- 25.3.5.1 General
- 25.3.5.2 Assessed Liabilities
- 25.3.5.3 Unassessed Liabilities
- 25.3.5.4 Offers in Settlement
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Area Technical Services Advisory (Advisory) is responsible for initial processing of judgments and establishing follow-ups.
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Compliance Services Collection Operations (CSCO) is responsible for monitoring taxpayers' compliance with judgments resulting from settlements requiring future actions.
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Revenue Officers may be called upon to assist in collecting judgments and conducting follow-up investigations.
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Upon advice of judgment entered, input TC 550, definer code 4, using the judgment lien expiration date (20 years from the date of the judgment) as the CSED.
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Ensure that all applicable notices of federal tax lien are properly refiled.
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After DOJ advises that their efforts to collect the judgment have ended, input TC 521 if there is an unreversed TC 520.
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If the judgment includes a payment agreement, establish an IDRS or manually-monitored installment agreement. Otherwise, evaluate for current collection potential.
If Then there is current collection potential 1. Input TC 531 if there is an unreversed TC 530. 2. Forward any useful information to the Revenue Officer who will receive the BAL DUE. 3. Close the ICS case. there is no current collection potential 1. Input TC 530 with the appropriate closing code. 2. Close the ICS case.
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Unassessed money judgments include erroneous refund judgments, judgments for failure to honor a levy, judgments for unpaid employment taxes under IRC § 3505 or under the Miller Act or under third-party contract rights., judgments against transferees for liabilities not imposed under IRC § 6901, judgments for sanctions or costs or fees that cannot be assessed under IRC § 6673(b), and judgments for restitution of amounts that cannot be assessed.
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Requests for suits that result in unassessed judgments are routed through Area Counsel to the Department of Justice (DOJ) Tax Division and assigned to a trial attorney who is responsible for filing the suit and obtaining the judgment. For approximately nine months after the judgment has been entered, it is the responsibility of the trial attorney to attempt collection of the judgment. If unsuccessful, DOJ Tax Division will close its case and refer the judgment to the local United States (US) Attorney in the area in which the debtor resides for further collection action. A copy of the referral will be forwarded to Advisory.
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Advisory must follow up as appropriate on all active unassessed judgments.
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The US Attorney will coordinate with Area Counsel (AC) and Advisory to ensure that collection efforts continue. In order to maximize the collection of unassessed judgments, Advisory will take the following actions:
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Upon receipt of a referral to Area Counsel from a Revenue Officer, Advisory will assign the case to an advisor who will open an Other Investigation (OI) on the Integrated Collection System (ICS) using case code 131, Suit by United States of America. Once the judgment is granted, the OI will be closed and a subsequent OI will be opened using case code 135, Judgments. When Area Counsel receives a request to obtain an erroneous refund judgment directly from a Campus, a copy of their initial referral to DOJ will be forwarded to Advisory and the same procedures will be followed.
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The advisor is responsible for coordinating with the AC attorney and the DOJ Tax Division trial attorney to offer assistance in obtaining and/or collecting the judgment. This would include conducting investigations using all available internal sources to determine if resources exist for satisfying the judgment.
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If the judgment is transferred by DOJ to the local US Attorney, the TS advisor will assume responsibility for coordinating with Area Counsel and Field Collection, if necessary. The advisor will conduct appropriate follow-up contacts with the US Attorney's Office and/or the DOJ Financial Litigation Unit to determine the status of collection efforts and to offer assistance in locating assets to satisfy the judgment. The 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. Once assets are located that can be seized in satisfaction of the judgment, this information will immediately be communicated to the US Attorney. Follow-up actions by the TS advisor should take place a minimum of every three months. Circumstances of the case may warrant more frequent case activity.
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In the year preceding the expiration date of the judgment lien, determine the taxpayer's potential earning capacity and request refiling of the judgment if appropriate. Direct this request to the US Attorney. Send a copy to the Judgment and Collection Unit in the Tax Division of the Department of Justice. The US Attorney will confirm the refiling and advise the Service of the new expiration date.
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Cases may be removed from active follow-up status and ICS controls closed when it is determined that there is little or no potential for the judgment to be satisfied.
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Occasionally, revenue officer assistance will be requested by the TS advisor. Generally, this will not occur on judgments under $25,000. When necessary, the TS advisor will issue an OI requesting that specific actions be taken by the revenue officer. This may include identifying assets through public records research, or any other type of asset verification deemed necessary, after the TS advisor has exhausted all available internal sources.
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Area Technical Services Advisory is responsible for coordination between the Department of Justice (DOJ) and CSCO. It is the primary point of contact on
settlements. -
CSCO is responsible for monitoring taxpayers' compliance with settlement terms.
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If the taxpayer requests modification of a settlement or collateral agreement, advise DOJ, which alone has authority to modify settlements.
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Upon notification by DOJ of an accepted offer, photocopy the following documents and forward them to the CSCO Offer in Compromise tax examiner
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taxpayer's offer
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government's acceptance
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collateral agreement
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any other information needed to identify the liability and terms of the settlement
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Assist CSCOand DOJ as requested.
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Upon receipt, review the documents to ensure that there is sufficient information to allow proper monitoring and control. If additional information is needed, contact Technical Services Advisory.
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Prepare Form 2515, Record of Offer in Compromise. Annotate Form 2515 "DOJ-Offer in Settlement" and process per IRM 5.19.7. Do not input TC 480 or 780.
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Prepare Form 6314, Deferred Payment Offer Payment Record, for all settlement agreements requiring deferred payments. Maintain Form 6314 in chronological order by anniversary date of payments due. If the account is NMF, follow the procedures outlined in IRM 5.19.7.
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Prepare Form 6313, Collateral Agreement Payment Record, for all settlement agreements involving a collateral agreement. File Form 6313 in alphabetical order.
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Deposit payments as revenue received. Apply the payments directly to the appropriate tax module in accordance with IRM 5.19.7. If the liability is unassessed, all payments should be processed through the Department of Justice Lockbox in Atlanta.
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Send DOJ (through Technical Services Advisory) a copy of Form 6314 in October of each year and a copy of Form 6313 in May of each year.
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When a deferred payment has not been received within 30 days after the due date, send Letter 274(C). to the taxpayer. If payment is not received within 15 days, send Letter 275(C). If payment is not received within 30 days, send Form 2209, Courtesy Investigation, with a copy of the letters and Form 6314 to Advisory requesting that DOJ be advised of the taxpayer's default.
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When a taxpayer fails to comply with the terms of the collateral agreement within 30 days after the due date, send Letter 279(C). If no reply is received within 30 days, send Form 2209, Courtesy Investigation, with a copy of the letter and Form 6313 to Advisory requesting DOJ be advised of the default.
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When the terms of the agreement are fulfilled, input the appropriate adjustments to zero out the account.
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When the transcript indicates a zero balance during the final year of the collateral agreement or when the terms of the collateral agreement have been fulfilled, close the collateral agreement account.
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When all amounts due under the settlement agreement, including accrued interest and amounts due under a collateral agreement, have been received, notify DOJ (through Advisory) and send copies of Form 6313 and 6314.