Chief Counsel Advice 201616011
In an emailed Chief Counsel Advice, IRS has concluded that the fact that an individual has a pending appeal of his motion to vacate his criminal conviction does not affect IRS’s ability to assess the amount of criminal restitution owed it under a court order.
Background. 18 USC 3556 provides for mandatory and discretionary court-ordered restitution to certain crime victims. IRS may assess and collect the amount of restitution under an order made pursuant to 18 USC 3556 for failure to pay any tax imposed under the Code, in the same way it could if the restitution amount were the tax itself. (Code Sec. 6201(a)(4)(A))
An assessment of such a court-order restitution amount can’t be made “before all appeals of such order are concluded and the right to make all such appeals has expired.” (Code Sec. 6201(a)(4)(B))
A prisoner in custody, who claims the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the U.S., or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, may move the court which imposed the sentence to vacate, set aside or correct the sentence. (28 USC 2555)
Issue. Whether a restitution assessment would be premature if, at the time the assessment was made, there was appeal pending under 28 USC 2555.
The assessment would not be premature. IRS held that the fact that there was an appeal pending under 28 USC 2555 would not cause a restitution assessment to be premature.
The term “such order” in the phrase “all appeals of such order” in Code Sec. 6201(a)(4)(B) refers to the restitution order itself, not the overall sentence. If a defendant is appealing the denial of a 28 USC 2555 motion to vacate a prison sentence, it is not an appeal of the restitution order. If a motion under 28 USC 2555 is granted, the result would be that the taxpayer would be released. It would not have any effect on the restitution ordered. IRS cited Smullen v. United States, (CA 1 1996) 94 F.3d 20, for this last conclusion. That case held that a criminal defendant, who is in custody, may not, under 28 USC 2555, collaterally challenge the restitution order imposed as a part of his sentence.