Swifter even than jeopardy comes Section 6851 termination. If it looks like the non-taxpayer is about to scarper with the readies, IRS can immediately assess and grab. Ugorji Timothy Wilson Onyeani, 2020 T. C. Memo. 15, filed 1/16/2020, is a perfect candidate.

UTWO was born in Nigeria, naturalized in the UK where he practiced medicine (but lost his license for falsifying records and misconduct), got a US green card and, claiming to be a broker for the Nigerian National Petroleum Corp., got an $800K advance from a couple customers (hi, Judge Holmes), who should have known better, for Bonny Crude, of which he had none but he did have a phony corporate shell. When he tried to wire $300K to a UK corporation from his BoA account, BoA shut him down.

UTWO then went to Harris Bank, who tipped off the Secret Service. Then IRS got word, did a flash bank deposits reconstruction and a quick-and-dirty SFR, and did the Section 6851 grab. Harris escrowed $289K to cover the potential lien, which UTWO fought unsuccessfully in USDCNDIL, whereupon Harris paid IRS the $289K, and UTWO took the rest. Some he’d already spent on trips to Disneyland and at Victoria’s Secret (don’t ask). The onshore customer sued him, and he settled for $400K. And he and Mrs. UTWO filed a return for the year at issue showing only Mrs. UTWO’s income, and paid $2K in tax.

Maybe I got one of UTWO’s e-mails in my spam box; I don’t remember.

Judge Albert G (“Scholar Al”) Lauber spends some time on the Section 6751(b) Boss Hoss, but that was OK.

UTWO does get credit for the $400K he paid back to one of his customers. If you steal and repay in  the same year, you deduct what you repaid.

But whomever he defrauded, it wasn’t IRS.

Remember, Section 6664(a) defines “underpayment of tax,” a necessary component of a deficiency, as “the amount by which the tax imposed for the year (i.e., the correct amount of tax) exceeds the sum of ‘(A) the amount shown as the tax by the taxpayer on his return, plus (B) amounts not so shown previously assessed (or collected without assessment).’” 2020 T. C. Memo. 15, at p. 30. And Reg. Section 1.6664-2(a) includes termination assessments per Section 6851 in “amounts not shown previously assessed.”

IRS knew about the termination assessment, and the money was paid to IRS. UTWO gets a deduction for what he paid back to the onshore customer. And the amount of tax that IRS assessed on the termination, plus Mrs. UTWO’s tax exceeds the amount of tax they owed. And UTWO couldn’t evade payment of tax that was already in IRS’ hands.

No deficiency, no fraud chop, not even an accuracy penalty. There’s a Rule 155, so it just might be possible that UTWO gets a refund.

UTWO was pro se. I’ll give him a Taishoff “Good Job, Second Class.”