IRS Guidance on Court-Ordered Restitution

In a piece of informal guidance, the IRS Office of Chief Counsel provided an outline of its understanding of the IRS’ new authority to assess and collect court-ordered restitution for failure to pay tax (CCA 201105037).


The Firearms Excise Tax Improvement Act (PL 111-237), enacted in August 2010, amended IRC § 6201(a)(4) to allow the IRS to assess and collect restitution ordered by a court for any failure to pay tax “in the same manner as if such amount were such tax.”


According to the Chief Counsel advice, this means the IRS can assess and collect the restitution without going through the civil assessment process. However, the advice concludes that the assessed amount is limited to losses attributable to violations of the IRC and does not include tax-related criminal charges under U.S. Code Title 18.


The IRS formed a team to develop new procedures for collecting restitution assessments, including addressing which agency will have primary responsibility for ensuring that restitution is collected.


The IRS interprets its new authority to mean that the defendant cannot challenge the assessment. The advice also concludes that the Service is not prevented from also assessing a civil tax above the amount of the court-ordered restitution, under normal assessment procedures.


The general 10-year statute of limitation period for collection applies to tax liabilities assessed under section 6201(a)(4)(A), and the IRS may also file suit under section 6502(a) before the end of the 10-year period to avail itself of a 20-year judgment lien.


More from the JofA:


 Find us on Facebook      Follow us on Twitter



Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.