Commissioner v. Zuch

In this case, the court considered this issue: Does a proceeding under 26 U-S-C § 6330 for a pre-deprivation determination about a levy proposed by the Internal Revenue Service to collect unpaid taxes become moot when there is no longer a live dispute over the proposed levy that gave rise to the proceeding?The case was decided on June 12, 2025.The Supreme Court held that the Tax Court lacks jurisdiction under 26 U-S-C §6330 to adjudicate disputes between a taxpayer and the IRS once the IRS is no longer pursuing a levy. Justice Amy Coney Barrett authored the 8-1 majority opinion of the Court.Section 6330 of the Internal Revenue Code grants taxpayers the right to a hearing before the IRS can levy (seize and sell) a taxpayer’s property to collect unpaid taxes. At this hearing, a taxpayer can raise issues about the levy, including the existence or amount of the underlying tax liability, and the appeals officer makes a “determination” about whether the levy may proceed. The law then permits review of this “determination” by the Tax Court. The Tax Court’s jurisdiction is strictly limited to reviewing the determination whether a levy may go forward, not every dispute considered at the hearing. If there is no longer a proposed or ongoing levy—for example, because the taxpayer’s liability has been zeroed out during the pendency of the appeal—there is no determination left to review, and thus, no case or controversy for the Tax Court to resolve under §6330.The reasoning rests on several points: (1) The statutory text and structure focus the collection due process hearing and subsequent Tax Court review on the levy alone; (2) The default rule in tax litigation is that challenges to tax liability must proceed as refund suits after payment, except where specifically authorized exceptions, like the collection due process review, apply; and (3) The statute does not authorize the Tax Court to issue refunds or declaratory judgments unrelated to stopping a levy. Therefore, after the IRS drops the levy because the tax debt has been satisfied, any continuing disputes about liability or overpayment must proceed through a refund suit in district court, not in the Tax Court under §6330.Justice Neil Gorsuch authored a dissenting opinion, arguing that the Tax Court retains jurisdiction over all issues addressed in the IRS’s determination—including disputes about underlying tax liability—even after a levy is abandoned, and that stripping jurisdiction in these circumstances creates opportunities for the IRS to evade judicial review and leaves taxpayers without meaningful remedies for erroneous IRS actions.The opinion is presented here in its entirety, but with citations omitted. If you appreciate this episode, please subscribe. Thank you.