Sen.
Jim
Justice
of
West
Virginia
and
his
wife,
Cathy,
reached
an
agreement
with
the
I.R.S.
to
pay
over
$5
million
in
back
federal
income
taxes.
This
agreement
comes
hours
after
the
Department
of
Justice’s
Tax
Division
filed
a
civil
lawsuit
in
federal
court
against
the
Justices
for
the
unpaid
taxes.
The
senator
claims
that
the
lawsuit
was
politically
motivated.
Justice,
a
Republican,
took
office
in
January
2025,
replacing
Democrat-turned-independent
Joe
Manchin
who
chose
not
to
run
for
reelection.
Prior
to
that,
he
was
the
governor
of
West
Virginia,
initially
as
a
Democrat
and
then
switching
to
the
Republican
party.
The
complaint
filed
on
November
24,
2025,
alleges
that
the
Justices
owe
$5,164,739.75
for
income
taxes
from
2009
that
were
assessed
on
November
25,
2015.
In
2009,
Justice
sold
one
of
his
coal
companies
to
Russian
coal
company
Mechel
for
$436
million
in
cash
and
shares.
Looking
at
the
dates
may
raise
questions.
First,
if
the
income
tax
was
from
2009,
why
was
it
assessed
on
November
25,
2015?
In
most
cases,
the
taxes
are
assessed
when
the
taxpayer
files
their
tax
returns,
with
the
earliest
date
being
April
15
of
the
following
year.
Some
people
file
extensions
and
file
by
October
15
of
the
following
year.
If
the
tax
was
assessed
five
years
after
the
due
date,
it
is
usually
because
the
tax
returns
were
filed
five
years
late
or
because
there
was
a
reassessment
due
to
a
tax
audit.
Since
the
case
has
been
settled,
it
is
assumed
that
the
Justices
are
not
challenging
the
assessment
date.
The
next
popular
question
would
be
whether
the
IRS
can
legally
collect
on
a
tax
that
is
15
years
old.
By
law,
the
IRS
has
10
years
from
the
date
of
assessment
to
collect
the
balance
in
full.
The
date
of
assessment
is
used
instead
of
the
due
date
of
the
tax
return
because
the
tax
amount
due
is
unknown
until
the
taxpayer
files
the
tax
return.
In
rare
cases
of
habitual
nonfilers,
the
IRS
can
issue
substitute
for
returns
(SFR)
which
acts
as
a
substitute
return
without
claiming
any
eligible
deductions.
When
these
SFRs
are
filed
by
the
IRS,
that
becomes
the
assessment
date
and
the
10-year
time
limit
begins
then.
The
10-year
limit
is
administratively
extended
in
certain
circumstances,
usually
when
the
IRS
is
forbidden
by
law
to
collect.
The
two
most
common
cases
are
when
the
taxpayer
files
bankruptcy
and
when
the
taxpayer
files
an
Offer
in
Compromise
which
proposes
to
settle
the
debt
for
less
than
they
owe.
When
either
a
bankruptcy
or
Offer
in
Compromise
is
filed,
collection
actions
are
stopped
until
bankruptcy
is
lifted
or
a
settlement
offer
is
rejected.
But
in
extreme
cases,
the
government
can
extend
the
10-year
collection
statute
of
limitations
by
filing
and
winning
a
civil
lawsuit,
which
is
what
they
did
with
the
Justices.
The
2009
tax
was
assessed
on
November
25,
2015,
and
the
lawsuit
was
filed
on
November
24,
2025,
one
day
before
the
collection
statute
would
have
expired.
In
recent
years,
the
IRS
has
respected
the
10-year
statute
of
limitations.
The
IRS
seldom
resorts
to
civil
lawsuits
in
order
to
extend
the
collection
time
limit.
The
IRS
must
consider
resolving
a
debt
internally,
in
addition
to
the
economic
value
of
the
lawsuit.
If
the
IRS
feels
a
lawsuit
is
appropriate,
they
refer
the
case
to
the
Tax
Division
of
the
Department
of
Justice,
which
also
considers
the
feasibility
of
the
lawsuit
before
doing
so.
So
was
this
lawsuit
politically
motivated?
The
senator
did
not
provide
details
or
evidence
to
support
this
claim.
But
Sen.
Justice’s
public
image
may
have
played
a
part
in
the
IRS
decision.
According
to
the
IRS
Internal
Revenue
Manual,
once
a
decision
is
made
to
litigate,
collection
personnel
should
take
every
effort
to
ensure
its
success.
Because
they
believe
a
timely
and
successful
court
action
can
have
a
positive
impact
on
voluntary
compliance.
While
the
case
has
been
settled
hours
after
it
began,
it
is
unclear
when
the
tax
will
be
paid.
Steven
Chung
is
a
tax
attorney
in
Los
Angeles,
California.
He
helps
people
with
basic
tax
planning
and
resolve
tax
disputes.
He
is
also
sympathetic
to
people
with
large
student
loans.
He
can
be
reached
via
email
at [email protected].
Or
you
can
connect
with
him
on
Twitter
(@stevenchung)
and
connect
with
him
on LinkedIn.