Third-party victims had priority over IRS restitution collection

Plain-English summary

Chief Counsel considered two criminal cases with separate docket numbers but linked judgment and restitution orders. After consulting with the Tax Division, Counsel recommended treating them as one consolidated case. Under 18 U.S.C. § 3664(i), the IRS should not collect its tax restitution claim until the third-party, non-federal victims had been fully paid. Counsel therefore advised the IRS not to pursue collection from the taxpayer at that time.

Ruling snapshot

• Question: Could the IRS collect tax restitution before the linked case's non-federal victims were fully compensated?
• Outcome: Advice given: no, the IRS should wait.
• Key authorities: IRC § 6201(a)(4); 18 U.S.C. § 3664(i); IRM 5.1.5.18.3.

Full text (IRS public release)

ID: CCA_2018041713174320
UILC: 6201.01-06

Number: 201818016
Release Date: 5/4/2018
From:
Sent: Tuesday, April 17, 2018 1:17:44 PM
To:
Cc:
Bcc:
Subject: FW: Counsel Opinion-RBA Collection -- POSTN-112136-18

Good morning,

We took a look at this case and both Judgment and Commitment Orders and although
the cases have separate docket numbers, we would recommend treating them as a
single consolidated case for the purposes of 18 USC 3664(i) and IRM 5.1.5.18.3. After
consulting with Tax Division, we think that the judge considers the cases to be linked
(see pp. ----------------------------- order, which mentions the term of incarceration and the
restitution that was ordered in the tax case). Also, the tax case included a charge for ---
--------------------, and the restitution order for the non-government victims came from a ---
------------------------------------. Given the case linkage, we think the safe course of action
is to assume that 18 USC 3664(i) (and IRM 5.1.5.18.3 which was modeled from 18 USC
3664(i)) prevents the IRS from recovering until the third-party, non-federal victims have
been fully compensated. Therefore, we do not think the IRS should pursue collection
from the taxpayer at this time. Please let us know if you have any questions and would
like to discuss.

Thanks,

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