J is for Jeopardy Assessment

Overview: Jeopardy assessments are made in situations where, prior to the assessment of a deficiency, it is determined that the assessment or the collection of such deficiency would be endangered if regular assessment procedures were followed.

There are three IRC sections authorizing jeopardy assessments:

  • IRC 6861 authorizes assessment where the due date for filing of a return has expired;
  • IRC 6862 authorizes the assessment of taxes other than income, estate, gift, and certain excise taxes, even when the due date for filing a return has not expired and;
  • IRC 6867 authorizes assessment in situations where an individual is in possession of cash in excess of $10,000 and does not claim ownership of the cash or who claims the cash belongs to another individual, whose identity can be determined, and who claims ownership of the cash.

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What is a Jeopardy Notice?

The IRS must generally issue a notice to a taxpayer before proceeding with a levy on their assets. … One situation where the IRS is not required to provide a notice is when they believe that collection of the tax is in jeopardy, known as a jeopardy levy.