[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6861-1]

[Page 462-464]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                 Jeopardy, Bankruptcy, and Receiverships
 
Sec. 301.6861-1  Jeopardy assessments of income, estate, gift, and certain 
excise taxes.

    (a) Authority for making. If a district director or director of a 
service center believes that the assessment or collection of a 
deficiency in income, estate, gift, or chapter 41, 42, 43, or 44 tax 
will be jeopardized by delay, then the director is required to assess 
such deficiency immediately, together with the interest, additional 
amounts, and additions to the tax provided by law. A district director 
will make an assessment under this section if collection is de termined 
to be in jeopardy because at least one of the conditions described in 
Sec. 1.6851-1(a)(1) (i), (ii), or (iii) (relating to termination 
assessments) exists. A

[[Page 463]]

jeopardy assessment may be made before or after the mailing of the 
notice of deficiency provided by section 6212. However, a jeopardy 
assessment for a taxable year under section 6861 cannot be made after a 
decision of the Tax Court with respect to such taxable year has become 
final (see section 7481) or after the taxpayer has filed a petition for 
review of the decision of the Tax Court with respect to such taxable 
year. In the case of a deficiency determined by a decision of the Tax 
Court which has become final or with respect to which the taxpayer has 
filed a petition for review and has not filed a bond as provided in 
section 7485, assessment may be made in accordance with the provisions 
of section 6215, without regard to section 6861.
    (b) Amount of jeopardy assessment. If a notice of a deficiency is 
mailed to the taxpayer before it is discovered that delay would 
jeopardize the assessment or collection of the tax, a jeopardy 
assessment may be made in an amount greater or less than that included 
in the deficiency notice. If a deficiency is assessed on account of 
jeopardy after the decision of the Tax Court is rendered, the jeopardy 
assessment may be made only with respect to the deficiency determined by 
the Tax Court.
    (c) Jurisdiction of Tax Court. If the jeopardy assessment is made 
before the notice in respect of the tax to which the jeopardy assessment 
relates has been mailed pursuant to section 6212(a), the district 
director shall, within 60 days after the making of the assessment, send 
the taxpayer a notice of deficiency pursuant to such subsection. The 
taxpayer may file a petition with the Tax Court for a redetermination of 
the amount of the deficiency within the time prescribed in section 
6213(a). If the petition of the taxpayer is filed with the Tax Court, 
either before or after the making of the jeopardy assessment, the 
Commissioner, through his counsel, is required to notify the Tax Court 
of such assessment or of any abatement thereof, and the Tax Court has 
jurisdiction to redetermine the amount of the deficiency, together with 
all other amounts assessed at the same time in connection therewith.
    (d) Payment and collection of jeopardy assessment. After a jeopardy 
assessment has been made, the district director is required to send 
notice and demand to the taxpayer for the amount of the jeopardy 
assessment. Regardless of whether the taxpayer has filed a petition with 
the Tax Court, he is required to make payment of the amount of such 
assessment (to the extent that it has not been abated) within 10 days 
after the sending of notice and demand by the district director, unless 
before the expiration of such 10-day period he files with the district 
director a bond as provided in section 6863. Section 6331 provides that, 
if the district director makes a finding that the collection of the tax 
is in jeopardy, he may make demand for immediate payment of the amount 
of the jeopardy assessment and, in such case, the taxpayer shall 
immediately pay such amount or shall immediately file the bond provided 
in section 6863. If a petition is not filed with the Tax Court within 
the period prescribed in section 6213(a), the district director will be 
so advised, and, if collection of the deficiency has been stayed by the 
timely filing of a bond as provided in section 6863, he should then give 
notice and make demand for payment of the amount assessed plus interest. 
After the Tax Court has rendered its decision and such decision has 
become final, the district director will be notified of the action 
taken. He will then send notice and demand for payment of the unpaid 
portion of the amount determined by the Tax Court, the collection of 
which has been stayed by the bond. If the amount of the jeopardy 
assessment is less than the amount determined by the Tax Court, the 
difference will be assessed and collected as part of the tax upon the 
issuance of a notice and demand therefor. If the amount of the jeopardy 
assessment is in excess of the amount determined by the Tax Court, the 
unpaid portion of such excess will be abated. If any part of the excess 
amount has been paid, it will be credited or refunded to the taxpayer as 
provided in section 6402, without the filing of claim therefor.
    (e) Abatement of excessive assessment. The district director or the 
director of the regional service center may, at any

[[Page 464]]

time before the decision of the Tax Court is rendered, abate a jeopardy 
assessment in whole or in part if the district director believes that 
such assessment is excessive in amount.
    (f) Abatement if jeopardy does not exist. (1) The district director 
or the director of the regional service center may abate a jeopardy 
assessment in whole or in part, if it is shown to the satisfaction of 
the district director that jeopardy does not exist. An abatement may not 
be made under this paragraph after a decision of the Tax Court in 
respect of the deficiency has been rendered or, if no petition is filed 
with such court, after the expiration of the period for filing such 
petition.
    (2) After abatement of a jeopardy assessment in whole or in part, a 
deficiency may be assessed and collected in the manner authorized by law 
as if the jeopardy assessment or part thereof so abated had not existed. 
If a notice of deficiency has been sent to the taxpayer before the 
abatement of the jeopardy assessment in whole or in part, whether such 
notice was sent before or after the making of the assessment, such 
abatement will not affect the validity of the notice or of any 
proceedings for redetermination based thereon. The period of limitation 
on the making of assessments and the beginning of levy or a proceeding 
in court for collection in respect of any deficiency shall be determined 
as if the jeopardy assessment so abated had not been made, except that 
the running of such period shall in any event be suspended for the 
period from the date of such jeopardy assessment until the expiration of 
the tenth day after the date on which such jeopardy assessment is abated 
in whole or in part. The provisions of this subparagraph may be 
illustrated by the following example:

    Example. On March 18, 1958, 28 days before the last day of the 3-
year period of limitations on assessment, a jeopardy assessment is made 
in respect of a proposed deficiency. On May 2, 1958, before the mailing 
of the notice of deficiency provided by section 6861(b), this assessment 
is abated. By virtue of this subparagraph, the last day of the period of 
limitations for the making of an assessment is June 9, 1958, that is, 
the 38th day after the date of the abatement. If the notice of 
deficiency provided for in section 6861(b) has been sent before the 
abatement, the running of the period of limitations on assessment would 
have been suspended pursuant to the provisions of the section 6503(a).

    (3) See section 7429 with respect to requesting the district 
director to review the making of the jeopardy assessment.
    (g) Special rules for chapters 42 and 43 taxes. For purposes of 
paragraph (a) of this section, the amount of a deficiency with respect 
to any tax imposed by section 4941(a), 4942(a), 4943(a), 4944(a), 
4945(a), 4951(a), 4952(a), 4955(a), 4971(a) or 4975(a) shall include the 
amount of additional tax imposed by section 4941(b), 4942(b), 4943(b), 
4944(b), 4945(b), 4951(b), 4952(b), 4955(b), 4971(b) or 4975(b) for 
failure to correct the act (or failure to act) which gave rise to 
liability for the initial tax.

[32 FR 15241, Nov. 3, 1967, as amended by T.D. 7575, 43 FR 58817, Dec. 
18, 1978; T.D. 7838, 47 FR 44253, Oct. 7, 1982; T.D. 8084, 51 FR 16305, 
May 2, 1986; T.D. 8628, 60 FR 62213, Dec. 5, 1995]