VII. Closing of Cases and Reference of Judgments for Further Collection Activity
A. When and Where
A case should be closed as uncollectible in the Tax Division and the judgment referred to the IRS for further collection efforts where the initial collection activity reveals no assets which may be currently and/or readily collected by the Tax Division
B. Steps to Refer the Judgment to the IRS
When closing the case, IRS Technical Support (formerly Special Procedures) should be advised that the judgment appears not to be currently and/or readily collectible by the Tax Division and that the Tax Division is closing its file on the case. IRS Technical Support should be requested to:
(1) Take action on the taxpayer's account to ensure that any overpayments of tax are offset against the judgment liability;
(2) Attempt to levy on income or assets that are located; such as, for example, serving a continuing levy on wages;
(3) Notify the Tax Division if assets or income need to be reached by a foreclosure action, a suit to set aside a fraudulent conveyance, or other litigation;
(4) Refile the notice of tax lien, as appropriate;
(5) Request the Tax Division or United States Attorney to extend the judgment lien, as appropriate;
(6) Conduct investigations, as appropriate, to determine if any sources exist for satisfying the judgment; and
(7) Ensure that the federal judgment lien has been perfected on real property of the debtor by filing an abstract of the judgment wherever real property of the debtor is located.
(8) Assess any court costs, sanctions and attorneys' fee awarded to the United States as permitted under I.R.C. § 6673(b). See Exhibit 6 for a sample Form to Direct IRS to Assess and Collect in the Same Manner as a Tax, Sanctions, Attorney Fees, and Court Costs.
A sample letter to IRS Technical Support is attached as Exhibit 28. A list of mailing addresses and telephone numbers for IRS Technical Support offices is attached as Exhibit 29.
When referring the judgment to the IRS, the trial attorney also should advise Technical Support of any special circumstances, such as those listed below, and should ask Technical Support to monitor or investigate and take appropriate action:
(1) If the taxpayer is a defunct corporation without assets, an IRS investigation of transferee liability may be appropriate and may be requested concurrently with the referral, if a prior request has not been made;
(2) If the taxpayer has died, and the estate was closed without assets, an IRS investigation of possible assets or transferee liability may be appropriate and may be requested concurrently with the referral, if a prior request has not been made;
(3) If the taxpayer's whereabouts are unknown, despite a search, or the taxpayer has left the country, then, concurrently with the referral, the IRS should be given any information which will assist it in locating the taxpayer or the taxpayer's assets. The Immigration and Naturalization Service can be requested to institute a border check for the return of the taxpayer. A form letter to the Immigration and Naturalization Service is attached as Exhibit 30.
(4) If the taxpayer has pauperized himself or herself, will not work for wages, own property, hold a bank account, etc.;
(5) If the taxpayer is imprisoned for a long period and investigation has revealed no assets;
(6) If the taxpayer has a possibility of inheritance or survivorship of a joint tenancy or tenancy by the entirety; or
(7) If the taxpayer's financial situation appears likely to improve for any other reason, such as the maturity of dependents, a fresh start after bankruptcy, or an anticipated growth in income or business.
When all of these procedures have been accomplished, the Tax Division's responsibility for judgment collection has been met.