The normal path to a bank levy is long and loud: notice and demand, reminders, a notice of intent to levy, a notice of your right to a hearing, and 30-day waiting periods. I lay it out in the timeline from assessment to bank levy.
A jeopardy levy short-circuits that path. When the IRS believes collection is in jeopardy, the Code lets it levy without waiting. That is a big power, so Congress wrapped it in approval requirements and a fast review procedure. If you are on the receiving end, those protections are where your case lives.
The authority
The last sentence of IRC § 6331(a) says that if the IRS finds collection of a tax is in jeopardy, notice and demand for immediate payment may be made, and on failure to pay, collection by levy is lawful "without regard to the 10-day period" that normally follows notice and demand.
The other waiting periods fall away too:
- Notice of intent to levy. Section 6331(d)(3) says the 30-day notice requirement does not apply if the IRS has made a jeopardy finding.
- Pre-levy CDP notice. Section 6330(f)(1) makes the pre-levy hearing inapplicable after a jeopardy finding, but requires that you be given the opportunity for a CDP hearing within a reasonable period after the levy.
- Third-party contact notice. The IRM notes advance notice of third-party contacts may not be required in jeopardy situations (IRM 5.11.3.2, citing § 7602(c)(3)(B)).
- Levy bars. Jeopardy is an exception to the bars for pending or active installment agreements and pending offers (IRM 5.11.1.4.8; IRM 5.11.1.4.11), and to the bar on levying on the appearance date of a summons (§ 6331(g)(2)).
When collection is "in jeopardy"
The IRM says a jeopardy levy "requires a condition that would have allowed a jeopardy assessment," and points to Policy Statement 4-88, titled "Jeopardy assessments to be used sparingly and assessment to be reasonable in amount" (IRM 5.11.3.3).
The IRM's own illustrations of a jeopardy levy without a jeopardy assessment are telling. In one, a taxpayer starts moving property to hide it after a prompt assessment, and a revenue officer may make a jeopardy levy after getting the required approvals (IRM 5.11.3.2). In another, the IRS makes a quick assessment to recover refunds from false Form 1099-OID filings.
The common thread is a real risk that the money will disappear if the IRS waits. Being behind on taxes, by itself, is not that.
The approval wall
This is where jeopardy levies get scrutinized.
Chief Counsel approval. IRC § 7429(a)(1)(A) says no levy may be made under § 6331(a) less than 30 days after notice and demand "unless the Chief Counsel for the Internal Revenue Service (or such Counsel's delegate) personally approves (in writing)" the levy. The IRM repeats it: "Per IRC 7429, Chief Counsel must approve in writing a jeopardy levy before it is made" (IRM 5.11.3.4).
Management approval. The revenue officer prepares a written report or ICS history entry for the territory manager, through the group manager, with the same information needed for a jeopardy assessment (IRM 5.11.3.4). Jeopardy levies during an installment agreement or a pending offer also require the field compliance or territory manager's approval and Associate Area Counsel concurrence (IRM 5.11.1.4.8; IRM 5.11.1.4.11).
When you challenge a jeopardy levy, ask for the paper trail. If the written approvals are missing or came after the levy, that is a serious defect.
What you should receive
The written statement. Under § 7429(a)(1)(B), within 5 days after the levy, the IRS must give you a written statement of the information it relied on.
Letter 2439 or 2439-A. The IRM uses Letter 2439/2439-A, Notice of Jeopardy Levy and Right of Appeal, to tell you why collection is in jeopardy and which appeal rights apply: § 7429 review, a CDP hearing, or CAP (IRM 5.11.3.5). If you never had a CDP hearing for a period on the jeopardy levy, that letter serves as your CDP notice for that period (IRM 5.11.3.6).
A notice to your bank. When warranted, the IRS includes Letter 2438 with the levy. According to the IRM, that letter asks the levy recipient to delay sending payment for 45 days because the taxpayer has appeal rights, while warning not to let the taxpayer have the attached funds (IRM 5.11.3.5). The IRM also notes the normal 21-day bank hold under § 6332(c) applies and can be extended.
Section 7429 review: fast and judge-driven
Section 7429 is one of the fastest review procedures in the tax law.
- Administrative review. You may ask the IRS to review the action within 30 days after you are furnished the written statement, or within 30 days after the last day it was due (§ 7429(a)(2)). The IRS then decides whether the levy is reasonable under the circumstances (§ 7429(a)(3)(B)).
- Court. Within 90 days after the earlier of the IRS's decision or the 16th day after your request, you may sue in district court (§ 7429(b)(1)). The Tax Court shares jurisdiction in limited cases where a deficiency petition was already pending (§ 7429(b)(2)(B)).
- A 20-day decision. The court must decide within 20 days after the proceeding begins whether the levy is reasonable (§ 7429(b)(3)). You can ask for up to 40 more days for reasonable grounds (§ 7429(c)).
- Burden on the IRS. On whether the levy was reasonable, the burden of proof is on the government (§ 7429(g)(1)).
- Real remedies. If the levy is unreasonable, the court may order the IRS to release it or take other appropriate action (§ 7429(b)(4)). The determination is final and not reviewable by any other court (§ 7429(f)).
Choosing among § 7429, CDP, and CAP
According to IRM 5.11.3.2 and 5.11.3.5:
- You must be offered § 7429 rights when the levy came before the normal notice and demand waiting period or before the § 6331(d) notice period ran.
- You must be offered CDP rights after the levy if you had not previously been offered a hearing for that period. In some cases you are offered both § 7429 and § 6330 rights and choose.
- You are offered CAP when you are not entitled to § 7429 or CDP rights, or you declined them. CAP otherwise excludes jeopardy levies (IRM 5.1.9.4.1).
Pick based on what you need. If the issue is whether jeopardy really existed, § 7429 is built for that question and puts the burden on the IRS. If you need a collection alternative, CDP may fit better. See CDP hearings and CAP.
Practical steps after a jeopardy levy
- Calendar three dates: day 21 of the bank hold, the 30-day § 7429 request window, and the 30-day CDP window if your letter offers CDP.
- Request the written statement if you have not received it within 5 days of the levy.
- Answer the jeopardy reason directly. If the IRS says you are moving assets, show where the money went and why.
- Ask for the approvals. Chief Counsel's written approval is a statutory requirement, not a formality.
- Do not make the IRS's case for it. Moving money after a jeopardy levy is the worst possible response.
A jeopardy levy skips the warnings. It does not skip the law. Make the IRS show its work.
Jeopardy cases move fast and the deadlines are short, so representation matters here more than almost anywhere. For background on the firm, see getirshelp.com. Related: getting a bank levy released.