5.11.3  Jeopardy Levy without a Jeopardy Assessment

Manual Transmittal

April 03, 2013

Purpose

(1) This transmits revised text for IRM 5.11.3, Jeopardy Levy without a Jeopardy Assessment.

Material Changes

(1) 5.11.3.1(1) clarified purpose of guidance.

(2) 5.11.3.1.1(1) clarified personal service of notice and demand is not always required.

(3) 5.11.3.1.1(2) clarified when IRC 7249 appeal rights are available.

(4) 5.11.3.1.1(3) clarified when CDP Hearing Rights must be offered.

(5) 5.11.3.1.1(4) Clarified when CAP rights will be offered.

(6) 5.11.3.3(2) added electronic signature as valid method to reflect approval of a jeopardy levy.

(7) 5.11.3.3(5) clarified L2438(CG) only issued when warranted.

(8) 5.11.3.4 paragraphs rearranged for clarity.

(9) 5.11.3.4(5) new paragraph to explain when to issue L2438(CG).

(10) 5.11.3.4(6) paragraph renumbered.

(11) 5.11.3.5(3) clarified when L2438(CG) is included with levy.

(12) 5.11.3.5(4) clarified notice and demand may be mailed to taxpayer's last known address.

(13) 5.11.3.6 clarified when taxpayer is entitled to an administrative appeal and judicial review under IRC 7249.

(14) Editorial changes made throughout.

Effect on Other Documents

This IRM supersedes IRM 5.11.3 dated August 20, 2010.

Audience

This material is used by SB/SE revenue officers and AI - Advisory.

Effective Date

(04-03-2013)

Signed by
Scott D Reisher, Director, Collection Policy

5.11.3.1  (04-03-2013)
Jeopardy Levy Overview

  1. Normally, the notices and waiting periods described in IRM 5.11.1.2.1, Required Notices, must be issued before property may be levied. However, if collection is in jeopardy, property may be levied sooner. This IRM provides guidance on obtaining approval for a jeopardy levy, issuing notice to the taxpayer after the levy, and on the taxpayer’s appeal rights after notice is provided.

5.11.3.1.1  (04-03-2013)
Jeopardy Levy Considerations

  1. Generally, if collection is in jeopardy, there is a jeopardy or termination assessment. Then there is an immediate notice and demand which is followed by a jeopardy levy. Sometimes, however, there may already be an assessment before jeopardy is known and in some of those cases, collection under regular procedures may have begun before the jeopardy is known.

    Note:

    In every situation where a jeopardy levy occurs without a jeopardy or termination assessment, the Service has already assessed the tax liability through normal procedures. If collection is not in jeopardy, a quick assessment or prompt assessment is insufficient to support a levy immediately after issuing notice and demand. However, if collection is in jeopardy, the jeopardy situation may support an immediate levy after personal service, if practical, of the notice and demand (Form 3552).

    Example:

    There may be a prompt assessment on a voluntarily filed return. Then, if the taxpayer starts moving property to hide it, a revenue officer may make a jeopardy levy if collection is in jeopardy, after securing the required approvals outlined in IRM 5.11.3.3,"Getting Approval." Property may be levied, even though the usual waiting periods after notices have not passed.

    Example:

    If the Service makes a quick assessment to recover refunds resulting from a false Form 1099–OID, Original Issue Discount filing, a revenue officer may make a jeopardy levy if collection is in jeopardy, after securing the required approvals outlined in IRM 5.11.3.3," Getting Approval."

  2. A taxpayer must be offered IRC 7429 appeal rights when:

    • The notice and demand described in IRC 6303 for an assessment has not been issued or the 10-day waiting period arising after the issuance of that notice has not expired; or

    • A notice of intent to levy described in IRC 6331(d)(1) specifying each tax and tax period has not been issued for the property subject to levy or the waiting period described in IRC 6331(d)(2) has not expired. See IRM 5.11.1.2.1(4), Required Notices.

  3. A taxpayer must be offered Collection Due Process (CDP) rights pursuant to IRC 6330(f) within a reasonable period of time after the levy when the taxpayer has not been offered a hearing previously for the taxable period for the type of tax subject to the levy.

  4. A taxpayer will be offered an appeal under the Collection Appeals Program (CAP) when:

    • An appeal was offered under either of the two preceding paragraphs, but the taxpayer did not appeal; or

    • The jeopardy levy was made after the period for offering IRC 7429 appeal rights; or

    • CDP rights were already offered for the taxable period for the type of tax subject to the levy.

  5. Situations in which a taxpayer may request an appeal under CAP can arise in the following situations in which the Service is generally prohibited from levying, but for which an exception for jeopardy levy has been provided:

    • On the appearance date of a summons,

    • While an installment agreement is pending or active,

    • For 30 days following the date of termination of an installment agreement and during an appeal of the termination,

    • During the period a rejected installment agreement can be appealed or is being appealed,

    • During the period an offer in compromise is pending, or

    • During the period a rejected offer in compromise can be appealed or is being appealed.

  6. Hereafter, any reference to "jeopardy levy" in this section shall refer only to a jeopardy levy without a jeopardy or termination assessment unless otherwise noted.

5.11.3.2  (08-20-2010)
Required Conditions for Jeopardy

  1. A jeopardy levy requires a condition that would have allowed a jeopardy assessment.

  2. See the IRS Policy Statement 4–88 in IRM 1.2.13.1.27, regarding jeopardy assessments.

5.11.3.3  (04-03-2013)
Getting Approval

  1. If the collection of an assessed tax is in jeopardy, prepare either a written report or a narrative Integrated Collection System (ICS) history entry for the territory manager requesting approval to issue a jeopardy levy. Include the same information that is needed for a jeopardy assessment. See IRM 5.1.4,Jeopardy, Termination, Quick and Prompt Assessments. Send the request through the group manager.

  2. The managerial approval process may be accomplished by having the group manager and territory manager access ICS and document their approval with a history entry. Electronic signature by the approving official is an acceptable method of written approval. When written or electronic approval is secured, a copy of the approval must be kept in the file and the RO will document the ICS history.

  3. In addition, IRC 7429(a)(1)(A) requires Counsel approval, in writing, for a jeopardy levy issued less than 30 days after notice and demand; under Treas. Reg. 301.7429-1 approval is required for levies made before the waiting period described in IRC 6331(d)(2) expires. See IRM 1.2.44.4(20) and (21) Delegation Order 5-3 (Rev. 1) requiring the concurrence of the responsible Area Counsel or Associate Area Counsel for a jeopardy levy issued when the pre-levy notices have not been issued and/or the waiting periods after the notices have not passed.

    Note:

    For SB/SE International Operations, the authority is delegated to the Deputy Associate Chief Counsel (Strategic International Programs) or this person's delegate.

    Note:

    See IRM 1.2.44.4(14) and (15) Delegation Order 5-3 (Rev. 1) requiring Counsel’s concurrence for a jeopardy levy issued after such waiting periods but at a time when the issuance of a levy is generally prohibited (i.e., see the exceptions described at IRM 5.11.3.1.1(5).

  4. When all appropriate approvals for issuance of a jeopardy levy are secured, the revenue officer may generate the levy on ICS, sign, and issue it.

  5. When securing written approval, include Letters 2439/2439A(CG), Notice of Jeopardy Levy and Right of Appeal, and when warranted 2438(CG), Jeopardy Levy Letter to Third Party Levy Recipient, for the territory manager's signature. If approval is secured via ICS, then sign the letter, and write "on behalf of" above the territory manager's name and title.

    If Then
    The notice and demand has not been issued, or it has been issued and 10 days have not passed yet. The taxpayer must be given an immediate notice and demand for payment. See " Note " under subsection IRM 5.11.1.2.1(2)

    For joint IMF returns, prepare two Letters 2439A(CG) that include the dual notice language. If an immediate notice and demand is required, also prepare two Forms 3552, Prompt Assessment Billing Assembly, Parts 3 & 4. Put both taxpayers' names on the letters and on the notice and demand.

  6. Use Parts 3 & 4 of Form 3552 to make immediate notice and demand. Cross out "Please return this copy with your payment to the address shown above" at the bottom of the form. If a blank Form 3552 is not available, copy the text of one on IRS letterhead stationery or print one off the Publishing website. Have the territory manager sign this, too, when the notice of levy is approved or sign for the territory manager if approval is secured via ICS.

  7. See IRM 1.2.44.4Delegation Order 5-3 (Rev. 1) for all position titles with the authority to issue notices of levy when collection is in jeopardy and the pre-levy notices have not been issued and/or the waiting periods after the notices have not passed or the general levy prohibition exists.

  8. If time constraints or other conditions prevent securing territory manager written or systemic approval, the territory manager can approve the levy by telephone. When this occurs, write a narrative ICS history entry or a memo to file including the information that would have been in the report described in (1). Send a copy of the memo to file to the territory manager.

5.11.3.4  (04-03-2013)
Forms and Letters for a Jeopardy Levy without a Jeopardy Assessment

  1. The forms and letters that are needed depend on the timing of the jeopardy levy. The process is somewhat simplified because Letters 2439/2439A(CG) allow for the selection of the appropriate appeals right information (IRC 7429, CDP, or CAP).

  2. Use the ICS L2439/2439A template to choose the correct appeal rights paragraph. In some situations the Service will offer the taxpayer appeal rights under both IRC 7429 and IRC 6330 and the taxpayer will choose which procedure to use. If, however, the Service previously issued a pre-levy CDP notice for a tax period covered by the jeopardy levy, the taxpayer is not entitled to a post-levy CDP notice and hearing for that tax period.

    • If 30-day period under IRC 6331(d)(2) has not passed then select the "Under IRC Section 7429" paragraph. (The 30-day period applies per Treas. Reg. § 301.7429.)

    • If 30-day period under IRC 6330(d)(1) has not passed then select the "Under IRC Section 6330" paragraph. (See IRM 5.11.3.6(3) regarding the procedure for issuing CDP notice with the jeopardy levy notification.)

    • If the above time periods have passed and/or the taxpayer has previously had a CDP hearing, then select the "Collection Appeals Program" paragraph.

  3. When the levy includes multiple periods ensure the appeal rights paragraph selected applies to all periods listed on the L2439/2439A. This may require issuing more than one L2439/2439A for the corresponding periods to which the appeal rights applies. For example CDP appeal rights may apply for some periods but for other periods only CAP rights apply.

  4. In addition to notices of levies and federal tax liens the forms and letters needed for jeopardy levies are:

    If And Then prepare
    Tax has been assessed. The notice and demand normally required by IRC 6331(a) has not been issued or the notice and demand has been issued but ten days have not passed. 1. IMMEDIATE NOTICE AND DEMAND (Altered Form 3552)
    2. LETTER 2439/2439A (CG)
    3. LETTER 2438(CG)
    4. PUBLICATION 594
    5. PUBLICATION 1660
    6. FORM 12153
    The notice and demand has been issued. It is between 10 and 30 days since issuance of the notice and demand, or 30 days have passed but a notice of intent to levy and notice of your right to a hearing has not been issued or the notice was issued and it is within the 30 (+15) days to request an appeal. 1. LETTER 2439/2439A(CG)
    2. LETTER 2438(CG)
    3. PUBLICATION 594
    4. PUBLICATION 1660
    5. FORM 12153
    A jeopardy levy is to be issued during the general levy prohibition (5.11.3.1.1(5)) A notice of intent to levy and notice of your right to a hearing has not been issued or the notice was issued and it is within the 30 (+15) days to request an appeal.
    1. LETTER 2439/2439A(CG)
    2. LETTER 2438(CG)
    3. PUBLICATION 594
    4. PUBLICATION 1660
    5. FORM 12153
    6. FORM 9423
    A jeopardy levy is to be issued during the general levy prohibition (5.11.3.1.1(5)) A notice of intent to levy and notice of your right to a hearing was issued and the 30 (+15) days to request an appeal have passed but it is within one year since issuance of the notice of intent to levy and right to a hearing. (Taxpayer may request an Equivalent Hearing).
    1. LETTER 2439/2439A(CG)
    2. LETTER 2438(CG)
    3. PUBLICATION 594
    4. PUBLICATION 1660
    5. FORM 12153
    6. FORM 9423
    A jeopardy levy is to be issued during the general levy prohibition (5.11.3.1.1(5)) The taxpayer previously had a CDP hearing or one year has passed since the issuance of the notice of intent to levy and notice of your right to a hearing.
    1. LETTER 2439/2439A(CG)
    2. LETTER 2438(CG)
    3. PUBLICATION 594
    4. PUBLICATION 1660
    6. FORM 9423
  5. When the jeopardy levy is to be issued to a third party who is in possession of the taxpayer’s property or property rights, prepare Letter 2438(CG) when warranted to include with the notice of levy. Additional time may be warranted based on the unique factors of each case. This letter asks the party in receipt of the levy to delay sending payment for 45 days because the taxpayer is entitled to certain appeal rights but warns not to let the taxpayer have the funds that have been attached during that period. This allows time to see if the taxpayer appeals. If the taxpayer successfully appeals, the levy may be released rather than issuing a manual refund.

    Note:

    Under IRC 6332(c) a bank surrenders deposits only after 21 days after service of levy and that period may be extended per Treas. Reg. 301.6332–3(d)(2).

  6. The taxpayer must be told the reason collection is in jeopardy. Use Letter 2439/2439A(CG), to communicate this. Avoid saying anything in the letter that could identify a confidential informant.

    If Then
    Form 3552 is required. Give the taxpayer Letter 2439/2439A(CG), enclosures, and Form 3552 simultaneously.
    Form 3552 is not required. Give Letter 2439/2439A(CG) and enclosures to the taxpayer within five calendar days of serving the jeopardy levy.

5.11.3.5  (04-03-2013)
After the Jeopardy Levy Is Approved

  1. If an immediate notice and demand is required, give the altered Form 3552 to the taxpayer and demand immediate payment. If personal delivery is not practical, send it by certified mail to the last known address. If a field visit to deliver the form reveals the address is not good, check IDRS for a new one.

  2. When the immediate notice and demand is issued, or if it is not required:

    • File a Notice of Federal Tax Lien and

    • Serve the Notice(s) of Levy.

  3. When warranted, include Letter 2438(CG) with each notice of levy.

  4. Try to give the letter to the taxpayer in person. If a field visit to deliver the letter reveals the address is not good, check IDRS for a new one. The Letter 2439/2439A(CG) mailing method is the same as the Letter 1058 mailing method required in IRM 5.11.1.2.2.2,Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in CFf.

    Note:

    For joint IMF returns, try to deliver letters to each taxpayer in person. Also, if an immediate notice and demand is required, deliver Form 3552 to each taxpayer. If this is not practical, mail the notices as described in IRM 5.11.1.2.2.3Issuing Notice of Intent to Levy /Notice of a Right to a Hearing for Joint IMF Bal Due Account.

    Reminder:

    If the taxpayer has a representative authorized to receive notices and communication, a copy of correspondence to the taxpayer must also be given to the representative. If mailed, use regular mail for the copy.

  5. If the taxpayer has not previously had a CDP hearing for any period on the jeopardy levy, the L2439/2439A(CG) serves as the CDP notice for that period. Input the CDP notice Transaction Code (TC) 971 codes manually using Form 4844, since CDP notice TC971 codes cannot currently be input for L2439/2439A(CG) systemically through ICS. See IRM 5.11.1.2.2.2, Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in CFf, for guidance on the correct action code to use with TC 971.

5.11.3.6  (04-03-2013)
Appealing the Jeopardy Levy

  1. In certain situations a taxpayer must be offered an appeal under IRC 7429 or in CDP under IRC 6330. See IRM 5.11.3.1(2) and (3), respectively. As indicated at IRM 5.11.3.4(2), the taxpayer may have the option of obtaining an administrative and judicial determination on the jeopardy action in an expedited proceeding under IRC 7429 or in a CDP hearing under IRC 6330 that makes the determination under IRC 6330(f).

  2. The issue on review under IRC 7429 is whether the jeopardy levy is reasonable under the circumstances (collection is truly in jeopardy). If Appeals sustains the jeopardy levy, the taxpayer may obtain judicial review of the jeopardy levy. The decision of the court regarding reasonableness may not be appealed to a higher court.

    Note:

    Generally, district courts have exclusive jurisdiction over IRC 7429; however, if any of the liabilities on the jeopardy levy were in a statutory notice of deficiency that was timely petitioned before the making of the jeopardy levy, the taxpayer may, alternatively, obtain IRC 7429 review of all periods in the jeopardy levy by the Tax Court in an expedited procedure that only considers the reasonableness of the levy. See Tax Court Rule 56.

  3. The issue on review in CDP is whether the Service’s finding that use of a jeopardy levy under IRC 6330(f) was appropriate, is reasonable. If Appeals sustains the jeopardy levy, the taxpayer may obtain judicial review of the jeopardy levy issue as part of the CDP proceeding.

    Note:

    In addition to making a determination under IRC 6330(f) in the CDP proceeding, Appeals and the Tax Court may address issues involving the seizure of the property under the broad language of Treas. Reg. 301.6330-1(e)(3) Q&A-E1.

  4. If a taxpayer challenges the reasonableness of the jeopardy levy under IRC 7429, the taxpayer is precluded from raising the jeopardy action under IRC 6330(f) in the CDP proceeding.

  5. If the taxpayer has not received a pre-levy CDP notice, the IRS will provide a CDP notice within a reasonable amount of time after the jeopardy levy. Treas. Reg. 301.6330–1(a)(3) A-A5. Issuance of the L2439/2439A with enclosures meets the CDP notification requirement. If Form 3552 giving notice and demand has not been given the Service will issue the L2439/2439A(CG) containing CDP rights language at the same time as issuance of Form 3552. If Form 3552 has already been issued the Service will issue the L2439/2439A(CG) containing CDP rights language within 5 days of serving the jeopardy levy notice.

  6. The taxpayer has 30 days from the date of the CDP notice given in L2439/2439A(CG) to request a CDP hearing. The taxpayer must request a CDP administrative hearing in order to request judicial review. See IRM 5.1.9, Collection Appeal Rights, for additional information about taxpayers' rights to appeal under IRC 6330.

  7. In certain situations a taxpayer may be offered an appeal under CAP. See IRM 5.11.3.1.1(5). An appeal of a jeopardy levy under CAP is limited administratively due to the appeal rights afforded specifically to jeopardy levies under IRC 7429 and in CDP. See IRM 5.1.9.4.1, Exclusions from CAP. Taxpayers may not go to court if they disagree with Appeals' decision under CAP. See IRM 5.1.9, Collection Appeal Rights, for additional information on CAP.


More Internal Revenue Manual