Jeopardy Assessment refers to a tax assessment made by a tax authority when it believes that the collection of tax owed is at risk due to a taxpayer’s actions or circumstances. This typically occurs when the taxpayer is suspected of attempting to evade tax payment or when there is a significant risk that the tax liability may not be collected timely.
In a Jeopardy Assessment, the tax authority may assess the tax due immediately, bypassing the normal assessment procedures. The taxpayer is then required to pay the assessed amount without the usual opportunity for appeal before payment. This process is used to protect the government’s interests and ensure that taxes owed are collected promptly, especially if the taxpayer is perceived to be dissipating assets or planning to leave the jurisdiction.
For example, if a business is under investigation for tax fraud and begins liquidating its assets, the tax authority may issue a jeopardy assessment to secure the tax revenue before the business can deplete its resources further.
« Back to Glossary Index