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Section 6. Notice of Levy in Special Cases

5.11.6 Notice of Levy in Special Cases

5.11.6.1 Retirement Income
5.11.6.2 Funds in Pension or Retirement Plans
5.11.6.3 Insurance
5.11.6.4 Government Employees
5.11.6.5 Federal Contractors
5.11.6.6 Levy on Other Government Payments
5.11.6.7 Receivables
5.11.6.8 Securities—Stocks, Bonds, Mutual Funds, etc.
5.11.6.9 United Nations (UN) Employees' Income
5.11.6.10 Mutilated Currency
5.11.6.11 Levy on Non-Liable Spouse in a Community Property State
5.11.6.12 Levy on Inheritances
5.11.6.13 Single Member/Owner Limited Liability Companies
Exhibit 5.11.6-1 Addresses often used for Levy on Federal Contracts
Exhibit 5.11.6-2 Social Security Levy Payment
Exhibit 5.11.6-3 National Labor Relations Board Addresses

5.11.6.1 (06-29-2001)
Retirement Income

Use discretion before levying retirement income.
A notice of levy is continuous for wages and salary. Other levies only reach property a third party is holding when the levy is received.

Reminder:

References to property include rights to property.

As long as the taxpayer has a fixed and determinable right to property, a levy attaches that right. Therefore, a levy on retirement income can reach payments in the future whether the taxpayer has begun receiving payments when the levy is served or not. This often means that a levy on retirement income reaches future payments. Because this type of levy may begin attaching payments long after the levy is served, follow-up when the taxpayer is expected to become eligible to receive payments. This may require a mandatory follow-up for Bal Due accounts reported currently not collectible.
If the taxpayer has the right to receive future payment but has not opted to do so, the levy attaches that right.
A levy served while the taxpayer is receiving periodic payments reaches payments due then, as well as payments as they become due later, as long as there is already a fixed and determinable right to the future payments.

5.11.6.1.1 (03-15-2005)
Social Security

The Social Security Administration (SSA) makes payments for:

Retirement, Survivors, and Disability Insurance (RSDI) and
Supplemental Security Income (SSI).

RSDI is based on social security taxes during a person's working years. RSDI payments are not based on need, and they can be levied. SSI payments are for needy people who are elderly, blind, or disabled. Although IRC Section 6331(h) permits the service to levy on up to 15 percent of SSI payments, the Service will not pursue these levy sources at this time. See IRM 5.11.7.2.1(5), Background and Authority.
Send Part 1 of Form 668–W(ICS) or 668-W(c)(DO) to the SSA office that issued the taxpayer's social security number. Include Notice 484, Instructions to Employer with Centralized Payroll System for Processing Statement of Exemptions and Filing Status. See the Servicewide Electronic Research Program (SERP), Who/Where, Levy Source Information for SSA office addresses. Send the other parts of the levy to the taxpayer with Notice 483, Instructions to Employee Paid Through a Centralized Payroll System for Submitting Statement of Exemptions and Filing Status. Make appropriate changes to Notice 483 and 484.
Once a levy is served, SSA will continue honoring it, until the levy is released. However, the taxpayer's eligibility for benefits could change. This might stop the levy proceeds. If this happens, SSA will notify the office that issued the levy not to expect more payments. However, SSA is not allowed to explain why. This would violate the privacy laws that restrict who SSA can disclose benefit information to.

Example:

The taxpayer may get full benefits when the levy is served. Later, the person starts working. This may reduce the benefits to less than the exempt amount, so there will be no levy proceeds. If the person stops working and gets full benefits again, SSA will not automatically start sending levy payments. A new levy must be served.

There is limited space on the check for information to identify the payment. Each line is limited to 22 characters. The check is sent in a window envelope with information in Exhibit 5.11.6–2 showing through the window. There is no need to send a supply of reply envelopes with the levy.

5.11.6.1.2 (11-05-1999)
Military Retirement

See SERP, Who/Where, Levy Source Information, for addresses for mailing levies on military retirement.
Expect the first payment two to three months after the notice of levy is sent.

If	Then
The levy is received by the 15th of the month.	The first payment is sent on the first business day of the second month after that.
The levy is received after the 15th of the month.	The first payment is sent on the first business day of the third month after that.

Example:

A levy is received on September 12. The first payment is sent on the first business day of November.

Example:

A levy is received on September 19. The first payment is sent on the first business day of December.

5.11.6.1.3 (06-20-2001)
Civil Service Retirement

See SERP, Who/Where, Levy Source Information, for the address for these levies.
If the civil service account number is known, include it on the levy.
Expect the first payment in two to three months. See IRM 5.11.6.1.2(2) above.

5.11.6.1.4 (03-15-2005)
Railroad Benefits, Medal of Honor Winners, and Annuities for Military Families and Survivors

Certain annuity and pension payments are exempt from levy. See IRC 6334.
The exempt payments include:

Railroad Retirement and Unemployment
Special Pensions for Medal of Honor Winners
Annuities under the Retired Serviceman's Family Protection Plan and Survivor Benefit Plan

Although IRC Section 6331(h) permits the Service to levy on up to 15 percent of railroad retirement and unemployment payments, the Service will not pursue these levy sources at this time. See IRM 5.11.7.2.1(5) Background and Authority.

5.11.6.2 (03-15-2005)
Funds in Pension or Retirement Plans

These instructions cover money accumulated in a pension or retirement plan, as well as Individual Retirement Arrangements (IRAs). They do not deal with levying retirement income. See section IRM 5.11.6.1 above.
There are many employer and self-sponsored retirement vehicles that are not exempt from levy. These plans include, for example:

Qualified Pension, Profit Sharing, and Stock Bonus Plans under ERISA
IRAs
Retirement Plans for the Self-Employed (such as SEP-IRAs and Keogh Plans)

Because these retirement vehicles provide for the taxpayer's future welfare, levy on the assets in a retirement account (as contrasted with income from the account) after following the procedures set forth below.

Note:

On January 1, 2000, a new exception to the 10 percent additional tax on early distributions from retirement plans was added to the Internal Revenue Code. If an account is levied upon, the taxpayer does not owe the 10 percent additional tax. Because of the levy exception to the 10 percent additional tax, occasionally taxpayers may ask the Service to levy the funds in the retirement accounts. Even though the taxpayer may be able to voluntarily withdraw money in a lump sum from a retirement account and apply it to the outstanding tax liability, do not levy on retirement assets at the request of the taxpayer. Instead, follow the procedures set forth below.

Note:

An imminent CSED, alone, does not justify levying on retirement assets. Levying on assets in retirement accounts requires application of the procedures set forth below.

The first step in deciding whether to levy on a retirement account is to determine what property, retirement assets and non-retirement assets, is available to collect the liability. If there is property other than retirement assets that can be used to collect the liability, or if a payment agreement can be reached, consider these alternatives before issuing a levy on retirement accounts. Also consider the expense of pursuing other assets as well as the amount to be collected.
The second step in deciding whether to levy on a retirement account is to determine whether the taxpayer's conduct has been flagrant. If the taxpayer has not engaged in flagrant conduct, do not levy on retirement accounts. Deciding whether the taxpayer has engaged in flagrant conduct must be done on a case-by-case basis. Keep in mind extenuating circumstances may exist that mitigate the taxpayer's flagrant conduct. The following are some examples of flagrant conduct.

Example:

Taxpayers whose failure to pay is based on frivolous arguments such as taxes are illegal, unconstitutional, only apply to a narrow range of people, and similar arguments that have been consistently rejected by the courts.

Example:

Taxpayers who continue to make voluntary contributions to retirement accounts while asserting an inability to pay an amount that is owed.

Example:

Taxpayers who contributed to retirement accounts during the time period the taxpayer knew unpaid taxes were accruing.

Example:

Taxpayers convicted of tax evasion for the tax debt.

Example:

Taxpayers assessed with a fraud penalty for the tax debt.

Example:

Taxpayers assisting others in evading tax.

Example:

Taxpayers with liabilities based on illegal income.

Example:

Taxpayers who are in business and pyramiding unpaid trust fund taxes, or individual taxpayers who are pyramiding unpaid income taxes.

Example:

Taxpayers against whom the Trust Fund Recovery Penalty has been asserted on more than one occasion.

Example:

Taxpayers who have demonstrated a pattern of uncooperative or unresponsive behavior, e.g., failing to meet established deadlines, failing to attend scheduled appointments, failing to respond to revenue officer attempts to contact. In such cases, determining alternatives and the taxpayer's dependence on the money in the retirement accounts (final step) may not be possible, so a levy may need to be served without making those determinations.

Example:

Taxpayers who have placed other assets beyond the reach of the government, e.g., sending them outside the country, concealing them, dissipating them, or transferring them to other people.

Example:

Taxpayers with jeopardy or termination assessments.

The final step in deciding whether to levy on retirement assets is to determine whether the taxpayer depends on the money in the retirement account (or will in the near future) for necessary living expenses. If the taxpayer is dependent on the funds in the retirement account (or will be in the near future), do not levy the retirement account. In determining whether the taxpayer depends on the money (or will in the near future), use the standards in IRM 5.15, Financial Analysis, to establish necessary living expenses. Use the life expectancy tables in Publication 590, Individual Retirement Arrangements (IRAs), to estimate how much can be withdrawn annually to deplete the retirement account in the taxpayer's remaining life. Also, consider any special circumstances in the taxpayer's specific situation, such as extraordinary expenses or additional sources of income that will be available to pay expenses during retirement.
The taxpayer may be able to withdraw money in a lump sum from a plan. If the taxpayer has the right to do so, a levy can reach that right. However, remember that a levy only reaches the taxpayer's present rights.

Example:

The taxpayer has $10,000 in a plan but can only withdraw it later. The taxpayer may have a present right to the money, although it can not be withdrawn immediately. A levy may reach that right, but the money can be not paid over until the taxpayer can withdraw it. At that time, there may be $30,000 in the plan. Without a new levy, though, only $10,000 could be paid over.

Example:

The taxpayer has money in a plan. The terms of the plan do not allow for any lump sum withdrawal. The plan provides a right in the future to receive monthly payments, but the taxpayer has not paid into it long enough yet to qualify for any future payments. A notice of levy attaches nothing, because the taxpayer has no present property rights.

The notice of levy form says it does not attach money in pension or retirement plans. When levying on these funds, sign the notice of levy in the block to the left of, "Total Amount Due. "
Have the SB/SE Director, Collection Area approve the notice of levy by signing the form as the Service Representative.
Consider discussing the case with the Employee Plans Group before issuing the levy. Their advice, as well as advice from Technical Services and Associate Area Counsel, may be needed to determine the present right to property. Often, a levy is served before the taxpayer's precise rights are determined. Try to get a copy of the plan instruments as soon as possible to determine the taxpayer's interests in the plan.
When money is withdrawn from a retirement account, the taxpayer may be liable for income tax on the withdrawal. If the taxpayer is less than 591/2 years old, there may also be 10 percent additional tax on early distributions. However, there is an exception where the taxpayer is not liable for the 10 percent additional tax on early distributions.

Although the taxpayer will not owe the 10 percent additional tax on early distributions if money was withdrawn because a notice of levy was served on the retirement account, there may still be income tax owed for the amount withdrawn, however.
Send Letter 3257 (DO) with the notice of levy and Letter 3258 (DO) with the taxpayer's copy of the notice of levy. These letters state the withdrawal is not subject to the tax on early distributions, even if the taxpayer is under 59 1/2 years old. These letters are available as macros on the Integrated Collection System.

Retirement accounts that are excluded from the bankruptcy estate are still subject to being levies to collect taxes that are discharged in bankruptcy, where a Notice of Federal Tax Lien was filed before bankruptcy. Consider levy on the retirement accounts if there is no other property that survived the bankruptcy.

Note:

Where no Notice of Federal Tax Lien was filed before bankruptcy, it is not settled whether the IRS can levy to collect discharged taxes from excluded retirement accounts. Counsel should be consulted in such situations.

5.11.6.2.1 (06-29-2001)
Thrift Savings Plan

Federal employees may contribute to the Thrift Savings Plan (TSP). Generally, distributions cannot be paid from taxpayers' accounts before they have left federal service, so there may be no immediate right to withdrawn money from the TSP account.

If	Then
The taxpayer is a current federal employee.	The levy attaches to the taxpayer's TSP account. However, the TSP will not have to send money until the taxpayer could withdraw it.
The taxpayer is receiving regular payments of money from the TSP.	The levy attaches these payments.
The taxpayer has left federal employment and still has funds in the TSP to continue growing.	A levy attaches the taxpayer's account.

The TSP is administered by the Thrift Investment Board (TIB) which has contracted with the Department of Agriculture's National Finance Center in New Orleans to be the TSP record keeper. See SERP, Who/Where, Levy Source Information for the address.
TIB's position is that money in the TSP can not be levied. This includes funds that have accumulated in the Plan, as well as periodic payments that are being made to taxpayers. Get advice from Associate Area Counsel before issuing a levy to TIB.

5.11.6.3 (05-05-1998)
Insurance

This subsection contains instructions on levying on insurance.

5.11.6.3.1 (05-05-1998)
Cash Loan Value of Life Insurance

The cash loan value of life insurance and endowment contracts can be levied. The policy does not have to be surrendered. See IRC 6332(b).

5.11.6.3.1.1 (06-29-2001)
Serving the Levy

Generally, do not levy the cash loan value of life insurance if the taxpayer has:

few assets,
small income, and
policies with a face value below $1000.

If known, include the following on the notice of levy:

policy number(s) and, "and any other policies this person owns on his/her life,"
date of birth, or
taxpayer's approximate age and spouse's name.

The group manager or an Insolvency/Technical Services manager (second level or above) must approve the notice of levy. See IRM 5.11.1.2.4, Managerial Approval.
The insurance company does not have to turn over money until 90 days pass.

Compute penalty and interest through 90 days from the date of the levy.
Write, "I certify that a copy of this notice was mailed on (insert date) to the taxpayer's last known address" above the taxpayer's name and address.
Sign this statement.
Mail Part 3 to the taxpayer before sending the levy to the insurance company.

5.11.6.3.1.2 (06-29-2001)
Payment for a Levy on the Cash Loan Value of Life Insurance

If the amount owed is paid before 90 days, send the insurance company Letter 980(DO), Notice of Levy Against Insurance Cash Value, with a release of levy.
The taxpayer can ask the insurance company to pay before 90 days to save penalty and interest. A new payoff figure may be needed.
If the amount is not paid within 90 days, send Letter 980(DO) to the insurance company. This tells them the amount still owed. Send the letter even if the amount has not changed.
The insurance company must pay over the amount the taxpayer could have obtained as a loan. This amount is computed to the 90th day after the levy. Automatic premium loans and contractual interest is not paid over, if they keep the contract in force. However, an agreement to do this must be before the insurance company knew of the tax lien.

5.11.6.3.1.3 (06-29-2001)
Actual Knowledge of the Tax Lien

The insurance company may have to pay more than the amount in IRM 5.11.6.3.1. Actual knowledge of the tax lien gives it priority over the insurance company if there are loans later. This means policy loan payments (and contractual interest) must be paid over, too, if a levy is served.
Give the insurance company a copy of the lien or a letter to give actual notice of the lien. This stops the taxpayer from taking loans as equity builds up in the policy.

Note:

Do not try to give notice by serving a new levy. This starts the 90 day period again.

5.11.6.3.2 (06-29-2001)
Foreclosure on the Policy

There is also a right to foreclose on the policy, if necessary. Consult with Technical Services and Associate Area Counsel for advice. See IRM 5.17.3.5.11, Legal Reference Guide for Revenue Officers, for discussion of the differences between foreclosing on the policy to obtain the cash surrender value and levying to obtain the cash loan value.

5.11.6.3.3 (05-05-1998)
Department of Veterans Affairs Insurance Policies

Dividends payable in cash and the cash loan value of Department of Veterans Affairs (VA) insurance policies can be levied.

Exception:

If the dividends are applied to pay future premiums, they can not be levied.

5.11.6.3.3.1 (05-05-1998)
Levy on Dividends of VA Policies

Before serving a notice of levy on VA insurance policy dividends, use Form 2876, Request for VA Insurance Policy Dividend Information, to get:

Insurance File Number
Policy Number
Anniversary Date of the Policy
Office that Pays Dividends

Note:

The P.O. Box for Philadelphia on Form 2876 is wrong. Use Box 42954, instead.

Dividends are payable on:

United States Government Life Insurance Policies
National Service Life Insurance Policies

Exception:

Policies with a number preceded by RH do not pay dividends.

To levy dividends, mail Form 668-A(ICS) or 668A-(c)(DO) thirty days before the policy's anniversary date.

Write, "Levy is only on dividends, " on the levy form.
Write, "Policy Number ______," above the taxpayer's name and address.

Exception:

If the policy number and file number are different, write, "Policy No. ______(File No. ______), " on the form.

5.11.6.3.3.2 (06-29-2001)
Levy on Cash Loan Value of VA Insurance Policies

Many VA insurance policies have cash loan value. This can be levied like other life insurance policies. Some policies are term life insurance. These have no cash loan value.
Write, "Cash Loan Value: $ ______," in the Remarks block of Form 2876 to find out this amount. If the policy is term, VA will write, " Term Policy," in this space, instead of an amount.
Write, "Levy is only against cash loan value," on the levy. Also, include the policy number. Use other procedures in IRM 5.11.6.3.1, above. For example, send Letter 980(DO), Notice of Levy Against Insurance Cash Value, after 90 days.

5.11.6.3.4 (06-29-2001)
Insurance Company Employees

To levy an insurance company employee's income, send Form 668-W(ICS) or 668-W(c)(DO). Write on the form that it is levying the person's income. This may prevent confusion between these and levies on policies.
Contact the insurance company to determine where to send the levy.

5.11.6.3.5 (06-29-2001)
Death Benefits

Death benefits from an insurance company or a government agency (Veterans Administration, Social Security Administration, etc.) can be levied. However, only use this source in flagrant cases. Consider whether the levy will cause a hardship and whether it may prevent the taxpayer from paying the funeral expenses of the person who died.
Because of the sensitive nature, have the SB/SE Director, Collection Area approve the notice of levy. See IRM 5.11.1.2.4, Managerial Approval.

5.11.6.4 (05-05-1998)
Government Employees

The income of federal, state and local government officers and employees can be levied. This includes:

Civilian Employees
Military Personnel
Elected Officials
Appointed Officials

If the taxpayer increases voluntary deductions after a levy is served, tell the employer that this is not allowed.

Note:

Comptroller General's Decision B–45105 explains this to federal payroll offices. This decision is dated January 21, 1955, and amended April 18, 1955.

Certain government employee salaries are included in the Federal Payment Levy Program. See IRM 5.11.7.2,Federal Payment Levy Program .

5.11.6.4.1 (03-15-2005)
Military Personnel on Active Duty

If a taxpayer is in a Qualified Combat Zone (QCZ) or has been granted military deferment under the Servicemembers Civil Relief Act of 2003, no levy action is to be taken. This includes issuance of L1058, Notice of Intent to Levy and Notice of Your Right to a Hearing. See IRM 5.1.7.9, QCZ, and IRM 5.1.7.12, Military Deferment, for additional clarification.
A levy on the income of active military personnel does not attach just wages and salary. It also attaches:

Payments for Quarters
Subsistence
Travel
Clothing and Uniform Allowances
Personal Money and Overseas Allowances
Reimbursement for Shipment of Household Goods
Lump Sum Leave Payments
Retirement Income (Including Disability Payments)
Re-enlistment Bonuses
Severance Pay
Mustering Out Pay
Savings Deposits

Exception:

See IRM 5.11.1.3.1(4), Property Exempt from Levy.

See SERP, Who/Where, Levy Source Information for addresses to mail these notices of levy.

If	And		Then
The taxpayer is in the Air Force or Marines.	The taxpayer is on active duty or is in the reserves.		Include the taxpayer's military service address on the levy, if it is known, e.g. Andrews Air Force Base.

Use Letter 1096(DO), Follow-up to Form 668-W, to follow up on military levies.

If	Then
The taxpayer is overseas.	Follow up 10 weeks after the levy is acknowledged.
The taxpayer is in the United States, except for Air Force.	Follow up four weeks after the levy is acknowledged.
The taxpayer is in the United States and is in the Air Force.	Follow up eight weeks after the levy is acknowledged.

A response should be received to Letter 1096(DO) within 30 days. If not, call the finance center or send a new notice of levy.
The taxpayer may pay the amount owed before the levy proceeds are received. If the release does not stop the proceeds in time, a payment for the levy will be received. Do not return the check to the finance center. Credit the money, so the overpayment will generate a refund. If a hardship exists, request a manual refund. See IRM 5.1.15, Account Transfers, Adjustments, Payment Tracers, Credit Transfers and Refunds .

5.11.6.4.2 (05-05-1998)
Military Class Q Allotments

Class Q allotments are for dependents of military personnel. They can be levied to collect tax from the dependent.

5.11.6.4.3 (06-29-2001)
Health and Human Services Employees

The Department of Health and Human Services maintains a central payroll office. See SERP, Who/Where, Levy Source Information. These payroll records include:

HHS in metropolitan Washington, DC
HHS Regional Offices
Public Health Service
Food and Drug Administration

Send the Statement of Exemptions and Filing Status directly to the taxpayer. See IRM 5.11.5.4.2, Employers with Centralized Payrolls.

5.11.6.4.4 (03-15-2005)
Postal Service Employees

For levies on postal employees, include the following on the levy form, if known:

Postal Service Employee Number,
Type of employment, and
The town where the employee works, if it is different from where the employee lives.

Send notices of levy on postal employees to:

U.S. Postal Service
Accounting Service Center
Minneapolis Information Service Center
Involuntary Deduction Unit
2825 Lone Oak Pkwy.
Eagen, MN 55121–9650

5.11.6.5 (06-29-2001)
Federal Contractors

Use Form 668-A(ICS) or 668-A(c)(DO) to levy payments owed to federal contractors. Except as described in (4) below, the levy has no continuing effect. It only reaches payments owed to the contractor when the levy is received.
The contract number must be included on levies sent to the Department of Defense. If the number is known, include it on levies sent to other federal agencies, too. This can help them find the contract and honor the levy.

Current federal contracts can be found on the Currency and Banking Retrieval System. Contract numbers are on the Federal Contract Information screen.
Sources may also be found on IDRS using cc LEVYS. The contract number may appear on the levy source's name line after, "CONTRACT #." "FC" to the right of the number means this is a federal contract.

See Exhibit 5.11.6–1 for contract levy addresses at several agencies.
Federal contractor and vendor payments are systemically levied through the Federal Levy Payment Program. IRC Section 6331(h) permits the Service to serve a continuous levy on up to 15 percent of payments owed to federal contractors. If the payments are for goods and services but not real estate sold or leased to the Federal Government, the Service may levy up to 100 percent of the payments under section 6331(h), as amended by the American Jobs Creation Act of 2004. See generally IRM 5.11.7.2, Federal Payment Levy Program.

5.11.6.5.1 (03-15-2005)
Department of Defense Contractors

Paper levies issued to attach monies due Department of Defense (DoD) contractors should be sent to:
Defense Finance and Accounting Service - Columbus Center
Attn: DFAS-BKSD/CC
Debt Management Office
P.O. Box 182317
Columbus, OH 43218-2317
Paper levies may be faxed to DFAS at (614) 693-2492.
For information about the timing of paper levy issuance, contact the DFAS Lead Accounting Technician, Tax Levy Office at (614) 693-9449.
For information regarding contracts and payments, send an E-mail message to CCO-IRS@DFAS.MIL

5.11.6.6 (05-05-1998)
Levy on Other Government Payments

This subsection contains instructions for levy on other government payments.

5.11.6.6.1 (06-29-2001)
Medicare Payments

Levy Medicare payments only in flagrant cases. Use Form 668-A(ICS) or 668A(c)(DO).
An insurance company is an intermediary or carrier contracting with Health Care Financing Administration (HCFA). The insurance company makes the Medicare payments. Serve the levy on this company, and send a copy to the HCFA Regional Office. See SERP, Who/Where, Levy Source Information for the Regional Office addresses.
Payments are made directly to hospitals, home health agencies, and extended care facilities. Doctors and other medical services and supplies can be paid directly, too. However, the beneficiary may pay these and get reimbursed by Medicare, later.
The territory manager or a second level Insolvency/ Technical Services manager must approve the notice of levy. See IRM 5.11.1.2.4, Managerial Approval.

5.11.6.6.2 (05-05-1998)
U.S. Savings Bonds—Series HH/H Interest Payments

Series HH/H savings bonds pay interest semi-annually.
To levy the interest, use Form 668-W(ICS) or 668-W(c)(DO). See SERP, Who/Where, Levy Source Information for the address to mail these levies. With the levy, send a copy of the lien. Also, send a letter with the levy. Include in the letter:

bond series,
serial number(s),
bond denomination(s), and
bond issue date(s).

5.11.6.6.3 (05-05-1998)
Agricultural Stabilization and Conservation Service (ASCS) Payments

Serve levies on ASCS county offices to attach these payments.

If	And	Then
The taxpayer is eligible for payment	ASCS is authorized to pay the taxpayer	A levy payment will be sent.
The taxpayer is eligible for payment	ASCS is not authorized to pay the taxpayer yet	ASCS will complete the back of the levy and state when the payment will be made and how much it will be for. When a payment is authorized, ASCS will send the amount the taxpayer was eligible for on the date of the levy. No new levy is needed.
The taxpayer is not eligible for payment		ASCS will send the levy back saying no money is owed. If they know when the taxpayer will be eligible, they will say so. Another levy can be served later, if appropriate.

5.11.6.6.4 (06-29-2001)
Relocation Act Payments

Relocation Act payments pay for displaced people's:

moving costs,
related expenses, and
cost of replacement housing.

Levy these payments only in flagrant cases. See IRM 5.11.6.2(5). The SB/SE Collection territory manager or a second level Insolvency/Technical Services manager must approve the notice of levy. See IRM 5.11.1.2.4, Managerial Approval.

5.11.6.6.5 (05-05-1998)
Fees for Attorneys of Social Security Claimants

Records of attorneys for Social Security claimants are with the claimant's files. To levy an attorney's fees, attach a list of claimants' names and SSNs. If the SSNs are not known, give anything else to identify the claimant.

Example:

Include the claimants' address and date of birth, if these are known.

Avoid sending these levies without claimants' SSNs. SSA's files, like those of IRS, are very large. There are many people with the same name.
A separate levy is not needed for each claimant's fees.

5.11.6.6.6 (06-29-2001)
Restitution Payments for Japanese Internment in World War II

The Civil Liberties Act of 1988 authorizes payment to people of Japanese ancestry interned in World War II. Each eligible person may receive $20,000.
These payments are not exempt from levy. However, the payments are restitution for injustices that were done. Levy the payments only in flagrant cases. See IRM 5.11.6.2(5).
Have the SB/SE Director, Collection Area Operations approve the notice of levy. See IRM 5.11.1.2.4, Managerial Approval.

5.11.6.6.7 (06-29-2001)
State Income Tax Refunds

In many states, computer tapes of IRS liabilities are matched with state refund tapes. The state tax agency sends payment with a list (or tape) of taxpayers whose refunds were taken.
Payments posted before 2000 used designated payment code (DPC) 04. Starting in 2000, these payments use DPC 20 for systemically applied payments and DPC 21 for manually applied payments. If the taxpayer says a state refund paid the amount owed, check IDRS for the payment. If it has not posted, ask for a copy of the state's letter showing the refund was taken. If the refund only pays part of the amount owed, collect the rest.
Correspondence letter 2167C, State Refund Applied to IRS Balance Due/Excess Will be Refunded, on IDRS is used to respond to inquiries about these levies.

5.11.6.6.8 (03-15-2005)
National Labor Relations Board and Backpay Awards

Backpay awards administered by the National Labor Relations Board (NLRB) can be attached by issuing Form 668-A(ICS) or 668-A(c)(DO), Notice of Levy, to the appropriate Regional Office of the Board. See Exhibit 5.11.6-3 for addresses, contacts, and phone numbers for the NLRB Regional Offices. Send the levy to the office closest to the location of the taxpayer. If it is unclear which office to send the notice of levy to, then call the closest office or access www.nlrb.gov and click on "Offices" .
Include the case name and number on the form.

If	And	Then
There has been a final nonappealable determination that the taxpayer is eligible for payment	The amount of the award has been determined	The NLRB Regional Office will forward the levy payment.
There has been a final nonappealable determination that the taxpayer is eligible for payment	The amount of the award has not yet been determined	The NLRB Regional Office will notify the contact person on the notice of levy that the amount of the backpay award and the date of distribution are unknown. NLRB will provide an estimated date, if available, when they will comply with the levy.
A levy has been served	The IRS no longer wants the NLRB to honor the levy	The IRS will issue a levy release to the NLRB Regional Office
There has been no final determination that the taxpayer is eligible for payment (case is under investigation or on appeal)		The NLRB Regional Office will complete the back of the levy form indicating no money is owed the taxpayer. If the taxpayer later becomes eligible for payment, the Regional Office will so advise the revenue officer who issued the notice of levy so that a new levy can be issued, if appropriate.

If the amount of the check for the backpay award exceeds the amount of the taxpayer's outstanding tax liability, apply the full amount of the check to the taxpayer's account and any overpayment will be refunded to the taxpayer subject to IRS offset procedures.
If the taxpayer's employer has not withheld the taxes from the backpay award, the NLRB will withhold the taxes before issuing the levy payment.

5.11.6.7 (03-15-2005)
Receivables

Accounts receivable, notes receivable, and other debts owed to a taxpayer may be levied upon.
Accounts receivable are assets representing money due to a taxpayer for products and services provided on credit.

Example:

monies owed to the taxpayer by clients, customers, patients, insurance companies, rental income, funds processed by credit card companies

Consider issuing a summons to the taxpayer's bank for deposited items to obtain information on possible accounts receivable on which to levy.
A note receivable is a certain amount loaned to another that is owed and payable at a certain time to the holder of the promissory note.

Example:

money loaned to a customer, employee, or officer of the company.

A notice of levy reaches future payments, only if the taxpayer already has a right to them.
If receivables can be sold, consider seizing and selling them.

5.11.6.7.1 (03-15-2005)
Billing Services

Some taxpayers use billing services for receivables. The service may only prepare bills, or it may also receive payments.

If	Then
The billing service only prepares and sends the bills	Use a summons or Form 2270, Notice to Exhibit Books and Records, to review records of the taxpayer's receivables to obtain levy sources.
The billing service receives payments and forwards them to the taxpayer	Serve a levy on the billing service.

Caution:

Form 2270 must not be used to solicit information from a financial institution within the Tenth Circuit or in any circumstance where a suit can be filed against the U.S. Government within the 10th Circuit. See IRM 25.5, Summons Handbook, for information on those circumstances.
Tapes may include records of many of the billing service's customers. Use a summons or Form 2270 to get only the taxpayer's records. The ten calendar day response period for summonses may need to be extended to get the records extracted.
The billing service may deduct a fee and send the difference to the taxpayer. In this case, this is all the service needs to pay for the levy. If it normally sends the entire receivable to the taxpayer, then this should be paid in response to the levy.

5.11.6.8 (03-15-2005)
Securities—Stocks, Bonds, Mutual Funds, etc.

The taxpayer's ownership interest in securities is subject to collection. Stocks, bonds, money market accounts, mutual funds, and debentures are examples of securities.
Where the taxpayer's ownership interest in a security fund is not represented by a certificate (uncertificated), the person receiving the notice of levy should liquidate the interest in response to the levy and turn the funds over to the Service.
Taxpayers may also have interests in securities that are represented by certificates (certificated). Certificated securities are disposed of in accordance with the procedures contained in IRM 5.10, Seizure and Sale.
Compliance Services Campus Operations (CSCO) sometimes receives securities for ACS levies. CSCO sends these to the territory office to decide what to do with them.

5.11.6.9 (06-29-2001)
United Nations (UN) Employees' Income

Legal processes can be served at the UN:

with the Secretary General's approval
in conditions the Secretary General approves.

Note:

This authority comes from a joint resolution of the 80th Congress.

Consider a levy on UN employees' salary only after all other sources have failed. Send the Form 668-W(ICS) or 668–W(c)(DO) from the SB/SE Director, Collection Area to the Director of Collection Policy SE:S:C:CP at Headquarters. Include a memo that explains attempts to collect the tax and any other relevant information. See IRM 5.11.1.2.4, Managerial Approval.
Headquarters will forward the levy to the State Department.
Because of the restriction on legal process, the levy is used to counsel the employee.

5.11.6.10 (11-05-1999)
Mutilated Currency

Mutilated currency may be redeemed at the Department of Treasury. It can also be turned in to a bank which will send it to Treasury for redemption. This can be levied.
The fact that mutilated currency was turned in may be found out through routine investigation. Also, if the amount is $5000 or more, the Office of Currency Standards reports the request to IRS. Then, this may be reported to the area where the redemption was requested.

5.11.6.11 (06-29-2001)
Levy on Non-Liable Spouse in a Community Property State

In some states, community property laws may mean that people who are liable for delinquent tax have a community property interest in their spouse's property and rights to property. In this case, the delinquent taxpayers' property rights in their spouses' property and rights to property might be subject to levy.

Example:

Taxpayers who are liable for delinquent tax may have a community property interest in their spouses' wages, so the wages of the spouse who is not liable for the tax might be subject to levy to pay it.

Community property laws vary from state to state. This may affect how much of a non-liable spouse's property can be attached by a levy. State law may have other effects, too. Contact Technical Services for advice on any special language or inserts/cover letters needed with the levy, unless local instructions have already been issued for how to handle these levies. Technical Services will consult with Associate Area Counsel, as needed.

5.11.6.11.1 (03-15-2005)
Wages & Salary

Although a non-liable spouse's wages or salary might be subject to levy, the levy does not have a continuous effect. This is because the Internal Revenue Code says that a levy on a taxpayer's wages and salary is continuous. However, in this case, the non-liable spouse's (not the taxpayer's) wages or salary is being levied.
Although a levy on a non-liable spouse's wages or salary is not continuous, the exempt amount can still be claimed.

However, because the levy might attach only part of the non-liable spouse's income, the portion that is not attached can be treated like an income source that is not being levied when the exempt amount is figured. See IRM 5.11.5.4.4, Taxpayers with More Than One Source of Income.

Example:

A non-liable spouse's weekly take home pay is $700. Assume this person is in a state where a levy attaches half of a non-liable spouse's wages, and this is the only source of income that is levied. This means $350 is not attached by the levy. If this levy is served in 2005, and the person is filing jointly with two exemptions, $325.38 is exempt from levy. Since the exempt amount is less than the amount that is not levied, no exempt amount is subtracted from the $350 that the levy attaches. The employer should send a weekly check of $350. The $315.38 exempt amount has been accounted for by the other $350 that is not attached.

Example:

Take the same facts as the prior example, but the person claims four exemptions, so the weekly exempt amount is $438.46. Because this is more than the $350 that is not attached, the person needs to be allowed an additional exempt amount from the $350 that is attached. This is figured.
$438.46 Exempt from Levy
−$350.00 Not Attached by the Levy
88.46 Additional Exempt Amount to be Allowed $
The employer, then, figures:
$350.00 Attached by the Levy
88.46 −$ Additional Exempt Amount
$261.54 Weekly Levy Proceeds

As a practical matter, in this example, a simpler explanation may be to tell the employer to send half of the person's take home pay if the exempt amount is less than half of that, but follow the instructions on the levy form if the exempt amount is more than half of the take home pay. This will lead to the same amount of levy proceeds:
$700.00 Take Home Pay
−$438.46 Exempt Amount
$261.54 Weekly Levy Proceeds

5.11.6.11.2 (06-29-2001)
Notice to the Non-Liable Spouse

When a taxpayer's community property interest in a non-liable spouse's property or right to property is levied, the notices in IRM 5.11.1.2.1, Required Notices,must have been sent to the taxpayer. However, do not send these notices to the non-liable spouse.
After serving the notice of levy, the non-liable spouse is notified of the levy same way the taxpayer is notified of a levy. See IRM 5.11.2.1.7, Notifying the Taxpayer After Serving the Levy.

If a notice of levy is served, e.g., on a bank account, a copy of the levy is sent to the taxpayer. Part 4 of Form 668-A(ICS) or 668A(c)(DO) is generally used for this. In this case, though, also send a photocopy of the taxpayer's copy of the levy to the non-liable spouse.
If a levy is served on wages, salary, or other income, the statement of exemptions and filing status notifies the taxpayer of the levy. Similarly, the non-liable spouse will get these copies of the levy to claim the exempt amount, and this is the notification that a levy has been served.

5.11.6.12 (06-29-2001)
Levy on Inheritances

If a taxpayer is due an inheritance, serve the notice of levy on the administrator/executor.

5.11.6.13 (04-21-2005)
Single Member/Owner Limited Liability Companies

A single member Limited Liability Company (LLC) may elect to be classified as an association taxable as a corporation by filing with the appropriate campus a Form 8832, Entity Classification Election. In this case, the single member LLC is liable for all employment taxes.
If the single member LLC does not elect to be classified as an association taxable as a corporation, then, it is, by default,"disregarded " as an entity separate from its owner for Federal tax purposes. The single member/owner is treated as the taxpayer responsible for payment of the employment taxes incurred by the LLC.
A notice of levy issued to collect the liability of the owner must reflect the name and identification number of the single member owner and not the name or identification number of the LLC.
When notice of levy is issued to collect liabilities assessed in the name and TIN of a disregarded entity, special care is needed. To avoid accounts being incorrectly attached and to facilitate the posting of levy proceeds received, a disclaimer may be added to the notice of levy: " This notice attaches to all accounts in the name of (single member owner name and EIN) as owner of (name of disregarded LLC and EIN) but does not attach accounts established in the name of (name of disregarded LLC and EIN)" .

Exhibit 5.11.6-1 (06-29-2001)
Addresses often used for Levy on Federal Contracts

(Reference 5.11.6.5)

Administrative Conference of the U.S. Courts

Administrative Conference of the U.S.

2120 L Street NW, Suite 500

Washington, DC 20037

Agency for International Development

1300 Pennsylvania Ave.

Washington, DC 20523

202–712–0000 Tel:

Agriculture, Department of

1400 Independence Ave. SW

Washington, DC 20250–9303

202–720–3035 Tel:

Air Force, Department of

Department of the Air Force (Headquarters

USAF)

SAF/AQCP, 1060 AF Pentagon

Washington, DC 20330–1060

703–545–6700 Tel:

Appalachian Regional Commission

1666 Connecticut Ave NW, Rm 730

Washington, DC 20235

202–884–7730 Tel:

Army

Commander

U.S. Army Finance & Accounting Center

FINCY Attn:

Indianapolis, IN 46249

Defense Logistics Agency

Director DFAS–CO–JXF; Attn:

P. O. Box 182317

Columbus, OH 43218–2317

Defense Mapping Agency

OUSD (A&T) DP/CPA, 3060 Defense

Pentagon

Washington, DC 20301–3060

703–285–9370 Dir, CPA; Tel:

Department of the Army

Exc Corps of Engineers Civil Program Fin

DFAS–IN–FV

8899 E. 56th Street

Indianapolis, IN 46249–0001

Dir, Vendor Pay

Department of the Army

Headquarters U.S. Army Material

Development and Readiness Command

5001 Eisenhower Ave.

Alexandria, VA 22333

DRCGC–S Attn:

USA MDW Finance & Accounting Office

Forrestal Bldg, Rm. GA270

1000 Independence Ave., S.W.

Washington, DC 20314

ANFINW–AAP Attn:

Army, Cont'd

Chief, U.S. Army Signal Finance and

Accounts Office

U.S. Army Strategic Communications

Command

Office of the Comptroller

Washington, DC 20315

Commerce, Department of

1401 Constitution Ave., NW

Washington, DC 20230

Commodity Futures Trading Commission

1155 21st Street NW

Washington, DC 20581

202–418–5164 Tel:

Consumer Product Safety Commission

Washington, DC 20207

Corporation for National Service

1201 New York Ave NW, Room 7209

Washington, DC 20591

Defense, Department of

Defense Financing and Accounting Service-Columbus Center

Attn: DFAS-BKSD/CC

Debt Management Office

PO Box 182317

Columbus, OH 43218–2317

Education, Department of

7th & D Streets SW, Rm 3616

Washington, DC 20202

Energy, Department of

1000 Independence Ave SW

Washington, DC 20585–0001

Environmental Protection Agency

Ariel Rios Building

1200 Pennsylvania Ave., NW

Washington, DC 20460

Equal Employment Opportunity Commission

Financial Management Div.

1801 L Street NW

Washington, DC 20507

Federal Aviation Administration

Financial Systems Branch, ABA–320

800 Independence Ave SW

Washington, DC 20591

Federal Communications Commission

Chief Financial Officer

Washington, DC 20554

Federal Election Commission

999 E Street NW, Rm 819

Washington, DC 20463–0001

Federal Emergency Management Agency

500 C Street SW

Washington, DC

Federal Energy Regulatory Commission

888 1st Street NE, Room 42–73

Washington, DC 20426

Federal Labor Relations Authority

500 C Street SW, Room 225

Washington, DC 20424–0001

Federal Maritime Commission

800 North Capitol Street

Washington, DC 20573–0001

Federal Mine Safety and Health Review Commission

1730 K Street NW, Room 640

Washington, DC 20006–3868

Federal Reserve System

Room M–1200, Mail Stop 152

20th & Constitution Ave NW

Washington, DC 20551

Fish and Wildlife Service, U.S.

Department of the Interior

U.S. Fish and Wildlife Service

FWS MS2544–MIB

Washington, DC 20240

General Accounting Office

U.S. General Accounting Office

Claims Division

Washington, DC 20548

General Services Administration