The IRS uses various means of collection. This section provides guidance on how to implement IRS collection efforts and coordinate with other agencies when working the cases of government agencies, federal employees/retirees, military personnel, and Department of Defense employees with delinquent accounts.

Authorities related to this section include:

The Director, Collection Policy, is responsible for the policies and procedures related to government agencies, federal employees/ retirees, military personnel, and Department of Defense employees.

The Program Manager, Collection Policy, Employment Tax Group is responsible for the development and delivery of the policies and procedures within this IRM.

Collection group managers (GM) and field compliance managers (FCM) are responsible for ensuring compliance with the guidance and procedures described in this IRM.

Collection employees are responsible for implementing these policies and procedures in appropriate situations involving government agencies, federal employees/retirees, military personnel, and Department of Defense employees.

Employee performance is measured through periodic reports generated by management in the Embedded Quality Review System (EQRS) and the National Quality Review System (NQRS).

Operational and Program Reviews are conducted to ensure that case actions follow the policies and procedures in this IRM.

The Integrated Collection System (ICS) is a case management system that supports SB/SE revenue officers (ROs) in working delinquent tax cases. In every case, the file must show that the disposition method selected is consistent with the facts outlined in the case, the IRM, and other official guidance. Certain actions taken by ICS users generate systemic approval requests to the manager.

Collection group managers are responsible for the quality of work performed by the employees they supervise. Managers are required to follow program management procedures and controls addressed in IRM 1.4.50, Resource Guide for Managers, Collection Group Manager, Field Compliance Manager and Area Director Operational Aid.

Employees must offer and encourage taxpayers and Powers of Attorney (POA) to use available digital tools such as the Document Upload Tool (DUT) and Taxpayer Digital Communications (TDC) Secure Messaging (SM) to submit any required documentation. It is not mandatory for taxpayers to communicate using digital tools however paper correspondence should be the last resort option, only after all available digital communication options have been offered, declined, and exhausted. More information on DUT is available via the Document Upload Tool web page. Taxpayers and POAs can find more information and sign up for Secure Messaging on the Secure Messaging web page.

This table lists commonly used terms, acronyms and their definitions:

This IRM does not include guidance for all of the topics discussed. Throughout this IRM section, remain alert for references to other resources, such as other IRM sections and websites. Access the related guidance as needed to ensure a thorough understanding of the topics.

Additional resources can be found in:

The Taxpayer Bill of Rights (TBOR) groups rights from the Internal Revenue Code into ten fundamental taxpayer rights. IRS employees are responsible for knowing and following these rights. See IRC 7803(a)(3). For more information, see Pub 1, Your Rights as a Taxpayer, or visit the Taxpayer Advocate Service’s Taxpayer Bill of Rights web page.

Collection employees are authorized to disclose return information to the extent necessary to obtain information which may be related to a collection investigation and which is not otherwise reasonably available. See IRC 6103(k)(6) and 26 CFR 301.6103(k)(6)-1. No special permission or authorization is needed to make investigative disclosures under the circumstances and conditions described in 26 CFR 301.6103(k)(6)-1, as long as the collection employee is performing official duties for collection activity. It is important to note that IRC 6103(k)(6) and 26 CFR 301.6103(k)(6)-1 permit the disclosure of return information in the investigatory process, but do not authorize the disclosure of the taxpayer’s return. See IRM 11.3.21.8, Requirements for Investigative Disclosures, for more information.

Refer to IRM 10.5.5, Privacy and Information Protection, Unauthorized Access, Attempted Access or Inspection of Taxpayer Records (UNAX) Program Policy, Guidance and Requirements, for additional guidance on the policies, procedures, and requirements regarding unauthorized access, attempted access, or the inspection of taxpayer records (UNAX).

Under Title 18, U.S. Code, Section 3056, the U.S. Secret Service is charged with protecting:

To carry out its protective duties the U.S. Secret Service has requested that the IRS provide any information:

To carry out its duties regarding investigations of counterfeiting and forgery, the U.S. Secret Service has requested that the IRS provide any information:

Prepare a memorandum to the Criminal Investigation (CI), Director, Field Operations, and forward it through the FCM. The memorandum must state:

With the advice of Criminal Tax Counsel, the CI Director, Field Operations, will respond to the request by:

Compelled testimony and other information must not be used in any other civil action during the pendency of the criminal aspects of the investigation without express written consent of the Director, Field Operations.

If a prosecution referral to the Department of Justice is in effect, the concurrence of the Tax Division must be obtained prior to the non-injunctive civil use of the testimony or information.

Maintain any collection case file containing compelled information so that:

Do not give CI personnel access to compelled information without a request in writing from the CI Director, Field Operations, to the FCM.

Maintain a chronological record of all IRS personnel who had access to compelled information in any open case file.

Revenue officers who have access to compelled information must not be subsequently assigned to any joint criminal investigation on the witness who furnished it.

While state and local governmental entities are generally exempt from federal income tax, they are required to file employment tax and information returns. Unlike federal entities, state and local government segments are subject to enforcement type actions if all resolution attempts have been exhausted. Due to the structure of governmental entities, additional research and contact with other areas within the IRS (CAWR, EXAM, FSLG) will sometimes be required. If there is a CAWR related discrepancy, contact with CAWR and / or SSA may be required to reconcile the account.

Since July 1,1975, penalties and interest have been assessed and collected from state and local governments.

Work with the state or local government agency to obtain voluntary compliance.

Consider reasonable cause for penalties if the agency has taken action that will ensure compliance in the near future, generally within the next six months. Whenever possible, use the Reasonable Cause Assistant (RCA) program for consideration of a penalty relief request. Refer to IRM 20.1.1.3.6, Reasonable Cause Assistant (RCA), for additional information.

Contact an official within the state or local government who has the proper authority to resolve the tax delinquencies and offer assistance for resolution.

Prior to taking action to either file a notice of federal tax lien (NFTL) or issue a notice of levy, the following must be addressed:

Do not make referrals to Headquarters regarding the assertion or collection of penalties and interest against state and local government agencies.

IRC 7871, Indian Tribal Governments Treated as States for Certain Purposes, creates a unique relationship between Indian Tribal Governments (ITG) and the United States government.

ITG entities can be identified on IDRS by the business operating division (BOD) code "TE" and the employment code "I" or "1" .

ITG accounts can be complex and involve an array of legal issues. Tribal constitutions or tribal resolutions usually designate a specific person to address tax matters and land ownership legalities are outlined by treaty to ensure that legal rights are not violated. Technical issues specific to Indian tribes are listed in the table below. This list is not all-inclusive.

The Office of Indian Tribal Governments is in the TE/GE operating division and coordinates all aspects of ITG. Refer to IRM 25.5.6.6.7.2, Indian Tribal Government, and IRM 21.3.8.16, Indian Tribal Governments (ITG), for additional information.

For assistance with delinquent account assignments involving Indian tribal government entities, ROs can access the Specialist Referral System (SRS) and create a referral request. The ITG manager will assign an ITG specialist to the RO. The ITG specialist will:

The IRS must comply with Presidential Executive Orders. See IRM 4.70.11.2.6, Indian Tribal Governments Consultation Policy and Protocol Requirements. Special care must be taken to avoid violating Indian tribal legal rights because there are tribal sovereignty and land ownership legalities unique to Indian tribes which are outlined by treaty.

Work closely with an ITG specialist before taking any enforcement action on the ITG account, including:

Federal agencies in collection status are to be re-assigned to the centralized Federal Agency Delinquency (FAD) team in the Brookhaven campus. If the case is on ICS, it needs to be re-assigned to FAD. Refer to next paragraph for additional guidance. The role of the FAD team is to assist federal agencies with all compliance related issues including resolving delinquencies, monitoring compliance, and reconciling accounts as well as education to prevent future compliance issues. The CFO office and Federal, State and Local Governments (FSLG) support the program by assisting with case resolution when appropriate. Federal agency delinquency cases will not be worked in Field Collection, except in special circumstances. If you receive a federal agency delinquency case in your inventory without indication the case is an official referral, inform your group manager as soon as possible. Do not contact the federal agency.

As of July 2015, FAD inventory is systemically assigned and maintained on the Integrated Collection System (ICS) under assignment code 0100-8300. Since cases are not subject to enforcement actions, a final notice is not issued and the module is accelerated to status 26 within 5-6 weeks of the assessment date.

Federal agencies will have an "Employment Code - F." To confirm the entity is a federal agency, review the following:

Detailed information regarding federal agencies filing, paying and reporting requirements can be found in IRM 5.19.15, Federal Agency Delinquency (FAD) Program.

When open Examination involvement is present on the account (i.e. -L Freeze, unreversed TC 420), you must reach out to TE/GE prior to initiating contact with the taxpayer. Contact the TE/GE FSL/ET coordinator via fax at ≡ ≡ ≡ ≡ ≡ ≡ ≡ and provide the following:

Include a fax cover sheet and notate "Assignment of GE Collection Case" . Do not include any PII on the fax cover sheet.

Upon receipt of the fax, the FSL/ET coordinator will input the appropriate employment code, as applicable and forward the request to the appropriate TE/GE Field group to which the case assigned, to respond to the inquiry and provide any information available regarding:

FERDI taxpayers are identified by matching the primary social security number (SSN) and secondary SSN (if joint liability) of balance due and/or return delinquency accounts against:

Systemic master file processing of the matched records generates a transaction code (TC) 016 with document locator number (DLN) 38263-996-00100-y, (where "y" is the last digit of the year the DLN was assigned). This transaction will cause a FERDI indicator to be set on the individual master file (IMF). The FERDI indicator can also be manually set by input of TC 971 AC 51.

IRS computer systems display the indicator by the following literals:

FERDI Del Ret cases for tax years 2004 and subsequent can be identified by SELECTION CODE 12.

If a code is not present and contact with the taxpayer reveals that he/she or his/her spouse is a federal employee or retiree, request input of the federal indicator code to IDRS with TC 971, Action Code 51. For joint balance due assessments, input the federal indicator code on the primary SSN.

If taxpayer contact on a case with a federal indicator reveals the taxpayer receives no federal salary or retirement benefit, confirm this by checking IDRS cc IRPOL, IRPTR, and/or SUPOL.

If this research is inconclusive, initiate contact as needed with:

Once a year, FERDI indicators are systemically removed from the accounts of taxpayers who are no longer federal employees or retirees. This is accomplished by matching FERDI taxpayer records (both the primary and secondary SSN for joint accounts) against federal sources to identify those individuals no longer employed, or in the case of retirees, deceased. To meet the criteria for removal of the FERDI indicator, both the primary and secondary SSNs must not match the federal sources. Master file processing generates a TC 016 with DLN 38263-995-00100-y, (where "y" is the last digit of the year the DLN was assigned) which removes the FERDI indicator.

If you are sure the taxpayer is not receiving a federal salary or pension, request reversal the federal indicator code with TC 972, Action Code 51. After three cycles, the system will no longer block case closures listed below in IRM 5.1.7.8.2 (2).

In most instances, FERDI cases, with the exception of IRS employee cases and cases with an aggregate assessed balance of $1,000,000 or more will be worked in ACS. Assignment to the field will be based on the current inventory prioritization guidelines applied to all cases.

The following balance due module dispositions are blocked:

The following delinquent return module dispositions are blocked:

Attempts to close cases using any of the dispositions above will cause an unpostable condition and result in an error message or re-issuance of the case.

Follow normal collection and taxpayer interview procedures for FERDI cases. The objective of FERDI cases is to secure full payment and/or filing of delinquent returns as soon as possible, as with any other case. Because of the sensitivity of FERDI cases and the requirements of the Office of Government Ethics regulation 5 CFR 2635.809, which addresses the responsibility of federal employees to satisfy their financial obligations, take extra care when granting FERDI taxpayers additional time to pay.

You must determine the cause for the delinquency and take corrective actions to prevent future delinquencies.

Secure all required returns. For delinquent return modules previously closed with TC 593, TC 595 (unless the assessment is pending or the case is assigned), TC 597, or TC 598, reverse the transactions with a TC 592 with no closing code.

When entering into installment agreements with federal employees, the use of direct debit or payroll deduction installment agreements is encouraged, but not required.

A FERDI case may be closed Currently Not Collectible (CNC) (hardship), if the taxpayer is unable to pay reasonable basic living expenses. Generally, these cases involve insufficient income and insufficient equity in assets to make any payment without causing hardship. Conduct a full financial analysis in order to determine the correct disposition for the case.

To resolve accounts when the taxpayer meets the criteria for CNC (hardship) but has unfiled returns, ACS employees will follow the guidance in IRM 5.19.18.5.10.2, Currently Not Collectible (CNC) - Hardship, and Field Collection employees will follow the guidance in IRM 5.16.1.2.9, Hardship.

Open delinquent return modules can be resolved by closing as little or no tax due, refund due or income below filing requirement (P-5-133), if warranted by the facts of the case. See the provisions in IRM 5.1.11, Delinquent Return Investigations, that explain the various methods of "resolving" open return delinquency modules. If the taxpayer is required to file and refuses, a referral to Examination or summons issuance may be appropriate. See IRM 25.5.5, Summons for Taxpayer Records and Testimony, for summons procedures.

Refer taxpayers to the Taxpayer Advocate Service (TAS) when the contact meets TAS criteria and you cannot resolve the taxpayer’s issue the same day. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for additional information regarding TAS case criteria. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer "same day" cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. See IRM 13.1.7.5, Same Day Resolution by Operations. When you refer cases to TAS, complete Form 911, Request for Taxpayer Advocate Service Assistance and Request and Application for Taxpayer Assistance Order, and forward to TAS.

Remove the IRS employee indicator if, after investigation, you determine that:

Use Form 4844, Request for Terminal Action, to request input of TC 972, AC 191 for removal of the IRS employee indicator. Leave the MFT/Tax Period sections of the form blank and note "Reversing IRS employee indicator" in the remarks section. Allow two cycles for posting of the TC and removal of the IRS employee indicator.

If the above conditions are met and you determine the taxpayer is not a federal employee or retiree, also request removal of the FERDI indicator by submitting Form 4844, Request for Terminal Action, requesting input of TC 972 AC 51. See IRM 5.1.7.8.1 (9) above for additional information on removing the FERDI indicator.

Although IRC 7508 applies to individual taxpayers the IRS allows business taxpayer accounts to be postponed if the account meets the criteria in (3) below. The postponement includes the suspension of all collection activity (including the assessment of the Trust Fund Recovery Penalty) during the period of time in which the criteria of (3) below applies plus 180 days.

Revenue officers will use the procedures in IRM 5.1.7.10.3.1 below to suspend BMF del ret and bal due accounts of taxpayers deployed to a combat zone.

To suspend the BMF account of a taxpayer deployed to a combat zone, the taxpayer must meet both of the following criteria:

Document the case history to indicate that the taxpayer meets all of the criteria to qualify for combat zone status.

When it is common knowledge or apparent that the taxpayer is combat zone personnel, oral testimony is acceptable proof that the taxpayer is entitled to the combat zone special tax treatment.

When it is not common knowledge or apparent that the taxpayer is combat zone personnel, written substantiation, such as a copy of the military or civilian orders or a statement issued by the Department of Defense (DOD) attesting that the combat zone qualifications are met, is required.

A signed statement secured by the taxpayer or a contact, such as a spouse or attorney, will be accepted as substantiation when a copy of the military or civilian orders or a DOD statement is not easily accessible.

In addition, the IRS may have previously identified the taxpayer as combat zone personnel by entering a -C freeze on the taxpayer’s account.

The combat zone freeze code suspends:

To initiate the combat zone (-C) freeze, complete Form 4844, Request for Terminal Action, requesting input of TC 500 with the appropriate closing code (see below) and including the combat zone entry date:

As of January 2008, TC 598 CC 70 will systemically be input on delinquent return modules upon the input of TC 500 with the above closing codes. The TC 598 CC 70 closes the module during the administrative relief period. The module will be identified on IDRS with a -C freeze code.

When it is determined that the TC 500 (-C Freeze) is no longer appropriate, complete Form 4844, Request for Terminal Action, and include the combat zone exit date. Use the following transaction and closing codes to reverse the combat zone freeze code:

If a taxpayer requests a military deferment, issue Letter 1175, Collection Postponed During Initial Period of Active Military Service, to the taxpayer. Include Form 15696, Request for Deferment of Collection of Income Tax - Letter 1175 Response Form, and request any delinquent returns be filed. Explain that all delinquent returns must be filed through the revenue officer to ensure expedited processing.

Document ICS with the taxpayer’s request for a military deferment and issuance of the Letter 1175 with Form 15696. Advise the taxpayer of the forthcoming letter and instruct them to respond directly to you with the completed response form within 60 days for consideration of their deferment request. Suspend collection action for 60 days to allow the taxpayer to respond to the letter. If the completed request is not received after 60 days, resume collection action with the group manager's approval. You must document ICS indicating approval by the group manager and the date the approval was received. If information becomes available indicating that the taxpayer is not in military service or is merely seeking a military deferment unjustifiably to delay payment, secure FCM approval and resume collection.

If the completed request for deferment is received, review the taxpayer’s response to determine the taxpayer's eligibility for a deferment. The taxpayer’s response must include their name, social security number, address, monthly income and source of income before the military service began, current monthly income, description and amount of expenses incurred because of the military service (if current monthly income is less than monthly income before the military service), military rank, and the From/To dates and Branch of Service information for all periods of active service. A copy of the taxpayer’s orders is helpful, but not required. Review the taxpayer’s correspondence to confirm the required information has been provided. With regard to the taxpayer’s income, review the response to determine:

If the taxpayer is entitled to a deferment:

FCM approval is required to deny the taxpayer's request for military deferment. If the taxpayer is not entitled to a deferment, prepare Letter 3079, Denial of Military Deferment, and secure the FCM’s signature. If the taxpayer provided a copy of his or her military orders or reporting instructions no later than 180 days after the date of termination or release from military service, include the optional sentence in Letter 3079, explaining that the taxpayer is eligible for the reduced interest rate. Follow the procedure in IRM 5.1.7.13.2(3) below, to provide the taxpayer with the reduced interest rate. Enclose a copy of Pub 1, Your Rights As a Taxpayer, and Pub 594, The IRS Collection Process. Document ICS with the Letter 3079 issuance, signed by the FCM, and retain a copy of the letter with the other case file documents. Resume collection actions, as applicable.

If a deferment on collection is granted under SCRA, the statutory collection period is suspended during the taxpayer's military service plus an additional 270 days after the day following military service. See U.S. Code, 50 U.S.C. 4000.

Interest (and failure to pay penalties) do not accrue during the deferment on any tax for which collection is deferred under SCRA. See IRM 20.2.7.12, Military Deferment. However, the taxpayer remains liable for any interest which accrued before the beginning date of military service. Interest will also accrue while the tax remains unpaid after deferment ends.

If the deferment is denied, no more than 6% interest (unless the applicable interest rate is below 6%) per year will be charged while the taxpayer is in active military service. See U.S. Code, 50 U.S.C. 3937 (formerly cited as 50 App. USCA 527 relating to the Soldiers' and Sailors' Civil Relief Act of 1940). However, the liability must have been incurred before the taxpayer entered active military duty. The reduced rate applies regardless of whether the military service materially affects the taxpayer’s ability to pay. To substantiate the claim for reduced interest rate, the service member must furnish the IRS a copy of their orders or reporting instructions detailing the call to military service. They must do so no later than 180 days after the date of their termination or release from military service.

All responses from taxpayers, as a result of balance due notices sent out, are forwarded to the campus.

For military accounts where the taxpayer makes a specific inquiry about a military deferment in response to a notice request for payment of individual income tax, the campus will accelerate the account to balance due status and place the correspondence in the suspense file for attachment to the balance due case. When assigned to Field Collection, the taxpayer’s request will be processed in accordance with the procedures in IRM 5.1.7.13.1 above.