Notice
of Levy
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Chapter 11
Notice of Levy
Section 1
Background, Pre-Levy Actions & Restrictions on Levy
5.11.1.1 (01-19-1999)
Background
This section contains background information.
5.11.1.1.1 (06-29-2001)
Legal Authority
The Internal Revenue Code (IRC) authorizes levies to collect delinquent
tax. See IRC 6331. Any property or right to property can be levied,
unless it is exempt. See IRM 5.11.1.3. All references to property
in this handbook include rights to property.
5.11.1.1.2 (01-19-1999)
Notice of Levy vs. Seizure
There is no legal distinction between levy and seizure.
Generally, use a notice of levy to take a taxpayer's property
held by someone else, if it can be turned over by writing a check.
EXAMPLE:
Notice of Levy is often used to take a taxpayer's bank account,
wages, or receivables.
If the taxpayer is holding the property, use procedures in the
seizure and sale handbook.
EXAMPLE:
Seizure procedures are often used to take a taxpayer's car, house,
or business property.
If a third party is holding property that can not be turned over
by writing a check, use seizure procedures. Also, give a notice
of levy to the person holding the property. This is the demand
to turn over the taxpayer's property.
EXAMPLE:
If a taxpayer's car is seized in a commercial parking lot, use
seizure procedures. Give the attendant a notice of levy to demand
that the car be turned over.
There is no required sequence for levying. Generally, though,
levy funds that are held by a third party first. This is usually
less time consuming.
5.11.1.1.3 (07-26-2002)
Appeals
Taxpayers may be entitled to a "Collection Due Process"
hearing, or an equivalent hearing, under IRC 6330. See IRM 5.1.9
General Handbook.
Notices of levy can also be appealed under the Collection Appeals
Program (CAP), regardless of whether the taxpayer can appeal under
IRC 6330. CAP was created to give taxpayers a chance for administrative
review that is independent from the Collection function. See IRM
5.1.9.
5.11.1.1.4 (06-29-2001)
Taxpayer Advocate Cases
Taxpayer Advocate Cases may be initiated because of notices of
levy. See IRM 5.1, General Handbook, for criteria and procedures.
5.11.1.2 (01-19-1999)
Pre-Levy Actions
This contains guidance on pre-levy actions.
5.11.1.2.1 (07-26-2002)
Required Notices
Before property can be levied, the taxpayer must be given a
a notice and demand,
a notice of intention to levy, and
a notice of a right to a Collection Due Process (CDP) hearing.
See Exhibit 5.11.1-4
NOTE:
When a notice of levy is issued, it is a third party contact.
IRC 7602(c) says that taxpayers must be given reasonable notice
that the Service plans to make such contacts to collect delinquent
tax. Letter 3164 and Notice 1219, Notification of Potential Third
Party Contact are used to give this notice. Prepare Form 12175
after the third party is contacted. See IRM 5.1.17
The notice and demand must be left at the taxpayer's home or business,
or it must be mailed to the taxpayer's last known address. This
is normally taken care of by a master file notice mailed shortly
after there is an assessment. This is commonly referred to as
the first notice. The taxpayer has ten days to pay the amount
that is owed. See IRC 6331(a). If the taxpayer neglects or refuses
to pay the amount due, a Federal tax lien arises.
NOTE:
No interest is charged for 21 days after the notice and demand,
if less than $100,000 is owed. If at least $100,000 is owed, no
interest is charged for ten business days. This does NOT affect
the ten day notice and demand period before issuing a levy.
In addition, the taxpayer must be given a notice of intention
to levy. The taxpayer has thirty days to pay the amount that is
owed before property can be levied. See IRC 6331(d). This notice
must be:
given in person,
left at the taxpayer's home or business, or
sent to the taxpayer's last known address by certified or registered
mail.
NOTE:
Use registered mail only if the taxpayer is outside the United
States. There is no international certified mail.
EXCEPTION:
If collection is in jeopardy, only the notice and demand is required,
and then property can be levied immediately. See IRM 5.11.3.
For any levy served after January 18, 1999, the taxpayer must
also be given a notice of a right to a hearing. See IRC 6330.
The taxpayer has thirty days after this notice is given or mailed
to ask for a hearing, before property can be levied. This notice
is given to the taxpayer in the same manner as the notice of intent
to levy, except that if it is mailed, a return receipt MUST be
included. See IRM 5.1.9 for instructions about the taxpayer's
right to a hearing, including whether the TP can appeal, when
the TP can appeal, and the consequences of asking for an appeal.
EXCEPTION:
The exception for jeopardy in (3) also applies to the notice of
a right to a hearing. However, the taxpayer must still be given
the opportunity for a hearing within a reasonable time AFTER the
levy, if collection is in jeopardy. See IRM 5.11.3.
EXCEPTION:
A taxpayer's state tax refund can be levied, even though the TP
may not have already been sent a notice of a right to a hearing.
However, the taxpayer must be given the opportunity for a hearing
within a reasonable time AFTER the levy.
EXCEPTION:
The taxpayer can waive the right to a hearing. See IRM 5.11.1.2.2.9.
EXCEPTION:
There is no right to a hearing when Child Support Obligations
are being collected. See IRM 5.11.1.2.2.10.
When counting the ten day or thirty day periods, do not count
the day that the notice is mailed or given to the taxpayer. Then,
when the time to pay has run out, the next action can be taken
on the following day.
CAUTION:
As long as a request for a hearing is correctly addressed and
postmarked timely, it is timely. Allow at least fifteen additional
days after the thirty day period ends, in case the taxpayer mails
a request for a hearing on the thirtieth day.
EXAMPLE:
A notice of a right to a hearing is given to the taxpayer on March
1. The taxpayer has until the close of business on March 31 to
pay or request a due process hearing. On April 1, the Code allows
property to be levied, unless something has happened to prevent
it, e.g. payment, request for a hearing, installment agreement
made, etc. However, counting the additional fifteen days, property
will not be levied until April 16.
EXCEPTION:
After thirty days, if the taxpayer confirms that no hearing has
been requested, there is no need to wait the additional fifteen
days.
EXCEPTION:
If the notice was unclaimed, returned undelivered, or if delivery
was refused, there is no need to wait the additional fifteen days,
as long as the notice has only been sent to one address. If multiple
notices have been sent, as described in IRM 5.11.1.2.1.1(3), wait
the additional fifteen days, unless all of them are returned undelivered,
unclaimed or refused.
EXCEPTION:
If collection is in jeopardy, a notice of levy can be served without
waiting the additional fifteen days. The notice of levy must be
approved by the compliance territory manager or a second level
Insolvency/Technical Support manager. If possible, consult with
counsel before the levy is served. The appeal process in IRM 5.11.3.6
does not apply, because the thirty day waiting period has passed.
However, if the taxpayer mailed or delivered the request for a
CDP appeal before the thirty days ran out, a CDP hearing will
be held. If not, the taxpayer can still discuss the levy with
the group manager or the Taxpayer Advocate, as well as discussing
it with Appeals under the Collection Appeals Program.
The required notices must be sent for each module included on
a levy.
CAUTION:
If the required notices for a module have been sent, and then
additional tax is assessed, new notices offering a due process
hearing must be sent before that additional assessment may be
included in a levy.
EXAMPLE:
The three notices have been sent for the tax owed on a taxpayer's
1999 income tax return, and nothing has happened to stop collection
action for that assessment, e.g. a timely request for a due process
hearing. A notice of levy can be issued to collect this tax. If
a TC 290 posts on that module later, a notice and demand will
be sent from the service center. However, a new notice of intent
to levy and notice of a right to a hearing must also be sent for
this additional assessment before it can be included in a notice
of levy.
Also, see IRM 5.11.6.11.2 when a levy is served on a non-liable
spouse in a community property state.
5.11.1.2.1.1 (06-29-2001)
Last Known Address
Generally, the last known address is the master file address which
posted from the most recently filed and properly processed return.
A list of returns that are used to update this address is in Revenue
Procedure 90-18. This Rev. Proc. also describes how a taxpayer
can give a new address to the Service.
If a third party provides a new address for the taxpayer, this
is not the taxpayer's last known address, unless the taxpayer
verifies it.
When a Notice of Intent to Levy and Notice of Your Right to a
Hearing (Letter 1058) is mailed to the taxpayer, it must be sent
to the last known address. If other addresses have been received
from third parties without the taxpayer verifying them, send a
copy of the Notice and the enclosures to the taxpayer at these
other addresses on the same date that the one is sent to the last
known address. Use regular mail for the copies sent to unverified
addresses.
NOTE:
There is no need to check for additional taxpayer addresses before
sending the Notice, unless there is reason to believe that the
last known address is not good, e.g. mail has already been returned
undelivered, information gathered during a field call raises doubt
that the address is good, etc. Checking third party sources that
are reasonably available at the office where the case is assigned
is a normal part of skip tracing to try to locate the taxpayer.
Try to find a good address before sending the Notice to a last
known address that is bad.
If the taxpayer has already been sent a 1058 and another address
is found later, do not send an additional 1058 for the same TDAs
to this new address, as long as the original notice was correctly
sent to the address that was the last known one when it was mailed.
If another written notice to the taxpayer at this new address
is desirable, use Letter 3174(P). See Exhibit 5.11.1-3.
EXAMPLE:
The 1058 was mailed and was returned unclaimed, but it was correctly
sent to the taxpayer's last known address. While working the account
later, a new address for the taxpayer was found. Attempts to contact
the taxpayer at the new address to demand payment are unsuccessful.
Letter 3174(P) may be sent to try to get the taxpayer to pay the
amount owed or to contact the revenue officer.
5.11.1.2.2 (06-29-2001)
Satisfying the Notice Requirements
Generally, a notice and demand is sent before a revenue officer
receives TDAs.
The service center sends the taxpayer the notice and demand, unless
there is a jeopardy, quick, termination or prompt assessment.
The Notice of Intent to Levy and Notice of Your Right to a Hearing
is issued when the next planned action for ACS or a revenue officer
is to levy, because offering an appeal to taxpayers for whom no
levies will be issued would be inappropriate. However, when the
levy is part of a computer matching program in which files of
liabilities are matched against files of income/assets, the notice
can be issued, although the levy is not necessarily the next planned
action. Also, see IRM 5.7.8.3(6).
After January 18, 1999, there is no need to check whether IDRS
issued a notice of intent to levy.
5.11.1.2.2.1 (06-29-2001)
Recognizing if ACS Issued a Notice of Intent to Levy/Notice of
a Right to a Hearing
ACS can issue a notice of intent to levy/notice of a right to
a hearing.
If the ACS transcript shows action code LT11 on or after 1-19-1999
for the same liabilities that a revenue officer will be levying
to collect, there is no need to issue this notice in CFf. An LT11
issued before this date was only a notice of intent to levy. It
did not include the notice of a right to a hearing.
EXCEPTION:
The ACS transcript may show LT11, but the notice may have been
stopped before it was sent.
If And Then
Action Code CLnn (nn is a two digit number) is on the ACS transcript.
This Code is the same date as the LT11. The LT11 was not sent.
Action Code MCLT is on the transcript. The LT11 is the most recent
LTnn (nn is a two digit number) before the MCLT. The LT11 was
not sent.
Another way to recognize if the notice has been
issued already is to see if there is a Transaction Code (TC) 971,
Action Code (AC) 069 on the module. This is input after the service
center mails the ACS notice. Then, the results of mailing the
notice are shown by a second TC 971.
AC 066 The return receipt was signed (not necessarily by the taxpayer)
, so the notice was delivered. See second Note in IRM 5.11.1.2.2.2(6).
AC 067 Delivery was refused or the notice was unclaimed.
AC 068 The notice was returned, undelivered.
NOTE:
Action Codes 066-069 can not be input on IRAF modules.
5.11.1.2.2.2 (07-26-2002)
Issuing Notice of Intent to Levy/Notice of a Right to a Hearing
in CFf
When levy is the next planned action, the revenue officer must
first issue a notice of intent to levy/notice of a right to a
hearing (Letter 1058) before a notice of levy is issued, unless
collection is in jeopardy or ACS already issued an LT11 for all
of the periods included in the levy.
EXAMPLE:
The taxpayer provides a Collection information Statement to the
revenue officer who determines that the taxpayer may qualify for:
an installment agreement but does not agree to an acceptable monthly
payment or
an offer in compromise but does not submit one.
As a result, the revenue officer determines that levy is the next
planned action to collect the amount owed and issues Letter 1058.
Letter 1058 is both a notice of a right to a hearing and a notice
of intent to levy. Envelope E-44B can be used to mail it, if a
window envelope can be used. See IRM 5.11.1.2.2.3. With these
letters, include:
Publication 594 (Understanding the Collection Process),
Publication 1660 (Collection Appeal Rights),
Form 12153 (Request for a Collection Due Process Hearing),
A copy of the letter, and
An envelope.
CAUTION:
The date on the 1058 MUST be the date it is given to, left for,
or mailed (return receipt requested) to the taxpayer.
CAUTION:
If the 1058 is sent but mistakenly is not sent to the taxpayer's
last known address, issue another 1058, i.e. a substitute for
the one that was not sent to the last known address. Release any
levies that had been served for the liabilities included in the
improperly mailed 1058. Also, see IRM 5.11.1.2.1.1 and 5.11.2.3.
REMINDER:
If the taxpayer has an authorized representative, a copy of correspondence
to the taxpayer must also be given to the representative. However,
use regular mail for the copy.
NOTE:
In addition to ACS and CFf, a Collection Due Process Notice may
be issued by master file for the State Income Tax Levy Program
or the Federal Payment Levy Program. See IRM 5.11.7, Automated
Levy Programs.
Issue the 1058 only after at least one attempt to contact the
taxpayer in person, by telephone, or by sending an appointment
letter.
EXCEPTION:
An attempt to contact the taxpayer before sending a 1058 is not
necessary if:
the taxpayer is in another country,
the taxpayer is dead (however, try to contact the administrator/executor
of the estate, if one can be found),
there has already been an attempt to contact the taxpayer, a 1058
or LT11 was sent, and then additional modules were received,
the taxpayer can not be located,
no telephone number can be found, and the taxpayer is either potentially
dangerous or lives in a remote location, where field calls are
rarely made, or
the levy is issued in a computer program in which files of liabilities
are matched against files of income/assets (not merely a computer
match to identify levy sources) e.g. levy on state tax refunds.
Do not issue the 1058, unless there is a levy source, and levy
is the next planned action. See IRM 5.7.8.3:(6). Also, do not
issue it, if there is a restriction that would prohibit levies
when the 45 day waiting period (30 days plus a 15 day tolerance)
runs out. See IRM 5.11.1.3. If the restriction has an ending date,
though, the notice can be issued as long as this 45 day period
does not run out before the restriction ends.
EXAMPLE:
The taxpayer offers to pay the tax in installments. Because of
the pending installment agreement, there is generally a restriction
on levy. See IRM 5.11.1.3.9. While the agreement is pending, the
restriction does not have a specific ending date. Do not issue
Letter 1058.
EXAMPLE:
The taxpayer's request for an installment agreement is rejected,
and the independent reviewer sustains the rejection. The taxpayer
then has thirty days to appeal the rejection, plus there is an
additional fifteen day tolerance period. See IRM 5.14.9.4. If
levy is the next planned action, Letter 1058 can be issued at
the same time the taxpayer is notified of the rejection, and the
two 45 days periods will run concurrently.
EXAMPLE:
The taxpayer's request for an installment agreement is rejected,
and the independent reviewer sustains the rejection. If Letter
1058 is not issued when the taxpayer is notified of the rejection,
and the rejected agreement is appealed, a new restriction arises
that does not have a specific ending date. Do not issue Letter
1058.
EXAMPLE:
The taxpayer fails to meet the terms of an agreement, so the Service
proposes to terminate it. There is a 90 day restriction on levies.
See IRM 5.14.11. When the letter is issued that proposes terminating
the agreement, Letter 1058 can not be issued, because there would
still be a restriction preventing levies when the 45 day waiting
period for the 1058 runs out. However, when there are no more
than 45 days left on the restriction, and levy is the next planned
action, Letter 1058 can be issued, as long as the taxpayer has
not appealed the defaulted agreement.
Because taxpayers only have the right to one Collection Due Process
Hearing for each liability, avoid listing liabilities on Letter
1058 which have already been included in such a notice. Sending
more than one notice for a liability may give taxpayers the impression
they can have another Due Process Appeal for that liability.
REMINDER:
None of the service center IDRS notices are notices of a right
to a hearing.
REMINDER:
If the notice is mailed, it must be sent by certified or registered
mail WITH A RETURN RECEIPT .
When the notice is mailed, update IDRS with Transaction Code (TC)
971, Action Code (AC) 069 using the ICS FINAL NOTICE DELIVERY
METHOD option.This will update theICS FINAL NOTICE DATE and upload
the transaction to IDRS for each module included on the notice.
Then, when the results of the delivery are known, use the appropriate
ICS option under FINAL NOTICE DELIVERY METHOD or METHOD RECEIPT
RESPONSE to upload AC 066, 067, or 068, as shown in IRM 5.11.1.2.2.1.
For modules that are not in status 26 or when the TC 971, AC 069
should be input for a date that is more than thirty days before
the current date, prepare Form 4844, for manual terminal input
to IDRS. Ask the terminal operator to input the date the action
took place, rather than the date of the input.
EXAMPLE:
The 1058 is mailed on March 10. The TC 971, AC 069 is input on
March 12. The date of the TC is March 10.
If the notice is given in person instead of being mailed, input
TC 971, AC 069 and TC 971, AC 066 on the same date to indicate
this.
If the notice is left at the taxpayer's home or business address
instead of being mailed, input TC 971, AC 069, and TC 971, AC
067 on the same date to indicate this.
NOTE:
Using the AC 067 has nothing to do with delivery being refused.
Inputting it the same date as the AC 069 is merely a way to show
how the notice was delivered. Refused delivery is distinguished
from this by the AC 067 being at a later date than the AC 069.
NOTE:
If the return receipt comes back unsigned, but the envelope is
not attached, use Action Code 066. If there is a postmark date
on the receipt, use that as the date of the transaction. If there
is no postmark date, use the date that the return receipt is received.
NOTE:
In the past, if an IDRS 504 notice (status 58) had never been
issued for a module, TC 971 Action Code 35 was input to increase
the failure to pay rate to 1% after Letter 1058 was issued. However,
Action Code 069 now causes this change, if the higher rate has
not already gone into effect because of a 504 notice. Action Code
35 is not necessary.
5.11.1.2.2.3 (07-26-2002)
Issuing Notice of Intent to Levy/Notice of a Right to a Hearing
for Joint IMF TDAs
If there are TDAs for jointly filed income tax returns, prepare
two copies of Letter 1058.
If they are not delivered in person or left at the taxpayers'
home or business, mail them in separate envelopes to the taxpayers.
Address one envelope to the primary taxpayer and one to the secondary,
although both taxpayers' names will be on each of the notices.
Do this regardless of whether the taxpayers live at the same address
or different addresses. Do not use a window envelope. If there
are changing name lines, be careful that taxpayers are not sent
a notice for taxes they do not owe.
EXAMPLE:
John and Mary Doe owe tax for their 1999 joint income tax return.
John Doe also owes tax for his single return for 1998. John must
be sent a notice for both years, but only send Mary a notice for
1999.
If the notices are going to different addresses, do not reveal
one person's address to the other.
EXAMPLE:
William and Barbara White owe tax for a joint income tax return.
They now have different addresses. One 1058 is printed with both
names on it and William's address. This letter is put in a non-window
envelope with only William's name and his address on it. A copy
of the letter is printed for Barbara. Both names are also printed
on her copy, but Barbara's address is used on it. Her copy of
the notice is put in a non-window envelope with only Barbara's
name and her address on it.
Before sending the L1058 to joint taxpayers living at different
addresses, try to contact both of them, so the letter is not a
surprise to either of them. See IRM 5.11.1.2.2.2(3). If one of
the taxpayers is living in a different jurisdiction, try to get
a telephone number to call this person before sending the L1058s.
If a number can not be found or the attempted call fails, the
letters can still be sent.
Before sending the 1058 to the secondary taxpayer, check master
file on-line to find out if this person has filed a return with
a different address since the joint return(s) that generated the
TDAs. This step is not necessary when there has been contact with
the taxpayers confirming the secondary's address or when the TDAs
are for the most recent tax year.
EXAMPLE:
There are TDAs for Steven and Marcia Brown for their joint income
tax return for 1999. The revenue officer has not been able to
contact the taxpayers but has found a levy source, so two 1058s
are going to be sent. Before sending them, the revenue officer
uses master file on line to check Marcia Brown's social security
number and finds that she has filed a more recent joint return
with her second husband. The 1058 mailed to Marcia needs to be
mailed to the address on her most recent return rather than the
same address where Steven Brown's 1058 will be mailed.
If levy on one of the taxpayers' property is prohibited, do not
send a separate notice to that person. Instead, prepare a notice
with both taxpayers' names on it, and mail it in an envelope addressed
to the taxpayer whose property will be levied as the next, planned
action. When the condition that prohibits levy no longer exists,
and a levy is the next planned action to collect from the person
whose property previously could not be levied, send a 1058 to
that person. Also, see IRM 5.11.2.1.2(4).
EXAMPLE:
John and Mary Doe owe tax for a joint return. They are separated,
and Mary is making payments on an installment agreement for the
joint liability. John is not a party to the agreement. The revenue
officer identifies the bank where John has an account and plans
to send a notice of levy to the bank. Before the bank account
can be levied, John must be sent a 1058, if one has not already
been sent for the liabilities that will be included in the notice
of levy. The notice will have both names on it, but it will only
be mailed to John. Mailing a 1058 to Mary would be improper, because
her installment agreement prevents levy on her property. Later,
Mary defaults on her agreement, and she has the right to appeal
the default. When her property is going to be levied, though,
she must first be sent a 1058 giving her the right to a due process
hearing. During the waiting period for her 1058 and during her
appeals, collection can continue against John.
EXAMPLE:
Joseph and Marcia Smith owe tax for a joint return. Nothing prohibits
levy on their property. A levy source is found for Joseph but
not Marcia. As long as a levy is about to be served as the next
planned action, and there is no restriction on being able to levy
the property of both taxpayers, separate 1058s will be sent to
both of them.
Input the TC 971 and ACs as explained in IRM 5.11.1.2.2.2(6).
However, when separate notices are sent for joint assessments,
include the secondary taxpayer's social security number as, "X-Ref
XXX-XX-XXXX," in the Remarks on the posting document for
inputting the record of that person's notice. This will distinguish
the primary and secondary taxpayers' ACs.
EXAMPLE:
John and Mary Doe's notices for their joint 1999 income tax return
are both mailed on 1-29-2002. John's return receipt comes back
signed, but Mary's is returned undelivered. There will be two
TC 971s with AC 069 on 1-29-2002. One will have Mary's X-Ref SSN.
The other will have no X-Ref SSN. There will also be a TC 971
AC 066 with no X-Ref SSN for John's notice and a TC 971 AC 068
with Mary's X-Ref SSN for Mary's notice.
When ACS issues an LT11, it will only issue one notice for joint
IMF assessments, unless the taxpayers are known to be living at
different addresses. The Restructuring and Reform Act of 1998
includes a standard for separate notices, "wherever practicable."
Because of the volume and batch processing of these computer printed
notices, ACS will not normally issue separate notices for joint
assessments. The single ACS notice is, nevertheless, notice to
both taxpayers. Additionally, separate notices do not have to
be sent when CFf is collecting the same liabilities for which
ACS already issued its Notice of Intent to Levy/Notice of a Right
to a Hearing.
While working the TDAs in CFf, however, the revenue officer may
discover that the taxpayers were separated, and one of them was
not living at the last known address when the LT11 was sent. As
long as that was the person's last known address when the notice
was sent, however, it was a legally valid notice of a right to
a hearing. See IRM 5.11.1.2.1.1. Nevertheless, it may be inequitable
to take this person's property without notice. Give Letter 3174(P)
to the taxpayer who was not living at the address before serving
additional notices of levy on that person's property, and release
notices of levy that have been served on that person's property.
See Exhibit IRM 5.11.1-3.
EXAMPLE:
ACS had TDAs on Joe and Janet Green. An LT11 was sent to the address
shown on master file for them. The revenue officer then receives
the TDAs in transfer from ACS and finds out that Janet Green was
not living at that address when the LT11 was sent. However, she
had not reported her address change, e.g., she had not filed a
return showing a new address.
ACS may have sent LT11 to the address shown on master file for
the last joint return that the taxpayers filed. However, if they
had separated, they were living at different addresses when the
LT11 was sent, and the secondary had already reported a new address,
that becomes that person's last known address. In this case, a
1058 (i.e., a substitute notice) needs to be sent to the secondary
taxpayer before that person's property can be levied.
EXAMPLE:
ACS had TDAs on James and Sandra Jones. An LT11 was sent to the
address shown on master file. The revenue officer then receives
the TDAs in transfer and finds out that Sandra Smith (formerly
Jones) was not living at that address when the LT11 was sent.
She is filing jointly with her new husband, and they had already
filed a return showing their address when the LT11 was sent.
By the same token, the revenue officer may send two 1058s for
a joint TDA and discover later that one of the taxpayers was living
at a different address when the letters were sent. Although the
notice is legally valid if it is sent to the last known address,
it has been administratively determined that Letter 3174(P) will
be sent to this taxpayer before serving additional notices of
levy on that person's property, and notices of levy that have
already been served on that person's property will be released.
NOTE:
Because of procedures in (2), above, this should only be an issue
if the secondary taxpayer has not reported a new address.
5.11.1.2.2.4 (06-29-2001)
Issuing Notice of Intent to Levy/Notice of a Right to a Hearing
for Deceased Taxpayers
Generally, if a taxpayer has died, a proof of claim may be filed
to collect delinquent tax from the estate. In some circumstances,
however, a notice of levy may be called for.
EXAMPLE:
The estate or certain assets may not be going through probate.
EXAMPLE:
For a joint return, the assets of the surviving spouse may be
levied to collect the delinquent tax.
Technical Support and/or Associate Area Counsel may need to be
consulted to determine whether a notice of levy can be served.
If a notice of levy will be served, Letter 1058 must be sent,
even if the TP has died.
For single liabilities
IF THEN
No estate administrator or executor is known Send the 1058 to:
John Smith (Decd)
John Smith's Last Known
Address
IF THEN
An estate administrator or executor is known Send the 1058 to:
John Smith (Decd)
Charles Jones, Administrator (or Executor)
Charles Jones' Last Known Address
For joint IMF liabilities
IF THEN
No estate administrator or executor is known Send two 1058s.
Address both to:
James Doe (Decd) and Mary Doe
Use James' last known address on his 1058 and Mary's last known
address on hers. Put James' 1058 in a non-window envelope addressed
only to him at his last known address. Put Mary's 1058 in a non-window
envelope addressed only to her at her last known address.
IF THEN
An estate administrator or executor is known Send two 1058s.
Address one to:
James Doe (Decd) and Mary Doe
William Green, Administrator (or Executor)
William Green's Last Known Address
Put this in a non-window envelope addressed the same way as the
letter, except delete Mary's name.
Address the other 1058 to:
James Doe (Decd) and Mary Doe Mary's Last Known Address
Put this in a non-window envelope addressed the same way as the
letter, except delete James' name.
5.11.1.2.2.5 (06-29-2001)
Issuing Notice of Intent to Levy/Notice Of a Right to a Hearing
to Partnerships
When sending Letter 1058 to a partnership, send it to the last
known address of the partnership. See IRM 5.11.1.2.1.1.
Do not send additional 1058s to the partners at their addresses.
EXCEPTION:
If the partnership is no longer operating, or there is another
reason to know that it is not at the last known address, Letter
1058 must still be sent to this address. However, send a copy
of the letter and the enclosures to any general partners whose
addresses are known, e.g. partners who provide their addresses
when contacted about the taxes, and partners whose addresses are
found through normal skip tracing when a partnership is not at
its last known address. Use regular mail for the copies sent to
the partners.
5.11.1.2.2.6 (06-29-2001)
Timeliness of Notice
The purpose of the Notice of Intent to Levy described in IRM 5.11.1.2.1(3)
is to warn the taxpayer that continued failure to respond can
be expected to result in imminent enforcement. However, when a
long time passes after the notice is issued and there has not
been enforcement, the notice loses its effectiveness as a warning.
If a notice of intent to levy is over 180 days old, it is legally
valid to support subsequent collection action by levy. However,
it has been administratively determined that the taxpayer will
get a new warning of enforcement action before a notice of levy
is issued.
This warning must be documented in the case file. It may be
given orally (in person or by phone) that there is a deadline
(not necessarily thirty days) after which there will be enforcement,
or
given in writing (see Exhibit 5.11.1-3), if the taxpayer can not
be contacted.
NOTE:
Do not issue another Letter 1058 to give the taxpayer a timely
warning. The taxpayer gets the opportunity only once for a pre-levy
hearing described in that letter for each liability. Sending another
1058 will give the incorrect impression that the taxpayer can
do this again.
EXCEPTION:
Collection is at risk. The compliance territory manager or an
Insolvency/Technical Support Manager (second level) must approve
the levy. The taxpayer can discuss the levy with the group manager,
the Taxpayer Advocate, and the Appeals Officer.
EXCEPTION:
Computer matching programs in which files of liabilities are matched
against files of assets/income resulting in immediate payment,
e.g. levy on state tax refunds.
EXCEPTION:
Enforcement has taken place within the last 180 days. Enforcement
only includes seizures and notices of levy, so the taxpayer should
realize there has been enforcement. For example, if a notice of
levy is sent to an employer, and it is returned because the taxpayer
no longer works there, this notice of levy does not start the
count for a new 180 day period. The taxpayer would have no way
to realize there had been an attempt to enforce. On the other
hand, if a levy were sent to a bank and a copy was sent to the
taxpayer, even if there were no proceeds, the taxpayer would have
been notified of the levy.
EXCEPTION:
The taxpayer is a trust fund repeater. See IRM 5.7.8.2.
This "timeliness" warning is in addition to the notices
described in IRM 5.11.1.2.1 (notice and demand/notice of intent
to levy), which are required by law and must have been sent at
some point. An oral warning to pay is not adequate to allow a
notice of levy to be served if there has never been a thirty day
notice of intent to levy and a notice of the right to a hearing.
If the most recent warning of enforcement is over 180 days old,
give the taxpayer a new one before taking enforcement. This means
that over the life of the liability, there may be a need to give
this warning more than once.
EXAMPLE:
A letter 1058 is sent to a taxpayer, followed by a notice of levy.
After 180 days pass with no additional enforcement, a new warning
needs to be given before another notice of levy or a seizure,
unless one of the exceptions in a. exists. Then, a new 180 day
count begins.
The notices described in IRM 5.11.1.2.1 must have been sent for
every module that is included in a notice of levy. However, the
taxpayer has had timely notice as long as there has been recent
warning of enforcement for at least one module included in a notice
of levy within the last 180 days. In other words, the requirement
for the notices in IRM 5.11.1.2.1 must be met for each module
included in a notice of levy, but the timeliness of warning is
for the entity rather than each module.
EXAMPLE:
The notices described in IRM 5.11.1.2.1 have been sent for all
modules included in the notice of levy. They are over 180 days
old, so the TP is given a new oral warning of enforcement. After
the deadline passes, a new module is received for which a notice
of intent to levy and notice of the right to a hearing had been
sent more than thirty days ago, so the legal requirement for this
module has been met. A new oral warning is not necessary, even
if the notice of intent to levy and notice of the right to a hearing
for this new module had been sent more than 180 days earlier,
because the TP has been warned of enforcement within the last
180 days.
If the taxpayer can not be located, the notices described in IRM
5.11.1.2.1 still must have been sent to the last known address.
However, additional notices for these liabilities do not have
to be sent to the last known address just to meet the timeliness
requirement.
5.11.1.2.2.7 (07-26-2002)
Rescinding a Notice of Intent to Levy/Notice of a Right to a Hearing
Sometimes Letter 1058 is issued, and it should not have been.
This may mean that it should be rescinded.
If the letter should not have been issued, and less than 45 days
have passed , send Letter 3212. This is available as an ICS macro.
This letter says that Letter 1058 is rescinded. However, if a
due process hearing has already been requested, the taxpayer can
have the hearing. If the taxpayer decides to go ahead with the
hearing, Letter 1058 has not been rescinded.
At the taxpayer's option, however, the request for a hearing can
be withdrawn in response to Letter 3212. Form 12227 (sent with
the letter) is used for the withdrawal. This way, Letter 1058
is rescinded, and the taxpayer reserves the right to have a due
process hearing when levy is imminent.
If the letter 1058 is rescinded, input TC 972, Action Code 066-069,
to reverse each TC 971 that has already been input for the rescinded
letter. The input date for each TC 972 must be the same as the
date for the TC 971 it is reversing.
After 45 days have passed since the Letter 1058 was issued, however,
it does not have to be rescinded. At this point, the taxpayer
has had the right to ask for a hearing.
EXAMPLE:
The reason for rescinding Letter 1058 may be found years later,
and in the interim, the taxpayer may have already taken advantage
of the right to a due process hearing. Withdrawing Letter 1058,
at this point, would entitle the taxpayer to a second hearing,
when only one is allowed by law.
5.11.1.2.2.8 (07-26-2002)
Verification of Notice of Intent to Levy/Notice of a Right to
a Hearing
A record will be made in the ICS history showing when and how
the Notice of Intent to Levy/Notice of a Right to a Hearing is
given to the taxpayer. This will be automatically generated by
ICS when the input described in IRM 5.11.1.2.2.2(6) is done.
If the Notice is mailed, the Postal Service's rubber stamp imprint
on a Certified Mail Receipt (Postal Service Form PS 3800) or a
Certified Mail Book (Form PS 3877) is desirable to verify the
mailing. However, getting the Form stamped may not be practical,
e.g. the nearest Post Office may be many miles from a remote post
of duty. Even if the Postal stamp is not obtained, keep the unstamped
Certified Mail Receipt in the case file.
If the Notice is delivered, the return receipt (PS Form 3811)
should come back. If the notice is not delivered, the envelope
with the attached return receipt should come back, instead. Keep
the return receipt or the undelivered envelope (with the attached
return receipt) in the case file. These can serve as proof the
notice was mailed. Sometimes, though, neither the return receipt
nor the undelivered envelope comes back. In this case, the number
on the Certified Mail Receipt (even if it is unstamped) will allow
verification through the Postal Service's web site (www.usps.gov)
for six months.
5.11.1.2.2.9 (07-26-2002)
Waiver of Notice of Intent to Levy/Notice of a Right to a Hearing
Occasionally, a taxpayer may want the Service to issue a notice
of levy quickly.
EXAMPLE:
The taxpayer is expecting another creditor to attach assets. The
other creditor's debt can be discharged in bankruptcy, but the
delinquent taxes cannot. The taxpayer may want the assets levied
before the other creditor can attach them and then file bankruptcy
to discharge the other debt.
Normally, a levy cannot be issued until an L1058 has been issued,
and the waiting period after the notice has passed. However, in
this situation, the taxpayer may have an incentive to waive the
waiting period and the right to a hearing, so the notice of levy
can be issued promptly.
Waiving this right must be knowing and voluntary, or it is not
a valid waiver. The waiver must be in writing.
First, give the taxpayer an L 1058, including all the enclosures,
so there will be an opportunity to understand the rights that
are being waived. Then, have the taxpayer sign Form 13207. This
is available as an ICS macro.
If this form does not fit the situation, discuss the need for
some alternative language with Technical Support, which may consult
with Associate Area Counsel, as needed. However, the right to
Collection Due Process must be waived in its entirety. Do not
accept a proposed waiver that is restricted to allowing levy only
on a specific asset or class of assets.
Input the appropriate codes shown in IRM 5.11.1.2.2.2(6).
5.11.1.2.2.10 (07-26-2002)
Issuing Notice of Intent to Levy for Child Support Obligation
TDAs
IRC 6305 says that federal courts have no jurisdiction to restrain
or review the assessment and collection of Child Support Obligation
(CSO) TDAs. It also says that the assessment and collection are
not, ..."subject to review by the Secretary in any proceeding...."
This means that Collection Due Process does not apply to these
liabilities, so no notice of a right to a hearing (L 1058) will
be issued when CSO TDAs are being collected. Similarly, the taxpayer
can neither request review under the Collection Appeals Program
nor by the Taxpayer Advocate.
Before a notice of levy can be issued to collect a CSO liability,
there must be
a notice and demand, and
a notice of intent to levy.
The notice and demand is issued at the service center, when the
liability is assessed.
Use Letter 3524 instead of Letter 1058. This is the notice of
intent to levy for CSO TDAs. It is available as an ICS macro.
This must be given to the taxpayer, as described in IRM 5.11.1.2.1(3).
If it is mailed, no return receipt is required.
If the person who owes child support also owes tax, give Letter
1058 to the taxpayer for delinquent tax modules, but do not include
the child support on this letter. Letters 1058 and 3524 can be
mailed in the same envelope, but if that is done, a return receipt
is required.
Because Letter 1058 has not been issued for the CSO TDA, ICS will
not allow the revenue officer to issue a notice of levy. Instead,
this must be done by the group manager.
Also, see IRM 5.11.1.3.2.
5.11.1.2.3 (06-29-2001)
Delegation Orders
See Delegation Order No. 191 (Rev 3).
5.11.1.2.4 (06-29-2001)
Managerial Approval
Certain Notices of levy must be approved by managers. See Delegation
Order No. 191 (Rev 3).
When the notice of levy is turned in for approval, include the
following information:
a summary of any information the taxpayer has provided that may
affect the decision to levy, e.g. claims that the assessment is
wrong;
if the taxpayer has submitted such information, an explanation
that the employee has reviewed the information, and why the notice
of levy should still be served;
verification that the amount is still owed, e.g. IDRS has confirmed
the amount is still unpaid;
an explanation that the notice of levy is appropriate, considering
the amount owed and any circumstances that are known about the
taxpayer and the liability;
other collection alternatives considered or rejected.
Some things that might influence how appropriate the levy is may
include, among other things:
the taxpayer's responsiveness to attempts at contact and collection,
anything that is known about the taxpayer's financial condition,
the taxpayer's history of delinquency,
the taxpayer's effort to pay the tax,
whether current taxes are being paid.
This information must be written, but the format can be at local
management discretion.
EXAMPLE:
A notice of levy that a group manager approves may need no more
than a history entry, and the case file can be turned in with
the notice of levy. On the other hand, the history entry can be
on ICS, and the notice of levy can include a note telling the
group manager the date of the entry, so it can be retrieved on
ICS.
The approval must also be written, but the method can be at local
management discretion.
EXAMPLE:
The revenue officer and manager are at the same location, so the
notice of levy is turned in to the group manager who signs the
levy.
EXAMPLE:
The revenue officer and manager are at the same location, so the
revenue officer signs the notice of levy and turns it in to the
manager who initials it to show it has been approved.
EXAMPLE:
The revenue officer and manager are at different locations. The
revenue officer writes an explanation of why the notice of levy
should be approved, includes an "Approved" line on it,
and faxes this to the manager. The manager signs on the "Approved"
line, and faxes this back to the revenue officer who puts this
in the case file to document the approval, and then the revenue
officer signs the notice of levy.
EXAMPLE:
The revenue officer and manager are at different locations. The
revenue officer faxes a copy of the first page of the notice of
levy to the manager who signs it and faxes it back to the revenue
officer. The revenue officer places this in the case file to document
the approval, and then the revenue officer signs the notice of
levy.
EXAMPLE:
The revenue officer uses the Integrated Collection System (ICS)
to send an e-mail message to the manager asking for approval of
the notice of levy. The manager accesses the case and records
the approval in the ICS history. The manager's access to the case
generates a notification to the revenue officer who then accesses
the case, sees that the levy is approved, prints the notice of
levy, and signs it.
A notice of levy that requires the approval of the SB/SE Compliance
Area Director, the Director of Compliance Services, or the Director
of Specialty Tax and Technical Support must include a memo explaining
the information in (2). If all levels approve the notice of levy,
but the Director rejects it, the rejection must be in writing
and explain the reason(s). Keep a copy of memos asking for approval
and the rejections with the case.
If a courtesy levy is involved, indicate that the required manager
has approved of the notice of levy.
5.11.1.2.5 (12-31-2001)
Approval of Alter-Ego, Nominee, and Transferee Notices of Levy
Notices of levy that name alter-egos, nominees, and transferees
often involve complex issues and are likely to result in litigation.
See IRM 5.12.1.18.1 and 5.12.1.18.2 for guidance about whether
the facts support such a determination. Also, see IRM 5.1.14.2
for additional guidance about transferee liability.
The compliance territory manager or Insolvency /Technical Support
manager (second level) must approve the notice of levy. Associate
Area Counsel must also approve it. See IRM 5.11.1.2.4.
Do not issue notices of levy listing alter-egos, nominees, or
transferees without first getting legal review, advice, and written
direction from Associate Area Counsel as to:
the need for a supplemental assessment
the need for a new notice and demand
the need for a new notice of intent to levy and notice of the
right to a hearing
the language to be included on pre-levy notices and the notice
of levy
5.11.1.3 (06-29-2001)
Restrictions on Levy
This contains restrictions on levy. See IRM 5.1.9.3.3, regarding
restrictions on levy during Due Process Hearings.
5.11.1.3.1 (06-29-2001)
Property Exempt from Levy
IRC 6334 describes property that is exempt from levy. Some are
property that would be taken by seizure procedures, if not for
the exemption. See seizure instructions about these. Others are
income that would be taken by a notice of levy, if they were not
exempt. Do not attempt to serve a notice of levy on the source
of these payments. The exempt income sources are:
Unemployment benefits,
Certain annuity and pension payments, including payments under
the Railroad Retirement Act, Railroad Unemployment Insurance Act,
Special Pensions for Medal of Honor Winners, and Retired Serviceman's
Family Protection Plan and Survivor Benefit Plan,
Workers Compensation,
Judgment for support of minor children, if the judgment is before
the date of the levy,
Certain military service connected disability payments,
Certain public assistance payments,
Assistance under the Job Training Partnership Act.
NOTE:
IRC 6331(h) allows for levy on 15% of certain previously exempt
government payments. However, the intent of this provision was
to make a computer match possible between tax liabilities and
records of payments from the government's disbursing agencies,
so a flat percentage of the payments could be attached. The computer
matches are being arranged by Headquarters. Continue refraining
from issuing Forms 668A(C)(DO) and 668W(C)(DO) on the payments
listed above. See IRM 5.11.7.2 for additional information about
levies issued under IRC 6331(h).
In addition to these exempt sources of income, a portion of a
taxpayer's wages, salary, and other income is exempt from levy.
See IRM 5.11.5.4 for additional information about this exemption.
See IRC 6334 and IRM 5.17, Legal Reference Guide for additional
information about property exempt from levy.
Members of the military and Public Health Service employees may
deposit money in a Special Treasury Fund. Money can be deposited
while the employees are outside the U.S. and its possessions.
This money can not be levied. See Subsection 1035 of Title 10
of the U.S. Code.
No other property is exempt from levy. No state or local law can
exempt property from levy to collect federal tax.
EXAMPLE:
Even if property is exempt under a state homestead exemption law,
it is not exempt from federal levy.
5.11.1.3.2 (07-26-2002)
Property Exempt from Levies Used to Collect Child Support TDAs
When child support TDAs are being collected, three of the things
in IRM 5.11.1.3.1(1) are not exempt from levy.
Unemployment benefits
Certain annuity and pension payments
Amount of income needed to pay a judgment for the support of minor
children. However, income withheld for a judgment for child support
is not levied, if the judgment is dated before the levy.
Use Letter 1696(P) to explain the exemptions that do not apply
for child support levies. See Exhibit 5.11.1-2
Also, see IRM 5.11.1.2.2.10.
5.11.1.3.3 (06-29-2001)
Property in the Hands of the Courts
IRC 6332 (a) provides that property subject to attachment or execution
under any judicial process is not subject to levy. Also, the IRS
generally does not levy on assets in the custody or control of
a court, because that would interfere with the court proceeding.
Generally, if the taxpayer is in bankruptcy or state insolvency
proceedings, do not levy assets in the hands of the court to collect
the tax that this person owes. However, a levy can be served to
attach assets the court may distribute to another person who is
the taxpayer's creditor.
EXAMPLE:
Fred Green is a delinquent taxpayer who files bankruptcy. Fred's
assets are in the hands of the court, so it can determine which
of Fred's creditors will be paid and how much to pay each of them.
While this is underway, generally, a levy will not be served on
the court in an attempt to take any of these assets to collect
Fred's tax. However, Joe Blue is one of Fred's creditors, and
Joe also owes delinquent tax. A levy can be served on the court
to attach Joe's fixed and determinable right to assets it may
distribute to him.
CAUTION:
Do not levy without getting advice from the Insolvency Unit, when
there is a current bankruptcy condition, or the taxpayer states
taxes were discharged in a prior bankruptcy. Bankruptcy laws allow
debtors to sue the Service for damages and attorney fees when
the automatic stay or discharge injunction is violated.
Property may have been seized before the taxpayer began court
proceedings. In non-bankruptcy cases, this may affect whether
the property can be sold. Contact Technical Support for advice.
In bankruptcy cases, property that has not been sold may have
to be turned over to the bankruptcy estate. Contact the Insolvency
Office that covers your Territory for advice.
When property is being used as evidence in a criminal court, it
can be levied.
Serve the levy on the official responsible for holding and releasing
the property, e.g. police property clerk.
Tell this person not to surrender the property, until the court
releases it.
5.11.1.3.3.1 (06-29-2001)
Cash Deposited as Security for Bail
Levy cash deposited as security for bail only if collection is
at risk. The compliance territory manager or a second level Insolvency/Technical
Support manager must approve the levy.
If a levy is served, tell the Court Clerk to respond when the
taxpayer no longer requires a bond.
If collection is not at risk, do not levy. Instead, ask the Court
Clerk to notify IRS when the bond is no longer required. Then,
decide whether to levy the bond before it is returned to the taxpayer.
5.11.1.3.3.2 (06-29-2001)
Forfeited Property
Sometimes, property used in a crime or acquired through crime
is forfeited.
EXAMPLE:
Criminal Investigation may seize money used in violating the Internal
Revenue Code. This may be subject to judicial forfeiture.
If property can be forfeited in a federal proceeding, it will
not be levied. However, Criminal Investigation may alert Collection
to levy property if the court declares it is not forfeited. In
a state or local forfeiture, contact Associate Area Counsel to
determine whether the federal tax lien encumbers the property
under IRC 6323 (i)(3), which would allow the IRS to levy the property.
5.11.1.3.4 (06-29-2001)
Property Outside the United States
Serve notices of levy only within the United States, including
the District of Columbia and U.S. possessions and territories.
All of these are referred to below simply as the U.S.
If the taxpayer is outside the U.S., but there are assets here,
they can be levied.
Never serve a notice of levy outside the U.S. Also, never serve
a levy at another country's embassies, consulates, or missions,
even if they are within U.S. Borders. See IRM 5.11.6.9 for levies
served at the United Nations.
A foreign bank may have branches in the U.S. A notice of levy
can be served at U.S. branches and reach funds held there. It
might also reach funds in branches outside the U.S. See 26 CFR
301.6332. Contact Technical Support and Associate Area Counsel
for advice.
Several countries, including Canada, now have reciprocal tax treaties
with the United States. See IRM 5.1.8.7.9 regarding the Mutual
Collection Assistance Program.
5.11.1.3.5 (06-29-2001)
Appearance Date of Summons
Do not levy on a day the taxpayer must appear for a summons that
was issued to collect tax. For example, the taxpayer may be summoned
for a Collection Information Statement. See IRC 6331(g).
Even if a summons is issued for another reason, though, do not
levy on the appearance date. For example, there may be TDAs and
TDIs on the same taxpayer. The summons could be issued for the
unfiled return.
You are not expected to contact other divisions to ask if they
have summoned the taxpayer.
EXCEPTION:
If collection is in jeopardy, a levy can be issued on the summons
appearance date. Collection is only in jeopardy if one of the
conditions allowing a jeopardy assessment exists. See Policy Statement
P-4-88.
The compliance territory manager or a second level Insolvency/Technical
Support manager must approve the jeopardy levy.
If the notices described in IRM 5.11.1.2.1 have been sent, and
the time periods for them have passed, the appeal process in IRM
5.11.3.6 does not apply. If possible, consult with Counsel before
the levy is served. The taxpayer can discuss the levy with the
group manager, the Taxpayer Advocate, or the Collection Appeals
Officer.
If the notice requirements have not been satisfied, however, see
IRM 5.11.3 for required procedures and approval level.
5.11.1.3.6 (01-19-1999)
Banks under FDIC (Formerly RTC) Control
The Service made an agreement with the Resolution Trust Corporation
(RTC) about amounts owed by banks under RTC control. A notice
of levy will not be used to collect these amounts.
RTC has been abolished, and the Federal Deposit Insurance Corporation
(FDIC) took over RTC's functions. The RTC agreement continues
to apply to banks under FDIC's control.
5.11.1.3.7 (07-26-2002)
Repeated Levies on the Same Source
If repeated levies on the same source are necessary to collect
a liability, document managerial approval.
Manager's approval is required only if the same source has been
levied before to collect the same liability. The age of the prior
levy does not affect whether approval is needed, although it may
affect how frequently the source can be levied without causing
a hardship on the taxpayer.
Review the case file/ICS history to determine if the source has
been levied before to collect the same liability. If an ACS transcript
has been received with the case, review the transcript, too, to
see if the source was already levied to collect the tax.
For cases that have been worked, closed, and then reactivated,
there will not be an available file to review. For example, if
the case is a reactivated CNC, there generally is no way to know
whether a source was levied before to collect the same liability.
There is no need to attempt to locate the earlier file in the
Federal Records Center, since they are not retired in a manner
that makes any given file retrievable. However, if the case was
previously worked in ICS, the sources previously levied through
ICS might be retrievable from the archives, depending on how long
ago it was reported CNC. If it is available through the archives,
check that.
If there are any new modules that were not included in the earlier
levy to the same source, manager's approval is not required, because
the levy is being used to collect a new liability.
EXAMPLE:
A notice of levy was issued to collect taxes owed for Form 941
for all four quarters of 2000. Later, another notice of levy is
going to be issued to the same levy source. The four quarters
of 2000 are still not fully paid, but there are now also TDAs
for the first two quarters of 2001. A notice of levy to collect
the six TDAs does not require manager's approval, unless it is
required for a reason other than the fact that it is going to
the same levy source.
A continuous wage levy or a levy that otherwise reaches a series
of future payments, e.g. retirement payments, is not a repeated
levy requiring manager's approval.
See Policy Statement P-5-28.
5.11.1.3.8 (01-19-1999)
Government Training Allowances
People attending government training programs develop skills,
so they can get jobs. Except for payments under the Job Training
and Partnership Act, these payments are not exempt from levy.
However, levying them would defeat the purpose of the programs,
so these payments will not be levied.
See Policy Statement P-5-33.
5.11.1.3.9 (06-29-2001)
Pending & Active Installment Agreements
If the taxpayer makes an offer to pay a liability through installments,
no levies can be served while the proposal is pending.
NOTE:
An unreversed transaction code (TC) 971, Action Code (AC) 043
means there is a pending installment agreement. This can be reversed
by a TC 972, AC 043. However, if the pending agreement becomes
an active agreement, there will also be a TC 971, AC 063, in which
case both the pending and active installment agreement coding
are reversed by a TC 971, AC 163.
EXCEPTION:
A levy can be served if the taxpayer waives the restriction, in
writing.
EXCEPTION:
A levy can be served if collection is in jeopardy. Collection
is only in jeopardy if one of the conditions allowing a jeopardy
assessment exists. See Policy Statement P-4-88.
The compliance territory manager or a second level Insolvency/Technical
Support manager must approve the jeopardy levy.
If this happens while a rejected installment agreement is being
appealed, notify Appeals of the jeopardy determination.
If the notices described in IRM 5.11.1.2.1 have been sent, and
the time periods for them have passed, the appeal process in IRM
5.11.3.6 does not apply. However, the taxpayer can still discuss
the levy with the group manager, the Taxpayer Advocate, or the
Appeals Officer. If possible, consult with Counsel before the
levy is served.
If the notice requirements in IRM 5.11.1.2.1 have not been satisfied,
see IRM 5.11.3 for required procedures and approval level.
In addition to the period that an offer of an installment agreement
is pending, no levy can be served
for thirty days after an offer of an installment agreement is
rejected
while a rejection of a proposed agreement is being appealed
while an agreement is in effect
for thirty days after notifying a taxpayer that an agreement has
been defaulted and will be terminated, i.e. CP523 or Pattern Letter
2975
for an additional thirty days after an agreement is terminated
while termination (or proposed termination) of an agreement is
being appealed.
CAUTION:
Allow an additional fifteen days after each of these thirty day
periods, as discussed in IRM 5.11.1.2.1(5).
NOTE:
Status 60 or an unreversed TC 971, AC 063 means there is an active
installment agreement. This is reversed by TC 971, AC 163.
EXCEPTION:
The same as in (1), above.
By contrast, if a levy was issued BEFORE an installment agreement
is made, it must be released, unless the agreement provides otherwise.
See IRC 6343(a)(1)(C). However, if a levy was served and then
the taxpayer offers to pay in installments, the levy does not
have to be released while negotiations for the installment agreement
are pending.
If an offer of an installment agreement is made merely to delay
collection, levies can be served to collect the tax.
The levy must be approved by the compliance territory manager
or a second level Insolvency/Technical Support manager.
If the notices described in IRM 5.11.1.2.1 have been sent, and
the time periods after them have passed, jeopardy is not required,
and the appeal process in IRM 5.11.3.6 does not apply. However,
the taxpayer can discuss the levy with the group manager, the
Taxpayer Advocate, or Appeals.
If the notice requirements in IRM 5.11.1.2.1 have not been satisfied,
jeopardy is required. See IRM 5.11.3 for required procedures and
approval level.
CAUTION:
The determination that the offer is merely to delay collection
must be apparent to any impartial observer, i.e. there is clearly
no reality to the offer.
EXAMPLE:
The taxpayer offers to make a periodic, token payment such as
$1 a month.
EXAMPLE:
A taxpayer makes an offer to make installment payments. The agreement
is rejected. The taxpayer, then, offers to increase the proposed
agreement by a token amount, such as $1.
5.11.1.3.10 (06-29-2001)
Refund Litigation
Responsibility for refund litigation depends on who is suing and
the type of tax involved.
Technical Support is responsible for refund litigation if
the suit is filed by a third party, or
a trust fund recovery penalty is involved.
The service center refund litigation unit is responsible for all
other refund litigation.
For tax periods that begin before January 1, 1999, if the taxpayer
files a suit for a refund of divisible taxes, Technical Support
or the service center refund litigation unit determines whether
collection is suspended during the suit. For further information
about refund suits, see IRM 105.2, Litigation and Judgments Handbook.
Divisible taxes include
employment taxes
trust fund recovery penalties
excise taxes (except chapters 41-44 taxes)
abusive tax shelter penalties.
Unlike other taxes, the taxpayer can pay only a portion of the
amount owed before filing suit for refund, so this refund litigation
happens while there still is an amount owed.
Collection does not have to be in jeopardy, as long as the pre-levy
notice requirements of IRM 5.11.1.2.1 have been satisfied. However,
get Associate Area Counsel's approval because of their ongoing
involvement in the case. The compliance territory manager or a
second level Insolvency/Technical Support manager must also approve
the levy.
Generally, however, for tax periods beginning after December 31,
1998, no levy can be served to collect divisible taxes that are
included in a suit for refund.
This change only applies to employment taxes and trust fund recovery
penalties for employment taxes.
For trust fund recovery penalties for other taxes, continue to
follow (2), above.
EXCEPTION:
If collection is in jeopardy, levies can be issued to collect
the tax.
If the notice requirements of IRM 5.11.1.2.1 have not been satisfied,
see IRM 5.11.3 for required procedures and approval level of the
jeopardy levy.
If the notice requirements of IRM 5.11.1.2.1 have been satisfied,
the jeopardy levy must be approved by the compliance territory
manager or a second level Insolvency/Technical Support manager.
It must also be approved by Associate Area Counsel. The appeal
process in IRM 5.11.3.6 does not apply. The taxpayer can still
discuss the levy with the group manager, the Taxpayer Advocate,
or the Appeals Officer.
EXCEPTION:
If the taxpayer waives the restriction on levy in writing, levies
can be issued to collect the tax.
NOTE:
If either of these exceptions applies, notify Technical Support
that collection is not being withheld.
A levy that was issued before the suit was filed does not have
to be released. However, contact Associate Area Counsel for advice
about whether to release the notice of levy. If necessary, tell
the person who received the levy to delay sending any proceeds
until counsel's advice is received.
5.11.1.3.11 (06-29-2001)
Due Process for Lien Filing
Generally, within five business days after a Notice of Federal
Tax Lien (NFTL) is filed, Letter 3172(DO) is sent to taxpayers
to tell them about the NFTL and allow them a chance for a Collection
Due Process appeal about the lien. See IRM 5.12.3.
If the notice requirements in IRM 5.11.1.2.1 have been satisfied,
Letter 3172(DO) does not create a new waiting period before a
Notice of Levy can be issued. However, once the taxpayer appeals
the lien filing, generally, no Notices of Levy will be issued
during the administrative or judicial appeal. See IRM 5.1.9.3.3
for a description of when property can be levied during the appeal
process.
EXAMPLE:
On April 5, 1999, a Notice of Federal Tax lien is filed, and Letter
3172(DO) is sent to the taxpayer on April 7. The taxpayer appeals
the NFTL on April 29. Until April 29, as long as the notice requirements
in IRM 5.11.1.2.1 have been satisfied, a Notice of Levy can be
issued to collect the amount that is owed, including the periods
that are included in Letter 3172(DO).
5.11.1.3.12 (12-31-2001)
Offers in Compromise
Notices of levy can not be served while an offer in compromise
is pending, within 30 days after an offer is rejected, or while
a rejected offer is being appealed. Ensure that the Offer in Comprise
has been closed before issuing the levy.
CAUTION:
After the 30 days run out following rejection of the offer, allow
an additional 15 days, as discussed in IRM 5.11.1.2.1(5).
EXCEPTION:
Notices of levy can be served if collection is in jeopardy. If
this happens while a rejected offer is being appealed, notify
Appeals of the jeopardy determination.
The compliance territory manager or a second level Insolvency/Technical
Support manager must approve the jeopardy levy.
If the notices described in IRM 5.11.1.2.1 have been sent, and
the time periods after them have passed, the appeal process in
IRM 5.11.3.6. does not apply. However, the taxpayer can discuss
the levy with the group manager, the Taxpayer Advocate, or the
Appeals Officer. If possible, consult with Counsel before the
levy served.
If the notice requirements in IRM 5.11.1.2.1 have not been satisfied,
see IRM 5.11.3 for required procedures and approval level.
EXCEPTION:
Notices of levy can be served if the taxpayer waives the restriction,
in writing.
See IRM 5.8.3.5.
If an Offer in Compromise is made merely to delay collection,
levies can be served to collect the tax. The provisions in IRM
5.11.1.3.9(4) also apply to such offers.
Exhibit 5.11.1-1 (06-29-2001)
Guide for Determining Whether Counsel Approval and/or Jeopardy
are Required for a Notice of Levy
Exhibit 5.11.1-1 (Cont.) (06-29-2001)
Guide for Determining Whether Counsel Approval and/or Jeopardy
are Required for a Notice of Levy
Exhibit 5.11.1-1 (Cont. 3) (06-29-2001)
Guide for Determining Whether Counsel Approval and/or Jeopardy
are Required for a Notice of Levy
Internal Revenue Manual Part 5 Collecting Process Chap. 11 Notice
of Levy Sec. 1 Background, Pre-Levy Actions & Restrictions
on Levy (12-31-2001
Send us an email at info@irstaxattorney.com
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