                            151 T.C. No. 12



                   UNITED STATES TAX COURT



            JASON BONTRAGER, Petitioner v.
    COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 5998-16L.                          Filed December 12, 2018.



       P pleaded guilty in 2012 to violation of I.R.C. sec. 7201. The
basis for his conviction was that he had aided and abetted his father in
evading payment of his father’s Federal income tax liability for 1994.
In 2013 P filed a petition under chapter 7 of the Bankruptcy Code. At
sentencing in 2014 the District Court ordered P to pay restitution of
$72,710, representing 10% of the Government’s total tax loss attri-
butable to his father’s unpaid tax liability for 1994.

       Relying on I.R.C. sec. 6201(a)(4), R assessed the $72,710 of
restitution that P had been ordered to pay and recorded this assess-
ment as a liability for P’s 1994 tax year. When P did not pay the
balance of the liability, R began collection action by filing a notice of
Federal tax lien (NFTL). After a CDP hearing the settlement officer
upheld the filing of the NFTL, and P timely petitioned this Court.

       1. Held: I.R.C. sec. 6201(a)(4) authorizes the IRS to assess
restitution that a person has been ordered to pay upon conviction of
                                         -2-

      violating I.R.C. sec. 7201, when his wrongdoing consisted of aiding
      and abetting the evasion of payment of a third party’s tax liability.

            2. Held, further, P’s restitution liability was not discharged in
      the bankruptcy proceeding.

             3. Held, further, the IRS collection action is sustained.



      Holly C. Henson, for petitioner.

      Derek S. Pratt and Rachael J. Zepeda, for respondent.



                                     OPINION


      LAUBER, Judge: In this collection due process (CDP) case, petitioner

seeks review pursuant to sections 6320(c) and 6330(d)(1)1 of the determination by

the Internal Revenue Service (IRS or respondent) to uphold a notice of Federal tax

lien (NFTL) filing. The IRS filed the NFTL to facilitate collection of criminal

restitution that it had assessed against petitioner under section 6201(a)(4). That

section authorizes the IRS to “assess and collect the amount of restitution * * * for




      1
       Unless otherwise indicated, all statutory references are to the Internal Reve-
nue Code (Code) in effect at all relevant times, and all Rule references are to the
Tax Court Rules of Practice and Procedure. We round all monetary amounts to
the nearest dollar.
                                          -3-

failure to pay any tax imposed under this title in the same manner as if such

amount were such tax.”

      Petitioner pleaded guilty in 2012 to one count of violating section 7201,

which criminalizes willful attempts “to evade or defeat any tax * * * or the

payment thereof.” The basis for his conviction was that he had aided and abetted

his father in evading payment of his father’s Federal income tax liability for 1994,

which the IRS had assessed in 1998. At sentencing, petitioner was ordered to pay

to the IRS restitution of $72,710, representing 10% of the Government’s tax loss

relating to his father’s unpaid tax liability for 1994.

      The principal question presented, one of first impression in this Court, is

whether section 6201(a)(4) authorizes the IRS to assess restitution that a person

has been ordered to pay, upon conviction of violating section 7201, when his

wrongdoing consisted of aiding and abetting the evasion of payment of a third

party’s tax liability. We resolve this question in respondent’s favor.

                                     Background

      The parties have submitted the case for decision without trial under Rule

122. Relevant facts have been stipulated or are otherwise included in the record.

See Rule 122(a). Pursuant to rule 201 of the Federal Rules of Evidence, we take

judicial notice of certain filings in petitioner’s criminal case. See United States v.
                                        -4-

Bontrager, No. 2:12-CR-00052-RAJ (W.D. Wash.) (Mar. 11, 2014). Petitioner

resided in Arizona when he filed his petition.2

      Petitioner, Jason Bontrager, is the son of Winston G. Bontrager (Winston).

In 1994 Winston was convicted of conspiracy to commit wire fraud, ordered to

pay restitution of $687,000, and sentenced to prison for several years. About the

time when he was released from prison, the IRS assessed against him $185,346 of

Federal income tax for 1994.

      In 1997 petitioner lived in Everett and Snohomish, Washington. Then aged

26, he had completed some coursework at Seattle University and had worked at

several real estate title firms. In March 1997 he established his own real estate

firm, Alexandria Investment Co., Inc. (AIC), of which he was the president and

(initially) the sole shareholder.

      From age seven until well into his adulthood, petitioner had had little con-

tact with his father. Shortly after Winston was released from prison, however, he

moved to nearby Bellevue, Washington, and offered to help petitioner with the

real estate business. Unwisely perhaps, petitioner accepted his father’s offer.


      2
       Absent stipulation to the contrary, appeal of this case would lie to the U.S.
Court of Appeals for the Ninth Circuit. See sec. 7482(b)(1)(G). Where relevant to
the discussion, we note that court’s precedent. See Golsen v. Commissioner, 54
T.C. 742, 757 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971).
                                          -5-

Winston thereafter played a significant role in the business, exercising substantial

control over financing arrangements and negotiating terms for complex real estate

deals.

         Winston, petitioner, and others eventually became the subjects of a Federal

investigation into various crimes, including tax crimes and mortgage fraud. That

investigation revealed (among other things) that Winston had evaded payment of

his outstanding Federal tax and restitution liabilities by using petitioner’s real es-

tate business as a front to conceal Winston’s income and assets.

         On February 29, 2012, the U.S. Department of Justice filed a criminal infor-

mation against petitioner in the U.S. District Court for the Western District of

Washington. The information alleged one count of violating section 7201 and 18

U.S.C. sec. 2. Section 7201 criminalizes any willful attempt “to evade or defeat

any tax imposed by this title [viz., title 26, U.S. Code] or the payment thereof.”

Title 18 U.S.C. sec. 2 provides that “[w]hoever commits an offense against the

United States or aids, abets, counsels, commands, induces or procures its commis-

sion, is punishable as a principal.”

         The information alleged that petitioner, from 1998 through 2010, had

criminally aided and abetted Winston in evading payment of Winston’s 1994

Federal income tax liability. Petitioner was alleged to have done this by using
                                        -6-

AIC and a related real estate company to help Winston conceal assets, income,

bank accounts, and business interests. The information alleged that petitioner had,

for example, issued corporate checks to Winston’s female acquaintance, had used

corporate funds to purchase a Rolls Royce for Winston’s use, had allowed Win-

ston to charge personal expenditures to a corporate credit card, had titled various

assets in the names of Winston’s nominees, and had used offshore accounts to

conceal Winston’s income and assets.

      That same day petitioner pleaded guilty as charged. Almost two years later,

on January 31, 2014, the District Court issued its judgment in petitioner’s criminal

case. The judgment entered on his plea stated that he was adjudicated guilty of

violating “26 U.S.C. § 7201.” It stated that his “Offense Ended” on August 9,

2010. And it described the “Nature of [his] Offense” as “Aiding and Abetting the

Evasion of Payment of Income Tax.”

      Petitioner was sentenced to one year in prison and three years of supervised

release. At the sentencing hearing the District Court described petitioner as an

upstanding member of his community but noted his “very significant role” in his

father’s tax-evasion scheme. The parties agreed that the Government’s overall tax

loss stemming from Winston’s unpaid 1994 tax liability was $727,096, i.e., in-
                                          -7-

come tax of $185,346, additions to tax totaling $90,781, and statutory interest of

$450,969.

      While acknowledging that he could be held liable for the full amount of the

tax loss, petitioner asked the sentencing court “to apportion the restitution obliga-

tion * * * and to assign ten percent of the total loss to * * *[him] as his separate

liability.” In light of petitioner’s lesser role in the overall scheme, the District

Court granted this request, apportioned 10% of the tax loss (or $72,710) to peti-

tioner, and ordered him to pay to the IRS restitution in that amount.

      Several months before his sentencing, on October 4, 2013, petitioner filed a

petition under chapter 7 of the Bankruptcy Code. During the bankruptcy proceed-

ing, the IRS filed a general unsecured proof of claim for $233,530, of which it

ultimately received $17,542 from the bankruptcy estate. On February 20, 2014,

several weeks after petitioner’s sentencing, the U.S. Bankruptcy Court for the

Western District of Washington closed the bankruptcy case by issuing an order of

discharge. That order noted that certain types of debts are not discharged in a

chapter 7 case, including “[d]ebts for most fines, penalties, forfeitures, or criminal

restitution obligations.”

      On June 9, 2014, the IRS assessed against petitioner, under section

6201(a)(4), the amount of restitution the District Court had ordered him to pay,
                                        -8-

$72,710. The IRS also assessed pursuant to section 6601(a) underpayment interest

of $165,508, calculated from the due date of Winston’s 1994 tax return. The IRS

applied a credit of $17,542 for the payment it had received from petitioner’s bank-

ruptcy estate.

      On June 3, 2015, after petitioner did not pay the balance of the liability on

notice and demand, the IRS filed an NFTL. Upon notification, petitioner timely

requested a CDP hearing. In his hearing request he contended that the restitution

was not assessable because it was ordered for failure to pay a tax that title 26 im-

posed upon his father rather than upon him.

      Petitioner’s hearing request was assigned to a settlement officer (SO) from

the IRS Appeals Office. The SO scheduled a telephone hearing for November 4,

2015. At the hearing petitioner challenged the validity of the assessment and

sought withdrawal of the lien. He contended that the assessment was invalid, in

whole or in part, because: (1) the IRS had no legal authority to assess the restitu-

tion, (2) the restitution obligation had been discharged in bankruptcy, (3) the IRS

had no legal authority to assess underpayment interest, and (4) the assessment was

improperly recorded as a liability on his 1994 tax module. He did not request a

collection alternative.
                                        -9-

      The SO rejected all four arguments. On February 8, 2016, the IRS issued

petitioner a notice of determination sustaining the NFTL filing, and he timely

petitioned this Court for redetermination. On May 15, 2017, the parties submitted

this case for decision without trial under Rule 122.

      On March 6, 2018, the parties filed a stipulation of settled issues in which

respondent conceded that, under this Court’s decision in Klein v. Commissioner,

149 T.C. __ (Oct. 3, 2017), petitioner is not liable for underpayment interest under

section 6601(a)(1) on the $72,710 restitution-based assessment. In light of that

concession, the issues remaining in live dispute are whether the SO erred in deter-

mining that: (1) the IRS had authority under section 6201(a)(4) to assess the resti-

tution and (2) the restitution obligation had not been discharged in bankruptcy.3

                                    Discussion

I.    Standard of Review

      Petitioner challenges the restitution-based assessment of $72,710. We treat

this amount as being the “underlying tax liability” in this case. See Klein, 149

T.C. at __ (slip op. at 13). The Code expressly precludes review of the amount of

      3
        The parties had originally presented, as a third question for review, whether
the restitution obligation should be assessed on petitioner’s 1994 or 2014 tax mod-
ule. Given respondent’s concession that petitioner is not liable for underpayment
interest, that question no longer has any practical importance for this case, and we
therefore decline to address it.
                                        - 10 -

restitution ordered by the sentencing court. See sec. 6201(a)(4)(C) (“The amount

of such restitution may not be challenged by the person against whom assessed on

the basis of the existence or amount of the underlying tax liability in any proceed-

ing authorized by this title[.]”).

      When the taxpayer’s underlying liability is not properly at issue, the Court

reviews the SO’s determination for abuse of discretion. Goza v. Commissioner,

114 T.C. 176, 181-182 (2000). In this case our evaluation of the questions pre-

sented turns largely on issues of law. The standard of review we apply thus makes

little difference; as a rule, we must reject the SO’s determinations to the extent

they were based on erroneous views of the law. See Kendricks v. Commissioner,

124 T.C. 69, 75 (2005) (“Whether characterized as a review for abuse of discretion

or as a consideration ‘de novo’ (of a question of law), we must reject erroneous

views of the law.”); Swanson v. Commissioner, 121 T.C. 111, 119 (2003) (“If

respondent’s determination was based on erroneous views of the law and peti-

tioner’s unpaid liabilities were discharged in bankruptcy, then we must reject re-

spondent’s views and find that there was an abuse of discretion.”).

II.   Validity of Assessment

      The IRS can make a restitution-based assessment only to the extent author-

ized by section 6201(a)(4)(A). That section provides that the Secretary “shall as-
                                        - 11 -

sess and collect the amount of restitution under an order pursuant to section 3556

of title 18, United States Code, for failure to pay any tax imposed under this title

[viz., title 26] in the same manner as if such amount were such tax.” The parties

agree that the restitution obligation at issue arose “under an order pursuant to sec-

tion 3556 of title 18.”4 They disagree, however, as to whether this restitution was

ordered “for failure to pay any tax imposed under this title.”

      The restitution petitioner was ordered to pay equals 10% of the Govern-

ment’s loss attributable to Winston’s unpaid tax liability for 1994. In petitioner’s

view this restitution falls outside the scope of section 6201(a)(4) because it was

ordered for failure to pay a tax that title 26 imposed, not upon him, but upon his

father. Petitioner thus reads “tax imposed under this title,” as used in section

6201(a)(4), to mean “tax imposed upon him under this title.” The answer to the

question presented depends on whether this gloss is correct.


      4
        Title 18 U.S.C. sec. 3556 (2012) provides that “[t]he court, in imposing a
sentence on a defendant who has been found guilty of an offense[,] * * * may
order restitution in accordance with section 3663.” The latter section permits the
court to “order restitution in any criminal case to the extent agreed to by the
parties in a plea agreement.” 18 U.S.C. sec. 3663(a)(3) (2012). Tax crimes under
title 26 are covered by 18 U.S.C. sec. 3663(a)(3). See United States v. Soderling,
970 F.2d 529, 534 (9th Cir. 1992) (“[S]ection 3663(a)(3) applies to offenses under
any title of the United States Code.”). Petitioner agreed to pay restitution as a part
of his guilty plea, which left the amount of the restitution to be apportioned by the
sentencing court pursuant to its authority under 18 U.S.C. sec. 3664(h) (2012).
                                        - 12 -

      “We begin our inquiry, as we must, by considering the plain and ordinary

meaning of the text Congress enacted.” Klein, 149 T.C. at __ (slip op. at 17)

(citing Jimenez v. Quarterman, 555 U.S. 113, 118 (2009), and Rainero v. Archon

Corp., 844 F.3d 832, 837 (9th Cir. 2016)). Section 6201(a)(4) authorizes assess-

ment and collection of restitution “under an order pursuant to section 3556 of title

18.” The latter section provides (as relevant here) that “[t]he court, in imposing a

sentence on a defendant who has been found guilty of an offense[,] * * * may or-

der restitution in accordance with [18.U.S.C.] section 3663.”

      We thus start with the District Court’s sentencing order. That order stated

that petitioner was adjudicated guilty of violating “26 U.S.C. § 7201.” Section

7201 criminalizes any willful attempt “in any manner to evade or defeat any tax

imposed by this title or the payment thereof.” The elements of a section 7201 of-

fense are “(1) willfulness; (2) the existence of a tax deficiency; and (3) an affirm-

ative act constituting an evasion or attempted evasion of the tax.” United States v.

Kayser, 488 F.3d 1070, 1073 (9th Cir. 2007) (citing Sansone v. United States, 380

U.S. 343, 351 (1965)). The second element is equivalent to a failure to pay tax.

See United States v. DeTar, 832 F.2d 1110, 1113 (9th Cir. 1987) (noting that the

first two elements of a section 7201 offense are the same as the elements of an

offense under section 7203, which criminalizes any willful failure to pay tax);
                                        - 13 -

United States v. Fisher, 607 F. App’x 645, 646 (9th Cir. 2015) (“It is undisputed

that § 7203 is a lesser included offense of § 7201.”).

      The sentencing order described the nature of petitioner’s offense as “aiding

and abetting the evasion of payment of income tax,” within the meaning of 18

U.S.C. sec. 2. This section does not make “aiding and abetting” a distinct crime.

Rather, it provides that a person who “aids, abets, counsels, commands, induces or

procures” the commission of an offense against the United States “is punishable as

a principal.” See United States v. Snider, 957 F.2d 703, 706 (9th Cir. 1992) (“Sec-

tion 2 does not establish ‘an offense’ of which a defendant may be convicted; it

merely determines which offenders may be punished as principals.”). Restitution

orders in this setting are thus based on the underlying crime, not on the aiding and

abetting.

      Section 6201(a)(4) authorizes the Commissioner to assess and collect the

amount of restitution under a sentencing order “for failure to pay any tax imposed

under this title.” Petitioner was convicted of violating section 7201. He was thus

found guilty of attempting “to evade or defeat [a] tax imposed by this title or the

payment thereof.” Because failure to pay a tax imposed by title 26 was an element

of the offense with which petitioner was charged, and because he was convicted of
                                        - 14 -

that offense, section 6201(a)(4) by its terms authorized respondent to assess and

collect the amount of restitution that petitioner was ordered to pay.

      Petitioner notes correctly that the tax, the payment of which he was con-

victed of evading, was not originally imposed upon him by title 26. But neither

section 7201 nor section 6201(a)(4) requires that this be the case. Section 7201

criminalizes any willful attempt to evade payment of “any tax imposed by this

title.” Section 6201(a)(4) authorizes the assessment of restitution “for failure to

pay any tax imposed under this title.” Petitioner was ordered to pay restitution for

aiding and abetting Winston’s failure to pay Federal income tax. That tax was

clearly “[a] tax imposed under this title.”

      The phrase “any tax imposed under this title” in section 6201(a)(4) contains

no limiting language. “Read naturally, the word ‘any’ has an expansive meaning.”

United States v. Gonzales, 520 U.S. 1, 5 (1997). In Gonzales, the Supreme Court

was called upon to interpret the meaning of the phrase, “any other term of impris-

onment” as used in 18 U.S.C. sec. 924 (c)(1) (1994). Because Congress had in-

cluded no language limiting the scope of “any,” the Court held that “any * * *

term of imprisonment” must be construed “as referring to all ‘terms of imprison-

ment,’ including those imposed by state courts.” See Gonzales, 520 U.S. at 5.
                                        - 15 -

      Reasoning similarly here, we conclude that the term “any tax imposed under

this title” includes all taxes imposed under title 26. The tax that petitioner was

convicted of willfully attempting to evade the payment of--Winston’s income tax

liability for 1994--was “[a] tax imposed under this title.” Because “failure to pay

[a] tax imposed under this title” was an element of the crime of which petitioner

was convicted, section 6201(a)(4) authorized respondent to assess and collect that

restitution. The statute’s text does not support the limiting gloss that petitioner

seeks to place upon it.

      The statute’s purpose likewise counsels rejection of petitioner’s proposed

construction. Historically, principal responsibility for restitution has lain with the

Financial Litigation Unit (FLU) at the U.S. Attorney’s Office. Klein, 149 T.C. at

__ (slip op. at 16). “The FLU reported restitution payments to the sentencing

court and eventually transmitted the funds to the IRS.” Ibid. But before 2010 the

IRS typically had no account receivable against which restitution payments it re-

ceived could be credited, because it usually had not yet completed (or even begun)

a civil examination of the defendant taxpayer and assessed the tax. Section

6201(a)(4) cured this problem by allowing the IRS to assess and collect the resti-

tution amount immediately “as if such amount were such tax.” See Klein, 149

T.C. at __ (slip op. at 26-27).
                                         - 16 -

      If the IRS cannot assess restitution of the sort involved here, the problem

Congress aimed to solve in 2010 would be perpetuated for a subset of restitution

payments. Indeed, the problem would be particularly acute in this context. The

IRS cannot commence an examination of petitioner to determine Winston’s 1994

civil tax liability. Thus, it could never make an assessment against petitioner for

that tax unless permitted to do so by section 6201(a)(4). And this problem could

arise in the case of restitution ordered, not just for violations of section 7201, but

for violations of other Code provisions. See, e.g., secs. 7202 (willful failure to

collect or pay over tax) and 7203 (willful failure to file, supply information, or pay

tax). We decline to find a gap in the statutory scheme in the absence of any textu-

al evidence suggesting that such gap exists.

      We thus conclude that section 6201(a)(4) authorized the IRS to assess the

restitution at issue. That section directs the Commissioner to assess and collect

restitution ordered “for failure to pay any tax imposed under this title.” Sec.

6201(a)(4)(A). Winston’s 1994 Federal income tax was “[a] tax imposed under

this title,” and petitioner was convicted of violating section 7201, which involved

willful failure to pay that tax. The plain language of the statute, supported by the
                                         - 17 -

policy goal Congress sought to achieve, justifies the assessment of restitution in

these circumstances.5

III.   Bankruptcy Discharge

       Petitioner asserts that his restitution obligation was discharged in his 2013-

2014 bankruptcy proceeding. Under the Bankruptcy Code, restitution obligations

imposed under title 18 are generally excepted from a chapter 7 discharge. See 11

U.S.C. secs. 523(a)(13), 727(b) (2012); Olson v. United States (In re Olson), 154

B.R. 276, 285 (Bankr. D.N.D. 1993) (“[R]estitution owing to the IRS as part of the

Debtor’s criminal sentence is not dischargeable.”). Indeed, the discharge order

that petitioner received stated that “[d]ebts for most fines, penalties, forfeitures, or

criminal restitution obligations” are not discharged.

       However, certain actions taken by a creditor during a bankruptcy proceed-

ing may result in the creditor’s waiving the nondischargeability of his claim. See,

e.g., In re Garrett, 2017 WL 2990376, at *4 (B.A.P. 9th Cir. July 14, 2017) (hold-

ing that creditor waived claim of nondischargeability by failing to raise certain

       5
        Petitioner contends that he cannot be held responsible for his father’s tax
liability for 1994, which arose before he and Winston began doing business to-
gether. This is an impermissible attempt to relitigate the criminal case. Petitioner
pleaded guilty to a violation of section 7201, and he was punishable as a principal
for that crime. He was ordered to pay restitution for evading payment of a tax
imposed under title 26, and he cannot now challenge the restitution he was ordered
to pay. See sec. 6201(a)(4)(C).
                                         - 18 -

claims during the bankruptcy case). Petitioner asserts that a waiver occurred here.

Specifically, he contends that the IRS waived the nondischargeability of the resti-

tution obligation by filing a claim as a general unsecured creditor in petitioner’s

chapter 7 case.

      Contrary to petitioner’s view, nothing in the Bankruptcy Code prevents a

creditor of a nondischargeable debt from filing a claim. Generally, all properly

filed creditor claims are allowed in a bankruptcy case unless expressly disallowed

by the Bankruptcy Court under a specific provision. See 11 U.S.C. sec. 502(a),

(b), (d), (e) (2012). None of these provisions disallows claims for nondischarge-

able debts. And no provision of the Bankruptcy Code prevented the IRS from

filing a claim or attached any adverse consequences to its doing so.

      Further, the IRS properly filed its claim as a general unsecured creditor.

Because the IRS had not assessed the restitution obligation at the time of peti-

tioner’s bankruptcy, let alone filed an NFTL, it was required to file its claim as a

general unsecured creditor. See In re Bennett, 237 B.R. 918, 923 (Bankr. N.D.

Tex. 1999) (holding that the IRS could file only a general unsecured claim when it

had not filed an NFTL before the commencement of the chapter 7 case). Peti-

tioner has cited no legal authority for the proposition that the IRS’ filing of this

claim effected a waiver of any kind.
                                        - 19 -

      In sum, we conclude that petitioner’s restitution obligation was not dis-

charged in his prior bankruptcy and that section 6201(a)(4) authorized the Com-

missioner to assess and collect that amount as if it were a tax. Taking account of

respondent’s concession that the restitution-based assessment does not attract

underpayment interest under section 6601(a), we will sustain the collection action

as set forth in the notice of determination.

      To reflect the foregoing,


                                                 An appropriate decision will be

                                        entered.
