nder Chapter 68 of Subtitle F of the CodeCode Sections outside of Chapter 68 of Subtitle F for which violations are specifically penalized commonly: contain their own express provision specifying the treatment of penalties or other amounts as a "tax" or an "assessable penalty" for purposes of assessment and collectioncontain a cross-reference to a provision within Chapter 68 of Subtitle F providing a penalty for their violation orare expressly covered by a penalty provision within Chapter 68 of Subtitle FIn contrast, Section 6038 neither specifies the treatment of Section 6038(b) penalties as a "tax" or "assessable penalty," nor does it contain or cross reference to a provision authorizing assessment of the 6038(b) penaltiesThe IRS' reliance on Section 6201(a) was misplaced as the term "assessable penalties" is undefined and could not be used by the IRS to assess Section 6038(b) penaltiesThe government's remedy to collect Section 6038(b) penalties is filing a civil action under Title 28 U.S.C. § 2461(a), which allows penalties to be recovered when there is no specified mode of recovery or enforcementFarhy Fallout – Where Does the IRS Go from Here?From a legal and administrative perspective, this decision is problematic for the agency. With respect to Section 6038(b) penalties, the IRS's role has been reduced to that of a private litigant. The enforcement of Section 6038(b) will rest on the U.S. Department of Justice (DOJ), which will need to file a lawsuit seeking a judicial determination. Assuming the parties agree that there was a Section 6038(b) violation, the central issue in the de novo proceeding will be the defenses raised by the taxpayer on which the taxpayer will have the burden. If the DOJ is successful, then it must seek judicial collection of the judgment lien.Although Section 6038(b) penalties are not subject to the USTC's deficiency jurisdiction, the court had jurisdiction to review the IRS's Notice of Determination sustaining the Section 6038(b) penalties resulting fro

L. No. 101–410, 104 Stat. 890 (28 U.S.C. § 2461 note).[2]Bipartisan Budget Act of 2015, Pub.

This decision did not survive Kaley v. United States, 134 S. Ct. 1090 (2014).United States v. Silvious, 512 F.3d 364 (7th Cir. 2008) Though 18 U.S.C. § 982 limits the federal crimes for which criminal forfeiture is an available remedy, a separate statute, 28 U.S.C. § 2461(c) permits criminal forfeiture in any case in which civil forfeiture is an available remedy. Therefore, because the civil forfeiture statutes provide for forfeiture in mail fraud cases, criminal forfeiture is also available, pursuant to 28 U.S.C. § 2461, even though mail fraud is not one of the listed offenses in 18 U.S.C. § 982 (unless the offense involved a financial institution).

t disagreed.First, the Tax Court recognized that Congress specifically empowered the IRS to make certain penalty assessments in various parts of the Code. For example, section 6671(a) provides that numerous penalties found in subchapter B of chapter 68 of subtitle F (i.e., sections 6671 through 6725) “shall be assessed and collected in the same manner as taxes.” In addition, section 6665(a)(1) similarly provides that additions to tax, additional amounts, and penalties provided in chapter 68 of subtitle F (i.e., sections 6651 through 6751) “shall be assessed, collected, and paid in the same manner as taxes.” Regarding penalties outside the scope of these provisions, the Tax Court further noted that Congress embedded within the particular penalty statute the express authority for the IRS to make such penalty assessments. By contrast, section 6038 only cross-referenced criminal penalties and not civil penalties. See I.R.C. § 6038(f)(1).Second, the Tax Court reasoned that Congress enacted 28 U.S.C. § 2461 to capture instances in which the means or mode of recovery or enforcement was not specified. Under 28 U.S.C. § 2461(a), if Congress fails to so specify for a “civil fine, penalty or pecuniary forfeiture,” the fine, penalty, or forfeiture must be “recovered in a civil action.”Third, the Tax Court squarely rejected the IRS’s position that the term “assessable penalties” within section 6201 applied to all penalties in the Code that were not subject to deficiency procedures. In this regard, the Tax Court noted:‘Assessable penalties’ is not a term used to distinguish between penalties subject to deficiency procedures and those that are not. The label of assessable penalty . . . does not automatically bar a taxpayer from using the deficiency procedures to challenge the liability. An assessable penalty, rather, must be paid upon notice and demand and assessed and collected in the same manner as taxes. While some provisions explicitly exempt certain assessable penalties from deficiency proce

See Office of Mgmt. & Budget, Memorandum for the Heads of Executive Departments and Agencies (Dec. 16, 2016).[2] U.S. Department of Labor, Fact Sheet (2016), https://www.dol.gov/sites/default/files/2016-inflation-factsheet.pdf.[3] Specifically, the notes to 28 U.S.C. § 2461 define a civil monetary penalty as “a penalty, fine, or other sanction that (A)(i) is for a specific monetary amount as provided by Federal law; or (ii) has a maximum amount provided for by Federal law; and (B) is assessed or enforced by an agency pursuant to Federal law; and (C) is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts.”[4] Office of Mgmt. & Budget, Memorandum for the Heads of Executive Departments and Agencies (Feb. 24, 2016).

The district court denied the motion, holding that 21 U.S.C. § 853(k) prohibits third parties from intervening in criminal proceedings, other than a third party proceeding under 21 U.S.C. § 853(n).How Criminal Forfeiture Works Under 28 U.S.C. § 2461(c), “criminal forfeiture is available for general . . . wire fraud violations.” United States v. Day, 524 F.3d 1361, 1376 (D.C. Cir. 2008).

nalties that started at the same amount are now vastly different. For example, take the Clean Air Act, enacted in 1963, and the Clean Water Act, enacted in 1972. Both statutes provide for a $25,000 penalty in certain instances. Yet, due to when the statutes were enacted, those same $25,000 penalties now cost a violator $121,275 under the Clean Air Act and $66,712 under the Clean Water Act. The mandatory inflation adjustment schedule prescribed by statute has inflated older penalties relative to newer penalties, resulting in a skewed policy at EPA.Because EPA’s adjustments are mandated by a statute lending EPA no discretion, regulated entities seeking to challenge EPA’s adjustments are unlikely to succeed. Our research revealed no case in which a party challenged EPA’s authority to adjust civil penalties pursuant to the 2015 Act. Regulated entities should assume the new penalty amounts will apply to any potential violations and plan accordingly.88 Fed. Reg. 89309 (December 27, 2023)and 28 U.S.C.A. § 2461 note

Under section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461, as amended by the Inflation Adjustment Act, Public Law 114–74, 129 Stat. 584 (2015), each federal agency is required to issue annually a rule adjusting the statutory civil monetary penalties that can be imposed under the respective laws the agency administers. The Office of Management and Budget (OMB) provides agencies an adjustment multiplier that is based on the rate of inflation. In the preamble to the Final Rule, the Service states that periodically increasing the penalties’ dollar amounts ensures that these laws retain their deterrent effects and further the policy goals of the underlying statutes.While the Final Rule should have been published by the Service no later than January 15, 2024, like in 2023, there was a minor delay. The Service published the Final Rule without an opportunity for public comment. Section 553(b) of the Administrative Procedure Act (5 U.S.C. § 551 et seq.) (APA) provides that the public notice and comment processes typically required under the APA are u

ter the notice is mailed to comply with the filing requirement. Failure to comply within the 90-day period subjects the taxpayer to an additional penalty of $10,000 for each 30-day period, with a maximum penalty of $50,000. (See Code Section 6038(b)(2).) Farhy had failed to file Form 5471 with his 2003 to 2010 US federal income tax returns, so the IRS assessed penalties. Farhy argued that the IRS did not have the power to assess the penalties under Code Section 6038.The Tax Court agreed with Farhy and held that the Code does not contain any provision that permits the IRS to assess the penalty provided in Code Section 6038(b). As such, although the IRS correctly determined that Farhy should be penalized for failing to file Form 5471 with his returns, the IRS lacked the statutory ability under the Code to assess and collect the penalty under the assessment and collection procedures.The Tax Court did note that the IRS had other tools at its disposal to collect the penalties, for example, 28 U.S.C. § 2461(a), which provides:Whenever a civil fine, penalty or pecuniary forfeiture is prescribed for the violation of an Act of Congress without specifying the mode of recovery or enforcement thereof, it may be recovered in a civil action.This would mean that the federal government would be required to bring an action against the taxpayer in district court to collect a penalty for failing to file Form 5471. The civil action is a procedure that is not common, thus making the penalty improbable to apply to many taxpayers.THE IRS’S POWER TO ASSESS AND COLLECT CIVIL TAX PENALTIESThe Code provides specific rules that permit the IRS to assess taxes (including interest and additions to tax) and certain types of civil tax penalties (so-called “assessable penalties”). For example, Code Section 6201(a) permits the IRS to “assess” taxes and assessable penalties. Assessment is the act of formally recording a tax liability on the IRS’s records. After an assessment and the taxpayer’s failure to pay, the IRS ca

to the extent the federal courts tolerate such deception, we enable more fraud in the present and future. We also place at a competitive disadvantage the other businesses that resisted the temptation to cheat the government.” Press Release, Dep’t of Just. Off. of Pub. Affs., “False Claims Act Settlements and Judgments Exceed $2 Billion in Fiscal Year 2022” (Feb. 7, 2023), https://www.justice.gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-2-billion-fiscal-year-2022. “These recoveries restore funds to federal programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families.” Id. Id.(The “health care industry” includes “drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians”).Id. Dep’t of Just., “The False Claims Act” (Updated March 23, 2023), https://www.justice.gov/civil/false-claims-act. 31 U.S.C. § 3729(a)(1)(A). 28 U.S.C. 2461 note; Public Law 104-410. 31 U.S.C. § 3729(a)(1); 42 U.S.C. § 1320a-7a; “Civil Monetary Penalties Inflation Adjustments for 2023” 88 FR 5776 (January 30, 2023), https://www.federalregister.gov/documents/2023/01/30/2023-01704/civil-monetary-penalties-inflation-adjustments-for-2023. Civ. Div., U.S. Dep’t of Just., FCA FY2022 Statistics, at 3, Attach. to Press Release, Dep’t of Just. Off. of Pub. Affs., False Claims Act Settlements and Judgments Exceed $2 Billion in Fiscal Year 2022 (Feb. 7, 2023), https://www.justice.gov/opa/press-release/file/1567691/download.See note 5, supra; 31 U.S.C. § 3730. Kohn, Kohn and Colapinto, LLP, “What is Qui Tam?” .; 31 U.S.C. § 3730(d).See note 1, supra. Taxpayers Against Fraud, The Return on Investment from False Claims Act Partnerships (Oct. 2013), https://www.taf.org/resources/roi-from-fca-partnerships/. The kinds of acts that constitute submission of a false claim are generally outlined in the False Claims Act at 31 U.S.C. § 3729(a)(1)(A)-(G). 31 U.S