A restitution-based assessment is the entry the IRS makes on your tax account after a federal court orders you to pay restitution in a criminal tax case. Once the assessment is recorded, the IRS treats the court-ordered amount as if it were an unpaid tax and uses its ordinary collection tools to recover it: federal tax liens, bank levies, wage garnishments, and the rest. The mechanism was created by Congress in 2010 and sits alongside, not in place of, any civil tax the IRS decides to assess for the same years.1Public Law 111-237 (Firearms Excise Tax Improvement Act), adding IRC § 6201(a)(4).
Where the Assessment Comes From
A sentencing judge in a federal tax case will typically order restitution to the IRS, either under 18 U.S.C. § 3663 or as a condition of a plea agreement, probation, or supervised release. Tax offenses charged under Title 26 are not on the mandatory restitution list, but restitution shows up in nearly every federal tax conviction anyway because prosecutors write it into plea agreements and judges impose it as a supervision condition.
Before 2010, the IRS had no clean way to record that court order in its collection systems. Section 6201(a)(4) of the Internal Revenue Code fixed that. It directs the IRS to assess the restitution amount and collect it “in the same manner as if such amount were such tax.” That single phrase is what pulls the criminal order into the civil collection machinery.
The IRS cannot record the assessment while the criminal case is still moving. All appeals of the criminal judgment must be concluded and the right to appeal must have expired. When that window closes, the agency posts the amount from the sentencing order directly onto your account. The IRS is bound by the figures in the judgment and cannot raise the number on its own. Nothing stops it from opening a separate civil examination and assessing additional tax, penalties, and interest for the same years through the normal channels.
What You Can and Cannot Challenge
The most important thing to understand about an RBA is that the amount is locked. You cannot challenge the existence or amount of the underlying tax liability in any IRS proceeding, and that bar extends to refund suits under IRC § 7422. The criminal court already determined the loss, and that number controls. If you discover a legitimate deduction after sentencing that no one raised at the time, the RBA figure does not move.
You still have procedural rights when the IRS starts collecting. If the agency issues a levy notice, you can request a Collection Due Process hearing. But the scope of that hearing is narrow. Under IRC § 6201(a)(4)(C), you cannot use it to argue about how much you owe. You can raise whether the IRS followed proper notice procedures, whether the proposed collection action fits your circumstances, and whether an alternative like an installment agreement makes sense.
Interest and Penalties on the Assessment
The IRS cannot add underpayment interest under IRC § 6601 to an RBA. In Klein v. Commissioner (2017), the Tax Court held that criminal restitution is not a “tax imposed by” the Internal Revenue Code, so the statutory interest provision for tax underpayments does not reach it. The IRS accepted that result and issued Chief Counsel Notice 2019-004 telling its personnel to abate RBA interest when taxpayers challenge it. The failure-to-pay penalty is treated the same way.
There is one exception. If the sentencing court’s own order includes interest as part of the restitution amount, the IRS can assess that court-ordered interest, because it is baked into the number the judge signed. Interest on the criminal judgment itself is a separate track: under 18 U.S.C. § 3612, any restitution order above $2,500 accrues interest unless paid in full within 15 days of judgment, at a rate tied to the one-year Treasury yield. That interest belongs to the criminal case, not to the RBA.
If penalties or interest were assessed on your RBA before Klein, you can file Form 843 (Claim for Refund and Request for Abatement) to ask for correction. The IRS Criminal Restitution Coordinator is the office responsible for adjusting the account.
The Parallel Civil Assessment
A tax conviction usually produces two entries on your IRS account for the same tax years: the RBA and a civil tax assessment. Both come from the same underlying conduct. The civil assessment typically includes underpayment interest, failure-to-file penalties, and often a 75% civil fraud penalty, none of which sit on the RBA. That is why the civil balance for a given year is almost always the larger of the two.
The government treats these as duplicate claims against the same loss and applies a one-satisfaction rule so it does not collect twice. A payment toward the criminal restitution reduces the civil balance for the same period, and a payment toward the civil assessment reduces the RBA. In practice, the cross-credits do not always post cleanly between the two account modules. Pulling account transcripts regularly and comparing them to Department of Justice payment records is the most reliable way to catch a credit that failed to move.
The two liabilities also expire on different clocks. Criminal restitution stays enforceable for 20 years from the date of judgment or 20 years after release from prison, whichever is later. A civil tax assessment carries the standard 10-year collection statute under IRC § 6502. You can watch the civil liability drop off while the RBA keeps running for another decade.
Who Collects, and How
Two agencies can come after you at once. The IRS uses its administrative collection powers on the RBA: it can file a Notice of Federal Tax Lien that attaches to current and after-acquired property, levy bank accounts, garnish wages, and seize other assets without going back to court. The Department of Justice’s Financial Litigation Unit retains independent authority over the criminal restitution judgment under 18 U.S.C. § 3613 and can enforce it through federal civil proceedings, including garnishments and property sales.
If you are paying both, coordinate carefully. Payments need to be identified so the credit posts against the right balance, and you should verify on transcript that it did.
Settlement Is Limited, and Your Passport May Be at Risk
An Offer in Compromise is not available for a restitution-based assessment. The IRS lacks authority to compromise it because the underlying obligation is a criminal court order rather than an administrative tax determination. If you also owe a separate civil liability for the same years, that civil portion can potentially be compromised, but a successful offer on the civil side does nothing to the RBA. Resolving the civil debt for a fraction of face value while still owing the full restitution amount is a realistic outcome.
An unpaid RBA can also cost you your passport. Under IRC § 7345, the IRS certifies seriously delinquent tax debt to the State Department, which can deny a new passport application or revoke one you already hold. The threshold sits at $66,000 in assessed, legally enforceable federal tax debt, adjusted annually. The statute does not carve RBAs out of that number, and because an RBA is assessed and treated “in the same manner as” a tax, it likely counts. A large RBA paired with a filed lien or active levy can trigger certification on its own, without any civil tax debt in the picture.
Fixing Errors on the Account
Mistakes in the handoff between the courts and the IRS are common enough to plan for. The two situations worth watching are pre-Klein interest and penalty charges still sitting on the account, and cross-credits between the RBA and the civil balance that never posted.
For unauthorized interest or failure-to-pay penalties, Form 843 goes to the IRS Criminal Restitution Coordinator. If the criminal judgment itself is vacated or modified on appeal, the IRS adjusts the RBA through an internal process using Form 3870 (Request for Adjustment) and Form 3177 (Notice of Action for Entry on Master File), routed through Technical Services and Centralized Case Processing. Send the amended judgment or appellate order to both the IRS and the probation office. The two systems do not talk to each other reliably, and an order that changes your obligation on one side will not always change it on the other without prompting.