IRS Can Levy Tax Penalty Without Lawsuit, Appeals Court Says

The IRS has the authority to levy fines on a taxpayer for failing to report his interest in foreign corporations without resorting to the judicial system, the Second Circuit said Friday.

The decision from the US Court of Appeals for the Second Circuit reverses a US Tax Court ruling that the IRS had to bring a lawsuit in federal district court to collect the tax, allowing the IRS to penalize Joseph Safdieh directly for failure to report interests in foreign corporations from 2005 to 2009.

Writing for the appeals court, Judge José A. Cabranes said IRC Section 6038(b) “strongly suggests” ...