Amicus Curiae Brief — Commissioner of Internal Revenue, Petitioner v. Jennifer Zuch

No. 24-416

IN THE

Supreme Court of the United States

__________________________________

COMMISSIONER OF INTERNAL REVENUE,

Petitioner,

v.

JENNIFER ZUCH,

Respondent.

__________________________________

On Writ of Certiorari to the United States Court of

Appeals for the Third Circuit

__________________________________

BRIEF OF THE CHAMBER OF COMMERCE OF

THE UNITED STATES OF AMERICA AS

AMICUS CURIAE IN SUPPORT OF

RESPONDENT

__________________________________

Janet Galeria

Kevin R. Palmer

U.S. CHAMBER

LITIGATION CENTER

1615 H Street, NW

Washington, D.C. 20062

(202) 463-5337

Lauren Willard Zehmer

Counsel of Record

Kandyce Jayasinghe

Emily Caputo

COVINGTON & BURLING LLP

One CityCenter

850 Tenth Street, NW

Washington, D.C. 20001

LZehmer@cov.com

(202) 662-6000

Counsel for Amicus Curiae

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................................... iii

INTEREST OF AMICUS CURIAE ............................1

INTRODUCTION AND SUMMARY OF

ARGUMENT ........................................................2

ARGUMENT ...............................................................7

I.

The Tax Court Has Jurisdiction in This

Case Under 26 U.S.C. § 6330. .............................7

The Tax Court Has Jurisdiction to

Review an Appeals Determination,

Not Just a Levy. ............................................7

The Statutory Text, Legislative

History, and Treasury Regulations

All Confirm the Tax Court’s

Jurisdiction Here. .........................................9

II.

Holding That the Tax Court Lacks

Jurisdiction in This Circumstance Would

Deprive Taxpayers of Full and Fair

Judicial Review. .................................................12

Denying Tax Court Review Could

Permit the IRS to Unilaterally and

Significantly Delay Judicial Review

and Relief to Taxpayers. .............................12

Denying Tax Court Review Could

Deprive Taxpayers of Any Judicial

Review in Certain Situations. ....................16

ii

III. The Government’s Position Would Give

the IRS Unfettered Discretion to Pick and

Choose Which Taxpayers Are Able to

Receive Tax Court Review. ................................18

CONCLUSION ..........................................................22

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Barnhill v. Comm’r,

155 T.C. 1 (2020) ................................................. 7

Boechler, P.C. v. Comm’r,

596 U.S. 199 (2022) ............................................. 9

Cleveland v. Comm’r,

600 F.3d 739 (7th Cir. 2010) ............................... 9

Dillon v. United States,

620 F. Supp. 3d 856 (D. Minn. 2022) ............... 16

Georgeff v. United States,

67 Fed. Cl. 598 (2005) ....................................... 18

Goza v. Comm’r,

114 T.C. 176 (2000) ....................................... 8, 17

Long v. Comm’r,

T.C.M. (RIA) 2023-130 ...................................... 18

Organic Cannabis Found., LLC v. Comm’r,

161 T.C. 13 (2023) ............................................. 19

Redeker-Barry v. United States,

476 F.3d 1189 (11th Cir. 2007) ......................... 20

Zuch v. Comm’r,

97 F.4th 81 (3d Cir. 2024) ................................. 20

iv

Statutes

26 U.S.C.

§ 6303................................................................... 7

§ 6330......................... 1, 2, 3, 7, 10, 11, 19, 20, 22

§ 6330(a) .......................................................... 3, 7

§ 6330(b) .......................................................... 3, 7

§ 6330(c)................................... 3, 4, 7, 8, 9, 16, 17

§ 6330(d) .......................... 3, 4, 8, 9, 12, 16, 17, 19

§ 6330(d) (1998) ................................................. 14

§ 6330(e) ............................................................ 10

§ 6331............................................................... 3, 7

§ 6402................................................................. 18

§ 6601(a) ............................................................ 12

§ 6651(a)(2) ........................................................ 12

§ 6654................................................................. 12

§ 6655................................................................. 21

§ 6662(b)(2) ........................................................ 21

§ 7441................................................................. 21

§ 7803(a)(3)(C) ................................................... 17

Pension Protection Act of 2006, Pub. L. No.

109-280, 120 Stat. 781 (2006) ........................... 14

Regulatory Materials

26 C.F.R. § 301.6330-1 ................................... 5, 8, 11

26 C.F.R. § 301.7122-1 ....................................... 6, 16

Other Authorities

Alan J. Auerbach & Kevin A. Hasset, A New

Measure of Horizontal Equity, 92 Am.

Econ. Rev. 1116 (2002)...................................... 17

v

Docket Access Within a Secure Online

Network (DAWSON), U.S. Tax Court .............. 13

H.R. Rep. No. 105-599 (1998)................................. 10

14 Jacob Mertens, Jr., The Law of Federal

Income Taxation § 50.22 (2009) .......................... 9

Leslie Book & Michael I. Saltzman, IRS

Practice and Procedure ¶ 15.06 ........................ 16

Frequently Asked Questions about Small

Business, 2023, Office of Advocacy, U.S.

Small Bus. Admin. (Mar. 7, 2023) ...................... 1

Richard A. Musgrave, Horizontal Equity,

Once More, 43 Nat’l Tax J. 113 (1990) ............. 17

S. Rep. No. 105-174 (1998) ........................... 2, 19, 22

Small Business Cash Liquidity in 25 Metro

Areas, JPMorgan Chase Inst. (Apr. 2020) ....... 15

Tax Ct. R. 70 ........................................................... 15

1

INTEREST OF AMICUS CURIAE1

The Chamber of Commerce of the United States of

America (the “Chamber”) is the world’s largest business federation. It represents approximately 300,000

direct members and indirectly represents the interests of more than 3 million companies and

professional organizations of every size, in every industry sector, and from every region of the country.

An important function of the Chamber is to represent

the interests of its members in matters before Congress, the Executive Branch, and the courts. To that

end, the Chamber regularly files amicus curiae briefs

in cases, like this one, that raise issues of concern to

the nation’s business community.

The Chamber has a special interest in this case

due to the potential implications of the Court’s decision for small businesses. More than half of net job

growth in the United States over the past three decades is attributable to the more than 30 million small

businesses in our nation.2 These enterprises depend

on predictable cash flow—to meet payroll, to manage

inventory, and to plan for the future. If the Tax Court

is deprived of its jurisdiction over 26 U.S.C. § 6330

1 Pursuant to Supreme Court Rule 37.6, amicus curiae affirms

that no counsel for any party authored this brief in whole or in

part, and that no entity or person, aside from amicus curiae, its

members, or its counsel, made any monetary contributions

intended to fund the preparation or submission of this brief.

2 Frequently Asked Questions about Small Business, 2023, Office

of Advocacy, U.S. Small Bus. Admin. (Mar. 7, 2023),

https://advocacy.sba.gov/2023/03/07/frequently-asked-questionsabout-small-business-2023.

2

proceedings by unilateral IRS action, small businesses will be harmed. They will be forced to incur

unnecessary expenses of restarting and relitigating

their tax disputes in a different court, and in some

cases may be deprived of judicial review entirely.

Adopting the Government’s position would also erode

the transparency of the tax administration system,

giving the IRS unprecedented discretion over which

taxpayers can continue to litigate in the more accessible Tax Court and which are shut out.

INTRODUCTION AND

SUMMARY OF ARGUMENT

The Collection Due Process (“CDP”) procedures

were enacted to “afford taxpayers due process” and

“increase fairness” before the Internal Revenue Service (“IRS”) seizes and sells someone’s property to pay

a tax debt. S. Rep. No. 105-174, at 67 (1998). The

Government’s position in this case would eviscerate

those purposes by giving the IRS power to significantly delay or even deny pre-levy judicial review and

relief. Under the Government’s approach, the IRS

could apply a taxpayer’s refunds for subsequent years

to deprive the taxpayer of the ability to have its CDP

case heard in Tax Court—even where there are open

issues about the tax. But nothing in 26 U.S.C. § 6330

gives the IRS the power to unilaterally—and selectively—determine the jurisdiction of the Tax Court.

Such an approach would disproportionately harm

small businesses and other taxpayers with limited resources, who do not have the time or cash-flows to

withstand the additional years of litigation that would

result (assuming judicial review is available at all).

This Court should affirm the judgment of the Third

3

Circuit to protect taxpayers from the IRS’s gamesmanship and abuses that the CDP procedures were

designed to counteract.

The Government’s position rests on a fundamental

misunderstanding of how 26 U.S.C. § 6330 and Tax

Court review of an IRS Independent Office of Appeals

(“Appeals”) determination operate. The IRS has the

power to levy a taxpayer’s property to satisfy a tax

debt. 26 U.S.C. § 6331(a), (b). Before it can exercise

this power, the IRS must notify the taxpayer of its intent and provide an opportunity to challenge the levy

through an administrative proceeding, known as a

CDP hearing, before Appeals. 26 U.S.C. § 6330(a), (b).

During a CDP hearing, the taxpayer may raise “any

relevant issue,” including “offers of collection alternatives.” 26 U.S.C. § 6330(c)(2)(A). At the conclusion of

the hearing, Appeals issues a “determination,” which

“shall take into consideration” the issues that the taxpayer raised at the hearing. 26 U.S.C. § 6330(c)(3).

Within thirty days of an Appeals determination, a taxpayer may “petition the Tax Court for review of such

determination (and the Tax Court shall have jurisdiction with respect to such matter).”

26 U.S.C.

§ 6330(d).

The Government argues that the Tax Court loses

jurisdiction if, during the pendency of a CDP case, the

IRS stops pursuing a levy by unilaterally deciding to

apply a taxpayer’s refunds or “overpayments” from

later years to the liability, even when there are other

issues outstanding. In this case, Ms. Zuch had challenged a proposed IRS levy in Tax Court connected to

her 2010 tax liability. While the case was pending,

the IRS took overpayments of tax that Ms. Zuch made

4

in subsequent years and, rather than refunding them

to her, applied them to the 2010 liability. Despite the

outstanding question of whether the 2010 tax had already been paid, the Tax Court dismissed the case,

holding that it lacked jurisdiction under 26 U.S.C.

§ 6330(d) in the absence of a proposed levy. The Third

Circuit vacated the Tax Court’s decision, and this

Court granted certiorari.

The Third Circuit’s holding is correct. The Tax

Court does not lose jurisdiction over a properly filed

CDP case when the IRS ceases to pursue a levy but

other live issues remain. This is because the Tax

Court’s jurisdiction is keyed to an Appeals “determination.” 26 U.S.C. § 6330(d). And an Appeals

determination is not, as the Government argues, limited to the terminal decision whether to proceed with

a levy. Section 6330(c) sets forth the items that the

determination “shall take into consideration,” which

include “any relevant issue relating to the unpaid tax

or the proposed levy” that the taxpayer raises at the

hearing. 26 U.S.C. § 6330(c)(2), (c)(3)(B) (emphases

added). The Government’s attempt to bifurcate the

final decision to proceed with the levy from the items

that must be taken into consideration in coming to

that decision is unavailing. The statute does not constrict the contours of an Appeals determination in this

manner. Rather, the Tax Court has jurisdiction over

the whole of the Appeals determination, including any

relevant issues the taxpayer raised and still seeks resolution over, irrespective of whether the IRS no longer

intends to levy.

The Government’s own regulations confirm this interpretation.

The

Notice

of

Determination

5

memorializing an Appeals determination “will set

forth Appeals’ findings and decisions.” 26 C.F.R.

§ 301.6330-1(e)(3), Q&A E-10. The Notice must “resolve” issues raised by the taxpayer, “include a

decision on” certain taxpayer defenses and challenges,

“respond to” offers of collection alternatives, and “address” whether the proposed levy balances the need to

collect taxes with the taxpayer’s legitimate concerns.

Id. It is therefore clear that an Appeals determination

is broader than the singular decision of whether to

proceed with the levy, and includes decisions on issues

that the taxpayer raised at the hearing. Because the

Tax Court has jurisdiction to review the determination as a whole—not just the levy—jurisdiction is not

extinguished by the IRS’s unilateral decision to apply

a taxpayer’s tax refunds to the contested balance.

In addition to being grounded in the statutory and

regulatory language, the Third Circuit’s holding prevents unfairness to taxpayers and respects Congress’s

intent. Even though there is no longer the looming

prospect of a levy, there is still a live question of

whether Mr. Gennardo and Ms. Zuch’s estimated tax

payment should have been applied to Ms. Zuch’s 2010

liability. If so, Ms. Zuch had no unpaid tax liability to

justify the levy, and the IRS wrongfully withheld Ms.

Zuch’s subsequent refunds from her. The Government, however, seeks to deprive the Tax Court of

jurisdiction to address this issue and instead force Ms.

Zuch to re-litigate from scratch in district court, despite her having spent over a decade already litigating

the current proceeding.

Requiring taxpayers to change venues from Tax

Court to district court in these circumstances would

6

cause inequitable delay and further financial costs,

disproportionately harming small businesses and

other taxpayers with limited resources. As it is, taxpayers often wait years for a Tax Court decision.

Having to start the entire litigation process all over

again in a different court would be patently unfair: It

would needlessly enlarge the time and cost of an already lengthy resolution process, all the while tying

up prevailing taxpayers’ much-needed refunds.

Moreover, in some instances, the Government’s position would result in no available judicial review at

all. Specifically, during a CDP hearing, the taxpayer

may suggest collection alternatives, such as an offerin-compromise that lowers the overall tax due based

on certain factors like economic hardship. See 26

U.S.C. § 6330(c)(2)(A)(iii); 26 C.F.R. § 301.71221(b)(3)(i). If the IRS rejects such an offer, the only judicial review available to taxpayers is in Tax Court

through the CDP process. In a case where the IRS

should have accepted a taxpayer’s offer, but decided to

use subsequent-year overpayments to satisfy the liability, the taxpayer could very well pay more tax than

was due under the law, with no judicial recourse. The

IRS should not be able to deprive taxpayers of judicial

review in this manner.

Finally, reversing the Third Circuit would give the

IRS the power to arbitrarily pick and choose which

taxpayers in CDP proceedings can continue with their

Tax Court cases and which cannot. This unprecedented concentration of power contravenes Congress’s

entire purpose in granting the Tax Court jurisdiction

to check the IRS’s abuses of power and provide due

process guardrails for taxpayers. It further punishes

7

taxpayers who are attempting to comply with their

federal tax obligations and who overpay their taxes

out of an abundance of caution. Given its lack of statutory support and the unjust consequences, the

Government’s position should be rejected.

ARGUMENT

I. The Tax Court Has Jurisdiction in This Case

Under 26 U.S.C. § 6330.

The Tax Court Has Jurisdiction to Review an

Appeals Determination, Not Just a Levy.

When a taxpayer fails to pay an assessed tax after

notice and demand for payment, 26 U.S.C. § 6303, the

IRS has several tools at its disposal to collect the tax.

One of those tools is a levy. 26 U.S.C. § 6331(a). Before the IRS may levy a taxpayer’s property, however,

it must provide notice of the proposed levy and, if the

taxpayer so requests, an administrative hearing before the IRS Independent Office of Appeals

(“Appeals”). 26 U.S.C. § 6330(a)(1), (a)(3)(B), (b)(1).

This hearing is known as a Collection Due Process or

“CDP” hearing.

At the hearing, the taxpayer “may raise . . . any

relevant issue relating to the unpaid tax or the proposed levy.” 26 U.S.C. § 6330(c)(2)(A). The statute

enumerates three examples of relevant issues a taxpayer may raise: spousal defenses, “challenges to the

appropriateness of collection actions,” and “offers of

collection alternatives,” such as an offer-in-compromise. Id. The default rule is that a taxpayer cannot

challenge the existence or amount of the liability that

the IRS is attempting to collect. See Barnhill v.

8

Comm’r, 155 T.C. 1, at *12 (2020). There is an exception to this default rule under 26 U.S.C.

§ 6330(c)(2)(B), which provides an opportunity to challenge the underlying liability if the taxpayer had no

previous chance to do so.

At the conclusion of the hearing, Appeals will issue

its “determination.” 26 U.S.C. § 6330(c)(3). The determination is memorialized and communicated to a

taxpayer through what is called the Notice of Determination. 26 C.F.R. § 301.6330-1(e)(3), Q&A E-10

(“Appeals is required to issue a Notice of Determination in all cases where a taxpayer has timely

requested a CDP hearing.”). Regulations specify that

“[t]he Notice of Determination will set forth Appeals’

findings and decisions” and, inter alia, must “resolve

any issues appropriately raised by the taxpayer.” Id.

The taxpayer may then “petition the Tax Court for

review of such determination (and the Tax Court shall

have jurisdiction with respect to such matter).” 26

U.S.C. § 6330(d). “In seeking Tax Court review of a

Notice of Determination, the taxpayer can only ask

the court to consider an issue, including a challenge to

the underlying tax liability, that was properly raised

in the taxpayer’s CDP hearing.” 26 C.F.R. § 301.63301(f)(2), Q&A F-3. When the Tax Court reviews a challenge to the existence or amount of the liability, it

applies a de novo standard of review. Goza v. Comm’r,

114 T.C. 176, 181–82 (2000). Other challenges to an

Appeals determination are evaluated under an abuse

of discretion standard. Id. at 182.

9

The Statutory Text, Legislative History, and

Treasury Regulations All Confirm the Tax

Court’s Jurisdiction Here.

In the CDP context, an Appeals determination is

the “ticket to the Tax Court.” Cleveland v. Comm’r,

600 F.3d 739, 741 (7th Cir. 2010) (citing 14 Jacob

Mertens, Jr., The Law of Federal Income Taxation

§ 50.22 (2009)). The Tax Court “review[s] . . . such determination (and the Tax Court shall have

jurisdiction with respect to such matter).” 26 U.S.C.

§ 6330(d). “All agree that the parenthetical grants the

Tax Court jurisdiction over petitions for review of collection due process determinations.” Boechler, P.C. v.

Comm’r, 596 U.S. 199, 204 (2022).

The statute does not purport to define the word

“determination.” The Government argues that it refers only to Appeals’ ultimate decision on whether to

proceed with the levy. Brief for the Petitioner, at 13.

There is no statutory support for this reading.

Although the statute does not explicitly define “determination,” it states that, among other things, “[t]he

determination by an appeals officer under this subsection shall take into consideration . . . the issues raised

under paragraph (2).” 26 U.S.C. § 6330(c)(3). Paragraph (2) in turn provides that a taxpayer “may raise

at the hearing any relevant issue relating to the unpaid tax or the proposed levy.” Under the plain

language of the statute, then, Appeals’ decision with

respect to “any relevant issue” is a required part of the

“determination” that provides the Tax Court with jurisdiction.

10

The Government’s attempt to bifurcate the ultimate decision to proceed with the levy from the items

that must be taken into consideration in coming to

that decision are unavailing. An Appeals determination comprises multiple components, including any of

the matters that the taxpayer validly raises. There is

no statutory basis for the Government’s position that

the definition of “determination” is limited solely to

the ultimate decision to levy. And nothing in 26

U.S.C. § 6330 conditions the Tax Court’s jurisdiction

on the IRS’s continued pursuit of a levy.

If Congress had wanted to limit the Tax Court’s jurisdiction in the manner that the Government

advocates for, it would have been easy to do so. Rather

than imbuing the Tax Court with jurisdiction over

“such matter” (i.e., the determination), it could have

simply stated that the Tax Court has jurisdiction over

the “levy.” But Congress intended, and provided, that

review of an Appeals determination encompass more

than just the decision to proceed with the levy: “The

conferees expect the appeals officer will prepare a

written determination addressing the issues presented by the taxpayer and considered at the

hearing.” H.R. Rep. No. 105-599, at 266 (1998) (Conf.

Rep.). Congress intentionally chose to give the Tax

Court jurisdiction over this entire determination.

Further to this point, 26 U.S.C. § 6330(e)(1) states

that the Tax Court has jurisdiction to issue injunctive

relief “in respect of the unpaid tax or proposed levy to

which the determination being appealed relates.”

This language confirms that the “determination being

appealed” is not the same thing as the proposed levy.

11

This reading is confirmed by the regulations implementing 26 U.S.C. § 6330.

The regulations

explicitly instruct that the “Notice of Determination

will set forth Appeals’ findings and decisions.” 26

C.F.R. § 301.6330-1(e)(3), Q&A E-8(i) (emphasis

added). This provision clearly contemplates that the

determination constitutes not just one decision on

whether to proceed with a levy but rather multiple

“findings and decisions,” which form the bases of the

Tax Court’s jurisdiction. The regulations go on to enumerate a list of items that must be contained within

the Notice of Determination. The Notice:

will resolve any issues appropriately raised by

the taxpayer relating to the unpaid tax; it will

include a decision on any appropriate spousal

defenses raised by the taxpayer; it will include a decision on any challenges made by

the taxpayer to the appropriateness of the collection action; it will respond to any offers by

the taxpayer for collection alternatives; and it

will address whether the proposed collection

action represents a balance between the need

for the efficient collection of taxes and the legitimate concern of the taxpayer that any

collection action be no more intrusive than

necessary.

26 C.F.R. § 301.6330-1(e)(3), Q&A E-8(i).

Far from being a mere “yea” or “nay” on whether

to proceed with the levy, an Appeals determination

must “resolve,” “include” decisions about, “respond”

to, and “address” a panoply of items that span the potential breath of a CDP hearing. Together, these

12

items form the “determination” over which 26 U.S.C.

§ 6330(d) grants jurisdiction to the Tax Court. The

Government’s own regulations therefore belie its position here.

Because the Tax Court’s jurisdiction extends to the

review of any issue appropriately raised by the taxpayer irrespective of the existence of a continuing

collection action, this case is not moot. Even without

a levy, the issue of Ms. Zuch’s actual liability—

whether a prior estimated payment should have been

credited to her—is still a relevant issue. The fact that

the IRS found a different pot of money to satisfy the

contested balance does not moot Ms. Zuch’s dispute

over the application of the estimated payment and

does not deprive the Tax Court of jurisdiction.3

II. Holding That the Tax Court Lacks

Jurisdiction in This Circumstance Would

Deprive Taxpayers of Full and Fair Judicial

Review.

Denying Tax Court Review Could Permit the

IRS to Unilaterally and Significantly Delay

Judicial Review and Relief to Taxpayers.

The Government’s position would likely translate

to years of additional and unnecessary litigation and

expenses for taxpayers. Given the substantial time it

3 There is also an outstanding issue regarding whether interest

and additions to tax should have been running until the 2010

liability was offset by the subsequent overpayments. See 26

U.S.C. § 6601(a) (imposing interest on unpaid taxes until the

payment date); 26 U.S.C. § 6651(a)(2) (imposing an addition to

tax based on a failure to pay); 26 U.S.C. § 6654 (imposing an

addition to tax for failing to make estimated tax payments).

13

already takes for judicial review of a CDP case, depriving taxpayers of Tax Court review for their longrunning CDP proceedings would be a significant injustice.

More often than not, CDP cases take years to resolve. In a typical scenario, a taxpayer must wait for

the IRS to initiate collection proceedings, ask for and

wait months or years for a CDP hearing with Appeals,

await the issuance of a Notice of Determination, and

then undertake years of Tax Court litigation. Based

on a survey of recent CDP cases, it takes approximately a decade from the tax year at issue to the

issuance of a Tax Court opinion.4

If the Government prevails, these already protracted proceedings would become practically

interminable. No matter where they were in the Tax

Court process—even on the cusp of a decision—taxpayers would be forced to begin the entire litigation

process again in another court. Further, less sophisticated taxpayers would be deprived of the less formal

and easier-to-navigate Tax Court procedures designed

to promote their access to justice.

Compounding this inequity is the fact that, as discussed in Section III, infra, the IRS would be in full

control over whether and when a taxpayer loses the

4 Amicus conducted an empirical review of more than 30 CDP

cases decided by the Tax Court over the past 12 months, finding

the average time from the tax year at issue to the Tax Court’s

decision being filed in those cases was approximately a decade.

The search was conducted using the Tax Court’s electronic filing

system. Docket Access Within a Secure Online Network

(DAWSON), U.S. Tax Court, https://dawson.ustaxcourt.gov/.

14

right to be heard in Tax Court and forced into another

court. The IRS should not be able to unilaterally force

taxpayers to take such a winding path to justice.

This result is also inconsistent with Congress’s intent in conferring the Tax Court jurisdiction in CDP

cases—to protect against the IRS’s abuses and provide

taxpayers with due process and a more efficient forum

to bring such challenges. Prior to 2006, CDP cases

were either appealable to Tax Court (when the underlying liability was not at issue) or district court (when

the underlying liability was at issue). 26 U.S.C.

§ 6330(d) (1998). In 2006, Congress amended 26

U.S.C. § 6330(d) to grant the Tax Court exclusive jurisdiction in all CDP cases, including those contesting

the tax liability at issue. Pension Protection Act of

2006, Pub. L. No. 109-280, § 855, 120 Stat. 781, 1019

(2006). This change was intended to “provide simplification benefits to taxpayers and to the IRS by

requiring that all appeals be brought in the Tax Court,

because doing so will eliminate confusion over which

court is the proper venue for an appeal and will significantly reduce the period of time before judicial

review.” See Staff of the J. Comm. on Taxation, 109th

Cong., Description of the Revenue Provisions Contained in the President’s Fiscal Year 2007 Budget

Proposal 230–31 (Comm. Print 2006) (“2007 JCT

Bluebook”) (emphasis added). The Government’s position here would effectively revoke this 2006

amendment for taxpayers who have subsequent year

overpayments while a CDP case is pending.

Small businesses and other taxpayers with limited

resources would be especially harmed by this outcome. First, the increased expenses that would result

15

from restarting proceedings would increase the barriers to litigation for such taxpayers.

This is

exacerbated by the fact that district courts are generally less accessible for small businesses and

individuals than Tax Court. For instance, discovery

under the Federal Rules of Civil Procedure is generally more formal and complex than in Tax Court. See

Tax Ct. R. 70 (“[T]he Court expects the parties to attempt to attain the objectives of discovery through

informal consultation or communication before utilizing the discovery procedures provided in these

Rules.”).

Second, such a delay in review and relief is likely

to exacerbate the liquidity challenges many small

businesses face. When the IRS decides to offset an

overpayment against a contested CDP liability, it

takes a refund otherwise due to a taxpayer that overpaid its taxes and applies it to the contested liability.

The IRS holds onto this sum unless and until a court

resolves the issue in the taxpayer’s favor. A court may

very well eventually decide that the funds do not belong to the IRS at all. In the meantime, however, the

business is unable to use these funds to meet pressing

payroll, inventory, and other cash-intensive needs—

not to mention the costs of litigating against the IRS.

Research by the JPMorgan Chase Institute on 25 metropolitan areas demonstrates that “50 percent of

small businesses are operating with fewer than 15

cash buffer days – the number of days of typical outflows a business could pay out of its cash balance in

the event of a disruption to inflows.”5 Thus, delayed

5 Small Business Cash Liquidity in 25 Metro Areas, JPMorgan

Chase Inst. (Apr. 2020), https://perma.cc/M3S6-WYHL.

16

relief could have a significant impact on the operations and even the viability of many such businesses.

Denying Tax Court Review Could Deprive

Taxpayers of Any Judicial Review in Certain

Situations.

Beyond delaying judicial review, the Government’s

position would result in a taxpayer losing the opportunity for any judicial review in some instances. This

is because only the Tax Court has jurisdiction to review certain components of an Appeals determination.

If the Tax Court loses jurisdiction in CDP cases, this

important check on agency action will be lost.

As part of its charge to consider “any relevant issue

relating to the unpaid tax or proposed levy” at a CDP

hearing, Appeals must consider any “collection alternatives”

a

taxpayer

proposes.

26

U.S.C.

§ 6330(c)(2)(A). One “collection alternative” specified

by 26 U.S.C. § 6330(c)(2)(A) is an offer-in-compromise

(“OIC”). In submitting OICs, taxpayers seek to negotiate with the IRS to decrease the amount of tax owed

for compelling reasons, such as economic hardship. 26

C.F.R. § 301.7122-1(b)(3)(i). The only available judicial review over these collection alternatives is Tax

Court review through the CDP process. 26 U.S.C.

§ 6330(c)(2)(A), (d)(1); Leslie Book & Michael I. Saltzman, IRS Practice and Procedure ¶ 15.06 (citing

Dillon v. United States, 620 F. Supp. 3d 856 (D. Minn.

2022)). In cases where the IRS rejects a taxpayer’s

proposed OIC and the Tax Court loses jurisdiction

over the case, the taxpayer would have no recourse.

Thus, the Government’s position has ramifications

beyond a change of venue and the attendant time and

17

financial costs of such a change. If the IRS wrongfully

rejected an OIC, a taxpayer would end up paying more

tax than due under the law—and there would be no

oversight on such an abuse of discretion. See 26

U.S.C. § 7803(a)(3)(C) (stating that taxpayers have

the “right to pay no more than the correct amount of

tax”); Goza, 114 T.C. at 182 (explaining that the Tax

Court applies an abuse of discretion standard). In addition, the bedrock tax principle of “horizontal

equity”—that taxpayers in similar situations should

be treated equally—would be violated. See, e.g., Richard A. Musgrave, Horizontal Equity, Once More, 43

Nat’l Tax J. 113 (1990); Alan J. Auerbach & Kevin A.

Hasset, A New Measure of Horizontal Equity, 92 Am.

Econ. Rev. 1116 (2002). Without available judicial review, the IRS could unfairly reject an OIC from one

taxpayer but accept a comparable OIC from another

taxpayer in a nearly identical situation without any

check on this power. This goes against the core principles underpinning the U.S. tax system.

Finally, closing the door on review of OIC and

other collection alternative decisions contravenes the

purpose of 26 U.S.C. § 6330(d) to provide judicial review of these issues. The statute explicitly specifies

that “offers of collection alternatives” must be “take[n]

into consideration” by Appeals in reaching a determination in a CDP hearing.

26 U.S.C.

§ 6330(c)(2)(A)(iii), (c)(3). Section § 6330(d)(1) further

provides that taxpayers may “petition the Tax Court

for review of such determination (and the Tax Court

shall have jurisdiction with respect to such matter).”

Read together, the plain language of these provisions

demonstrates that Congress intended judicial review

of collection alternatives. Indeed, the Tax Court has

18

found the IRS to have abused its discretion in such

cases. See, e.g., Long v. Comm’r, T.C.M. (RIA) 2023130. The IRS should not be able to unilaterally prevent judicial review of its own actions, contrary to

congressional intent.

III. The Government’s Position Would Give the

IRS Unfettered Discretion to Pick and

Choose Which Taxpayers Are Able to

Receive Tax Court Review.

The Government’s position would allow the IRS to

pick and choose which taxpayers in these circumstances receive Tax Court review, and which are

forced into a different court or to forgo judicial review

altogether. Such broad and arbitrary power is not

supported by the statute, creates improper incentives,

and harms taxpayers.

This case arose because the IRS chose to apply Ms.

Zuch’s overpayments from subsequent years to her

2010 liability, rather than issue her a refund. The

IRS’s authority to offset a liability with overpayments

from other years is provided by 26 U.S.C. § 6402(a).

That section states that the IRS “may credit the

amount of such overpayment, including any interest

allowed thereon, against any liability. . . .” Id. (emphasis added). Offset authority under 26 U.S.C.

§ 6402(a) is completely discretionary. Georgeff v.

United States, 67 Fed. Cl. 598, 608 (2005) (“The statute, 26 U.S.C. § 6402, gives the IRS the discretionary

authority to credit tax overpayments to any tax liability.”). The IRS can choose to exercise that authority

or not, at will.

19

Under the Government’s interpretation of the Tax

Court’s jurisdiction, the IRS’s offset authority would

manifest as the power to decide whether a taxpayer

can have its case heard in Tax Court. Where a taxpayer has petitioned an Appeals determination in Tax

Court under 26 U.S.C. § 6330(d), and subsequently accrues an overpayment for a different tax year, the IRS

has a choice. It can decide to (1) refund the overpayment to the taxpayer or (2) apply the overpayment to

the liability at issue in the CDP case. If the Government prevails, the latter choice would extinguish the

Tax Court’s jurisdiction over the case even where live

issues remain—including a dispute over the very liability or unpaid tax at issue. That is, under the

Government’s interpretation of 26 U.S.C. § 6330(d),

the IRS would have complete discretion to decide

whether the taxpayer is allowed to be heard in Tax

Court.

Such a reading puts an unprecedented power in

the hands of the IRS—exactly the opposite of what

Congress intended by enacting 26 U.S.C. § 6330 and

providing Tax Court review of CDP cases. The CDP

regime was “designed to [e]nsure due process where

the IRS seeks to collect taxes.” Organic Cannabis

Found., LLC v. Comm’r, 161 T.C. 13, 20 (2023) (citation omitted). Specifically, it was “designed to afford

taxpayers due process in collections with increased

fairness to taxpayers.” Id. (cleaned up). As the legislative history explains, “taxpayers should be entitled

to the same rights and protections in dealings with the

IRS that persons have in dealing with any other creditors and should receive a ‘meaningful hearing before

the IRS deprives them of their property.’” Id. (quoting

S. Rep. No. 105-174, at 67 (1998)).

20

Allowing the IRS, in this unique subset of cases,

the power to decide whether a taxpayer has the

chance to be heard in Tax Court (or at all) is antithetical to Congress’s purposes of increasing taxpayer

fairness and providing taxpayers with rights and protections.

The Government’s position that a taxpayer could

simply re-file its case in district court is no answer.

First, as set forth in Section II, supra, this route exacerbates the harm to the taxpayer by requiring

protracted litigation over issues already ripe for decision by the Tax Court, and district court is not an

available venue for all tax disputes that will be impacted by the Court’s decision in this case. Second,

Congress decided to grant the Tax Court exclusive jurisdiction over CDP cases in an effort to “eliminate

confusion” and “significantly reduce the period of time

before judicial review.” 2007 JCT Bluebook 230–31;

see Redeker-Barry v. United States, 476 F.3d 1189,

1190 (11th Cir. 2007) (discussing the Tax Court’s exclusive jurisdiction over CDP cases). Interpreting 26

U.S.C. § 6330 in a manner that provides the IRS with

the power to kick a CDP case out of Tax Court cannot

be reconciled with Congress’s clear intent to provide

the Tax Court with exclusive jurisdiction over these

cases. See Zuch v. Comm’r, 97 F.4th 81, 86 (3d Cir.

2024) (“When Congress grants taxpayers the right to

challenge what the Internal Revenue Service says is

owed to the government, Congress’s will prevails. The

IRS cannot say that such a right exists only under the

circumstances it prescribes.”).

An even more recent statutory amendment confirms this understanding of congressional intent. In

21

2015 Congress amended 26 U.S.C. § 7441 to read:

“The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.”

Yet the Government’s position here would allow the

IRS to unilaterally dictate what CDP cases the Tax

Court has jurisdiction to hear, contravening clear congressional intent that the Tax Court be independent

from the executive branch.

Such discretionary power also creates improper incentives.

The IRS may be inclined to apply

overpayments in cases it is more likely to lose and unilaterally declare victory to avoid an unfavorable

decision. Given the expense and hurdles that taxpayers face in re-filing and re-litigating their case in

district court, the IRS’s offset authority could be improperly used to litigate by fiat—especially against

small businesses and other taxpayers of limited resources who may not be able to afford the additional

costs.

Nor can taxpayers circumvent this situation by

simply paying the IRS less to avoid creating an overpayment. Corporations, small and large, for example,

are required to make quarterly estimated tax payments to the IRS, the amount of which is keyed off last

year’s tax liability, or face penalties. 26 U.S.C.

§ 6655(a), (d)(1)(B). Further, taxpayers cannot predict the exact amount of a current year’s tax, and

overpaying avoids understatement penalties—particularly important for small businesses running on

already tight margins. See 26 U.S.C. § 6662(b)(2).

Adopting the Government’s position would thus punish taxpayers attempting to comply with their federal

22

tax obligations by granting the IRS power to arbitrarily select whose time, money, and refunds are tied up

in district court proceedings. This result is the very

opposite of the “due process in collections” and “increased fairness to taxpayers” that Congress pursued

in enacting 26 U.S.C. § 6330. S. Rep. No. 105-174, at

67 (1998).

CONCLUSION

For the reasons discussed above, the decision of the

Third Circuit should be affirmed.

Respectfully submitted,

Janet Galeria

Kevin R. Palmer

U.S. CHAMBER

LITIGATION CENTER

1615 H Street, NW

Washington, D.C. 20062

(202) 463-5337

Lauren Willard Zehmer

Counsel of Record

Kandyce Jayasinghe

Emily Caputo

COVINGTON & BURLING LLP

One CityCenter

850 Tenth Street, NW

Washington, D.C. 20001

LZehmer@cov.com

(202) 662-6000

Counsel for Amicus Curiae

March 24, 2025