6-7.010 - Introduction
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. The Tax Division Collection Manual sets forth collection policies and offers suggestions about how to collect tax judgments. See http://www.justice.gov/tax/tax-division-judgement-collection-manual-2004.
6-7.100 - Tax Division's Responsibility
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 or cross-claim, the trial attorney will follow the collection steps outlined in the Tax Division 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.
6-7.200 - United States Attorney's Responsibility
There are two categories of tax judgment collection cases, for which the United States Attorney’s Offices have different responsibilities: cases that the Tax Division has formally referred to a United States Attorney’s Office for collection, and cases in which the United States Attorney’s Office assists the Tax Division in collection. <i>See </i>Tax Division Directive No. 139, located in 28 C.F.R. Pt. O, Subpt. Y, App., “Redelegation of Authority to Compromise and Close Civil Claims.”
- Formal judgment collection referrals. On occasion, and only after consultation, the Tax Division may formally refer a judgment for collection to a United States Attorney’s Office. When it makes a formal referral, the Tax Division will send the United States Attorney’s Office a letter stating that it has formally referred the judgment collection case.
In these formal judgment collection referrals, the United States Attorney’s Office has the primary responsibility to take further collection efforts and accordingly should take all necessary steps to collect the judgment and to protect the Government’s interests. When it refers the case to a United States Attorney’s Office, the Tax Division may concurrently request the IRS Advisory Services to advise the United States Attorney’s Office directly of the existence of potential assets for collection.
The United States Attorney’s Office should advise the Tax Division if any problems arise, including any disagreements between the United States Attorney’s Office and the IRS about the handling of a formally-referred case. The Tax Division then will assist 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’s Office and take responsibility for the litigation.
- Case Assistance. Where the Tax Division retains primary collection responsibility and has not formally referred the case, the United States Attorney’s Office has more limited responsibilities. That Office may have open files and furnish assistance to the Tax Division trial attorney who is assigned to the case.
6-7.300 - Compromise Authority of United States Attorneys
The Tax Division authorizes the United States Attorney to compromise only those judgments that the Tax Division has formally referred to the United States Attorney’s Office for collection. Before compromising a judgment, the United States Attorney must obtain the written concurrence of the IRS.
For details of the extent of the United States Attorney’s settlement authority, see Tax Division Directive No. 139, located in 28 C.F.R. Pt. O, Subpt. Y, App., “Redelegation of Authority to Compromise and Close Civil Claims.”
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 the redelegated amount.
6-7.400 - Collection of Tax Judgments—Collection Procedures
Assistant United States Attorneys should consult the Tax Division's Collection Manual for a detailed discussion of special procedures used in collecting tax judgments, which are broader than those available under the Federal Debt Collection Procedure Act (28 U.S.C. §§ 3001-3308). 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.
6-7.420 - Collection of Tax Judgments—Disclosure and Use of Tax Returns and Tax Return Information
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’s Office must use extreme care to ensure that returns and return information are used only to collect tax judgments and are not disclosed beyond the United States Attorney’s Office personnel directly engaged in the collection matter without first consulting with the Chief of the Tax Division’s Civil Trial Section, Southern Region. See also JM 6-1.130 (discussing confidentiality of tax return information supplied by IRS).
6-7.430 - Collection of Tax Judgments—Assistance of IRS Personnel
IRS Advisory Services personnel are specially trained in collecting taxes. The local Advisory Services staff also has access to financial data that is contained in tax returns the judgment debtor may have filed after the United States obtained the judgment. Assistant United States Attorneys may find this information useful in judgment collection efforts.
The United States Attorney’s Office should request that the IRS Advisory 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 April 2018]