26 U.S.C. § 6201(a)(4)(A) Authorizes IRS Assessment and Immediate Civil Collection of Criminal Tax Restitution for Title 18 Offenses, Unconstrained by Sentencing Payment Schedules

1. Introduction

This decision resolves (as the Seventh Circuit framed it) an issue of first impression among the federal courts of appeals: whether the Internal Revenue Service may, under 26 U.S.C. § 6201(a)(4)(A), administratively assess and collect a criminal restitution obligation when the underlying conviction is a Title 18 tax-related offense rather than a Title 26 offense.

The petitioner, Paul M. Daugerdas, was convicted in the Southern District of New York of multiple crimes arising from a fraudulent tax shelter scheme, including conspiracy to defraud the IRS under 18 U.S.C. § 371, and was ordered to pay $371,006,397 in restitution to the U.S. Treasury. After his criminal judgment was affirmed, the IRS assessed “parallel” civil restitution in the same amount under § 6201(a)(4)(A) and filed a Notice of Federal Tax Lien (NFTL) in Cook County, Illinois. Daugerdas did not dispute the restitution amount; instead he challenged the IRS’s statutory authority to (i) assess restitution tied to a Title 18 conviction and (ii) treat the full amount as immediately due notwithstanding the criminal court’s payment schedule.

The Seventh Circuit affirmed the Tax Court, holding that § 6201(a)(4)(A) authorizes assessment and collection of restitution ordered under 18 U.S.C. § 3556 for “failure to pay any tax imposed under” Title 26, even when the triggering conviction is a Title 18 offense such as § 371 conspiracy to defraud the IRS; and further holding that the IRS is not bound by the sentencing court’s payment schedule when collecting the assessed restitution “as if such amount were such tax.”

2. Summary of the Opinion

• Statutory authorization: 26 U.S.C. § 6201(a)(4)(A) authorizes the IRS to assess and collect criminal restitution ordered under 18 U.S.C. § 3556 for tax losses—covering qualifying Title 18 offenses (here, 18 U.S.C. § 371) that resulted in “failure to pay” taxes imposed under Title 26.
• Payment schedule: The IRS may collect the assessed restitution “in the same manner as if such amount were such tax” and is not limited by the criminal judgment’s installment schedule (here, 10% of gross monthly income after release).
• Liens: The IRS’s lien filing was upheld; the court noted that restitution also operates as a lien by statute under 18 U.S.C. § 3613(c), and the IRS’s NFTL authority aligns with 26 U.S.C. §§ 6321 and 6323.
• Constitutional objection rejected: The court found no separation-of-powers violation in Congress’s scheme permitting administrative assessment and collection.

3. Analysis

3.1. Precedents Cited

Although the core holding turned on statutory text and structure, the panel relied on several cited decisions to situate its review posture and to confirm lien consequences of restitution orders.

• United States v. Daugerdas, 837 F.3d 212 (2d Cir. 2016)
  The Seventh Circuit invoked this case primarily as procedural and factual backdrop: the Second Circuit’s affirmance cemented the validity and finality of the convictions and sentence (including restitution), which then became the predicate “order pursuant to section 3556 of title 18” referenced in § 6201(a)(4)(A). The Seventh Circuit did not revisit the criminal merits; it treated the restitution order as a given and analyzed the IRS’s post-judgment administrative collection authority.
• Freda v. Comm'r of Internal Revenue, 656 F.3d 570 (7th Cir. 2011)
  Freda supplied the standard of review framework: appellate review of Tax Court decisions “in the same manner and to the same extent” as a district court bench trial, supporting independent review of the Tax Court’s legal conclusions on summary judgment. This mattered because the dispute was purely legal—statutory authorization and the relationship between criminal payment schedules and civil tax-collection mechanisms.
• Klein v. Commissioner of Internal Revenue, 149 T.C. 341, 355-58 (2017)
  Daugerdas leaned on Klein’s description of § 6201(a)(4)(A) as having a “modest aim” (allowing the IRS to create an account receivable to credit payments). The Seventh Circuit treated that characterization as non-limiting: even if Congress sought to close an accounting gap, that purpose is compatible with (and does not narrow) the statute’s operative command that the IRS “shall assess and collect” restitution “in the same manner as if such amount were such tax.” Importantly, the court refused to transform Klein’s “modest aim” language into an atextual limitation that would prevent assessment for Title 18 tax-related offenses.
• United States v. Miller, 39 F.4th 844, 846 (7th Cir. 2022)
  Miller was cited to confirm the lien effect of criminal restitution upon entry of judgment: restitution becomes a lien “in favor of the government on all of [the defendant’s] property and rights to property.” This supported the panel’s conclusion that lien mechanisms are not anomalous or punitive add-ons; they are part of Congress’s integrated enforcement design across Titles 18 and 26.

3.2. Legal Reasoning

The opinion’s reasoning is a textbook exercise in textual and structural statutory interpretation, with three key moves.

1. The statute’s trigger is the restitution order and its tax-loss character—not the title of conviction.
   The court began with 26 U.S.C. § 6201(a)(4)(A), which directs that the Secretary “shall assess and collect” restitution ordered under 18 U.S.C. § 3556 “for failure to pay any tax imposed under this title.” The panel emphasized that the cross-reference to § 3556 is doing real work: it points to restitution imposed at sentencing under the federal criminal restitution framework (including the Mandatory Victims Restitution Act via 18 U.S.C. § 3663A). Because Daugerdas’s restitution was imposed pursuant to that framework and was for tax losses (a “failure to pay” taxes), the statutory condition was satisfied even though one key conviction was under Title 18.
2. Daugerdas’s “Title 26-only” reading would effectively nullify Congress’s cross-reference to Title 18 restitution law.
   Daugerdas argued that “for failure to pay any tax imposed under this title” implicitly means “only Title 26 crimes.” The Seventh Circuit rejected that as a rewrite: if Congress meant to confine assessments to Title 26 convictions, it could have said so and would have had no reason to tie the assessment mechanism to 18 U.S.C. § 3556. The court treated the cross-reference as a deliberate bridge between criminal restitution and civil tax collection.
3. Collection “as if such amount were such tax” decouples IRS collection from criminal payment scheduling constraints.
   On the payment schedule dispute, the panel contrasted (a) the sentencing court’s obligation to set restitution equal to the victim’s loss and then craft a payment schedule with attention to the defendant’s finances under 18 U.S.C. § 3664(f), with (b) the IRS’s distinct mandate under § 6201(a)(4)(A) to collect the assessed amount “in the same manner as if such amount were such tax.” In tax administration, assessed liabilities are generally immediately due and collectible through liens and levies without the IRS being confined to the debtor-friendly installment contours of a criminal judgment. The court found no textual hook importing the criminal payment schedule into the IRS’s civil collection authority.

Finally, the court addressed liens from two reinforcing angles. First, 18 U.S.C. § 3613(c) provides that restitution obligations operate as liens “as if” they were tax liabilities. Second, after the IRS’s assessment, traditional tax lien authority under 26 U.S.C. § 6321 and NFTL procedures under 26 U.S.C. § 6323 fit naturally. This dual-track lien logic supported the conclusion that the NFTL was legally sound.

3.3. Impact

The decision has significant practical and doctrinal consequences for criminal tax enforcement and post-conviction collection:

• Expands (and clarifies) the reach of restitution-based tax assessment: By holding that Title 18 tax-related offenses can trigger § 6201(a)(4)(A), the court forecloses a formalistic “Title 26-only” limitation that would have exempted common tax-adjacent prosecutions (e.g., conspiracies to defraud the IRS) from IRS assessment authority.
• Accelerates collection risk: Defendants who negotiate or receive lenient criminal payment schedules may nonetheless face immediate civil collection tools (liens, levies) once the IRS assesses restitution as a tax-like liability—materially altering settlement leverage, asset protection planning, and post-sentencing expectations.
• Encourages integrated criminal-civil enforcement: The opinion confirms Congress’s design to allow the IRS to operationalize restitution through its well-developed tax collection apparatus, reducing reliance on slower or differently prioritized criminal restitution collection channels.
• Likely to influence other circuits: Because the panel described the issue as one of first impression across circuits, this opinion may become a leading template for interpreting § 6201(a)(4)(A) in future appellate disputes.

4. Complex Concepts Simplified

• Restitution (criminal): Money a sentencing court orders a defendant to pay to compensate a victim for losses caused by the crime. Here, the victim was the U.S. Treasury for lost tax revenue.
• 18 U.S.C. § 3556 and § 3663A (MVRA): The statutory pathway authorizing and (often) requiring federal courts to impose restitution at sentencing. The MVRA makes restitution mandatory for certain offenses, including many Title 18 property crimes.
• Assessment: The IRS’s formal act of recording a liability on its books. Once assessed, the government generally gains access to administrative collection tools.
• “In the same manner as if such amount were such tax”: A direction to treat restitution like a tax debt for collection mechanics—meaning the IRS may use tax collection procedures rather than being restricted to the criminal court’s payment timetable.
• Federal tax lien and NFTL: A lien is the government’s legal claim against a taxpayer’s property to secure payment. The NFTL is a public filing that puts other creditors on notice and can affect priority, refinancing, and asset transfers.
• Separation of powers concern (as raised here): The argument that the executive branch (IRS) cannot alter or override a judicial sentencing order. The court rejected this, reasoning that Congress itself authorized an administrative, tax-like collection track alongside the criminal judgment.

5. Conclusion

Paul M. Daugerdas v. Commissioner of Internal Revenue establishes (in the Seventh Circuit and as a leading first appellate precedent) that 26 U.S.C. § 6201(a)(4)(A) empowers—and requires—the IRS to assess and collect restitution ordered under 18 U.S.C. § 3556 for unpaid taxes, even when the predicate conviction is a Title 18 offense such as 18 U.S.C. § 371 conspiracy to defraud the IRS. The court further held that, once assessed, the IRS may collect that restitution as it would a tax liability, without being constrained by the criminal sentencing court’s installment schedule. The opinion reinforces Congress’s integrated design linking criminal tax restitution to the IRS’s civil enforcement machinery, making restitution a more immediately enforceable financial consequence of tax-related crime.