Supreme Court Accepts Cert in Zuch as to Mootness in CDP where IRS Collected by Offset the Tax Subject to Levy (1/13/25)

On Friday, January 10, 2024, the Supreme Court granted the Solicitor General’s petition for writ of certiorari in Commissioner v. Zuch (S.Ct. No. 24-416), here. The order granting the petition is here; the Supreme Court’s docket sheet is here; the Third Circuit opinion is Zuch v. Commissioner, 97 F.4th 81 (3rd Cir. 2024), here. My blog on the 3^rd Circuit panel opinion in Zuch is 3rd Circuit Holds Tax Court Has Jurisdiction to Determine Overpayments in CDP Proceedings (3/29/24; 3/30/24), here. (Although I cite my prior blog, I recommend those new to the issue, spend their time on the briefing on the petition for writ of certiorari and the 3rd Circuit panel opinion.)

The Question Presented from the petition, filed by Solicitor General Prelogar but naming attorneys from the Solicitor General’s office and the Tax Division, is:

Whether 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 becomes moot when there is no longer a live dispute over the proposed levy that gave rise to the proceeding.

The Question Presented from the Brief in Opposition. here, filed by a formidable Skadden Arps team led by Shay Dvoretzky, here, and joined by the ubiquitous Frank Agostino, here,

          The Internal Revenue Code authorizes the IRS to levy—that is, seize—a taxpayer’s property to collect unpaid taxes, but only after providing the taxpayer with notice and an opportunity for an administrative hearing before the IRS Independent Office of Appeals. (Appeals Office). See I.R.C. § 6330. At the hearing, the taxpayer may raise “any relevant issue relating to the unpaid tax or the proposed levy.” I.R.C. § 6330(c)(2)(A). The taxpayer may also challenge her underlying tax liability if she did not previously have an opportunity to do so. I.R.C. § 6330(c)(2)(B). After the Appeals Office renders its decision, the taxpayer may “petition the Tax Court for review of such determination,” “and the Tax Court shall have jurisdiction with respect to such matter.” I.R.C. § 6330(d)(1).

          The question presented is whether the Tax Court retains jurisdiction under I.R.C. § 6330 to review and issue declaratory relief as to the Appeals Office’s determination of the taxpayer’s underlying liability when, despite the parties’ live dispute about that liability, the IRS stops pursuing the levy.

JAT Comments:

Mootness and Tax Court Proceedings (9/14/12)

OK, I know the reaction of most readers for this blog is going to be "So What."  That is probably a good reaction, but I persist in wanting to evoke that reaction.  Here goes.

In Media Space Inc. v. Commissioner, 2010 U.S. App. LEXIS _____ (2d Cir. 2012), here, the Second Circuit remands to the Tax Court "with instructions to dismiss the petition."   The IRS appealed because it thought the decision document did not determine enough of a tax liability for Media Space.  On appeal, , Media Space, advised the 2d Circuit that, notwithstanding the Tax Court decision, it had paid all of the amounts in issue.  If that is true, and the Government apparently did not contest it the representation, the Government has seemingly won the case despite the Tax Court decision which at least partially favored the taxpayer (which is, of course, why the Government appealed).  So, with the Government having practically won, despite the Tax Court decision, the Court of Appeals dismissed on grounds of mootness over the Government's objection.

I think there is something going on that is not evident from the Second Circuit's cryptic opinion.  I think the appropriate resolution of the case would be to remand for entry of decision in the full amount for the IRS.  Maybe there is something I am missing there, so hopefully readers will let me know if I am missing something.

Moreover, despite the payment, the Government still wanted the Second Circuit to decide an issue it felt important.  The Second Circuit punted on the case or controversy dodge, citing as "'established practice' of federal courts is to 'vacate the judgment below and remand with a direction to dismiss.'  Oh well,