The Notice of Jeopardy Levy (What You Should Know)

The Notice of Jeopardy Levy (What You Should Know)

The Notice of Jeopardy Levy  

There are many different types of enforcement actions the IRS can take against taxpayers who have been assessed taxes and/or penalties. While the Internal Revenue Service may pursue a lien or levy against the Taxpayer, a Notice of Jeopardy Levy is a very serious matter in which the IRS seeks to bypass the timing and other requirements under the general Levy statute and instead pursue a more aggressive Notice of Jeopardy Levy. The Notice of Jeopardy Levy can be found under 26 USC 7429 and can have a serious impact on the Taxpayer’s financial situation. Let’s take a look at the Notice of Jeopardy Levy.

26 USC 6331 – Levy and Distraint

(a) Authority of Secretary

• • • If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property (except such property as is exempt under section 6334) belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. Levy may be made upon the accrued salary or wages of any officer, employee, or elected official, of the United States, the District of Columbia, or any agency or instrumentality of the United States or the District of Columbia, by serving a notice of levy on the employer (as defined in section 3401(d)) of such officer, employee, or elected official. If the Secretary makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary and, upon failure or refusal to pay such tax, collection thereof by levy shall be lawful without regard to the 10-day period provided in this section.

(3) Jeopardy

• • • Paragraph (1) shall not apply to a levy if the Secretary has made a finding under the last sentence of subsection (a) that the collection of tax is in jeopardy.

26 USC 7429 – Review of Jeopardy levy or assessment procedures

(in pertinent part)

(a) Administrative review

(1) Administrative review

(A) Prior approval required

• • • No assessment may be made under section 6851(a), 6852(a), 6861(a), or 6862, and no levy may be made under section 6331(a) less than 30 days after notice and demand for payment is made, unless the Chief Counsel for the Internal Revenue Service (or such Counsel’s delegate) personally approves (in writing) such assessment or levy.

(B) Information to Taxpayer

• • • Within 5 days after the day on which such an assessment or levy is made, the Secretary shall provide the taxpayer with a written statement of the information upon which the Secretary relied in making such assessment or levy.

(2) Request for Review

• • • Within 30 days after the day on which the taxpayer is furnished the written statement described in paragraph (1), or within 30 days after the last day of the period within which such statement is required to be furnished, the taxpayer may request the Secretary to review the action taken.

(3) Redetermination by Secretary

• • • After a request for review is made under paragraph (2), the Secretary shall determine

      • (A)whether or not—

        • (i) the making of the assessment under section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and=

        • (ii) the amount so assessed or demanded as a result of the action taken under section 6851, 6861, or 6862 is appropriate under the circumstances, or (B) whether or not the levy described in subsection (a)(1) is reasonable under the circumstances.

(2) Jurisdiction for determination

(A) In general

• • • Except as provided in subparagraph (B), the district courts of the United States shall have exclusive jurisdiction over any civil action for a determination under this subsection.

(B) Tax Court

• • • If a petition for a redetermination of a deficiency under section 6213(a) has been timely filed with the Tax Court before the making of an assessment or levy that is subject to the review procedures of this section, and 1 or more of the taxes and taxable periods before the Tax Court because of such petition is also included in the written statement that is provided to the taxpayer under subsection (a), then the Tax Court also shall have jurisdiction over any civil action for a determination under this subsection with respect to all the taxes and taxable periods included in such written statement.

(4) Order of court

• • • If the court determines that the making of such levy is unreasonable, that the making of such assessment is unreasonable, or that the amount assessed or demanded is inappropriate, then the court may order the Secretary to release such levy, to abate such assessment, to redetermine (in whole or in part) the amount assessed or demanded, or to take such other action as the court finds appropriate.

(f) Finality of determination

• • • Any determination made by a court under this section shall be final and conclusive and shall not be reviewed by any other court.

(g) Burden of proof

(1)Reasonableness of levy, termination, or jeopardy assessment

• • • In a proceeding under subsection (b) involving the issue of whether the making of a levy described in subsection (a)(1) or the making of an assessment under section 6851, 6852, 6861, or 6862 is reasonable under the circumstances, the burden of proof in respect to such issue shall be upon the Secretary.

(2) Reasonableness of amount of assessment

• • • In a proceeding under subsection (b) involving the issue of whether an amount assessed or demanded as a result of action taken under section 6851, 6852, 6861, or 6862 is appropriate under the circumstances, the Secretary shall provide a written statement which contains any information with respect to which his determination of the amount assessed was based, but the burden of proof in respect of such issue shall be upon the taxpayer.

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