Ca. Tax Lawyer Summer 2015, Volume 24, Number 2

The Modification and Compromise of Restitution Orders in Criminal Tax Cases1

By Robert S. Horwitz and Steven L. Walker2


Federal district courts may sentence a defendant to pay restitution upon conviction of certain criminal tax offenses. A federal district court is required to order a defendant to pay restitution in all Title 18 cases to compensate victims for actual loss. In criminal cases under Title 26, the Court may order restitution if agreed to by the parties, as a condition of probation or as a condition of supervised release.3 A restitution order is a final judgment that cannot be modified.

In 2010, the Unites States Congress ("Congress") added section 6201(a)(4) to the Internal Revenue Code of 1986, as amended ("IRC"), which requires the Internal Revenue Service ("IRS") to assess and collect the amount of restitution under an order pursuant to section 3556 of Title 18 of the United States Code for failure to pay any tax imposed under Title 26 in the same manner as if such amount were a tax. Sometimes, the IRS may be identified as the victim, and the district court therefore orders the defendant to pay a tax-related loss to the IRS. This new code section allows the IRS to use its administrative collection tools to collect the amount of the restitution order issued by the federal district court.

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