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Billionaire Tax Case Shows IRS Can Act Fast on Risky Collections

Oct. 6, 2022, 8:45 AM

Much has been made of those new 87,000 armed IRS agents waiting to seize your assets—including your home and your small business—by force.

Only that’s not true. Thousands of new armed agents aren’t heading your way. And the IRS assessment and collections processes are much more complicated than storming the premises—the agency is required by law to follow specific procedures.

But what happens when, as taxpayers may fear, the IRS colors outside of the lines? There are processes for that, too, which may include filing suit to right the alleged wrong. That’s precisely what happened in a recent high-profile case involving a jeopardy assessment.

Assessment and Collections

The IRS, like most creditors, wants to get paid. If you don’t pay what you owe in full, you’ll receive a bill. The bill could be the result of a failure to pay the balance shown on your return, a balance computed by the IRS after a substitute return, or because of an audit or proposed change in tax resulting in an adjustment.

The bill will explain the amount of tax due, plus any penalty and interest, and starts the collection process. The IRS will continue to collect until you pay what you owe in full or until it can no longer legally collect the tax—typically, when the time for collection expires. You can read more about IRS assessments and collections here.

There are several ways that you can pay what you owe—from putting it on a credit card to entering into an installment agreement.

Liens and Levies

If you ignore the notice—or refuse to pay—the IRS can levy your assets to satisfy your debt.

Do not confuse a levy with a lien. A lien signals that the government has a legal right to your property. Practically speaking, a lien lets creditors know they may not be first in line if you don’t pay up on other debts. Additionally, if and when you sell any assets, you may be forced to turn over the proceeds to the IRS to satisfy your debt.

A levy is a legal seizure of your property to satisfy your tax obligations. Generally, before the IRS can take your property, it must send you a levy notice. In most cases, you’ll get a notice via certified mail at least 30 days before the levy, and you’ll have the right to appeal during this time.

Jeopardy Assessments

Collections processes are in place to allow you several opportunities to resolve your tax debt. Occasionally, the IRS may believe there’s a reason to circumvent the process to protect the government’s interests. In that case, the IRS can make an immediate assessment. This is known as a jeopardy assessment—and it means that the tax, penalties, and interest become immediately due and payable under Sections 6851 and 6861 of the Internal Revenue Code.

Typically, to make a jeopardy assessment, one of the following must apply:

  • The taxpayer is or appears to be planning to leave the country or to go into hiding;
  • The taxpayer is or seems to be hiding property; or
  • The taxpayer is putting the property out of reach of the government by removing it from the country, dissipating it, transferring it to another person, or putting their financial solvency at risk.

Several factors can influence whether the IRS elects to make a jeopardy assessment, including whether a taxpayer may be involved in illegal activity, and whether they have a history of concealing assets overseas and selling or transferring property for less than adequate consideration. Objective facts must support the determination that collection is in jeopardy—no guessing games. And the amount of the assessment must be supported.

After a jeopardy assessment is made, the IRS must send a notice. The taxpayer has 10 days to pay in full or file a bond to stay collections, as outlined in the tax code at Section 6863.

However, if the IRS believes that the collection of the tax might be in danger, it can bypass the standard notice procedures and go ahead with a levy.

Brockman v. United States

That brings us to the 2020 case in which Robert T. Brockman was charged in a 39-count indictment with various financial crimes, including tax evasion. The IRS alleged that Brockman owed over $1.4 billion in taxes, fraud penalties, and interest, as a result of his actions, calling it: “the largest-ever tax charge against an individual in the United States.”

The government charged that Brockman went to great lengths to keep the IRS from learning about his assets. He even used code words to conceal his activities, calling the IRS “The House” and dubbing his colleagues “Redfish” and “Permit” in their communications.

The contentious case began to wind its way through the courts, with Brockman’s lawyers filing documents suggesting he couldn’t stand trial because he had dementia. He was 79 at the time. Prosecutors, however, had “serious doubts” about the diagnosis, claiming it might be a fake, noting that until the end of 2020, he ran a multibillion-dollar software company.

As the government built its case, it alleged that after Brockman learned about the investigation, he began taking steps to potentially avoid paying up. That included, they say, transferring, gifting, and selling real property, including property owned by an entity that was not disclosed to the IRS and did not file any tax returns. Brockman also sold millions of dollars worth of securities and other interests, including a yacht and a jet, and closed several bank accounts. He also transferred money to two newly created offshore trusts.

In response, the IRS made a jeopardy assessment and levy. Brockman subsequently filed a civil action, challenging both, claiming they were not reasonable.


The remedies which are available in response to a jeopardy assessment are largely the same as those available to all assessments, including taking it to court. The applicable law authorizing judicial review can be found in Section 7429(b) of the tax code, which allows for a fresh review of the assessment in federal district court. The review is limited to determining whether the assessment is reasonable and whether the amount assessed is appropriate.

In his filing, Brockman only raised the issue of whether the jeopardy assessment was reasonable under the circumstances. To prove its burden, the court, relying on precedent, found that the government “need only establish that the taxpayer’s circumstances appear to be jeopardizing collection of a tax—not whether they definitely do so.” And the standard is one of “reasonableness, not one of substantial evidence.”

The court found substantial evidence that Brockman engaged in tax fraud, and that the nature, sophistication, and sheer size of the alleged fraud satisfied the reasonableness requirement. Additionally, the court determined that Brockman’s subsequent actions were enough to give the appearance that the government’s ability to collect his taxes was in jeopardy. With that, Brockman’s motion to abate the jeopardy assessment and levy was denied, and the matter was dismissed on Sept. 30, 2022.

Brockman died a month before the dismissal, on Aug. 5, 2022. As a result of his death, the criminal case against him ended. However, the IRS’s attempt to recover the taxes he allegedly owed will likely continue for years.

This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.

To contact the reporter on this story: Kelly Phillips Erb in Washington at

To contact the editors responsible for this story: Rachael Daigle at; Joe Stanley-Smith at