Supreme Court Holds That Satisfaction Of Tax Liability Strips Tax Court Of Jurisdiction In Levy Proceedings
Client Alert | June 12, 2025
Commissioner of Internal Revenue v. Zuch, No. 24-416 – Decided June 12, 2025
Today, the Supreme Court held 8-1 that the Tax Court loses jurisdiction in a proceeding under 26 U.S.C. § 6330 when the IRS ceases to pursue a levy.
“Because there was no longer a proposed levy, the Tax Court properly concluded that it lacked jurisdiction to resolve questions about Zuch’s disputed tax liability.”
Justice Barrett, writing for the Court
Background:
In order to collect previously assessed tax liabilities, the IRS may seek to levy—i.e., to seize and sell—a taxpayer’s assets. In such cases, the taxpayer may request an administrative pre-levy hearing with the IRS’s Independent Office of Appeals. An adverse “determination” in that proceeding may then be petitioned to the United States Tax Court under 26 U.S.C. § 6330.
In 2013, the IRS sent Jennifer Zuch a notice of intent to levy her property to collect unpaid taxes from 2010. Zuch requested a pre-levy hearing, claiming that a payment from her former husband should have been applied to offset her tax liabilities for the year at issue. The IRS’s Office of Appeals sustained the proposed levy, and Zuch petitioned the U.S. Tax Court. The U.S. Tax Court remanded for clarification, and, in 2017, the IRS’s Office of Appeals once again sustained the proposed levy.
Meanwhile, Zuch overpaid her annual taxes in certain years. Instead of issuing Zuch a refund in each of those years, the IRS applied the overpayments against her 2010 outstanding tax liability. By April 2019, the entire amount of Zuch’s alleged federal tax liability subject to the levy action had been paid.
The IRS then moved to dismiss the levy case as moot, and the Tax Court granted that motion. The Third Circuit reversed, holding that the Tax Court still had jurisdiction to determine Zuch’s underlying tax liability under 26 U.S.C. § 6330 and Zuch did not need to file a separate refund suit in district court.
Issue:
Does a proceeding under 26 U.S.C. § 6330 become moot when the IRS no longer seeks the proposed levy that gave rise to the proceeding?
Court’s Holding:
Yes. The IRS’s decision to stop seeking to levy a taxpayer’s property deprives the Tax Court of jurisdiction in a proceeding under 26 U.S.C. § 6330.
What It Means:
- Today’s decision ties a taxpayer’s ability to pursue a pre-levy challenge to the IRS’s decision to continue seeking to levy the taxpayer’s property. If the IRS ceases to pursue a levy and the taxpayer believes they overpaid, the taxpayer must file a new administrative action before the IRS claiming a refund (the precursor to a refund suit in the U.S. District Court of the U.S. Court of Federal Claims).
- An administrative action before the IRS seeking a refund must be filed within two years of any potential overpayment. For this reason, a taxpayer who has potentially satisfied an outstanding liability during the pendency of a proceeding under 26 U.S.C. § 6330 should file a protective administrative action promptly, even if the IRS has not yet formally abandoned its request for a levy.
- Justice Gorsuch speculated in dissent that today’s decision may incentivize the IRS to stop pursuing levies in 26 U.S.C. § 6330 proceedings if it anticipates unfavorable rulings from the Tax Court, and to instead pursue other mechanisms of collection, like keeping future overpayments.
The Court’s opinion is available here.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the U.S. Supreme Court. Please feel free to contact the following practice group leaders:
Appellate and Constitutional Law
| Thomas H. Dupree Jr. +1 202.955.8547 tdupree@gibsondunn.com |
Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com |
Julian W. Poon +1 213.229.7758 jpoon@gibsondunn.com |
|
Lucas C. Townsend +1 202.887.3731 ltownsend@gibsondunn.com |
Bradley J. Hamburger +1 213.229.7658 bhamburger@gibsondunn.com |
Brad G. Hubbard +1 214.698.3326 bhubbard@gibsondunn.com |
Related Practice: Tax
| Sandy Bhogal +44 20 7071 4266 sbhogal@gibsondunn.com |
Pamela Lawrence Endreny +1 212.351.2474 pendreny@gibsondunn.com) |
Eric B. Sloan +1 212.351.5220 esloan@gibsondunn.com |
Related Practice: Tax Controversy and Litigation
|
Sanford W. Stark |
Saul Mezei +1 202.955.8693 smezei@gibsondunn.com |
C. Terrell Ussing +1 202.887.3612 tussing@gibsondunn.com |
This alert was prepared by Samuel Eckman and Brian Sanders.
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.