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Levy Additional Information:
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Background, Pre-Levy Actions & Restrictions on Levy
5.11.1 Background, Pre-Levy Actions & Restrictions on Levy
5.11.1.1
(01-19-1999)
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| If | And | Then |
|---|---|---|
| Action Code CLnn (nn is a two digit number) is on the ACS transcript. | This Code is the same date as the LT11. | The LT11 was not sent. |
| Action Code MCLT is on the transcript. | The LT11 is the most recent LTnn (nn is a two digit number) before the MCLT. | The LT11 was not sent. |
- AC 066 - the return receipt was signed (not necessarily by the taxpayer) , so the notice was delivered. See second Note in IRM 5.11.1.2.2.2(6)
- AC 067 - delivery was refused or the notice was unclaimed
- AC 068 - the notice was returned, undelivered
Note:
Action Codes 066–069 can not be input on IRAF modules.
5.11.1.2.2.2 (07-26-2002)
Issuing Notice of Intent to
Levy/Notice of a Right to a
Hearing in CFf
-
When levy is the next planned
action, the revenue officer must
first issue a Notice of Intent
to Levy/Notice of a Right to a
Hearing (Letter 1058) before a
notice of levy is issued, unless
collection is in jeopardy or ACS
already issued an LT11 for all
of the periods included in the
levy.
Example:
The taxpayer provides a Collection information Statement to the revenue officer who determines that the taxpayer may qualify for:
- an installment agreement but does not agree to an acceptable monthly payment or
- an offer in compromise but does not submit one.
As a result, the revenue officer determines that levy is the next planned action to collect the amount owed and issues L1058.
-
L1058 is both a notice of a
right to a hearing and a notice
of intent to levy. Envelope
E-44B can be used to mail it, if
a window envelope can be used.
See IRM 5.11.1.2.2.3. With these
letters include the following,
- Publication 594 (Understanding the Collection Process)
- Publication 1660 (Collection Appeal Rights)
- Form 12153 (Request for a Collection Due Process Hearing)
- A copy of the letter, and
- A return envelope
Caution:
The date on the L1058 MUST be the date it is given to, left for, or mailed (return receipt requested) to the taxpayer.
Caution:
If the L1058 is sent but mistakenly is not sent to the taxpayer's last known address, issue another L1058 to substitute for the one that was not sent to the last known address. Release any levies that had been served for the liabilities included in the improperly mailed L1058. Also, see IRM 5.11.1.2.1.1 and 5.11.2.3, Returning Levied Property to the Taxpayer.
Reminder:
If the taxpayer has an authorized representative, a copy of correspondence to the taxpayer must also be given to the representative. Use regular mail for the copy.
Note:
In addition to ACS and CFf, a Collection Due Process Notice may be issued by master file for the State Income Tax Levy Program (SITLP) or the Federal Payment Levy Program (FPLP). See IRM 5.11.7, Automated Levy Programs.
-
Issue the L1058 only after at
least one attempt to contact the
taxpayer. Usually, initial
contact will be a field call.
Exception:
An attempt to contact the taxpayer before sending an L1058 is not necessary if,
- The taxpayer is in another country
- The taxpayer is dead (try to contact the administrator/executor of the estate, if one can be found)
- There has already been an attempt to contact the taxpayer, an L1058 or LT11 was sent, and then additional modules were received
- The taxpayer can not be located
- No telephone number can be found, and the taxpayer is either potentially dangerous or lives in a remote location, where field calls are rarely made, or
- The levy is issued in a computer program in which files of liabilities are matched against files of income/assets (not merely a computer match to identify levy sources) e.g., levy on state tax refunds
-
Do
not issue the L1058, unless
there is a levy source, and levy
is the next planned action. See
IRM 5.7.8.3(6),
Working
Repeater Trust Fund Taxpayers,
for an exception when working
repeater trust fund taxpayers.
Also, do not issue it if there
is a restriction that would
prohibit levies when the 45 day
waiting period (30 days plus a
15 day tolerance) runs out. See
IRM 5.11.1.3. If the restriction
has an ending date, the notice
can be issued as long as the 45
day period does not run out
before the restriction ends.
Example:
The taxpayer offers to pay the tax in installments. Because of the pending installment agreement, there is generally a restriction on levy. See IRM 5.11.1.3.9. While the agreement is pending, the restriction does not have a specific ending date. Do not issue L1058.
Example:
The taxpayer's request for an installment agreement is rejected, and the independent reviewer sustains the rejection. The taxpayer then has thirty days to appeal the rejection, plus there is an additional fifteen day tolerance period. See IRM 5.14.9.4,Collection Appeals Program. If levy is the next planned action, L1058 can be issued at the same time the taxpayer is notified of the rejection, and the two 45 days periods will run concurrently.
Example:
The taxpayer's request for an installment agreement is rejected, and the independent reviewer sustains the rejection. If L1058 is not issued when the taxpayer is notified of the rejection, and the rejected agreement is appealed, a new restriction arises that does not have a specific ending date. Do not issue L1058.
Example:
The taxpayer fails to meet the terms of an agreement, so the Service proposes to terminate it. There is a 90 day restriction on levies. See IRM 5.14.11, Defaulted Installment Agreements, Terminated Agreements and Appeals of: Proposed Terminations (Defaults) and Terminated Installment Agreements. When the letter is issued that proposes terminating the agreement, L1058 can not be issued, because there would still be a restriction preventing levies when the 45 day waiting period for the L1058 runs out. However, when there are no more than 45 days left on the restriction, and levy is the next planned action, L1058 can be issued, as long as the taxpayer has not appealed the defaulted agreement.
-
Because taxpayers only have the
right to one Collection Due
Process Hearing for each
liability, avoid listing
liabilities on L1058 that have
already been included in such a
notice. Sending more than one
notice for a liability may give
taxpayers the impression they
can have another Due Process
appeal for that liability.
Reminder:
None of the campus IDRS notices are notices of a right to a hearing.
Reminder:
If the L1058 is mailed, it must be sent by certified or registered mail WITH A RETURN RECEIPT.
-
When the L1058 is mailed, update
IDRS with Transaction Code (TC)
971, Action Code (AC) 069 using
the ICS FINAL NOTICE DELIVERY
METHOD option. This will update
the ICS FINAL NOTICE DATE and
upload the transaction to IDRS
for each module included on the
notice. Then, when the results
of the delivery are known, use
the appropriate ICS option under
FINAL NOTICE DELIVERY METHOD or
METHOD RECEIPT RESPONSE to
upload AC 066, 067, or 068, as
shown in IRM 5.11.1.2.2.1. For
modules that are not in status
26 or when the TC 971, AC 069
should be input for a date that
is more than thirty days before
the current date, prepare Form
4844, Request for Terminal
Action, for manual terminal
input to IDRS. Ask the terminal
operator to input the date the
action took place, rather than
the date of the input.
Example:
The L1058 is mailed on March 10. The TC 971, AC 069 is input on March 12. The date of the TC is March 10.
- If the L1058 is given in person instead of being mailed, input TC 971, AC 069 and TC 971, AC 066 on the same date.
- If the notice is left at the taxpayer's home or business address instead of being mailed, input TC 971, AC 069, and TC 971, AC 067 on the same date.
Note:
Using the AC 067 in this case does not indicate delivery was refused. Inputting it the same date as the AC 069 is merely a way to show how the notice was delivered. Refused delivery is distinguished from this by the AC 067 being at a later date than the AC 069.
Note:
If the return receipt comes back unsigned, but the envelope is not attached, use Action Code 066. If there is a postmark date on the receipt, use that as the date of the transaction. If there is no postmark date, use the date that the return receipt is received.
Note:
In the past, if an IDRS 504 notice (status 58) had never been issued for a module, TC 971 Action Code 35 was input to increase the failure to pay rate to 1% after L1058 was issued. Action Code 069 now causes this change. If the higher rate has not already gone into effect because of a 504 notice, Action Code 35 is not necessary.
5.11.1.2.2.3 (07-26-2002)
Issuing Notice of Intent to
Levy/Notice of a Right to a
Hearing for Joint IMF Bal
Due account
-
If
there are Bal Dues for jointly
filed income tax returns,
prepare two copies of L1058.
- If they are not delivered in person or left at the taxpayers' home or business, mail them in separate envelopes to the taxpayers. Address one envelope to the primary taxpayer and one to the secondary, although both taxpayers' names will be on each of the notices. Do this regardless of whether the taxpayers live at the same address or different addresses. Do not use a window envelope. If there are changing name lines, be careful that taxpayers are not sent a notice for taxes they do not owe.
-
If the notices are going
to different addresses,
do not reveal one
person's address to the
other.
Example:
William and Barbara White owe tax for a joint income tax return. They now have different addresses. One L1058 is printed with both names on it and William’s address. This letter is put in a non-window envelope with only William’s name and his address on it. A copy of the letter is printed for Barbara. Both names are also printed on her copy, but Barbara’s address is used on it. Her copy of the notice is put in a non-window envelope with only Barbara’s name and her address on it.
- Before sending the L1058 to joint taxpayers living at different addresses, try to contact both of them, so the letter is not a surprise to either of them. See IRM 5.11.1.2.2.2(3). If one of the taxpayers is living in a different jurisdiction, try to get a telephone number to call this person before sending the L1058s. If a number can not be found or the attempted call fails, the letters can still be sent.
Example:
John and Mary Doe owe tax for their 2000 joint income tax return. John Doe also owes tax for his single return for 1999. John must be sent a notice for both years, but only send Mary a notice for 2000.
-
Before sending the L1058 to the
secondary taxpayer, check master
file on-line to find out if this
person has filed a return with a
different address since the
joint return(s) that generated
the Bal Dues. This step is not
necessary when there has been
contact with the taxpayers
confirming the secondary’s
address or when the Bal Dues are
for the most recent tax year.
Example:
There are Bal Dues for Steven and Marcia Brown for their joint income tax return for 2000. The revenue officer has not been able to contact the taxpayers but has found a levy source, so two L1058s are going to be sent. Before sending them, the revenue officer uses master file on line to check Marcia Brown’s social security number and finds that she has filed a more recent joint return with her second husband. The L1058 mailed to Marcia needs to be mailed to the address on her most recent return rather than the same address where Steven Brown’s L1058 will be mailed.
-
If
levy on one of the taxpayers’
property is prohibited, do not
send a separate notice to that
person. Instead, prepare a
notice with both taxpayers’
names on it, and mail it in an
envelope addressed to the
taxpayer whose property will be
levied as the next, planned
action. When the condition that
prohibits levy no longer exists,
and a levy is the next planned
action to collect from the
person whose property previously
could not be levied, send an
L1058 to that person. Also, see
IRM 5.11.2.1.2(4).
Example:
John and Mary Doe owe tax for a joint return. They are separated, and Mary is making payments on an installment agreement for the joint liability. John is not a party to the installment agreement. The revenue officer identifies the bank where John has an account and plans to send a notice of levy to the bank. Before the bank account can be levied, John must be sent an L1058, if one has not already been sent for the liabilities that will be included in the notice of levy. The notice will have both names on it, but it will only be mailed to John. Mailing an L1058 to Mary would be improper, because her installment agreement prevents levy on her property. Later, Mary defaults on her agreement, and she has the right to appeal the default. When her property is going to be levied she must first be sent an L1058 giving her the right to a due process hearing. During the waiting period for her L1058 and during her appeals, collection can continue against John.
Example:
Joseph and Marcia Smith owe tax for a joint return. Nothing prohibits levy on their property. A levy source is found for Joseph but not Marcia. As long as a levy is about to be served as the next planned action, and there is no restriction on being able to levy the property of both taxpayers, separate L1058s will be sent to both of them.
-
Input the TC 971 and ACs as
explained in IRM
5.11.1.2.2.2(6). However, when
separate notices are sent for
joint assessments, include the
secondary taxpayer's social
security number as, "X-Ref
X07-01-2004, " in the "Remarks"
on the posting document for
inputting the record of that
person's notice. This will
distinguish the primary and
secondary taxpayers' ACs.
Example:
John and Mary Doe's notices for their joint 2000 income tax return are both mailed on 1–29–2002. John's return receipt comes back signed, but Mary's is returned undelivered. There will be two TC 971s with AC 069 on 1–29–2002. One will have Mary's X-Ref SSN. The other will have no X-Ref SSN. There will also be a TC 971 AC 066 with no X-Ref SSN for John's notice and a TC 971 AC 068 with Mary's X-Ref SSN for Mary's notice.
-
When ACS issues an LT11, it will
only issue one notice for joint
IMF assessments, unless the
taxpayers are known to be living
at different addresses. Because
of the volume and batch
processing of these computer
printed notices, ACS will not
normally issue separate notices
for joint assessments. The
single ACS notice is,
nevertheless, notice to both
taxpayers. Additionally,
separate notices do not have to
be sent when CFf is collecting
the same liabilities for which
ACS already issued its Notice of
Intent to Levy/Notice of a Right
to a Hearing.
- While working the Bal Dues in CFf, the revenue officer may discover that the taxpayers were separated, and one of them was not living at the last known address when the LT11 was sent. As long as that was the person’s last known address when the notice was sent, it was a legally valid notice of a right to a hearing. See IRM 5.11.1.2.1.1. Nevertheless, it may be inequitable to take this person’s property without notice. Give Letter 3174(P) to the taxpayer who was not living at the address before serving additional notices of levy on that person’s property, and release notices of levy that have been served on that person’s property. See Exhibit IRM 5.11.1–3.
-
ACS may have sent LT11
to the address shown on
master file for the last
joint return that the
taxpayers filed.
However, if they had
separated, they were
living at different
addresses when the LT11
was sent, and the
secondary taxpayer had
already reported a new
address, that becomes
that person’s last known
address. In this case,
an L1058 needs to be
sent to the secondary
taxpayer before that
person’s property can be
levied.
Example:
ACS had Bal Dues on James and Sandra Jones. An LT11 was sent to the address shown on master file. The revenue officer then receives the Bal Dues in transfer and finds out that Sandra Smith (formerly Jones) was not living at that address when the LT11 was sent. She is filing jointly with her new husband, and they had already filed a return showing their address when the LT11 was sent.
-
By
the same token, the revenue
officer may send two L1058s for
a joint Bal Due and discover
later that one of the taxpayers
was living at a different
address when the letters were
sent. Although the notice is
legally valid if it is sent to
the last known address, it has
been administratively determined
that Letter 3174(P) will be sent
to this taxpayer before serving
additional notices of levy on
that person’s property, and
notices of levy that have
already been served on that
person’s property will be
released.
Note:
Because of procedures in (2), above, this should only be an issue if the secondary taxpayer has not reported a new address.
5.11.1.2.2.4 (06-29-2001)
Issuing Notice of Intent to
Levy/Notice of a Right to a
Hearing for Deceased
Taxpayers
-
Generally, if a taxpayer has
died, a proof of claim may be
filed to collect delinquent tax
from the estate. In some
circumstances a notice of levy
may be called for.
Example:
The estate or certain assets may not be going through probate.
Example:
For a joint return, the assets of the surviving spouse may be levied to collect the delinquent tax.
- Technical Services and/or Associate Area Counsel may need to be consulted to determine whether a notice of levy can be served.
- If a notice of levy will be served, L1058 must be sent, even if the TP has died.
-
For
single liabilities
IF THEN No estate administrator or executor is known Send the L1058 to: John Smith (Dec'd)
John Smith's Last Known
AddressIF THEN An estate administrator or executor is known Send the L1058 to: John Smith (Dec'd)
Charles Jones, Administrator (or Executor)
Charles Jones' Last Known AddressNote:
Consider sending a copy to the address of the fiduciary and/or attorney for the estate.
-
For
joint IMF liabilities
IF THEN No estate administrator or executor is known Send two L1058s.
Address both to:James Doe (Dec'd) and Mary Doe Use James' last known address on his L1058 and Mary's last known address on hers. Put James' L1058 in a non-window envelope addressed only to him at his last known address. Put Mary's L1058 in a non-window envelope addressed only to her at her last known address. IF THEN An estate administrator or executor is known Send two L1058s.
Address one to:James Doe (Dec'd) and Mary Doe
William Green, Administrator (or Executor)
William Green's Last Known AddressPut this in a non-window envelope addressed the same way as the letter, except delete Mary's name. Address the other L1058 to: James Doe (Dec'd) and Mary Doe
Mary's Last Known AddressPut this in a non-window envelope addressed the same way as the letter, except delete James' name. Note:
Consider sending a copy to the address of the fiduciary and/or attorney for the estate.
5.11.1.2.2.5 (06-29-2001)
Issuing Notice of Intent to
Levy/Notice Of a Right to a
Hearing to Partnerships
- When sending L1058 to a partnership, send it to the last known address of the partnership. See IRM 5.11.1.2.1.1.
-
Do
not send additional L1058s to
the partners at their addresses.
Exception:
If the partnership is no longer operating, or there is another reason to know that it is not at the last known address, L1058 must still be sent to this address. Also send a copy of the letter and the enclosures to any general partners whose addresses are known, e.g., partners who provide their addresses when contacted about the taxes, and partners whose addresses are found through normal skip tracing when a partnership is not at its last known address. Use regular mail for the copies sent to the partners.
5.11.1.2.2.6 (07-01-2004)
Timeliness of Notice
- The purpose of the Notice of Intent to Levy described in IRM 5.11.1.2.1(3) is to warn the taxpayer that continued failure to respond can be expected to result in imminent enforcement. When a long time passes after the notice is issued and there