Pre-Levy Action & Restrictions on Levy
Part 5. Collecting Process
Chapter 11. Notice of Levy
Section 1. Background, Pre-Levy Actions & Restrictions on Levy
5.11.1 Background, Pre-Levy Actions & Restrictions on Levy
18.104.22.168 Pre-Levy Actions
22.214.171.124 Restrictions on Levy
Exhibit 5.11.1-1 Guide for Determining Whether Counsel Approval and/or Jeopardy are Required for a Notice of Levy
Exhibit 5.11.1-2 Letter 1696(P) (Rev. 1–90)
Exhibit 5.11.1-3 Letter 3174 (P) (Rev 1–1999)
This section contains background information on notices of levy.
The Internal Revenue Code (IRC) authorizes levies to collect delinquent tax. See IRC 6331. Any property or right to property that belongs to the taxpayer or on which there is a Federal tax lien can be levied, unless it is exempt. See IRM 126.96.36.199 for restrictions on levy issuance. All references to property in this subsection include rights to property.
Notice of Levy vs. Seizure
There is no legal distinction between levy and seizure.
Generally, use a notice of levy (Form 668-A/668-W) to take a taxpayer's property held by someone else if it can be turned over by writing a check.
Notice of Levy is often used to take a taxpayer's bank account, wages, other income, or accounts receivables.
If the taxpayer is holding the property, use the procedures in IRM 5.10, Seizure and Sale.
Seizure procedures are 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 Form 668-A, Notice of Levy, to the third party holding the property. This is the demand to turn over the taxpayer's property.
If a taxpayer's car is seized in a commercial parking lot, give the attendant a Form 668-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.
Taxpayers may be entitled to a Collection Due Process (CDP) hearing, or an equivalent hearing, under IRC 6330. See IRM 188.8.131.52Collection Due Process.
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 184.108.40.206,Collection Appeals Program.
This subsection contains guidance on pre-levy actions.
Before property can be levied, the taxpayer must be given a
Notice and demand
Notice of intent to levy, and
Notice of a right to a Collection Due Process (CDP) hearing
When a notice of levy is issued to a third party, it is a third party contact. Unless an exception applies, IRC 7602(c) states taxpayers must be given reasonable notice the Service plans to make such contacts to collect delinquent tax. Make sure the taxpayer has been advised of potential third party contacts. See IRM 5.1.17,Third Party Contacts, prior to issuing a levy.
The notice and demand must be left at the taxpayer's home or business, or 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.
If less than $100,000 is owed, no interest is charged for 21 days after the notice and demand. 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 intent to levy. The taxpayer has 30 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
Use registered mail only if the taxpayer is outside the United States. There is no international certified mail.
If collection is in jeopardy, only the notice and demand is required, and then property can be levied immediately. See IRM 5.11.3 Jeopardy Levy Without a Jeopardy Assessment.
When a levy is to be served, the taxpayer must also be given a notice of a right to a hearing per IRC 6330. The taxpayer has 30 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 220.127.116.11 Collection Due Process, for instructions about the taxpayer's right to a hearing, including whether the taxpayer can appeal, when the taxpayer can appeal, and the consequences of asking for an appeal.
The exception for jeopardy in (3) also applies to the notice of a right to a hearing. If collection is in jeopardy, the taxpayer must still be given the opportunity for a hearing within a reasonable time AFTER the levy. See IRM 5.11.3, Jeopardy Levy without a Jeopardy Assessment.
A taxpayer's state tax refund can be levied, even though the taxpayer 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.
The taxpayer can waive the right to a hearing. See IRM 18.104.22.168.2.9.
There is no right to a hearing when Child Support Obligations are being collected. See IRM 22.214.171.124.2.10.
When counting the ten day or 30 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.
As long as a request for a hearing is correctly addressed and postmarked timely, it is timely. Allow at least 15 additional days after the 30 day period ends, in case the taxpayer mails a request for a hearing on the thirtieth day.
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 or pending, etc. However, counting the additional 15 days, property will not be levied until April 16.
After 30 days, if the taxpayer confirms that no hearing has been requested, there is no need to wait the additional 15 days.
If the notice was unclaimed, returned undelivered, or delivery was refused, there is no need to wait the additional 15 days, as long as the notice has only been sent to one address. If multiple notices have been sent, as described in IRM 126.96.36.199.1.1(3), wait the additional 15 days, unless all of them are returned undelivered, unclaimed or refused.
If collection is in jeopardy, a notice of levy can be served without waiting the additional 15 days. The notice of levy must be approved by the territory manager or a second level Insolvency/Technical Services-Advisory manager. Consult with counsel before the levy is served. The appeal process in IRM 188.8.131.52,Appealing the Jeopardy Levy, does not apply, because the 30 day waiting period has passed. A CDP hearing will be held if the taxpayer mailed or delivered the request for a CDP appeal before the 30 days ran out. If a CDP appeal request is not made, 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.
If the required notices for a module have been sent, and then additional tax is assessed, a new notice offering a due process hearing must be sent before that additional assessment may be included in a levy.
The required notices have been sent for the tax owed on a taxpayer's 2002 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 campus. 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 184.108.40.206.2 Notice to the Non-Liable Spouse, when a levy is to be served on a non-liable spouse in a community property state.
The Notice of Intent to Levy and Notice of Your Right to a Hearing (L1058) should be issued to the taxpayer who is liable to pay the tax. In the case of a disregarded single member Limited Liability Company, issue the L1058 to the single member owner of the disregarded LLC. If the L1058 was originally issued to the disregarded LLC, issue a new L1058 to the single member owner to ensure the single member owner's rights are protected.
If a single member LLC was issued an L1058 that was proper because the LLC was not a disregarded entity for the period covered by the notice, it is not necessary to issue a new L1058 to the later disregarded LLC.
Last Known Address
Generally, the last known address is the master file address that 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 (Rev. Proc.) 2001–18. 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 and requests it be used as such by the Service.
When a Notice of Intent to Levy and Notice of Your Right to a Hearing (L1058) is mailed to the taxpayer, it must be sent to the last known address. If other addresses have been received from third parties without a change to the official last known address, send a copy of the L1058 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 other addresses.
There is no need to check for additional taxpayer addresses before sending the L1058, 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 L1058 to a last known address that is not good.
If the taxpayer has already been sent an L1058 and another address is found later, do not send an additional L1058 for the same Bal Dues 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.
The L1058 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 or left at the new address to try to get the taxpayer to pay the amount owed or to contact the revenue officer.
Satisfying the Notice Requirements
Generally, a notice and demand is sent before a revenue officer receives a Bal Due account.
The campus 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 (L1058) is usually issued on initial contact with a BMF or combination BMF/IMF taxpayer on initial contact when a deadline is set for the taxpayer to take specific action, e.g., provide proof of payment, proof of Federal Tax Deposits, financial statement information, substantiation for a request for abatement or adjustment, etc. Use of Form 9297, Summary of Taxpayer Contact, is recommended to establish what is due and the deadline for receipt.
It is not necessary to have a levy source at the time the L1058 is issued.
L1058 and L1058A are available in Spanish.
Use discretion when issuing the L1058 on initial contact with an IMF only balance due taxpayer. Consider the circumstances of the case and the compliance history of the taxpayer in determining whether to issue the L1058.
Recognizing if ACS Issued a Notice of Intent to Levy/Notice of a Right to a Hearing
ACS also issues 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, do not issue an L1058. An LT11 issued before 1–19–1999 was only a notice of intent to levy. It did not include the notice of a right to a hearing.
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 campus 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 220.127.116.11.2.2(9)
AC 067 - delivery was refused or the notice was unclaimed
AC 068 - the notice was returned, undelivered
Action Codes 066–069 can not be input on IRAF modules.
Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in CFf
When, on initial contact, a deadline is set for a taxpayer to take specific action, the L1058 will be issued with all required enclosures. Explain to the taxpayer:
if they meet the deadline, the enforcement action warned of will not take place;
if they do not meet the deadline, the enforcement action warned of may take place after 30 days, and
that only by making a request for a CDP hearing, using Form 12153, Request for a Collection Due Process Hearing, within 30 days, will their right to go to court be preserved.
If the taxpayer does request a hearing, continue to work with the taxpayer pursuant to IRM 18.104.22.168.5, Processing Requests for Collection Due Process and Equivalent Hearing.
When the L1058 is delivered in person, update IDRS through ICS by inputting Transaction Code (TC) 971, Action Code (AC) 069 and TC 971, AC 066 on the same date.
If no contact is made on the attempted initial contact, the L1058 and all required enclosures may be left in an envelope at the taxpayer's home or business or mailed certified the next business day.
When the L1058 is left at the taxpayer's home or business, update IDRS by inputting TC 971, AC 069, and TC 971, AC 067 on the same date.
If initial contact is made with the authorized representative and a deadline is set for specific action to be taken, provide a copy of the L1058 to the representative and mail the original and all required enclosures to the taxpayer by certified or registered mail, return receipt requested. Input TC 971, AC 069, and follow-up with the appropriate transaction code per IRM 22.214.171.124.2.1(3) when the results of the delivery are known.
When extenuating circumstances, e.g, assigned inventory covering a large geographical area, exist and initial contact with the taxpayer is not in the field, L1058 should still be issued if a deadline is set for the taxpayer to take specific action.
Issuing L1058 is not appropriate or may not be appropriate when
levy action is prohibited
a levy would not be issued if the taxpayer did not comply with the deadline, e.g., the taxpayer is in a hardship situation or there is doubt as to the correctness of the liability
information obtained during the attempted contact indicates the taxpayer may no longer be at the last known address
IMF accounts have been in a suspended status, i.e., assigned to the Queue or reported currently not collectible for more than 12 months
the taxpayer satisfactorily demonstrates that the deadline set will be complied with, e.g., the taxpayer provides documentation that a loan is in process to full pay the liability
granting an extension of time to pay per IRM 126.96.36.199, Extensions of Time to Pay.
The L1058 may be issued 30 days prior to the expiration of the extension, or earlier if interim deadlines are not met.
Because taxpayers only have the right to one Collection Due Process hearing for each taxable period, avoid listing liabilities on L1058 that have already been included in such a notice. Sending more than one notice for a taxable period may give taxpayers the impression they can have another Due Process appeal for that liability.
None of the campus IDRS notices are notices of a right to a hearing.
If the L1058 is mailed, it must be sent by certified or registered mail WITH A RETURN RECEIPT.
When the L1058 is mailed, update IDRS through ICS with TC 971, AC 069. When the results of the delivery are known, upload AC 066, 067, or 068, as shown in IRM 188.8.131.52.2.1 (3). 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 30 days before the current date, prepare Form 4844, Request for Terminal Action, for manual terminal input to IDRS. Ask the TET to input the date the action took place, rather than the date of the input.
The L1058 is mailed on March 10. The TC 971, AC 069, is input on March 12. The date of the TC is March 10.
Inputting AC 067 on the same date as the AC 069 shows how the notice was delivered. Refused delivery is distinguished from this by the AC 067 being a later date than the AC 069.
If the return receipt comes back unsigned, but the envelope is not attached, use AC 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.
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 L1058 was issued. 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.
If the L1058 was not issued on initial contact, do not issue it when, after consultation with the Fraud Technical Advisor (FTA), it is determined that a firm indication of fraud has been established. (See IRM 184.108.40.206 ,Preparation of Form 2797).
Except in cases involving a taxpayer identified as an in-business repeater trust fund taxpayer ( IRM 220.127.116.11, Identifying Repeater Trust Fund Taxpayers), avoid issuing the L1058 if you have issued a Collection summons to the same taxpayer for the same tax periods and the summons is still pending. Issuing the notice while the summons is pending could conflict with the taxpayer's opportunity in CDP to resolve any issues or disputes.
A summons is considered pending when:
Issuance of the summons will occur during the 30 days the taxpayer has to exercise their CDP rights
Compliance with the summons will occur during the 30 days the taxpayer has to exercise their CDP rights
Referral of the summons will occur during the 30 days the taxpayer has to exercise their appeal rights
The taxpayer exercises the right to a hearing and the compliance date for the summons will occur during the time the hearing is pending in Appeals
The L1058 may be issued when the pending summons was issued to a third party.
Issuing Notice of Intent to Levy/Notice of a Right to a Hearing for Joint IMF Bal Due account
If there are Bal Dues for jointly filed income tax returns, prepare two copies of L1058-A.
If they are not delivered in separate envelopes 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 taxpayer, 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 joint and separate liabilities, be careful that taxpayers are not sent a notice for taxes they do not owe.
John and Mary Doe owe tax for their 2000 joint income tax return. John Doe also owes tax for his single return for 1999. John must be sent a notice for both years, but only send Mary a notice for 2000.
If the notices are going to different addresses, do not reveal one person's address to the other.
William and Barbara White owe tax for a joint income tax return. They now have different addresses. ICS users must make two passes of the application to generate two letters. One pass to generate a letter for William and a second pass to generate a letter for Barbara. " William and Barbara White" will appear next to, "For Account of" in the upper right hand corner of the letter.
Before sending the L1058-A to joint taxpayers living at different addresses, try to contact both of them, so the letter is not a surprise to either of them. If one of the taxpayers is living in a different jurisdiction, try to get a telephone number to call this person before sending the L1058-A. If a number can not be found or the attempted call fails, the letters can still be sent.
Before sending the L1058-A 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 Bal Dues. This step is not necessary when there has been contact with the taxpayers confirming the secondary taxpayer’s address or when the Bal Dues are for the most recent tax year.
There are Bal Dues for Steven and Marcia Brown for their joint income tax return for 2000. The revenue officer has not been able to contact the taxpayers but has found a levy source, so two L1058s 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 L1058 mailed to Marcia needs to be mailed to the address on her most recent return rather than the same address where Steven Brown’s L1058 will be mailed.
If levy on one of the taxpayers’ property is prohibited, do not issue a separate L1058 to that person. Instead, prepare a notice with both taxpayers’ names on it, and deliver or mail it in an envelope addressed to the taxpayer whose property can be levied. When the condition that prohibits levy no longer exists, an L1058 can be issued to that person. Also, see IRM 18.104.22.168.2(4) ,Preparing the Notice of Levy.
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 installment agreement. The L1058 will have both names on it, but it will only be issued to John. Issuing an L1058 to Mary would be improper, because her installment agreement prevents levy on her property. Later, Mary defaults on her agreement; she has the right to appeal the default. She must also be issued an L1058 giving her the right to a due process hearing. During her appeal and during the 30 days she has to request a due process hearing, collection can continue against John.
Input the TC 971 and ACs as explained in IRM 22.214.171.124.2.2(9). However, when separate notices are sent for joint assessments, include the secondary taxpayer's social security number as, "X-Ref X07-01-2004, " in the "Remarks" on the Form 4844 for inputting the record of that person's notice. This will distinguish the primary and secondary taxpayers' ACs.
John and Mary Doe's notices for their joint 2000 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. 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 Bal Dues in CFf, 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, it was a legally valid notice of a right to a hearing. See IRM 126.96.36.199.1.1. 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.
ACS may have sent LT11 to the address shown on master file for the last joint return that the taxpayers filed. However, if the taxpayers had separated, they were living at different addresses when the LT11 was sent, and the secondary taxpayer had already reported a new address, that becomes that person’s last known address. In this case, an L1058 needs to be sent to the secondary taxpayer before that person’s property can be levied.
ACS had Bal Dues on James and Sandra Jones. An LT11 was sent to the address shown on master file. The revenue officer then receives the Bal Dues 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 L1058s for a joint Bal Due 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.
Because of procedures in (2), above, this should only be an issue if the secondary taxpayer has not reported a new address.
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 a notice of levy may be called for.
The estate or certain assets may not be going through probate.
For a joint return, the assets of the surviving spouse may be levied to collect the delinquent tax.
Technical Services-Advisory 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 issued, L1058 must be sent to the estate's representative, even if the taxpayer has died.
For single liabilities
No estate administrator or executor is known Send the L1058 to:
John Smith (Dec'd)
John Smith's Last Known
An estate administrator or executor is known Send the L1058 to:
Estate of John Smith
Charles Jones, Administrator (or Executor or Personal Representative)
Charles Jones' Last Known Address
Consider sending a copy to the address of the fiduciary and/or attorney for the estate.
For joint IMF liabilities
No estate administrator or executor is known Send two L1058s.
Address both to:
Estate of James Doe and Mary Doe
Use James's last known address on his L1058 and Mary's last known address on hers. Put James's L1058 in a non-window envelope addressed only to him at his last known address. Put Mary's L1058 in a non-window envelope addressed only to her at her last known address or issue it to Mary on initial contact.
An estate administrator or executor is known Send two L1058s.
Address one to:
Estate of James Doe and Mary Doe
William Green, Administrator (or Executor)
William Green's Last Known Address
Put the L1058 in a non-window envelope addressed the same way as the letter, except delete Mary's name.
Address the other L1058 to:
Estate of James Doe and Mary Doe
Mary's Last Known Address
Put the L1058 in a non-window envelope addressed the same way as the letter, except delete James' name. The L1058 can also be delivered on initial contact with Mary.
Consider sending a copy to the address of the fiduciary and/or attorney for the estate.
Issuing Notice of Intent to Levy/Notice Of a Right to a Hearing to Partnerships
When sending L1058 to a partnership, send it to the last known address of the partnership. See IRM 188.8.131.52.1.1.
Do not send additional L1058s to the partners at their addresses.
If the partnership is no longer operating, or there is another reason to know that it is not at the last known address, L1058 must still be sent to this address. Also 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.
Timeliness of Notice
The purpose of the Notice of Intent to Levy described in IRM 184.108.40.206.1(3) is to warn the taxpayer that failure to respond can be expected to result in imminent enforcement. When a long time passes after the notice is issued and there has not been enforcement action or a warning of enforcement, the notice loses its effectiveness as a warning.
If a notice of intent to levy is over 180 days old, it is legally sufficient 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) by telling the taxpayer that there is a deadline (not necessarily 30 days) after which there will be enforcement. If the taxpayer cannot be contacted in person or by telephone, then the warning may be given in writing. See Exhibit 5.11.1-3 and include the dual notice language in the letter when it is issued to both spouses for joint income taxes.
Do not issue another L1058 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 L1058 will give the incorrect impression that the taxpayer can have a pre-levy hearing again for the same liability.
Exceptions to a new warning of enforcement include,
Collection is at risk. The territory manager or an Insolvency/Technical Services-Advisory manager (second level) must approve the levy. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate, and the Appeals Officer.
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.
The taxpayer exercises their Collection Due Process (CDP) rights. The Notice of Determination in CDP constitutes a warning of imminent enforcement if the levy is supported.
The taxpayer is a trust fund repeater. See IRM 220.127.116.11, Identifying Repeater Trust Fund Taxpayers.
Enforcement action has taken place within the last 180 days or a warning of enforcement has been given in the last 180 days. Enforcement action only includes seizures and notices of levy, so the taxpayer should realize there has been enforcement.
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 because the taxpayer would be unaware of the levy.
A levy is sent to a bank and a copy is sent to the taxpayer. Even if no proceeds are received, the taxpayer would be aware of the levy action.
This "timeliness" warning is in addition to the notices described in IRM 18.104.22.168.1, Required Notices, that 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 30 day Notice of Intent to Levy / 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.
An L1058 is sent to a taxpayer, followed by a notice of levy. After 180 days pass with no additional enforcement action or warning of 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 required notices in IRM 22.214.171.124.1 must have been sent for every taxable period or module that is included in a notice of levy. 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 126.96.36.199.1 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.
The required notices have been sent for all modules included in the notice of levy. They are over 180 days old and there has been no enforcement action or warning of enforcement, so the taxpayer 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 30 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 taxpayer has been warned of enforcement within the last 180 days.
If the taxpayer can not be located, the required notices 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.
Rescinding a Notice of Intent to Levy/Notice of a Right to a Hearing
At times, L1058, Notice of Intent to Levy and Notice of Your Right to a Hearing, is issued and you subsequently learn the case was in a status where levy action is prohibited. If the notice is issued when levy action is prohibited, it may have to be rescinded.
Situations warranting possible rescission of the notice include when the taxpayer,
Has a pending offer-in-compromise
Has a pending installment agreement
Has an innocent spouse claim pending
Is in bankruptcy and levy is prohibited
Is in a combat zone
Is in any other situation where levy action is prohibited
Use Letter 3876, Rescission of Collection Due Process Levy Notice, to notify the taxpayer. The letter explains the Notice of Intent to Levy and Notice of Your Right to a Hearing is rescinded and any CDP hearing request received as a result is cancelled. It also explains the taxpayer's CDP hearing rights are preserved.
The L3876 must be issued whenever a CDP notice is issued in violation of the automatic stay.
The L3876 must be issued when the taxpayer is in a combat zone or enters a combat zone during the 30 day period for filing a request for hearing.
In other situations when a CDP notice is issued when levy action is prohibited, the rescission letter must be issued when the taxpayer timely requests a CDP hearing.
When the notice is rescinded, input Transaction Code (TC) 972, Action Code 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.
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 188.8.131.52.2.2(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. 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 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.
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.
The taxpayer is expecting another creditor to attach assets. The taxpayer may want the assets levied before the other creditor can attach them.
Normally, a levy cannot be issued until an L1058 has been issued, and the waiting period 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 informaed and voluntary, or it is not a valid waiver. The waiver must be in writing.
First, give the taxpayer an L1058, including all the enclosures so they have an opportunity to understand the rights they are waiving. Discuss those rights with the taxpayer and document the case history accordingly. Then, have the taxpayer sign Form 13207, Waiver of Right to Receive a Collection Due Process Hearing Under Internal Revenue Code Section 6330.
If this form does not fit the situation, discuss the need for some alternative language with Technical Services-Advisory, which may consult with Associate Area Counsel. 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 184.108.40.206.2.2(9).
Issuing Notice of Intent to Levy for Child Support Obligation Bal Dues
IRC 6305 provides that federal courts have no jurisdiction to restrain or review the assessment and collection of Child Support Obligation (CSO) Bal Dues. 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 (L1058) will be issued when CSO Bal Dues 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
Notice of intent to levy
The notice and demand is issued at the campus when the liability is assessed.
Use Letter 3524, Final Notice - Notice of Intent to Levy, Please Respond Immediately, instead of L1058. This is the notice of intent to levy for CSO Bal Dues. It is available as an ICS macro. This must be given to the taxpayer, as described in IRM 220.127.116.11.1(3). If it is mailed, no return receipt is required.
If the person who owes child support also owes tax, give L1058 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 L1058 has not been issued for the CSO Bal Dues, 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 18.104.22.168.2.
See Servicewide Delegation Order 5–3 (formerly DO-191, Rev.3).
Certain notices of levy must be approved by managers. See Servicewide Delegation Order 5–3 (formerly DO 191, Rev.3).
When submitting a notice of levy 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, provide an explanation you have 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 in consideration of the amount owed and any circumstances that are known about the taxpayer and the liability
Other collection alternatives considered or rejected
Consider the following when determining if the levy is appropriate,
The taxpayer's responsiveness to attempts at contact and collection
Anything that is known about the taxpayer's financial condition
The taxpayer's compliance history
The taxpayer's effort to pay the tax
Whether current taxes are being paid
This information must be in writing, but the format can be at local management discretion.
The approval must also be in writing, but the method can be at local management discretion. Either the manager must write the approval in the ICS history, or a copy of the manager's written approval must be kept in the case file.
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. A copy of the notice of levy, with the manager's signature on it, is put in the case file.
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. A copy of the notice of levy, with the manager's initials on it, is put in the case file.
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.
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.
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 Collection Area Director 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). Maintain copies of all approvals and rejections in the case file.
If a courtesy levy is involved, indicate the required manager has approved of the notice of levy.
Approval of Alter-Ego and Nominee Notices of Levy
Notices of levy that name alter-egos or nominees often involve complex issues and are likely to result in litigation.
See IRM 22.214.171.124.1,Transferee and Nominee Cases, and IRM 126.96.36.199.2,"Alter Ego" Doctrine - Corporations, for guidance about whether the facts support such a determination.
Area Counsel or Associate Area Counsel concurrence is required. With that concurrence, the notice of levy can be issued by GS-09 Revenue Officers, GS-12 Insolvency employees and Technical Services advisors. See Servicewide Delegation Order 5-3 (formerly DO-191, Rev. 3) for the complete list of employees with the delegated authority to issue such levies.
Do not issue notices of levy listing alter-egos or nominees without first getting legal review, advice, written direction, and approval from Associate Area Counsel as to the,
Issuance of the levy
Language to be included on pre-levy notices and the notice of levy
Restrictions on Levy
This subsection contains restrictions on levy. See IRM 188.8.131.52.3,Levy Action during the Period of the Collection Due Process Hearing, regarding restrictions on levy during Due Process Hearings.
Property Exempt from Levy
IRC 6334 describes property that is exempt from levy. The exempt income sources include:
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
Judgments 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
IRC 6331(h) allows for levy on 15% of certain previously exempt government payments. See IRM 184.108.40.206,Federal Payment Levy Program, 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 under IRC 6334. See IRM 220.127.116.11, Exempt Amount, for additional information about this exemption.
See IRC 6334 and IRM 5.17, Legal Reference Guide, for information about other property exempt from levy.
Other than property listed in IRC 6334, no property is exempt from levy. No state or local law can exempt property from levy to collect federal tax.
Even if property is exempt under a state homestead exemption law, it is not exempt from federal levy.
Property Exempt from Levies Used to Collect Child Support Bal Dues
When child support Bal Dues are being collected, three of the items in IRM 18.104.22.168.1(1) are not exempt from levy. They are,
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 22.214.171.124.2.10.
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.
Fred Green is a delinquent taxpayer who files bankruptcy. Fred's assets are in the hands of the court to determine which of Fred's creditors will be paid and how much. 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 trustee to attach Joe's fixed and determinable right to assets that may be distributed to him.
Do not levy without getting advice from Insolvency 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.
Contact Technical Services-Advisory regarding levy on property that is or may be in the control of a probate court.
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 Services-Advisory for advice. In bankruptcy cases, property that has not been sold may have to be turned over to the bankruptcy estate. Contact Insolvency in 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.
Cash Deposited as Security for Bail
Issue a notice of levy on cash deposited as security for bail only if collection is at risk. The territory manager or a second level Insolvency/Technical Services-Advisory 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.
Sometimes, property used in a crime or acquired through crime is forfeited.
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.
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 126.96.36.199 ,United Nations (UN) Employees' Income, 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 Services-Advisory and Associate Area Counsel for advice.
Several countries, including Canada, now have reciprocal tax treaties with the United States that permit the United States and the other country to collect taxes for each other.. See IRM 188.8.131.52.9,Mutual Collection Assistance Requests (MCARs).
Appearance Date of Summons
Do not levy on the day the taxpayer must appear for a summons that was issued to secure information to collect delinquent tax. For example, when a taxpayer is summoned to provide information to complete a Collection Information Statement. See IRC 6331(g).
Even if a summons is issued for another reason, do not levy on the appearance date. For example, there may be Bal Dues and Del Rets 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.
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 territory manager or a second level Insolvency/Technical Services-Advisory manager must approve the jeopardy levy.
If the notices described in IRM 184.108.40.206.1 have been sent, and the time periods for them have passed, the appeal process in IRM 220.127.116.11,Appealing the Jeopardy Levy does not apply. If possible, consult with Technical Services-Advisory and Counsel before the levy is served. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate, or Appeals.
If the notice requirements have not been satisfied, see IRM 5.11.3,Jeopardy Levy Without Jeopardy Assessment, for required procedures and approval level.
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.
Repeated Levies on the Same Source
Exercise caution when levying repeatedly on the same source
Per Policy Statement P–5–28, Successive seizures-Timing to avoid undue hardship, while the Code allows for the service of as many successive levies on the same source as necessary to satisfy the tax liability, judgment should be exercised to avoid undue hardship on the taxpayer and/or the taxpayer's family.
Servicewide Delegation Order 5-3 delegates authority to issue notices of levy repeatedly on the same source to GS-12 Insolvency employees; Technical Services Advisors; GS-09 Revenue Officers. See Servicewide Delegation Order 5-3 for the complete list of employees with the delegated authority to issue such levies.
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.
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.
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. 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.
A levy can be served if the taxpayer waives the restriction in writing.
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 territory manager or a second level Insolvency/Technical Services-Advisory 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 required notices have been sent, and the time periods for them have passed, the appeal process in IRM 18.104.22.168,Appealing the Jeopardy Levy, does not apply. The taxpayer can still discuss the levy with the group manager, the Taxpayer Advocate, or the Appeals Officer. If possible, consult with Technical Services-Advisory and/or Counsel before the levy is served.
If the notice requirements in IRM 22.214.171.124.1 have not been satisfied, see IRM 5.11.3,Jeopardy Levy Without Jeopardy Assessment, 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 30 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 30 days after notifying a taxpayer that an agreement has been defaulted and will be terminated, i.e., CP523 or Letter 2975
For an additional 30 days after an agreement is terminated
While termination (or proposed termination) of an agreement is being appealed.
Allow an additional 15 days after each of these 30 day periods.
Status 60 or an unreversed TC 971, AC 063 means there is an active installment agreement. This is reversed by TC 971, AC 163.
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 installment agreement provides otherwise. See IRC 6343(a)(1)(C). 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 (Treas. Reg. 301.6331-4(a)(4)).
The levy must be approved by the territory manager or a second level Insolvency/Technical Services-Advisory manager.
If the notices described in IRM 126.96.36.199.1 have been issued, and the time periods after them have passed, jeopardy is not required, and the appeal process in IRM 188.8.131.52,Appealing the Jeopardy Levy does not apply. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate, or Appeals.
If the notice requirements in IRM 184.108.40.206.1 have not been satisfied, the jeopardy levy procedures in 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, must be followed.
The determination that the offer of an installment agreement is merely to delay collection must be apparent to any impartial observer, i.e., there is clearly no reality to the offer.
The taxpayer offers to make a periodic, token payment such as $1 a month.
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.
Responsibility for refund litigation depends on who is suing and the type of tax involved.
Technical Services-Advisory is responsible for refund litigation if a suit is filed by a third party regarding a Trust Fund Recovery Penalty assessment.
The campus refund litigation unit is responsible for all other refund litigation.
For tax periods that began before January 1, 1999, if the taxpayer files a suit for a refund of divisible taxes, Technical Services-Advisory or the campus refund litigation unit determines whether collection is suspended during the suit. For further information about refund suits, see IRM 25.3,Litigation and Judgments.
Divisible taxes include employment taxes, trust fund recovery penalties, excise taxes (except chapters 41-44 taxes), and 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 220.127.116.11.1 have been satisfied. Get Associate Area Counsel's approval because of their ongoing involvement in the case and keep Technical Services-Advisory apprised of case developments. The territory manager or a second level Insolvency/Technical Services-Advisory manager must also approve the levy.
Generally, 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.
If collection is in jeopardy, levies can be issued to collect the tax.
If the notice requirements of IRM 18.104.22.168.1 have not been satisfied, see IRM 5.11.3,Jeopardy Levy Without Jeopardy Assessment, for required procedures and approval level of the jeopardy levy
If the notice requirements of IRM 22.214.171.124.1 have been satisfied, the jeopardy levy must be approved by the territory manager or a second level Insolvency/Technical Services-Advisory manager. It must also be approved by Associate Area Counsel. Keep Technical Services-Advisory apprised of case developments. The appeal process in IRM 126.96.36.199 does not apply. The taxpayer can still discuss the levy with the group manager, the Taxpayer Advocate, or Appeals.
If the taxpayer waives the restriction on levy in writing, levies can be issued to collect the tax.
If collection is in jeopardy or the taxpayer waives the restriction on levy in writing, notify Technical Services-Advisory that collection is not being withheld.
A levy that was issued before the suit was filed does not have to be released. 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. Keep Technical Services-Advisory apprised of case developments.
Due Process for Lien Filing
Generally, within five business days after a Notice of Federal Tax Lien (NFTL) is filed, Letter 3172(DO), Notice of Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320, 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,Appeals Process and Claims for Damage.
If the notice requirements in IRM 188.8.131.52.1 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 as a matter of policy, no notices of levy will be issued during the administrative or judicial appeal. See IRM 184.108.40.206.3(4),Levy Action during the Period of the Collection Due Process Hearing for a description of when property can be levied during the appeal of an NFTL filing.
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 220.127.116.11.1 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).
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 compromise has been closed before issuing the levy.
After the 30 days run out following rejection of the offer, allow an additional 15 days.
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 territory manager or a second level Insolvency/Technical Services-Advisory manager must approve the jeopardy levy.
If the notices described in IRM 18.104.22.168.1 have been sent, and the time periods have passed, the appeal process in IRM 22.214.171.124, Appealing the Jeopardy Levy, does not apply. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate, or Appeals. If possible, consult with Counsel before the levy is served.
If the notice requirements in IRM 126.96.36.199.1 have not been satisfied, see IRM 5.11.3,Jeopardy Levy Without Jeopardy Assessment, for required procedures and approval level.
Notices of levy can be served if the taxpayer waives the restriction, in writing.
See IRM 188.8.131.52,Offers Submitted Solely to Delay Collection.
If an offer in compromise is made solely to delay collection, levies can be served to collect the tax. The provisions in IRM 184.108.40.206.9(4) also apply to such levies.
Special Treasury Fund
Members of the military and Public Health Service employees may deposit money in a Special Treasury Fund, while they are outside the U.S. and its possessions.
Get advice from Associate Area Counsel before attempting to levy money in the Special Treasury Fund. Keep Technical Services-Advisory informed in light of the potential for litigation and wrongful levy actions.
Refer Counsel to Subsection 1035 of Title 10 of the U.S. Code.
Exhibit 5.11.1-1 (06-29-2001)
Guide for Determining Whether Counsel Approval and/or Jeopardy are Required for a Notice of Levy
Requires Jeopardy, Unless There is a TP Waiver Requires Counsel Approval Does TP have IRC 7249 Right to Appeal Jeopardy (see IRM 5.11.3)
1. Pre-levy notices and the waiting periods after them have not passed (IRM 5.11.3) Yes Yes Yes
2. After the pre-levy notices and the waiting periods have passed
a. During refund litigation (see IRM 220.127.116.11.10)
i. Tax periods before 1-1-1999 No Yes No
ii. Tax periods after 12-31-1998 Yes Yes No
b. Nominee, Alter-Ego, (see IRM 18.104.22.168.5) No Yes No
c. Appearance Date of Summons (see IRM 22.214.171.124.5) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
d. During pending or active Installment Agreement (see IRM 126.96.36.199.9) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
e. When an Offer of an Installment Agreement is made merely to delay collection (see IRM 188.8.131.52.9) No No No
f. While rejected Installment Agreement can be or is being appealed (see IRM 184.108.40.206.9) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
g. During pending Offer in Compromise (see IRM 220.127.116.11.12) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
h. When an Offer in Compromise is made merely to delay collection (see IRM 18.104.22.168.12) No No No
i. While pending Offer in Compromise can be or is being appealed (see IRM 22.214.171.124.12) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
j. While payments are being made on an accepted deferred Offer (see IRM 126.96.36.199.12) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
k. Cash Deposited as Security for Bail (see IRM 188.8.131.52.3.1) No (Levy only if collection is at risk) No No
l. Latest warning of enforcement is over 180 days old (see IRM 184.108.40.206.2.6) No ( if no other exception in IRM 220.127.116.11.2.6 applies, serve the levy only if collection is at risk) No No
m. Within the 15 day tolerance following the 30 day L1058 waiting period (see IRM 18.104.22.168.1(5)) Yes No (Counsel approval not required, but consult with Counsel, if possible, before serving the levy) No
n. Levy on Benefit Income, Retirement Income, and Social Security Income (see IRM 22.214.171.124) No No No
o. Repeated levy on the same source (see IRM 126.96.36.199.7) No No No
p. Cash Loan Value of Life Insurance (see IRM 188.8.131.52.1) No No No
q. Levy on both spouses' income (see IRM 184.108.40.206.3) No No No
r. Relocation Act Payments (see IRM 220.127.116.11.4) No No No
s. Foster Care Payments No No No
t. Medicare Payments (see IRM 18.104.22.168.1) No No No
u. Funds Held in pensions and retirement plans (including IRAs) that the levy withdraws as a Lump Sum (see IRM 22.214.171.124) No No No
v. Death Benefits (see IRM 126.96.36.199.5) No No No
w. United Nations employees' salaries (see IRM 188.8.131.52) No No No
x. Restitution payments for Japanese WWII internment (see IRM 184.108.40.206.6) No No No
Exhibit 5.11.1-2 (06-29-2001)
Letter 1696(P) (Rev. 1–90)
(Reference IRM 220.127.116.11.2)
Social Security Number:
Person to Contact:
(Name and Address of Levy Source)
The enclosed notice of levy is for the collection of a delinquent child support obligation as authorized by section 6305 of the Internal Revenue Code. The following exemptions from levy under Code sections 6334(a)(4), (6), and (8) listed on the back of Part (Insert " 2" , if Form 668-W(ICS) is enclosed. Insert "1" , if Form 668-A(ICS) is enclosed). of the levy do not apply:
1) Unemployment benefits,
2) Certain annuity and pension payments, and
3) Judgments for support of minor children unless the funds are actually withheld because of a garnishment under the judgment.
If you have any questions, please contact the person whose name and telephone number are shown above.
(Place for signature)
Notice of levy
Letter 1696(P) (Rev. 1–90)
Exhibit 5.11.1-3 (06-29-2001)
Letter 3174 (P) (Rev 1–1999)
(Reference, IRM 18.104.22.168.1.1, IRM 22.214.171.124.2.3, & IRM 126.96.36.199.2.6)
Social Security Number or Employer Identification Number
Person to Contact:
Although we previously sent you a notice of our intention to collect your unpaid tax through enforced collection, our records show that you still have not paid the amount you owe. Enforced collection may include placing a levy on your bank accounts, wages, receivables, commissions, etc. It could also involve seizing and selling your property, such as real estate, vehicles, or business assets.
To prevent collection action, please pay the amount you owe by mm-dd-yyyy. (dual notice language - To ensure that you and your spouse receive this notice, a copy is being sent to each of you. Each copy contains the same information related to your joint account. Any amount you owe should be paid only once.) Make your check or money order payable to United States Treasury, and write your social security number or employer identification number on it. Send your payment to us in the enclosed envelope with a copy of this letter. The amount you owe is:
Form Tax Unpaid Amount Additional Additional Amount
Number Period From Prior Notices Penalty Interest You Owe
If you recently paid this or if you can't pay it, call as soon as you get this letter. Our telephone number is at the top of this letter. If you disagree with our taking enforcement action, you may be able to work out another solution. Speak to the person whose name appears at the top of this letter, or ask for that person's manager. If you do not agree with the results, you may fill out Form 9423, Collection Appeals Request, to ask for Appeals consideration.
The unpaid amount from prior notices may include tax, penalties, and interest you still owe. It also includes credits and payments we have received since our last notice to you.
Copy of Letter