Source: U.S. Supreme Court
A Florida couple is making a legal argument that tax practitioners should be watching closely: if the IRS can penalize taxpayers for paying late, courts should be able to do the same to the government.
Ramzi and Catarina Akel filed a tax refund suit in early 2025 and settled by the end of the year. A federal court approved a consent judgment of $13.9 million plus interest on January 9, 2026. Four months later, they still have not received a dime.
The IRS initially said it needed time to process the refund and calculate overpayment interest. When the court ordered a status update in April, the government revealed it had discovered a requirement for an additional manual approval and suggested that six months is not an unusual processing window for this type of refund. The Akels were not satisfied with that answer.
On May 12, they filed a motion for sanctions asking the court to hold the government to the same standard it applies to taxpayers. Their argument centers on IRC Section 6651(a)(2), which imposes a penalty of up to 25 percent on unpaid tax liabilities when a taxpayer fails to pay on time. That penalty does not have a good faith exception. It does not pause for administrative complexity or staffing shortages. It runs from the due date, automatically.
The Akels argue that the government's obligation was fixed the moment the court signed the consent judgment, and that every month of nonpayment since January 9 should carry the same financial consequence a taxpayer would face for the same delay.
Their attorneys at Neiman Mays Floch & Almeida did not mince words: "When a taxpayer is late on a payment, the IRS doesn't care about internal inefficiencies or staffing shortages. The penalties run automatically, no matter the impact to the taxpayer."
The government is expected to raise sovereign immunity as a defense. The Akels have preemptively addressed that argument, noting that existing precedent on sovereign immunity applies to compensatory sanctions, while their motion seeks coercive ones designed to compel payment rather than punish.
Why This Matters to Your Practice
The Akels have the resources to hire experienced tax litigators to pursue this fight. Most of your clients do not. And this case is not an isolated situation. Their attorney pointed to the recent court ruling that extended Section 7508A disaster relief across the entire COVID period, meaning tens of millions of pandemic related refund claims are now potentially in the pipeline. If the IRS cannot process a single $20 million consent judgment in four months, practitioners need to prepare clients for significant delays on those claims as well.
For any client currently waiting on a refund judgment or negotiating a settlement with the IRS, document every milestone carefully. Establish payment deadlines in writing where possible. And watch this case. If the court grants sanctions, it could become a meaningful tool for practitioners with clients stuck in exactly this position.
Dr. Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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