Further Commotion in Liberty Global Collection Suit Over Whether a Notice of Deficiency Is Required Before Collection Suit (1/16/23; 1/19/23)

Updated 1/19/23 with Court docket entry stating that the claim Liberty Global wanted to assert should not be filed.  See Comment #2 below.

I recently wrote on the Government’s Collection Suit against Liberty Global. Government Files Collection Suit in Liberty Global Raising Procedural Issues (Federal Tax Procedure Blog 10/8/22; 10/12/22), here. In their respective positions in pre-filing letters to the court, the parties address Liberty Global’s claim that a collection suit cannot be commenced without assessment of the tax and the assessment must be preceded by a notice of deficiency which did not occur here. Liberty Global’s letter of 12/20/22 at Docket Entry 15 is here; the Government’s response letter of 1/11/23 at Docket Entry 19 is here. (I noted in paragraph 9 of my initial blog that the complaint did not allege assessment of the tax liability.)  The docket entries in the case are here.

The letters are short and recommended reading. The gravamen of the competing claims are

• Liberty Global’s Claim. Timely notice of deficiency and assessment are required to precede a collection suit, citing § 6213(a), here (“no levy or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer”).
• The Government’s Claim. The Government claims that neither notice of deficiency nor assessment is required before filing a tax collection suit within the assessment period, citing § 6501(a), here (“no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such [three-year] period”)

Basically, on the face of the claims, § 6213(a) and § 6501(a) seem to conflict. Which is it?

We’ll see.

JAT Comments:

1. Tax Procedure enthusiasts will know of the central role that § 6213(a) plays.  When teaching tax procedure, § 6213(a) just kept popping up in important contexts throughout the class sessions.

2. Added 1/19/23 at 3:00pm:  The Court entered the following on the docket entries (CL here):

21    Jan 16, 2023  MINUTE ORDER: The Court has reviewed the parties' letter of intent and response. The Court agrees that the proposed motion presents an issue of law. However, it appears based upon our review of the law cited in your letters that the motion to dismiss would very likely be denied. See U.S. v. Sarubin, 507 F.3d 811, 815 (4th Cir. 2007); U.S. v. Jersey Shore States Bank, 781 F.2d 974, 979-80 (3d Cir. 1986); Shelter Mut. Ins v. Gregory, 555 F. Supp. 2d 922, 933 (M.D. Tenn. 2008). Therefore, briefing and deciding a motion to dismiss would appear to be a waste of resources, including judicial resources, and the Court discourages your filing of the motion. Text Only Entry (rbjlc6, ) (Entered: 01/16/2023)

In essence, the Court is arguing that Liberty Global's claim in the letter of intent is frivolous. In support of its Order, the Court cites three cases, two of which were not cited by the Government and none of which were cited by Liberty Global.  Ouch!  So, on the "What is it?" question I asked in the body of the blog, for now the answer is § 6501(a) permits the Government to file a collection suit without a predicate assessment or notice of deficiency. But, the Order as I read it does not preclude the motion Liberty Global wanted to file. But, I guess the message is that Liberty Global better have a better argument than it presented in summary in the letter.