Tax Court Holds that an Aider and Abetter of Tax Evasion Assessed Tax for Another's Tax May Be Assessed under § 6201(a)(4) (12/13/18)

In Bontrager v. Commissioner, 151 T.C. ___, No. 12 (2018), here and here, the Court held that a taxpayer convicted of tax evasion as an aider and abetter of his father's tax evasion and ordered to pay restitution of a portion of his father's evaded tax liability can be assessed the restitution amount under § 6201(a)(4), here.  Readers will recall that § 6201(a)(4) and related provisions were enacted in 2010 to (i) permit the IRS to assess tax restitution immediately without going through the predicate step of notice of deficiency and Tax Court proceeding and (ii) make assessment preclusive.

Section 6201(a)(4)(A) provides in relevant part:

The Secretary shall assess and collect the amount of restitution under an order pursuant to section 3556 of title 18, United States Code, for failure to pay any tax imposed under this title in the same manner as if such amount were such tax.

Judge Lauber does a straightforward job of working to his conclusion.

JAT Comments:

1.  The statutory text, in my mind, is inconclusive on the issue.  (In the lingo of Chevron, the statute is ambiguous thus leaving some room for the IRS to adopt a reasonable interpretation by regulation (had it done so) and, failing that, for the Courts to adopt their own reasonable interpretation.  The Tax Court has done so.

2.  Another conclusion that, I think, the Court could have reached on the same statutory text would be that the restitution based assessment must be for taxes that the person owes under the IRC.  One can rack one's brains for Code provisions permitting assessment of tax against a person that did not owe the tax.  OK, I know about responsible person penalty (which is a separate liability merely quantified by the employer's tax liability) and transferee liability (which is also a separate liability quantified by the transferor's liability).  Well, I guess, depending on perspective, one could say that, given the possible reading of the statute, § 6201(a)(4) functions in the same way.

3.  Any time I hear of a conviction of the nontaxpayer for tax evasion based on aiding and abetting concepts, I am reminded of my previous foray into tax evasion and derivative liabilities for tax evasion for another actor's taxes.  John A. Townsend, Theories of Criminal Liability for Tax Evasion (May 15, 2012), here.  The thesis of that article is that a person other than the taxpayer (nontaxpayer) who aids in the evasion (whether the taxpayer is culpable or not) the nontaxpayer is directly guilty of tax evasion and the derivative liabilities of aiding and abetting, causing or Pinkerton are irrelevant.  Placing this concept in the context of Bontrager, that means that if Bontrager were guilty as an aider and abetter, he was also directly guilty of the crime of tax evasion.  The criminal liability derived through the aiding and abetting statute is redundant and for that reason probably not applicable (i.e., the derivative liability through aiding and abetting is to nail the person not otherwise guilty of the substantive criminal offense).  (Somewhat tongue in cheek, how does one aid and abet a crime he committed?)

4. One possible quibble with a paragraph (bold-face supplied by JAT):

The sentencing order described the nature of petitioner’s offense as “aiding and abetting the evasion of payment of income tax,” within the meaning of 18 U.S.C. sec. 2. This section does not make “aiding and abetting” a distinct crime. Rather, it provides that a person who “aids, abets, counsels, commands, induces or procures” the commission of an offense against the United States “is punishable as a principal.” See United States v. Snider, 957 F.2d 703, 706 (9th Cir. 1992) (“Section 2 does not establish ‘an offense’ of which a defendant may be convicted; it merely determines which offenders may be punished as principals.”). Restitution orders in this setting are thus based on the underlying crime, not on the aiding and abetting.

The quibble is really picky.  I understand that Judge Lauber is referring to the crime of tax evasion.  Aiding and abetting is not the crime.  Where applicable, it merely makes the actor a principal inn a substantive offense the he or she would not otherwise have been a principal of. (This wraps back into the point in 3 above, so I'll quit.)