IRS and Jeopardy Assessment

It has been almost four years since we lost the great Alex Trebek, the host of Jeopardy, one of the greatest game shows in television history. Trebek was the host of Jeopardy for 37 years and Jeopardy has not been the same since he died. I can’t hear this song without thinking of Jeopardy and Alex Trebek. For a few laughs search Saturday Night Live Jeopardy and you’ll find some great SNL Celebrity Jeopardy games like this or this.

I was reminded of Jeopardy when I read the recent decision from a U.S. District Court in Florida upholding the IRS jeopardy assessment against Gunter Grant Geiger, as the fiduciary of his father’s estate. Jeopardy assessments, under IRC Section 6861, bypass normal assessment and collection procedures and are used by the IRS when tax collection would be endangered if normal assessment and collection procedures are used because assets are being depleted. Geiger’s father had participated in the IRS Offshore Voluntary Disclosure Program and owed the IRS $6.3 million but died after making only one payment of $1.9 million. Geiger refused to agree to the terms of his father’s OVDP agreement and started transferring estate assets. The IRS removed Geiger’s father from the OVDP, issued a $15 million assessment against the estate, along with the jeopardy assessment. Thereafter, Geiger filed the suit seeking judicial review of the jeopardy assessment.

In granting the government’s motion for summary judgement, the court said, “What the evidence shows is a systematic pattern … the Plaintiff uses the estate’s assets, which he decided to disburse to himself, for his personal expenditures when he chooses. Because the assets in the Wyoming trusts are insufficient to pay the disputed tax is this case, should the IRS prevail, every dollar that is spent or lost from the trusts in the future further depletes the funds available to pay the estate’s tax liability”.

If you are not a fan of Jeopardy, please refer to "Jeopardy" the 1983 hit by the Greg Kihn Band and imagine an IRS Revenue Officer substituting the word “tax” for the word “love” in the lyrics and you’ll get the idea behind a jeopardy assessment.

If you have any questions on this or any other tax issues, please feel free to contact me at jcrouch@meadowscollier.com.