Fund Recovery Penalty assessment on an employment, excise, or partnership tax return prepared and signed under authority of IRC 6020(b) may be made if a proof of claim covering the liability is filed in a receivership or probate proceeding. In Trust Fund Recovery Penalty cases, a quick assessment may also be made if the expiration of the statutory assessment period is imminent (less than 60 days) and a waiver extending the assessment period cannot be obtained.

  2. When a quick assessment is made on an unagreed liability, the taxpayer shall be afforded the same appeal rights, without prior payment and claim for refund, that are available to a protesting taxpayer prior to assessment.

  3. All collection action should be withheld until the administrative appeal rights have been exhausted.

4.23.11.9.2  (05-13-2008)
Investigating Employee Responsibilities for Quick Assessments

  1. If a quick assessment is required, the investigating employee will:

    1. Prepare Form 2859, Request for Quick or Prompt Assessment, in quadruplicate. Original and one copy are sent to the Campus, one copy is retained by preparer, and in bankruptcy cases one copy is sent to Technical Services,

    2. Transmit a copy of Form 2859 to the Technical Services Manager if receivership proceedings are involved,

    3. Prepare Form 4844, Request for Terminal Action, requesting input of TC 599, if applicable,

    4. Prepare Form 2363, Master File Entity Change, to indicate final filing requirements, if applicable,

    5. Forward Forms 2363 and 4844 to the appropriate function within the area for input. Do not attach these forms to the Form 2859 or the return. The unit in the Campus which processes the assessments cannot process these requests for IDRS input, and

    6. Annotate returns attached to Form 2859 as "Back-up for Quick Assessment."

4.23.11.9.3  (10-19-2010)
Forwarding Quick Assessments to Campus

  1. Forward the original and two copies of Form 2859, along with the related returns and documents, under separate cover and identified as "Quick Assessment" to Case Processing Support to be transmitted to the Campus as follows:

    1. Form 2859 and attachments can be forwarded directly to the Campus Accounting Branch.

    2. For Trust Fund Recovery Penalty assessment, the Accounting Branch then forwards the appropriate documents to the Collection Branch after assessment.

    3. If TSIGN (TDA/TDI Assignment Code) of the balance due is being requested, Form 2859 and attachments, as well as the TSIGN request, must be forwarded to the Campus Collection Branch.

  2. The Campus Accounting Branch will note the reference number and the "23-C" date on a copy of Form 2859 and returns this copy to the initiator to be placed in the case file.

  3. When a quick assessment of a proposed Trust Fund Recovery Penalty is made, the Campus Accounting Branch sends Parts 3, 4, and 5 of Form 3552, Prompt Assessment Billing Assembly, to the initiator. The initiating officer will immediately deliver or send Parts 3 and 4, along with Publication 1, Your Rights as a Taxpayer, and Publication 594, The IRS Collection Process, to the taxpayer.

4.23.11.9.4  (10-19-2010)
Forwarding SB/SE Employment Tax Quick Assessments to Cincinnati Centralized Case Processing (CCP)

  1. To expedite processing procedures for quick assessments of Employment tax return and adjustments, SB/SE Employment Tax field groups should follow these procedures:

    1. Notify the CCP Manager by phone to inform them that assessment information is to be faxed and to identify the fax recipient.

    2. Prepare a fax cover sheet for transmittal with all relevant information, including identification of all parties, the forms attached, and the number of pages.

    The fax will consist of:

    • Fax cover sheet,

    • Completed Form 3198 with the "Partial Assessment" box checked,

    • Form 2504, Form 2504-S, or Form 2504-WC signed by the taxpayer, if applicable,

    • Completed report including Form 4666, Form 4667, and Form 4668, and

    • Form 5344 for each period to be assessed. Complete the form through Item 15.

  2. CCP will make the partial assessment within ten days and fax back the copies of Form 5344 marked "Request Completed" and TXMODA’s showing the pending assessments to associate with the case file.

  3. Upon closing the case, Form 5344 or Form 5599, TE/GE Examined Closing Record, must be completed for all periods. For periods where there is no additional assessment due to the processing of the partial assessment, show a TC 300 with a zero amount.

  4. Additional instructions for Form 5344 for quick and partial assessments can be found in IRM 4.4.25.9.1, "Form 5344."

    Note:

    For multiple quick assessments, the Field Groups should inform the Team Manager that the assessment information is being sent to the CCP using overnight mail. Overnight mail should only be used when the faxing of multiple assessment documents would be too time consuming and inefficient.

4.23.11.10  (10-19-2010)
Prompt Assessments

  1. A prompt assessment is a manually processed assessment of a secured return where collection appears to be at risk and the intention is to proceed with collection action immediately upon request of the assessment. A prompt assessment may only be requested when prompt collection action is necessary as to protect the Government’s interest and revenue.

  2. If the taxpayer is quickly placing property beyond the reach of the Government, collection action may be taken, even though the 10 day notice and demand period and the 30 day notice of intent to levy has not passed. In addition, IRC 7429(a)(1)(A) requires Counsel approval, in writing, for a jeopardy levy.

4.23.11.10.1  (05-13-2008)
Procedures for Recommending Prompt Assessments

  1. Form 2859, Request for Quick or Prompt Assessment, will be prepared in quadruplicate.

  2. If the initiator has not been designated to determine when collection is in jeopardy, Form 2859 should also be signed by a revenue officer who was designated such authority.

  3. Annotate returns attached to Form 2859 as "Back-up for Prompt Assessment."

  4. The original and two copies of Form 2859 should be attached to the tax return and will be forwarded, under separate cover and identified as "Prompt Assessment," to the Campus as follows:

    1. Form 2859 and attachments are forwarded directly to the Campus Accounting Branch, and

    2. For Trust Fund Recovery Penalty assessment, the documents are forwarded to the Campus Collection Branch by the Accounting Branch after assessment.

  5. The Campus Accounting Branch notes the reference number and the "23-C" date on a copy of Form 2859 and will return this copy to the initiator to be placed in the case file.

  6. Form 4844 must be prepared to request input of TC 599, if applicable.

4.23.11.11  (10-19-2010)
Jeopardy Assessments

  1. All jeopardy assessments must be in full compliance with Policy Statement 4–88, found at IRM 1.2.13.1.27, which advises "Jeopardy assessments should be used sparingly and care should be taken to avoid excessive and unreasonable assessments." At least one of the following conditions must exist:

    1. The taxpayer is, or appears to be, preparing to quickly depart from the United States or to conceal himself/herself,

    2. The taxpayer is, or appears to be, designing quickly to place his/her or its property beyond the reach of the Government either by removing it from the United States, by concealing it, by dissipating it, or by transferring it to other persons,

    3. The taxpayer’s financial solvency is, or appears to be, imperiled. (This does not include cases where the taxpayer becomes insolvent by virtue of the accrual of the proposed assessment of tax, penalty, and interest), or

    4. An individual is in physical possession of cash. An individual is in physical possession of cash, or its equivalent, in excess of $10,000 who does not claim such cash as theirs, or as belonging to another person whose identity can be readily ascertained and who acknowledges ownership of such case, so that the collection of tax on such cash is presumed to be in jeopardy within the meaning of IRC 6867. See Policy Statement 4-88.

  2. If an examiner determines that collection will be endangered by following regular assessment and collection procedures, use the provisions relating to recommendations for jeopardy assessment under IRC 6861, IRC 6862, or IRC 6867. See IRM 4.23.11.8.

  3. Advance written approval from Counsel is required for jeopardy assessments.

4.23.11.12  (05-13-2008)
Transferee Assessment

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

  2. If the tax cannot be collected from the partnership or corporation, possible transferee liability can be explored. If the transferee agrees to pay the tax due, the examiner will prepare a supplemental return for the taxpayer involved. The transferee will evidence his/her agreement by signing the return as transferee under IRC 6901(a)(2). In an unagreed case, the transferee has the same appeal rights as any non-transferee taxpayer has in unagreed employment tax cases.


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