Purpose: This Internal Revenue Manual (IRM) section describes the process and procedures for preparation of a jeopardy levy. Specifically, the IRM section discusses:

Audience: This IRM is designed for use by revenue officers, Civil Enforcement Advice and Support Operations (CEASO) employees, and their managers.

Policy Owner: Director, Collection Policy. Collection Policy is an organization under Small Business/Sell-Employed Division (SBSE), Collection.

Program Owner: SBSE Collection Policy, Enforcement.

Primary Stakeholders: SBSE revenue officers and Civil Enforcement Advice and Support Operations (CEASO) employees.

Program Goals: Enforcement is a necessary component of a voluntary assessment system, see IRM 1.2.1.6.1, Policy Statement 5-1. While we will actively assist taxpayers to comply, we will also take appropriate enforcement actions when warranted to resolve the delinquency. Levies are an important enforcement tool. By following the procedures in this IRM, revenue officers will be able to identify jeopardy levy situations, and properly prepare, issue, and address appeals of jeopardy levies.

Generally, if collection is in jeopardy, there is a jeopardy or termination assessment. Then there is an immediate notice and demand which is followed by a jeopardy levy. Sometimes, however, there may already be an assessment before jeopardy is known and in some of those cases, collection under regular procedures may have begun before the jeopardy is known.

A taxpayer must be offered IRC 7429 appeal rights when:

A taxpayer must be offered Collection Due Process (CDP) rights pursuant to IRC 6330 (f) within a reasonable period of time after the levy when the taxpayer has not been offered a hearing previously for the taxable period for the type of tax subject to the levy.

A taxpayer will be offered an appeal under the Collection Appeals Program (CAP) when the taxpayer is not entitled to either CDP appeal rights or IRC 7429 appeal rights, and when the taxpayer who is entitled to such rights has declined them.

Situations in which a taxpayer may request an appeal under CAP can arise in the following situations in which the IRS is generally prohibited from levying, but for which an exception for jeopardy levy has been provided:

Hereafter, any reference to jeopardy levy in this section shall refer only to a jeopardy levy without a jeopardy or termination assessment unless otherwise noted.

Advance notice of third-party contacts may not be required in jeopardy situations, pursuant to IRC 7602(c)(3)(B). See IRM 25.27.1.3.2, Exceptions to IRC 7602(c) Notification Requirements, for further discussions of third-party contact requirements.

A jeopardy levy requires a condition that would have allowed a jeopardy assessment.

See the IRS Policy Statement 4–88, Jeopardy assessments to be used sparingly and assessment to be reasonable in amount in IRM 1.2.1.5.27, regarding jeopardy assessments.

If the collection of an assessed tax is in jeopardy, prepare either a written report or a narrative Integrated Collection System (ICS) history entry for the territory manager requesting approval to issue a jeopardy levy. Include the same information that is needed for a jeopardy assessment. See IRM 5.1.4, Jeopardy, Termination, Quick and Prompt Assessments. Send the request through the group manager.

The managerial approval process may be accomplished by having the group manager and territory manager access ICS and document their approval with a history entry. Electronic signature by the approving official is an acceptable method of written approval. When written or electronic approval is secured, a copy of the approval must be kept in the file and the RO will document the ICS history.

Per IRC 7429, Chief Counsel must approve in writing a jeopardy levy before it is made. See IRM 1.2.2.6.3(2), (14), (15) (20) and (21), Delegation Order 5-3 (Rev. 1). Forward the ICS history entry or written report approved by the group manager and territory manager along with a draft of Letter 2439/Letter 2439-A and a draft of Letter 2438 , if warranted, to Counsel via local Counsel Sharepoint. Contact Counsel for access to their Sharepoint site or for guidance on how to route the documents if no Sharepoint exists.

When all appropriate approvals for issuance of a jeopardy levy are secured, the revenue officer may generate the levy on ICS, sign, and issue it.

When securing written approval, include Letter 2439/Letter 2439-A, Notice of Jeopardy Levy and Right of Appeal, and when warranted Letter 2438 , Jeopardy Levy Letter to Third Party Levy Recipient, for the territory manager's signature. If approval is secured via ICS, then sign the letter, and write "on behalf of" above the territory manager's name and title.

Use Parts 3 & 4 of Form 3552 to make immediate notice and demand. Cross out "Please return this copy with your payment to the address shown above" at the bottom of the form. If a blank Form 3552 is not available, copy the text of one on IRS letterhead stationery or print one off the Publishing website. Have the territory manager sign this, too, when the notice of levy is approved or sign for the territory manager if approval is secured via ICS.

See IRM 1.2.2.6.3(20) Delegation Order 5-3 (Rev. 1) for all position titles with the authority to issue notices of levy when collection is in jeopardy and the pre-levy notices have not been issued and/or the waiting periods after the notices have not passed or the general levy prohibition exists.

If time constraints or other conditions prevent securing territory manager written or systemic approval, the territory manager can approve the levy by telephone. When this occurs, write a narrative ICS history entry or a memo to file including the information that would have been in the report described in (1). Send a copy of the memo to file to the territory manager.

The forms and letters that are needed depend on the timing of the jeopardy levy. The process is somewhat simplified because Letter 2439/Letter 2439-A allow for the selection of the appropriate appeals right information (IRC 7429, CDP, or CAP).

Use the ICS L2439/2439-A template to choose the correct appeal rights paragraph. In some situations the IRS will offer the taxpayer appeal rights under both IRC 7429 and IRC 6330 and the taxpayer will choose which procedure to use. If, however, the IRS previously issued a pre-levy CDP notice for a tax period covered by the jeopardy levy, the taxpayer is not entitled to a post-levy CDP notice and hearing for that tax period.

When the levy includes multiple periods ensure the appeal rights paragraph selected applies to all periods listed on the L2439/2439-A. This may require issuing more than one L2439/2439-A for the corresponding periods to which the appeal rights applies. For example CDP appeal rights may apply for some periods but for other periods only CAP rights apply.

In addition to notices of levies and federal tax liens the forms and letters needed for jeopardy levies are:

When the jeopardy levy is to be issued to a third party who is in possession of the taxpayer’s property or property rights, prepare Letter 2438 when warranted to include with the notice of levy. Additional time may be warranted based on the unique factors of each case. This letter asks the party in receipt of the levy to delay sending payment for 45 days because the taxpayer is entitled to certain appeal rights but warns not to let the taxpayer have the funds that have been attached during that period. This allows time to see if the taxpayer appeals. If the taxpayer successfully appeals, the levy may be released rather than issuing a manual refund.

The taxpayer must be told the reason collection is in jeopardy. Use Letter 2439/Letter 2439-A, to communicate this by choosing the appropriate reason from IRM 1.2.1.5.27(5) . Avoid saying anything in the letter that could identify a confidential informant.

If an immediate notice and demand is required, give the altered Form 3552 to the taxpayer and demand immediate payment. If personal delivery is not practical, send it by certified mail to the last known address. If a field visit to deliver the form reveals the address is not good, check IDRS for a new one.

When the immediate notice and demand is issued, or if it is not required:

When warranted, include Letter 2438 with each notice of levy.

Try to give the letter identified in IRM 5.11.3.5 (4) to the taxpayer in person. Since immediate notice and demand is something that should be given to the taxpayer as early as possible, it does warrant an unannounced field call. Revenue officers should consider pairing with a manager or another revenue officer for an unannounced field call. If a field visit to deliver the letter reveals the address is not good, check IDRS for a new one. The Letter 2439/Letter 2439-A) mailing method is the same as the Letter 1058 mailing method required in IRM 5.11.1.3.3.3, Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in Field Collection.

If the taxpayer has not previously had a CDP hearing for any period on the jeopardy levy, the L2439/2439-A serves as the CDP notice for that period. Input the CDP notice Transaction Code (TC) 971 codes manually using Form 4844, since CDP notice TC971 codes cannot currently be input for L2439/2439-A systemically through ICS. See IRM 5.11.1.3.3.3, Issuing Notice of Intent to Levy/Notice of a Right to a Hearing in Field Collection, for guidance on the correct action code to use with TC 971.

In certain situations a taxpayer must be offered an appeal under IRC 7429 or in CDP under IRC 6330. See IRM 5.11.3.2 (2) and (3), respectively. As indicated at IRM 5.11.3.5(2), the taxpayer may have the option of obtaining an administrative and judicial determination on the jeopardy action in an expedited proceeding under IRC 7429 or in a CDP hearing under IRC 6330 that makes the determination under IRC 6330(f).

The issue on review under IRC 7429 is whether the jeopardy levy is reasonable under the circumstances (collection is truly in jeopardy). If the Independent Office of Appeals (Appeals)sustains the jeopardy levy, the taxpayer may obtain judicial review of the jeopardy levy. The decision of the court regarding reasonableness may not be appealed to a higher court.

The issue on review in CDP is whether the IRS’s finding that use of a jeopardy levy under IRC 6330(f) was appropriate, is reasonable. If Appeals sustains the jeopardy levy, the taxpayer may obtain judicial review of the jeopardy levy issue as part of the CDP proceeding.

If a taxpayer challenges the reasonableness of the jeopardy levy under IRC 7429, the taxpayer is precluded from raising the jeopardy action under IRC 6330(f) in the CDP proceeding.

If the taxpayer has not received a pre-levy CDP notice, the IRS will provide a CDP notice within a reasonable amount of time after the jeopardy levy. Treas. Reg. 301.6330–1(a)(3)Q& A-A5. Issuance of the L2439/2439-A with enclosures meets the CDP notification requirement. If Form 3552 giving notice and demand has not been given the IRS will issue the L2439/2439-A(CG) containing CDP rights language at the same time as issuance of Form 3552. If Form 3552 has already been issued the IRS will issue the L2439/2439-A(CG) containing CDP rights language within 5 days of serving the jeopardy levy notice.

The taxpayer has 30 days from the date of the CDP notice given in L2439/2439-A(CG) to request a CDP hearing. The taxpayer must request a CDP administrative hearing in order to request judicial review. See IRM 5.1.9, Collection Appeal Rights, for additional information about taxpayers' rights to appeal under IRC 6330.See IRM 5.1.9.3.3.2, Sending Hearing Request to Appeals.

In certain situations a taxpayer may be offered an appeal under CAP. See IRM 5.11.3.2 (5). An appeal of a jeopardy levy under CAP is limited administratively due to the appeal rights afforded specifically to jeopardy levies under IRC 7429 and in CDP. See IRM 5.1.9.4.1, Exclusions from CAP. Taxpayers may not go to court if they disagree with Appeals' decision under CAP. See IRM 5.1.9, Collection Appeal Rights for additional information on CAP.