Chamberlain Hrdlicka’s Jasen Hanson says the Supreme Court’s 8-1 decision on a woman’s case over her tax levy could risk making enforcement challenges prohibitively expensive.
The US Supreme Court’s decision in Commissioner v. Zuch could have immediate and long-term effects on Tax Court jurisdiction and the prepayment forum that it provides taxpayers challenging IRS determinations.
While Zuch involved a taxpayer’s right to contest a levy under Section 6330 of the tax code and levy-enforcement proceedings, the rationale may have an impact beyond those borders to any prepayment deficiency proceeding.
It effectively permits the IRS to assert a tax liability and enforce collection of the alleged liability—despite legal challenges to its propriety—depriving the US Tax Court of jurisdiction over the prepayment liability challenge.
That threatens every prepayment deficiency proceeding before the Tax Court.
The justices’ narrow definition of “determination” under Section 6330(d)(1) guts collection due process hearings. By limiting review of those proceedings to enforcement determinations, the high court deprives taxpayers of meaningful review of the pre-enforcement existence of the underlying tax liability, removing essential due process protections.
Section 6330 hearings offer a pre-collection right to challenge collection enforcement activity (seizures) and, where the challenger can show they weren’t previously afforded the opportunity to do so, challenge the underlying tax liability under Section 6330(c)(2)(B).
For many taxpayers, these hearings are their first and only opportunity to challenge the liability asserted against them. By limiting the Tax Court’s jurisdiction to review IRS determinations regarding the underlying tax liability in Section 6330 hearings, the high court removes any incentive for the IRS to take those challenges seriously.
The Zuch decision will drive up the costs of litigation for taxpayers, potentially rendering collection enforcement challenges too expensive to bring. Now taxpayers who have incurred costs to challenge the levy action administratively through IRS Appeals and the US Tax Court will have to begin anew before the appropriate federal district court.
But even before that refund suit can begin, tax code Section 7422 requires taxpayers to first file an administrative claim for refund under Section 6511 and wait under Section 6532 until either the IRS rejects their administrative claim for refund or six months passes, whichever occurs first, before bringing suit in the district court.
In practice, the Tax Court provides a more forgiving forum for pro se litigants than the more complex federal district court forums. Now they’ll need to hire experienced counsel to navigate the more complex federal district procedural and substantive rules, advocate their interests, and protect their rights as they seek recovery of the seized property.
Still, the requirements for attorneys to appear on behalf of taxpayers in US district courts differ from Tax Court. Along with the nuances of procedural and substantive rule differences between the two forums, this may require taxpayers to hire a second set of lawyers to bring the appropriate federal court action.
All those layers and complexities raise costs (and risks) for taxpayers who now must face those expenses without the benefit of the funds seized (levied). Continued challenges to IRS activities may become cost prohibitive, further depriving taxpayers of essential due process protections.
Because district court judges must be generalists, federal tax law peculiarities may be foreign to some. That increases the chances for inconsistent federal tax administration across the 94 federal judicial districts.
The risk exists in any refund forum that must be brought before a district court—but there are additional due process concerns in the context of asset seizures of alleged deficiencies that aren’t present in traditional refund litigation.
Traditional refund litigation often involves voluntary payments of federal tax that the taxpayer seeks to reclaim. Those voluntary overpayments have far fewer Fourth and Fifth Amendment implications than forced involuntary seizure of taxpayer assets.
Historically, forced governmental takings have been subjected to Fourth Amendment protection against unreasonable seizures and Fifth Amendment protections against deprivation of property without due process.The high court’s ruling strips taxpayers of those protections in a prepayment forum.
The Zuch opinion limits pre-enforcement Tax Court jurisdiction. The IRS could ostensibly assess taxes without issuing a Statutory Notice of Deficiency, seek to enforce that assessment, and then collect those amounts—all depriving taxpayers of their due process rights.
The agency could force the taxpayer to bring an administrative claim for refund and ultimately require a suit for refund before the taxpayer has any opportunity to effectively check those actions.
The Zuch opinion immediately strips taxpayers of pre-seizure protections in the context of Section 6330 challenges to the propriety of the alleged tax liability, but its rationale could be used by the federal government and courts to further erode due process protections and Tax Court pre-payment jurisdiction. We’ll just need to wait and see how far the ripples of this decision extend.
The case is Comm’r v. Zuch, 2025 BL 8095, U.S., 24-416., 6/12/25.
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