Jeopardy Assessment and Levy on Fine Excess (7/14/11)

Readers -- at least readers other than those solely interested in foreign financial account stuff -- will surely remember the infamous criminal case involving KPMG related defendants.  The case became a cause celebre in the white collar crime arena because 13 defendants were dismissed because of the Government's prosecutorial abuse in forcing KPMG to withdraw attorney fee support for those 13 defendants.  One of the remaining defendants and two others were convicted in the much skinnied down criminal trial.  The judge imposed a fine of $6,000,000 when the statutory maximum fine for the counts of conviction was $3,000,000. Larson paid the fine. Larson and the others convicted also appealed their convictions.  Larson also complained about the fine.  The Second Circuit sustained the convictions but, in a separate opinion, vacated the fine with remand to set the fine correctly. United States v. Pfaff, 619 F.3d 172 (2d Cir. 2010). Although Larson is incarcerated, I suspect he surely relished the prospect of getting $3,000,000 back.

Enter the IRS (which was never far away from this case). The IRS made a jeopardy assessment and levy to grab the $3,000,000 refund of fine before it got to Larson. In Larson v. United States, 2011 U.S. Dist. LEXIS 74319 (ND CA 2011), the Court sustained the jeopardy assessment and levy.  (For the jeopardy assessment procedure see Section 6861 and for the expedited administrative and judicial review procedures designed to mitigate due procss implications of the jeopardy procedures, see Section 7429.)

Readers interested in federal tax crimes should read the opinion (linked above). It is a short one and gives a good introduction to the concept of the jeopardy assessment and levy which can rise in several contexts in criminal tax cases.

Readers will note that Larson's actions in trying to avoid his financial obligations led to an enhanced sentence as well as a jeopardy assessment. Larson's behavior was not rewarded.