On April 22, 2025, the United States Supreme Court heard arguments on an interesting case on whether the IRS can use a form of self-help to stop taxpayers from having their day in court.
We filed an important amici curiae (“friends of the court”) brief on behalf of National Taxpayers Union Foundation, the National Federation of Independent Business Small Business Legal Center, and the National Association of Wholesale-Distributors asking the Supreme Court to stop IRS abuse of helping itself to money it believes it was owed while there’s a court challenge going on precisely to stop that collection.
Jennifer Zuch and the IRS disagree on whether she still owes money on her 2010 tax return. During the resulting Collection Due Process hearing—a method taxpayers have to contest the collection of taxes before the government takes the money—the IRS took her tax refunds from other years and applied them to what it calculated as her 2010 liability, eventually reducing the balance to zero by 2019. Now the government says Zuch doesn’t get to keep making her arguments in court because the case is “moot.”
In a strongly-worded opinion, the Third Circuit rejected the IRS’s actions, saying they were “not supported by relevant statute, common law (incorporated into statute), or mootness principles.” The federal government asked the Supreme Court to take the case, and the high court agreed.
At oral argument before the Supreme Court, the justices asked questions of both sides about the scope of Collection Due Process hearings, whether a taxpayer would get a chance to keep making their arguments elsewhere, and how common it is that the government helps itself to tax money while the issue is being litigated in court.
Justice Clarence Thomas asked questions centered on whether the taxpayer can get review of the IRS’s actions after collection. He appears to think of the issue as whether the taxpayer can use another method of getting into court after the IRS takes the money, or if this Collection Due Process hearing was the only way for judicial review of the controversy. In our brief, we argued that “[t]he IRS’s voluntary cessation of applying a levy to Zuch’s property does not moot this case. Every year Respondent will have to file tax returns and state that she made payments to the IRS. The IRS, in turn, will continue to issue deficiencies, and this cycle will occur year after year until the ultimate question of whether the IRS rightfully collected on the pre-levy is resolved.”
Justices Elena Kagan and Sonia Sotomayor also asked questions on whether the taxpayer could get a refund later or if the statute of limitations had now blocked any hope of post-collection relief. Justice Kagan wanted to know if Ms. Zuch could get a refund later, but the government’s lawyer said that depended on if Ms. Zuch filed specific administrative paperwork contesting the taking of the refunds. If she had not, then the statute of limitations shut down that avenue of contesting the IRS too. In response, Justice Sotomayor noted that “[i]t does bother me . . . whether or not the IRS can sandbag somebody” by taking money via later years’ tax refunds and then leaving them without any other remedy.
Justice Neil Gorsuch said the “whole thing’s crazy” that the Tax Court has not yet decided if the IRS determination was accurate or not, but now the government claims the issue is moot because it got the money elsewhere. Justice Brett Kavanaugh also seemed skeptical, calling the government’s interpretation of the law on the matter “a little thin.” We agree with Justice Gorsuch: in our amici brief, we said that “[t]he IRS’s logic is akin to a cashier stealing money from a company’s cash register just because the company owes him backpay.” It makes no sense.
Justice Kentanji Brown Jackson appeared skeptical that the Tax Court retained jurisdiction once the government stopped trying to levy Ms. Zuch’s money (because the government took it via other means). Justice Jackson read the relevant statute narrowly, calling the government’s reading a “common-sense one” of no cause “to [keep] looking into whether the underlying tax liability is lawful or not,” once the tax debt was paid. In our brief, we argued that “Congress created a taxpayer’s right to a pre-levy challenge . . . as part of 1998 legislation generally improving taxpayers’ rights. Thus the statute gave taxpayers a fair chance to litigate prior to a levy being issued and collected . . . to stop abuses” such as what Ms. Zuch faced.
Chief Justice John Roberts and Justice Amy Coney Barrett, however, did not ask questions of the litigants. This is interesting because both jurists tend to probe issues of jurisdiction and write important decisions of the Court on whether a challenger can get into Court. Perhaps both were content with the briefing and the answers to questions asked by the other justices at oral argument. But the silence makes predicting their views of this case more difficult.
The case is Commissioner of Internal Revenue v. Zuch, No. 24-416.