From 2024 Term of Court
In most cases, federal tax law prevents unhappy taxpayers from challenging their assessed tax liabilities until the taxpayers have actually paid the tax they want to dispute. See 26 U.S.C. §7421(a) and 28 U.S.C. §2201(a). One exception to that general rule allows taxpayers who are facing a noticed Internal Revenue Service (“IRS”) seizure of their property to request and obtain a “fair hearing” from the IRS before the seizure occurs. 26 U.S.C. §6330(a). If, after the hearing, the IRS’s hearing examiner still allows the seizure to proceed, Section 6330(d)(1) allows the unhappy taxpayer to appeal the examiner’s decision to the United States Tax Court. At that point, the Tax Court must decide the taxpayer’s appeal before the IRS can execute its planned seizure.
In Commissioner of Internal Revenue v. Zuch (US SupCt Slip Opinion of June 12, 2025), the Court ruled 8-1 that the Tax Court loses jurisdiction over such an appeal whenever the IRS withdraws its intention to seize the taxpayer’s property. In that case, the Tax Court must dismiss the taxpayer’s appeal, even when the dismissal will leave several underlying issues involving the cancelled seizure unresolved. Those leftover issues, the Court explained, can be resolved in the taxpayer’s lawsuit for a refund of his or her tax payments, as authorized by federal law (see 28 U.S.C. §1346(a)(1)). Justice Gorsuch dissented from the Court’s Opinion and decision.
Comment: The wording of the statute in question, 26 U.S.C. §6330, leaves Congress’s precise intentions in doubt, but its language can reasonably be read, in the context of Congress’s general rule regarding legal challenges to tax assessments, to authorize only a narrow exception to that rule, applicable only to a pending seizure of a taxpayer’s property.
Dan D. Rhea
RECENT RULINGS 