On Tuesday, the Supreme Court held the oral arguments for 'Commissioner of Internal Revenue Service v. Zuch'.
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00:00We will hear argument next in case 24-416, Commissioner of Internal Revenue v. Zouk.
00:09Ms. Ross?
00:10Mr. Chief Justice, and may it please the Court,
00:13Section 6330 of the Internal Revenue Code is all about levies, using the word levy nearly 30 times.
00:21The statute provides a levy-specific exception to the general rule that taxpayers must pay their taxes first
00:28and dispute them later in a refund suit.
00:31When the IRS proposes to collect a tax by levying on the taxpayer's property, that is, by seizing and selling it,
00:39Section 6330 allows the taxpayer to dispute that particular method of collection before it occurs.
00:46A taxpayer cannot use Section 6330's prepayment mechanism unless the IRS seeks to levy on her property.
00:54The proposed levy is her ticket to the IRS's Appeals Office and later to the Tax Court.
01:00But the Tax Court is one of limited jurisdiction.
01:03Under Section 6330, Congress has given the Court only the power to review the Appeals Office's
01:10quote, determination, end quote, whether a levy may proceed.
01:14Whereas here the IRS no longer has a basis to enforce its proposed levy, the Tax Court lacks jurisdiction.
01:21Just as it would lack jurisdiction if the IRS had never proposed a levy at all.
01:27Respondent contends that even after the levy has dropped out of the case,
01:31the Tax Court may continue to consider arguments about the taxpayer's unpaid tax or underlying tax liability.
01:38But in this case, the IRS cannot levy on the taxpayer's property because she has already paid.
01:44So there is no unpaid tax or underlying tax liability.
01:48And more generally, the statute instructs the Appeals Office to consider those subsidiary issues
01:53only in service of making the ultimate determination whether a levy may proceed.
01:57They are not the determination itself.
01:59And nothing in the statute suggests those subsidiary questions are independent bases for Tax Court jurisdiction.
02:05Indeed, even if the Tax Court agreed with Respondent on those issues, it could afford her no relief in the absence of a threatened levy.
02:14The Tax Court therefore lacks jurisdiction, although Respondent may pursue challenges to the taxes she has paid in a post-refund suit,
02:21just like any other taxpayer subject to the general rule.
02:27Should we look at this case as statutory jurisdiction as opposed to mootness?
02:35So, Justice Thomas, I think you can look at this case in a variety of ways, but they sort of all get you to the same place.
02:40I think you can think about it sort of as statutory mootness.
02:43The statute requires something that's no longer present.
02:46It requires that the parties be fighting over a levy.
02:49As I mentioned earlier this morning, the entire statute is about levies.
02:53And I think we know this not only because the statute talks about levies 29 or 30 times,
02:58but also because there's no relief that can be given at this point to the taxpayer when there's no longer a levy proposed.
03:05Well, the taxpayer says that it still wants to litigate the underlying liability.
03:12But why wouldn't the Tax Court have jurisdiction since at the beginning of the litigation there was a levy in place?
03:24So I think, Your Honor, the Tax Court wouldn't have jurisdiction when there's no longer a levy because, again, the jurisdiction is very much tied to the levy.
03:32So the question here is whether the determination that the appeals office has made, which is whether the levy can go forward, that's the language of D1.
03:41The question here is whether the respondent can continue litigating questions that are subsidiary to that ultimate determination.
03:48I think my point is why is that so? At the beginning of the litigation there was a levy involved.
03:54Why does it have to extend throughout the litigation that's already in court?
03:58Sure, Your Honor. So two answers to that question.
04:00One, by analogy to this court's recent decision in Royal Canaan, I think there are some things that happened during the course of a litigation that so fundamentally altered the litigation that statutory jurisdiction is ousted.
04:11So in that case, it was a question about federal question jurisdiction and supplemental jurisdiction.
04:17The court was exercising supplemental jurisdiction over state law claims in addition to Section 1331 jurisdiction.
04:25And this court said that when the federal claims fell out, there was no more Section 1367 supplemental jurisdiction because the federal claims were the anchor.
04:33Similarly here, I think it's impossible to read this statute all the way through and not come away with the sense that the levy is the anchor to federal court to tax court jurisdiction here.
04:42But if I could discuss the statutory provisions specifically because I think they also really show this point.
04:47The whole question here, or a piece of the question here at least, is about this meaning of determination on page 5A, Section D1 of the statute.
04:56And I think everyone agrees that the determination is sort of your source of tax court jurisdiction.
05:02And what my friend suggests is that anything that goes into that determination is sort of independently appealable, even in the absence of a levy.
05:10But I think we know that's not true because if you just step back one page in the appendix, so this is on page 4A of the gray brief, and we're looking at C3, this tells us the basis for the determination.
05:21It says the determination by an appeals officer under this subsection shall take into consideration, and then it provides a few different things.
05:30The one that respondent is focused on is B, the issues raised under paragraph 2.
05:35So we know whatever those issues are, they're not the determination itself.
05:38There are inputs to the determination, and so therefore they're not an independent basis for tax court jurisdiction.
05:43And if you flip back a page further to page 3A of our appendix, you see...
05:50I hate to interrupt because it's a good explanation, but I just want to make sure I track you.
05:56You agree that the tax court's jurisdiction hinges on a determination?
06:03So I agree that the determination is necessary.
06:05I think we have additional arguments about what remedy the tax court could provide at this point, but I agree that the determination is necessary.
06:11Let's just start. We can get to remedy later. I'm sure we'll get there.
06:14But the determination, and there was a determination here by the appeals office.
06:20Yes, there was a determination that the IRS's threatened levy could go forward.
06:25And has that been withdrawn?
06:26There is no basis for there to be a levy in this case at this point.
06:30That wasn't my question. It was a good answer, but it wasn't my question.
06:34Has that determination been withdrawn?
06:38So I think it's important. So I think the answer to your question, just to give it, is not exactly.
06:43But there's a reason why that is. And that's because...
06:45How about no?
06:46We're talking about... Well, we're talking about an appeals office here, which is not...
06:49This isn't a district court decision that...
06:51Oh, I'm well aware of that.
06:52...that you know you would need to be vacated or something like that.
06:54This is an appeals officer. It's an extremely informal determination.
06:57And so this person may not be a lawyer. The IRS is generally not represented before the appeals office.
07:03So the determination lacks any practical significance at this point.
07:06The government didn't ask the appeals office to withdraw its determination at any point, right?
07:11I'm not aware of that being in the record.
07:13But again, I don't think that would normally happen because we've just said that it's moot.
07:16The IRS has no lawful basis to proceed with a levy at this point.
07:19Well, you say it's moot, but you say don't do mootness in that footnote.
07:22Because it's not in Article III. We're in the executive branch over here, right?
07:28And Article III mootness principles don't apply.
07:31And you encourage us not to decide that issue in that footnote of yours.
07:35It's a good footnote.
07:36So I think...
07:37So it's about statutory jurisdiction, your argument.
07:40And that hinges, at least at the front end, on a determination.
07:44And to this day, there's still a determination.
07:46So there's a determination that has no practical effect in the world.
07:50There is no way for the IRS to...
07:51I do appreciate that answer.
07:53Yeah.
07:54Okay.
07:56Sure.
07:57You were going to say something on 3A.
07:58Sure.
07:59So 3B, I think, is the set of issues that are raised under Paragraph 2.
08:04So then we have to flip back another page.
08:06And the issues that are raised under Paragraph 2 that Respondent has focused on are the issues relevant,
08:12any relevant issue relating to the unpaid tax or the proposed levy.
08:16So in this case, there's no unpaid tax and there's no longer a proposed levy.
08:20And then under B...
08:21Well, isn't that...
08:22I hate to stop you there, but that's the dispute is whether there's an unpaid tax.
08:26No, you're...
08:27So just as a matter of fact, this tax has been fully paid.
08:30The IRS has Respondents' money in full for 2010, so there is therefore...
08:34Because of the way you credited it, but...
08:36Because the IRS exercised the authority that Congress gave it in Section 6402 to apply overpayments as a credit, but...
08:43It seems a little circular, though.
08:45Is there an issue relating to an unpaid tax?
08:48One side says yes, the other side says no, and no because we...
08:53Because of what we did.
08:55Well, because we exercised authority, again, that Congress has given.
08:58And I think...
08:59I want to finish the answer on how the jurisdictional provisions play out,
09:02but I just want to point out that Congress could have decided to stay the offset authority during a Section 6330 proceeding,
09:09but it did not do that.
09:10That's undisputed in this case, and so I don't think there's any question here that the IRS lawfully authorized that authority.
09:16That may be something they want to raise in their refund action, but I don't think it's before this court at this point.
09:20So to go back to what we were talking about with respect to the unpaid tax,
09:25I think as a factual matter there is no unpaid tax in this case.
09:28There is also no pending levy.
09:30And then she also would like to raise underlying liability questions.
09:34If there were underlying liability, right?
09:36Sure.
09:37I also think that there's no underlying liability at this point because, again, there's no liability.
09:43She has paid.
09:44And what she really wants is a refund or a determination that she's overpaid.
09:48But it's not a liability at this point.
09:50And it's not underlying anything of significance because, as the Fourth Circuit recognized in McLean...
09:55Isn't that parsing underlying tax liability a little thin?
09:58So, Your Honor, I don't think so.
10:00I think that's the natural consequence of those words.
10:02But even if you disagree with me on all of this, I think we're still obviously correct for at least two reasons.
10:08One, and two reasons that are just specific to this provision before I even get to remedy.
10:13One is that these are things that the appeals officer shall take into consideration in making the determination.
10:20We know from C3 that they're not the determination itself, and so they're not the source of that tax court jurisdiction.
10:25And two, if you go down to C3, big C, something that the appeals officer must take into account in every case is this balancing question.
10:36I'm going to paraphrase because the statute is wordy, but it's essentially whether the proposed collection action balances or appropriately balances the need for the efficient collection of taxes with the taxpayer's interest in this being no more intrusive than necessary.
10:54And so I think on respondents view of this statute, that's an independently appealable issue, even in the absence of a levy.
11:00And that just can't be right.
11:01There's no reason to still be fighting about that when there's no longer a levy.
11:05Now, I take some of the concerns that Justice Gorsuch was maybe hinting at as to, you know, she's in court already.
11:11She just really wants to finish this out to be talking about this is inefficient.
11:15And I certainly...
11:16No, no, the whole thing's crazy.
11:19It is certainly a dense and technical statute, Your Honor.
11:22I don't know what's most efficient, but I do think that there is a dispute about the underlying tax liability.
11:29Sure.
11:30And I think Congress expected that dispute when there is no levy.
11:32And I do think there's a determination made that the government hasn't withdrawn.
11:36And so that's where I'm stuck.
11:38So, Your Honor, I don't think it's right to think about this as a determination that the government has to withdraw,
11:43because that determination, again, by the appeals office doesn't even bind the IRS going forward.
11:48The IRS is not committing itself to taking the position that that was, you know, whatever subsidiary issues are decided by the appeals officer
11:55are not sort of the final position of the IRS for future litigation, for example.
12:00Well, I appreciate that too, but the statutory jurisdiction hooks on a determination.
12:07We have a determination.
12:08In making that determination, you can contest your underlying tax liability.
12:11So, you can contest that, but I think it's important to situate us in the type of proceeding that Congress provided here.
12:17So, again, you only get into this proceeding if there is a levy.
12:21This is an extra level of protection that Congress provided in order to protect people,
12:26because while levies are well-established and constitutional, they are more intrusive than other means of tax collection.
12:32And so I think it makes perfect sense that you might consider the person's underlying liability
12:37when you're deciding whether the government can finish out its levy.
12:40And Ms. Ross, so what is the determination?
12:43I mean, we see a lot of textual evidence here that the jurisdiction is being provided to make a determination, the determination.
12:52So, in your view, can you just tell us what that is?
12:55That is the determination whether the levy can go forward.
12:58All right.
12:59And so your point is sort of a common sense one, I think, that to the extent that Congress is providing this extra process
13:07when someone is targeted for this particular treatment, having a levy imposed.
13:14And I'm going to ask you about if for whatever reason.
13:19But in this case, because the underlying tax liability is resolved through the credits, the levy is no longer going to be imposed.
13:29Precisely.
13:30Then the whole point of the proceeding is done and we don't have any other cause, I think you're saying, to be looking into whether the underlying tax liability is lawful or not.
13:42That's precisely correct, Justice Jackson.
13:44And I think, you know, the way that we would normally look into an underlying tax liability is that the taxpayer would pay their money and then they would file a refund action.
13:53And so all we are saying here is that Section 6330 has no work left to do.
13:57Ms. Rose, I understand that would be a perfectly sensible statute to write.
14:02And Congress could have done that.
14:04But Congress, I think, also, rational Congress could say, hey, once you issue a levy, taxpayer can bring anything about his underlying tax liability in that proceeding too.
14:16And maybe they thought that was more efficient.
14:19Maybe they didn't think about it.
14:21You know, maybe.
14:22I mean, that would be.
14:23It's not irrational to think that Congress would want to do that, is it?
14:26So, Justice Gorsuch, I don't think it's irrational, but I think we know from the text of the statute that that's not what Congress intended here.
14:31This is not one-stop shopping to resolve all of a taxpayer's issues.
14:35And if I could point the court to a provision we haven't discussed yet this morning, E1, on pages 6a to 7a of our appendix.
14:43This is the provision that effectively stays the levy during the pendency of the Section 6330 proceeding.
14:49But in response to your question, Justice Gorsuch, it also does some other stuff.
14:52It tolls certain statutes of limitations.
14:55And one of the statutes of limitations that it's tolling is 6532.
14:596532, although it's somewhat unhelpfully summarized here as relating to other suits, it's actually the statute of limitations for a refund action.
15:07So, we know very well that Congress didn't design the most efficient system where it thought everything was going to get resolved in a refund, excuse me, in a Section 6330 proceeding.
15:17Instead, it expected that there would be follow-on refund suits.
15:20And I think we know that for two more reasons.
15:22One is that there's no refund jurisdiction here.
15:25It's very important that the tax court is a court of limited statutory jurisdiction.
15:30Respondent has not claimed that there is jurisdiction to provide a refund here, and it's lacking.
15:35And the other is that a Section 6330 proceeding can be resolved on any one of a number of issues that will not actually tell us anything about a person's unpaid tax or underlying liability.
15:45And again, that makes sense because to Justice Jackson's point, it's really just about the levy.
15:50And of course you might have to figure out whether the person actually owes money in the service of deciding whether the levy can go forward.
15:56But that's not primarily what this statute is doing.
15:58How often does this situation arise?
16:01Justice Kavanaugh, unfortunately, I don't have empirics for you on that.
16:04You know, we cited a statistic in our opening brief that there are about 30,000 Section 6330 proceedings a year.
16:09My sense, anecdotally, is that the number, you know, in a year that might have a mootness question like this is in the tens.
16:18You know, I would say probably less than 100, but I don't know for sure.
16:21What is usually at issue in these suits, if not the underlying tax liability?
16:25What are people fighting about?
16:26Sure.
16:27So, Justice Kagan, if you look at pages, again, 3A to 4A of our appendix, one of the things that you can do in a Section 6330 proceeding is bring a spousal defense.
16:37You know, another one is offer a collection alternative.
16:39So you might say, yes, I owe this tax, or I'm not even going to fight with you at this point about whether I owe this tax, but I can pay it on an installment plan.
16:46Please don't take my car.
16:47And that, I think, to the point I was making to Justice Gorsuch earlier, you know, it makes a lot of sense when we're talking about this informal hearing that can often be by telephone, through an exchange of correspondence, where we're just trying to get the liability paid.
16:59So it's like, don't levy.
17:00I promise to pay this.
17:02Let's try to work out a schedule.
17:03Exactly.
17:04That's the idea.
17:05That's the idea.
17:06I mean, I think C3C, that big C that I was talking about earlier, this balancing test, goes to that point as well.
17:11Because that's something that the appeals officer has to consider in every case, whether the taxpayer raises it or not.
17:17It's just, does this make sense?
17:19Does it make sense to take this more drastic remedial measure in this case?
17:23And the statute of limitations provision that you talked about, does that ensure that in...
17:30I was going to ask before you talked about that provision, like, what happens to somebody like Ms. Zuck when, you know, the months have rolled by, the years have rolled by?
17:39Is she always able to bring a refund suit?
17:43So, Justice Keegan, I think that that will depend on whether she has brought an administrative claim for a refund.
17:49Because generally, and, you know, I'm going to speak in generalities because the tax law is obviously quite complicated.
17:55But generally, a taxpayer must make an administrative refund claim before she can file a refund action.
18:02And so, if you just report an overpayment on your tax return, that counts.
18:06So, it's not necessarily a particularly high burden.
18:08But it would depend on whether the person had also done that because that is not...
18:12So, if the person did nothing and then there was a levy action, but then for reasons such as this, the levy went away, then she'd be out of luck because she did nothing in the first place?
18:24Well, I think it would depend on what her tax return said.
18:27If she had sort of claimed an overpayment at that point or filed another...
18:30So, it's a little hard to say if she did nothing because presumably she's at least filed a tax return.
18:34And so, I think I would need to know, you know, what happened there.
18:37But I think that whatever issue she would have there would have nothing to do with the Section 6330.
18:41It would be her own issue with respect to whether she had filed the administrative claim in the first place.
18:45Would it matter to you that the levy was resolved for other reasons?
18:52I mean, here there's no need for a levy because the IRS continued to credit these tax payments and so eventually there was no underlying liability.
19:02Does it matter to your argument the reason why the levy disappears?
19:06So, I think you can imagine situations in which the IRS says, you know, for some reason we're not proceeding with this levy right now,
19:15but we are not saying it's off the table, that might raise a different case.
19:18But I think in the main, when we're talking about a tax that's either been fully paid, as in this case,
19:24or abated is one of the ones that you see a lot of times in the case law, then the levy is just off the table.
19:29And so, no, I don't think the precise reason matters.
19:32It does bother me following up on Justice Kagan's question of whether or not the IRS can sandbag somebody.
19:45She doesn't know that the offset's not being made until you move for a levy.
19:50She then challenges the levy because she says, I paid my tax, and the IRS says no,
19:56and that gets fully litigated in 6330, and 5, 10, whatever number of years it takes the IRS to decide if collected what it needed, it drops to 6330.
20:08You're now saying to me that because she didn't say something administratively, E doesn't toll her statute of limitation.
20:17No, Justice Sotomayor, I want to be clear about this.
20:20So, all I'm saying is that E includes a tolling mechanism for the statute of limitations to bring your refund action.
20:27There is a different requirement that anyone, whether they faced a levy or not, would have to satisfy.
20:32And that is that—
20:33So, does she satisfy that here by the fact that she sent you a letter saying, I'm owed this money, and you guys said no?
20:40So, Your Honor, my understanding is that, consistent with the way that Respondent has pled their refund suit, which they have now filed in the District of New Jersey,
20:50they have satisfied that for most of the years in question.
20:54I think they would know better than I do if the underlying theory here is that—
20:57You can answer that.
20:58I think in their brief they said about $20,000 is up in the air.
21:03Right, and my point is that that just, as far as we can tell, has nothing to do with the Section 6330 proceeding.
21:08That is because those are the 2014 and 2015 tax years, and in the time required to do that as an administrative matter,
21:15they just haven't asked—or they haven't stated that they overpaid as to those years.
21:19And you're pointing to the statute of limitations provision to demonstrate that Congress also thought that prepayment had nothing to do,
21:26or seeking—challenging the underlying tax liability had nothing to do with this 6-30-30 action.
21:36So, maybe we're saying the same thing, but the way that I'm thinking about it is that what we know from the tolling of the refund suit
21:42is that Congress knew that this 6-30-30 proceeding wasn't going to resolve all issues.
21:47Right. And I go back to the—
21:48There might need to be—oh, I'm sorry.
21:49Sorry, finish your—
21:51There might well need to be refund actions.
21:53I would still really love at some point to talk about the remedial issue here, but Justice O'Meara, please.
21:57Just one collateral estoppel question.
21:59Sure.
22:00Assume—you said we can't use that tax court determination as collateral estoppel in the lawsuit. Why? Why not?
22:13So, Justice Sotomayor, what I meant to say was that you can't use the appeals officer's determination
22:20because that just has sort of no legal effect going forward.
22:26What happens here is that the appeals officer decides whether the levy can go forward
22:31or whether there's an installment plan or something else that could forestall collection.
22:35All I meant to say was that there's no need to kind of vacate that appeals officer determination
22:41because once there's no reason, no lawful basis for the IRS to levy, they're not going to levy.
22:48There's sort of nothing else to be done here. We are done with the Section 63-30 proceeding.
22:51If that's true, why you're—
22:53Sorry, please.
22:54Well, I was just going to say before your time runs out, what would you like to say about the remedial issue?
23:00I very much appreciate that, Justice Alito.
23:03So a few points. I think some of these have been covered.
23:06But, you know, I think it's important to just situate ourselves in the tax court
23:09where the tax court needs to have specific statutory authority.
23:12It doesn't have the tax equivalent of Section 1331 jurisdiction.
23:15It has these specific proceedings.
23:17And it doesn't have general remedial authority.
23:19So there's no refund—no refund authority has been specifically given to the tax court in this case.
23:25No overpayment authority. I think my friend agrees with those.
23:28The only statutory citation he's provided for a remedy in this case, if he's right that the tax court proceeding can go forward, is E1.
23:38And so the theory is that E1 provides for an injunction against a levy.
23:43And so if it provides for an injunction, it must, on my friend's view, also provide for the milder form of declaratory relief.
23:51I think if you read E1 there's at least two problems with that.
23:54Number one is that it actually only provides for an injunction against the levy.
23:59And so there's no levy at this point, and therefore there's no lesser authority to provide declaratory relief.
24:05The second problem is that it's actually a stay much more than it's an injunction.
24:10This is not a permanent injunction provision.
24:12This is a provision that says in the first sentence that the levy actions which are the subject of the requested hearing shall be suspended,
24:20and then allows the tax court to come along and enforce that suspension through an injunction, but again only during the period in which the Section 6330 proceeding is pending.
24:30And so that can't provide permanent relief in either injunctive or declaratory form.
24:34Ms. Ross, why couldn't the tax court simply vacate the appeals office decision?
24:41So, Justice Gorsuch, I think if the…
24:44Why wouldn't it have jurisdiction to do that?
24:46So, I guess my first answer would be it really wouldn't make a difference.
24:50It wouldn't give respondent to anything because this levy is not going to go forward.
24:55There's no longer a levy in this case.
24:57And so vacating, you know, as I was saying earlier, this has no sort of forward-looking stare decisis effect, and so it wouldn't give them anything.
25:03No, but we just have two executive officers talking to one another here anyway, right?
25:08And one could say, well, that decision's vacated.
25:13Wouldn't it have authority to do that?
25:15You know, I mean, perhaps it would, but I still really struggle to see how that would be different than dismissing the appeal for mootness purposes.
25:22Do you want any further exchange?
25:24I'm afraid I do have one more question, but I'll wait my turn.
25:27You can go ahead right now.
25:28Thank you, Chief, for your indulgence, and my colleagues, too, on tax law, of all things.
25:38What do we do with the IRS's prior position?
25:41It's another footnote here, 36 of the PEDAP, that suggested mootness motions should be filed if the tax liability has been fully paid and the taxpayer raises no other relevant issues.
25:59It seems like the government's changed its position with respect to what follows after and.
26:04I'm sorry, Justice Gorsuch.
26:05Could you just give me the page again?
26:06I want to make sure we're looking at this.
26:08I want to move to a footnote 36.
26:11Sure.
26:12So I think I would have two answers for you on that.
26:15The first is sort of well in line with our colloquy so far this morning, is that IRS chief counsel notices are not binding.
26:22And so I think even if there was a change, that is sort of neither here nor there.
26:26I also believe that the change that was alleged here was, I think the second notice, which I'm not seeing as I look at it quickly, was sometime around 2005.
26:36This statute was passed in 1998.
26:38And so I think the fact that kind of the chief counsel was getting their head around how these things would work in practice at that period, you know, 20 years ago, really doesn't say much about what the IRS's position should be at this point.
26:49Thank you, counsel.
26:50Justice Thomas?
26:51Justice Alito?
26:52Justice Sotomayor?
26:53Justice Sotomayor?
26:54Anything further?
26:55Justice Kamenor?
26:56Justice Barrett?
26:57Justice Jackson?
26:58Thank you, counsel.
26:59Thank you, counsel.
27:04Mr. Jarefsky?
27:05Mr. Chief Justice.
27:19Mr. Chief Justice, and may it please the Court.
27:22The IRS can't evade the Tax Court's jurisdiction to review the Appeals Office's determination of a taxpayer's liability or unpaid tax simply by keeping the taxpayer's money through discretionary offsets.
27:33In Section 6330D, Congress gave the Tax Court jurisdiction to review not just the proposed levy, but also the taxpayer's challenge to her liability and unpaid tax.
27:44So if a taxpayer disputes the Office's resolution of her liability and unpaid tax, Section 6330 review isn't moot just because the IRS stops pursuing a levy.
27:54To the contrary, if the taxpayer wins, she is entitled to, and likely will receive, money.
28:00Under D1, a taxpayer may petition the Tax Court for review of the Appeals Office's determination.
28:07The Court has jurisdiction to review that determination, which Paragraph C2 and 3 make clear, encompasses the issues that the taxpayer raises, including liability and unpaid tax.
28:19Moreover, Paragraph D1, which is the key provision creating tax court jurisdiction, says nothing about needing a continuing levy for tax court jurisdiction.
28:28It requires only a determination.
28:30That makes sense.
28:32Congress sought to give taxpayers process and prevent unfair IRS collection practices, not to reward IRS gamesmanship and force taxpayers to challenge adverse appeals office determinations by starting over in district court.
28:45The tax court's review jurisdiction means that the case isn't moot.
28:49The jurisdiction to review the Appeals Office's determination, under D1, comes with jurisdiction to rule, including reversing and ruling in the taxpayer's favor on liability and unpaid tax issues.
29:02If Zook wins, the IRS will likely refund or credit her in a future tax year.
29:07The tax court's authority comes from the jurisdictional grant in 6330D, jurisdiction to review, and thus necessarily to affirm, vacate, or reverse the Appeals Office's determination, which includes liability and unpaid tax.
29:21I welcome the Court's questions.
29:23Do you have an example where what you just articulated actually has occurred?
29:30Meaning where the—
29:31Any other proceeding?
29:33I don't, and I think that just goes to show how unusual this case is.
29:39In a typical—
29:40The Court could also show that this proceeding, 6330, does no more than decide whether or not there's a levy.
29:49Well, I don't think that's right, Justice Thomas, because under C3 and under C2B, if the existence or amount of the underlying liability are challenged,
29:59the Appeals Office has to consider that, has to make a determination about it.
30:03Here the Appeals Office did.
30:04It was a determination adverse to my client, but it was, in fact, considered.
30:09So do you have any example of under 6330 of anything other than a determination with respect to a levy?
30:19Refund or anything else?
30:22I don't, but again, if you think about the limited universe of cases in which this is going to come up.
30:31The Appeals Office is making a determination about the existence or the amount of the underlying tax liability.
30:36Yes, in connection with a levy.
30:38It is the rare case, like this one, where the IRS then moots the case when it's pending decision in the tax court.
30:47But isn't the default for money in this—with the IRS, isn't it post-deprivation review?
30:55I mean, isn't this an unusual—this is an exception to post-deprivation review?
30:59It is an exception.
31:01It is also an unusual statute that Congress created.
31:03But in creating it, Congress hinged tax court jurisdiction not on a continuing levy, which it easily could have said in D1, just as Ms. Ross pointed out.
31:13Congress pointed to levies elsewhere in 6330.
31:16But, counsel, that's the whole context of the statute.
31:19And your argument seems to be equating determination with consideration in C3, right?
31:26You say that the court has jurisdiction to review the determination of liability and unpaid tax, as though what the hearing officer is doing is making that determination.
31:40But when we look at the statute, we say—it says, the determination under this subsection shall take into consideration things like unpaid tax.
31:51So it appears as though Congress was very clear that there are considerations to include the unpaid tax that should be thought about when you're making the determination.
32:02And Ms. Ross says the determination is whether or not the levy goes forward.
32:07Justice Jackson, I think what the Appeals Office is doing is both.
32:11It is making a determination about whether the levy can go forward, which is necessary for the Appeals Office to issue its findings.
32:19But it is also making a determination about the issues—
32:22That's not what the statute says.
32:23The statute says the determination shall take into consideration the unpaid tax.
32:30The determination.
32:31And then when we get down to tax court jurisdiction, it says such determination, such matter—determination singular, not plural.
32:41I mean, it's pretty clear that the statute is about a particular determination—that is, whether the levy will go forward.
32:48And Congress is providing people with notice and an opportunity to be heard with respect to that determination.
32:54And so I guess the question is, once that determination is no longer necessary because, for whatever reason, the IRS is no longer seeking a levy,
33:04it just seems odd that you say that there's some jurisdiction left to still say something about the considerations that the statute says you're supposed to look at in making that determination.
33:18So, Justice Jackson, a couple of points in response to that.
33:21One, I don't ascribe much significance to the singular determination given the Dictionary Act, that singular can also mean plural.
33:29But even with respect to this determination, if you look at what the determination was in this case, the initial determination at Cert Appendix 62A,
33:39it talks about how the appeals office reviewed both the tax payment transfer request and the request for penalty abate.
33:46But how about we look at it as it exists in the statute?
33:49I mean, it's—I appreciate that determination can be plural, but it says the determination, such determination.
33:56There's nothing about that that suggests that the appeals officer is vested with the authority to make more than one determination.
34:03There's also nothing in D1, which doesn't mention a levy, in C3B, which doesn't mention a levy, in C2B, which doesn't mention a levy, in C2B, which doesn't mention a levy,
34:15and in C2A, which distinguishes—it uses a disjunctive or to distinguish between issues relating to the unpaid tax or the proposed levy.
34:24And so in these key provisions, in C and D, Congress didn't use the levy language.
34:30Can I just ask you one final question and then I'm done?
34:32Why is it gamesmanship for the IRS to get rid of the terribly punitive and coercive levy mechanism in the context of this particular case or any case?
34:44I mean, I understand you're saying, oh, that's sort of gamesmanship.
34:47But really, the only reason why people are getting notice in a hearing is because everybody recognizes that a levy is a really big deal.
34:54So when the agency says, we're not going to do a levy anymore, it seems strange to me that that's considered, like, a bad thing.
35:01So the gamesmanship or the potential abuse comes from letting the IRS, on the one hand, begin this process with a levy,
35:08and then 10-plus years later pull the rug out from under the taxpayer, force them to start again in a refund action,
35:16and potentially do so—again, using the government's sole discretion about whether to apply an offset—
35:21do so after they've lost a determination before the appeals office in order to mood out, on the government's view, the tax court appeal.
35:30Keep going.
35:32That's not what Congress contemplated in 6330 when it pegged tax court jurisdiction not to a continuing levy,
35:39which, again, it could have said—it obviously knew how to use the word levy throughout the statute,
35:42but it didn't in D1 when it just talked about the determination.
35:45Just want to make sure you've addressed 6532 relating to other suits in E1 that Ms. Ross raised.
35:53Yeah.
35:54So a couple of points on E1 and on that argument.
35:57One, the limitations argument that Ms. Ross made could easily cut in exactly the opposite direction.
36:03Congress could have thought that the reason it was staying the limitations period for a refund action
36:08was to avoid the need for taxpayers to file a protective and duplicative action
36:13because a Section 6330 action might resolve the liability and tax issues.
36:18There's no need to run to federal court at the same time that the 6330 proceeding is pending.
36:23In addition to that, as Ms. Ross's colloquies with the court showed,
36:28that tolling in E1 doesn't protect taxpayers in all circumstances
36:33because it doesn't absolve the taxpayer of having to file the administrative refund claim
36:38within that two-year time period.
36:40And in fact, here there are a couple of years for which Ms. Zook can't recover in the refund action
36:46because she didn't file the timely administrative refund claim.
36:49So the limitations provision that Ms. Ross pointed to in E1 doesn't solve this problem
36:54and, if anything, points in our favor.
36:58So the statutory argument here is ultimately quite simple.
37:04C2A talks about any issue relevant to an unpaid tax or proposed levy.
37:09C2B talks about underlying liability.
37:12C3 makes those issues part of the determination.
37:16And D1 hinges tax court jurisdiction on a petition for review of the determination.
37:22Once the tax court has that jurisdiction, it has under D1 the authority to act
37:30that is read against background principles of appellate review.
37:34It's similar to APA 706 principles.
37:37The tax court can hold unlawful or set aside agency findings and conclusions.
37:42It can vacate the appeals officer's determinations about the unpaid tax and liability issues.
37:49The other analogy I would draw here, it's similar to interlocutory appeal under 1292B
37:56or to review of remand orders under 1447D.
38:00Once there is jurisdiction over an order, which is analogous to the determination here,
38:05that appellate jurisdiction also includes issues that are fairly included within the order
38:10and here fairly included within the determination.
38:15With respect to mootness, there remains a live disputed issue about unpaid liability and unpaid tax.
38:23Ms. Zook was injured by the misallocation of her money by the IRS.
38:29That injury is obviously traceable to the IRS and it's redressable by a favorable ruling
38:34because presumably the IRS will comply and will either credit Ms. Zook in a future year
38:39or refund her money if a court were to hold that she was entitled to that.
38:45In terms of empirical numbers, the government has not come forward with any statistics to show that the sky will fall
38:57if the court affirms the Third Circuit's ruling and rules in our favor here.
39:01There is a recent report from the IRS Taxpayer Advocate showing that between 2004 and 2018,
39:09only a little over 1% of levy notices actually resulted in a CDP hearing being sought.
39:17Less than 1% then resulted in a tax court proceeding.
39:22And the government has not come forward with other examples of where cases like this are being mooted out.
39:28And so the sky's not going to fall and the tax court's not going to have an overwhelming burden
39:32if the court rules in our favor.
39:34Ruling in the government...
39:36I'm sorry?
39:37There are two other circuits who have ruled against this position.
39:41The Third Circuit was saying it wasn't going to follow the D.C. or Fourth Circuit, correct?
39:46Correct.
39:47So the issue has arisen at least twice other, two times, and two other courts have said no.
39:54Sure.
39:55So it's come up, as far as we can tell, a total of three times over the course of decades.
39:59My point is the sky's not going to fall.
40:01The tax court's not going to be overburdened by our position.
40:05Taxpayers in Ms. Zuck's position will be burdened,
40:08and I think Congress's purpose would be undermined by a ruling in the government's favor.
40:13Again, the IRS began this process with a levy.
40:16It shouldn't be allowed to pull the rug out from under taxpayers.
40:19Congress wanted to make tax court an available forum.
40:24It is a much more taxpayer-friendly forum than district court, particularly for low-income taxpayers.
40:30The Center for Taxpayer Rights Brief, page 18 to 19, describes that.
40:35And the limitations problems for taxpayers in these sorts of situations are real.
40:40I guess that cuts both ways, though, because if it happened all the time,
40:45I think there would be a stronger sense that while Congress wouldn't have wanted all these cases,
40:51you know, the unfairness that you point out, to be yanked around like this,
40:56where if it's happening very rarely, you know, you might think Congress wouldn't have thought about it.
41:03Well, but I think the real backstop here is that Congress said that you can't bring an underlying liability challenge in a 6330 action
41:12if you had a prior opportunity to bring that liability challenge.
41:16And so I think in a typical case, you're going to have a deficiency notice,
41:20and that's going to be the opportunity to challenge the underlying liability.
41:23It simply doesn't come up that much that these issues are resolved in 6330 proceedings.
41:29But where they are, Congress meant to provide a meaningful forum.
41:32And just to complete the point for Justice Sotomayor, yes, there are two cases over decades.
41:38But in those cases, the government gave up not only on the levy, but also on liability, as we pointed out in our brief in opposition to CERT.
41:46And so this is a highly unusual, as far as I can tell, unprecedented case where the government has given up on the levy, but is still keeping the taxpayers' money.
41:54And that, Justice Gorsuch, to your point, is why this determination still has significance.
41:59The determination is what is justifying the government keeping Ms. Zuck's money.
42:05Just out of curiosity, does Ms. Zuck's tax liability for 2014 and 2015 have anything to do with the issues in this case?
42:15Well, it does insofar as those—
42:19She's not seeking a refund for those years, right?
42:22Well, she is seeking a refund insofar as the government, the IRS, has offset her earlier liability with overpayments for those years.
42:33And she's saying—and we're saying that that's improper.
42:35For those two years?
42:36Correct.
42:37The Court has no further questions?
42:42I'm afraid you've got a couple.
42:45Plenty of time.
42:47Right, yeah.
42:48Hold on.
42:49I'm sorry.
42:50In answer to Justice Alito, we're only talking about the refund for those two years that were credited against her liability, or something else was credited?
42:59No, so there were several years of overpayments that the IRS offset against the earlier liability.
43:07And she's seeking to have the earlier liability erased because the $50,000 from 2010 and 2011, I think it were, should have been credited to her, but also to get those overpayments back that were used in order to improperly offset the—
43:22So she's looking for refunds from those overpayments?
43:23Correct.
43:24Correct.
43:25Okay.
43:27Can you explain to me just one more time the statute of limitations problem that you see arising from the government's position?
43:35Sure.
43:36So under the government's position, 6330 E1 does not toll the time for filing an administrative refund claim, which is a prerequisite to then bringing a refund claim in federal court.
43:50And you'd have no notice that you need to file a refund claim until there's a determination—until they pull the switcheroo on the levy.
43:58Correct.
43:59And it's too late.
44:00Correct.
44:01Yeah.
44:02Okay.
44:03And then, just curious, do you think Article III mootness principles apply in an executive tribunal like the tax court?
44:11Not to avoid the question, but I don't think you need to decide it.
44:16I understand.
44:17I understand.
44:18You're a smart lawyer in front of me, and I've got a chance to ask you the question.
44:22And my colleagues are being very patient, so briefly, thoughts?
44:25So I think as a practical matter, it makes sense to think that Article III mootness principles do apply, because the way this case would proceed, it's going to go from the appeals office to the tax court and then up to the Third Circuit.
44:37And then when we get to the Third Circuit, the Third Circuit is going to apply Article III principles.
44:40So it doesn't make a whole lot of sense for the case to proceed all the way up to that point, without regard for Article III, only for the Third Circuit to then throw up its hands and say, nothing we can do because Article III doesn't apply.
44:51So the tax court does apply those principles, and I think it makes sense.
44:55Thank you, counsel.
44:57Rebuttal, Ms. Ross?
44:58Thank you, Mr. Chief Justice.
44:59I hope to make just three hopefully quick points.
45:10The first is that my friend spoke a lot about review jurisdiction under 6330 and that being similar to sort of APA review.
45:19I think that's not the right way to think about this case.
45:21Again, the tax court needs very specific authorization to provide any type of relief.
45:27And so if you look at footnote four of our brief, we discussed the fact that there's no overpayment jurisdiction here.
45:34I think what Respondent is really asking for is something that looks like overpayment jurisdiction.
45:40When Congress has wanted the tax court to have the authority to calculate someone's overpayment and, in fact, to say, you know, you, Commissioner, need to go back and give that money to the taxpayer, it has specifically provided for that.
45:55So I would point the court to the Greent-The-Petty case that's cited in footnote four of our brief.
45:59Section 6512B does this in deficiency actions.
46:03I think it's really important that there's not just sort of free-floating general review jurisdiction in the tax court.
46:09The second point I would make on gamesmanship, Justice Jackson, I think you're exactly right.
46:13I don't think it's correct to think about, in the D.C. Circuit's words, in Wilson, the taxpayer getting exactly what she wanted when she came into the refund suit, meaning for the levy to go away.
46:25I don't think it's right to think about that as gamesmanship of any sort.
46:30I think here the IRS used the tools that Congress gave it to have this debt go away without having to finally carry out a levy on Respondent's property.
46:39I think this relates a little bit, Justice Gorsuch, to your question about Section 6532.
46:44I don't think it's correct to say that the taxpayer would not have been on notice that she needed to file an administrative refund claim unless and until the levy went away.
46:53She would always need to file that, again, because most taxpayers are never going to wind up in a levy proceeding.
46:59And so from the beginning, they are supposed to file an administrative refund claim if they think that they are due a refund.
47:05The third point, there was some suggestion that there are some provisions in the statute that don't speak specifically about levies.
47:12I think they use collection action or unpaid tax.
47:15We've already spoken about unpaid tax today.
47:17I really hesitate to further complicate this case.
47:20But I think the reason why the language is broader in some places is that 6320, which is a statute that we cite in our brief, applies the 6330 procedures when the government has filed a notice of a federal tax lien.
47:33And so that's why we're talking about collection actions a little bit more broadly.
47:37I don't think anything in there suggests, as I took my friend to suggest, that that doesn't mean that we're focused on a levy when the levy is what's before the court.
47:45To take a step back, you know, Section 6330, I think, is dense.
47:50It's technical, as we've explored this morning.
47:52But I think it plainly provides a prepayment mechanism for review of a challenged levy.
47:59In this case, Ms. Zuck has fully paid her 2010 taxes, and there is no longer a levy.
48:04Section 6330 is, therefore, just no longer the right mechanism for her.
48:08And we would ask that the court reverse the Court of Appeals' contrary judgment.
48:13Thank you, counsel.
48:15Part of the Court of Appeals against cases submitted.
48:16Summitted.