6-8.010
Introduction
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The collection of judgments is an essential part of the Tax
Division's work. It requires imagination, perseverance, and
skill in using federal tax lien and levy law, post-judgment
discovery, judicial sale procedures, the Federal Debt Collection
Procedures Act (FDCPA), and state judgment execution laws. In
its Judgment Collection Manual, the Tax Division sets forth the
Tax Division's collection policies, explains the laws that
authorize enforced judgment collection, and offers suggestions
about how to collect tax judgments. See
http://www.justice.gov/tax/readingroom/JCM2004/JCUtitlepg.htm.
[updated September 2007]
6-8.100
Tax Division's Responsibility
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After a court has entered a money judgment in favor of the
United States, either in a suit originating as a collection
matter or on a counterclaim, 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 has the primary responsibility for collecting the
judgment.
If the trial attorney is unable to collect the entire amount
of the judgment and the court or the parties terminate the
litigation, the Tax Division generally refers the judgment to the
IRS for further administrative collection and closes its file.
On occasion, and only after consultation, the Tax Division may
formally refer a judgment to the United States Attorney's Office
Financial Litigation Unit (FLU) for further collection efforts.
Should it subsequently appear that the Government needs to pursue
additional litigation to collect the judgment (e.g., to
set aside a fraudulent conveyance), the Tax Division may elect to
withdraw the referral and conduct the litigation.
[updated September 2007]
6-8.200
United States Attorney's Responsibility
There are two categories of tax judgment collection cases,
for which the United States Attorney has different
responsibilities: cases that the Tax Division has formally
referred to the United States Attorney to collect a judgment and
cases in which the United States Attorney assists the Tax
Division in collecting a judgment. Tax Division Directive No.
105. See
Tax Resource Manual 28.
- Formal judgment collection referrals
. On occasion, and only after
consultation, the Tax Division may formally refer a judgment for collection
to the United States Attorney. When it makes a formal referral, the Tax
Division will send the United States Attorney a letter stating that it has
formally referred the judgment collection case.
- In these formal judgment collection referrals, the United
States Attorney has the primary responsibility to take further
collection efforts. To that end, he or she should take all
necessary steps to collect the judgment and to protect the
Government's interests. When it refers the case to the United
States Attorney, the Tax Division may concurrently request the
IRS Technical Services to advise the United States Attorney
directly of the existence of potential assets for collection.
- The United States Attorney should advise the Tax Division if
any problems arise, including any disagreements between the
United States Attorney and the IRS about the handling of a
formally-referred case. The Tax Division then will assist the
United States Attorney in resolving those problems.
- Should it appear that the Government needs to pursue
additional litigation in order to collect the judgment, the Tax
Division may withdraw the referral to the United States Attorney
and take responsibility for the litigation.
- Case Assistance
. In judgment collection cases where the Tax
Division has not formally referred the case, the United States Attorney has
more limited responsibilities. He or she may have open files and furnish
assistance to the Tax Division trial attorney who is assigned to the case.
In these cases, however, because the Tax Division has not referred the case
to the United States Attorney for handling, the Tax Division will retain
primary collection responsibilities.
[updated September 2007]
6-8.300
Compromise Authority of United States Attorneys
As provided in Tax Division Directive No. 105, the Tax
Division has authorized United States Attorneys 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 for judgments in favor of the
Government which do not exceed $300,000, if the United
States Attorney concludes that the judgment is
uncollectible.
The Tax Division authorizes the United States Attorney to
take these actions only for judgments that the Tax Division has
formally referred to the United States Attorney for collection.
Before taking these actions, the United States Attorney must
obtain the written concurrence of the IRS.
The United States Attorney must refer to the Tax Division for
resolution offers to compromise judgments where: 1) the United
States Attorney and the IRS have a difference of opinion; or 2)
the judgment exceeds $300,000.
[updated September 2007]
[cited in USAM 6-2.000;
6-6.130;
6-6.420]
6-8.400
Collection of Tax Judgments—Collection
Procedures
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The United States Attorney should consult the Tax Division's
Judgment Collection Manual for a detailed discussion of special
procedures used in collecting tax judgments. These procedures
are different from those used when the United States Attorney
collects other judgments in favor of the United States. For
example, the IRS can use a levy to collect a tax judgment; state
exemption statutes do not apply to tax judgments; and federal tax
liens have special characteristics. See 26 U.S.C.
§ 6323. Additionally, post-judgment interest on tax
judgments accrues at a different rate than the non-tax judgment
rate and is compounded daily. See
http://www.justice.gov/tax/readingroom/JCM2004.
[updated September 2007]
6-8.420
Collection of Tax Judgments—Disclosure and Use of
Tax Returns and Tax Return Information
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Pursuant to 26 U.S.C. § 6103(h)(2)(A), the IRS may
disclose tax returns and return information of tax judgment
debtors to the United States Attorney for use in collecting tax
judgments. The statute prohibits the disclosure or use of such
returns and return information to collect non-tax judgments in
favor of the United States. The United States Attorney must use
extreme care to ensure that returns and return information are
used only to collect tax judgments.
[updated September 2007]
6-8.430
Collection of Tax Judgments—Assistance of IRS
Personnel
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The IRS specially trains its local IRS Technical Services
personnel in the collection of tax indebtedness. The Technical
Services staff also has continuing access to financial data that
is contained in tax returns that the judgment debtor may have
filed after the United States obtained the judgment. The United
States Attorney may find this information useful in judgment
collection efforts.
The United States Attorney should request that the IRS
Technical Services verify any financial statement that a taxpayer
submits in connection with an offer to compromise a judgment or
in response to a request for financial information.
[updated September 2007]
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