IRS levy fails after DOJ settlement covers same tax liabilities
Joseph White v. Commissioner. United States Tax Court. No. 7838-25L. 2026.
The IRS acted improperly by upholding a levy that would have sped up collection of restitution-based assessments, even though the DOJ had already settled those same tax debts through a court-approved payment plan.
Holding
The Tax Court refused to allow the proposed levy. It denied the IRS’s request for summary judgment, treated the taxpayer’s response as a cross-motion, and ruled in favor of the taxpayer.
Why It Matters
The decision limits the IRS's collection discretion when the DOJ has already resolved the same tax liabilities through a settlement agreement.
The ruling does not invalidate restitution-based assessments, or RBAs. It limits how the IRS may collect them when collection conflicts with a later DOJ compromise.
The case turns on timing and consistency, not double collection. The Tax Court accepted that payments against RBAs would be credited against civil tax liabilities.
The practical point is procedural. Appeals must consider whether a levy is more intrusive than necessary when the government has already agreed to installment payment rights.
Key Facts
Joseph White owed federal income tax liabilities for 2000 through 2011.
In 2017, he was convicted under §7201 for willfully attempting to evade payment of those taxes. The sentencing Court ordered $1.2 million in restitution to the IRS. The IRS then made RBAs under §6201(a)(4) for the same $1.2 million.
In 2022, DOJ brought a civil collection action under §6502 to reduce White’s unpaid 2000 through 2011 tax liabilities to judgment. By August 2023, the liabilities had grown to about $1.893 million with interest and additions to tax.
DOJ and White settled that action in September 2023. White agreed to a judgment of about $1.893 million. DOJ agreed to treat the judgment as satisfied and take no further collection action for the 2000 through 2011 income tax liabilities if White paid $1.6 million by July 1, 2027, under a specified payment plan.
White stayed current on the payment plan. By March 2026, he had paid almost $1 million.
While the civil collection case was pending, the IRS issued a levy notice to collect about $1.102 million of unpaid RBAs. Appeals sustained the levy.
Statutory Framework
Section 6201(a)(4) allows the IRS to assess and collect criminal tax restitution as if it were tax. An RBA is a tax collection assessment issued pursuant to a restitution order. Section 6201(a)(4)(C) bars the taxpayer from challenging the amount of restitution by disputing the underlying tax liability in a tax proceeding.
Section 6330 requires Appeals to verify legal requirements, consider issues the taxpayer raises, and decide whether the proposed collection action balances efficient collection with the taxpayer’s legitimate concern that collection be no more intrusive than necessary.
Arguments
Taxpayer argued:
The RBAs matched the same unpaid income tax liabilities for 2000 through 2011 that were covered by the DOJ settlement.
The levy conflicted with the settlement because DOJ agreed to accept $1.6 million over time.
Immediate collection of the levy would disregard his contractual right to pay through July 2027.
The levy would be more intrusive than necessary.
Government argued:
The RBAs were separate and distinct from White’s civil income tax liabilities.
DOJ’s settlement resolved only the civil tax liabilities reduced to judgment.
Appeals properly sustained the levy because White could not challenge the restitution assessment under §6201(a)(4)(C).
White did not provide financial information supporting a collection alternative.
Court’s Reasoning
The Tax Court reviewed the Appeals for abuse of discretion because White could not challenge the underlying RBA liability in the CDP proceeding.
The Court rejected White’s double collection theory. The IRS could not collect the same tax loss twice, but any RBA collection would be credited against the related tax liabilities.
The Court found that the RBAs were distinct in assessment procedure, but not separate in economic substance. They represented the same 2000-2011 income tax liabilities.
DOJ had already agreed to a different collection mechanism for those same liabilities. The settlement gave White until July 1, 2027, to complete payment.
Appeals sustained a levy that would have collected the remaining balance immediately, and potentially more than the unpaid balance under the settlement.
The settlement officer failed to account for White’s ongoing compliance with the DOJ payment plan.
The levy conflicted with the government’s settlement and was more intrusive than necessary under §6330(c)(3).
Result
Decision entered for White, and the proposed levy was not sustained.
The Takeaway
This case is not a sweeping victory for taxpayers against restitution assessments. Instead, it says the IRS cannot use an RBA levy to get around a DOJ settlement that covers the same tax debts and payment plan.
Practitioners should pay attention to how the tax debts, the settlement terms, and the taxpayer’s payment plan fit together. This is the important part of the case, since it shows that different parts of the government may not always coordinate their actions.
List of Citations
Klein v. Commissioner, 149 T.C. 341, supports the treatment of RBAs and limits on interest or additions assessed on restitution.
Carpenter v. Commissioner, 152 T.C. 202, addresses RBA procedures and limitations.
Zuch v. Commissioner, 145 S. Ct. 1707, cited for mootness after liabilities were fully paid.