When the IRS wants to collect a tax debt, it has several options, including tax liens and levying property to satisfy a debt. But when the government is concerned that following the usual collection procedures will result in a loss to the government, they can use a jeopardy assessment or levy.

What is a Jeopardy Assessment?

The IRS has standard procedures for assessing how much you owe in taxes. It typically happens when you file taxes but can also happen if you fail to file a return, during an audit, or if the IRS finds undeclared income. The IRS will notify you of the tax debt owed and, after a series of notices, can place the debt in collection. However, the IRS can use a jeopardy assessment when the agency believes the delay in the regular assessment and collection process will jeopardize its ability to lien or levy assets. In these cases, the IRS may circumvent the usual procedures and immediately assess the debt. A jeopardy assessment may happen if an auditor finds that a taxpayer is hiding assets or evidence of criminal activity like narcotics sales or gambling or if the IRS believes the taxpayer may flee the country.

What is a Jeopardy Levy?

A jeopardy levy is a similar process where the IRS can immediately seize assets or property to avoid a loss to the government. Typically, the agency must give taxpayers 30 days' notice before levying their assets. During this time, the taxpayer can request a Collection Due Process Hearing to negotiate an installment payment, dispute the debt, or present defenses. However, the IRS doesn't have to provide notice in a jeopardy levy and can immediately levy an asset such as a bank account, car, wages, or other property.

Generally, the IRS collection will only consider a collection in jeopardy if:

• A taxpayer is attempting to hide or appears to be preparing to flee the country,
• A taxpayer is trying to hide, transfer, or move assets to prevent the IRS from seizing them, or
• A taxpayer appears financially insolvent and likely to lose all assets.

You Need an Experienced Tax Attorney

While jeopardy assessments and levies are an extreme remedy for the IRS, they are appealable. If you're facing a jeopardy assessment or levy, you need a skilled tax professional immediately. If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.