Part 4. Examining Process

Chapter 15. Jeopardy/Termination Assessments

Section 3. Assessment Procedures (Centralized Case Processing )

4.15.3 Assessment Procedures (Centralized Case Processing )

Manual Transmittal

October 03, 2018

Purpose

(1) This transmits revised IRM 4.15.3, Jeopardy/Termination Assessments, Assessment Procedures (Centralized Case Processing).

Material Changes

(1) Updated campus to Ogden Campus Accounting throughout this IRM where applicable.

(2) Expanded to include the requirements of IRM 1.11.2.2.5, Address Management and Internal Controls.

IRM Reference Description of Change
IRM 4.15.3.2 Updated approval authority.
IRM 4.15.3.2 Updated the assessment time frame to within 24 hours.
IRM 4.15.3.2 Updated that EEFAX is an acceptable method of receipt for Quick Assessments. EEFAX is also the preferred method.
IRM 4.15.3.2 Table - Telephone item 6, added IRM Exhibit 20.2.1-2, Definition of Terms, to provide definition of a 23 C date.
IRM 4.15.3.2 IRM 4.4 17.2.2, Area Procedures Against the Taxpayer’s Correct TIN, and IRM 4.4.17.2.3, FORT Procedures, were added to provide additional information on the processing of forms.
IRM 4.15.3.2.1 Updated time for faxing a quick assessment.
IRM 4.15.3.3 Deleted obsolete Form 23C, Assessment Certificate - Summary Record of Assessments. This form is no longer used by Centralized Case Processing.
IRM 4.15.3.3 Changed original to a copy to accommodate electronic submissions. A note was added allowing all forms in this section to be EEFAXed to the respective recipients.
IRM 4.15.3.3 Deleted incorrect timing of events.
IRM 4.15.3.3 Added Form 5344, Examination Closing Record, and provided IRM 4.10.8.17.1, Completion of Form 5344, Examination Closing Record.
IRM 4.15.3.3 Added reference to IRM 4.10.9, Workpaper System and Case File Assembly, to provide guidance on Form 3198, Special Handling Notice for Examination Case Processing.
IRM 4.15.3.3 Removed copy of Form 933-A, Income Tax Discrepancy Adjustments, and replaced with Form 4549, Income Tax Examination Changes. Added IRM 4.10.8.3.1, Individual and Corporate Cases, to provide guidance in completing Form 4549.
IRM 4.15.3.4 Removed Form 6335, NMF First Notice. Centralized Case Processing no longer receives this form. Removed all references of mailing forms to area offices.
A note was added allowing all forms in this section to be EEFAXed to the respective recipients.

(3) Editorial changes were made to this IRM to edit grammar and update references.

Effect on Other Documents

This material supersedes IRM 4.15.3, dated September 16, 2011.

Audience

Small Business/Self-Employed (SB/SE), Large Business and International (LB&I), Wage and Investment (W&I), Tax Exempt and Government Entities (TEGE) and Appeals employees.

Effective Date

(10-03-2018)

Michael W. Damasiewicz
Director, Examination - Field and Campus Policy
SE:S:E:HQ:EFCP
Small Business/Self Employed

4.15.3.1 (10-03-2018)

Program Scope and Objectives

  1. Audience. These procedures apply to Small Business/Self-Employed (SB/SE), Large Business and International (LB&I), Wage and Investment (W&I), Tax Exempt Government Entities (TEGE) and Appeals employees.

  2. Policy Owner. The Director, Examination - Field and Campus Policy, which is under the Director, Headquarters Examination.

  3. IRM Owner. Field Examination Special Processes (FESP), which is under the Director, Examination - Field and Campus Policy.

  4. Primary Stakeholders. Stakeholders include Small Business/Self-Employed (SB/SE) and Wage and Investment (W&I) employees.

  5. Contact Information. To recommend changes or make any other suggestions related to this IRM section, see IRM 1.11.6.6, Providing Feedback About an IRM Section - Outside of Clearance.

  6. Program Goals. The goal of this section is to provide procedures for the preparation, assessment, and confirmation of jeopardy/termination assessments.

4.15.3.1.1 (10-03-2018)

Background

  1. This IRM section provides examiners with information and guidance on the preparation, assessment processes and confirmation of the Jeopardy/Termination Assessment Program.

4.15.3.1.2 (10-03-2018)

Authority

  1. The Service has the authority to examine any books, papers, records or other data for the purpose of ascertaining the correctness of any return or making a return where none has been made under IRC 7602, Examination of Books and Witnesses. If the Service believes that the collection of a deficiency will be jeopardized by delay, it may make a jeopardy assessment of such deficiency, or if the tax year has not ended or the return filing date has not passed, a termination assessment of income tax, without regard to any notice of the proposed assessment usually required, under the following IRC sections:

    • IRC 6851, Termination Assessments of Income Tax.

    • IRC 6852, Termination Assessments In Case of Flagrant Political Expenditures of Section 501(c)(3) Organizations.

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

    • IRC 6862, Jeopardy Assessment of Taxes Other Than Income, Estate, Gift, and Certain Excise Taxes.

    • IRC 6867, Presumptions Where Owner of Large Amount of Cash Is Not Identified.

    Note:

    A jeopardy assessment or a termination assessment of income tax is to be used sparingly; see IRM 1.2.13.1.27, Policy Statement 4-88, and IRM 1.2.13.1.28, Policy Statement 4-89, respectively.

4.15.3.1.3 (10-03-2018)

Roles and Responsibilities

  1. The Director, Headquarters Examination, is the executive responsible for providing policy and guidance for field employees and ensuring consistent application of policy, procedures and tax law to effect tax administration while protecting taxpayers’ rights. See IRM 1.1.16.3.5, Headquarters Examination, for additional information.

  2. The Director, Examination - Field and Campus Policy (formerly known as the Director, Examination AUR/Policy), reports to the Director, Headquarters Examination, and is responsible for the delivery of policy and guidance that impacts the field examination process. See IRM 1.1.16.3.5.1, Exam/AUR Policy, for additional information.

  3. Field Examination Special Processes (FESP), which is under the Director, Examination - Field and Campus Policy, is the group responsible for providing oversight and policy and procedural guidance on specialized examination processes to SB/SE field examiners and managers. See IRM 1.1.16.3.5.1.2, Examination - Field Special Processes.

4.15.3.1.4 (10-03-2018)

Program Management and Review

  1. Periodic program reviews are conducted by FESP to:

    • Assess the effectiveness of specific programs within Examination or across the organization,

    • Determine if procedures are being followed,

    • Validate policies and procedures and

    • Identify and share best/proven practices.

4.15.3.1.5 (10-03-2018)

Acronyms

  1. The following table lists commonly used acronyms:

    Acronym Definition
    FESP Field Exam Special Processes
    MF Master File
    NMF Non-master File
    TIN Taxpayer Identification Number
4.15.3.1.6 (10-03-2018)

Terms

  1. The following table lists commonly used terms and associated definitions:

    Term Definition
    Possessor of Cash Assessment If an individual, in physical possession of cash or its equivalent in excess of $10,000, does not claim the cash as his or hers or as belonging to another person who can be easily identified and who acknowledges ownership of the cash, then for purposes of IRC 6851 and IRC 6861, it is presumed that:

    1. The cash represents gross income of a single individual for the taxable year in which the possession occurs; and

    2. The collection of tax is presumed to be jeopardized by delay. See IRM 5.17.15.3, Presumption Regarding $10,000 in Unclaimed Cash.
4.15.3.1.7 (10-03-2018)

Related Resources

  1. The following table contains related resources referenced in this IRM:

    Resources Title
    IRM 4.4.17.2.2 Area Procedures Against the Taxpayer’s Correct TIN
    IRM 4.4.17.2.3 FORT Procedures
    IRM 4.4.25 AIMS Procedures and Processing Instructions, Quick Assessments
    IRM 4.10.8.3.1 Individual and Corporate Cases
    IRM 4.10.8.17.1 Completion of Form 5344, Examination Closing Record
    IRM 4.10.9 Workpaper System and Case File Assembly
    IRM 4.15.2.4.1.4.1 Securing Approval of the Report
    IRM 5.1.4.4 Quick Assessment
    IRM 5.17.15.3 Presumption Regarding $10,000 in Unclaimed Cash
    IRM Exhibit 20.2.1-2 Definition of Terms
4.15.3.2 (10-03-2018)

Preparing Assessments

  1. The Chief Counsel (or the Chief Counsel's delegate) must approve a jeopardy/termination assessment. IRC 7429 (a)(1)(A), Review of Jeopardy Levy or Assessment Procedures. Counsel should sign off last on the jeopardy/termination assessment before it is submitted to the Area Director for approval. See IRM 4.15.2.4.1.4.1, Securing Approval of the Report. The assessment must be made within 24 hours of the approval from the Area Director being received in the office that will make the assessment. Jeopardy/termination assessments will be prepared following quick assessment procedures. See IRM 4.4.25, AIMS Procedures and Processing Instructions, Quick Assessments. Quick assessments are made on either master file (MF) or non-master file (NMF). NMF are processed in the same manner as MF, except the numbering is different and abstract codes are needed for individual MF and business master file (BMF) adjustments.

  2. Requests for quick assessments will be made by telephone or electronic facsimile (EEFAX). EEFAX is the preferred method to request a quick assessment. Form 2644, Recommendation for Jeopardy/Termination Assessment, will be used to request quick assessments, in addition to Form 2859, Request for Quick or Prompt Assessment.

    IF the request is made by: THEN provide the following information:
    Telephone

    1. Affirmative statement that the Area Director approved Form 2644;

    2. Name, address and TIN of the taxpayer;

    3. Type of tax;

    4. Taxable period;

    5. Amount of tax, penalties with the appropriate transaction code(s), interest to be assessed, credit adjustments and/or reference numbers;

    6. Amount of payment, if any, the balance due, 23C date (see IRM Exhibit 20.2.1-2, Definition of Terms, for definition of 23C date); and

    7. Document locator number (DLN).
    Electronic Facsimile/EEFax

    1. Form 2859 for each type of tax return, with a control number; and

    2. Form 3210, Document Transmittal Form, for each type of tax return. Include the name control, MFT, TIN, Tax period, and Control number. In the remarks area, enter the 23C date and "FAX QUICK ASSESSMENT" . Address the form to the appropriate function and include the originator’s complete address, mail stop and fax number so the receipted Form 3210 can be faxed back. For additional information see IRM 4.4.17.2.2, Area Procedures Against the Taxpayer’s Correct TIN, and IRM 4.4.17.2.3, FORT Procedures.
4.15.3.2.1 (10-03-2018)

Information Transmitted

  1. The quick assessment is transmitted to Ogden Campus Accounting. Only Centralized Case Processing will transmit the quick assessment.

  2. Faxing should be done only once each day, if possible, and prior to 12:00 p.m. CST. If there are numerous entities and returns, the information should be transmitted as early as possible.

    Note:

    If two work days or less remain before the statute of limitations will expire, follow telephonic quick assessment procedures. See IRC 6871, Claims for Income, Estate, Gift and Certain Excise Taxes in Receivership Proceedings etc.

4.15.3.2.2 (09-16-2011)

How Assessment is Made

  1. The assessment is made according to the type of assessment.

  2. Jeopardy — Assessment is made on MF for the full period.

  3. Termination — Assessment is made on NMF as a short period, even though the period may be a full period. The assessment is made as a short period to differentiate between the termination period and the full period under normal filing requirements.

  4. Possessor of Cash — The possessor of cash assessment is made as either a jeopardy or termination assessment, as noted above. A new taxable entity and temporary TIN is created for possessor of cash assessments.

    1. New Taxable Entity — A new taxable entity (dummy file) is created for the individual who is in physical possession of the cash. All documents requiring entity information must use "(Possessor's Name) as Possessor of Certain Cash" as the name line.

    2. Temporary TIN — A temporary TIN must be obtained for all assessments made under IRC 6867, Presumptions Where Owner of Large Amount of Cash Is Not Identified, regardless of information indicating the possessor's personal TIN. Contact the campus entity function to obtain a temporary TIN. The use of the temporary TIN will enable separate tax liability treatment for the possessed cash and avoid any effect on the possessor's personal individual tax liability, which remains separate from the IRC 6867 assessment.

4.15.3.3 (10-03-2018)

Assessing Amounts

  1. After the jeopardy/termination assessment information is transmitted to Ogden Campus Accounting, Campus Accounting will process the assessment and provide Centralized Case Processing with the required information that an assessment was made.

  2. Campus Accounting Action — Ogden Campus Accounting will process the assessment and forward Form 3552, Prompt Assessment Billing Assembly, to Centralized Case Processing.

  3. Centralized Case Processing Action — After the assessment is made by Ogden Campus Accounting, Centralized Case Processing will return one copy of Form 2644 to the examiner.

  4. After the assessment is processed by the campus and the DLN and 23C data have been placed on Form 2644 and Form 2859, the following items will be forwarded within one day to Ogden Campus Accounting:

    • Copy of Form 2644;

    • Copy of Form 2859;

    • Copy of Form 5344, Examination Closing Record, prepared in accordance with IRM 4.10.8.17.1, Completion of Form 5344, Examination Closing Record;

    • Copy of Form 3198, Special Handling Notice for Examination Case Processing, prepared in accordance with IRM 4.10.9, Workpaper System and Case File Assembly;

    • Copy of pages 1 and 2 of applicable Form 4549, Income Tax Examination Changes, portion of the tax computation prepared in accordance with IRM 4.10.8.3.1, Individual and Corporate Cases; and

    • Copy of narrative.

    Note:

    All forms in this section can be EEFAXed to the respective recipients.

4.15.3.4 (10-03-2018)

Confirming Assessment

  1. After the jeopardy/termination assessment is processed by Centralized Case Processing, Ogden Campus Accounting will provide Form 3552, Prompt Assessment Billing Assembly, to Centralized Case Processing. The form will be reviewed to verify the name, address, TIN, tax period and assessment information are consistent with Form 2859.

  2. After processing, Form 3552 and Form 2859 are EEFAXed to the area office. Form 3552 must be associated with the control copy in Centralized Case Processing.

  3. Upon request, the campus will withhold manual and/or computer billing.

  4. Verification Errors — If any errors are detected in Form 3552, immediately contact Ogden Campus Accounting for issuance of a corrected bill. If verification of the assessment is not received, the Centralized Case Processing Manager, or designated employee, must follow-up with Ogden Campus Accounting.

  5. Follow-up will be done in sufficient time to prevent barred assessments.

  6. Follow-up will be done three weeks from the 23C assessment date for non-statute assessments.

    Note:

    All forms in this section can be EEFAXed to the respective recipients.