5.21.3  Collection Tools for International Cases

Manual Transmittal

December 04, 2013

Purpose

(1) This transmits a revision of IRM 5.21.3, Collection Tools for International Cases, for collection employees.

Material Changes

(1) This IRM is revised to make minor grammatical corrections, update organization terms and/or titles, and correct cross references

Effect on Other Documents


IRM 5.21.3 supersedes IRM 5.21.3, dated 2/17/2009

Audience

The target audience is revenue officers in SB/SE Field Collection (FC).

Effective Date

(12-04-2013)

Dretha Barham
Director, Collection Policy

5.21.3.1  (12-04-2013)
Introduction

  1. Other collection tools are available to reach offshore assets in international cases when an offshore account is located. Some of the collection tools are:

    • Levy on a domestic branch of a financial institution (for funds held offshore),

    • Writ Ne Exeat Republica,

    • Customs Order or Prevent Departure Order,

    • Appointment of a Receiver,

    • Suit to Repatriate Property - Repatriation Orders.

  2. Consult Area Counsel before using these collection tools.

5.21.3.2  (12-04-2013)
Levy on a Domestic Branch of a Financial Institution

  1. There are instances where funds held offshore can be reached by a levy if the bank has a branch in the U.S. or in a possession of the U.S.

  2. Treasury Regulations Section 26 C.F.R. 301.6332–1(a)(2) outlines the procedures where a bank is in business in the U.S. with deposits held in a branch outside the United States.

  3. The regulations provide two different sets of procedures with regard to a levy on bank deposits held in offices outside the United States depending on whether or not the taxpayer is or is not within the jurisdiction of the U.S. court at the time the levy is made.

    1. If the taxpayer is within the jurisdiction of a U.S. court at the time the levy is made, then:

      • The notice of levy must specify that the Area Director intends to reach such deposits, and

      • That the bank is in possession of (or obligated with respect to) such deposits in an office outside the United States or a possession of the United States.

    2. If the taxpayer is not within the jurisdiction of the U.S. court at the time the levy is made, then:

      • The notice of levy must specify that the Area Director intends to reach such deposits,

      • That the bank is in possession of (or obligated with respect to) such deposits in an office outside the United States or a possession of the United States, and

      • That such deposits consist, in whole or in part, of funds transferred from the United States or a possession of the United States in order to hinder or delay collection of the tax imposed by the Code.

  4. Use IDRS command code IRPTR to locate the foreign bank account.

    IRPTR may indicate:

    1. foreign investments if federal taxes are withheld,

    2. transfer of funds in the taxpayer's domestic bank,

    3. the type of income/form received by the taxpayer's domestic bank in the Currency Banking and Retrieval System (CBRS).

      Note:

      Document thoroughly in the case history how the foreign bank account was located and verified even though an actual account number cannot be obtained.

  5. Write this statement on the front of the levy: "The Area Director intends to attach funds held outside the U.S. or U.S. Territory. "

  6. Serve the levy in person at the domestic branch, if possible, or send the levy via certified mail.

  7. Because of the likelihood the bank will contest the levy, consult Area Counsel prior to considering Levy on a Domestic Branch of a Financial Institution. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).

5.21.3.3  (12-04-2013)
Writ Ne Exeat Republica

  1. Writ Ne Exeat Republica is another action authorized by IRC §7402(a) . Writ Ne Exeat Republica is the appropriate suit action when the taxpayer:

    • is about to leave the U.S.,

    • is unlikely to return to the U.S., and

    • has conveyed or concealed property so that the property may be taken out of the U.S.

  2. Writ Ne Exeat Republica is usually filed in conjunction with some other civil action against the taxpayer such as a Suit to Foreclose the Notice of Federal Tax Lien, a Repatriation Order, or a Summons Enforcement.

  3. Consider these factors when determining whether or not to file a Writ Ne Exeat Republica:

    1. taxpayer has a sizeable liability,

    2. taxpayer has transferred, or is in the process of transferring, substantially all of his assets to a location outside the United States,

    3. the tax liability is valid,

    4. taxpayer established residency outside the United States or intends to do so,

    5. taxpayer's assets cannot be reached absent the issuance of the writ.

  4. Develop a request for a Writ Ne Exeat Republica, as applicable.

  5. Consult Area Counsel prior to considering a Writ Ne Exeat Republica. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).

5.21.3.4  (12-04-2013)
Customs Order or Prevent Departure Order

  1. A Customs Order or Prevent Departure Order is an administrative action similar to the Writ Ne Exeat Republica. A Customs Order can prevent a non-U.S. Citizen from exiting the United States, pending the resolution of a collection matter.

  2. The authority for a Customs Order is found in 22 C.F.R.§46.2(a) which states in part "...No alien shall depart, or attempt to depart, from the United States if his departure would be prejudicial to the interest of the United States under the provisions of 46.3." In addition, C.F.R §46.3(h) applies to a collection investigation where it states, in part, "Any alien who is needed in the United States in connection with any investigation or proceeding being, or soon to be, conducted by any official executive, legislative, or judicial agency in the United States or by any governmental committee, board, bureau, commission, or body in the United States, whether national, state, or local."

  3. Coordinate with Area Counsel before requesting a Customs Order or Prevent Departure Order. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).

  4. Request the Treasury Enforcement Communication System (TECS) coordinator to input a Customs Order into TECS.

    Note:

    Close coordination must be maintained between the TECS coordinator and the revenue officer as the TECS coordinator may need to provide instructions to the Department of Homeland Security if the taxpayer is prevented from leaving the country.

    Note:

    See IRM 5.1.18.14, Treasury Enforcement Communication System, for instructions on placing a taxpayer on TECS.

5.21.3.5  (12-04-2013)
Appointment of a Receiver

  1. The Appointment of a Receiver is a civil action brought in the U.S. District Court under the authority of IRC §7402(a).

  2. Appointment of a Receiver is usually in conjunction with a repatriation order and/or a Writ Ne Exeat Republica. For domestic assets, a Suit to Foreclose the Notice of Federal Tax Lien may accompany the Appointment of a Receiver.

  3. When considering Appointment of a Receiver, the following conditions must exist:

    1. Assets in the U.S. are not sufficient to satisfy the liability, and

    2. Evidence shows substantial assets exist outside the U.S.

  4. Develop a request for an Appointment of a Receiver, as applicable.

  5. Consult Area Counsel prior to considering the request. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).

5.21.3.6  (12-04-2013)
Suit to Repatriate Property - Repatriation Orders

  1. A Repatriation Order is an order issued by a federal judge, after a hearing, requiring a taxpayer who has transferred assets to a foreign country to transfer them back into the United States. If the taxpayer refuses or neglects to return the assets, the taxpayer is subject to contempt proceedings.

  2. A Repatriation Order must show:

    1. an outstanding tax liability,

    2. a reasonable basis that the taxpayer has assets outside the U.S.,

    3. levy on domestic assets is not sufficient to satisfy the tax liability, and

    4. U.S. is able to get personal jurisdiction over the taxpayer. The revenue officer must show that the taxpayer is either in the U.S. or a U.S. Territory or the likelihood that the taxpayer will be returning to, or passing through, the United States.

  3. Consider a Repatriation Order in concert with all other possible actions that fit the facts of the case such as Appointment of a Receivership, a Suit to Reduce the Tax to a Judgement, and a Writ Ne Exeat Republica.

  4. Develop a request for a Repatriation Order, as applicable.

  5. Consult Area Counsel prior to considering a Repatriation Order. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).


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