MANUAL TRANSMITTAL

Department of the Treasury Internal Revenue Service

5.11.3
AUGUST 20, 2010

PURPOSE (1) This transmits revised text for IRM 5.11.3, Jeopardy Levy without a Jeopardy Assessment. MATERIAL CHANGES (1) 5.11.3.1(3) clarified when CDP rights are available and L2439/2439A serves as the CDP Notice. (2) (3) (4) (5) (6) (7) 5.11.3.4(1) updated and consolidated the chart of necessary Forms and Letters. 5.11.3.4(2) added instructions for using the L2439/2439A ICS template. 5.11.3.5(6) added instructions for inputing TC971 codes upon issuance of CDP rights. 5.11.3.5(3) added instructions for issuing CDP rights when a jeopardy levy is issued within 30 days from the notice and demand. 5.11.3.5(4) added reason for advising levy source to delay sending payment when jeopardy levy appealed. Editorial changes made throughout.

EFFECT ON OTHER DOCUMENTS This IRM supersedes IRM 5.11.3 dated September 19, 2006. AUDIENCE This material is used by SB/SE revenue officers and AIQ - Advisory. EFFECTIVE DATE (08-20-2010)

Signed by Frederick W. Schindler, Director, Collection Policy

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Part 5 Collecting Process Chapter 11 Notice of Levy

Manual Transmittal 5.11.3 Jeopardy Levy without a Jeopardy Assessment

IRM 5.11.3

Table of ContentsTable of Contents

5.11.3.1 5.11.3.2 5.11.3.3 5.11.3.4 5.11.3.5 5.11.3.6 Background Required Conditions for Jeopardy Getting Approval Forms and Letters for a Jeopardy Levy without a Jeopardy Assessment After the Jeopardy Levy Is Approved Appealing the Jeopardy Levy

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5.11.3.1 (08-20-2010) Background

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(1) Normally, the notices and waiting periods described in IRM 5.11.1.2.1, Required Notices, must be issued before property may be levied. However, if collection is in jeopardy, property may be levied sooner. (2) Generally, if collection is in jeopardy, there is a jeopardy or termination assessment. Then there is an immediate notice and demand which is followed by a jeopardy levy. Sometimes, however, there may already be an assessment before jeopardy is known. Note: In every situation where a jeopardy levy occurs without a jeopardy or termination assessment, the Service has already assessed the tax liability through normal procedures. If collection is not in jeopardy, a quick assessment or prompt assessment is insufficient to support a levy immediately after issuing notice and demand. However, if collection is in jeopardy, the jeopardy situation may support an immediate levy after personal service of the notice and demand (Form 3552). See IRM 5.11.3.3, Getting Approval , for the approvals required for a jeopardy levy. Example: There may be a prompt assessment on a voluntarily filed return. Then, the taxpayer starts moving property to hide it. Property may be levied, even though the usual waiting periods after notices have not passed. Example: If the Service makes a quick assessment to recover refunds resulting from a false Form 1099OID filing, a Revenue Officer may make a jeopardy levy if collection is in jeopardy, after securing the required approvals outlined in IRM 5.11.3.3, Getting Approval. (3) A jeopardy levy without a jeopardy or termination assessment may be appropriate: After tax is assessed, but before the notice and demand normally required by IRC 6331(a) is issued, provided immediate notice and demand is given to the taxpayer After the notice and demand is issued, but before 10 days have passed After the 10 day notice and demand period ends, but before the 30 day notice of intent to levy and notice of a right to a hearing have been issued, or After the notice of intent to levy and notice of a right to a hearing have been issued, but before the 30 days for the taxpayer to request a hearing have passed. Note: The taxpayer may request an administrative or judicial review of the jeopardy levy action under IRC 7429 only when the jeopardy levy is issued within 30 days from the notice and demand (first notice). SeeIRM 5.11.3.6 , Appealing a Jeopardy Levy, for appeal rights available when a jeopardy levy is issued. (4) In general, no levy may be made: On the appearance date of a summons, While an installment agreement is pending or active, During the period a rejected installment agreement can be appealed or is being appealed During the period an offer in compromise is pending During the period a rejected offer in compromise can be appealed or is being appealed

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5.11 Notice of Levy

However, in the circumstances listed in (4) above, if collection is in jeopardy a jeopardy levy may be issued. (5) Hereafter, any reference to jeopardy levy in this section shall refer only to a jeopardy levy without a jeopardy or termination assessment unless otherwise noted.

5.11.3.2 (08-20-2010) Required Conditions for Jeopardy

(1) A jeopardy levy requires a condition that would have allowed a jeopardy assessment. (2) See the IRS Policy Statement 488 in IRM 1.2.13.1.27, regarding jeopardy assessments. (1) If the collection of an assessed tax is in jeopardy, prepare either a written report or a narrative ICS history entry for the territory manager requesting approval to issue a jeopardy levy. Include the same information that is needed for a jeopardy assessment. See IRM 5.1.4, Jeopardy, Termination, Quick and Prompt Assessments . Send the request through the group manager. (2) The managerial approval process may be accomplished by having the group manager and territory manager access ICS and document their approval with a history entry. Alternatively, if written approval is secured, a copy of the written approval must be kept in the file and the RO will document the ICS history. (3) In addition, IRC 7429(a)(1)(A) requires Counsel approval, in writing, for a jeopardy levy. This approval may be no lower than the Associate Area Counsel. Note: For SB/SE International Operations, the authority is delegated to the Deputy Associate Chief Counsel (Strategic International Programs) or this persons delegate. Note: All jeopardy levies must be approved by Counsel even though under IRC 7429(a)(1)(A) Counsel is only required to approve jeopardy levies issued less than 30 days after notice and demand. While IRM 1.2.44.3(14) Delegation Order 5-3 (Rev. 1) does not require Counsels approval to issue a jeopardy levy after all pre-levy notices have been issued and the waiting periods for them have passed, see IRM 5.11.3.1(4) above, Collection policy requires Counsel approval of all jeopardy levies. (4) When all appropriate approvals for issuance of a jeopardy levy are secured, the revenue officer may generate the levy on ICS, sign, and issue it. (5) When securing written approval, include Letters 2439/2439A(CG), Notice of Jeopardy Levy and Right of Appeal, and 2438(CG), Jeopardy Levy Letter to Third Party Levy Recipient, for the territory managers signature. If approval is secured via ICS, then sign the letter, and write on behalf of above the territory managers name and title. If The notice and demand has not been issued, or it has been issued and 10 days have not passed yet. Then The taxpayer must be given an immediate notice and demand for payment. See Note under subsection IRM 5.11.1.2.1(2)

5.11.3.3 (08-20-2010) Getting Approval

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For joint IMF returns, prepare two Letters 2439A(CG) that include the dual notice language. If an immediate notice and demand is required, also prepare two Forms 3552, Prompt Assessment Billing Assembly, Parts 3 & 4. Put both taxpayers names on the letters and on the notice and demand. (6) Use Parts 3 & 4 of Form 3552 to make immediate notice and demand. Cross out Please return this copy with your payment to the address shown above at the bottom of the form. If a blank Form 3552 is not available, copy the text of one on IRS letterhead stationery or print one off the Publishing website. Have the territory manager sign this, too, when the notice of levy is approved or sign for the territory manager if approval is secured via ICS.

(7) See IRM 1.2.44.3(14) Delegation Order 5-3 (Rev. 1) for all position titles with the authority to issue notices of levy when collection is in jeopardy and the prelevy notices have not been issued and/or the waiting periods after the notices have not passed or the general levy prohibition exists. (8) If time constraints or other conditions prevent securing Territory Manager written or systemic approval, the Territory Manager can approve the levy by telephone. When this occurs, write a narrative ICS history entry or a memo to file including the information that would have been in the report described in (1). Send a copy of the memo to file to the territory manager. 5.11.3.4 (1) The forms and letters that are needed depend on the timing of the jeopardy (08-20-2010) levy. In addition to notices of levies and federal tax liens the forms and letters Forms and Letters for a needed for jeopardy levies are: Jeopardy Levy without a Jeopardy Assessment

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5.11 Notice of Levy

If Tax has been assessed. And The notice and demand normally required by IRC 6331(a) has not been issued or the notice and demand has been issued but ten days have not passed. Then prepare 1. IMMEDIATE NOTICE AND DEMAND (Altered Form 3552) 2. LETTER 2439/2439A (CG) 3. LETTER 2438(CG) 4. PUBLICATION 594 5. PUBLICATION 1660 6. FORM 12153 1. LETTER 2439/2439A(CG) 2. LETTER 2438(CG) 3. PUBLICATION 594 4. PUBLICATION 1660 5. FORM 12153

The notice and demand has been issued.

It is between 10 and 30 days since issuance of the notice and demand,or 30 days have passed but a notice of intent to levy and notice of your right to a hearing has not been issued or the notice was issued and it is within the 30 (+15) days to request an appeal. A notice of intent to levy and notice of your right to a hearing has not been issued or the notice was issued and it is within the 30 (+15) days to request an appeal. A notice of intent to levy and notice of your right to a hearing was issued and the 30 (+15) days to request an appeal have passed but it is within one year since issuance of the notice of intent to levy and right to a hearing. (Taxpayer may request an Equivalent Hearing).

A jeopardy levy is to be issued during the general levy prohibition (5.11.3.1(4))

1. LETTER 2439/2439A(CG) 2. LETTER 2438(CG) 3. PUBLICATION 594 4. PUBLICATION 1660 5. FORM 12153 6. FORM 9423 1. LETTER 2439/2439A(CG) 2. LETTER 2438(CG) 3. PUBLICATION 594 4. PUBLICATION 1660 5. FORM 12153 6. FORM 9423

A jeopardy levy is to be issued during the general levy prohibition (5.11.3.1(4))

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Jeopardy Levy without a Jeopardy Assessment

If A jeopardy levy is to be issued during the general levy prohibition (5.11.3.1(4)) And

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Then prepare 1. LETTER 2439/2439A(CG) 2. LETTER 2438(CG) 3. PUBLICATION 594 4. PUBLICATION 1660 6. FORM 9423

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The taxpayer previously had a CDP hearing or one year has passed since the issuance of the notice of intent to levy and notice of your right to a hearing.

(2) Use the ICS L2439/2439A template to choose the correct appeal rights paragraph. When the levy includes multiple periods ensure the appeal rights paragraph selected applies to all periods listed on the L2439/2439A. This may require issuing more than one L2439/2439A for the corresponding periods to which the appeal rights applies. For example CDP appeal rights may apply for some periods but for other periods only CAP rights apply. Select the appeal rights as follows: If 30 days have not passed since notice and demand, then select the Under IRC Section 7429 paragraph. If 30 days have passed since notice and demand and the taxpayer has not previously had a CDP hearing for any period on the jeopardy levy, then select the Under IRC Section 6330 paragraph. If 30 days have passed since notice and demand and the taxpayer has previously had a CDP hearing for all periods on the jeopardy levy, then select the Collection Appeals Program paragraph. 5.11.3.5 (08-20-2010) After the Jeopardy Levy Is Approved (1) If an immediate notice and demand is required, give the altered Form 3552 to the taxpayer and demand immediate payment. If personal delivery is not practical, send it by certified mail to the last known address. If a field visit to deliver the form reveals the address is not good, check IDRS for a new one. (2) When the immediate notice and demand is issued, or if it is not required: File a Notice of Federal Tax Lien, and Serve the Notice(s) of Levy. (3) Include Letter 2438(CG) with each notice of levy. This letter asks the party in receipt of the levy to delay sending payment for 45 days. This allows time to see if the taxpayer appeals. If the taxpayer successfully appeals, the levy may be released rather than issuing a manual refund. (4) The taxpayer must be told the reason collection is in jeopardy. Use Letter 2439/2439A(CG), to communicate this. Avoid saying anything in the letter that could identify a confidential informant.

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5.11 Notice of Levy

If Form 3552 is required. Then Give the taxpayer Letter 2439/ 2439A(CG), enclosures, and Form 3552 simultaneously. Give Letter 2439/2439A(CG) and enclosures to the taxpayer within five calendar days of serving the jeopardy levy.

Form 3552 is not required.

(5) Try to give the letter to the taxpayer in person. If personal delivery is not practical, send it to the taxpayers last known address by certified mail with a return receipt. The Letter 2439/2439A(CG) mailing method is the same as the L1058 mailing method required in IRM 5.11.1.2.2.2(8), Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in CFf. If a field visit to deliver the letter reveals the address is not good, check IDRS for a new one. Note: For joint IMF returns, try to deliver letters to each taxpayer in person. Also, if an immediate notice and demand is required, deliver Form 3552 to each taxpayer. If this is not practical, mail the notices as described in IRM 5.11.1.2.2.3 Issuing Notice of Intent to Levy /Notice of a Right to a Hearing for Joint IMF Bal Due Account. Reminder: If the taxpayer has an authorized representative, a copy of correspondence to the taxpayer must also be given to the representative. If mailed, use regular mail for the copy. (6) If the taxpayer has not previously had a CDP hearing for any period on the jeopardy levy, the L2439/2439A(CG) serves as the CDP notice for that period. Input the CDP notice TC 971 codes manually using Form 4844, since CDP notice TC971 codes cannot currently be input for L2439/2439A(CG) systemically through ICS. See IRM 5.11.1.2.2.2, Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in CFf, for guidance on the correct action code to use with TC 971. 5.11.3.6 (08-20-2010) Appealing the Jeopardy Levy (1) Only if the jeopardy levy is issued within 30 days of the notice and demand may the taxpayer appeal under IRC 7429. The taxpayer may appeal under IRC 7429 within 30 days after the L2439/2439A(CG) is or should have been given. See IRM 5.11.3.5(4) for the time frames required to provide the taxpayer L2439/2439A(CG). The issue on review is whether the jeopardy levy is reasonable under the circumstances (collection is truly in jeopardy). If the appeal is rejected, the taxpayer may obtain judicial review of the jeopardy levy. If any of the liabilities on the jeopardy levy were being considered in Tax Court before the making of the jeopardy levy, the taxpayer may obtain judicial review of the jeopardy levy by the Tax Court. (2) If the jeopardy levy is issued more than 30 days after the notice and demand and the taxpayer has not already been issued their appeal rights under IRC 6330, the IRS must notify the taxpayer of their appeal rights under IRC 6330 within the time frames in IRM 5.11.3.5(4). Per Treas. Reg. 301.63301(a)(3) A-A5 if the taxpayer has not received a pre-levy notice, the Service will provide a CDP notice within a reasonable amount of time after the jeopardy levy. Issuance of the L2439/2439A with enclosures meets the CDP notification re5.11.3.6 Internal Revenue Manual Cat. No. 35746R (08-20-2010)

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quirement. Since the notice and demand has already been issued and therefore Form 3552 is not required the Service will issue the L2439/2439A(CG) containing CDP rights language within 5 days of serving the jeopardy levy notice. The taxpayer has 30 days from the date of the L2439/ 2439A(CG) to request a Collection Due Process hearing. The taxpayer must request a CDP hearing under IRC 6330 in order to request judicial review under that section. See IRM 5.1.9, Collection Appeal Rights, for additional information about taxpayers rights to appeal under IRC 6330. (3) If the jeopardy levy is issued within 30 days after the notice and demand and the taxpayer has not already been issued their appeal rights under IRC 6330, the IRS must notify the taxpayer of their appeal rights under IRC 6330 within the time frames in IRM IRM 5.11.3.5(4) . Per Treas. Reg. 301.63301(a)(3) A-A5, if the taxpayer has not received a pre-levy notice, the Service will provide a CDP notice within a reasonable amount of time after the jeopardy levy. Issuance of the L2439/2439A with enclosures meets the CDP notification requirement. The notice and demand may have been issued and therefore Form 3552 may not be required. The Service will issue the L2439/2439A(CG) containing CDP rights language either at the same time as issuance of Form 3552, or within 5 days of serving the jeopardy levy notice. The taxpayer has 30 days from the date of the L2439/2439A(CG) to request a Collection Due Process hearing. The taxpayer must request a CDP hearing under IRC 6330 in order to request judicial review under that section. See IRM 5.1.9, Collection Appeal Rights, for additional information about taxpayers rights to appeal under IRC 6330. Note: The taxpayer can file an appeal under IRC 7429 and IRC 6330 simultaneously if the conditions in IRM 5.11.3.6(1) and IRM 5.11.3.6(3) both apply. (4) If the taxpayer appeals or says a suit is being filed, contact AIQ-Advisory. Also, get advice from Counsel, as needed. The local Appeals Office will handle the administrative appeal. Tell the levy recipient(s) to delay paying over the funds while the appeal is considered using Letter 2438(CG), Jeopardy Levy Letter to Third Party Recipient. If the taxpayer successfully appeals, the levy may be released rather than issuing a manual refund. (5) Per IRM 8.24.1.2.2, Exclusions from CAP, an appeal of a jeopardy levy under CAP is limited administratively due to the appeal rights afforded specifically to jeopardy levies. When a jeopardy levy is issued a taxpayer may appeal under CAP when: the time to appeal under IRC 7429 has expired and the taxpayer will not be given a CDP hearing (e.g., no hearing request was submitted within 30 days of the notice granting CDP rights or a prior CDP hearing was held for the liability at issue) the jeopardy levy was issued during the general levy prohibitions outlined in IRM 5.11.3.1(4) The taxpayer may not go to court if they disagree with Appeals decision under CAP. See IRM 5.1.9, Collection Appeal Rights, for additional information on CAP and equivalent hearings.

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