5.11.1. Background, Pre-Levy Actions, Restrictions on Levy & Post-Levy Actions

(1) This Internal Revenue Manual (IRM) section provides revenue officers and advisors with directions for the levy process which is impacted by IRC 6330, IRC 6331, and IRC 6334, as well as by the Taxpayer Bill of Rights and by IRS policy statements. The procedures in this IRM are designed to ensure levy actions we take are in compliance with law and policy.

(2) The Small Business and Work Opportunity Tax Act of 2007 modified the Collection Due Process (CDP) procedures for certain employment tax liabilities. This Act amended IRC 6330(f) and IRC 6330(h) to permit issuance of a Disqualified Employment Tax Levy (DETL) for collection of certain employment taxes without first giving the taxpayer pre-levy CDP notice. This amendment relates to Forms 941, 943, 944, 945, 940, and CT-1.

(3) The Small Business Jobs Act of 2010 (SBJA) section 2104, amended IRC section 6330(f) and (h)(2) to allow the Collection Due Process (CDP) notice and hearing to occur post-levy with respect to “Federal contractor levies.”

(4) The Taxpayer First Act amended IRC 7602(c)(1) and is effective for notices of third-party contacts and contacts of third parties made after August 15, 2019.

(1) 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 5.11.1.4 for restrictions on levy issuance. All references to property in this subsection include rights to property.

(2) Authorities relating to this section include:

(1) The Director, Collection Policy is responsible for all policies within the levy program.

(2) The Program Manager, Enforcement is responsible for development and delivery of policies within the levy program.

(3) Managers of revenue officers who issue levies are responsible for ensuring these procedures are followed and employee actions are timely and accurate.

(4) Revenue officers are responsible for following the procedures in this IRM.

(1) Integrated Collection System (ICS) is used by field revenue officers as a method for generating levy documents that are issued to third-party levy sources.

(2) The Collection Activity Reports (CAR) report number 5000–24 records the total number of levies issued. Total levies are the sum of Field, SB/SE ACS and W & I ACS (monthly and cumulative). The data sources are the ACS Customer Service Activity Reports (CSAR) - Monthly Support Site Report (ACS Levies) and ICS (Field Levies). See IRM 5.2.4.11, Levy and Seizure Report (Report Symbol NO-5000-24). The IRS has determined that levy data may be made available as national statistics, provided that such data will never be used to evaluate any employee or to suggest or impose production quotas or goals. See IRM 1.5.2, Managing Statistics in a Balanced Measurement System, Uses of Section 1204 Statistics.

(3) Levy program numbers are published yearly in the IRS Data Book, Enforcement: Collections, Penalties & Criminal Investigation, in Table 16 at https://www.irs.gov/uac/enforcement-collections-penalties-criminal-investigation

(4) Targeted program reviews are periodically performed by Collection Policy to determine whether IRM guidance requires clarification or revision.

(5) Management will ensure program effectiveness through managers' case reviews, operational reviews conducted by the territory, Area, and Field Collection Director, and NQRS reviews.

(1) National Quality Review System (NQRS), attribute 417, Managerial Approvals for Enforcement provides independent collection review information from which management may draw inferences regarding overall case quality for this attribute. See IRM 5.13.1, Embedded Quality Administrative Guidelines.

(2) Embedded Quality Review System (EQRS), Collection managers use EQRS, attribute 416, Appropriate Enforcement Tools, and attribute 607, Taxpayer Rights to complete all case reviews for revenue officers.

(3) Certain Notices of Levy must be approved by managers. See IRM 1.2.2.6.3, Delegation Order 5-3 (Rev-1), Levy on Property in the Hands of a Third Party (not to include Levy Form 668-B).

(4) Programing safeguards are built into the ICS system to prevent a levy from being generated on a module where the required notices have not been issued.

(1) Terms associated with the field levy program include:

(2) See Exhibit 5.11.1-1 for list of Acronyms.

(1) The ICS User Guide, Chapter 10 - Levy & Chapter 15 - Forms and Correspondence details all the functions necessary to maintain levy sources, issue levies and final demands, and close or release levies. See Integrated Collection System (ICS) - Book Landing Page (irsnet.gov)

(2) The National Levy Source Look-Up web page provides up-to-date levy source name and address information. See https://acsweb.enterprise.irs.gov/nlsweb/pages/nl08.xhtml.

(3) The MySB/SE, Enforcement web page provides access to various information and job aids related to the levy program. See Integrated Collection System (ICS) - Book Landing Page (irsnet.gov)

(4) 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. For additional information see IRM 1.2.1.2.36, Policy Statement 1-236.

(5) Below are recommended resources, which can be used to address questions on levy guidance

(1) Generally, taxpayers are given an opportunity to request a Collection Due Process (CDP) hearing under IRC 6330, or an equivalent hearing. See IRM 5.1.9.3.1(5) regarding the exception for child support obligations. See IRM 5.1.9.3, Collection Due Process.

(2) The Notice 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 Field Collection on Notices of Levy that have been or will be taken. See IRM 5.1.9.4, Collection Appeals Program.

(3) If a case has been referred to Department of Justice (DOJ) or is otherwise under DOJ jurisdiction, remind the taxpayer that any Collection Due Process (CDP) hearing with Appeals may be suspended until the litigation is resolved. Also remind the taxpayer that actions under control of the Department of Justice are excluded from CAP. See IRM 8.22.6.9, Cases Controlled by Department of Justice (DOJ).

(1) 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. Under these rights taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing. Also, taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

(2) Accordingly, levy determinations are made on a case-by-case basis and revenue officers must exercise good judgment in making the determination to levy. When determining if a levy is appropriate consider the following:

• Anything that the revenue officer knows about the taxpayer's financial condition including economic hardship. If the revenue officer has sufficient information and verified that the levy would cause an economic hardship, the levy should not be issued. While information in the IRS’s records may be sufficient to corroborate the presence of economic hardship, in some cases the taxpayer may need to provide additional information in order to make that determination.

• The taxpayer’s responsiveness to attempts at contact and collection

• The taxpayer’s compliance history

• The taxpayer’s effort to pay the tax

• Whether current taxes are being paid

(3) If contacted by TAS due to a taxpayer's request for assistance, TAS will advise the RO of the reason a hold on collection activity is requested. The RO should highlight actions taken to date, outstanding information requests, advised of appeal rights and/or any other facts that may impact the circumstances of the case. Allow TAS time to work with the taxpayer to resolve the tax problem, action to collect the tax, such issuing a levy, while not prohibited, will generally be suspended. If the RO believes such action is necessary, e.g., the taxpayer is dissipating assets, pyramiding additional liabilities, or other exigent circumstances exist; TAS should be contacted and advised of Collection’s plans in advance.

(1) In most cases, before property can be levied, the taxpayer must be given a:

• Notice and Demand

• Notice of Intent to Levy

• Notice of a Right to a Collection Due Process (CDP) Hearing, and

• Notice of Third-Party Contact

(2) When a Notice of Levy is issued to a third-party, it is a Third-Party Contact (TPC). IRC 7602(c)(1) requires that the IRS provide advance written notification of intent to contact third parties for each module that will be referenced in the TPC. Carefully review each module to determine if the taxpayer received advance TPC notification and that the date of TPC notification is less than one year old. If it has been more than one year since the taxpayer last received advance written notification of TPC, on one or more modules, a new notification is required. Calculate the one year period from the 46th day after the date of the notice, provided the 46th day is the first day of the contact period specified in the letter. Employees may not contact a third-party (levy) until the 46th day following the date of the TPC notice. See IRM 25.27.1, Third-Party Contact Program, for further discussions of TPC requirements

(3) The Notice and Demand required by IRC 6303(a) 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. The taxpayer has 10 days to pay the amount that is owed. If the taxpayer neglects or refuses to pay the amount due, the Federal tax lien arises.

(4) In addition, the taxpayer must be given a Notice of Intent to Levy at least 30 days prior to the date of the 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:

1. Given in person,

2. Left at the taxpayer's home or business, or

3. Sent to the taxpayer's last known address by certified or registered mail.

(5) Generally, the IRS will give taxpayers 10 days to pay the tax liability following issuance of the IRC 6303 Notice of Assessment and Demand for payment, before issuing the IRC 6331 Notice of Intent to Levy and IRC 6330 Notice of a Right to a CDP Hearing. Both the IRC 6331 Notice of Intent to Levy and the IRC 6330 Notice of a Right to a CDP Hearing must be given at least 30 days before the day of the first levy for that tax liability. Treas. Reg. 301.6331-2(a)(1) permits the IRS, in satisfying the 30 day requirement of IRC 6331(d), to issue the IRC 6331 Notice of Intent to Levy at the same time as the IRC 6303 Notice of Assessment and Demand for payment. Also, the IRS may issue the IRC 6330 Notice of a Right to a CDP Hearing at that same time. The IRC 6330 and/or 6331 notices should not generally be issued simultaneously with the section 6303 notice or during the section 6303 timeframe. However, the IRS may determine that waiting 10 days after issuing the IRC 6303 Notice and Demand before issuing the IRC 6331 Notice of Intent to Levy and/or the IRC 6330 Notice of a Right to a CDP Hearing is not in the government's interest if one or more of the circumstances listed below has occurred. The IRC 6330 and /or 6331 notices may be issued simultaneously with the section 6303 notice or during the section 6303 timeframe if the taxpayer:

• is pyramiding employment taxes (in business, not current with FTDs, and two or more trust fund modules assigned to a revenue officer);

• has made to the IRS, for two or more periods, frivolous arguments which are listed in Notice 2010-33, 2010-17 Internal Revenue Bulletin 609, or subsequent updates. See Notice 2010-33 at http://www.irs.gov/pub/irs-irbs/irb10-17.pdf;

• has failed to file required returns for two successive periods or three non-consecutive periods, for which the IRS has prepared substitutes for return (and issued a deficiency notice where applicable), at least one of which is included in current or proposed notices. See IRM 5.1.18.2.2.2, Use of Asset Locator Research Results, when a new address is received from asset locator research.

(6) When a levy is to be served, the taxpayer must also be given a Notice of a Right to a Hearing per IRC 6330. For exceptions, see (7) below. 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 request for certified or registered mail return receipt MUST be included. See IRM 5.1.9.3, 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.

(7) There are four exceptions to the pre-levy notice requirements of IRC 6330.

1. When the collection of tax is in jeopardy under section 6331(a). See IRM 5.1.9.3.13, Jeopardy Levy, State Income Tax Levy Program (SITLP), and Federal Payment Levy Program (FPLP) and IRM 5.11.3, Jeopardy Levy without Jeopardy Assessment.

2. When a levy is served on a State to collect a Federal tax liability from a State tax refund, referred to as the State Income Tax Levy Program (SITLP). 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. See IRM 5.1.9.3.13, Jeopardy Levy, State Income Tax Levy Program (SITLP), and Federal Payment Levy Program (FPLP) and IRM 5.19.9.3.4, SITLP Notices.

3. When a Disqualified Employment Tax Levy (DETL) is served. See IRM 5.1.9.3.14, Disqualified Employment Tax Levy.

4. When a Federal Contractor Levy (FEDCON) is served. A Federal contractor levy is any levy if the person whose property is subject to the levy (or any predecessor thereof) is a Federal contractor. See IRM 5.11.1.6, Post-Levy Actions - Federal Contractor Levy.

   Note: In jeopardy, DETL, SITLP, and FEDCON situations above, the taxpayer will be given the opportunity for a CDP hearing within a reasonable period of time after the levy; i.e., generally within 10 days.

(8) When counting the 10 day or 30 day periods, do not count the day that the notice is given or mailed to the taxpayer. Then, when the time to pay has run out, the next action can be taken on the following day.

(9) The required notices must be sent for each module included on a levy.

(10) See IRM 5.11.6.13.2, Notice to the Non-Liable Spouse, when a levy is to be served on a non-liable spouse in a community property state.

(11) For exception to the third-party contact notice requirements, including jeopardy, see IRM 25.27.1, Third-Party Contact Program.

(1) Generally, a Notice and Demand is sent before a revenue officer receives a Bal Due account. However, if there are existing Bal Dues assigned on ICS, notice modules will be accelerated to Bal Due status resulting in the Notice and Demand being sent by the campus at the time of ICS assignment.

(2) The campus sends the taxpayer the Notice and Demand, unless there is a jeopardy, quick, termination, or prompt assessment.

(3) 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 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 required to establish what is due and the deadline for receipt.

(4) 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.

(1) See Servicewide Delegation of Authority 5-3 (Rev. 1), Levy on Property in the Hands of a Third-Party (not to include Levy Form 668-B) at IRM 1.2.2.6.3, Delegation Order 5-3 (Rev. 1).

(1) Certain Notices of Levy must be approved by managers. See Servicewide Delegation Order 5-3 (Rev. 1).

(2) 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, explain your analysis of that information and why the Notice of Levy should still be served.

• Verification that the amount is still owed, e.g., IDRS confirms 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 and rejected.

(3) Consider the information in IRM 5.11.1.3.1, Pre-Levy Considerations, when determining if the levy is appropriate.

(4) This information must be in writing, but the format can be at local management discretion.

(5) 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. Electronic signature by the approving official is an acceptable method of written approval.

(6) A Notice of Levy that requires the approval of the SBSE 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). The Form 15000, Request for Approval of Levy on Funds in Pension, Retirement Plans or TSP Account will replace the memo when a levy is issued on the assets accumulated in retirement account or TSP account. Complete Form 15000 each time a Notice of Levy is issued on a retirement plan, even if the subsequent Notice of Levy is issued to the same financial entity. Maintain copies of all approvals and rejections in the case file including a printed copy of the electronically executed form.

(7) If a courtesy levy is involved, indicate the required manager has approved of the Notice of Levy.

(1) Notices of Levy that name alter egos or nominees often involve complex issues and are likely to result in litigation.

(2) See IRM 5.12.7.6.1, Nominee NFTLs, and IRM 5.12.7.6.2, Alter Ego NFTLs, as well as, IRM 5.17.2.5.7.1, Alter Ego, and IRM 5.17.2.5.7.2, Nominee, IRM 5.17.14.7, Nominee, Alter Ego, and Transferee Elements, for guidance about whether the facts support such a determination and creating request package.

(3) Document ICS history to summarize case facts that support special condition request.

(4) Request for alter ego and nominee Notices of Levy require group manager approval. 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, see IRM 5.11.1.3.5. Forward the group manager approved request to Advisory for review. Advisory will review and forward the group manager approved request to Area Counsel or Associate Area Counsel (SBSE) for concurrence.

(5) With Counsel concurrence, the Notice of Levy can be issued by GS-09 and above Revenue Officers, GS-12 Specialty Collection Insolvency employees and Advisors. See Servicewide Delegation Order 5-3 (Rev. 1) at IRM 1.2.2.6.3, Delegation Order 5-3 (Rev. 1), for the complete list of employees with the delegated authority to issue such levies.

(6) 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 (SBSE) as to the,

• Issuance of the levy

• Language to be included on pre-levy notices and the Notice of Levy

(1) IRC 6334(a) describes property that is exempt from levy. The exempt levy sources include:

(2) 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 5.11.5.4, Exempt Amount, for additional information about this exemption.

(3) See IRC 6334(a) for information about other property types exempt from levy.

(4) Other than property listed in IRC 6334(a), no property is exempt from levy. No state or local law can exempt property from levy to collect Federal tax. See, however, IRM 5.11.1.4.3, regarding property in the hands of the courts.

(1) When child support Bal Dues are being collected, three of the items in IRM 5.11.1.4.1 are not exempt from levy per IRC 6305(a)(2). They are:

• Unemployment benefits

• Certain annuity and pension payments

• Amount of income needed to pay a judgment for the support of minor children, however, income withheld for a judgment for child support is not levied, if the judgment is dated before the levy.

(2) Use Letter 1696(CG), Property Exempt From Levy Levied to Collect Child Support, to explain the exemptions that do not apply for child support levies.

(3) See IRM 5.11.1.3.3.11, Issuing Notice of Intent to Levy for Child Support Obligation Bal Dues

(1) The IRS generally does not levy on assets in the custody or control of a court unless the levy would not interfere with the work of the court or the court grants permission to levy. If the court is expected to order the distribution of property under its control, a levy may be served on the court clerk to ensure the levy attaches to the property when the distribution order is entered.

(2) If a taxpayer is in bankruptcy or the subject of other Federal or State insolvency proceedings do not levy assets in the custody/control of the court to collect the tax owed without the advice of Specialty Collection Insolvency or Advisory.

(3) 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 Advisory for advice. In bankruptcy cases, property that has not been sold may have to be turned over to the bankruptcy estate. Contact Specialty Collection Insolvency in your territory for advice.

(4) If levies were served and in place prior to referring a case to the Department of Justice (DOJ), do not release the levy without consultation with Advisory. DOJ has settlement authority under IRC 7122, Compromises. This authority extends during litigation, after a judgment, or with a DOJ settlement.

(5) Even if property is being used as evidence in a criminal court, it can be levied.

1. Serve the levy on the official responsible for holding and releasing the property, e.g., police property clerk.

2. Advise this person not to surrender the property until the court releases it.

(1) Notices of Levy should only be served within the United States, including the District of Columbia and U.S. territories (also known as possessions), collectively referred to as the "U.S."

(2) If the taxpayer is outside the U.S., but there are assets within the U.S., the assets can be levied.

(3) A Notice of Levy shall never be served outside the U.S. or outside the U.S. possessions or territories. Also, never serve a levy at the embassy, consulate, or mission of another country, even if it is physically located within the U.S. See IRM 5.11.6.10, United Nations (UN) Employees' Income, for levies served at the United Nations.

(4) A Notice of Levy can be served at the U.S. branch of a foreign bank and can reach funds held there. In limited circumstances, the levy may also reach funds in branches outside the U.S., but only when the Notice of Levy specifies that such funds are intended to be reached. See 26 CFR 301.6332-1(a)(2). Contact Advisory and Associate Area Counsel for advice. See IRM 5.21.3.2, Levy on a Domestic Branch of a Financial Institution.

(5) Chapter 15 of the United States Bankruptcy Code provides a procedural framework for the administration of cross-border insolvency. In particular, Chapter 15 provides foreign debtors and their representatives, who have filed bankruptcy in another country, with access to U.S. courts in the administration of their U.S. assets. See IRM 5.9.7.2, Chapter 15 - Ancillary and Other Cross-Border Cases.

(6) The U.S. treaties with Canada, Denmark, France, Netherlands, Sweden and Japan permit the United States and the other country to collect taxes on behalf of each other. See IRM 5.21.3.7, Mutual Collection Assistance Requests, and IRM 5.21.7.4.8, Outbound Mutual Collection Assistance Requests.

(1) 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).

(2) Even if a summons is issued for another reason, e.g., an examination summons issued to assist a RO to prepare an unfiled return, 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.

(3) You are not expected to contact other divisions to ask if they have summoned the taxpayer.

(4) 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 at IRM 1.2.1.5.27.

1. The territory manager or the Advisory territory manager must approve the jeopardy levy. Also secure the concurrence of the responsible Area Counsel or Associate Area Counsel.

2. If the notices described in IRM 5.11.1.3.2 have been sent, and the time periods for them have passed, the appeal process in IRM 5.11.3.7, Appealing the Jeopardy Levy, does not apply. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate Service, or Appeals.

3. If the notice requirements have not been satisfied, see IRM 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, for required procedures and approval level.

(1) Exercise caution when levying repeatedly on the same source

(2) Per Policy Statement P-5-28, at IRM 1.2.1.6.5, 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.

(1) Some individuals receive payment for government training programs to develop skills so they can get jobs. Except for payments under the Job Training 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.

(2) See Policy Statement P-5-33 at IRM 1.2.1.6.7.

(1) If the taxpayer makes an offer to pay a liability through installments, no levies can be served on the taxpayer’s property or rights to property while the proposal is pending.

• The territory manager or the Advisory territory manager must approve the jeopardy levy.

• Secure Area Counsel or Associate Area Counsel (SBSE) concurrence before issuing the 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 5.11.3.7, Appealing the Jeopardy Levy, does not apply. The taxpayer can still discuss the levy with the group manager, the Taxpayer Advocate Service, or the appeals officer in a Collection Appeals Program hearing.

• If the notice requirements in IRM 5.11.1.3.2 have not been satisfied, see IRM 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, for required procedures and approval level.

(2) In addition to the period that an offer of an installment agreement is pending, no levy can be served on the taxpayer’s property or rights to property,

• 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, Notice of Defaulted Installment Agreement Under IRC 6159(b)

• For an additional 30 days after an agreement is terminated

• While termination (or proposed termination) of an agreement is being appealed.

Caution: Before levying, wait an additional 15 days after each of these 30 day periods to allow for receipt of a timely mailed appeal.

Note: Status 60 or an unreversed TC 971 AC 063 means there is an active installment agreement. This is reversed by TC 971 AC 163.

(3) If a levy is served and then the taxpayer requests an installment agreement, the levy does not have to be released while installment agreement is pending. Once the parties enter into an installment agreement, however, the levy must be released, unless the installment agreement provides otherwise. See IRC 6343(a)(1)(C).

(4) 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)).

1. If the notices described in IRM 5.11.1.3.2 have been issued, and the time periods after them have passed, jeopardy is not required, and the appeal process in IRM 5.11.3.7, Appealing the Jeopardy Levy, does not apply. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate Service, or Appeals in a Collection Appeals Program hearing.

2. If the notice requirements in IRM 5.11.1.3.2, have not been satisfied, the jeopardy levy procedures in IRM 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, must be followed.

(1) Responsibility for refund litigation depends on who is suing and the type of tax involved.

1. Advisory is responsible for refund litigation if a suit is filed by a third-party regarding a Trust Fund Recovery Penalty assessment.

2. The campus refund litigation unit is responsible for all other refund litigation.

(2) For tax periods that began before January 1, 1999, if the taxpayer files a suit for a refund of divisible taxes, 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.

1. Divisible taxes include employment taxes, trust fund recovery penalties, excise taxes (except chapters 41-44 taxes), penalties for aiding and abetting the underpayment of tax and abusive tax shelter penalties.

2. Unlike other taxes where full payment is required in order to sue for a refund, the taxpayer need 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.

3. Collection does not have to be in jeopardy, as long as the pre-levy notice requirements of IRM 5.11.1.3.2 (but not including a CDP levy notice because such a notice was not required before January 1, 1999) have been satisfied. Get Associate Area Counsel's approval because of their ongoing involvement in the case and keep Advisory apprised of case developments. The territory manager or the Advisory territory manager must also approve the levy.

(3) Generally, for tax periods beginning after December 31, 1998, no levy can be served to collect certain divisible taxes that are included in a suit for refund.

1. This change only applies to employment taxes and trust fund recovery penalties for employment taxes.

2. For trust fund recovery penalties for other taxes, continue to follow (2), above.

(4) If collection is in jeopardy, levies can be issued to collect the tax.

1. If the notice requirements of IRM 5.11.1.3.2 have not been satisfied, see IRM 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, for required procedures and approval level of the jeopardy levy

2. If the notice requirements of IRM 5.11.1.3.2 have been satisfied, the jeopardy levy must be approved by the territory manager or the Advisory territory manager. It must also be approved by Associate Area Counsel. Keep Advisory apprised of case developments. The appeal process in IRM 5.11.3.7, Appealing the Jeopardy Levy, does not apply. The taxpayer can still discuss the levy with the group manager, the Taxpayer Advocate Service, or Appeals in a Collection Appeals Program hearing.

(5) A levy that was issued before the suit was filed does not have to be released. Contact Associate Area Counsel (SBSE) 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 Advisory apprised of case developments.

(1) Generally, within five business days after a Notice of Federal Tax Lien (NFTL) is filed, Letter 3172, 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 CDP hearing about the lien. See IRM 5.12.6, Federal Tax Liens, Appeals Processes Involving Liens.

(2) If the notice requirements in IRM 5.11.1.3.2 have been satisfied, Letter 3172 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 5.1.9.3.5, Levy Action during the Period of the CDP or EH, for a description of when property can be levied during the appeal of an NFTL filing.

(1) Notices of Levy cannot be served on the taxpayer’s property or rights to property 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 on the taxpayer’s property or rights to property.

• The territory manager or the Advisory territory manager must approve the jeopardy levy.

• Secure Area Counsel or Associate Area Counsel (SBSE) concurrence before issuing the levy

• If the notices described in IRM 5.11.1.3.2 have been sent, and the time periods have passed, the appeal process in IRM 5.11.3.7, Appealing the Jeopardy Levy, does not apply. The taxpayer can discuss the levy with the group manager, the Taxpayer Advocate Service, or Appeals in a Collection Appeals Program hearing.

• If the notice requirements in IRM 5.11.1.3.2 have not been satisfied, see IRM 5.11.3, Jeopardy Levy Without a Jeopardy Assessment, for required procedures and authority level.

(2) See IRM 5.8.3.14.1, Offers Submitted Solely to Delay Collection per Forms 657.

(3) If an offer in compromise is made solely to delay collection, levies can be served to collect the tax. The provisions in IRM 5.11.1.4.8 also apply to such levies.

(1) 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.

(2) Get advice from Associate Area Counsel (SBSE) before attempting to levy money in the Special Treasury Fund. Keep Advisory informed in light of the potential for litigation and wrongful levy actions.

(1) When a determination is made to levy the assets of a tribal government the employee should coordinate as required with the Indian Tribal Government (ITG) specialist. See IRM 5.1.12.24.2, Indian Tribal Government Procedures.

(2) The IRS must comply with Presidential Executive Orders regarding Tribal Sovereignty and the ITG specialist can assist the employee with case-related technical issues specific to Indian tribes.

(1) Starting in 2014, the individual shared responsibility provision of IRC 5000A(b) calls for each individual to have minimum essential health coverage (known as minimum essential coverage (MEC)) for each month, qualify for a coverage exemption, or make a SRP when filing their Federal income tax return. For years after 2018, the individual SRP was reduced to $0.

(2) Per IRC 5000A(g)(2)(B)(ii) and Treas. Reg 1.5000A-5, if a taxpayer fails to pay the shared responsibility payment imposed by this section and Treas. Reg.1.5000A-1 through 1.5000A-4, the Secretary will not levy on any property of the taxpayer for the failure.

(3) The individual SRP assessments (shown as MFT 35 or mirrored MFT 65) are processed on the Individual Master file (IMF).

(1) The Small Business and Work Opportunity Tax Act of 2007 modified the Collection Due Process (CDP) procedures for certain employment tax liabilities. This Act amended IRC 6330(f) and IRC 6330(h) to permit issuance of a Disqualified Employment Tax Levy (DETL) for collection of certain employment taxes without first giving the taxpayer pre-levy CDP notice. This amendment is effective for such levies served on or after September 22, 2007 and relates to Forms 941, 943, 944, 945, 940, and CT-1.

(2) IRC 6330(h) DISQUALIFIED EMPLOYMENT TAX LEVY. —For purposes of subsection (f), a Disqualified Employment Tax Levy is any levy in connection with the collection of employment taxes for any taxable period if the person subject to the levy (or any predecessor thereof) requested a hearing under this section with respect to unpaid employment taxes arising in the most recent 2-year period before the beginning of the taxable period with respect to which the levy is served. For purposes of the preceding sentence, the term employment taxes means any taxes under chapter 21, 22, 23, or 24.

(1) IRC 6330(h) describes a DETL, as any levy for the collection of employment taxes for a taxable period that is within the two-year period after an employment tax period for which the taxpayer or predecessor timely requested a hearing under IRC 6330 . Generally, employment taxes include FICA, FUTA, and withheld income taxes.

(2) When a DETL is served, the taxpayer will be given post-levy CDP rights. The taxpayer may seek Tax Court judicial review of the determination resulting from the post-levy hearing.

(3) A DETL is comprised of these three components:

1. Levy served to collect employment taxes,

2. Taxpayer or its predecessor previously requested a CDP levy hearing relating to employment taxes,

   Note: See IRM 5.1.9.3.14(3), Disqualified Employment Tax Levy, for help in determining if the taxpayer requested a prior CDP levy hearing involving unpaid employment taxes.

3. The prior CDP hearing included unpaid employment taxes that arose within the two-year period prior to the beginning of the period for which the levy is served.

(4) If the taxpayer requested a prior CDP levy hearing involving employment taxes, determine if the CDP levy tax periods occurred in the two-year “look back” period. The two-year look back period is measured from the beginning of the period for which the DETL is served. If the CDP levy hearing periods fall within this two-year period, the new period meets the criteria for a DETL. See examples below.

(1) Determine whether a business is a predecessor business for the purpose of IRC 6330(h) by applying the following factors:

• The taxpayer has substantially the same owner(s) or shareholder(s) and the same officer(s) as the prior business.

• The same individual(s) are actively involved in running the taxpayer that were actively involved in running the prior business, regardless of whether they are officially listed as the owners/shareholders/ officers.

• There is no evidence that the taxpayer’s owner(s) or shareholder(s), if different than before, acquired the business in an arms-length transaction for fair market value.

• The taxpayer provides substantially the same product(s), service(s), or function(s) as the prior business.

• The taxpayer has substantially the same customers as the prior business.

• The taxpayer has substantially the same assets as the prior business.

• The taxpayer has the same location/telephone number/fax number, etc. as the prior business.

  Caution: No one factor is determinative. A tax-avoidance motivation for the change is not a requirement.

(2) A business will not be considered a predecessor if there has been a genuine change in control and ownership of the business. A genuine change in control and ownership of the business is present if:

• It was acquired in an arm’s length transaction for fair market value, and

• The previous owner(s) has (have) ceased all involvement in running the business.

(3) If the previous owner serves for a limited period as a consultant to the new business solely in an advisory capacity, then the prior owner should not be deemed to have any involvement in running the new business.

(4) Contact Advisory for advice on questions regarding whether the taxpayer has meet the factors to be considered a “predecessor". Advisory will consult with Associate Area Counsel, as needed.

(5) When it is determined that a predecessor previously requested a CDP levy hearing relating to employment taxes, the revenue officer will document the ICS history with the factors that supported the determination. The group manager or the Advisory group manager must approve the determination of “predecessor" in the ICS History. The group manager signature on the levy is not required. See IRM 5.11.1.3.5, Managerial Approval.

(1) When warranted, the IRS may exercise its discretion to issue a pre-levy CDP notice for DETL periods; i.e., even where a taxpayer's employment tax liabilities meet DETL criteria. Ensure the Letter 1058 to be issued includes a third-party contact notification.

(2) If the tax period meets the criteria for issuing a DETL and levy action is determined to be appropriate:

• Make sure the IRC 6331(d), Notice of Intent to Levy, was properly issued.

  Note: This is the CP 504 notice or the "Status 58" notice. If the CP 504 notice was not issued, issue the pre-levy CDP notice, L1058. This meets the IRC 6331(d) and IRC 6330 requirement. If the CP 504 notice was not issued the DETL can only be issued 30 days after issuance of the L1058 per IRC 6331(d)

  .

Example: Tax period 01-201709 meets criteria for issuing a DETL but CP 504 was not issued prior to assignment to revenue officer Pike. Revenue officer Pike issues L1058 providing pre-levy CDP hiring rights to meet the requirement for IRC 6331(d) and issues a DETL on the 31st day.

• Ensure the advanced third-party notification requirements are met prior to issuance of DETL. See IRM 25.27.1, Third-Party Contact Program.

• Document the ICS case history regarding the DETL determination, and

  Example: DETL to be issued for tax periods 01-201606 and 01-201609. TP qualifies for a DETL based on CDP levy hearing requested on July 27, 2017 for tax periods 01-201512 and 01 201603

• Prepare and issue the DETL

  Note: ICS will block revenue officer issuance of the DETL unless the revenue officer answering yes when ICS prompts with the following: "Final Notice Delivery Date is not 30 days prior to levy. Is this a DETL levy? (Yes or No)?" This is a requirement because there is no TC 971 AC 069 on the module.

(3) If a DETL is served, send the post-levy CDP notice with the taxpayer's copy of the levy within 10 days. Letter 1058-D, Notice of Levy and Notice of Your Right to a Hearing, is used to provide post-levy CDP rights.

(4) Both the post-levy and/or pre-levy CDP notice must be:

1. Given in person,

2. Left at the taxpayer's home or business, or

3. Sent to the taxpayer's last known address by certified or registered mail.

   Note: Use registered mail only if the taxpayer is outside the United States. There is no international certified mail.

   Note: Refer to IRM 5.11.1.3.2.1

   .

Exception: Where L1058-D has been correctly sent to the taxpayer's last known address and another address is subsequently found, do not send an additional L1058-D, relating to the same employment tax liability, to the new address.

Exception: If L1058-D is mistakenly sent to an address other than the last known address, immediately send a new L1058-D to the correct last known address.

(5) Include a copy of the Levy, Publication 594, Publication 1660 and Form 12153 with the L1058-D.

(6) If the L1058-D is issued more than 10-days after issuing the DETL, document the reason in the ICS history.

(7) DETL post-levy hearing requests are processed similarly to other hearing requests. Refer to IRM 5.1.9, Collection Appeal Rights, for guidance in processing hearing requests.

(8) A DETL may be served during a timely requested pre or post-levy CDP hearing or judicial review of such hearing to collect employment tax liabilities (DETL tax periods) subject to the hearing.

• If the DETL levy is to take place during the hearing, check IDRS for actions that may prohibit levy action, i.e., TC 480 or TC 971 AC 043. If there are no apparent TC codes, then contact the Appeals Team Manager of the assigned hearing officer, preferably via email, to inform Appeals that levy action will be taken. Determine whether Appeals has information that prohibits levy or may affect the decision to levy.

• If the DETL levy is to be issued during the judicial review, contact the Counsel attorney assigned the case to advise them of the planned levy action and to determine if there is any new information that may affect the decision to levy.

(1) The Small Business Jobs Act of 2010 (SBJA) section 2104, amended IRC 6330(f) and (h)(2) to allow the Collection Due Process (CDP) notice and hearing to occur post-levy with respect to “Federal contractor levies.” This term is defined in IRC 6330(h)(2) as “…any levy if the person whose property is subject to levy is (or any predecessor thereof) a Federal contractor.”

(1) IRC 6330(h)(2) describes a Federal contractor (FEDCON) levy, as any levy if the person whose property is subject to levy is a Federal contractor. When a FEDCON levy is served, the taxpayer will be given post-levy CDP rights. The taxpayer may seek Tax Court judicial review of the determination resulting from the post-levy hearing.

(2) Federal contractors are any person or entity who currently has a contract with the Federal government to sell or lease property, goods or services. This does not include a taxpayer who was in the past a Federal contractor but currently is not involved in any contractual relationship with the Federal government. A contract is a mutually binding legal relationship obligating the person or entity to furnish property, goods, or services and the Federal executive agency to pay for those property, goods, or services.

(3) Our computer systems identify some Federal contractor cases on the Individual Master File (IMF) and the Business Master File (BMF). Indicators that a person or entity is a Federal contractor may include the following:

• Federal Contractor Indicator. See IRM 5.7.9.2.1, Federal Contractor Indicator (FCI) (unreversed TC 971 AC 647).

• Federal Payment Levy Program (FPLP), TC 971 AC 062 Document Location Number (DLN). See IRM 5.7.9.2.2 and IRM Exhibit 5.11.7-5, TC 971 AC 062 (Document Locator Number (DLN) Format, Miscellaneous Field, XREF Field).

• The Federal Payment Levy Program (FPLP) can also issue Federal Contractor (FEDCON) levies and can be identified by a TC 971 AC 677 posted to the module. See IRM 5.11.7.2.3.4(4).

(4) Only the Federal contractor may be listed on the FEDCON levy. For Federal payments a FEDCON levy may be issued to any payment source on all BMF tax modules and IMF tax modules if the entity is identified as a Federal contractor with an unreversed TC 971 AC 647 posted on the entity. For BMF tax modules do not include or list the general partners and members of a LLC on the FEDCON levy. For IMF tax modules only include the spouse identified as the Federal contractor on filing status 2, married filing joint modules.

(5) A FEDCON levy may have previously been issued by FPLP. A TC 971 AC 677 will post on the module with the literals "SAL, OTH" displayed in the Miscellaneous Field. This will generate a post-levy CDP notice CP 90C (or 297C) and post a TC 971 AC 069. The taxpayer is provided their CDP appeal rights after the levy. SeeIRM 5.11.7.2.3.3, FPLP Notice Process (TC 971 AC 069 or AC 169).

(6) The FEDCON (TC 971 AC 677) levy processes occur after the expiration of the 30-day notice required by IRC 6331(d). The issuance of the CP 504 meets the 30-day pre-levy requirement of IRC 6331(d)

(1) When warranted, the IRS may exercise its discretion to issue a pre-levy CDP notice on modules eligible for FEDCON levy based upon the unique case factors. Examples of unique case factors:

• The issuance of a pre-levy notice might be advisable if there was no contact with the taxpayer.

• When the Letter 1058 is issued on initial contact with a BMF or combination BMF/IMF taxpayer when a deadline is set for the taxpayer to take specific action. See IRM 5.11.1.3.3, Satisfying the Notice Requirement.

• When the Letter 1058 will be issued during initial contact on IMF case but a FEDCON levy is not yet appropriate. See IRM 5.11.1.3.3.

• Ensure the Letter 1058 to be issued includes a third-party contact notification. IRM 25.27.1, Third-Party Contact Program.

(2) If the tax period meets the criteria for issuing a FEDCON levy and levy action is determined to be appropriate:

• Make sure the IRC 6331(d), Notice of Intent to Levy, was properly issued at least 30 days prior to levy action.

• Make sure that the advanced third-party notification requirements are met prior to issuance of the FEDCON levy.

Note: This refers to the CP 504 notice or the "Status 58" notice. If the CP 504 notice was not issued, issue the pre-levy CDP notice, L1058. This meets the IRC 6331(d) and IRC 6330 requirement. FEDCON levy can only be issued 30 days after issuance of the L1058 per IRC 6331(d).

• Document the ICS case history regarding the FEDCON determination.

• Verify the existence of a Federal contractor indicator (FCA) on the ICS Case Summary screen. The FCA is required before a FEDCON levy can be generated through ICS. Reference IRM 5.7.9.2.1(3).

Note: When there is no TC 971 AC 069 on the module, ICS will block revenue officer issuance of the FEDCON unless the revenue officer answers yes when ICS prompts with the following: "Final Notice Delivery Date is not 30 days prior to levy. Is this a FEDCON levy? (Yes or No)?" .

(3) Include Letter 1058-F, Post-Levy Federal Contractor Collection Due Process with the taxpayer’s copy of a FEDCON levy for post-levy CDP notices.

(4) Both the post-levy or pre-levy CDP 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 return receipt requested.

  Reminder: Use registered mail only if the taxpayer is outside the United States. There is no international certified mail.

  Reminder: Where L1058-F has been correctly sent to the taxpayer's last known address and another address is subsequently found, do not send an additional L1058-F, relating to the same tax liability, to the new address.

  Reminder: If L1058-F is mistakenly sent to an address other than the last known address, immediately send a new L1058-F to the correct last known address.

(5) Include a copy of the Levy, Publication 594, Publication 1660 and Form 12153 with the L1058-F.

(6) If the L1058-F is issued more than 10-days after issuing the FEDCON, document the reason in the ICS history.

(7) FEDCON post-levy hearing requests are processed similarly to other hearing requests. Refer to IRM 5.1.9, Collection Appeal Rights, for guidance in processing hearing requests.