The U.S. Supreme Court will review a Third Circuit decision permitting a woman to continue challenging what she claims was an improper application of her tax payments to her ex-husband’s bill, even though the IRS ceased pursuing a proposed property seizure against her.
In an order list released Friday, the high court granted the IRS’ request to review the case, which centers on Jennifer Zuch’s ability to contest her $27,000 tax liability in the U.S. Tax Court. The IRS had used Zuch’s tax refunds to cover the debt and stopped seeking to levy her property but argued that this made the issue moot.
The IRS, in its October petition for review, claimed the Third Circuit’s March decision diverged from rulings by the Fourth and D.C. Circuits by holding that a pre-levy proceeding under Internal Revenue Code Section 6330 is not necessarily moot if the IRS ceases levy efforts.
The IRS asserted that letting the decision stand would grant the Tax Court excessive authority and disrupt the intended function of levy proceedings under Section 6330. This section was designed to allow the Tax Court to review IRS levies specifically for unpaid taxes, the agency said, arguing there was no longer any unpaid tax debt in Zuch’s case.
