5.17.4  Suits by the United States

Manual Transmittal

March 30, 2015


(1) This transmits revised IRM 5.17.4, Legal Reference Guide for Revenue Officers, Suits by the United States.


This section provides procedures for instituting and carrying out a lawsuit. It incorporates outstanding Interim Guidance.

Material Changes

(1) Editorial changes were made and cross references to IRM provisions were updated throughout this section.

(2) IRM Revised - Change 20 days to 21 days. See Rule 12, F.R.Civ.P.

(3) IRM Incorporates SBSE-05-0414-0032.reissued April 18, 2014 which adds requirements related to lien foreclosures related to principal residences.

(4) IRM Changed to Division Counsel (Small Business/Self-Employed) - the delegation for certification of the Secretary, during a proceeding for a collection suit, that a court appointed receiver is in the public interest.

(5) IRM Incorporates SBSE-05-1014-0078 reissued October 16, 2014 which deletes the monthly filing and special deposit procedures as a requirement for demonstrating that administrative remedies have been exhausted.

(6) IRM New section on IRC § 7402(a) Injunctions regarding monitoring the injunction after it is obtained.

Effect on Other Documents

This IRM supersedes IRM 5.17.4 dated January 1, 2015. This IRM also incorporates the following Interim Guidance number SBSE-05-0414-0032, titled, Reissuance of Principal Residence Suit Foreclosure Recommendations, reissued on 4/18/2014 and Interim Guidance number SBSE-05-1014-0078, titled, Interim Guidance for Monthly Filing and Special Deposit Procedures, reissued on 10/16/2014.


SB/SE Revenue Officers.

Effective Date


Kristen Bailey
Acting Director, Collection Policy
Small Business/Self-Employed  (08-01-2010)

  1. The purpose of this section is to outline some general characteristics and procedures followed in instituting and carrying out a lawsuit and some common types of lawsuits commenced by the United States for effecting or assisting in the collection of taxes.

  2. For information regarding lawsuits that are brought against the United States, see IRM 5.17.5, Suits Against the United States.

  3. For procedural guidelines on recommending suits after administrative actions have been exhausted or determined to be unfeasible and/or inappropriate, see IRM 25.3.2, Suits by the United States.  (08-01-2010)
Distinctions between Judicial and Administrative Collection Processes

  1. U.S. Constitution, Article 1, Section 8, provides that "... Congress shall have power to lay and collect taxes..." Congress in enacting the Internal Revenue Code gave the Service broad administrative processes for the collection of taxes. Although such processes are responsible for a majority of the delinquent tax accounts collected, considerable credit for such success lies in the ability of the Internal Revenue Service to utilize, when necessary, the aid of the courts to ensure collection of the tax. This use of the courts in assisting and effecting collection is commonly referred to as "judicial process."

  2. The determination of whether to use administrative or judicial collection processes depends upon the facts of a specific case. However, once the decision is made to proceed by way of a court action, collection personnel should move quickly and thoroughly to ensure its success. Because of the publicity that may accompany a court proceeding, the success of such an action cannot be measured only in the dollar amount of the tax collected. A timely and successful court action can increase the effectiveness and success of the voluntary and prompt payment of taxes.  (08-01-2010)
Initiating and Processing Collection Suits

  1. A request for institution of a legal proceeding to effect or assist in the collection of a tax is generally initiated in the office of the Area Director by the Field Collection function or Advisory. However, suit recommendations can be initiated by any Collection employee.

  2. The authority to approve most suit recommendations is delegated to Collection Territory Managers and Advisory Territory Managers. However, Area Director approval is required if the recommendation is to either

    1. secure judicial approval to seize a principal residence; or

    2. foreclose the federal tax lien against the principal residence of any person.

    See SB/SE Delegation Order 145.2 (Rev. 2).  (08-01-2010)
General Procedures

  1. Prior to recommending the commencement of any legal proceeding for the collection of taxes, the responsible initiating officer should become thoroughly familiar with appropriate provisions of the Internal Revenue Manual and Section 12 of this Legal Reference Guide (IRM 5.17.12), entitled "Investigations and Reports."

  2. Area Counsel is always available for the purpose of rendering legal advice in ascertaining the most desirable course of action available and the probability of processing a case through to a successful conclusion. Should the revenue officer uncover information early in the investigation that casts doubt on the success of a contemplated legal proceeding, much time and effort can be saved by requesting timely legal assistance.

  3. An examination of the steps taken after a suit recommendation is received by Area Counsel will show the advantage of making a timely recommendation for the institution of a collection suit. After receipt of the suit recommendation, together with supporting documents, Area Counsel examines the case carefully from a legal viewpoint to determine whether or not suit is warranted on the facts presented. If suit is warranted, Area Counsel then prepares a letter to the Assistant Attorney General, Tax Division, Department of Justice, authorizing and requesting the institution of suit. That letter must contain a discussion of the necessary facts and supporting documents, tax information, and applicable statutes and judicial decisions that may be relevant to the case.

  4. When the Department of Justice receives the authorization, the case becomes the responsibility of the Department of Justice which makes the final decision whether to institute the suit. The Department of Justice, generally following coordination with Area Counsel, may also determine that a settlement agreement with the taxpayer should be considered. Thus, a significant amount of time may elapse before a suit is filed and a judgment is obtained.

  5. When the Department of Justice is given authorization to initiate litigation to collect unpaid federal taxes, it assumes jurisdiction over collection actions. No further administrative collection actions not specifically authorized by the Department of Justice may be taken until jurisdiction for collection is returned to the Internal Revenue Service.  (08-01-2010)
Statutory Authority

  1. The general authority for the United States to commence a court action for the collection or recovery of taxes is provided for by IRC § 7401, as follows:

    No civil action for the collection or recovery of taxes, or of any fine, penalty, or forfeiture shall be commenced unless the Secretary authorizes or sanctions the proceedings, and the Attorney General or his delegate directs that the action be commenced.

  2. The Attorney General has not delegated the authority to direct the institution of such a proceeding to the United States Attorney. The Secretary of the Treasury has delegated his power of authorization to the Chief Counsel of Internal Revenue. Where the commencement of such an action has not been authorized or sanctioned, it is subject to dismissal. Civil actions commenced under this provision must be brought in the name of the United States and not a government official.  (08-01-2010)
Parties to Suit

  1. Generally, the parties or persons who are actively concerned in the prosecution and defense of a lawsuit can be designated as either plaintiffs or defendants.

    • The plaintiff is the usual term applied to the person or persons who initiate the suit.

    • The defendant is the usual term applied to the person or persons against whom relief or recovery is sought in an action or suit.

  2. The United States may only be named as a defendant where Congress has enacted a statute specifically authorizing such suit. See IRM 5.17.5, Suits Against the United States.  (08-01-2010)
Jurisdiction of Courts

  1. Generally, jurisdiction can be defined as the power conferred upon a court to hear and determine the subject matter in controversy between parties and to grant the relief asked. Federal courts derive their authority to act either from the United States Constitution or an Act of Congress. State courts derive their authority to act either from the State Constitution or Acts of the Legislature of the particular state. The United States may be a defendant in a state court proceeding, such as a mortgage foreclosure proceeding. The United States, however, has the right to seek removal from the state court to federal district court. However, the United States only has 30 days from receipt of the initial pleading setting forth the claim for relief or 30 days from service of the summons and complaint to file a notice of removal. See 28 USC §§ 1441 and 1446. Where it is the plaintiff, the United States utilizes federal courts to enforce collection of its taxes.

  2. The jurisdiction of United States district courts to hear collection suits is established by IRC § 7402(a) which provides as follows:

    The district courts of the United States at the instance of the United States shall have such jurisdiction to make and issue in civil actions, writs and orders of injunction, and of ne exeat republica, orders appointing receivers, and such other orders and processes, and to render such judgments and decrees as may be necessary or appropriate for the enforcement of the internal revenue laws. The remedies hereby provided are in addition to and not exclusive of any and all other remedies of the United States in such courts or otherwise to enforce such laws.

  3. The United States Code additionally provides in 28 USC § 1345:

    United States as plaintiff. Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress.  (08-01-2010)
Venue of Actions

  1. Venue means the place where a suit is tried. A civil action for the collection of internal revenue taxes may be brought in the district where the liability for such tax accrues, in the district of the taxpayer's residence, or in the district where the return was filed. 28 USC § 1396.

  2. The United States, therefore, has a choice of forum in the institution of civil suits for the collection of taxes. However, in an in rem action (an action against property, rather than against a person, such as a lien foreclosure suit), venue would ordinarily lie in the district where the property in question was located.  (03-30-2015)
General Characteristics of a Suit

  1. A lawsuit by the United States to collect taxes is generally commenced by the filing of the complaint drafted, in most cases, by someone assigned to the case in the Tax Division of the Department of Justice. When the suit is brought by the United States, the action is commenced in a federal district court.

  2. After the filing of the complaint with the court, a copy of the complaint accompanied by a summons is generally served upon all persons named as a party to the action. After service of a summons and complaint, the defendant or defendants are required to file an answer to the complaint within 21 days. See Rule 12, F.R.Civ.P.

  3. The purpose of the complaint and answer thereto, which together with all other documents filed in the case are described as pleadings, is to define the issues and apprise the parties of what they must be prepared to argue at the trial.  (08-01-2010)

  1. Decisions of a state or district court are generally subject to review by another court. That is, the losing party can usually appeal the lower court’s decision as a matter of right to a higher authority, generally referred to as an appellate court. The method and procedure for effecting an appeal are provided by statute.

  2. Issues appealable from a federal district court are usually appealed to the Court of Appeals for the Circuit in which the district court is located. Appeals to the United States Supreme Court may be taken from a decision of a Court of Appeals or the highest state court. The usual time limitation in which an appeal may be taken from a decision of the federal district court in a case in which the United States is a party is 60 days.  (08-01-2010)
Periods of Limitation upon Assessment and Collection of Tax under the Internal Revenue Code

  1. The statute of limitations for collection is found in IRC § 6502. However, since the statute of limitations for collection generally starts to run on the date of assessment, it is also important to be familiar with the statutory period within which such assessment must be made to be valid. See Exhibit 5.17.4–1 for a summary of some of the more common periods of limitation upon assessment, or commencement of a proceeding in court without assessment, and collection of tax as provided for by the Internal Revenue Code. The failure to timely assess or to commence a suit for the collection of taxes assessed within the period of limitations can defeat a judicial action.

  2. The burden of proving that the assessment or collection suit is untimely because the period of limitations has expired generally rests on the taxpayer, unless the United States is acting in reliance on an exception to the normal statute of limitations. See IRC §§ 6502 and 6503 for lists of events which suspend the normal limitation periods.


    There are other IRC sections whose provisions may result in extensions of the CSED, including, but not limited to, IRC §§ 6015(e)(2), 6330(e)(1), 6331(i)(5), 6331(k)(3)(B), 6672(c)(4), 7508 and 7508A.

  3. If an exception is relied upon for assessing the tax or commencement of the collection suit after the normal period for such action has expired, the burden is upon the Government to show that the exception applies. Failure to carry this burden will generally result in a dismissal of the proceedings.  (08-01-2010)
Administrative Procedures for Extending Period of Limitations for Collection by Waiver

  1. Prior to the enactment of the Internal Revenue Service Restructuring and Reform Act of 1998 ("RRA 98" ), the collection period could commonly be extended by the execution of a written waiver between the taxpayer and the Secretary of the Treasury or his delegate. This authority was severely curtailed by RRA 98.

  2. For waiver agreements entered into on or before December 31, 1999, the expiration of the collection period is the latter of:

    1. the 10-year period;

    2. December 31, 2002; or

    3. in the case of an extension in connection with an installment agreement, the 90th day after the end of the period of such extension.

  3. For agreements to extend the period of limitations made in conjunction with offers in compromise, the above rules also apply. Thus, in the case of a waiver made in conjunction with an offer entered into on or before December 31, 1999, the expiration of the collection period is the later of the 10-year period or December 31, 2002. No waiver may be made in conjunction with offers entered into after December 31, 1999. In situations involving cumulative offers, or other statute problems involving offers, advice of Area Counsel may be sought.

  4. After December 31, 1999, waiver of the statute of limitations for collection may be secured only in the following two situations:

    1. For requests to extend the period of limitations made after December 31, 1999, if there is an installment agreement between the taxpayer and the Secretary, a court proceeding must be brought or a levy made prior to the date which is 90 days after the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer at the time the installment agreement was entered into.

    2. Where release of levy has been made under IRC § 6343 after the 10-year period, a levy must be made or court proceeding begun prior to the expiration of any period for collection agreed upon in writing by the Secretary and the taxpayer before such release.

  5. For any waiver, the extension period commences to run on the date the acceptance of the waiver is signed by the Area Director or authorized delegate, not the date of receipt of the waiver.  (12-03-2010)
Collection of Judgments

  1. The primary responsibility for the collection of judgments rendered in favor of the United States rests with the Department of Justice (DOJ). As a general rule, the DOJ Tax Division Financial Litigation Unit (FLU) will collect judgments for money due, other than payments to be made as part of a bankruptcy case or plan. United States Attorney Offices also have FLUs. The FLU may request advice and assistance from the IRS.

  2. After the judgment has been entered, or a settlement is reached, the case is transferred to the Tax Division FLU, which is responsible for attempting to collect the judgment. When collection efforts are exhausted, the FLU transfers the case back to the DOJ trial section for closing and notification to the IRS. At this point, collection jurisdiction is generally returned to the IRS. However, jurisdiction to compromise taxes that are reduced to judgment is retained by DOJ.

  3. If property is located which can be seized in satisfaction of the judgment, this information should be made immediately available to the appropriate DOJ employee. Levy provisions of the Internal Revenue Code are also available to enforce collection of accounts reduced to judgment in litigation begun within the 10-year collection period. See IRM 25.3.5, Judgment Follow-up, for procedures relating to the collection of judgments.

  4. Under the provisions of IRC § 7406,"[a]Il judgments and moneys recovered or received for taxes, costs, forfeitures, and penalties shall be paid to the Secretary as collections of internal revenue taxes."  (08-01-2010)
Settlement of Judgments

  1. In all cases where the United States has obtained a judgment for tax liabilities, compromise authority thereafter rests with the Department of Justice (DOJ). The IRS cannot compromise under IRC § 7122 taxes that have been reduced to judgment (except Tax Court judgments). See IRM, Chief Counsel Directives Manual, Settlement Procedures.

  2. Although DOJ may have referred a judgment back to the IRS for collection, it continues to retain sole jurisdiction to compromise the judgment.  (12-03-2010)
Effect of Judgment on Collection Statute of Limitations

  1. Under IRC § 6502(a), if a court action is brought against the taxpayer prior to the Collection Statute Expiration Date (CSED), the collection period is extended until the liability for the tax (or the judgment against the taxpayer) is satisfied or becomes unenforceable. Therefore, when a tax assessment is reduced to judgment, thereby extending the collection period, the IRS has two different avenues for collection:

    1. the tax may be collected by levy by the IRS under the Internal Revenue Code, or

    2. the judgment may be enforced by the DOJ Tax Division or U.S. Attorney Office under the Federal Debt Collection Procedures Act (FDCPA). See 28 USC §§ 3001 through 3308.

  2. The FDCPA provides alternative ways in which civil judgments entered in favor of the United States may be collected. While the FDCPA applies to judgments entered in civil tax cases, the collection remedies contained in the Internal Revenue Code are still available for assessments that are reduced to judgment.

  3. Under the FDCPA, when a judgment is obtained in a suit to reduce assessments to judgment, the Government may file a certified copy of the abstract of judgment in order to create a judgment lien against the taxpayer's real property. The certified copy of the abstract of judgment must be filed in the same manner as a Notice of Federal Tax Lien under IRC § 6323(f).

  4. The judgment lien created by the filing of the abstract of judgment attaches only to real property. A judgment lien against personal property can be obtained only by seizing the property under judgment enforcement procedures.

  5. The judgment lien is effective, unless satisfied, for 20 years. Upon court approval, the judgment lien may be renewed for one additional period of 20 years by filing a notice of renewal. See 28 USC § 3201.


    While a suit to reduce assessments to judgment has the effect of extending the collection statute of limitations under IRC § 6502(a), the collection statute expiration date (CSED) is not tied to the duration of the judgment lien. The federal tax lien created under IRC § 6321 does NOT merge into the judgment lien, but continues to exist independently.

  6. If the Government does not file the abstract of judgment with a recording office, it may nonetheless enforce the judgment against the taxpayer's property, including real property, by writ of execution. The FDCPA does not provide a time limit within which the Government must enforce the judgment in this manner.

  7. Because the federal tax lien does not merge with the judgment lien, the time periods applicable to judgment liens do not apply to the federal tax lien. If a suit is timely filed to reduce tax assessments to judgment, the IRS may pursue administrative collection indefinitely against the taxpayer's real or personal property under IRC § 6502(a).


    While a timely suit to reduce assessments to judgment will extend the CSED indefinitely, Notices of Federal Tax Lien must still be timely refiled during the refiling period in order for the IRS to maintain its priority. See IRM, Refiling the NFTL.

  8. Although the collection statute of limitations is extended indefinitely when a tax assessment is reduced to judgment, the IRS has determined that assessments reduced to judgment for which there is no collection potential after 20 years from the date of the judgment will not be maintained on IDRS. However, if collection sources are identified after this 20-year period, the account may be reinstated and collection actions may be resumed. See IRM for procedures for establishing controls for cases in which tax assessments have been reduced to judgment.  (12-03-2010)
Assessment of Court Sanctions, Penalties and Costs

  1. Under IRC § 6673(b)(1), a court may require the taxpayer to pay a penalty not in excess of $10,000 when the taxpayer’s position in an IRC § 7433 damages case is frivolous or groundless.

  2. Under IRC § 6673(b)(2) & (3), any monetary sanctions, penalties or costs awarded to the government in a civil tax proceeding brought by or against the government in any court (other than the Tax Court), or awarded in connection with an appeal from the Tax Court or other court, may be assessed and, upon notice and demand, collected in the same manner as a tax.

  3. See IRM for procedures for requesting assessments under IRC § 6673(b).  (08-01-2010)
Suit to Reduce Assessments to Judgment

  1. As a general rule the purpose of instituting a suit to reduce assessments to judgment is to prevent the statute of limitations for collection from running where collection cannot be accomplished by administrative methods within the normal statutory period.

  2. A suit in aid of collection of taxes will not usually be authorized unless all administrative remedies available have been exhausted or their use would prove ineffective.  (08-01-2010)
Statutory Authority

  1. The statutory authority for bringing a suit to reduce assessments to judgment is found in IRC §§ 7401 and 7402(a). These sections are set forth in IRM and IRM  (08-01-2010)
Amount and Collectibility of Tax Claim

  1. Guidelines for determining whether it is feasible to recommend a suit to reduce assessments to judgment are found in IRM 25.3.2.  (08-01-2010)
Effect of Judgment on Tax Lien and Levy

  1. IRC § 6322 (relating to period of lien) provides that where a tax assessment is reduced to judgment, the lien continues until the underlying tax liability is satisfied or becomes unenforceable by reason of lapse of time.

  2. With respect to levy proceedings, IRC § 6502(a) (relating to length of period of collection) makes it clear that the Government may continue to levy beyond the normal collection period when a judgment is timely sought until the tax liability or judgment is satisfied or becomes unenforceable.

  3. Moreover, the Government's right to foreclosure under the tax lien (as contrasted with the more cumbersome method of foreclosing under the judgment) is still available after the assessment is reduced to judgment.  (03-30-2015)
Affordable Care Act’s (ACA) Shared Responsibility Assessments

  1. Shared Responsibility Payment (SRP): The IRC § 6321 statutory lien arises normally on the IMF SRP (MFT 35) assessments. However, an IRC § 6323Notice of Federal Tax Lien cannot be filed on these assessments. (See IRC § 5000A(g)(2)(B)). Also, IRS policy is that IRS will not take judicial action to reduce the liability to judgment.


    MFT 35, tax class 6 is still used on NFM for partnership returns Forms 1065.

  2. Shared Responsibility for Employer: The IRC § 6321 statutory lien arises normally on these BMF MFT 43 assessments and an IRC § 6323Notice of Federal Tax Lien may be filed and included in a recommendation to reduce assessments to judgment.( See IRC § 4980H(d)(1)).  (08-01-2010)
Foreclosure of Federal Tax Lien

  1. The Government uses a suit to foreclose a tax lien where there is a specific, presently available source of collection. It uses a suit to reduce assessments to judgment to extend the collection period where there is no source of collection currently available. In most other respects the commencement and prosecution of the suits are very similar.

  2. In a foreclosure action, the Department of Justice often requests a judgment against the taxpayer. Doing so is appropriate where the property subject to the federal tax lien is not sufficient to satisfy the entire tax liability. In addition, combining a lien foreclosure action with a suit to reduce assessments to judgment avoids potentially duplicative suits.  (08-01-2010)
Statutory Authority

  1. Under IRC § 7403, where there has been a refusal or neglect to pay any tax, the Attorney General, at the request of the Secretary of the Treasury, is authorized to institute a civil action in federal district court to enforce the lien or to subject any property in which the taxpayer has an interest to the payment of the tax liability. IRC § 7403(a). The Secretary of the Treasury has delegated to the Chief Counsel authority to request instituting an action under IRC § 7403.

  2. All persons having liens on or claiming any interest in the property involved in the action must be made parties to the action. IRC § 7403(b).

  3. In a lien foreclosure action, the court determines the merits of all claims to and liens on the property, and, where the interest of the United States is established, may order the sale of the property. The property is sold free and clear of all liens and encumbrances. The proceeds of the sale are then distributed in accordance with the court's determination of the parties' interests in the property. IRC § 7403(c).


    In United States v. Rodgers, 461 U.S. 677 (1983), the Supreme Court held that IRC § 7403 contemplates the sale of the entire property, not just the taxpayer's interest in the property. Nevertheless, the Court found where a nondelinquent third party has an interest in the property (such as homestead property), courts have limited equitable discretion to refuse to order the sale of the entire property. Where the entire property is sold, the nondelinquent third party is entitled to be fully compensated for the value of his or her interest in the property from the proceeds of the sale.

  4. If the United States holds the first lien on the property, it may bid at the sale. The amount of the United States' bid cannot exceed the amount of the federal tax lien plus the expenses of sale. IRC § 7403(c).


    Whether the Government exercises its right to bid is a matter within the discretion of the appropriate Area Director. It may be appropriate for the Government to bid on the property to prevent its sale at distress prices. This protects the interests of the Government as well as those of the taxpayer.

  5. IRC § 7403 also provides that the court may at the request of the Government appoint a receiver to enforce the lien. The court may also appoint a receiver with all of the powers of receivers in equity where the Government has certified that such appointment is in the public interest. IRC § 7403(d). For detailed discussion of receivership, see IRM  (11-06-2007)
Issues to Consider When Recommending an Action to Foreclose a Tax Lien

  1. There are several important factors to consider when determining whether to recommend to Area Counsel that a case be referred to the Department of Justice to institute an action to foreclose a federal tax lien.  (08-01-2010)
Administrative Collection Devices Are Not Feasible or Adequate

  1. As a general rule the administrative collection remedies available to the Government are adequate. However, there are situations in which such remedies have been exhausted or where administrative collection would not be feasible because, for example, a distraint sale would result in a lower price paid for the property. In such cases, consider recommending to Area Counsel that the matter be referred to the Department of Justice for court action. Below are several examples of situations in which lien foreclosure may be appropriate:

    • There are encumbrances on the property in addition to the federal tax lien which make it difficult to determine the relative interests in the property, thereby, in all likelihood, driving down the price purchasers would be willing to pay at a distraint sale.

    • There is a cloud on title, or title is contested by a third party or parties.

    • There are unpaid federal tax liens against only one of several co-owners of real property in an area where the sale of undivided partial interests is unfeasible.

    • A business is to be sold as a going concern (e.g., suit may be appropriate when also seeking the appointment of a receiver to operate the business pending the sale to prevent waste or fraud by the taxpayer, see IRM, below).

    • The Government wishes to reach the cash surrender value of a taxpayer's insurance policy.  (08-01-2010)
Redemption Rights

  1. Unlike the sale of real property at a distraint sale, the taxpayer has no right to redeem the property after court ordered foreclosure of the federal tax lien. This makes the property generally more desirable to purchasers and would normally result in a higher selling price than at a distraint sale.  (08-01-2010)
Statute of Limitations

  1. See IRM and Exhibit 5.17.4–1 for a general discussion of the statute of limitations on collection actions.

  2. Where the Government has reduced assessments to judgment, it may bring a lien foreclosure action after the statutory period provided in IRC § 6502(a) expires.


    While obtaining a judgment extends the life of the lien for the purposes of bringing a lien foreclosure action, in order to maintain the priority of the lien in relation to other creditors, the Government must refile the Notice of Federal Tax Lien as provided in IRC § 6323(g).

  3. A lien foreclosure action initiated before expiration of the statute of limitations on collection is sufficient to enforce the interest of the United States against the named property even if reduction of the assessments to judgment is not sought concurrently. The refiling of the Notice of Federal Tax Lien under IRC § 6323(g) is needed in this situation as well.  (08-01-2010)
Economic Feasibility of Lien Foreclosure

  1. The tax liability and the amount expected to be recovered should be substantial enough to warrant bringing a foreclosure action. Guidelines for determining whether it is feasible to recommend a suit are found in IRM  (03-30-2015)
Lien Foreclosure on a Principal Residence

  1. This section discusses the additional elements needed when the residence is defined as the taxpayer's principal residence. However, lien foreclosure, on the personal residence of any person (defined in IRM 5.10.2-1 Real Property, Row 2), or on the taxpayer's principal residence (defined in IRM 5.10.2-1 Real Property, Row 1), requires the written approval of the Area Director.

  2. Taxpayer's Principal Residence suit recommendations to foreclose the tax lien, while not explicitly stated, carry the same considerations as IRM, Judicial Approval for Principal Residence Seizures. The suit to foreclose is the secondary alternative used only when the seizure remedy is not the optimal solution. Additionally, a suit to foreclose should only be pursued when there are no reasonable administrative remedies and hardship issues, as described in (3 c) below, to consider.

  3. Taxpayer's Principal Residence suit to foreclose case action requirements are completed prior to submitting the suit recommendation to Advisory and with the results of the actions included in the suit recommendation narrative. They include:

    1. Attempt to personally contact the taxpayer and inform them that a suit to foreclose the tax lien on the principal residence is the next planned action (follow IRM, Personal Contact to Advise the Taxpayer of Proposed Seizure Action, and IRM, Right to Representation);

    2. Attempt to identify the occupants of the principal residence (see IRM;

    3. Attempt to discuss administrative remedies with the taxpayer (see discussion in IRM regarding alternative methods of collection and risk analysis). This discussion should include the taxpayer’s potential to submit an Offer in Compromise (including an Effective Tax Administrative offer or, an offer with consideration of special circumstances) as an administrative remedy, when appropriate (follow IRM 5.8.11);

    4. Advise the taxpayer about the Taxpayer Advocate Service (TAS), provide Form 911, Request for Taxpayer Advocate Assistance (And Application for Taxpayer Assistance Order); and explain its provisions; if the taxpayer indicates that the planned foreclosure of the principal residence would create a hardship, the RO will assist the taxpayer with the preparation of Form 911 and should forward the form to the local Taxpayer Advocate Service office if the revenue officer cannot or will not provide the requested relief (see IRM 13.1.7, Taxpayer Advocate Service Case Criteria, for other situations that qualify for Taxpayer Advocate referral and the appropriate procedures to follow);

    5. Include a summary statement in the case history (see IRM

  4. Taxpayer's Principal Residence: suit narrative body should contain, along with the information on the taxpayer, information on the occupants of the principal residence including children. Provide the name(s), relationship(s) to the taxpayer, brief history (age, health, etc.), and current mailing address of the occupant(s) if it differs from the address of the property being foreclosed and a summary of the administrative remedies considered. If the information is unavailable explain the circumstances why the information was not able to be obtained. (See the section IRM, Format of the Narrative Report and in particular IRM, Additional Items for Lien Foreclosure of Taxpayer's Principal Residence).

  5. ENTITY REPORT: A manager, management assistant, or IQA may input "Principal Residence" as a program name in ICS as an identifier in creating a sort query of cases. Instructions can be found in the ICS User Guide - Chapter 9 Program Names.  (08-01-2010)
Preparing Recommendation to Institute an Action to Foreclose Tax Liens

  1. A suit to foreclose a tax lien is initiated and processed in much the same manner as a suit to reduce assessments to judgment.

  2. In preparing a suit letter to the Department of Justice, Area Counsel relies on information provided in the recommendation. The Department of Justice, in turn, relies on the suit letter from Area Counsel in drafting its complaint should it decide to bring suit. Therefore, it is imperative that complete, accurate information be provided in the recommendation.


    If the recommendation is to foreclose the lien on a principal residence, the written approval of the Area Director must be provided along with the recommendation.

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