The IRS uses various means of collection. This section provides guidance on how to coordinate and implement IRS collection efforts with other agencies.

Delegation Order 5-1, found in IRM 1.2.2.6.1.2, Rejection Authority, previously known as 5.1 (Rev 4)

IRC 692(a), Income taxes of members of Armed Forces, astronauts, and victims of certain terrorist attacks on death

IRC 6103(k)(6), IRC 6103(b), and 26 CFR 301.6103(k)(6)-1, Return disclosure

IRC 6331(d), Return of property in certain cases

IRC 6343(e), Authority to release levy and return property

IRC 7508, Time for performing certain acts postponed by reason of service in combat zone or contingency operation

Policy Statement 20-2 (Formerly P-2-4), Penalties and interest not asserted against federal agencies, found in IRM 1.2.1.12.2, provides for non-assertion of penalties and interest against instrumentalities of the United States.

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

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

Field Collection group managers and territory managers are responsible for ensuring compliance with the guidance and procedures described in this IRM.

Field Collection employees are responsible for following the guidance provided in this IRM section.

Program Reports:

Program Reviews:

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

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

This table lists commonly used acronyms and their definitions:

Comprehensive guidance about all topics discussed in this section is not provided. Throughout this IRM section, remain alert for references to other resources, such as IRM references and websites. Access that guidance as needed to ensure a thorough understanding of topics.

Additional resources can be found as applicable in:

The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

Collection employees are authorized to disclose return information to the extent necessary to obtain information which may be related to a collection investigation and which is not otherwise reasonably available. See IRC 6103(k)(6) and 26 CFR 301.6103(k)(6)-1. No special permission or authorization is needed to make investigative disclosures under the circumstances and conditions described in 26 CFR 301.6103(k)(6)-1, so long as the collection employee is performing official duties for collection activity. It is important to note that IRC 6103(k)(6) and 26 CFR 301.6103(k)(6)-1 permit the disclosure of return information in the investigatory process, but do not authorize the disclosure of the taxpayer’s return. See IRM 11.3.21, Investigative Disclosure, for more detail on investigative disclosures.

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

To carry out its protective duties the U.S. Secret Service has requested that the IRS provide information (follow IRM 5.1.7.4(4) above to transmit the information):

To carry out its duties regarding investigations of counterfeiting and forgery, the U.S. Secret Service has requested that the IRS supply information (follow IRM 5.1.7.4 (4) above to transmit the information):

Prepare a memorandum to the Criminal Investigation (CI), Director, Field Operations, and forward it through the field territory manager. The memorandum will state:

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

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

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

Maintain any collection case file containing compelled information so that:

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

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

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

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

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

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

Consider reasonable cause for penalties if the agency has taken action that will assure compliance in the near future, generally within the next six months.

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

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

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

Federal agencies in collection status are to be re-assigned to the centralized Federal Agency Delinquency (FAD) team in the Brookhaven campus. If the case is on ICS, it needs to be re-assigned to FAD, refer to next paragraph for additional guidance. The role of FAD is to assist federal agencies with all compliance related issues, including resolving delinquencies, monitoring compliance, reconciling accounts as well as education to prevent future compliance issues. The CFO office and Federal, State and Local Governments (FSLG) support the program by assisting with case resolution when appropriate. Federal agency delinquency cases should not be worked in Field Collection, except in special circumstances. If you receive a federal agency delinquency case in your inventory without indication the case is an official referral, inform your group manager as soon as possible. Do not contact the federal agency. See IRM 5.1.7.6.2.1 for further guidance.

As of July 2015, FAD inventory was transitioned and is currently monitored on ICS under ICS assignment code 0100-8300. Since cases are not subject to enforcement actions, a final notice is not issued and the module is accelerated to status 26 within 5-6 weeks from the assessment date.

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

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

Prior to contacting a federal, state, or local government entity, the revenue officer and/or manager should contact FSL/ET. An encrypted e-mail will be sent to *TEGE FAST or tege.fast@irs.gov; Subject-Assignment of FSL/ET Collection Case. Provide the EIN and entity name in the body of the e-mail.

Upon receipt of the e-mail, the FSL/ET analyst will provide the following information:

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

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

Our computer systems display the indicator by the following literals:

FERDI del ret cases are further identified by SELECTION CODES 12 or 93. Cases for tax years 2000 and prior are identified by SELECTION CODE 93. Tax Years 2001, 2002 and 2003 cases are identified by SELECTION CODE 12 where the BOD is WI and SELECTION CODE 93 where the BOD is SB/SE. Starting with Tax Year 2004, SELECTION CODE 12 will be used to identify all FERDI Del. Ret cases.

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

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

If this research is inconclusive, contact as needed:

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

If you are sure the taxpayer is not receiving a federal salary or pension, reverse the federal indicator code with TC 972, Action Code 51. After three cycles, the system will no longer block case closures listed below in IRM 5.1.7.7.2 (2).

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

The following balance due module dispositions are blocked:

The following delinquent return module dispositions are blocked:

Attempts to close cases in these ways will cause an unpostable condition and result in an error message or re-issuance of the case.

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

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

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

When entering into installment agreements with federal employees, use of payroll deduction agreements (PDIA) is encouraged, but not required.

A FERDI case may be closed Currently Not Collectible (CNC) (hardship), if the taxpayer is unable to pay reasonable basic living expenses. Generally, these cases involve insufficient income and insufficient equity in assets to make any payment without causing hardship. See 5.16.1.2.9, Hardship. Conduct a full financial analysis in order to determine the correct resolution of the case.

To resolve accounts when the taxpayer meets the criteria for CNC (hardship) but has unfiled returns, ACS employees will follow the guidance in IRM 5.19.18.5.10.2, Currently Not Collectible (CNC) - Hardship, and Field Collection employees will follow the guidance in IRM 5.16.1.2.9, Hardship.
Reminder: Levies cannot be issued or left in place if the taxpayer meets the criteria for CNC (hardship).

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

Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and you cannot resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer "same day" cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. See IRM 13.1.7.4, Same Day Resolution by Operations. When you refer cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance and Request and Application for Taxpayer Assistance Order and forward to TAS.

Remove the IRS employee indicator using TC 972 AC 191 if, after investigation, you determine that:

If the above conditions are met and you determine the taxpayer is not a federal employee or retiree, also remove the FERDI indicator using TC 972 AC 51. See IRM 5.1.7.7.1(9).

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

Collection personnel (revenue officers) will use the following procedures to suspend BMF del ret and bal due accounts of taxpayers deployed to a combat zone.

To suspend BMF accounts of taxpayers deployed to a combat zone, the taxpayer must meet all of the following criteria:

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

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

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

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

In addition, the IRS may have previously identified the taxpayer as combat zone personnel by entering a "C" freeze on Masterfile.

The combat zone freeze code suspends:

Request input of TC 500 (-C Freeze) with the appropriate closing code(CC) to initiate the combat zone freeze, complete Form 4844, Request for Terminal Action, and include the combat zone entry date:

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

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

If a taxpayer requests a military deferment, send the taxpayer Letter 1175-C, Collection Postponed During Initial Period of Active Military Service, and request any delinquent returns be filed. All delinquent returns should be filed through the revenue officer to ensure expedited processing.

Suspend collection action for 60 days to allow the taxpayer to respond to Letter 1175-C. If the completed Letter 1175-C is not received after 60 days, resume collection action with the group manager's approval. You should document the case file indicating approval by the group manager and the date the approval was received. If information becomes available indicating that the taxpayer is not in military service or is merely seeking unjustifiably to delay payment, resume collection action after receiving the approval of the territory manager.

If received, review the completed Letter 1175-C to determine the taxpayer's eligibility for a deferment. The letter should include the taxpayer's name, social security number, affected tax periods, monthly income and source of income before military service, current monthly income, description and amount of expenses incurred because of military service if current monthly income is greater than monthly income before military service, military rank, date entered into military service, and date they are eligible for discharge. A copy of the taxpayer's orders is helpful but not required. Review the taxpayer correspondence for the following information:

If the taxpayer is entitled to a deferment:

Territory manager approval is required to deny the taxpayer's request for military deferment. If the taxpayer is not entitled to a deferment, prepare Letter 3079C, Denial of Military Deferment, for the signature by the territory manager. If the taxpayer provided a copy of his or her military orders or reporting instructions no later than 180 days after the date of termination or release from military service, include the optional sentence in Letter 3079C that the taxpayer is eligible for the reduced interest rate. Follow the procedure in IRM 5.1.7.12.2(3) to provide the taxpayer with the reduced interest rate. Enclose a copy of Pub. 1, Your Rights As a Taxpayer, and Pub. 594, Collection Process. Place a copy of the letter in the case file and resume collection action.

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

Interest (and failure to pay penalties) do not accrue during the deferment on any tax for which collection is deferred under SCRA. See 50 U.S.C.A. § 4000(b). See IRM 20.2.7.12, IRM Military Deferment. However, the taxpayer remains liable for any interest which accrued before the beginning date of military service. Interest will also accrue while the tax remains unpaid after deferment ends.

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

Direct all responses from the taxpayer as a result of notices sent out, to the campus.

Military accounts where the taxpayer makes a specific inquiry about a military deferment in response to a notice request for payment of individual income tax, the campus will accelerate the account to bal due status, place the correspondence in the suspense file for attachment to the bal due when assigned to Field Collection and process in accordance with procedures in IRM 5.1.7.12.1.