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What is Jeopardy Assessment? A Comprehensive Legal Overview
Definition & Meaning
A jeopardy assessment is a tax evaluation conducted by the IRS when a taxpayer has underpaid their taxes. This assessment occurs without the usual review procedures because the IRS believes that waiting could jeopardize the collection of the owed taxes. The assessment is immediate and includes any additional amounts, penalties, and interest. It applies to tax years where the deadline for filing, including extensions, has passed.
Table of content
Legal Use & context
Jeopardy assessments are primarily used in the context of federal tax law. They are relevant for income, estate, gift, and certain excise taxes. This type of assessment allows the IRS to act quickly to secure tax revenue when there is a risk that the taxpayer may not pay their tax debt. Users can manage related legal processes using templates from US Legal Forms, which can assist in understanding tax obligations or responding to assessments.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A taxpayer has not filed their tax returns for several years and has significant unpaid taxes. The IRS believes that the taxpayer may be attempting to hide assets. In this case, the IRS may issue a jeopardy assessment to quickly secure the owed taxes.
Example 2: A business owner who has reported declining revenue but has not paid their payroll taxes may face a jeopardy assessment if the IRS suspects that the business may close or liquidate soon (hypothetical example).
Relevant laws & statutes
The legal authority for jeopardy assessments is found in the Internal Revenue Code (IRC):
IRC 6861: Applies to income, estate, gift, and certain excise taxes.
IRC 6862: Covers taxes other than income, estate, gift, and certain excise taxes.
IRC 6867: Relates to "Possessor of Cash."
Comparison with related terms
Term
Definition
Key Differences
Jeopardy Assessment
An immediate tax assessment due to risk of non-collection.
Requires IRS approval and is used sparingly.
Regular Assessment
A standard process for determining tax owed.
Follows normal review procedures and does not require urgent action.
Common misunderstandings
What to do if this term applies to you
If you receive a jeopardy assessment, it is important to respond promptly. You may want to:
Review the assessment details carefully.
Consult a tax professional for guidance on your options.
Consider using templates from US Legal Forms to help you navigate the situation.
In complex cases, seeking professional legal help is advisable.
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