Monday, November 19, 2007

Fourth Circuit holds that IRS is not required to list the amount of interest on Certificates of Assessment to collect both principal and interest

In UNITED STATES v. SARUBIN, Sarubin's tax returns revealed a 2 million dollar tax liability which he never paid. The IRS sued to collect over four million dollars, an amount representing the original debt and penalties plus statutory interest. The district court denied the government's motion for summary judgment for the full amount. The court allowed recovery on the original debt, but held that the government was estopped from collecting some two million dollars in interest that was not included in the indebtedness balance listed in the Certificates of Assessment attached to the motion for summary judgment.

The Fourth Circuit reversed. The Court held that the IRS was not required to list the full amount of interest in the Certificate. According to the Court:

Although establishing the amount of tax liability is a matter of evidence, the amount of interest accrued on such tax liability is a matter of law. United States v. Schroeder, 900 F.2d 1144,1150 n.5 (7th Cir. 1990). Therefore, the government provided sufficient evidence to prove that Sarubin owed the underlying tax debt sought, which debt has in turn accrued interest by operation of statute.The district court’s suggestion that the government failed to show a prima facie case by attaching the Certificates and citing to § 6601(a) was thus inaccurate.

Hence, the district court's decision was reversed.

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