Brockman Jeopardy Assessment of $1.4+ Billion Sustained (10/2/22)

 On 9/30/22, the district court sustained the IRS’s $1.4+ Billion jeopardy assessment for taxes, fraud penalties, and interest.  United States v. Brockman (S.D. TX No. 4:22-CV-202 Dkt. # 71 Memo Opinion and Order 9/30/22), here (as retrieved from PACER); see also CL Dkt entries here (the pdf does not yet show up on the CL docket entries but should shortly).  The IRS asserted that the assessment “represents the largest jeopardy assessment/levy case in the history of the United States and features tax fraud on an unprecedented” scale.” (internal quotation marks omitted).

I won’t get into the details since the opinion is short (13 pages) and easily readable (with some nice graphics).  The opinion plows no new ground in jeopardy assessment law.  It is noteworthy (if at all) only because of the size of the assessments and the facts leading to the assessments.

I note that FBAR assessments (which certainly have been made or will be made, depending upon the statute of limitations) are not included.  There is no jeopardy assessment authority for FBARs, but the IRS does not need jeopardy assessment authority for FBARs because it can assess the FBAR penalties without predicate requirements for income tax assessments.  Of course, with FBAR assessments, the IRS will not have the substantial collection tools available for tax assessments and will have to proceed by suit to reduce the FBAR assessments to judgment.

I don’t know what type of estate Brockman had at death and the assets the IRS can get through various third-party liability remedies (such as transferee and similar state law remedies, alter ego, etc.), but I speculate that, with the probable size of the FBAR assessments and third-party liabilities, the IRS will be able ultimately to substantially wipe out his net worth (with third-party liabilities).  Of course, he lived large during his lifetime. And his death permitted him to escape criminal responsibility and liability.

This blog entry is cross-posted to my Federal Tax Procedure Blog, here.  For other postings on Brockman on the Federal Tax Crimes Blog, see here.

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.