In Re Robert J. Burns, Debtor. Robert J. Burns v. United States

This ease turns on a single issue. An IRS assessment was too high, because the IRS used an erroneous legal theory. The taxpayer argues that the assessment was void and the lien and money collected under it must be released. The IRS would then proceed under a reduced assessment and a new lien as of the date of the reduced assessment. The Commissioner argues that the effective date of the original assessment and lien must be maintained, and only reduced in amount. We are per suaded that the controlling statutes require us to adopt the Commissioner’s view.

I.Facts

Between 1982 and 1984, Robert Burns was a co-director of marketing for United Energy Corporation. In February 1984, the Internal Revenue Service enjoined United Energy from selling tax shelters in violation of 26 U.S.C. § 6700 . The United States assessed Robert Burns $3,668,318.65 for penalties under 26 U.S.C. § 6700 and interest, made demand, and filed a lien'for that amount. Burns filed for bankruptcy. Subsequently, we held in Bond v. United States, 872 F.2d 898 (9th Cir.1989), that the method used to assess Burns was improper. We determined that the IRS could hot impose a separate minimum $1,000 penalty under § 6700…