Trust Fund Handbook page1
Trust Fund Handbook page2
Trust Fund Handbook page3
Tax Fraud
Willfulness - knowledge of non-payment
Statute of Limitations
Assessment p1
Assessment p2
Assessment p3
GCM 33653

ACTION ON DECISION

Number 1996-006

Internal Revenue Service

July 15, 1996

Alan K. Lauckner v. United States

File No.: AOD/CC-1996-006,

             July 15, 1996

Decision: CA-3, Dkt. No. 94-5747,

             October 23, 1995,

             68 F.3d 69

Internal Control No.:CC: DOM :FS:PROC

                          LACamillo

Uniform Issue List Nos.: 6501.03-03

                              6672.00-00

Issue:

Whether assessments of the trust fund recovery penalty (TFRP) at I.R.C. § 6672 are subject to the three-year statute of limitations contained in I.R.C. § 6501(a).

Discussion:

AAA Trucking Corporation failed to pay over withholding taxes due for the last two quarters of 1989 and the first quarter of 1990. In an attempt to recover these taxes, the Service assessed section 6672 TFRPs against Alan Lauckner. Lauckner filed claims for refund and later filed a complaint with the District Court for the District of New Jersey seeking a refund. The government filed counterclaims seeking recovery of the unpaid TFRPs against Lauckner and others, including Umberto Guido.

The contested assessment against Guido was made more than three years after AAA filed its employment tax returns for the last two quarters of 1989. Guido filed a motion in the district court to dismiss the government's counterclaim against him with respect to the last two quarters of 1989 on the ground that the government's section 6672 assessment against him was barred by the three-year limitations period contained in section 6501(a).

The government opposed Guido's motion to dismiss, contending that neither the general statute of limitations contained in section 6501(a), nor any other statute of limitations, applies to section 6672 assessments. The government argued that the general period of limitations is only triggered by the filing of a return reporting the tax to be assessed and to be paid by the person filing the return. Inasmuch as no returns are filed with respect to the liability imposed by section 6672, the government reasoned that the general three-year limitations period contained in section 6501(a) does not apply to assessments of a section 6672 penalty. This interpretation was a change from the Service's previous long-standing interpretations of the applicable statute of limitations.

The Third Circuit held that section 6672 assessments are subject to the three-year limitations period in section 6501(a), and that the running of the limitations period is triggered by the filing of the employer's quarterly employment tax return. The court also pointed out that the government's position that no statute of limitations applies to assessments of the TFRP was contrary to the position taken by the government in numerous cases over the past thirty years.

The Third Circuit's opinion in Lauckner is consistent with the opinions of other courts. See United States v. Jones , 60 F.3d 584 (9th Cir. 1995); Stallard v. United States , 12 F.3d 489 (5th Cir. 1994); United States v. Hodgekins , 28 F.3d 610 (7th Cir. 1994); Bronson v. United States , 46 F.3d 1573 (Fed. Cir. 1995); Cooper v. United States , 95-2 USTC 50,521 (6th Cir. 1995) (unpublished opinion). On December 15, 1995, the Solicitor General decided that a petition for a writ of certiorari will not be filed in the Lauckner case. The Service will no longer litigate contrary to the opinions of these courts.

Recommendation:

Acquiescence.

Reviewers:

LYNNE A. CAMILLO,

Attorney

Approved: STUART L. BROWN,

              Chief Counsel

By: JUDITH C. DUNN

     Associate Chief Counsel

Written Determination

Number: 8510004

Internal Revenue Service

November 30, 1984

Symbol: 4G5080

NATIONAL OFFICE

TECHNICAL ADVICE MEMORANDUM

ISSUE

Whether section 6501(b)(2) of the Internal Revenue Code applies in determining the period of limitations for assessment of the penalty under section 6672 of the Code.

FACTS

The taxpayer filed its Form 941 (Employer's Quarterly Federal Tax Return) for the quarter ending June 30, 1980, on December 7, 1980. On March 28, 1984, the Internal Revenue Service assessed the 100% penalty against each of the three responsible persons for unpaid employment taxes.

LAW AND RATIONALE

Section 6672 of the Code imposes a penalty if any person required to collect, account for, and pay over any federal tax fails to collect the tax, account for and pay over the tax, or attempts in any manner to evade or defeat the tax or the payment thereof. The penalty is an amount equal to the amount of the tax evaded, or not collected, or not accounted for and paid over. For this reason, it is sometimes referred to as the "100% penalty."

Section 6671 of the Code provides that any penalties or liabilities imposed by sections 6671 through 6705 are assessed and collected in the same manner as taxes and must be paid upon notice and demand by the Secretary. Any reference to "tax" imposed by the Internal Revenue Code is deemed also to refer to the penalties and liabilities provided in sections 6671 through 6705.

Section 6501 of the Code sets forth the periods of limitations for assessment and collection of taxes imposed by the Internal Revenue Code. The general rule, under section 6501(a), is that the amount of any tax must be assessed within 3 years after the return was filed. A special rule applies to returns of certain employment taxes. This special rule, contained in section 6501(b)(2), provides that in the case of returns of tax imposed by chapter 3, 21, or 24, a return for any period ending with or within a calendar year that is filed before April 15 of the succeeding calendar year will be deemed filed on April 15 of such calendar year. Section 301.6501 (b)-1(b) of the Regulation on Procedure and Administration provides clarification that the deemed date referred to in section 6501(b)(2) is April 15 of the succeeding calendar year.

In Lesher v. United States , 440 F. Supp. 372 (N.D. Ind. 1977), one of the issues in dispute was timeliness of assessment of the section 6672 penalty for unpaid employment taxes. The court held that the taxpayer's Form 941 for third quarter of 1971, which was filed on November 11, 1971, was deemed filed on April 15, 1972, and the assessment of the 100% penalty made on March 26, 1975, was timely.

The section 6672 penalty for unpaid employment taxes must, in accordance with the provisions of section 6671, be assessed and collected in the same manner as the employment taxes are assessed and collected. Since, in this case, the taxpayer's return of employment taxes for the quarter ending June 30, 1980 , was filed before April 15, 1981 , the return is deemed, under section 6501(b)(2), to have been filed on April 15, 1981 . Accordingly, the 3-year period of limitations commenced on April 15, 1981, and the assessment of the section 6672 penalty on March 28, 1984 was timely.

CONCLUSION

Section 6501(b)(2) of the Code is applicable in determining the period of limitations for assessment of the penalty under section 6672 for unpaid employment taxes.

A copy of this technical advice memorandum is to be given to the taxpayer. Section 6110(j)(3) of the Code provides that may not be used or cited as precedent.