Ezel / IRS Rulings / 200908045

CCA 200908045: IRS could freeze a refund while a trust fund penalty was proposed

Number
200908045
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax or Supply Information by DISC or FSC
Topics
Procedure, penalties, and administration
Code sections
§ 6672
Ruling dated
January 23, 2009
Publicly released
February 20, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel was asked whether the IRS could freeze a taxpayer's refund after proposing, but before assessing, a trust fund recovery penalty. The advice said yes because the IRS was not required to issue the refund immediately. Freezing it preserved the agency's ability to offset the refund if the proposed penalty was later assessed. The email distinguished the temporary administrative freeze from a permanent settlement of the account or an actual offset.

Ruling snapshot

  • Question: Could the IRS freeze a refund while a trust fund recovery penalty was proposed but not yet assessed?
  • Outcome: Advice given: yes, an administrative freeze could preserve a possible later offset.
  • Key authorities: IRC § 6672.

Full text (IRS public release)

ID: CCA_2009012318335819 Number: 200908045
Release Date: 2/20/2009
Office: -----------
UILC: 6672.00-00

From: ----------------------
Sent: Friday, January 23, 2009 6:34:13 PM
To: ------------------
Cc: -----------------------------------------------------------
Subject: RE: TFRP Issue

You have asked whether the IRS can legally freeze a refund when the IRS has proposed (but not assessed) a trust fund recovery penalty (TFRP) against a taxpayer. The answer is yes. The IRS is not required to immediately issue a refund. In this situation the refund is frozen so the IRS can preserve its ability to offset the taxpayer's refund to any subsequent TFRP assessment. An administrative freeze is not an attempt to permanently settle the taxpayer's account nor is it an actual offset. Please call me if you would like to discuss further.

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