The One Creditor You Cannot Structure Against.

The honest answer is the one we give first, because everything else depends on it. The tax authority is not a creditor you plan against. It assesses without suing. It liens without a judgment. It levies without a court. Against a private claimant, the architecture of a properly seasoned structure does real work — it changes what the claimant can reach and how long it takes. Against the sovereign’s collection machinery, the protections that matter are of an entirely different kind: they are procedural, they are documentary, and they are available only to the client who complied in the first place.

On June 29, 2026, two courts issued decisions on the same day that make this point better than any advisory letter could. In White v. Commissioner, T.C. Memo. 2026-56, Docket No. 7838-25L (T.C. June 29, 2026) (Lauber, J.), the United States Tax Court refused to sustain a $1.1 million levy because it would have accelerated payments the government had already agreed, by contract, to take in installments. In Besicorp Group, Inc. v. Commissioner, Nos. 23-296(L), 23-299, 23-302, 23-321, 23-353, 23-359 (2d Cir. June 29, 2026), the Second Circuit reversed the Tax Court and held that an IRS Appeals Officer cannot sustain a lien or levy without verifying that the penalties being collected received the written supervisory approval the Code requires — even where the underlying liability was litigated to final judgment years earlier.

Two taxpayers with no sympathetic facts between them. Two wins, both on procedure. There is a planning lesson in that, and it is not the one clients expect.

Joseph White is not a case study in good behavior. He earned substantial income as an electrical contractor, failed to file returns for 2000 through 2008, and filed nine years of delinquent returns in 2009 only at the insistence of his ex-wife’s attorneys in a divorce proceeding — without payment. During his collection dealings with the Service he submitted a Form 433-A containing “materially false statements about his assets and liabilities,” and made an offer in compromise he then failed to document. Throughout, he “was secretly diverting money from two corporations for his personal use.” He filed for bankruptcy in 2014; the bankruptcy court dismissed the case in 2016, finding he had filed and proceeded in bad faith (White, T.C. Memo. 2026-56, at 3–4).

In 2016 the Justice Department charged him under §7201 with willfully attempting to evade payment of tax for 2000–2011, alleging he did so by diverting corporate funds for personal consumption, by creating a Nevada limited liability company as a nominee, and by concealing gambling income. He pleaded guilty. In February 2017 he was sentenced to 24 months in prison and ordered to pay $1.2 million in restitution — the sentencing court’s best estimate of his outstanding federal tax liabilities for those years (id. at 4–5).

Pause there, because that paragraph is this publication’s recurring theme in its harshest register. A nominee LLC formed to hold assets away from a claim that has already accrued is not a structure. It is an overt act. In the private-creditor context it produces a badge of fraud and a voidable transfer. Here it produced a count in a criminal information and a custodial sentence. Improvised shielding does not become safer because the claimant is the government. It becomes more dangerous.

So how did this taxpayer win?

He won because of what happened afterward, and because of paper. In April 2017 the IRS made restitution-based assessments (“RBAs”) of $1.2 million under §6201(a)(4), which authorizes the Service to assess and collect court-ordered restitution “in the same manner as if such amount were such tax.” RBAs are formidable: they are exempt from the usual assessment limitations period, exempt from the ordinary deficiency restrictions, and — under §6201(a)(4)(C) — the taxpayer may not challenge the amount on the basis of the underlying liability in any proceeding (I.R.C. §§6201(a)(4)(A)–(C), 6501(c)(11), 6213(b)(5); see Carpenter v. Commissioner, 152 T.C. 202, 210 (2019), aff’d, 788 F. App’x 187 (4th Cir. 2019); Klein v. Commissioner, 149 T.C. 341, 361–62 (2017)).

Separately, in September 2022 the Justice Department sued under §6502 to reduce the 2000–2011 liabilities to judgment, by then grown to $1,893,404. In September 2023 the parties settled: White consented to judgment in that amount, and the United States agreed to treat the judgment as satisfied and “take no further collection action” for those years if he paid $1.6 million by July 1, 2027 on a specified monthly schedule. He then did what he had never previously done. He paid — every installment, on time, from November 2023 forward, nearly $1 million by March 2026, documented by declaration and undisputed by the government (id. at 6–7, 11).

Meanwhile the Service’s collection arm pressed a levy for $1,101,788 — the unpaid balance of the RBAs — and Appeals sustained it, reasoning that the RBA was “a separate liability” not included in the DOJ judgment (id. at 7–8).

Judge Lauber rejected that. The RBAs, he held, were “not separate from petitioner’s personal income tax liabilities for 2000–2011. They were identical to his personal income tax liabilities for those years, and they simply afforded the IRS a distinct mechanism for collecting those liabilities” (id. at 12). By the time Appeals acted, the levy exceeded the actual remaining balance by roughly $153,000 — and more fundamentally, sustaining it would have collected immediately what the settlement entitled the taxpayer to pay over the ensuing 27 months. “By permitting acceleration of the payments in this way, the SO’s determination was fundamentally inconsistent with the DOJ settlement and with petitioner’s contract rights thereunder. It was therefore an abuse of discretion” (id. at 11–12). The Court held the settlement officer had at a minimum failed the §6330(c)(3) balancing test — the immediate collection was “more intrusive than necessary” (id. at 13).

Note precisely what did the work. Not a trust. Not an entity. A negotiated agreement, honored to the letter, evidenced by a payment record the government could not dispute.

The Second Circuit’s decision comes from the opposite end of the taxpayer spectrum — six corporate taxpayers that, from 1999 to 2003, participated in what the IRS concluded were “intermediary tax shelter transactions designed to avoid the payment of taxes” (Besicorp, slip op. at 20). Their deficiencies and penalties were determined, litigated, and upheld by the Tax Court in earlier proceedings; none of them raised supervisory approval then (id. at 20–21). Millions in penalties and accrued interest remained unpaid, and the Service moved to collect by lien and levy.

At their collection due process hearings, the taxpayers argued that the Appeals Officer had not verified — as §6330(c)(1) requires him to verify that “the requirements of any applicable law or administrative procedure have been met” — that the penalties satisfied §6751(b)(1). That provision states that no penalty “shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination.” The Service produced no evidence that the approval had been obtained, and no evidence that anyone had checked. Its position was that verification was unnecessary because the penalties had already been adjudicated, and that res judicata barred the argument in any event (id. at 2, 5–7).

The Second Circuit disagreed, and did so on the plainest possible ground: “We interpret these provisions literally, as we are required to do, and hold that Section 6751(b)’s supervisory approval requirement is a ‘requirement[] of . . . applicable law or administrative procedure’ encompassed by Section 6330(c)(1)” (id. at 7). The panel was careful about the remedy’s boundaries — the failure “did not invalidate the penalties or overall tax liability owed by the Taxpayers, but it did invalidate the Appeals Officer’s determination that the liens were proper and the Taxpayers’ properties could be levied” (id. at 2–3). The Court stressed that its ruling “does not disturb the Tax Court’s earlier, underlying liability determinations or other collection techniques: it bears only on whether the IRS may collect the amounts of the penalties owed by the Taxpayers by lien or levy” (id. at 27–28). Reversed and remanded — with the door left open for the government to establish, on remand, that approval was in fact timely obtained.

The measuring stick the Court applied is the one it set in Chai: the approval must have been obtained “no later than the date the IRS issue[d] the notice of deficiency (or file[d] an answer or amended answer) asserting such penalty” (id. at 28, quoting Chai v. Commissioner, 851 F.3d 190, 221 (2d Cir. 2017)). Approval after that point is too late. It is not a box to be ticked at collection time; it is a fact fixed years earlier, in a file, or not at all.

Read together, White and Besicorp describe the same landscape from two directions.

Neither taxpayer escaped the liability. White still owes $1.6 million under a payment plan running to July 2027, and the Besicorp taxpayers still owe their deficiencies, penalties, and interest — the Second Circuit said so expressly. Procedural wins against the sovereign constrain the manner and timing of collection. They do not extinguish the debt. Any client who reads these decisions as an escape hatch has misread them.

Both wins turned on documents that already existed or conspicuously did not. White’s leverage was a signed settlement plus a flawless 28-month payment record. The Besicorp taxpayers’ leverage was an empty space in the administrative file where a supervisor’s signature should have been. In each case the outcome was determined years before the hearing, by whether the paper was there.

And both are the reverse of the thing clients instinctively reach for. White’s nominee Nevada LLC did nothing for him except help send him to prison. What eventually protected him was compliance — belated, court-supervised, and meticulously performed.

We would put it this way to any client whose exposure includes a tax authority.

Structure is not a tax-collection defense, and should never be sold as one. The legitimate work of a seasoned, irrevocable, discretionary, independently administered structure lies elsewhere: private claimants, professional liability, matrimonial and succession risk, jurisdictional and political risk. Positioning it as a shield against assessed tax invites exactly the conduct — nominee entities, diverted receipts, concealed accounts — that converts a civil problem into a criminal one.

Against the fisc, the defensible position is compliance plus a complete record. Disclosure regimes are now the environment, not an obstacle within it. A structure that is fully reported is a structure whose protective features can be defended on their merits. One that is not reported has no merits to defend.

When an agreement is reached, perform it exactly. White stands for the proposition that a compromise is a contract and that the government’s own collection personnel are bound by it. That proposition is only worth something to a taxpayer who can prove, month by month, that he did what he promised. His declaration and payment record are the entire case.

Assume the file will be read by a stranger years from now. Besicorp is a reminder that in a dispute with the tax authority, both sides live or die by the contemporaneous record. The Service lost because its file could not show a signature obtained at the right moment. The same discipline cuts in both directions: valuations, appraisals, trustee minutes, distribution resolutions, board consents, and engagement letters are not administrative overhead. They are the evidence.

We have written many times that improvised protection creates evidence rather than safety. These two decisions add the corollary. Documented compliance creates leverage. It is a slower, duller, less satisfying form of protection than the one clients arrive asking about. It is also, when the counterparty is the government, close to the only form that works.