Jeopardy Levies and Jeopardy Assessments: When the IRS Skips the Waiting Periods

Most IRS collection runs on a predictable calendar: assessment, notice and demand, a 10-day wait, a 30-day notice of intent to levy, and a Collection Due Process notice. Jeopardy procedures exist for the situations where waiting would defeat collection. They are rare, they require high-level approval, and they come with a review process designed to move fast.

There are two related tools. A jeopardy assessment lets the IRS assess tax immediately instead of waiting out the deficiency procedures. A jeopardy levy lets the IRS levy immediately on a tax already assessed, without the usual notice periods. Both are reviewable under IRC 7429.

When the IRS can use jeopardy

IRC 6331(a) says that if the IRS finds collection of a tax is in jeopardy, it may make notice and demand for immediate payment and, if you do not pay, levy without the 10-day waiting period. IRC 6331(d)(3) removes the 30-day notice of intent to levy in that case. IRC 6330(f)(1) removes the pre-levy Collection Due Process notice, but requires that you be given the opportunity for a hearing within a reasonable period after the levy.

For deficiency taxes such as income tax, IRC 6861(a) lets the IRS immediately assess a deficiency if it believes assessment or collection will be jeopardized by delay, notwithstanding the normal bar on assessment before Tax Court review. If no notice of deficiency was mailed first, IRC 6861(b) requires one within 60 days after the jeopardy assessment, which preserves your path to the Tax Court.

IRM 5.10.1.10 describes when jeopardy is considered: when the taxpayer is, or appears to be, placing assets beyond the government's reach by removing them from the United States, concealing them, dissipating them, or transferring them to others. It should also be considered when the taxpayer's financial solvency is or appears to be imperiled, not counting insolvency caused by the tax debt itself.

The approval and disclosure requirements

Jeopardy action is not something a single revenue officer can do alone. IRC 7429(a)(1)(A) says no jeopardy or termination assessment may be made, and no levy may be made less than 30 days after notice and demand, unless the Chief Counsel for the IRS, or a delegate, personally approves it in writing. IRM 5.10.1.6 confirms that Counsel approval of a jeopardy situation is required in addition to all other approvals.

Within 5 days after a jeopardy assessment or levy, IRC 7429(a)(1)(B) requires the IRS to give you a written statement of the information it relied on. That statement is the foundation of your challenge. Read it closely. It tells you what facts the IRS believes justify skipping the normal process.

Administrative review: 30 days

Under IRC 7429(a)(2), you may ask the IRS to review the action within 30 days after you receive the written statement, or within 30 days after the last day it was due if the IRS did not provide one.

Under IRC 7429(a)(3), the IRS then determines whether making the assessment was reasonable under the circumstances and whether the amount assessed is appropriate, or for a jeopardy levy, whether the levy was reasonable. IRM 5.10.1.10 notes that these requests are coordinated with the examination office that made the assessment and that the sale of seized property will generally be suspended during this administrative review.

Court review: fast by design

IRC 7429(b) lets you sue within 90 days after the earlier of the date the IRS notifies you of its determination or the 16th day after you requested review. In other words, if the IRS sits on your request for more than 15 days, you can go to court.

The district court generally has exclusive jurisdiction. The Tax Court also has jurisdiction if you had already filed a timely deficiency petition covering at least one of the same taxes and periods before the jeopardy action.

Once a case is filed, IRC 7429(b)(3) requires the court to decide within 20 days whether the assessment or levy was reasonable and whether the amount is appropriate. You can ask for an extension of up to 40 more days for reasonable grounds under IRC 7429(c). If the court finds the action unreasonable or the amount inappropriate, it may order the IRS to release the levy, abate the assessment, redetermine the amount, or take other appropriate action. The court's determination is final and not reviewable by any other court, under IRC 7429(f).

Who has to prove what

IRC 7429(g) splits the burden. On whether the jeopardy assessment or levy was reasonable, the burden is on the IRS. On whether the amount assessed is appropriate, the IRS must provide a written statement of the information supporting the amount, but the burden of proof is on you.

That split shapes strategy. The strongest jeopardy challenges usually attack reasonableness: the taxpayer was not moving or hiding assets, was not leaving the country, and was not insolvent apart from the tax claim. Facts that explain a transfer or a move, with documents, go directly to the IRS's burden.

What happens to seized property

Jeopardy allows seizure without the usual wait, but it limits sale. IRC 6863(b)(3) says property seized after a jeopardy assessment under IRC 6851, 6852 or 6861 generally may not be sold until after the review periods, the notice of deficiency and the period to petition the Tax Court have run, and, if a petition is filed, until the deficiency could otherwise be assessed. IRC 6863(c) adds similar protection pending district court review in certain cases. Exceptions allow sale if you consent, if storage costs would greatly reduce net proceeds, or if the property is perishable.

IRM 5.10.1.10 explains the purpose: to prevent irreparable harm from a forced sale before the actual liability is determined. It also notes the Code does not bar levies on items like bank accounts, receivables and wages during that period, because those can be reduced to cash without loss.

Other seizure protections still matter. Jeopardy removes the area director requirement for business property under IRC 6334(e)(2)(B), but IRM 5.10.2.4 says there is no jeopardy exception to the judicial approval required to seize a principal residence. The house rules are in can the IRS seize my house.

Stopping collection with a bond

IRC 6863(a) lets you stay collection of all or part of a jeopardy assessment by filing a bond in the amount you want stayed, conditioned on payment of that amount when it would otherwise have been due. For taxes subject to Tax Court jurisdiction, the bond carries extra conditions tied to filing a timely petition and the eventual Tax Court decision.

A bond is not cheap, but in a case where the IRS has seized or frozen assets and the underlying liability is genuinely disputed, it can stop collection while the merits are decided.

If jeopardy turns out not to exist

IRC 6861(g) allows the IRS to abate a jeopardy assessment if it finds jeopardy does not exist, as long as it acts before the Tax Court decides the deficiency or, if no petition is filed, before the petition period expires. Abatement does not end the tax question. It returns the case to the normal deficiency process.

What to do in the first week

Jeopardy cases reward speed and documentation:

• Calendar the dates: when you received the written statement, 30 days from then for the review request, and the 16th day after the request.
• Request administrative review in writing within the 30 days, and address the IRS's stated reasons point by point.
• Gather documents that explain any transfers, moves or account activity the IRS relied on.
• If you receive a notice of deficiency, protect the Tax Court deadline independently of the jeopardy review.
• Consider whether a bond or a collection alternative can protect seized property while the merits are resolved.

For the general seizure framework, see how seizure and sale works. The firm's main site also covers IRS levies more broadly. Jeopardy is the one area of IRS collection where days, not months, decide outcomes. Treat it that way.