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When it comes to tax collection, the IRS isn’t the only government agency that you need to worry about. The Department of Justice can be involved in getting court judgments on tax payers and collecting back taxes. Generally, the tax situation has to be pretty serious for the Department of Justice to be involved, but it can and does happen.

If there is property owned clear, the tax debts are large in size, repeated pyramiding of payroll taxes, or there are exempt assets from a bankruptcy that the Government wants to pursue, the Department of Justice may get involved. As the IRS is settling back taxes fairly liberally, the questions comes up, “Will the Department of Justice compromise back tax debts?”

Dan Pilla of Tax Freedom Institute points out code section 7122(a) which states: “The Secretary may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense; and the Attorney General or his delegate may compromise any such case after reference to the Department of Justice for prosecution or defense.”

The law lets the Department of Justice compromise taxes, but the question is: will they do so? Referral of a tax case to the Department of Justice is generally pretty bad news. They have very broad collection and investigative power. Unlike the FBI, which is known for impeccable transparency, many say that the DOJ is much less clear and reasonable to deal with.

In representation of a taxpayer before the Department of Justice, you generally want to close out any issues over which they have jurisdiction as soon as possible. We want the case back in the hands of the Internal Revenue where we can get more reasonable resolutions of the case.