5.21.3. Collection Tools for International Cases

(1) Purpose. This IRM provides guidance to ROs on collection tools for International cases.

(2) Audience. These procedures and guidance apply to Small Business/Self-Employed (SB/SE) Field Collection (FC) ROs, FC revenue officer group managers (RO GMs), territory managers and area directors; however, employees in other organizations and functions may also refer to these procedures as appropriate.

(3) Authority. Congress has delegated to the IRS the responsibility of administering the tax laws, known as the Internal Revenue Code, found in Title 26 of the United States Code. Congress enacts these tax laws, and the IRS enforces them.

(4) Policy Owner. The Director, Collection Policy is the policy owner.

(5) Program Owner. The program owner is Collection Policy, Global Strategic Compliance, within the Small Business Self-Employed (SB/SE) division.

(6) Primary Stakeholders. The primary stakeholders are SB/SE Field Collection (FC).

(7) Program Management and Review. International Reviews:

1. Collection Policy will conduct ad hoc International program reviews as necessary to verify compliance with IRM requirements and to address Treasury Inspector General for Tax Administration/U.S. Government Accountability Office findings.

2. Case reviews are conducted by FC RO GMs to ensure compliance with this IRM.

3. Operational reviews are conducted by the Territory Manager and Area Director annually to evaluate program delivery and conformance to administrative and compliance requirements.

(8) Program Goals. In working a Collection case, ROs may find indications the taxpayer resides outside of the U.S. or owns assets that are located outside the borders of the U.S. ("offshore"). Collecting from these taxpayers can present unique challenges. Assisting ROs with understanding how to approach the challenges presented with offshore taxpayers is one of the goals of this program.

(9) Contact Information. Recommendations and suggested changes to this IRM should be e-mailed to the Content Product Owner. The owner is indicated on the Product Catalog Information page which is found in the Form/Pubs/Products IRM listing of the Media and Publications web site.

(1) Additional information and guidance on international collection issues can be found in the following IRM sections:

1. See IRM 5.21.1, Overview through IRM 5.21.8, Adjustments to International Cases for additional information on international collection issues.

2. See IRM 5, Collecting Process for additional information on general FC issues such as initial contact, courtesy investigations, special rules on mailing correspondence, TECS (formerly known as the Treasury Enforcement Communication System) and international currently not collectible closing code 06.

(2) Additional information can also be found at Knowledge Management, Collection Floor, International Tools and Actions & Examination Floor, International pages.

(1) There are instances where funds held offshore can be reached by a levy if the bank has a branch in the U.S. or in a territory of the U.S.

(2) Treasury Regulations 26 C.F.R. 301.6332–1(a)(2) outlines the procedures for levy when a bank is in business in the U.S. with deposits held in a branch outside the United States.

(3) The regulations provide two different sets of procedures with regard to a levy on bank deposits held in offices outside the United States depending on whether or not the taxpayer is or is not within the jurisdiction of the U.S. court at the time the levy is made.

1. If the taxpayer is within the jurisdiction of a U.S. court at the time the levy is made, then the notice of levy must specify that the Area Director intends to reach such deposits and that the bank is in possession of (or obligated with respect to) such deposits in an office outside the U.S. or a territory of the U.S.

2. If the taxpayer is not within the jurisdiction of the U.S. court at the time the levy is made, then the notice of levy must specify that the Area Director intends to reach such deposits, that the bank is in possession of (or obligated with respect to) such deposits in an office outside the U.S. or a territory of the U.S., and that such deposits consist, in whole or in part, of funds transferred from the U.S. or a territory of the U.S. in order to hinder or delay collection of the tax imposed by the Code.

(4) The following is an example of one type of situation in which a levy should be made on a domestic branch of a financial institution to reach funds held offshore.

(5) Research available sources to locate the foreign bank account. FATCA research needs to be conducted if a FATCA indicator is present on ICS.

(6) Check IDRS command code IRPTR which may indicate:

1. Foreign investments if federal taxes are withheld,

2. Transfer of funds in the taxpayer's domestic bank, and/or

3. The type of income/form received by the taxpayer's domestic bank in the Financial Crimes Enforcement Network Query System (FCQ).

(7) Check IDRS command code RTVUE to determine if the taxpayer has filed Form 8938, Statement of Specified Foreign Financial Assets. The "CC CD" indicator (or Computer Condition Code) will include an "H " to indicate that Form 8938 was filed. If Form 8938 has been filed, ESTAB the return to view the return information. This may lead to identification of a foreign account or asset.

(8) Prepare the notice of levy and write this statement on the front of the notice: The Area Director intends to attach funds held outside the U.S. or U.S. Territory. Prepare a memorandum to Area Counsel and include as much specific information as possible regarding

• Account numbers,

• Information linking the accounts to the foreign account,

• Financial statements/records,

• Third-party testimony, and

• Testimony from the taxpayer.

(9) Area Counsel will return the package to Advisory who will forward it to the RO. If the notice of levy is approved by Area Counsel, the RO will sign the notice of levy as the delegate of the Area Director. There may be circumstances where the RO must perfect the approved notice of levy prior to signing. For example, the RO may need to follow Area Counsel direction as to specific language required on the notice of levy or the RO may need to update the penalties and interest on the notice of levy.

(10) Serve the notice of levy in person at the domestic branch, if possible, or send the levy via certified mail.

(1) Writ Ne Exeat Republica is an action authorized by IRC 7402(a). Writ Ne Exeat Republica is the appropriate suit action when the taxpayer:

• Is about to leave the U.S. and is unlikely to return to the U.S., or

• Has left the United States but is likely to return and may be subject to detention by the writ, and

• Has conveyed or concealed cash or other property so that it may be taken out of the U.S.

(2) A Writ Ne Exeat Republica is an action against a person, not property. It is a temporary remedy, and not intended to operate as a perpetual restriction upon a taxpayer’s freedom of movement.

(3) Writ Ne Exeat Republica is usually filed in conjunction with some other civil action against the taxpayer such as a Suit to Foreclose the Federal Tax Lien, a Repatriation Order, or a Summons Enforcement. The purpose of a Writ Ne Exeat is to preserve the court’s power to provide a means of protecting the government’s ability to collect the tax by another means. The writ ne exeat republica is filed to prevent taxpayers from removing themselves and their assets from the territorial jurisdiction of the U.S. The RO will have to show that the other civil action they propose will not be enforceable unless the defendant is prevented from removing himself or his assets from the country.

(4) Consider these factors when determining whether or not to file a Writ Ne Exeat Republica:

1. Taxpayer has a large valid tax liability,

2. Taxpayer has transferred, or is in the process of transferring, substantially all of his assets to a location outside the United States,

3. Distrainable domestic property and other property reachable without the writ are insufficient to satisfy the tax liability,

4. Other proposed civil action will not be enforceable unless the taxpayer is prevented from removing themselves or their assets from the United States,

5. Taxpayer established residency outside the United States or intends to do so,

6. Taxpayer's assets cannot be reached absent the issuance of the writ.

(5) Before recommending a suit seeking a Writ Ne Exeat Republica:

1. Exhaust meaningful enforcement against domestic property.

2. Document the taxpayer’s location.

3. Document taxpayer attempts to conceal or gather property in anticipation of transfer.

4. Document time and location of likely return of the taxpayer if out of the country.

(6) If the taxpayer is not in the United States, secure evidence they are likely to return at a specific time and place. This is needed to establish jurisdiction. It is also important to demonstrate the taxpayer is expected to remain in the U.S. for a short period of time. If the taxpayer is returning to the U.S. permanently, a Writ Ne Exeat Republica is not appropriate. Sources for this evidence include:

• A notification from a taxpayer’s placement on TECS or a response to a request for historical travel information from TECS that may establish a U.S. entrance pattern of the taxpayer’s.

• Court records of pending required appearances in ongoing cases.

• Third parties’ testimony.

(7) Develop a request for a Writ Ne Exeat Republica, as applicable. Pay careful attention to the personal circumstances of the taxpayer, such as age, health, family status, and employment. Specific facts that must be covered are as follows:

1. Passport status, citizenship,

2. Taxpayer address, both domestically and internationally,

3. Past travel history of taxpayer,

4. CSED of tax liabilities,

5. Personal and family associations and circumstances,

6. Business activity and associations, and

7. Taxpayer owned financial accounts.

(8) The steps to initiate a suit requesting a Writ Ne Exeat Republica are as follows:

(9) A Writ Ne Exeat Republica and the corresponding order may be

• Issued before judgment, if necessary, due to time constraints,

• Provided for in a final decree, or

• Issued after judgment is established.

(10) Writ Ne Exeat Republica provisions generally include that the taxpayer is

• To be detained and taken into custody unless they post adequate security for the outstanding tax liability.

• To remain in custody pending a final evidentiary hearing on the writ.

• Required to provide testimony and documentation as to the value and extent of all assets.

• Prohibited from transferring or encumbering assets.

(11) After a Writ Ne Exeat Republica is issued:

• Coordinate with Area Counsel. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).

• The taxpayer is detained and served with the writ. If they have moved abroad, this occurs when they reenter the country.

• The taxpayer is taken into custody, unless they can post adequate security for the outstanding tax liability.

• The taxpayer remains in the custody of the United States Marshal until the matters addressed in the order are resolved.

(1) A Customs Order or Prevent Departure Order is an administrative action similar to the Writ Ne Exeat Republica. A Customs Order can prevent a non-U. S. Citizen from exiting the United States, pending the resolution of a collection matter.

(2) The authority for a Customs Order is found in 22 C.F.R. 46.2(a) which states in part "...No alien shall depart, or attempt to depart, from the United States if his departure would be prejudicial to the interest of the United States under the provisions of 46.3." In addition, C.F.R. §46.3(h) applies to a collection investigation where it states, in part, "Any alien who is needed in the United States in connection with any investigation or proceeding being, or soon to be, conducted by any official executive, legislative, or judicial agency in the United States or by any governmental committee, board, bureau, commission, or body in the United States, whether national, state, or local."

(3) Coordinate with Area Counsel before requesting a Customs Order or Prevent Departure Order. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International).

(4) If the alien is found attempting to exit the U.S., they will be detained and the RO will be notified and requested to provide instructions to the Customs officer.

(1) The Appointment of a Receiver is a civil action brought in the U.S. District Court under the authority of IRC 7402(a).

(2) A receivership places a responsible individual, known as the receiver, who works under the direction of the court in control of the taxpayer’s assets. The receiver controls and conserves the assets or liquidates the assets in an orderly and efficient manner.

(3) Appointment of a Receiver is usually in conjunction with a repatriation order and/or a Writ Ne Exeat Republica. For domestic assets, a Suit to Foreclose the Federal Tax Lien may accompany the Appointment of a Receiver.

(4) When considering Appointment of a Receiver, the following conditions must exist:

1. Assets in the U.S. are not sufficient to satisfy the liability, and

2. Evidence shows substantial assets exist outside the U.S.

(5) The receiver is not an agent or representative of the Government. They act under the control and authority of the court and may make decisions which are not favorable to the Government.

(6) A receiver’s duties include:

• Conserving the property subject to the Federal tax lien,

• Maintaining the business as an ongoing concern,

• Returning the property to its owners when all parties have been satisfied,

• Liquidating the business to pay creditors and

• Filing all tax returns which come due during the control of the business.

(7) Consult Area Counsel prior to considering a request for an Appointment of a Receiver. Area Counsel will coordinate as necessary with the Office of Associate Chief Counsel (International). Develop a request for an Appointment of a Receiver as applicable.

(1) A Repatriation Order is an order issued by a federal judge, after a hearing, requiring a taxpayer who has either transferred assets from the U.S. to a foreign country or acquired assets in a foreign country to transfer them back into the United States.

(2) A Repatriation Order must show:

1. An outstanding tax liability,

2. A reasonable basis that the taxpayer has assets outside the U.S.,

3. Levy on domestic assets is not sufficient to satisfy the tax liability, and

4. The U.S. is able to get personal jurisdiction over the taxpayer. The RO must show that the taxpayer is either in the U.S. or a U.S. Territory or the likelihood that the taxpayer will be returning to, or passing through, the United States.

(3) Before recommending a suit seeking a Repatriation Order:

1. Exhaust meaningful enforcement against domestic property.

2. Determine the nature, value and location of the foreign property.

3. Consider making an Exchange of Information (EOI) request to a foreign country pursuant to a U.S. tax treaty or tax information exchange agreement (TIEA), to confirm the existence and value of property located in that country. See IRM 5.21.2.2, Exchange of Information, for additional information. Under no circumstances should contact be made with a foreign tax authority without going through the office of the U.S. Competent Authority. The IRS can also obtain information from a U.S. territory tax department under exchange of information provisions contained in a U.S. territory tax coordination agreement. See IRM 5.21.2.2.3, Exchange of Information - U.S. Territories, for additional information.

4. Serve a levy on the domestic bank branch of a foreign banking institution if the property is held in a United States branch. Enforce the levy as needed.

5. Check to see if the United States has entered an income tax treaty with a foreign country that contains comprehensive mutual collection provisions (a Mutual Collection Assistance Request or MCAR). If the U.S. has an MCAR arrangement with the applicable country, make an MCAR request rather than seeking a repatriation order. SeeIRM 5.21.7.4, Mutual Collection Assistance Requests (MCAR), for additional information on the MCAR program.

6. Under no circumstances should contact be made with a foreign tax authority without going through the Office of the U.S. Competent Authority.

7. Document all action in the ICS history.

(4) The steps to initiate a Suit to Repatriate Property are as follows:

(5) If the suit is successful, the court will order the taxpayer to return the property to the United States.

(6) Consider a Repatriation Order in concert with all other possible actions that fit the facts of the case such as Appointment of a Receivership, a Suit to Reduce the Tax to a Judgement, and a Writ Ne Exeat Republica.

(1) The IRS can request assistance from certain treaty partners to collect taxes owed by individuals residing and/or having assets in the treaty country. This request is an outbound MCAR. There are six mutual collection income tax treaty partners:

• Canada

• Denmark

• France

• Japan

• The Netherlands

• Sweden

(2) These treaties provide that each of these countries, upon request by the United States, may take whatever actions it would take to collect its own taxes in order to collect on behalf of the United States. This includes the collection of U.S. taxes through the treaty partner's bankruptcy proceedings. See IRM 5.21.7.4.8, Outbound Mutual Collection Agreement Request, for guidance on issuing an outgoing MCAR request.

(1) This IRM provides guidance on cases that meet the definition of an international case as defined in IRM 5.21.1.2, Definition of an International Case. Simultaneous use of international tools helps the ROs (ROs) understand the issues involved and the steps necessary to move the case to resolution.

(2) A RO assigned a collection case with a U.S. domestic address may encounter international aspects during a case investigation. Simultaneous use of international tools is strongly recommended for effective case resolution when international aspects are present in the case, such as

• Foreign Bank and Financial Account Reports (FBAR), FinCEN 114 present on IRPTR

• Form 2555, Foreign Income Exclusion, filed with the taxpayer’s Form 1040 , Individual Income Tax Return.

• Taxpayers with investments in foreign entities

• Indicators of FATCA records on IDRS, ICS or CKGE

• Frequent travel outside the U.S.

• Transfers of funds to foreign financial institutions

• Taxpayer’s financial records show charges for foreign currency conversion

• Taxpayer’s business includes foreign customers or taxpayer has foreign expenses on credit card statements

• Taxpayer resides in the U.S. but is not a U.S. citizen or is a dual-status citizen

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