152 T.C. 12
Tax Ct.2019Background
- Petitioner Randy Carpenter pleaded guilty to two counts under I.R.C. § 7206(1) for filing false returns for 2005–2006; the District Court ordered $507,995 in restitution, made "due and payable immediately," and imposed a $100/month payment schedule if he could not pay in full.
- The U.S. Attorney’s Office pursued some collections (including FPLP levies on Social Security); after sentencing the IRS made restitution-based assessments (RBAs) under I.R.C. § 6201(a)(4) equal to the court-ordered restitution and sent notice and demand.
- The IRS issued a Final Notice of Intent to Levy (FNIL) and filed a Notice of Federal Tax Lien (NFTL); petitioner timely requested collection due process (CDP) hearings challenging the lien/levy and IRS authority to collect administratively.
- Appeals conducted a CDP hearing, considered petitioner’s arguments and partial financial information, and sustained the FNIL and NFTL; petitioner petitioned the Tax Court for review under I.R.C. §§ 6320(c) and 6330(d)(1).
- The Commissioner conceded and abated statutory interest and additions to tax (per Klein), leaving the assessed restitution principal as the remaining disputed amount; the Tax Court reviewed the Appeals officer’s determination for abuse of discretion.
Issues
| Issue | Carpenter's Argument | Commissioner’s Argument | Held |
|---|---|---|---|
| Whether § 6201(a)(4) authorizes the IRS to administratively collect RBAs (file liens/levy) | § 6201(a)(4) does not grant independent administrative collection power; collection must proceed under court (title 18) processes | § 6201(a)(4) authorizes the Secretary to assess and collect restitution “in the same manner as if such amount were such tax,” including administrative collection | Held: § 6201(a)(4) grants independent administrative collection authority to the IRS under these facts |
| Whether a sentencing-court payment schedule limits IRS administrative collections when restitution is ordered "due immediately" | The payment schedule caps what IRS may collect absent further court order | The schedule is a collection method; if restitution is due immediately the IRS may use other collection means | Held: A payment schedule does not limit IRS administrative collection where restitution is ordered due immediately |
| Whether Appeals abused its discretion in sustaining the FNIL and FNIL filing | Appeals lacked authority and should not have sustained levy/lien | Appeals properly verified procedures, considered issues, and balanced intrusiveness | Held: No abuse of discretion; Appeals’ determination sustained (excluding amounts of interest/additions later abated) |
| Whether petitioner could dispute the underlying assessed restitution in CDP | Petitioner argued the underlying tax/restitution amount could be challenged without prior deficiency notice | Commissioner: § 6201(a)(4)(C) bars collateral attack on restitution amount in CDP; disputes must be raised at sentencing | Held: Petitioner was precluded from challenging the restitution amount in CDP; underlying restitution was not reviewable here |
Key Cases Cited
- United States v. Williams, 898 F.3d 1052 (10th Cir. 2018) (payment schedule does not bar garnishment where restitution is ordered due immediately)
- United States v. Wykoff, 839 F.3d 581 (7th Cir. 2016) (government may pursue garnishment when restitution is due immediately)
- United States v. Martinez, 812 F.3d 1200 (10th Cir. 2015) (distinguishing restitution due immediately from restitution payable only by schedule)
- United States v. Hughes, 813 F.3d 1007 (D.C. Cir. 2016) (payment-schedule language may control if court clearly declines to make restitution immediately due)
- United States v. Ekong, 518 F.3d 285 (5th Cir. 2008) (immediate payment language supports collection beyond installment schedule)
- United States v. Dawkins, 202 F.3d 711 (4th Cir. 2000) (district court may order full restitution due immediately while setting installment schedule for collection)