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March 03, 2025
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(1) This transmits revised IRM 5.16.1, Collecting Process, Currently Not Collectible.
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(1) Refer to the table below for details on the list of material changes in this IRM.
IRM Subsection | Description of Change
IRM 5.16.1.1.7 | Added Pub 4235, Collection Advisory Offices Contact Information to Related Resources.
IRM 5.16.1.2.1 | Changed the title of Wage and Investment (W&I) to Taxpayer Services (TS)
IRM 5.16.1.2.1(4) | Added Letter 725-D, Meeting with Representative Confirmation for scheduling an appointment with a Power of Attorney.
IRM 5.16.1.2.1(10) | Removed the sentence, “Consider a mandatory follow-up if there is a definite indication that contact should be made in the future”.
IRM 5.16.1.2.6(7) | Updated subsection with guidance to issue appointment Letter 725-B, Meeting with Taxpayer Confirmation.
IRM 5.16.1.2.6(7) | Renamed Initial Contact to Initial Investigative Interview.
IRM 5.16.1.2.7(8) | Updated this subsection with the new Mandatory Follow-up guidance.
IRM 5.16.1.2.9(5) | Updated this subsection with the new Safety and Field Guidance to issue appointment Letter 725-B.
IRM 5.16.1.2.9(6) | Removed the option to consider a Mandatory Follow-up in bullet 4.
IRM 5.16.1.6(g) | Updated reference to include cc 12 and 18
IRM 5.16.1.6(h) | Updated the guidance to incorporate IGM SBSE-05-1122-0079, Interim Guidance for Field Collection Requests for Mandatory Follow-up on Currently Not Collectible (CNC) Cases dated 11-22-2022.
IRM 5.16.1.6(5)(d) | Removed the guidance to request a Mandatory Follow-up for cc 12 and cc 18.
IRM 5.16.1.6(8) | Note: Updated the sentence to reflect that CCP will monitor In-Business CNC cases with a Mandatory Follow-up.
IRM 5.16.1.6(9) | Removed the first Example and added the words “with a mandatory follow-up” to the sentence.
Exhibit 5.16.1-1(5) | Updated the steps for Form 53
Exhibit 5.16.1-1(6) | Updated the steps for Form 53
Exhibit 5.16.1-5 | Updated chart to include IGM SBSE-05-1122-0079, Interim Guidance for Field Collection Requests for Mandatory Follow-up on Currently Not Collectible (CNC) Cases dated 11-22-2022.
Exhibit 5.16.1-6 | Updated chart to include Field Compliance Manager (FCM), Territory Manager (TM), and Taxpayer Services (TS).
Throughout | Editorial changes were made throughout the IRM to update links and IRM references.
Throughout | Updated the references of Advisory to include Civil Enforcement Advise and Support Operations (CEASO).
Throughout | Added the name of Field Compliance Manager to reflect the name change of Territory Managers.
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This material supersedes IRM 5.16.1 dated November 14, 2023 and incorporates Interim Guidance Memorandum SBSE-05-1122-0079, Interim Guidance for Field Collection Requests for Mandatory Follow-up on Currently Not Collectible (CNC) Cases, dated November 22, 2022.
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All operating divisions and functions
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(03-03-2025)
Eric V. Slayback Acting Director, Collection Policy Small Business/Self Employed
5.16.1.1
(03-03-2025)
Program Scope and Objectives
Purpose - This chapter provides the requirements for reporting accounts uncollectible, including the level of approval authority necessary for different types of CNC closures.
Audience - These procedures and guidance apply to IRS employees responsible for reporting collection accounts as uncollectible, primarily IRS Field Collection revenue officers and group managers.
Policy Owner – The Director of Collection Policy is the policy owner of this IRM. Collection Policy is an organization under the Small Business/Self-Employed Division (SBSE), Collection.
Program Owner – SB/SE Collection Policy, Case Resolution Alternatives, is the program owner of this IRM.
Primary Stakeholders - The primary stakeholders affected or impacted by this IRM are Field Collection, Specialty Collection Insolvency, Independent Office of Appeals (Appeals) and Taxpayer Advocate Service (TAS).
Program Goals - In certain circumstances, collection personnel may determine that an account is currently uncollectible. By following the procedures in this IRM, employees will be able to properly and accurately close collection accounts as currently not collectible. All IRS personnel are responsible for execution of duties in accordance with the Taxpayer Bill of Rights as listed in IRC 7803(a)(3).
This IRM provides procedures for determining when an account is currently not collectible (CNC). These procedures are used by all functions when reporting an account as uncollectible.
5.16.1.1.1
(09-18-2018)
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The Internal Revenue Service (IRS) is granted the authority to determine that some accounts are CNC. The IRS balances the potential for collection against the costs and its ability to collect.
The decision to suspend collection action is made with an awareness that the IRS also is charged with fair and equitable enforcement of tax laws.
5.16.1.1.2
(04-13-2021)
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The Director, Collection Policy is responsible for overseeing policy and procedures regarding determinations to report accounts currently not collectible.
The program manager, Case Resolution Alternatives (CRA), is responsible for developing and delivering policies, procedures and practices within the currently not collectible program.
Field Collection group managers and field compliance managers (FCM)/territory managers (TM) are responsible for ensuring the guidance and procedures described in this IRM are complied with.
Revenue officers (RO), appeals officers (AO), and settlement officers (SO) may report accounts as CNC.
Tax examiners in Field collection (FC) and Centralized Case Processing (CCP) may report as CNC those accounts that meet existing criteria subject to the limitations shown below: IMF, Non-Masterfile (NMF), or out of business BMF sole proprietors or partners, with less than ≡ ≡ ≡ ≡ ≡ ≡ aggregate unpaid balance of assessments. BMF taxpayers (other than accounts for trust fund taxes owed by corporations, LLCs, or limited partnerships) with less than ≡ ≡ ≡ ≡ ≡ ≡ aggregate unpaid balance of assessments.
Bankruptcy specialists may report as CNC corporate liabilities when a corporation has been through a liquidating bankruptcy.
Civil Enforcement and Support Operations (CEASO) employees may report accounts CNC when a local probate office indicates that a proof of claim will not generate funds. Transferee issues should be considered. See IRM 5.16.1.2.4, Decedent and Decedent Estates for additional information.
The ICS/Entity Quality Analysts (IQAs), have the authority to shelve cases/modules in accordance with IRM 1.4.50.9.1.1, Shelving Erroneously Assigned Cases/Modules, and to recess modules in accordance with IRM 5.16.1.3.6, MFT 35 Shared Responsibility Payment (SRP) and MFT 65 Mirrored Shared Responsibility Payment.
The Inventory Delivery System (IDS), may shelve IMF accounts where the aggregate unpaid balance, including accruals, is less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ and BMF accounts where the aggregate unpaid balance, including accruals, is less than ≡ ≡ ≡ ≡ ≡ ≡.
5.16.1.1.4
(03-03-2025)
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Accounts and related dollar amounts closed as currently not collectible are reported monthly and quarterly, and monitored by Collection Policy. See IRM 5.2.4, Reports, Collection Reports.
CNC dispositions are reported monthly on the Taxpayer Delinquent Account (TDA) Monthly Report, Part 1 (Report Symbol Number NO-5000-1). Data is tabulated by both the business operating division (BOD) of the taxpayer and the BOD where the TDA is assigned. Each TDA report is separated into segments: All-National Office, Organizational BOD and Area. The Taxpayer Delinquent Account Cumulative Report (Report Symbol NO-5000-2) contains the same data elements as the NO-5000-1. The report provides information from the beginning of the fiscal year through the end of the current reporting month.
The Recap of Accounts Currently Not Collectible Report (CNC-149) reflects the results of operations during the quarter. The report contains the number of closures related to TC 530 for this fiscal year and related dollar amounts posted to the Master File, inventory and activity data.
The Recap of Accounts Currently Not Collectible Report (Report Symbol NO-5000-149) consists of two reports (Regular and BOD). The regular report includes all the cases reported CNC regardless of the BOD of the taxpayer. The BOD report lists cases by BOD of the taxpayer. Both reports contain the same data elements. Each report is broken out into Main and Minor Parts. MAIN: Contains the most commonly used Responsible Unit Codes (ACS, IDS, Campus, Total IMF, Total BMF and Total 941/940). MINOR: Contains less frequently used Responsible Unit Codes (By Exam, Appeals, Taxpayer Advocate, Other, Total IMF, Total BMF and Total in Private Debt Collection).
Program Effectiveness: Reviews by group managers, field compliance managers (FCM)/territory managers (TM), Collection Policy analysts and National Quality reviewers are conducted to measure consistency, effectiveness in case action, and compliance with policy and procedures. The results of these reviews are used to promote and improve program effectiveness.
5.16.1.1.5
(03-03-2025)
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CNC recommendations generally require the review and approval of the immediate manager to ensure the investigation meets established standards of thoroughness and integrity. See also IRM 5.16.1.5, Managerial Approval. Managerial review criteria of completed work is located in IRM 1.4.50, Collection Group Manager, Field Compliance Manager (FCM) and Area Director Operational Aid, Exhibit 1.4.50-2.
Quality control is accomplished through mandatory and sample reviews through Embedded Quality (EQ).
Collection Policy conducts program reviews of CNC closures to monitor compliance with IRM requirements.
5.16.1.1.6
(04-13-2021)
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The table in Exhibit 5.16.1-6, Common Acronyms, lists common acronyms used in this IRM.
5.16.1.1.7
(03-03-2025)
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If neither the taxpayer nor assets can be located, use cc 03 to report the account uncollectible. For Single Member Owners (SMO), where the SMO is liable for taxes assessed under an LLC EIN, and the SMO, and assets of the SMO are unable to locate, use cc 17 to report the SMO modules uncollectible. If all asset locators show the taxpayer is still at that address, but attempted contact confirmed the house is vacant or someone else lives there, the case would be closed UTL.
When the taxpayer's ability to pay cannot be determined because they cannot be contacted and income and assets cannot be identified, use cc 12, Unable to Contact. For SMOs, where the SMO is liable for taxes assessed under an LLC EIN, use cc 18 if the SMO is unable to contact, although the SMO address is known, and there is no means to enforce collection.
Revenue officers should not close accounts as UTL or UTC if the taxpayer is known to have a current address outside the United States, and the revenue officer can confirm an address or a country of residence for the taxpayer. For accounts having a current address outside the United States, follow procedures in IRM 5.1.8.2.4, Account Transfers to International, to transfer the account to SB/SE International. For taxpayers known to be living outside the country, but with an unconfirmed address, request a courtesy investigation in accordance with IRM 5.1.8.3, Originating Office Procedure. Taxpayers residing in U.S. possessions and territories (aka insular areas), are treated the same as those residing in the United States.
Asset checks for UTL/UTC must be completed within one year of closing the case as CNC. Prior to reporting domestic accounts as UTL or UTC, when the aggregate unpaid balance of assessments is less than ≡ ≡ ≡ ≡ ≡ ≡ employees will: Attempt to contact the taxpayer by sending appointment Letter 725-B, Meeting with Taxpayer - Confirmation, or Letter 725-D, Meeting with Representative - Confirmation, see IRM 5.1.10.3. Attempt to contact the taxpayer by phone at the ICS and other known telephone number(s). See IRM 5.1.10.6, Fair Tax Collection Practices, for guidance on fair tax collection and taxpayer rights. Make an observational field visit to externally view property or other assets. Research on-line services that help locate taxpayers, such as Accurint for asset and locator services. See IRM 5.1.18.2.2, Asset Locator Research. Follow security guidelines when using public internet search engines. Address all ICS levy sources. Issue levies or confirm the taxpayer is not owed any funds from the levy sources. When applicable, follow procedures in IRM 5.11.6.16.4, Issuing a Merchant Account Levy. If the last filed income tax return was due within the last two years and was filed by the taxpayer, review the return or the return information by using CC RTVUE/BRTVU/TRDBV. If using RTVUE/BRTVU, determine if a copy of the return should be secured to further develop leads to locate the taxpayer assets or levy sources. Reminder: For international accounts, the same sources will be checked whenever available for the country in question. See IRM 5.1.8.5, Status Reporting by Originator. For taxpayers residing outside the United States, and territories other than Puerto Rico and the U.S. Virgin Islands, a field call may not be practical. IRS personnel interested in traveling to a foreign jurisdiction must first consult the Large Business and International (LB&I) Exchange of Information (EOI) Program as far in advance as possible of any contemplated travel. The EOI Program will review any such travel plans, as such contacts could have serious legal implications in the destination jurisdiction, such as possible legal consequences relating to IRS activities conducted in the foreign location (including virtual contacts) without foreign authorization. If necessary, the EOI Program will further coordinate with IRS Counsel’s foreign-located testimony team and/or the foreign jurisdiction. See IRM 4.60.1.12, International Travel for Tax Authority Personnel. Finally, all foreign travel by IRS personnel must be administratively approved per the procedures described in IRM 1.32.5, International Travel Office Procedures, and IRM 1.32.11.5.5, Foreign Travel. Reminder: Taxpayer Services (TS) (formerly Wage and Investment) and SB/SE ACS call sites and tax examiners in Field Collection are exempt from the requirement to make field calls.
For domestic accounts where the aggregate unpaid balance of assessments is ≡ ≡ ≡ ≡ ≡ ≡, or more, attempt to develop leads by researching the following additional sources: Postal tracers, when an appointment letter is returned undeliverable or when an observational field visit indicates the taxpayer is unable to locate or contact at the Master File address. See IRM 5.1.18.11.2, Postal Tracer - Form 4759, for additional guidance on postal tracers. Motor vehicle records or Accurint (if motor vehicle records are available through Accurint in the state where the taxpayer is located) On-line courthouse records for real and personal property if you have access to the appropriate on-line tools, see IRM 5.1.18.4, Real Property Records In-person courthouse records for real and personal property if you do not have access to the appropriate online tools. An in-person courthouse records check is not required for personal property only. Employment commissions - if employees are unable to obtain state employment commission information in the state where the taxpayer is located, document the history. Conduct Financial Crimes Enforcement Network (FinCEN) research using FinCEN Query (FCQ) when IRPTR reflects that a taxpayer has filed a Foreign Bank Account Reporting (FBAR) form to obtain the name of the bank where the account is located, the amount in the account, co-owners, and other useful information. See IRM 5.1.18.17, Foreign Bank and Financial Account Report. Note: The on-line records referenced in bullet three above do not mean Accurint. The key to searching on-line courthouse records is whether the actual real property documents are available electronically from the courthouse without going through a third-party vendor. Accurint does not have the actual documents on-line. Accurint is referenced in bullet two above as a tool to help in locating taxpayers, not for researching real property records.
In addition to the requirements above, for accounts with an aggregate unpaid balance of assessments greater than ≡ ≡ ≡ ≡ ≡ ≡, the following is required: Local licensing authorities when a taxpayer has a business that requires a license or Accurint (if licensing records are available through Accurint in the state where the taxpayer is located). Request a passport check when the taxpayer travels outside the United States frequently or there is reason to believe the taxpayer travels outside the United States frequently in accordance with IRM 5.1.18.12, United States Passport Office. Consider requesting that a taxpayer be placed on the Department of Homeland Security lookout list if you have been unable to locate or contact the taxpayer and if they live or travel outside the U.S. See IRM 5.1.18.13, TECS. Request Foreign Account Tax Compliance Act (FATCA) report when IDRS command code RTVUE indicates that a taxpayer has filed Form 8938, Statement of Specified Foreign Financial Assets. Refer to proposed IRM 5.1.18.21, FATCA Research, for procedures to request Form 8966, FATCA Report.
For accounts where the aggregate unpaid balance of assessments is greater than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the following additional verification is required: Full credit report on IMF and sole proprietor taxpayers and LLCs, (where an individual owner is identified as the liable taxpayer). This includes balance due cases where recently filed returns will result in additional assessments causing the liability in excess of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. For additional information on credit report see IRM 5.1.18.19, Consumer Credit Reports. Credit reports are optional for accounts with an aggregate unpaid balance of assessments below ≡ ≡ ≡ ≡ ≡ ≡. CC AMDIS, if there is a -L freeze on the account indicating open examination activity. If there is an open examination, contact the revenue agent to determine any additional sources of collection or the need to limit the scope of the examination based upon collectibility.
Local management may require that additional information sources be checked, for example U.S. Coast Guard and local licensing agencies where boat ownership is common. Revenue officers should also consider other available tools including CDW Knowledge Graph Environment (CKGE) and FATCA data early in the investigation, to locate the taxpayer and their assets.
The following sources are not required, but should be considered prior to closing a case as UTL or UTC: If it appears the taxpayer is still living at the address or operating a business at the address, but is unable to be contacted, consider checking utility companies to see who is paying the bills at the taxpayer’s address and how the bills are paid for a possible levy source. Revenue officers should consider issuing third-party summonses to landlords, mortgagees, and bank accounts, following IRM requirements, to assist in locating the taxpayer and their assets.
Federal Employee/Retiree Delinquent Investigation (FERDI) cases cannot be reported as UTL. Follow procedures in IRM 5.1.7.8, Federal Employee/Retiree Delinquency Initiative (FERDI). A FERDI case may be closed CNC as Unable to Contact (cc 12), when the taxpayer's ability to pay cannot be determined because they cannot be contacted and all required asset checks per IRM 5.16.1.2.1 reveal no income or assets to collect from. In addition, all levies, including levies on the taxpayer's federal salary or retirement benefit, must result in no proceeds available to pay the tax liability. Note: This is not applicable for LLC-SMO liable cases.
Restitution modules cannot be closed unable to contact or unable to locate if there is an open probation NF OI in CEASO. If the taxpayer cannot be located or contacted, the RO must follow guidance in IRM 5.1.5, Balancing Civil and Criminal Cases, for reporting noncompliance with conditions of probation. If the taxpayer has fulfilled all conditions of probation and release, and cannot be located or contacted, the RO can request through the group manager that the "restitution" program name be removed on ICS to allow the closure.
When a business taxpayer is being closed UTL or UTC, address the trust fund recovery penalty (TFRP) when the liability meets the criteria in IRM 5.7.4, Investigation and Recommendation of the TFRP. If a potentially responsible person cannot be located, follow guidance in IRM 5.7.5, Collectibility Determination, to address the TFRP. Nonassertion of the penalty should be recommended if a responsible person cannot be located, nor can any assets or income sources be located. Assertion of the penalty should be recommended if the responsible person cannot be located, but assets or income sources for the responsible person can be located.
For BMF accounts on sole proprietorships and partnerships where a general partner is personally liable for partnership liabilities, UTL and UTC accounts are systemically reversed by new address or new levy source information reported for the individual or general partner. The Social Security Number (SSN) of the individual or general partner must be cross-referenced on IDRS. Evaluate BMF entities to determine if a TC 130 should be input on the SSN of an individual or general partner. If the account is being reported as CNC, and Form 53 is manually prepared, forward Part 3 of Form 53 to CCP for input. After the group manager approves the CNC, ICS will systemically generate an e-mail to CCP to transmit Part 3 of Form 53 to CCP. Reminder: This is a separate input from the cross-reference EIN/SSN input or the TC 130 input for refund offsets. The TC 130 for refund offsets and the TC 130 for systemic reactivation are both required for UTL and UTC closures on sole proprietorships and partnerships where a general partner is personally liable for partnership liabilities. Note: Refer to IRM 5.1.12.21.3.2, Offset an IMF Refund, for additional guidance on situations where input of a TC 130 is required.
5.16.1.2.2
(05-05-2009)
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Ensuring that the proper action is taken on an account before the collection statute expires is a priority. The actions required to resolve short statute issues will depend on the circumstances. See IRM 5.1.19, Collection Statute Expiration and/or IRM 25.6.1.9, Statute of Limitations Processes and Procedures - Assessments.
5.16.1.2.2.1
(11-14-2023)
Imminent Statute Expiration
An imminent Collection Statute Expiration Date (CSED) module is any module with twelve months or less remaining on the collection statute. See IRM 5.1.19.5, Imminent CSEDs, for specific procedures used to verify, monitor, work, and document these types of cases.
Imminent CSED modules must be worked to an appropriate conclusion prior to the statute expiration whenever circumstances permit. These modules do not qualify for the MFT 31 mirroring process. For further guidance, see IRM 5.1.19.5.2, Working Imminent CSEDs.
The RO must discuss imminent CSED modules with their group manager and document an appropriate plan of action to resolve the module(s) prior to the expiration of the statute. For further guidance, see IRM 5.1.19.5.3, Documenting Imminent CSEDs.
If payments are applied to a module with multiple CSEDs they should be applied in order of the date in which the CSED will expire, starting with the one that will expire first. This includes proceeds from seizures, levies, installment agreements and other undesignated voluntary payments. For proceeds from a levy or installment agreement, the CSED module where the payment will be applied must be included on the levy or installment agreement. Reminder: The Designated Payment Code (DPC) must be entered on all payment documents.
Do not solicit voluntary payments on accounts barred by statute. If a taxpayer makes a payment on an account barred by statute, inform them that payment is not required and ask if they still wish to make the payment or have it returned. The taxpayer must be advised that the payment is purely voluntary and will be treated as a gift to the United States Treasury. If the taxpayer's intentions cannot be ascertained, return the payment.
Proceeds from the sale of assets seized prior to the expiration of the statute can be applied after the date of expiration. The affected modules require that TC 520 cc 80 be input. The RO should request input of TC 520 cc 80 to allow for application of the proceeds from the seizure. Once the proceeds are posted, the RO must request input of TC 521, no closing code required. Any outstanding balance will be closed using TC 530 cc 05 after the application of sale proceeds and after the statute expires. See IRM 5.1.19.4, CSED Payment Application. Follow procedures in IRM 5.17.2.3.3, Refiling of Notice, to determine if the NFTL needs to be refiled.
Proceeds that are received as the result of a levy which was served prior to the CSED may be applied to the expired module(s). See IRM 5.11.2.3.1, Legal Basis for Releasing Levies. Note: Unlike interest which may be assessed and collected as long as the underlying tax can be collected (see IRC 6601(g)), penalties may have a different CSED apart from any other assessment on the module(s). See IRM 5.1.19.2.1, Transaction Codes That Carry Their Own CSED. The IRS, however, is not required to make a separate assessment of the accruals on Failure to Pay (FTP) penalties (i.e., the IRC 6651(a)(2) and IRC 6651(a)(3) additions to tax) in order to collect the accruals.
5.16.1.2.2.2
(04-13-2021)
Non-Master File Expired Statute
For non-master file accounts, if only a portion of the liability expired prior to issuance, report the expired portion on Form 53, using TC 530 cc 04 and annotate 'Statutory Period for Collection Expired'.
If the statute expired on a portion of the liability prior to issuance and the balance expires after issuance, use TC 530 cc 05 for the entire amount. It is not necessary to use cc 04 for a portion of the liability and cc 05 for the balance when the entire balance can be closed using cc 05.
Complete all actions such as payment tracers and adjustments prior to input of either cc 04 or 05.
5.16.1.2.2.3
(05-05-2009)
Master File Partial Statute Expiration
The majority of master file accounts on which the collection statute has expired, either on part of the liability or on the entire liability prior to issuance, will be identified by Taxpayer Delinquent Account (TDA) issuance code 534.
If only a portion of the module has expired, adjust the balance by reporting the expired portion on Form 3870, Request for Adjustment, using TC 534. Caution: Do not use cc 04 for master file accounts as this will cause the entire account to go to status 53.
If the remaining balance is determined to be uncollectible, use the appropriate closing code such as hardship, unable to contact, etc.
5.16.1.2.2.4
(05-22-2012)
Master File Complete Statute Expiration
Use closing code 05 when the entire module balance expires after issuance.
Closing code 05 is also used in circumstances where a suit has been filed to reduce a tax claim to judgment. The filing of the suit in court extends the collection statute so that if a judgment is obtained, the tax may be collected by levy until the tax is paid. If a suit recommendation has been submitted, but the collection statute expires prior to the filing of the suit in court, report the account CNC using cc 05. A report of the circumstances of the statute expiration is not required under these circumstances. Note: Closing code 05 can only be input after the statute has expired.
If a suit is being recommended based on anticipated improvement in the taxpayer's financial condition - such as discharge of a debt, inheritance or other significant property acquisition - report the account CNC based on the taxpayer's current circumstances (e.g. hardship, unable to locate, etc.).
The suit must be filed with the court prior to the statute's expiration. The recommendation should be initiated in sufficient time so that it can be forwarded to Area Counsel at least nine months before the expiration of the statute. A copy of the recommendation will be kept with the case file. For further information on suits, see IRM 5.17.4, Legal Reference Guide for Revenue Officers - Suits by the United States.
Guidelines for determining the feasibility of recommending a suit are found in IRM 25.3.2, Suits by the United States. If there is a question whether the suit has been filed or not, please check with CEASO.
5.16.1.2.2.5
(05-05-2009)
Report of Statute Expiration
The employee assigned the case at the time of the statute expiration will be required to report the expiration in accordance with the procedures in IRM 5.1.19.5, Imminent CSEDs. This requirement applies to situations where a statute expires on any party to a joint assessment where the balance is collectible from the other party(s). These procedures apply to cases where a module has been reported CNC with closing codes 04 and 05 or in cases where it is permissible to let the collection statute expire in inventory with group manager's prior concurrence.
To report an expired collection statute on a case where the RO has taken all appropriate actions without resolving the module(s) prior to the expiration of the statute, use the procedure in IRM 5.1.19.5.4, Expiration of a Collection Statute.
To report an expired collection statute on a case where the RO has not taken all appropriate actions to resolve the module(s) prior to the expiration of the statute, use the procedure in IRM 5.1.19.5.5, Collection Statutes That Expire Without Prior Approval.
5.16.1.2.3
(04-13-2021)
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If a corporation has been in a Chapter 7 or a liquidating Chapter 11 bankruptcy and no further proceeds will be received from the bankruptcy and anticipated collection from abandoned or after-acquired property is insufficient to warrant further collection efforts, use cc 07. Reminder: Collection employees must contact Insolvency prior to using cc 07.
Closing code 07 may also be used for exempt organizations that have been through liquidating bankruptcy and LLC accounts (where the LLC is identified as the liable taxpayer) that have been through liquidating bankruptcy. Note: See IRM 5.1.21, Collecting from Limited Liability Companies, for sources that may be used to identify the liable taxpayer.
A NFTL should not be filed regardless of the dollar amount, if the taxpayer is a corporation, exempt organization or LLC (where the LLC is identified as the liable taxpayer), and the entity has gone through a liquidating bankruptcy or receivership. Document the proceeding number in the case history.
The trust fund recovery penalty (TFRP) assessment must be considered and Form 4183, Recommendation Re: Trust Fund Recovery Penalty Assessment, must be approved prior to reporting the trust fund liabilities CNC using criteria in IRM 5.7.4.5, Form 4183 Penalty Assessment Recommendation.
Corporations and liquidating LLCs (where the LLC is the liable taxpayer) that have filed a Chapter 7 bankruptcy petition and have been designated a "No Asset" case, being closed as TC 530 cc 07 by the Centralized Insolvency Operation (CIO) do not require managerial approval.
5.16.1.2.4
(03-03-2025)
Codified text.
Use closing code 08 to report an account CNC on a decedent or decedent estate.
Closing code 08 is appropriate for IMF joint liabilities only when both taxpayers are deceased and a determination has been made that there is no collection potential from assets owned at death.
Closing code 08 may be used when the primary taxpayer is deceased and a determination has been made that there is no collection potential from the decedent's individual or business assets or persons in possession of such assets. Collection may also be pursued from the surviving spouse on joint liabilities using MFT 31 mirrored accounts. See IRM 5.16.1.3.2.1 for additional information.
Do not use cc 08 when only the secondary taxpayer is deceased. A TC 540 should be input on the secondary taxpayer's SSN, if it has not already posted to the account. Collection may be pursued from the decedent's individual or business assets or persons in possession of such assets. Collection may also be pursued from the primary taxpayer on joint liabilities. If the primary taxpayer is determined to be uncollectible, the account must be closed using a hardship closing code. A CIS must be secured from the primary taxpayer.
Closing code 08 also applies to BMF sole proprietorships and partnerships only if all of the partners are deceased and taxes were due at the time of death.
In situations where the owner of an LLC is identified as the liable taxpayer and is deceased, cc 08 is appropriate.
In all decedent and decedent estate cases attempt to secure the following: Date of death County/city in which the taxpayer died The taxpayer's place of residence at the time of death The name, address and telephone number of the fiduciary Probate records that list an inventory and appraisal of decedent assets Caution: Closing code 08 does not apply to corporations even though one or more of the officers may be deceased or to LLCs (where the LLC is identified as the liable taxpayer) and one or more of the members is deceased.
Additional sources may be used to determine the date of death including: On-line locator services (follow security guidelines when using public internet search engines) Obituaries Family members Death certificates
Field employees will consult with CEASO for assistance in determining if a proof of claim is needed when there is an estate proceeding. Note: See IRM 5.5, Decedent, Estate and Gift Taxes, and IRM 5.17.13, Legal Reference Guide for Revenue Officers, Insolvencies and Decedents' Estates, regarding proof of claim.
Consider a transferee assessment if circumstances warrant and document the ICS history. Note: See IRM 5.17.14, Legal Reference Guide for Revenue Officers, Fraudulent Transfers and Transferee and Other Third Party Liability.
When reporting accounts CNC using cc 08, do not request separate input of TC 540 to delete the master file filing requirements. TC 530 cc 08 generates a TC 540.
IRC 7345 requires the IRS to notify the State Department that an individual is certified as owing a seriously delinquent tax debt. The State Department generally will not issue or renew a passport to an individual after receiving the certification from the IRS. Section 7345 does not prohibit the IRS from exercising discretion to exclude certain debts from certification. The IRS has exercised discretion to exclude debts of a deceased taxpayer that are currently not collectible (CNC). See IRM 5.19.25.5(1), Discretionary Exclusions from Certification.
5.16.1.2.5
(04-13-2021)
Codified text.
The following accounts may be closed as CNC, tolerance without further action, where the aggregate unpaid balance, including accruals, is less than ≡ ≡ ≡ ≡: IMF (other than MFT 55) BMF (other than MFT 13) NMF IRAF Note: Use cc 09. These accounts do not require managerial approval. Caution: This does not apply to cases with TDA issuance codes of N (False Refund Claim Case), 914 (active CI case), or TRSF (transferred from another area office). This does not apply to bankrupt corporations, which should be closed using cc 07. Note: MFT 35 individual shared responsibility payment modules and MFT 65 mirrored shared responsibility payment modules must be included in the calculation of the tolerance amount. TC 530 cc 09 will be input on all balance due modules including the MFT 35/65 modules.
The following accounts may be closed as CNC, tolerance, where the aggregate unpaid balance, including accruals, is less than ≡ ≡ ≡ ≡ ≡ ≡: IMF MFT 55 BMF MFT 13 Note: Use cc 09. These accounts do not require managerial approval.
When there are multiple periods where any one period exceeds the tolerance level, do not use cc 09. Close all periods using the appropriate CNC closing code such as unable to locate, hardship, etc. Exception: A new LLC closing code 19 has been established for LLCs where the SMO is liable. If the SMO liable periods meet the tolerance criteria, they can be closed using cc 19, and the LLC liable periods can be closed using a different closing code or different type of closure. See IRM 5.16.1.3.4 (8), LLC tables. Modules closed using cc 19 do not require managerial approval.
5.16.1.2.6
(03-03-2025)
Codified text.
Closing code 10 applies to any corporation or exempt organization that is no longer operating and from which all assets have been dispersed. Closing code 10 may be used to close Form 1041, U.S. Income Tax Return for Estates and Trusts, assessments on trusts or estates, if there are no assets to collect from and transferee issues have been considered for all transfers of assets or distributions to beneficiaries or grantors.
Closing code 10 may also be used for limited liability partnership cases when the partnership agreement limits the liability of the partners under local law, when the business is no longer operating and from which all assets have been dispersed.
Closing code 10 may also be used for LLC cases (where the LLC is identified as the liable taxpayer) when the business is no longer operating and from which all assets have been dispersed.
When there is limited collection potential from a corporation with corporate income tax liability, investigate and consider the following collection actions against shareholders, successor entities or others receiving corporate property: Foreclosure of any Federal Tax Liens against property in the hands of other entities if they were in place before distribution Assertion of transferee liability against recipients of corporate property Enforcement of liens attaching to corporate property before the distribution (levy, suit) Assertion of fiduciary liability against any parties acting in a fiduciary capacity Suit to set aside the fraudulent transfer of specific property Establishing the recipient as a nominee, alter ego, or successor in interest of the taxpayer and proceeding appropriately Note: The above options, particularly assertion of transferee liability, should be considered when collecting unpaid deficiency income tax assessments against insolvent corporations that utilized an Intermediary Transaction or other type of tax shelter to shelter income.
When a corporation has been dissolved under state receivership proceedings or other dissolution actions, and there are no other assets, use closing code 10. A CIS is generally not required in these situations. See IRM 5.9.20, Non-Bankruptcy Insolvencies. Note: Seek Counsel's input in cases of state receivership. Revenue officers should consider consulting with Insolvency prior to contacting Counsel. See IRM 5.17.13, Legal Reference Guide for Revenue Officers, Insolvencies and Decedents' Estates, for further information in circumstances involving assignments for the benefit of creditors, corporate dissolutions, etc. Reminder: In situations where transferee liability exists, action may be needed to protect the statute of limitations of the transferee as well as the transferor. See IRM 25.6.22.6.2.4, Extension of Assessment Statute of Limitations by Consent, Dissolved Corporations.
Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, must be approved before reporting the employment and/or excise taxes CNC when the liability meets the criteria in IRM 5.7.4, Investigation and Recommendation of TFRP. Form 4183 will also include the additional TFRP liabilities from any unassessed returns. See IRM 5.7.4.3, Calculating the TFRP. Note: If the corporate Bal Due modules are being reported CNC prior to sending Form 2749, Request for Trust Fund Recovery Penalty Assessment(s) to Control Point Monitoring (CPM) on the Automated Trust Fund Recovery (ATFR) system, an Other Investigation (OI) will be created on ICS to control the TFRP case until the Form 2749 has been submitted to CPM.
If the aggregate unpaid balance of assessments is less than ≡ ≡ ≡ ≡ ≡ ≡: Issue a Letter 725-B or Letter 725-D to schedule a telephone contact with BMF taxpayers. An appointment should be scheduled at the taxpayer’s last known address after an investigative interview has been made and no safety concerns have been identified. Secure a complete CIS, if possible. The CIS must support the CNC recommendation to report the accounts defunct. If the taxpayer has equity in assets, the reason collection is not being pursued must be documented in the history. See exception in paragraph (11) below. Address all ICS levy sources. Issue levies or confirm the taxpayer is not owed any funds from the levy sources. When applicable, follow procedures in IRM 5.11.6.16.4, Issuing a Merchant Account Levy.
In addition to the requirements above, if the aggregate unpaid balance of assessments is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ : And the last filed income tax return (Form 1120, Form 1065, or Form 990) was due within the last two years and was filed by the taxpayer, review the return or the return information by using CC BRTVU/TRDBV to verify the CIS and identify additional assets. If using BRTVU and assets are indicated, secure a copy of the return to pursue any leads. Review Accurint to verify no assets, including vehicles and other personal property. Motor vehicle records or Accurint (if motor vehicle records are available through Accurint in the state where the taxpayer is located). Review courthouse records on-line or in-person to verify no real or personal property ownership. An in-person courthouse records check is not required for personal property only. Verify that state employment records show no wages paid. If employees are unable to obtain employment records for the state where the taxpayer is located, document the case history.
If the aggregate unpaid balance of assessments exceeds ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, the following additional verification is required: Check local licensing authorities when the taxpayer operates a business that requires a license. Accurint may be used if licensing records are available through Accurint in the state where the taxpayer is located. Secure bank records from the taxpayer to confirm there is no current business activity.
In addition, if the aggregate unpaid balance of assessments exceeds ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, And any portion of the assessment results from an examination and/or fraud penalty, request a copy of the revenue agent’s file (formerly known as RAR) by requesting the Document Locator Number (DLN) of the TC 29X/30X. Review the file for additional assets, inconsistencies in the taxpayer’s financial disclosure and potential for transferee assessment. Note: A Revenue Agent File is required only if the Examination assessment is for one of the immediate two preceding years. Check CC AMDIS where there is a -L freeze on the account indicating open examination activity. If there is an open examination, contact the agent for evidence of assets.
Regardless of the aggregate unpaid balance of assessments, in cases where neither a corporation/LLC, nor the officers can be located, and third-party sources (i.e., neighbor/landlord/current resident) indicate the business is no longer operating, the case may be closed defunct without a CIS. Confirm that the business is defunct and there are no assets to collect from by checking the following: State employment records to verify no wages paid. If employees are unable to obtain employment records for the state where the taxpayer is located, document the case history Postal tracers Accurint for asset and locator services, see IRM 5.1.18.2.2, Asset Locator Research Call all known telephone numbers All known levy sources DMV, or Accurint (if motor vehicle records are available through Accurint in the state where the taxpayer is located) Courthouse records check, on-line or in-person, to verify no real or personal property ownership. An in-person courthouse records check is not required for personal property only. Note: The research conducted on accounts with an aggregate unpaid balance of assessments less than ≡ ≡ ≡ ≡ ≡ ≡ should be commensurate with the balance due, and the history documented as to why the research was not conducted (i.e., cost to obtain records).
If there are no trust fund liabilities due, the accounts can be closed as defunct using cc10. If trust fund taxes are due, or the revenue officer cannot confirm the business is no longer operating, the accounts should be closed as unable to locate. Prior to reporting the accounts unable to locate, see IRM 5.7.5.4.1, Nonassertion Based on Collectibility, for TFRP recommendations when the potentially responsible person cannot be located.
If the corporation or LLC is chartered in a state that permits corporate or LLC reactivation or reinstatement, and it appears likely that the same entity will resume business, consider a mandatory follow-up.
Any amended returns or necessary adjustments to the tax assessments must be submitted prior to reporting the account CNC.
5.16.1.2.7
(03-03-2025)
Codified text.
Accounts may be reported CNC using cc 13 when an operating corporation, exempt organization, or limited liability partnership can pay current taxes but cannot pay its back taxes and enforcement cannot be taken because the business has no distrainable accounts receivable or other receipts or equity in assets.
Closing code 13 may also be used for LLC cases (where the LLC is identified as the liable taxpayer) when an operating business can pay current taxes but cannot pay its back taxes and enforcement cannot be taken because the LLC has no distrainable income or equity in assets. Reminder: LLC modules where the SMO is liable cannot be reported CNC using cc 13. Liabilities of a sole proprietor or partnership where a general partner is personally responsible for the partnership taxes also cannot be reported CNC using cc 13. In these cases, the sole proprietor and general partner are personally liable for the entire amount of business taxes due, and if they are determined to be uncollectible, the accounts must be reported CNC using a hardship closing code (24 - 32).
Secure a complete CIS. The CIS must support the CNC recommendation. If the taxpayer has equity in assets, the reason collection is not being pursued must be documented in the ICS history. Assets that should be viewed and verified include: Schedule an interview with the taxpayer using Letter 725-B or Letter 725-D with a request to review the business assets in the field if no safety concerns have been identified. Accurint Courthouse records check, on-line or in-person, for real or personal property ownership. An in-person courthouse records check is not required for personal property only. DMV check or Accurint (if motor vehicle records are available through Accurint in the state where the taxpayer is located) The last filed income tax return if it was due within the last two years and was filed by the taxpayer. Review the return or the return information by using CC BRTVU/TRDBV. If using BRTVU and assets are indicated, secure a copy of the return to pursue any leads. Other checks, if appropriate Note: Equity in assets must be verified against current loan balances provided by the taxpayer or secured via summons.
The income and expense analysis must show that the taxpayer can make current tax deposits, but cannot make payments on the back taxes. The income and expenses must be verified against: The last filed income tax return if it was due within the last two years and was filed by the taxpayer. Review the return or the return information by using CC BRTVU/TRDBV. If using BRTVU and assets are indicated, secure a copy of the return to pursue any leads. Bank statements or Other financial statements provided by the taxpayer. Note: See IRM 5.15.1.18, Business Expenses, and IRM 5.15.1.19, Determining Business Income, for detailed information on financial analysis of business entities.
The taxpayer must be current with all filing and paying requirements and must demonstrate an ability to remain current prior to closing as cc 13. The case will be monitored for filing and paying compliance and if the taxpayer does not remain current, the case will be reactivated. The officers’ full compliance with filing and paying requirements must also be verified and documented, including estimated tax payments if applicable. The officer of a corporation or LLC (where the LLC is identified as the liable taxpayer) is often an employee of the corporation or LLC, and therefore should be reporting a wage from the corporation or LLC and filing employment tax returns. An officer is not considered to be an employee of the corporation if the officer does not perform any services or performs only minor services; and the officer is not entitled to receive, directly or indirectly, any remuneration. Therefore, the only time a corporation or LLC closed as in-business CNC would not be filing employment tax returns is when it is inactive with no business activity, but not yet defunct. Note: An individual owner of a single-member LLC, classified as a disregarded entity, is not an employee of the LLC. Instead, the owner is subject to self employment tax on the net earnings of the LLC which is treated in the same manner as a sole-proprietorship.
A TFRP investigation must be completed and a recommendation on Form 4183 must be approved prior to disposition of the account. See IRM 5.7.4, Investigation and Recommendation of TFRP, for further information.
Consider issuance of Letter 903 to prevent accrual of additional liabilities and document the decision. For additional information, see IRM 5.7.2.2, Issuance of Letter 903.
There is no systemic follow-up on cc 13. If the aggregate account balance including accruals is ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more, initiate a mandatory follow-up 18 to 24 months after the date of the Form 53. Requests that exceed 24 months must include an explanation in the history or CCP will limit the time to 24 months. The mandatory follow-up will include securing a new CIS, conducting a full compliance check, and reviewing the latest income tax return for the business. This review will determine whether the account will be reactivated or scheduled for additional mandatory follow-up. CCP will reactivate and reassign the CNC accounts to the field if the mandatory follow-up is not worked timely.
If the taxpayer has incurred subsequent liabilities while collection on a prior liability was suspended, the taxpayer must be investigated to verify the taxpayer's financial condition, a NFTL determination made, and a TFRP recommendation made on applicable taxes. The additional liabilities should not be closed as in-business CNC, unless the liability was incurred prior to the date of the original CNC and inadvertently did not get reported CNC. If additional liabilities incurred after the date of the original CNC are not resolved, the CNC accounts will be reactivated for collection action. See IRM 5.7.4, Investigation and Recommendation of TFRP.
5.16.1.2.8
(08-25-2014)
Codified text.
TC 530 cc 15 was formerly used for corporate income tax liabilities owed by a financial institution certified as insolvent by the Office of the Controller of the Currency or the Office of Thrift Supervision and is now obsolete.
5.16.1.2.9
(03-03-2025)
Codified text.
Follow the procedures in IRM 5.15.1, Financial Analysis Handbook, to determine the correct resolution of the case based on the taxpayer's assets and equity, income and expenses: A hardship exists if a taxpayer is unable to pay reasonable basic living expenses. The basis for a hardship determination is from information about the taxpayer's financial condition provided on Form 433–A, Collection Information Statement for Wage Earners and Self-Employed Individuals or Form 433–B, Collection Information Statement for Businesses. Generally, these cases involve no income or assets, no equity in assets or insufficient income to make any payment without causing hardship. An account should not be reported as CNC if the taxpayer has income or equity in assets, and enforced collection of the income or assets would not cause hardship. Hardship accounts are closed using cc 24 through 32. See Exhibit 5.16.1-2. Mandatory follow-up may be appropriate for certain hardship cases. See IRM 5.16.1.6, Mandatory Follow-Up Reminder: Hardship closing codes can only be used for individual or joint IMF assessments, sole proprietorships, partnerships where a general partner is personally liable for the partnership taxes, and LLCs, where an individual owner is identified as the liable taxpayer. See IRM 5.16.1.2.4 for decedent cases.
Restitution based assessments may be closed CNC due to hardship. Restitution based assessments will appear on MFT 31 with a TC 290 and/or 298. The module will contain a TC 971 AC 102 and a TC 971 AC 180-189. If a taxpayer is making restitution payments in accordance with a court order, the restitution payments are an allowable expense. Court ordered restitution payments are allowable expenses.
When a court orders restitution paid to federal as well as nonfederal victims, the IRS will not pursue enforced collection actions until the nonfederal victims are paid in full. In those instances, the account may be closed as a CNC hardship using a closing code calculated in accordance with IRM 5.16.1.2.9(13), with a mandatory follow-up date based on information contained in the court order. The government may take steps to protect its interest, such as filing a NFTL.
There may be cases where the taxpayer cannot full pay a Restitution Based Assessment (RBA) and an MMIA or PPIA will be established for related civil assessments, exclusive of the RBA (that is, the RBA is not included as part of the IA). In these cases, the RBA modules may be closed as a CNC hardship using closing code 32. Refer to IRM 5.14.4, Withdrawals and Installment Agreements with Special Circumstances, for guidance on establishing an MMIA or PPIA for these accounts.
Schedule an office appointment at your post of duty or, in rare circumstances, a telephonic appointment to meet with IMF taxpayers using appointment Letter 725-B or Letter 725-D. Secure a Collection Information Statement (CIS). The CIS must support the CNC recommendation to report the account as hardship. If the taxpayer has equity in assets, the reason collection is not being pursued must be documented in the history. See IRM 5.15.1, Financial Analysis - Financial Analysis Handbook. Verification of a CIS is not required if the aggregate unpaid balance of assessments is less than ≡ ≡ ≡ ≡ ≡ ≡ and the information on the CIS appears reasonable.
Under certain conditions, a CIS is not required before reporting an account CNC. The aggregate unpaid balance of assessments, including any prior CNCs, must be less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ and at least one of the following conditions must exist: The taxpayer has a terminal illness or excessive medical bills. The taxpayer is incarcerated. The taxpayer's only source of income is Social Security, welfare, or unemployment. The taxpayer is unemployed with no source of income. Consider a Manually Monitored Installment Agreement (MMIA) for seasonal workers. Note: Employees are required to secure documentation from the taxpayer prior to declaring the account uncollectible if internal documents such as IRPTR and RTVUE do not confirm the taxpayer’s circumstance.
The following verification is required for accounts when the aggregate unpaid balance of assessments is between ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡: On-line locator services, such as Accurint. Follow security guidelines when using public internet search engines. If the last filed income tax return was due within the last two years and was filed by the taxpayer, review the return or the return information by using CC RTVUE/TRDBV. If using RTVUE and assets are indicated, secure a copy of the return to pursue any leads. Income reported on the CIS may be verified using the information from IRMF on the ICS Levy Information screen, or CC IRPTR/IRPTRJ.
For accounts where the aggregate unpaid balance of assessments is greater than ≡ ≡ ≡ ≡ ≡ ≡ the following additional verification is required: Motor vehicle records or Accurint (if motor vehicle records are available through Accurint in the state where the taxpayer is located) Courthouse records check, on-line or in-person, for real or personal property ownership. An in-person courthouse records check is not required for personal property only. See IRM 5.1.18.4, Real Property Records. Request Foreign Account Tax Compliance Act (FATCA) report when IDRS command code RTVUE indicates that a taxpayer has filed Form 8938, Statement of Specified Foreign Financial Assets. Refer to proposed IRM 5.1.18.21, FATCA Research, for procedures to request Form 8966, FATCA Report.
For accounts where the aggregate unpaid balance of assessments is greater than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the following additional verification is required: Full credit report on IMF and sole proprietor taxpayers and LLCs (where an individual owner is identified as the liable taxpayer). This includes balance due cases where recently filed returns will result in additional assessments causing the liability to be in excess of ≡ ≡ ≡ ≡ ≡ ≡ ≡. For additional information on credit reports, see IRM 5.1.18.19, Consumer Credit Reports. Credit reports are optional for accounts with an aggregate unpaid balance of assessments below ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Conduct FinCEN research when IRPTR reflects that a taxpayer has filed a Foreign Bank Account Reporting (FBAR) form to obtain the name of the bank where the account is located, the amount in the account, co-owners, and other useful information. See IRM 5.1.18.17, Foreign Bank and Financial Account Report. CC AMDIS, if there is a -L freeze on the account indicating open Examination activity. If there is an open examination, contact the revenue agent to determine any additional sources of collection or the need to limit the scope of the examination based upon collectibility. Audit file or Special Agents Report if the assessment originated in Examination or Criminal Investigation (CI). The file can be secured by requesting the DLN of the TC 29X/30X. Note: An Audit file is required only if the examination assessment is for one of the immediate two preceding years. If unable to obtain any information from the special agent, consider consulting with CEASO. If there is a TC 910 on the module, the taxpayer may have filed a financial statement with the probation office.
IRC 6343(e) requires the release of a levy on salary or wages payable to or received by a taxpayer, upon agreement with the taxpayer that the tax is currently not collectible. See IRM 5.11.2.3.1.4(6), Economic Hardship. Steps should be taken to accomplish the release immediately. Case histories must be reviewed to ensure that wage levies are released prior to declaring an account uncollectible under hardship closing codes. The case history must be documented. Reminder: If TC 670 with designated payment code (DPC) 05 (levy) is present on any module or a regular series of payments is noted, ensure that the disposition of the levy is known.
A compliance check will be made and the results documented in the case history for all hardship determinations per IRM 5.16.1.2(4). All open filing requirements or Del Ret modules must generally be resolved and closed appropriately when reporting an account CNC.
Open Del Ret modules may be resolved by closing as little or no tax due, or income below filing requirement (P-5-133), if warranted by the facts of the case. See IRM 5.1.11, Delinquent Return Investigations, for options to resolve delinquent return accounts. If the taxpayer is required to file and refuses, a referral or summons may be appropriate. See IRM 25.5, Summons Handbook for summons procedures. Caution: If a hardship determination is verified, a levy cannot be issued or left in place to persuade a taxpayer to file. Note: Accounts may be reported CNC hardship if a CIS can be verified, even if there are unfiled returns. If the unfiled return is needed to confirm the hardship determination (i.e., income, expenses and/or assets reported on the CIS), the Bal Dues should be held until the return is secured and the CIS can be verified, but levies cannot be issued to collect the Bal Dues if all other income/asset checks appear to confirm hardship.
Use the hardship closing code that most closely corresponds to the taxpayer's total living expenses allowed. See Form 433-A (Rev 5-2020), Collection Information Statement for Wage Earners and Self-Employed Individuals; Section 5, Monthly Income and Expense Analysis; Line 49, Total Living Expenses. If the closing code chosen does not correspond to the taxpayer's allowed expenses, document the reason for the deviation in the summarizing statement for the CNC decision. Generally, do not select a code below the taxpayer's total living expenses allowed. Do not use a higher code simply to prevent re-issuance of the account. Example: Monthly living expenses allowed x 12 (months) = Annual living expense amount. Select the hardship closing code with the closest dollar amount above the annual living expense amount. Note: If the closest closing code amount is only $300.00 more than the annual living expense amount, the next higher closing code would be selected. The history would be documented that an increase in Total Positive Income (TPI) of only $300.00 above total living expenses allowed annually would not enable the taxpayer to make monthly payments.
The systemic process for reactivating hardship CNC accounts relies on an increase in TPI above a predetermined amount based on the hardship closing code when the case is closed as CNC: The TPI is reviewed annually when a taxpayer files an income tax return. For BMF accounts on sole proprietorships, partnerships (where a general partner is personally liable for the partnership taxes) and LLCs (where the owner is identified as the liable taxpayer), TPI is determined by the annual income of the individual, general partner or member of the LLC. The social security number (SSN) of the individual, general partner or member of an LLC (where the owner is identified as the liable taxpayer) must be cross-referenced on IDRS. When a BMF account is closed as hardship on ICS, the "Input on IMF to reactivate BMF CNC" will automatically be selected and a TC 130 with the EIN, BMF name control and CNC closing code will be input on the IMF entity, under the SSN of the individual, general partner or sole member of an LLC (where the owner is identified as the liable taxpayer). The TC 130 input on IMF to reactivate BMF CNC is a separate input from the cross-reference EIN/SSN input. This is also a separate input from the TC 130 input for refund offsets, which is input on the BMF entity. Employees must still determine if the TC 130 for refund offset is required and select either "TC 130 requested before" or "TC 130 input required" . The input document for the TC 130 is Part 3 of Form 53 (Form 3177). Part 3 of Form 53 on ICS will be transmitted to CCP via a systemically generated e-mail after GM approval of the CNC. Reminder: When Form 53 is prepared manually, employees will need to check the appropriate TC 130 box for "Refund Offset" and check the box for "Input on IMF to reactivate BMF CNC" . Part 3 of a manually prepared Form 53 must be mailed to CCP. Note: Refer to IRM 5.1.12.21.3.2, Offset an IMF Refund, for additional guidance on situations where input of a TC 130 is required.
Taxpayers must be advised that interest and penalties will continue to accrue on the account even though the collection action is suspended. In addition, before reporting an account CNC, other collection options such as Offer in Compromise should be discussed with the taxpayer.
Case Closing Letter 4223, Case Closed - Currently Not Collectible, will be issued to the taxpayer and/or Power of Attorney (POA) when a case is closed as CNC - hardship. The case closing letter will only be used when the collection investigation on the taxpayer entity is concluded. Letter 4223 is systemically generated on ICS after GM approval of the CNC. Follow procedures in IRM 5.1.1.5, Case Closing Letters. For cases not on ICS, Letter 4223 is available on the publishing web site located at Publishing Catalog. Note: At case closing when generating Letter 4223 the RO’s fax number will auto populate. Each employee’s fax number must be input into the Employee Table for the fax number to generate on the Letter 4223. This information can be added by the Group Manager, Acting Group Manager, Group Secretary or the IQA. Exception: A case closing letter should not be sent when a suit recommendation is the final collection action, and the case has been placed into CNC status as suggested in IRM 25.3.2.6(7), Litigation and Judgments - Suits by the United States Revenue Officer Referral and Account Disposition.
IRC 7345 requires the IRS to notify the State Department that an individual is certified as owing a seriously delinquent tax debt. The State Department generally will not issue or renew a passport to an individual after receiving the certification from the IRS. Section 7345 does not prohibit the IRS from exercising discretion to exclude certain debts from certification. The IRS has exercised discretion to exclude debts that are currently not collectible (CNC) due to hardship. The IRS will reverse the certification of seriously delinquent tax debt and notify the State Department within 30 days if a certified taxpayer is later determined to be currently not collectible due to hardship. In some situations, employees may need to request expedited decertification. See IRM 5.19.25.2, Passport Certification Overview.
5.16.1.2.10
(04-13-2021)
Codified text.
Collection investigation and distraint actions by the IRS in cases involving taxpayers residing in foreign countries are not treated the same as those involving taxpayers residing in the United States. For taxpayers residing outside the United States, with no collection potential from assets in the United States, but there are indications of assets outside of the United States, and a field call is not practical, international revenue officers use TC 530 cc 06. International revenue officers should not close accounts as UTL (03) or UTC (12) if the taxpayer: is known to have a current address outside the United States, has the ability to pay in part or in full but has not done so, and has no collection potential from United States assets but there are indications of assets outside the United States.
International revenue officers also use TC 530 cc 06 in instances where they have initiated an Outgoing Mutual Collection Assistance Request (MCAR) request and have no other collection avenues to pursue. The TC 530 cc 06 closure can occur prior to the resolution of the Outgoing MCAR request by the foreign country. Currently, there are only six countries with which the United States has treaties that provide for mutual collection assistance. These countries are Canada, Denmark, France, Japan, The Netherlands and Sweden. Taxpayers residing in U.S. possessions and territories (a.k.a. insular areas) are treated the same as those residing in the United States and are not appropriate for closing as TC 530 cc 06. See IRM 5.21.7.4.8, Outbound Mutual Collection Assistance Request.
When the taxpayer travels outside the United States frequently or there is reason to believe the taxpayer travels outside the United States frequently in accordance with IRM 5.1.18.12, United States Passport Office, request a passport check if the aggregate unpaid balance of assessments is: ≡ ≡ ≡ ≡ ≡ ≡ or more for international taxpayers. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more for domestic taxpayers. Note: A passport check will not provide you with any travel information. If you are searching for historical travel information, see IRM 5.1.18.13.8, TECS Historical Travel Information.
5.16.1.3
(04-13-2021)
Special Conditions
In certain circumstances employees will be required to take additional actions to ensure that CNC accounts are properly closed.
Assessments made for Form 5330 appear on IDRS under MFT 76 and for Form 5500 under MFT 74. Whenever an assessment is made under either of these MFTs, a corresponding plan number is embedded in the assessment. Each plan has an associated three digit plan number assigned by the employee/sponsor (e.g., 001, 002). Employers may have more than one type of retirement or benefit plan. Multiple MFT 74/76 assessments can exist for each tax period if the employer has a deficit in more than one plan.
Create an incoming OI on the ICS case.
When recommending an account be reported CNC and there are MFT 74 or MFT 76 Bal Due modules showing on IDRS SUMRY or BMFOLI, follow the procedures below: Determine the correct type of CNC based on IRM 5.16.1 criteria, including the MFT 74 or 76 modules. Note: If the total balance due including the MFT 74 and 76 modules exceeds the tolerance amount, you will not be able to close the case as tolerance. Input the CNC request on ICS excluding the MFT 74 and 76 modules. Send Form 4844 to CCP requesting input of the appropriate TC 530 closing code on the MFT 74 or 76 modules. Form 4844 must include the plan number Document the closing ICS history that the MFT 74 and 76 modules were closed via Form 4844 requesting input of TC 530, closing code XX. Note: Input of the TC 530 will not change the status of the account on IDRS.
Close OI module on ICS as "Requested action taken."
A TC 530 on MFT 74 and 76 modules will not reverse systemically, and as noted: If you are working a case with MFT 74 or 76 modules, review to determine if a TC 530 was input. If a TC 530 was previously input and should be reversed, send Form 4844 to CCP requesting input of TC 531 on the MFT 74 or 76 modules. Form 4844 must include the plan number.
5.16.1.3.1
(05-05-2009)
Codified text.
If a transferee assessment has been recommended and the liability is not collectible from other sources, report the transferor account CNC under the appropriate closing code. See IRM 5.1.14.2, Transferee Liability and Fraudulent Conveyances, for further guidance.
Document the consideration of transferee liability prior to case disposition.
5.16.1.3.2
(04-13-2021)
Codified text.
Assessments against more than one taxpayer can only be reflected as CNC on IDRS and ICS if all of the liable taxpayers are determined to be uncollectible. In order to request a CNC hardship closing code on a joint IMF liability, where the taxpayers are now divorced or separated, both taxpayers would need to be uncollectible.
If one taxpayer qualifies for CNC hardship on a joint liability, or one taxpayer on the joint assessment requests separate treatment from their spouse, proceed with the CNC mirroring process. See IRM 5.16.1.3.2.1, Joint Liability Separate CNC Requests - MFT 31/65 Mirrored Assessments for additional information. Reminder: Employees should review joint accounts of divorced taxpayers to ensure that collection is not being pursued on a taxpayer that has already been determined to be uncollectible.
An accepted offer in compromise will release the taxpayer who made the offer from the entire liability if the taxpayer complies with all terms of the offer. Offer credits are applied to the original liability reducing the overall debt. If the liability against the remaining taxpayer is determined to be uncollectible, the amount to be reported as CNC is the balance of assessments after credits. Note: For specific procedures concerning partnership liabilities see IRM 5.8.4.22.2, Partnership Liabilities and IRM 5.15.1.14, Business Entity Types.
5.16.1.3.2.1
(11-14-2023)
Joint Liability Separate CNC Requests - MFT 31/65 Mirrored Assessments
When a taxpayer files a joint income tax return with a balance due, both taxpayers are equally responsible for payment of the tax liability. One or both taxpayers on the jointly filed return may request and qualify for separate treatment and meet CNC criteria. Revenue officers are to follow procedures in IRM 5.15.1, Financial Analysis Handbook, to determine the correct resolution based on the taxpayers' assets and equity, income and expenses.
If it is determined that one of the taxpayers on the joint return may not be collectible then the MFT 30 joint account must be mirrored into two separate MFT 31 accounts to allow the RO to report one of the liable taxpayers CNC and to pursue collection on the other liable taxpayer. MFT 35 individual shared responsibility payment modules can be mirrored. See IRM 5.16.1.3.6, MFT 35 Shared Responsibility Payment (SRP) and MFT 65 Mirrored Shared Responsibility Payment.
A mirrored assessment is identical to the MFT 30 assessment. The MFT 30 joint assessment will be replaced with two separate accounts using the MFT 31 account code. The purpose in creating the MFT 31 accounts is to pursue collection or withhold collection on each spouse separately, when needed. A mirrored account is identified on IDRS by MFT 31. The CNC mirroring process will be identified by TC 971 AC 109 on each account.
The MFT 30 account must be "mirrored" into two separate MFT 31 accounts when one taxpayer on a jointly filed return needs to be treated separately from the other taxpayer based upon the following triggering event(s): Joint MFT 30 liability Either taxpayer is determined to be CNC Taxpayer requests separate treatment from their spouse or former spouse
The RO will conduct the following analysis: Verify joint liability Analyze taxpayer's ability to pay (using financial information) Determine if one of the taxpayers meets CNC criteria Conduct full compliance check Consider appropriate enforcement actions such as levy or NFTL Document the taxpayer's request for separate treatment from their spouse or former spouse
A separate CNC on a joint liability cannot be referred for mirroring if any of the following conditions exist: Invalid SSN or TIN Name control is not the same as on CC INOLE (The IMF name control must match SSA's name control.) A credit balance exists on the module to be mirrored If either TIN begins with a "9" Bankruptcy International Entities CSED Imminent modules (CSED has 12 months or less remaining on the statute) Note: A compliance check must be made and documented when considering a CNC hardship case. Follow procedures in IRM 5.16.1.2.9 (12) if there are any unfiled returns.
5.16.1.3.2.2
(04-13-2021)
NFTL on Mirrored Tax Period(s)
If a NFTL is already filed on the MFT 30 tax period(s), (check for TC 582 and/or TC 360), then no additional NFTL filing is necessary when the account is mirrored. The NFTL transaction codes will transfer over to the mirrored accounts.
If there is no indication that a NFTL is already filed on the MFT 30 tax period(s) involved and the NFTL should be filed to protect the government's interest against both taxpayers, the RO will request filing of the NFTL prior to sending the account forward for mirroring. The MFT 30 case must be held until the NFTL filing requirements are met, the NFTL is requested and the TC 582 lien indicator is pending. See IRM 5.12.1.3, Program Overview - Creation and Duration; IRM 5.12.2.2, Notice of Lien Determinations - Taxpayer Contact; and IRM 5.12.7.3.1, Creating the Notice of Federal Tax Lien, Form 668(Y)(c), using ALS.
If a NFTL is only required on the mirrored tax period(s) against one spouse, the case may be packaged with a completed NFTL request via Form 12636, Request for Filing or Refiling Notice of Federal Tax Lien, and forwarded to *SBSE CLO Liens Team 301 or eFax 855-390-3528 for processing.
If a determination is made that no NFTL is to be filed on the mirrored account, a statement must be documented on Form 3210.
The SRP (MFT 35/65) amount owed is not subject to a NFTL filing.
5.16.1.3.2.3
(03-03-2025)
Processing Actions for Mirroring Assessment
Perform and document complete research prior to making a referral for the mirroring process. A manual Form 53 can be selected from the ICS template listing in preparing a referral for mirroring.
Document the following information on Form 3210: "MFT 31/65 Mirror" in the remarks section Taxpayer name line and MFT 30/35 TIN Name and TIN of taxpayer account to be mirrored Current address of the taxpayer to be mirrored All telephone numbers of taxpayer Tax years to be included Indicate appropriate TC 530 cc (24 - 32) RO name, T-sign and phone number "Taxpayer Requested Mirrored Account" and has been advised that once the account is mirrored for specified period(s) it will not be reversed. Note: Refer to Document 12990, IRS Records Control Schedules (RCS) 28, Item 26 for the National Archives and Records Administration (NARA) approved Form 3210, Document Transmittal retention and disposition requirement. Note: If a NFTL is not required, annotate on Form 3210 that the NFTL determination was made and no NFTL is to be filed. Caution: The SRP amount owed is not subject to a NFTL filing.
If a NFTL is required on the mirrored assessment, attach Form 12636 to Form 3210. Annotate "MFT 31 Mirror" on Form 12636. Complete Form 12636 with date, RO name, T-sign, and phone number.
Attach Form 53 package and Form 12636 to Form 3210 for routing to SB/SE CSCO PSC for input of TC 530 on the mirrored tax periods. Form 53 must be annotated with "MFT 31/65 Mirror Assessment" in red or bold. Group assessed and mirrored tax periods together in Item 16 of Form 53, beginning with assessed liabilities; write "mirrored" at the beginning of the mirrored periods header. The address for SB/SE CSCO in PSC can be found on SERP under the Who/Where tab MFT 31 & Mirrored Assessments or by clicking on this link MFT 31 & Mirrored Assessments.
SB/SE CSCO PSC will create the MFT 31/65 modules identified by TC 971 AC 109, process the NFTL request and input the appropriate CNC closing action(s).
Send case closing Letter 4223, Case Closed Currently Not Collectible, on the MFT 31/65 mirrored assessment when the account is reported as CNC hardship. Exception: A case closing letter should not be sent when a suit recommendation is the final Collection action, and the case has been placed into CNC status as suggested in IRM 25.3.2.6(7), Revenue Officer Referral and Account Disposition.
5.16.1.3.3
(04-13-2021)
Codified text.
If another delinquent module becomes due and owing after the initial CNC, the new module may be reported CNC without further investigation if the prior CNC determination is no more than twelve months old. If there are additional requirements for research based on the updated aggregate unpaid balance of assessments for all modules (the new module and prior CNC modules), the additional research must be conducted prior to reporting the new module CNC. A NFTL determination is required per IRM 5.12.2.3.2, Notice of Lien Determinations - Determination Requirements. Note: Example: A balance due module for $16,000 was reported CNC as unable to contact in March 2022 and a new balance due module for $18,000 is assigned in September 2022. The additional research required for accounts exceeding ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in IRM 5.16.1.2.1 must be conducted and a NFTL determination must be made prior to reporting the new module CNC.
Exceptions are: Trust fund taxes which require a TFRP determination or which accrued after the date of the prior CNC determination Cases closed as in-business CNC where the taxpayer has incurred subsequent liabilities, see IRM 5.16.1.2.7 Prior bankruptcy (07) dispositions; contact Insolvency to determine other collection sources The taxpayer has a new address and the case was reported as CNC unable to locate or unable to contact When a case was closed TC 530 cc 39, shelved
Combined Annual Wage Reporting (CAWR) assessments may be reported CNC without investigation if they meet the criteria in IRM 5.7.4, Investigation and Recommendation of the TFRP, and if the prior CNC cc is 10. If the prior cc is 07, contact Insolvency to determine collection potential.
Federal Unemployment Tax Act (FUTA) state matching assessments may be reported as CNC without further investigation if the prior CNC cc is 10. If the prior CNC cc is 07, contact Insolvency to determine collection potential.
5.16.1.3.4
(08-25-2014)
Codified text.
Limited Liability Companies (LLCs) are business entities that are organized and established under state law which specifically limits the liability of the owners for debts of the LLC. The identity of the party liable for taxes is either the LLC or the owner of the LLC. Note: See IRM 5.1.21, Collecting from Limited Liability Companies, for guidance in identifying the liable taxpayer. This includes information on the classification for federal tax purposes of a single member LLC (as a disregarded entity or an association taxable as a corporation) and a multi-member LLC (as a partnership or an association taxable as a corporation).
A single member LLC that is classified as a disregarded entity will, nevertheless, be treated as an entity separate from its owner for employment tax purposes (effective for wages paid on or after January 1, 2009) and for certain excise tax purposes (effective for liabilities imposed and actions first required or permitted in periods beginning on or after January 1, 2008). The regulations are not retroactive. Note: An individual owner of a single-member LLC membership, classified as a disregarded entity, is not an employee of the LLC. Instead, the owner is subject to self employment tax on the net earnings of the LLC which is treated in the same manner as a sole-proprietorship.
Prior to reporting any modules as CNC, ensure the appropriate TC 971 Action Codes 364/365/366 have been input to identify the liable taxpayer for each tax module.
Where the LLC is identified as the liable taxpayer, consider the following: Collectibility is based on the income and assets of the LLC. The NFTL is filed in the name of the LLC. The assets of the members of the LLC are not subject to collection action. The TFRP must be considered with respect to the members or employees of the LLC who meet the definition of responsibility under IRC 6672.
Where the SMO is identified as the liable taxpayer, consider the following: Collectibility is determined based on the income and assets of the owner. The NFTL is filed in the name of the SMO. Note: See IRM 5.12.7.5.3, Preparing the NFTL - Limited Liability Company (LLC), for further instructions concerning NFTLs against single member disregarded LLCs.
Because state law specifies that the owner of an LLC has no direct ownership in LLC assets, the property of the LLC is not available for collection action when the owner is identified as the liable taxpayer. Consider the following: In situations where an individual owner of an LLC is identified as the liable taxpayer, that individual is directly responsible for the entire liability and the TFRP is not required as to the owner. When the owner of an LLC is a partnership, the liable taxpayer is the partnership and the partnership is responsible for the liability. Counsel should be consulted to determine if individual partners are directly responsible for the liability or if a TFRP should be considered with respect to anyone who meets the definition of responsibility and willfulness under IRC 6672. Revenue officers should consider consulting with CEASO prior to contacting Counsel. When the owner of an LLC is a corporation, the liable taxpayer is the corporation and the corporation is responsible for the liability. Consider the TFRP with respect to employees of the LLC or of the corporation who meet the definition of responsibility and willfulness under IRC 6672.
If assessments in the name and EIN of an LLC include some tax periods where the LLC is identified as the liable taxpayer and other tax periods where the owner of the LLC is identified as the liable taxpayer, separate collection determinations must be made for each identified taxpayer. Caution: Administrative collection action should never include both the name of the LLC and the name of the SMO. Only the name of the liable taxpayer should be included.
There will be situations where one case resolution is appropriate for the single member owner and a separate case resolution is appropriate for the LLC, and special case processing is required. When modules, where the single member owner is liable, will be closed as UTL, UTC or tolerance, use cc 17, 18 or 19. Case resolution actions must be taken in a specific order as shown in the table below: If CNC is the appropriate case resolution for ... And... Then request CNC... all modules for both liable taxpayers different closing codes are appropriate for each liable taxpayer for one liable taxpayer using appropriate closing code and submit for approval on ICS. Following approval of the CNC on the first liable taxpayer, request CNC for remaining modules for the other liable taxpayer using appropriate closing code and submit for approval on ICS to close case. one liable taxpayer modules for the other liable taxpayer will remain open or require a separate case resolution for that liable taxpayer, using appropriate closing code and submit for approval on ICS. Then take necessary action on remaining modules for other liable taxpayer.
Counsel should be consulted whenever legal issues are encountered. Consider consulting CEASO prior to contacting Counsel.
5.16.1.3.5
(03-03-2025)
Codified text.
Prior to reporting preparer, promoter, appraiser, material advisor and aiding & abetting penalties as uncollectible, additional research may be needed. Revenue officers can identify these civil penalties by reviewing IDRS CC TXMODA or IMFOLT/BMFOLT for the penalty reference numbers associated with each penalty. Note: Field Collection defines return preparer penalties as civil penalties with MFT 13 or MFT 55 that have the following penalty reference numbers (PRN): 606, 581, 624, 714, 715, 716, 717, 718, 626, 627, 628, 631, 633, 634, 636, 645, 648 or 650.
Return Preparer Coordinators (RPCs) and Return Preparer Visitation (RPV) coordinators play a critical role in the assessment process of return preparer penalties and can be a very valuable resource for revenue officers. For example: Revenue officers may contact the RPC or RPV coordinator to determine if the Return Preparer Penalty case file is available. Revenue officers may contact the RPC or RPV coordinator to obtain a client list or to conduct research in the Return Preparer Database. This list or additional research may help provide leads for the collection investigation and can be used to corroborate a return preparer's claim that they have ceased doing business as a return preparer. For example, by contacting the former clients of a return preparer who claims they have ceased doing business, the RO may find out that the return preparer is still preparing returns, but has changed the name of the business and is not signing the returns and/or is having others sign as the preparer (e.g., spouse, employee, etc.). Former clients may also prove valuable for obtaining asset information and levy sources. Note: RPCs handle all return preparer penalties except for the earned income credit due diligence return preparer penalties. For earned income credit due diligence return preparer penalties (i.e., penalty reference number 627), the revenue officer should contact the RPV coordinator. Note: Revenue officers should contact the designated coordinator in the RO's area using the following links: Return Preparer Coordinator and Return Preparer Visitation Coordinator (RPV).
The IRC 6700 civil penalty is assessed against the promoters of abusive tax shelters. The IRC 6701 civil penalty is assessed against any person who aids and abets the understatement of a tax liability. See IRM 20.1.6.13, Penalty for Promoting Abusive Tax Shelters -IRC 6700, and IRM 20.1.6.14, Penalties for Aiding and Abetting - IRC 6701, for detailed descriptions of the IRC 6700 and IRC 6701 civil penalties. Persons against whom these penalties have been assessed often conceal assets and distort their financial picture through a wide variety of sophisticated means, making it difficult to immediately determine the true collection potential of promoter penalty assessment accounts with a high degree of confidence. Assets currently concealed or placed beyond the government's reach may be discovered or become available during subsequent investigations.
IRC 6700 and IRC 6701 can be identified by penalty reference number 628 and 631. IRC 6700 and IRC 6701 balance due accounts should be assigned to an Abusive Tax Avoidance Transaction (ATAT) trained RO. Contact the Area ATAT coordinator for reassignment of a promoter penalty assessment account. See IRM 5.20.8.4, Coordination with the Examination Function, for a web link to the Small Business/Self-Employed (SB/SE) Collection ATAT web site for a list of Area ATAT coordinators for collection. In addition to the requirements of IRM 5.16.1, the procedures in IRM 5.20.8, Abusive Tax Avoidance Transactions (ATAT) - Promoter/Preparer Investigations, should be followed prior to closing a promoter penalty assessment account as CNC.
5.16.1.3.6
(03-03-2025)
Editorial commentary — not part of the primary text.
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Citation: Internal Revenue Manual § 5.16.1
Short title: IRM 5.16.1
Long title: IRM 5.16.1 — Currently Not Collectible
Jurisdiction: United States
Category: Internal Revenue Manual
Effective Date (as published): (03-03-2025)
Revision Date: (03-03-2025)
Manual Transmittal date: March 03, 2025
Access Date: 2026-07-03
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Revision history
- (03-03-2025) — Manual Transmittal dated March 03, 2025. This is the currently published revision of IRM 5.16.1. Historical Manual Transmittals are not exposed on the currently published section and are not reconstructed.