Opinion ID: 152235
Heading Depth: 2
Heading Rank: 1

Heading: Statute Barred Penalties

Text: Anuforo claims the IRS penalties arising out of Comfort Plus are barred because the government did not comply with statutory requirements. The Internal Revenue Code (I.R.C.) states any person who is required to collect and pay over trust-fund employment taxes, and willfully fails to do so, is liable for a penalty in an amount equal to the total amount of tax not paid over. See I.R.C. § 6672(a). While employers generally pay trust-fund employment taxes in quarterly installments, the employment taxes are deemed to be filed on April 15 of the next calendar year. See I.R.C. § 6501(b)(2). The Commissioner typically has three years from the date a taxpayer files a return in which to assess penalties. See I.R.C. § 6501(a). However, the taxpayer and the Secretary may agree in writing to an extended assessment period. See I.R.C. § 6501(c)(4). The IRS may not impose a penalty under I.R.C. § 6672(a) unless the Secretary notifies the taxpayer in writing he is subject to an assessment of such a penalty. See I.R.C. § 6672(b). Anuforo does not deny he received notice he was subject to assessments for penalties, or that the IRS made the assessments. Instead, Anuforo argues the government failed to provide Anuforo with notice and demand after the assessments were completed. Pursuant to I.R.C. § 6303(a), the IRS is required to give notice to each person liable for an unpaid tax, stating the amount and demanding payment, within sixty days after the Commissioner conducts an assessment. While the government does not concede it failed to give Anuforo notice and demand under I.R.C. § 6303(a), it argues such notice was not required. The government acknowledges such notice and demand would be required if the government proceeded against Anuforo administratively. However, the government insists [e]very court of appeals that has addressed the issue has held that notice and demand is not a prerequisite to the Government's bringing a civil proceeding to reduce assessments to judgment. The government is correct our sister circuits have consistently held notice and demand is required when the government wishes to proceed administratively, such as by filing a tax lien under I.R.C. § 6321, or by administrative levy under I.R.C. § 6331(a). See, e.g., United States v. Berman, 825 F.2d 1053, 1060 (6th Cir.1987) (discussing I.R.C. §§ 6303(a), 6321, and 6331, and emphasizing the necessity of notice and demand to protect the taxpayer. . . where the summary powers of the IRS to collect taxes administratively are concerned). However, notice and demand are not required when the government files a civil action because the filing of the action allows the taxpayer sufficient time to consider and pay any tax that is due before a judgment or lien can be placed upon his property. See, e.g., Stevens v. United States, 49 F.3d 331, 337 (7th Cir. 1995) (It is only when the government wants to proceed administratively, as by filing a tax lien, that notice and demand are required. Their absence is irrelevant in a refund suit with counterclaim. (internal citations omitted)); Purcell v. United States, 1 F.3d 932, 941 (9th Cir.1993) (similar); United States v. McCallum, 970 F.2d 66, 69-70 (5th Cir.1992) (holding failure to give Section 6303(a) notice is not a bar to the government's bringing a civil action against a taxpayer to collect unpaid taxes); United States v. Chila, 871 F.2d 1015, 1018-19 (11th Cir.1989) (similar); Berman, 825 F.2d at 1060 (similar); cf. Jersey Shore State Bank v. United States, 479 U.S. 442, 447, 107 S.Ct. 782, 93 L.Ed.2d 800 (1987). Even if the government did fail to serve notice and demand of the assessments upon Anuforo, the government may still bring its counterclaim against Anuforo regarding the Comfort Plus penalties. [4]