Part 4. Examining Process
Chapter 15. Jeopardy/Termination Assessments
Section 5. Post-Assessment Procedures
October 15, 2014
(1) This transmits revised IRM 4.15.5, Jeopardy/Termination Assessments, Post-Assessment Procedures.
This chapter provides examiners with information and guidance for jeopardy/termination assessments.
(1) Minor editorial changes have been made throughout this IRM. Legal references, form and letter references, and IRM references were reviewed and updated as necessary.
(2) Deleted IRM 220.127.116.11 regarding the recording and reporting of jeopardy/termination assessments
(3) Corrected 18.104.22.168(7)(a) citing of IRM 4.15.6 to the current cite IRM 22.214.171.124.1.4 Abating Jeopardy/Termination Assessments
Shelley M. Foster
Acting Director, Examination Policy SE:S:E:EP
This section establishes procedures for the processing of jeopardy/termination assessment cases after the assessment has been made.
During administrative review of the jeopardy/termination assessment action, there may be a determination that the assessment was improperly made or excessive in amount. If the Area Director believes a jeopardy/termination assessment is excessive in amount, or if it is shown to the satisfaction of the Area Director that a jeopardy situation does not exist, he/she may abate the assessment in whole or in part.
An abatement of all or part of the tax should be supported by a statement of reasons, the report of findings, and a new computation of tax. Copies of the Area Director's, Appeals', or Counsel's statement of reasons, report of findings, and new computation of tax will be included in the file of any jeopardy/termination assessment.
The jeopardy/termination assessment case file (including the statement of reasons, report of findings, and a new computation of tax) will be forwarded according to whether a judicial or administrative decision is made.
Counsel will relay court orders to abate all or part of the tax to the Technical Services.
Appeals will relay Appeals decisions to abate all or a part of the tax to Technical Services.
Other Decision — The Area Director's decision to abate all or part of the tax will be relayed to Technical Services.
Technical Services will forward all of the following information:
The case file to Technical Services Manager, for immediate processing of the abatement. Form 5344, Examination Closing Record, will be prepared to decrease tax, penalty, and interest for cases open in Exam. Form 3870, Request for Adjustment, will be used in other cases. See IRM 126.96.36.199.1.4 Abating Jeopardy/Termination Assessments for instructions on abating jeopardy/termination assessment cases by Technical Services.
The information to the Field Territory Manager, to advise him/her of the redetermined liability, of any restrictions on the collection action which may be pursued, or of a final decision by the court which may permit sale of seized property. If a part of the assessment remains, collection action may be resumed for the balance due. If an excess collection has been made, the service center should refund the excess. No refund will be made until the case is closed.
A copy of the statement of reasons, report of findings, and a new computation of tax for granting an abatement, to the Area Director for review.
If an individual comes forward and claims ownership of cash (or cash equivalent) related to an assessment per IRC 6867, Presumptions where owner of large amount of cash is not identified, he/she should be advised to submit a written request to the Area Director marked for the attention of Technical Services.
The written request for return of the subject property should be signed under penalty of perjury. The request will contain the following information:
The name, address, and social security number of the person submitting the request;
A detailed description of the property levied upon, if other than cash; if cash, state the exact amount seized;
A description of the claimant's basis for claiming the property levied upon as belonging to the claimant;
The name and address of the "Possessor" of the cash or cash equivalent (the person who was originally found to be in possession of the cash and who denied its ownership and did not properly identify the true owner); and
The originating operating division, the date of lien or levy as shown on Form 668–A, Notice of Levy, or Form 668–B, Levy, or in lieu thereof, a statement of the reasons why such information cannot be furnished.
If Technical Services determines that the claim is valid, Technical Services will refer the claim to Exam for consideration. Exam will be responsible for abating any overassessment and refunding the overassessment to the claimant, if applicable. See IRM 188.8.131.52, Jeopardy/Termination Assessments, Post-Assessment Procedures. Exam will notify Technical Services of their determination so that Technical Services can arrange for disposition of any noncash items seized.
The original assessment should be abated. If circumstances dictate, another assessment may be made on the individual that came forward and claimed the cash as his/hers. The assessment, against the owner of the cash, that replaces the original assessment, will be treated as dating back to the date of the original assessment.
Termination assessment provisions require the taxpayer who is subject to a termination assessment to file a full year return, and the Service to issue a notice of deficiency to the taxpayer with respect to that full year return. Generally, the notice of deficiency should be issued within 60 days of the due date of the return including extensions. Controls must be established by Exam to follow through on termination assessments.
Exam is responsible for establishing non-master file controls and for determining whether or not the taxpayer files a full year's return and the location of the filing for termination assessments.
IRC 6091(b) and Treas. Reg. 1.6091–2 require persons to file their full taxable year returns with the Area Director or with the service center serving the Area, as prescribed by the regulations.
Where persons subject to a termination assessment are required to file their full taxable year returns depends on whether the taxpayer is an individual or a corporation. Such place of filing is prescribed to provide early receipt and time for necessary examination and issuance of the notice of deficiency within the 60 day period required by IRC 6851(b)Termination assessments of income tax, Notice of deficiency.
Taxpayers other than corporations are directed to file their full taxable year returns with the Area Director or with the service center serving the Area, as prescribed by the regulations, where the taxpayer residence or principal place of business is located.
Corporate taxpayers are directed to file their full taxable year returns with the Area Director or with the service center serving the Area, as prescribed by the regulations, where. their principal office or agency of the corporation is located.
If a taxpayer does not comply with the filing directions (files his/her full year's return with a service center or a Area Director not specified), the return is not deemed filed within the meaning of IRC 6851(b). The return is deemed filed once the proper Area Director or proper service center secures the return. Thus, the statutory notice of deficiency must be mailed within 60 days after the later of the date the proper Area Director secures the return (i.e., the filing date) or the due date of the return for the taxable year, determined with regard to extensions.
An examination of the full year return is required in order to determine the correct tax liability and issue a notice of deficiency, whether the taxpayer filed a full year return or failed to file a return. The examination should be completed in time for the preparation, review, and issuance of the notice of deficiency within the required 60 day period.
Filed Return — Upon filing of the full year return by the taxpayer subject to a termination assessment, an examination for the entire year should be initiated.
Nonfiled Return — If the taxpayer fails to file by the due date of the return, an examination for the entire year should be initiated. If a return is not secured, follow substitute for return (SFR) procedures. See IRM 4.12.1, Nonfiled Returns.
A notice of deficiency is required to be mailed to the last known address of the taxpayer within 60 days after a jeopardy/termination assessment.
Exam Technical Services is responsible for issuing the notices of deficiency in jeopardy/termination assessments, except in cases pending in Appeals. All notices of deficiency prepared in jeopardy/termination cases will be reviewed by Counsel before issuance.
Jeopardy Assessment — A notice of deficiency is required to be mailed within 60 days of the date of the assessment.
Termination Assessment — A notice of deficiency is required to be mailed within 60 days after the later of:
The due date of the taxpayer's return for the taxable year, determined with regard to extensions; or
The date the taxpayer files a return for the taxable year.