IRS Automated Levy Program Procedures on Taxpayer Advocate Cases

13.1.10.12  (04-01-2003)
Automated Levy Program Procedures on Taxpayer Advocate Cases

  1. This section provides information on the Automated Levy Program. Automated levies are divided into three categories:

    1. Federal Payment Levies

    2. State Income Tax Levies

    3. Other Automated Levies, such as Alaska Permanent Fund Dividend Levy Program in TAS.

13.1.10.12.1  (04-01-2003)
Federal Payment Levy Program (FPLP)

  1. IRC §6331(h) authorizes the IRS to issue systemic continuous levies against certain federal payments. The law allows up to 15% of specified federal payments to be levied.

  2. The Department of the Treasury, Financial Management Service (FMS) is the disbursing agent from many of the federal payments that can be levied.

  3. FPLP is a paperless, automated levy program the IRS has implemented with FMS that will systemically attach 15% of certain federal payments made by FMS.

13.1.10.12.1.1  (10-31-2004)
Federal Payments Subject to Levy

  1. An interagency agreement between the IRS and FMS has been developed and includes Federal Payment Levy issuance on the following:

    1. Federal retirement income disbursed for the Office of Personnel Management

    2. Federal (non military) vendor payments

    3. Federal employee travel voucher advances and reimbursements

    4. Federal employee salaries disbursed through the U.S. Department of Agriculture National Finance Center and the U.S. Department of Interior National Business Center

    5. Military (Defense Finance Accounting Service) contractor payments

    6. Social Security benefit payments under Title II (Old Age, Survivors and Disability Insurance) of the SS Act Dependent child benefits, lump sum death payments and Prouty benefits (recipients who are aged 72 on or before 1971)), under Title II are NOT subject to the levy. Supplemental Security Income (SSI) payments and payments with partial withholding to repay a debt owed to Social Security are also not subject to the FPLP.

      Note:

      The Social Security Benefit payments of IMF taxpayers will be excluded from an FPLP levy if their total positive income on their latest tax return is below the amount shown in LEM 5.19.9.3.2.1 and there is no TDI (Status 03) for any subsequent year. Refer to IRM 5.11.7.2.5.2, SSA No Levy Indicator .

  2. For jointly filed returns, the levy will attach only to the primary taxpayer's benefit payment.

  3. If a taxpayer is receiving two or more types of federal payments that are available for levy through the FPLP, then up to 15% of each of those payments may be levied.

    Example:

    A taxpayer is receiving both Social Security benefits and a federal retirement benefit. The FPLP may levy 15 % of each payment.

13.1.10.12.1.2  (04-01-2003)
Identifying FPLP Cases

  1. All modules must be researched to determine if the levy was issued through the FPLP process or through standard paper levy procedures. If the levy was issued through standard (non-systemic) levy procedures, an operations assistance request (OAR) to the appropriate Operating Division to release the levy is required. Refer to IRM 13.1.7.7, Operations Assistance Request (OAR) Process.

  2. Modules subject to levy are identified by Transaction Code (TC) 971 Action Codes (AC) 060, 062, 069, and other FPLP indicators.

  3. Status codes 22, 23, 24, 26 and 53 with closing codes 03, 06, 09, 10, 12, 13 and 39 are subject to levy. Refer to IRM 5.19.9.3.2.1, Selection Criteria.

  4. Modules will remain in their original Master File status codes if they are selected for the FPLP. Master File (I/BMFOL) entity will display the indicator FMS LEVY>1 or FMS-CD>1, if at least one module has been selected in the FPLP. Refer to IRM 5.19.9.3.2.3, FPLP Indicators for additional information.

13.1.10.12.1.3  (04-01-2003)
Notice of Levy and Appeal involving FPLP

  1. Prior to issuance of a levy, the FPLP issues a final notice, Notice of Intent to Levy and Notice of Your Right to a Hearing (CP 90 for IMF accounts and CP 297 for BMF accounts), if it was not previously issued. This provides taxpayers with the opportunity to work with the IRS to resolve their tax liabilities. Refer to IRM 5.19.9.3.2.5, Notice and Appeal. These are collection due process notices. A CP 90 or CP 297 will not be issued if any CDP notice (e.g. LT11, 1058C, CP 92, CP 77) was previously issued. A TC 971 AC 069 identifies the issuance of a CDP notice.

  2. If Social Security benefits are identified, a Final Notice Before Levy on Social Security Benefits (CP 91 for IMF or CP 298 for BMF) will also be issued prior to the levy, but after the issuance of any CDP notice.

  3. These notices will have the ACS contact phone numbers for taxpayers to call to resolve their balance or exercise their appeal rights. Taxpayers may exercise their appeal rights through:

    • Collection Appeals Program

    • Collection Due Process

    • Equivalent Hearing (Appeals request made after the 30 day CDP period has expired)

  4. If a taxpayer requests appeal of the levy, explain to the taxpayer their collection appeal rights, refer to IRM 5.19.8, Collection Appeal Rights Other than cases in status 26, input a TC 971 AC 061 to block the module from being selected for FPLP. If the case is in Status 22, contact ACS and advise of action. Document the reason of the block and input a History on CC ENMOD. After the Appeal, unblock the module (TC 972 AC 061). Refer to IRM 5.19.9.4.2.1, FPLP CP Responses.

  5. If the taxpayer contacts you, try and resolve the tax module through alternative collection means, i.e. installment agreement, currently non collectible.

13.1.10.12.1.4  (04-01-2003)
Economic Hardship Cases-FPLP Issue

  1. Taxpayers who are suffering an economic hardship as the result of the Federal Payment Levy (FPL) require immediate release of the levy and action to block future levies from occurring.

  2. IRM 5.19.9.4.3, Federal Payment Levy Release, General Information provides that if a FPL is creating an economic hardship (Form 911 or hardship CNC) the FPL is released. Refer to IRM 13.1.10.12.1.5(5), Releasing Federal Payment Levies for procedures on immediate release of a levies.

    1. Prior to any release, TAS should validate the economic hardship including analyzing the taxpayers ability to pay to determine if the levy should be released.

      Note:

      TAS has the authority to release the levy, except for modules assigned in Status 26. See IRM 5.11.7.2.1.2(2). If the tax module is assigned in Status 26 an OAR to the Operating Division is necessary.

13.1.10.12.1.5  (04-01-2003)
Releasing Federal Payment Levies

  1. Pursuant to Delegation Order 267, TAS employees are authorized to release levies in systemically generated cases in certain circumstances. Refer to IRM 13.1.4.2.3.19, Levy Release Authority.

  2. The following are circumstances where a FPLP can be released:

    1. FPL is creating an economic hardship (Form 911 or hardship CNC)

    2. The LT11/1058C or CP 90/297 was sent, but not to the most recent taxpayer confirmed address that was available to us when we requested the letter.

    3. Release facilitates the collection of the liability. The IRS, not the taxpayer, makes the determination that a release facilitates collection.

    4. The taxpayer makes an installment agreement.

    5. The taxpayer makes an Offer in Compromise.

    6. The taxpayer indicates that bankruptcy has been filed.

    7. Wrongful levy or erroneous levy conditions apply.

  3. The FPL must be electronically released. It is the case advocates responsibility to input and monitor the TC 971 061 block/release or any other necessary FPLP exclusion as discussed in IRM 5.11.7.2.1, Exclusions, 5.11.7.2.6, Blocking or Releasing FPLP Levy and Exhibit 5.11.7–4, FPLP Exclusion Criteria.

    Reminder:

    FMS has different cut-off dates and depending on the type of federal payments, the TC must be posted in accordance with FMS processing cut-off dates, as referenced in the table listed in IRM 5.11.7.2.6(6), Blocking or Releasing FPLP Levy.

  4. FPLP levies are released by posting a transaction code (TC) that would exclude the taxpayer from the FPLP. See Exhibit 5.11.7–4, FPLP Exclusion Criteria. Posting a FPLP exclusion will generate a TC 972 AC 060, releasing the levy.

  5. If the taxpayer states the levy is not appropriate and the exclusion is not yet warranted (you need more time to determine if the taxpayer qualifies under the exclusion criteria), block the module by inputting an automated levy block. Input a TC 971 AC 061, on each appropriate module. Posting the TC 971 AC 061 will generate a TC 972 AC 060 reversing the existing TC 971 AC 060. This will systematically block the balance due module from going into the FPLP. Refer to IRM 5.11.7.2.6, Blocking and Releasing FPLP for when to block and release a levy and necessary TC input time frames.

  6. In addition to inputting the appropriate TC to release the levy, a FPLP Coordinator assigned in each SB/SE Compliance Area office can input an immediate release directly with FMS, if an immediate release of levy is necessary and the TC will not be posted in time to stop the levy.

    Caution:

    An immediate release is not necessary if the transaction code is posted prior to the "cut-off date" , as referenced in the table listed in IRM 5.11.7.2.6(6), Blocking or Releasing FPLP Levy.

    Prepare Form 668-D, Release of Levy , in accordance with IRM 5.19.9.4.4, Immediate Release of FPLP, and send it to the FPLP Coordinator. DO NOT MAIL THE FORM 668-D TO FMS OR THE FEDERAL AGENCY. Only if requested, mail the taxpayer a letter explaining that the levy has been released. For a listing of FPLP Coordinators, refer to Taxpayer Account Operations webpage on the TAS website. If the case is in Status 22, contact ACS to advise of the release of levy. Document the reason for the release and input History on CC ENMOD.

    Note:

    It may take two weeks for a FPL to be stopped. This means a levied payment may still be en route to the IRS even though you have released the FPL.

13.1.10.12.2  (04-01-2003)
State Income Tax Levy Program (SITLP)

  1. The State Income Tax Levy Program (SITLP) is an automated levy program between the IRS and participating States with income tax. This agreement permits state tax refunds to be applied to federal tax liabilities. The federal tax debt is matched against state income tax refunds and is sent to IRS to satisfy the debt. Procedures for the SITLP program can be found in IRM 5.19.9.2, State Income Tax Levy Program and IRM 5.11.7.1, State Income Tax Levy Program.

    1. Each module included in the SITLP will have a TC 971 AC 600.

    2. Payments received as a result of the SITLP are posted with a TC 670 designated payment code (DPC) of 20 (systemically applied) or 21 (manually applied) to the earliest module. If the amount overpays the earliest module, it will systemically offset (TC 826/706) to the next SITLP module(s) whose balance was included in the levy or to other balance due tax periods as appropriate.

    3. SITLP notices are "post levy" notices. A post levy notice, CP 92, Notice of Levy on Your State Tax Refund Notice of Your Right to a Hearing, will be issued to the taxpayer when the combination of a TC 971 AC 600 and a TC 670 DPC 20, TC 670 DPC 21 or TC 706 posts to a tax module. This combination will systemically generate the CP 92 Notice. A TC 971 AC 069 will systemically post on each module when a CP 92 is generated.

    4. The taxpayer will receive a letter from the state advising them of the levy and to contact the IRS.

  2. If the taxpayer contacts you, explain that the state tax refund was levied to satisfy a federal debt. Explain the assessment, discuss the payment of any remaining balance, and collection options, as appropriate. Refer to IRM 5.11.7.1.7, Handling Inquiries.

  3. If the taxpayer wants to appeal the levy action, see IRM 5.11.7.1.6, Appeal Procedures and explain to the taxpayer his appeal rights including a Request for a Collection Due Process (CDP) Hearing and Collection Appeal Rights.

  4. If you can resolve the account prior to the CDP or Equivalent Hearing Request input a TC 971 AC 061 which will stop future levy action, pending the outcome of the appeal. After the appeal is resolved or there is a withdrawal, a TC 972 AC 061 will be input. Refer to IRM 5.11.7.1.6, Appeal Procedures.

  5. If the taxpayer claims a wrongful/erroneous levy, such as when only one taxpayer is liable for the tax delinquency contact the SITLP coordinator. Refer to IRM 5.19.9.2.6, Refunding SITLP Payments.

  6. If the taxpayer claims the amount should not have been levied, refer to Exhibit 5.11.7-1, SITLP Exclusion Criteria to determine if the taxpayer should be excluded from the levy. If the levy should have been excluded, contact the SITLP coordinator regarding the issuance of a refund. Refer to IRM 13.1.10.12.4, Return of Levy Property as return of levied property must be accomplished through an OAR to the Operating Division.

13.1.10.12.3  (04-01-2003)
Alaska Permanent Fund Dividend Levy Program (AKPFD)

  1. The Permanent Fund Dividend (PFD) is an annual dividend (payment) received by eligible Alaskan residents. The AKPFD is an automated levy program between the IRS and the State of Alaska. The IRS database of delinquent taxpayers is matched with the State of Alaska's database that have applied for the AKPFD. BMF levies are individually processed in the SB/SE Area 12 Compliance Alaska Territory office. For BMF levies contact the AKPFD levy coordinator at (907) 566-0611.

  2. A TC 971 AC 601 is input on each tax period subject to the AKPFD levy. Two notices are currently being used, a CP 77 Collection Due Process notice and a CP 78 Reminder Notice, prior to any levy action against the AKPFD. The taxpayers have approximately 45 days to resolve the tax account, prior to the IRS initiating levy action.

  3. AKPFD IMF account cases will be controlled using a unique IDRS number 32106-00000. Check SERP ALERTS for current AKPFD procedures. BMF AKPFD levy cases can be identified by IDRS control base 32106–21465.

  4. If a taxpayer wants to appeal the levy action, see IRM 5.11.7.3.8, Appeal Procedures.

  5. If the taxpayer is interested in working out arrangements to resolve the account and a decision is reached to remove the tax account from levy action, follow procedures in IRM 5.11.7.3.9, AKPFD Inquiries .

  6. If it is determined the levy should be excluded (refer to Exhibit 5.11.7–10, AKPFD Exclusion Criteria), is erroneous/wrongful or should be released due to economic hardship take the following actions:

    1. Complete Form "No Levy/Levy Release" , refer to current SERP ALERT; and

    2. Fax the request for levy release to Compliance Group Manager, AKPFD, at the Anchorage, AK office at (907) 271-6413.

  7. Contact with the Operating Division is necessary to ensure any necessary collection suspension actions are taken and to inform Compliance of your actions.

13.1.10.12.4  (04-01-2003)
Return of Levied Property

  1. TAS does not have the authority to independently make the decision to return levied property.

  2. Certain situations may warrant return of levied property to taxpayers. Refer to IRC 6343(d),IRM 5.19.4.4.15, Levy Release: Returning Levied Property andIRM 5.19.4.4.16, Wrongful Levies . Property may be returned if:

    • Levy was premature

    • Administrative procedures were not followed

    • Taxpayer has entered into an installment agreement for the liability included in the levy

    • Returning of the property facilitates the collection of the liability

    • Return of the property would be in the best interest of the taxpayer (as determined by the National Taxpayer Advocate) and the United States.

      Note:

      If the release of the levy relieved the hardship, it is not appropriate to return the levied property.

  3. An OAR to the appropriate Operating Division Liaison is necessary to request the return of any levied property. Refer to IRM 13.1.7.7, OAR Process.

  4. A return of levied property is not considered a manual refund. TAS does not have the authority to issue a manual refund to return levied property. Delegation Order Number 40 does not apply when returning levied property nor does IRC §6343(d) grant TAS the authority to return levy property or issue a manual refund.

    Note:

    IRC §6343(d) only provides TAS the authority to request the Operating Division return levied property, it does not grant TAS the authority to return levy property or issue a manual refund.

13.1.10.12.5  (04-01-2003)
Resolving Levy Cases

  1. Follow the guidelines in IRM 5.19, Liability Collection, in determining how to assist the taxpayer in resolving their outstanding liabilities.

  2. After addressing the cause of the levy, the taxpayer's balance due and any other underlying or related issues follow closing procedures in IRM 13.1.7.10, Closing Criteriafor all additional actions necessary prior to closing.


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