Burt Kroner v. Commissioner of Internal Revenue, 20-13902

Burt Kroner failed to report nearly $25 million in cash transfers; IRS audit proposed tax adjustments and §6662 accuracy-related penalties.
On Aug. 6, 2012 an IRS examiner delivered a report and letter to Kroner proposing the penalties and explaining protest/Appeals options.
Later the IRS sent a 30‑day letter and updated report signed by the examiner’s immediate supervisor, Diane Acosta; Acosta also signed a Civil Penalty Approval Form the same day.
After unsuccessful negotiations and an Appeals conference, the IRS issued a statutory notice of deficiency; Kroner timely petitioned the Tax Court.
The Tax Court sustained the tax adjustments but disallowed the penalties, holding §6751(b) required supervisory written approval before the initial communication proposing penalties.
The Eleventh Circuit reversed, holding §6751(b) governs assessment (the bookkeeping/recording of liability) and that supervisory approval need only occur before assessment, not before any communication to the taxpayer.

Issue	Plaintiff's Argument	Defendant's Argument	Held
What must the supervisor approve under 26 U.S.C. §6751(b)?	Kroner/Tax Court: approval must attach to any communication that advises the taxpayer penalties will be proposed.	IRS: supervisor must approve the "initial determination of such assessment"—i.e., the internal decision to assess/record the penalty.	Held: The statute requires approval of the initial determination of assessment (the formal decision to assess), not mere pre‑assessment communications.
When must supervisor approval occur?	Kroner/Tax Court: approval must precede any communication proposing penalties (effectively by the RAR/30‑day letter or by the notice of deficiency).	IRS: approval must occur before the penalty is assessed (no textual timing requirement that it precede communications).	Held: Timing condition is that approval precede assessment; the statute imposes no separate textual deadline requiring pre‑communication signoff.
Remedy for failure to obtain timely approval (scope of relief)	Kroner: absence of timely approval procedurally invalidates and permanently disallows the penalty.	IRS: relief is only precluded if assessment occurs without required approval; communication alone does not trigger forfeiture.	Held: Because approval occurred before assessment, §6751(b) was satisfied; the Tax Court’s permanent disallowance here was erroneous.

Laidlaw’s Harley Davidson Sales, Inc. v. Comm’r, 29 F.4th 1066 (9th Cir. 2022) (held supervisory approval before assessment satisfies §6751(b))
Chai v. Commissioner, 851 F.3d 190 (2d Cir. 2017) (held written approval required no later than the notice of deficiency)
TOT Prop. Holdings, LLC v. Comm’r, 1 F.4th 1354 (11th Cir. 2021) (declined to decide the scope/timing of §6751(b) approval)
Kardash v. Commissioner, 866 F.3d 1249 (11th Cir. 2017) (Tax Court statutory-interpretation review is de novo)
Hibbs v. Winn, 542 U.S. 88 (2004) (describes an assessment as a bookkeeping notation)
United States v. Galletti, 541 U.S. 114 (2004) (assessment is the calculation/recording of tax liability)
Direct Mktg. Ass’n v. Brohl, 575 U.S. 1 (2015) (treats statutory term “assess” in the Tax Code context)