5.1.4. Jeopardy, Termination, Quick and Prompt Assessments

(1) Purpose: This IRM section provides guidance on identifying and processing accelerated assessments.

(2) Audience: The primary users of this IRM are SBSE revenue officers and advisors.

(3) Policy Owner: Director, Collection Policy, SBSE

(4) Program Owner: Collection Policy, SBSE, Case Resolution Alternatives (CRA)

(5) Primary Stakeholders:

• Field Collection, including Civil Enforcement Advice and Support Operations (CEASO), Advisory

• Insolvency

• Chief Counsel

(6) Program Goals: Accelerated assessments protect the government’s interest by allowing the IRS to assess tax expeditiously when collection of tax is at risk or when the assessment statute expiration date (ASED) is imminent.

(1) The IRS initiates jeopardy assessments when collection of taxes will be endangered if regular assessment and collection procedures are followed and there is neither a voluntarily filed return nor an IRC 6020(b) return prepared by the Service.

(2) Relevant IRC sections concerning jeopardy assessments are:

• IRC 6861 authorizes assessment where the due date for filing of a return has expired and applies to jeopardy assessments of income, estate, gift and certain excise taxes.

• IRC 6862 applies to taxes other than income, estate, gift and certain excise taxes, that is, employment and other excise taxes whether or not the due date for filing and paying such tax has expired.

• IRC 6867 authorizes a jeopardy assessment in situations where an individual is in possession of cash, in excess of $10,000, and does not claim ownership or who claims the cash belongs to another individual, whose identity can be determined, and who claims ownership of the cash.

(3) All jeopardy assessments must be in full compliance with Policy Statement 4-88, found in IRM 1.2.1.5.27, which provides:

1. That jeopardy assessments are to be used sparingly,

2. Criteria under which jeopardy assessments will be made,

3. Examples of when prior national office notification is required,

4. A process to comply with a taxpayer request for administrative review, and

5. That jeopardy assessments involving alcohol, tobacco and firearms be closely coordinated with, and initiated at the request of, the Bureau of Alcohol, Tobacco and Firearms.

(4) Jeopardy assessments should be used prudently and care must be taken to avoid excess and unreasonable assessments. The amount of the assessment should be limited to an amount that can reasonably be expected to equal the liability due.

(5) Termination assessments are very similar to jeopardy assessments except that, under the provisions of IRC 6851, they are made only for the current or immediately preceding taxable year and can be made at any time prior to the return due date.

• A termination assessment is only initiated by Examination.

• It is used to assess income taxes immediately because waiting until the end of the tax year would jeopardize collection.

• Termination assessment of income tax, including terminations under the conditions described in IRC 6867, applies when the taxable year of a taxpayer has not ended or when the taxable year has ended but the return due date (determined with regard to any extensions) has not yet passed.

(6) All termination assessments must be in full compliance with Policy Statement 4-89, found in IRM 1.2.1.5.28, which provides:

1. That termination assessments are to be used sparingly and be a reasonable amount,

2. Criteria under which termination assessments will be made,

3. Criteria when prior national office notification is required, and

4. A process to comply with a taxpayer request for administrative review.

(7) A potential jeopardy or termination assessment may develop as the result of information received from a confidential informant. The source of the information must not be divulged to the taxpayer or other unauthorized personnel.

(8) For a more thorough discussion of jeopardy and termination assessments and criteria to consider before taking jeopardy collection actions, see IRM 5.17.15, Termination and Jeopardy Assessments and Jeopardy Collection, and IRM 5.11.3, Jeopardy Levy without a Jeopardy Assessment.

(1) Jeopardy assessments initiated by Collection personnel are limited to:

1. TFRP assessments (see IRM 5.7.4.5(8),

2. Employment and excise tax assessments, whether or not the return due date has passed,

3. Partnership penalty assessments, and

4. Income tax assessments when there is no question as to the amount of the liability.

(2) Request a jeopardy assessment when collection is in jeopardy due to the existence of one or more of the four conditions outlined in Policy Statement 4–88. See IRM 1.2.1.5.27(5) .

(3) Jeopardy assessments may apply when:

1. The appropriate appeal and protest periods have not expired for TFRP or IRC 6020(b) assessments.

2. Assessment/collection action is being proposed prior to the return due date for a signed return for income tax liabilities.

(4) Refer information that could lead to a jeopardy assessment of a proposed transferee liability, disputed additional income taxes, or any other tax liability to Examination.

(5) Prepare Form 2644, Recommendation for Jeopardy/Termination Assessment, for all jeopardy assessments and Form 2859, Request for Quick or Prompt Assessment, for quick or prompt assessments. Generate Form 2859through ATFR for TFRP assessments when possible. Form 2859 includes a chart of all required items to be completed for each type of return.

(6) Attach a memo setting forth the conditions and factors in support of the recommendation including:

• Name, address, and taxpayer identification number (TIN),

• Tax, penalty, and interest to be assessed by period,

• Nature of the taxpayer's business or activity,

• Taxpayer's present financial condition,

• Information regarding the grounds for jeopardy assessment (see IRM 5.17.15.2.1(2) ),

• Records or statements with respect to continuing business or personal losses,

• Filing record of taxpayer,

• Taxpayer’s record of delayed payment of taxes in the past (collection delays and unpaid taxes),

• Nature and location of the taxpayer’s assets and the source(s) of income,

• Statement as to the factual basis for the determination of taxable income and a schedule showing how the tax was computed, and

• Other information having a bearing upon the taxpayer’s financial condition, future anticipation of losses, etc.

(1) Quick assessment procedures apply when the tax is not at risk, but the assessment statute will expire within 90 days, or 30 days for TFRP assessments per IRM 5.7.6.3(1) , and is limited to the following:

1. Additional taxes and agreed deficiencies when the statutory period for assessment will expire before assessment action can be completed under regular procedures, and

2. Deficiencies or current additional and delinquent taxes where receivership/probate proceedings are involved or imminent, per IRC 6871.

(2) A quick assessment:

1. Does not provide authority to make immediate demand for payment of the tax liability assessed.

2. Allows the taxpayer the statutory 10-day period in which to pay and the 30-day notice of intent to levy period under IRC 6331(d) and notice of a right to a hearing under IRC 6330(a).

   Note: If the taxpayer is in a receivership or probate proceeding, an immediate proof of claim may be filed.

3. Does not change or update the existing Master File entity information.

   Note: Use Form 2363, Master File Entity Change, to change the Master File entity to agree with the information on the return.

(3) To eliminate unpostable conditions, research a transcript of the module involved, if practical, to determine if:

1. Module is established on Masterfile,

2. TIN and name line match Form 2859, Request for Quick or Prompt Assessment,

3. Tax period was previously assessed,

4. Any freeze codes exist,

5. Proper transaction codes are being input and not duplicated, and/or

6. Taxpayer is in bankruptcy.

(1) A prompt assessment is a manually processed assessment of a secured and processable return when collection of the resulting tax appears to be at risk and the intention is to proceed with collection action immediately following the 10-day period for notice and demand.

(2) A prompt assessment of employment, excise, and partnership tax returns prepared and signed under authority of IRC 6020(b) may be requested provided that Letter 1085(DO), 30 Day Letter Proposed IRC 6020(b) Assessment, or Letter 1616, 30 Day Letter Proposed IRC 6020(b) Assessment Partnership Return, was sent to the taxpayer and the appeal period has lapsed.

(3) Prior to recommending prompt assessment, determine the following:

(4) The initiator will establish, and document in the case history, a plan of action for ultimate resolution of the balance due. Do not recommend a prompt assessment in the following instances:

1. Taxpayer will be granted or already has an installment agreement,

2. Assessment will be reported as currently not collectible,

3. There are no known distrainable assets, or

4. Taxpayer is pyramiding tax liabilities and no enforcement action is pending. See IRM 5.7.8.4 , Pyramiding Taxpayers.

(5) The revenue officer must compute all applicable penalties.

(1) See IRM 5.7.6.3, Quick and Prompt Assessment Actions, for procedures to process quick and prompt assessments on Trust Fund Recovery Penalties.

(2) For a quick or prompt assessment,

1. Prepare Form 2859, Request for Quick or Prompt Assessment. The form includes a chart of all required items for each type of return.

2. Send a photocopy of Form 2859 to Advisory if receivership proceedings are involved.

3. Forward Form 2363, Master File Entity Change, to the appropriate area office function for input if information needs to be updated on Masterfile to agree with the information on the tax return.

(3) eFax the assessment package in the following order, ensuring all forms are legible:

1. Form 2859, Request for Quick or Prompt Assessment , and

2. Tax returns (with attachments).

(4) eFax the forms and returns to the Accounting Control/Service. See SERP, Who/Where, Prompt, Quick, Jeopardy and Termination Assessments for the eFax number. eFax the forms to the campus where the return would normally be filed. Accounting and Tax Payment Branch in Submission Processing will ensure the eFax numbers on SERP are correct.

(5) Upon receipt, Accounting Control/Services will process the request and either eFax the appropriate form or telephone acknowledgment of receipt along with the 23–C date and the Document Locator Number (DLN), with corrections to the computation if necessary, to the initiator immediately.

(6) The originator can destroy the original returns once they receive acknowledgment of receipt, the summary date of assessment and a DLN.

(1) If requested, the campus will prepare Form 3552, Prompt Assessment Billing Assembly, and forward parts 3 and 4 to the initiator. Otherwise, the initiator must prepare Form 3552.

(2) Immediately deliver Parts 3 and 4 of Form 3552 along with Pub 1, Your Rights as a Taxpayer, either personally or by certified mail.

(3) If the initiator manually prepared Form 3552, ensure the amounts on the form match IDRS when the assessment posts to Master File. Take appropriate corrective actions if there are errors.

(1) If the campus discovers a math error on a return submitted for prompt assessment which results in an increase of tax, they will prepare a new Form 3552 and send it to the revenue officer per IRM 3.17.244.5, Corrections of Math Errors on Returns Involving Quick and Prompt Assessments (Form 3552).

(2) If the math error results in an increase in tax:

1. Issue Form 3552 and include the cause of assessment in parts 3 and 4,

2. Advise the taxpayer of their appeal rights,

3. Advise the taxpayer that collection action will not be pursued on the math error amount on a contested assessment, and

4. Advise the taxpayer to address a request for abatement to the campus.

(3) If the math error results in tax, penalty or interest decrease, the campus will forward a copy of the return and Form 3552 to the initiator for abatement action.