25.3.5. Judgment Follow-up

(1) The provisions of this section apply in general to all judgment cases controlled by CEASO Advisory. Judgments entered in a civil tax case may be for assessed tax liabilities or for liabilities that cannot be assessed (i.e., unassessable liabilities). Required actions are to be taken by CEASO Advisory unless otherwise noted.

(1) This section covers the various types of authorities related to the use of this IRM.

(2) Settlement Authority: When a case has been referred to the DOJ (whether the Tax Division or a US Attorney’s Office), DOJ has settlement authority (IRC 7122, Compromises). The IRS has no authority to settle these cases. Depending upon the nature of the action, the litigation may be handled by either a civil trial attorney in the Tax Division or an Assistant U.S. Attorney in the local U.S. Attorney's Office. Any actions taken in litigation cases must be coordinated through the Area Counsel Attorney assigned to the case unless the case is of the type that may be handled solely by the local U.S. Attorney's Office.

(1) IRM 5.17.1, Legal Reference Guide for Revenue Officers, General Information, provides a list of the parties with an explanation of their role with suits.

(1) Program Reports: Suits are specific to the case or case combination at hand. They vary in type and scope. CEASO Advisors are required to monitor their ongoing litigation and open judgment cases annually and more frequently if appropriate. There are several reporting tools assisting CEASO advisors with this task and they notate the status in the Integrated Collection System (ICS) history.CEASO Advisor Sources for Monitoring Status of Litigation and Judgments

(2) Program Effectiveness: Whenever litigation involving collection matters is pending, ongoing, or liabilities are reduced to judgment, CEASO advisors are responsible for coordination with stakeholders, maintaining appropriate internal case controls, and monitoring outcomes. CEASO Advisory responds to requests for assistance and queries from Counsel and DOJ.

(1) CEASO Advisory maintains a copy of any suit documentation until the suit is closed. After case closure see Document 12990, Records and Information Management Records Control Schedules, under section Internal Revenue Service Records Control Schedule (RCS) 28, Tax Administration Collection, in:

• PART III - Administrative Records - All Collection Functions, item number 38, Litigation Files

• PART IV - Delinquent Accounts, Delinquent Returns, And Office Services Records, item 45, Suits to Foreclose Federal Tax Liens, item 53, Civil Suit Recommendation, Form 4477, and in item 54 (a), Special Procedures Function Case Files

(2) Preserving electronically stored information is covered in:

• IRM 25.3.1.7, Preserving Electronically Stored Information In Litigation Cases,

• IRM 25.3.1.7.21, References,

• Chief Counsel Notice 2016-005, (https://www.irs.gov/pub/irs-ccdm/cc%202016%20005.pdf).

(3) CEASO Advisory monitors open litigation (TC 520s) using the non-Insolvency portion of the Litigation Accounts Management System (LAMS) reports. See IRM 25.3.8.4.1, Litigation Account Management System (LAMS) and IRM 25.3.7, Reconciling Non-Insolvency LAMS Reports.

(4) eApproval metadata allows for operational and ad hoc reviews of selected inventory.

(5) CEASO Advisory managers verify program and procedural compliance by conducting case reviews, performance reviews, and security reviews. Prescribed internal controls are detailed in IRM 1.4.53, Advisory and Property Appraisal and Liquidation Specialist Group Manager Operational Aid, which communicates responsibility to Civil Enforcement Advice and Support Operations (CEASO) managers for promoting quality case work and required internal controls. The ICS, ENTITY Case Management, Embedded Quality Review, and National Quality Review Systems provide the case access, data and reports used by managers to monitor internal controls.

(1) The table below lists commonly used acronyms and their definitions.

(1) For procedural guidelines on recommending, working, and responding to suits and claims for damages both for and against the United States, see:

1. IRM 5.17.1, General Information

2. IRM 5.17.4, Suits by the United States

3. IRM 5.17.5, Suits Against the United States

4. IRM 5.17.14, Fraudulent Transfers and Transferee and Other Third Party Liability

5. IRM 25.3 series, Litigation and Judgments

6. IRM 34.1.1, Jurisdiction of the District Courts

7. Suits - Resources/Examples, (https://irsgov.sharepoint.com/sites/ETD-KMT-KB026/SitePages/Suits/Suit%20Resources%20and%20Examples/Suits---Resources---Examples.aspx), page which contains a webinar walking through the suit forms as well as the suit forms User Guide tutorials, examples of the most common suit types, the Basis Tool, and Excel version of Form 4477-A, Data Capture Spreadsheet (i.e., contains all the data tables for the narrative report)

8. eApproval Information Center, (https://irsgov.sharepoint.com/sites/ETD-KMT-KB123/SitePages/Forms/GrpByChapter.aspx?csf=1&web=1&e=gvN1Zc&cid=78903a38%2Dbea1%2D4c61%2D9ae5%2D73182582de74&RootFolder=%2Fsites%2FETD%2DKMT%2DKB123%2FSitePages%2FCollection%20Systems%2FeApproval&FolderCTID=0x01200012CA337F2046A94288AD39407CC1658A)

9. The Field Collection Area Campus Liaison Team, (https://irsgov.sharepoint.com/sites/ETD-KMT-KB109/SitePages/Campus%20Liaison%20Topics/Campus%20Liaison%20Team%20(CLT)%20Contacts/Area-Campus-Liaison-Team-2.aspx) resource provides revenue officers with an area point of contact to assist them if needed.

(2) 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, Taxpayer Bill of Rights (TBOR).

(1) Occasionally, the CEASO advisor will request revenue officer assistance in a judgment case. Generally, this will not occur on judgments less than the criteria in IRM 25.3.2.3(3), Criteria for Bringing Suit.

(2) When assistance is needed, and after the CEASO advisor has exhausted all available internal sources, the CEASO advisor will issue an Other Investigation (OI) to the Field Collection group manager’s hold file for the zip code where the tasks need to be completed. Generally, the CEASO advisor will contact the receiving group manager to explain the request and specific actions needed. This may include identifying assets through public records research or any other type of asset verification deemed necessary.

(3) When a judgment involving assessed liabilities is no longer in active status, a Bal Due case may be assigned to a revenue officer if case selection criteria are met.

(1) Once a judgment is entered in a case where assessments were reduced to judgment, request input of Transaction Code (TC) 550, definer code 4, using 20 years from the date the judgment was entered as the new extension date. This action will extend the CSED on IDRS for 20 years and prevent a TC 608 from being generated automatically and zeroing out the tax module.

1. Secure a copy of the judgment and upload it to eApproval.

2. A TC 520 cc 80 must remain on the TXMOD prior to the TC 550 input. The TC 520 cc 80 only puts the CSED into suspense, thereby preventing TC 608 from posting and the account being zeroed out during the pendency of the litigation.

   Reminder: Confirm all judgment modules retain their TC 520 cc 80.

   Caution: Contact the Centralized Insolvency Operation (CIO), if an account is in bankruptcy and risks discharge during litigation or after a judgment or DOJ settlement of litigation. Inform CIO of any litigation in bankruptcy court or district court, including prior litigation implicating DOJ’s authority to determine dischargeability or the survival of liens against pre-bankruptcy assets (IRC 7122, Compromises, and IRM 25.3.5.1.2(2), Settlement Authority.

3. The TC 550, definer code 4, must be input before the TC 520 is reversed. This will prevent premature TC 608 posting. If a TC 521 is input before the TC 550, and the CSED expires during the pendency of the litigation, a TC 608 will generate systemically and the account will be zeroed out. This may result in the loss of lien priority if the TC 608 triggers a systemic lien release.

   Example: Premature TC 608 posting problems. See References table below.References

   IRM Number	Title
   IRM 25.3.6.3.2.2(5)	Cases with Imminent CSEDs
   IRM 25.3.6-4	Correct TC 521 Posting Date
   IRM 25.3.6-5	Incorrect TC 521 Posting Date
   IRM 25.3.6-6	Correcting TC 521 Posting Date

4. Using the proper transaction date for inputting the TC 550 is also very important. Refer to Document 6209 IRS Processing Codes and Information for the current year to ensure the inputs for the TC 550 are correct thereby avoiding an IMF unpostable code 178 or BMF unpostable code 344-6.

(2) While the judgment control is active, ensure that all applicable Notices of Federal Tax Lien (NFTLs) are properly refiled protecting any and all underlying federal tax liens associated with the judgment. Determine the required refiling period and establish ICS controls to follow-up. See IRM 5.12.8.3, Refiling Period.

• Because the federal tax lien does NOT merge into the judgment lien, and NFTLs filed after 11-1982 contain self-releasing provisions which extinguish the tax lien if the notice is not refiled, the NFTL must be timely refiled to preserve the federal tax lien and maintain the IRS's priority position.

• Contact Counsel to CEASO advise them and secure from them any direction as to appropriateness of revoking the release, filing a new (i.e., replacement) NFTL, and whether there is a need for inclusion of special language on the replacement NFTL.

• If the NFTL is not timely refiled thus extinguishing the underlying tax lien and Counsel wants the lien’s priority reestablished, then actions will need to be taken to revoke the release and reinstate the lien to allow for potential future administrative collection action.

  Note: These are circumstances where it is appropriate to use the optional text available using the electronic Letter 3171 in the Product catalog. See instructions in the table below.DOJ jurisdiction, replacement NFTL filing, and Letter 3171

  Step	Action
  1	Revoke the lien release. See IRM 5.12.3.14, Revocation of Lien Release.
  2	Reinstate the lien. See IRM 5.12.3.15, Reinstating the Statutory Lien.
  3	File a replacement NFTL. See IRM 5.12.3.16, Re-establishing NFTL Priority.
  4	Send a manual Letter 3171, Notice of Federal Tax Lien Additional Filing, as follows: Use the November 2023 or later version of the letter from the Product Catalog. Click the button, Show Selectable Paragraph Pages. Check both boxes for Selectable Paragraph A and B. Reminder: The selectable text explains that cases under DOJ control are excluded from the Collection Appeals Program (CAP), IRM 5.1.9.4.1, Exclusions from CAP, and that the recipient may contact the attorney assigned their case. Click the button, Hide Selectable Paragraph Pages. Complete the letter’s fillable fields. Instruct the ALS employee inputting the NFTL to “Suppress the CDP notice” so that Notice (i.e., Letter 3171 in this case) is not systemically issued. Mail the letter and inform DOJ. Reminder: Letter 3172, Notice of Federal Tax Lien and Your Rights to a Hearing Under IRC 6320, remains legally required when the statutory lien for an assessment is on an NFTL for the first time.

(3) After DOJ advises the IRS (through counsel) that their efforts to collect the judgment have ended, and all terms of applicable settlement agreements have been met, request input of TC 521. If no information relating to the collection of the final judgment is provided by DOJ within 12 months from the judgment date, contact the Tax Division attorney or the FLU of the local U.S. Attorney's office if the case was handled by that office, to determine what, if any, actions are being taken by DOJ to collect the judgment. If DOJ has determined that there is no current collection potential and that it will, or has, closed its case, request written notification that DOJ is closing its case and jurisdiction is being transferred back to the IRS. When the case is referred to the IRS for collection, the TC 520 should be reversed to allow the case to be put back into the collection stream.

(4) TC 521 input will return the case to the collection status it was in before the litigation and subject it to normal case selection criteria. If the case is in currently not collectible (53) status, do not reverse the status unless there is indication of collection potential.

(5) After TC 521 input, close the ICS judgment control module and treat the case as an inactive judgment for CEASO Advisory case control purposes. See IRM 25.3.5.7, Closing Actions.

(1) In cases where a judgment is obtained for unassessable liabilities, it is important to ensure that a certified copy of the abstract of judgment is filed in order to create a judgment lien against the judgment debtor's real property. Secure a copy of the abstract and upload it to eApproval.

(2) The IRS may not take administrative collection action under the provisions of the Internal Revenue Code against the judgment debtor to collect the judgment if there is no underlying tax assessment or federal tax lien. Instead, judicially collection actions must be taken under state law or under the Federal Debt Collection Procedures Act (FDCPA) by the Tax Division or the local U.S. Attorney's Office (i.e., Tax Division FLU or the local U.S. Attorney Office’s FLU). See also IRM 5.17.4.6.2, Effect of Judgment on Collection Statute of Limitations.

(3) While administrative collection action may not be taken to collect a judgment for most unassessable liabilities, with the exception of offsetting tax refunds, the CEASO advisor is responsible for coordinating with either the Tax Division or the local U.S. Attorney's Office, depending upon which office is handling the case, to ensure the availability of assistance in conducting investigations using all available internal sources to determine if resources exist for satisfying the judgment.

(4) In appropriate cases, the CEASO advisor will issue an OI (Other Investigation) to field collection to assist in locating assets to satisfy the judgment. This may include identifying assets through public records research, or any other type of asset verification deemed necessary.

(5) If assets are located that can be seized in satisfaction of the judgment, this information should immediately be communicated to the appropriate DOJ component.

(6) The CEASO advisor will also take the appropriate steps to ensure that any individual tax refunds of those named in the judgment are offset to the unassessed judgment.

(7) In cases where there is collection potential, the CEASO advisor will follow-up with the DOJ at a minimum of annually to determine the status of efforts to collect the judgment. Circumstances may warrant more frequent case activity.

(8) Cases may not be removed from active follow-up status and the NF OI opened for the judgment case may not be closed as long as the case remains with DOJ. See also IRM 25.3.5.7, Closing Actions.

(9) See IRM 5.1.5.15, Restitution, for information relating to court orders requiring the taxpayer to pay restitution to the IRS in criminal cases.

(1) CEASO Advisory is the primary IRS point of contact on DOJ settlements. The CEASO advisor is responsible for coordination between DOJ and any other area within the IRS providing assistance on judgment settlement cases.

(2) If the taxpayer requests modification of a settlement or collateral agreement, DOJ alone has authority to modify settlements. So advise DOJ of the request and implement any changes DOJ determines are appropriate.

(3) Do not input any TC 521 or close the CEASO Advisory ICS judgment control until ALL settlement terms have been met.

(4) If an Offer in Settlement involves payment of the judgment through a deferred payment or collateral agreement, the Specialty Collection Offer in Compromise organization assists with monitoring the taxpayer's compliance with the settlement. See IRM 5.19.7.5.1, DOJ Settlements.

(5) Payments of deferred payment judgments are monitored by Specialty Collection Offer in Compromise organization in the Monitoring Offer in Compromise (MOIC) Units:

• Brookhaven

• Memphis

(1) CEASO Advisory Receipt: When CEASO Advisory receives notification from DOJ or Counsel of an accepted offer that involves a deferred payment or collateral agreement, the CEASO advisor:

1. Ensures the TC 520 cc 80 is maintained on all account modules involved in settlements being monitored by MOIC.

2. Ensures all associated statutory liens and NFTLs are maintained.

3. Photocopies the documents listed in (2) below.

   Exception: The documents can also be emailed to *SBSE Coll Policy OIC for distribution to MOIC, if the MOIC contact cannot be located.

4. Forwards them using Form 3210 to the appropriate MOIC Unit.

(2) Photocopy Documents and Send to MOIC:

• Taxpayer's offer

• Government's acceptance

• Deferred payment or collateral agreement

• Any other information needed to identify the liability and terms of the settlement

(3) CEASO Advisory Maintenance Actions:

1. Ensure the TC 520 cc 80 is maintained.

2. Ensure all associated statutory liens and NFTLs are maintained.

3. Assist the Campus MOIC unit and DOJ as requested.

4. Forward all information received from MOIC relating to these settlements to DOJ.

5. Ensure that DOJ is advised if the taxpayer defaults (see IRM 25.3.5.6.1(2) ).

6. Retain copies of forms forwarded to DOJ in the judgment file.

(4) CEASO Advisory Closing Procedures:

1. MOIC notifies CEASO Advisory when all amounts due under the settlement agreement, including accrued interest and amounts due under a collateral agreement, have been received.

2. CEASO Advisory will then notify DOJ, send them copies of Form 6314, Deferred Payment Offer Payment Record, or Form 6313, Collateral Agreement Payment Record.

3. Request TC 521.

   Reminder: The TC 521 is only requested after the CEASO advisor confirms that MOIC closing actions are complete, all payments have posted correctly, and there are no pending adjustments.

(1) See IRM 5.19.7.5.1.1, Processing Accepted DOJ Settlements.

(2) MOIC will send the CEASO advisor assigned a copy for the file and for forwarding to DOJ:

• Form 6314, Deferred Payment Offer Payment Records, in October of each year, and/or

• Form 6313, Collateral Agreement Payment Records, in May of each year.

(3) When the taxpayer fails to comply with the terms of the agreement, MOIC sends copies of the letters sent to the taxpayer with the Form 6314 or Form 6313 to the CEASO advisor along with a request that DOJ be advised of the default (see IRM 25.3.5.6.1(2) ).

(4) When the terms of the settlement agreement have been fulfilled, MOIC will take actions to close out the case, including but not limited to:

1. Requesting the release of Notices of Federal Tax Lien

2. abating any remaining liability

3. Informing the CEASO advisor assigned

(1) The Records Control Schedule (RSC) for Collection is located in Document 12990, Records and Information Management Records Control Schedules, Schedule 28. The RSC provides mandatory instructions for retaining and disposing of records no longer needed for current business.

(2) Active judgment files should be retained by CEASO Advisory until they become inactive. See Document 12990, Records and Information Management Records Control Schedules, Schedule 28, Item 53(a). The ICS judgment control module(s) remain(s) open, as long as a judgment remains active.

(3) Once the judgment becomes inactive, the related ICS judgment control is closed. Inactive judgment files should be retired to the Federal Records Center three years after being placed in inactive judgment files. For information on retiring records to the Federal Records Center, see Document 12990, Records and Information Management Records Control Schedules, Schedule 28, Item 53(b).

(4) In cases where the judgment has been fully satisfied, the judgment file should be destroyed two years after the judgment is satisfied. See Document 12990, Records and Information Management Records Control Schedules, Schedule 28, Item 53(c), Satisfied Judgment Files.