IRS Jeopardy Assessments — When the IRS Acts Without Warning

IRS tax assessment and enforcement actions typically follow strict protocols and procedures. The agency sends letters, gives taxpayers time to respond, and eventually moves on to liens, levies, and seizures. The entire process takes months, giving taxpayers plenty of time to question the amount owed, come up with payment arrangements, and otherwise avoid aggressive collection efforts.

Jeopardy assessments completely turn this routine on its head, giving the IRS the power to assess and collect taxes immediately, without any advance warning. While jeopardy assessments are rare, when they do happen, they have the power to turn a taxpayer’s life upside down and devastate their financial situation. Learn more about this type of assessment, how they occur, and what to do next.

Key Takeaways

• Jeopardy assessments are an aggressive tool used by the IRS when they believe their ability to collect is at risk.
• Unlike regular tax assessments, jeopardy assessments do not require a 90-day notice—or any prior notice at all.
• Jeopardy tax assessments may be combined with jeopardy levies to allow immediate seizure of assets.
• There is a short window of time to challenge the IRS’s jeopardy assessment.
• Work with a tax attorney to protect your assets.

What is a Jeopardy Assessment?

A jeopardy assessment is when the IRS assesses tax against a taxpayer without warning. The jeopardy rules permit the IRS to bypass the usual timeline and notice requirements to assess and collect tax. In other words, the agency can take action now before explaining things to the taxpayer.

Under Internal Revenue Code 6861, the IRS can immediately assess a deficiency and demand payment. If the taxpayer has previously been notified of a deficiency, the assessment may be less than or greater than what is stated in the notice.

In contrast, under normal circumstances, the IRS has to follow a standard tax assessment and collection timeline. This provides taxpayers plenty of chances to challenge assessments and come up with alternate payment arrangements to avoid levies, liens, and other aggressive collection actions.

What do the jeopardy assessment rules mean for taxpayers? They mean that the IRS does not have to wait for a return to be filed, an audit to be completed, or the clock to run out on a 90-day deficiency notice before they take action and seize what they are owed.

Triggers That May Lead to Jeopardy Assessments

Jeopardy assessments are a very aggressive collection tool, and because of this, the IRS uses them sparingly and under very limited circumstances. The IRS reserves jeopardy assessments for situations where taxpayers may make collection impossible. Triggers include:

• Risk of flight: If a taxpayer is preparing to leave the United States or move funds to an unreachable area, the IRS could permanently lose its ability to collect their tax debt.
• Asset concealment: When someone begins transferring or dissipating assets, the IRS views it as a red flag that they are trying to move their assets beyond the reach of the government.
• Fraud or evasion: If a taxpayer’s tax debt is the result of fraud or evasion and the IRS believes that they have the means to move their assets out of their reach, they may move to collect immediately.
• Business collapse: Sudden business closure, destruction of records, and dissipation of business assets may indicate an effort to avoid collection.
• Suspicious financial activity: The IRS may view financial transfers to offshore accounts or sudden closures of accounts as signs that a taxpayer is preparing to flee.

While these triggers are all different, they boil down to the same basic issue—the IRS fears that if they wait to collect on a tax debt, they will lose that chance forever.

Who is at Greatest Risk of a Jeopardy Assessment?

As noted earlier, jeopardy assessments are exceedingly rare and only used when the IRS has a genuine belief (backed up by evidence) that their ability to collect is in imminent danger. These assessments aren’t used for everyday taxpayers who are behind on filing their returns or paying their taxes.

They are used for individuals and businesses that the IRS considers high-risk, including:

• High net worth individuals: Individuals with large tax liabilities but also a significant amount of assets have the means and the motivation to evade collection by fleeing the country or moving all of their assets to offshore accounts.
• Businesses that deal extensively in cash: Restaurants, bars, gambling operations, and other businesses that deal heavily in cash may make a substantial amount of money by skimming or underreporting, leading to a massive tax debt but also the means to evade responsibility.
• Taxpayers under criminal investigation: When a criminal investigation is opened up for a taxpayer’s alleged fraud or tax evasion, the IRS watches them closely for signs that their ability to collect is in danger.
• Individuals and businesses who liquidate assets after IRS contact: Again, this often refers to high-net-worth individuals who have substantial assets that may allow them to evade tax collection.

If you fall into any of these categories or your tax professional warns you that you’re in a high-risk group, it’s important to respond promptly to IRS communications and take steps to address your tax situation. Failure to act may lead the IRS to worry about your willingness to pay.

How the IRS May Enforce a Jeopardy Assessment

Immediately after the IRS’s area director approves a jeopardy assessment, the IRS assesses the taxes and makes the entire amount due. The IRS then sends the following to the taxpayer within five days of assessment:

• Notice and demand to pay the tax
• Notice of jeopardy assessment
• Notice of right to appeal and right of review
• Computation of income and tax

If the IRS does not receive payment in full after receiving the notice and demand for payment, they will move forward with filing a Notice of Federal Tax Lien via the Automated Lien System. However, if the IRS believes that filing the lien isn’t enough to keep the taxpayer from liquidating or disposing of assets, they will move forward with a jeopardy levy.

The IRS may also notify the State Department that the taxpayer owes a seriously delinquent tax debt – defined as any tax debt over $65,000 as of 2025. If that happens, the taxpayer will lose their passport ^[a] and/or be unable to get a new one.

How Jeopardy Assessments Differ From Normal IRS Procedures

The stark differences between standard assessments and jeopardy assessments highlight why these cases are so rare and why it’s so crucial for taxpayers to retain legal assistance if they are the target of a jeopardy levy:

• No 90-day notice in jeopardy assessments: In most cases where the IRS assesses additional taxes, they give a 90-day notice that allows the taxpayer to appeal or agree. This doesn’t apply in cases of jeopardy assessment.
• No audit or final bill required: The IRS must legally avoid excess and unreasonable assessments, but the amount should be reasonably expected to equal the amount due; this means that the IRS does not have to have a fully calculated amount due at the time of the jeopardy assessment.
• Enforcement often occurs first: In normal cases, taxpayers have months to act before their assets are at risk; in jeopardy cases, the IRS often pursues both a jeopardy assessment and a jeopardy levy, so assets may be frozen before the taxpayer even knows they’re at risk.

Consequences for Taxpayers

The consequences of a jeopardy levy are immediate and severe. Taxpayers face enforcement without warning if the IRS believes that filing a lien isn’t enough to secure assets. This means that assets may be seized without time to react, as a jeopardy levy can be approved without notice.

Taxpayers’ personal and business property may be at risk, including bank accounts, wages, real estate, and vehicles. While taxpayers do have the right to appeal, that takes time—and in the meantime, they may have no funds, minimal income coming in due to garnishment, and the stress that comes with IRS collection actions.

Options to Challenge or Appeal

Although jeopardy assessments are harsh, taxpayers have some avenues to fight back. However, the procedures are fairly complex, and the windows to challenge the IRS are short. The letter you receive outlining your rights indicates that you can file a civil suit against the United States in the U.S. District Court where you reside. Before doing so, you must request administrative review within 30 days of the date on the letter. Your civil suit must be filed within 90 days after the day that the IRS notifies you of their decision or the 16th day after your protest, whichever date is earlier.

The court will then determine whether the assessment was reasonable under the circumstances. The court’s determination is final and cannot be reviewed by another court.

When It’s Time to Talk to a Tax Professional

If the IRS has issued a jeopardy assessment against you, you need to talk to a tax professional now. The IRS is watching your financial dealings closely and has broad legal freedom to enforce their right to collect what you owe. Without legal representation, you could find your bank accounts frozen, your wages extensively garnished, and your property seized.

You must talk to a tax professional to find out why the IRS believes their ability to collect is endangered, how to appeal their decision and protect your rights, and how to move forward to handle your tax debt without losing your assets.

At Timothy S. Hart Law Group, we help many high-net-worth individuals and corporations navigate the complexities and challenges of jeopardy assessments and levies. If you fall into a high-risk group or you have received a notice of jeopardy assessment, call us now. You can reach us at 518-213-3445 or contact us online to discuss your current tax situation.

Frequently Asked Questions

How does a jeopardy assessment differ from a normal tax assessment?

A jeopardy assessment is a way for the IRS to assess taxes without prior notice or warning. In comparison, the IRS typically has to give taxpayers a 90-day notice before assessing additional taxes.

Can the IRS seize my property without notice?

If the IRS believes that their ability to collect what they are owed is in danger, they can seize property without notice by using a jeopardy levy.

What’s the difference between a jeopardy assessment and a jeopardy levy?

A jeopardy assessment is when the IRS assesses tax against you without warning. A jeopardy levy is when the IRS seizes your assets to cover a tax liability without warning.

Do I have any options if a jeopardy assessment is issued against me?

Yes. You can request an administrative review and file a civil suit, but the timeline to appeal is very short—so you should take action immediately if the IRS has issued a jeopardy assessment.

Can I stop the IRS from seizing my assets?

You may be able to stop the IRS from seizing your assets after a jeopardy assessment by working with a tax attorney. They can figure out why the IRS believes their ability to collect is at risk, communicate with the IRS for you, and negotiate other payment arrangements.

Sources:

https://www.irs.gov/irm/part5/irm_05-001-004

https://www.irs.gov/pub/irs-tege/eotopicr97.pdf

https://www.irs.gov/irm/part5/irm_05-017-015

https://www.irs.gov/irm/part4/irm_04-015-001

https://www.law.cornell.edu/uscode/text/26/6861