6-8.010 Introduction
6-8.100 Responsibility of the Tax Division
6-8.200 Responsibility of the United States
Attorney
6-8.300 Compromise Authority of United States
Attorneys
6-8.400 Differences Between Tax Judgments and
Other Civil Judgments -- Collection Procedures
6-8.420 Differences Between Tax Judgments and
Other Civil Judgments -- Availability of IRS Personnel to Perform Collection
Investigations
6-8.430 Differences Between Tax Judgments and
Other Civil Judgments --Availability of Tax Returns and Tax Return
Information
Once a judgment is obtained, the sooner collection activity begins, the
more likely it is that it may be collected in full. The greater the delay, the
greater the likelihood that assets previously available for collection will be
dissipated or disappear. Accordingly, every effort must be made to effect
collection as quickly as may be feasible.
There are substantial differences between the collection of tax judgments
and collection of other civil judgments. These differences are set forth and
explained in the Tax Division's Judgment Collection Manual.
After a money judgment has been entered in favor of the United States,
either in a suit originating as a collection matter or on a counterclaim in a
refund suit,the Civil Trial Section has the initial responsibility to pursue
collection of the judgment promptly and vigorously.
For approximately a nine-month period after a judgment has been entered,
the trial attorney will follow the collection steps outlined in the Tax Division
Judgment Collection Manual. During this period of initial collection activity,
the Tax Division will have the primary responsibility for collecting the
judgment. The Tax Division, however, may request the assistance of the United
States Attorney (e.g., to register (record, docket, or index) the judgment).
After the initial collection activity has been completed or, if later, when
all pending litigation in the case has been terminated, the Tax Division will
close its file on the case and refer the judgment to the IRS or to the United
States Attorney for further collection efforts. If, however, it should
subsequently appear that litigation is necessary to effect collection of the
judgment, the Tax Division may elect to conduct the litigation.
Under Tax Division Directive No. 105, it is important to distinguish
between two categories of cases to understand the allocation of responsibilities
between the Tax Division and the United States Attorney for the collection of tax
judgments:
- Cases formally referred to the USAOs; and
- Cases as to which the USAOs may have open files, and be furnishing
assistance to the Tax Division, but ich have not been formally referred to the
United States Attorney.
A judgment is formally referred to the United States Attorney only when a
letter states that the case is being formally referred.
After the Tax Division has formally referred a judgment to the United
States Attorney, the United States Attorney will have the primary responsibility
within the Department for further collection efforts. However, if it develops
that litigation is necessary to effect collection of the judgment, the Tax
Division may elect to conduct the litigation.
The United States Attorney should take whatever steps are necessary to
effect collection and to protect the government's interests. To assist the
United States Attorney in the collection of the judgment, at the same time that
the Tax Division refers the case to the United States Attorney, the Tax Division
will request the Special Procedures Function of the IRS District Director's
office to advise the United States Attorney directly of the existence of
potential assets for collection by procedures in aid of execution and to send the
United States Attorney annually a copy of their Investigation Report of Judgment
Debtor (Form 3347), if one is prepared. The Tax Division will also request the
IRS, if it deems appropriate, to request the United States Attorney to extend the
judgment lien.
The United States Attorney should advise the Tax Division if any problems
arise as to which the Tax Division might be of assistance, including any possible
differences of view that might arise between the USAO office and the IRS in
connection with the handling of a case.
As provided in Tax Division Directive No. 105, the United States Attorney's
are authorized to:
- Reject offers in compromise of judgments in favor of the
government, regardless of amount;
- Accept offers in compromise of judgments in favor of the government where
the amount of the judgment does not exceed $300,000; and
- Terminate collection activity by that office as to judgments in favor of
the government which do not exceed $300,000 if the United States Attorney
concludes that the judgment is uncollectible.
Such actions are authorized only for judgments formally referred to the
United States Attorney for collection and require the concurrence in writing of
the IRS.
The United States Attorney is required to refer to the Tax Division any
offer to compromise a judgment (1) as to which a difference of opinion exists
between the United States Attorney and the IRS, or (2) where the judgment exceeds
$300,000.
The Tax Division's Judgment Collection Manual should be consulted
for an in depth discussion of special procedures for the collection of tax
judgments that are not available for, or are different from, the procedures for
collecting other judgments in favor of the United States. For example, an IRS
levy can be used to collect a tax judgment; the state exemption statutes are
inapplicable to tax judgments; federal tax liens have special characteristics;
and post-judgment interest on tax judgments accrues at a different rate than the
normal judgment rate and is compounded daily.
The personnel of the local IRS Special Procedures Function are trained in
the collection of tax indebtedness and also have continuing access to financial
data contained in subsequent tax returns of judgment debtors. To assist the
United States Attorney in the collection of judgments, at the same time that the
Tax Division refers a case to the United States Attorney, the Tax Division will
request the Special Procedures Function to conduct investigations to determine
if a source exists for satisfying the judgment and to advise the United States
Attorney directly of the existence of potential assets, and to send the United
States Attorney annually a copy of their Investigative Report of Judgment Debtor
(Form 3347), if one is prepared.
The United States Attorney should request the Special Procedures Function
to verify a financial statement submitted by a taxpayer in connection with an
offer to compromise a judgment or in response to the United States Attorney's
request for financial information.
Pursuant to 26 U.S.C. § 6103(h)(2)(A), tax returns and return
information of tax judgment debtors may be disclosed to United States Attorney
for their use in the collection of tax judgments. Such returns and return
information, however, are prohibited from disclosure in the collection of nontax
judgments in favor of the United States, and extreme care must be used to assure
that this distinction is observed.
| October 1997
| USAM Chapter 6-8
|