Opinion ID: 2966742
Heading Depth: 5
Heading Rank: 2

Heading: any prior assessments,

Text: (2) less any prior rebates. 26 U.S.C. § 6211(b)(1). 7 the return for accuracy. If it finds the return satisfactory, it enters an assessment for the amount of tax that the taxpayer has calculated to be owing. If the IRS disagrees with the taxpayer's determination of his tax liability, it can enter a different assessment, but only after it issues a notice of deficiency to the taxpayer and gives him 90 days to challenge its calculations in the Tax Court. The IRS has three years from the date the refund is filed to make an assessment of liability. 26 U.S.C. §§ 6201, 6212, 6213. Once it makes an assessment the IRS generally has 60 days to issue a notice and demand for payment to the taxpayer, and ten years to collect the assessed amount. 26 U.S.C. §§ 6303, 6502(a)(1). Collection may be made through administrative methods (including federal liens, summonses, and levies) or judicial methods (suits to foreclose liens or reduce assessments to judgment). 26 U.S.C. #8E8E # 6321-6326, 7403. If the IRS discovers that any assessment is imperfect or incomplete in any material respect, it may correct the problem by making a supplemental assessment within three years of the filing of the return. 26 U.S.C. § 6204. O'Bryant v. United States, 49 F.3d 340, 342 (7th Cir. 1995). See also Clark v. United States, 63 F.3d 83, 85 n. 1 (1st Cir. 1995). If, on the other hand, the taxpayer's reported liability is less than the amount paid to the Treasury, the IRS will issue a refund. O'Bryant, 49 F.3d at 342. Occasionally, the IRS makes mistakes during this process, by miscalculating the refund or by issuing the refund check twice. Id. In these cases, the IRS can reclaim the erroneous refund in one of two ways. Id. First, the IRS can bring an erroneous refund suit under 26 U.S.C. § 7405, within two years after the refund was made. Id. at 342-43. Second, the IRS can pursue the postcollection assessment procedures outlined above (§ 6213 notice of deficiency and demand for payment, followed by judicial or administrative action). Id. at 343. Here, the IRS chose the latter course of action, albeit without complying with the procedural requirements.12 _________________________________________________________________ 12 Presumably, the IRS did not file an erroneous refund suit here because the two-year statute of limitations imposed by 26 U.S.C. § 6532(b) had expired when the IRS realized its error. 8 Several circuit courts have rejected IRS attempts to reclaim erroneous refunds through such procedural shortcuts. See, e.g., Bilzerian, 86 F.3d 1067; Clark, 63 F.3d 83; O'Bryant , 49 F.3d 340. In each of these cases, the IRS mistakenly had issued a refund to the taxpayer, which the IRS later sought to collect through summary procedures. Id. In each case, the government argued that, because the erroneous refunds were of the non-rebate variety, the IRS was not required to make a new assessment or follow deficiency procedures before collecting the money. Each court rejected this argument. Declining to accept the government's proposed distinction between the treatment of rebate and nonrebate refunds, our sister circuits uniformly held that the IRS had acted improperly by failing to follow the statutory methods for reclaiming an erroneous refund. Bilzerian, 86 F.3d at 1069 (holding that once a tax liability is paid, no erroneous refund -- whether rebate or non-rebate -- can revive it); Clark, 63 F.3d at 87-88; O'Bryant, 49 F.3d at 346-47; Wilkes, 946 F.2d at 1152. In those cases, however, the courts criticized the IRS' failure to issue a supplemental assessment. Here, the IRS did issue a supplemental assessment to the Singletons before attempting to collect the erroneous refund. Thus, unlike these previous opinions, the Court must consider an additional wrinkle: Before issuing the 1991 supplemental assessment, was the IRS required to follow the assessment procedures in 26 U.S.C. § 6213(a), notably sending the Singletons a notice of deficiency? The Court concludes that a notice of deficiency was required and that, in its absence, the assessment was invalid.