“In the IRS’ view, even though Zuch still disputed her underlying liability, it had taken her money, so the case was over,” Zuch’s attorneys argued in their brief.
Initially, the Tax Court agreed with the IRS in 2022, ruling it lacked jurisdiction after the agency ceased pursuing the levy. However, the Third Circuit overturned this decision, stating the Tax Court could still address the dispute over Zuch’s liability. The appellate court further found that the IRS’ offsets, where it used refunds to cover the debt, were invalid.
The IRS countered in a reply brief last month, asserting Zuch’s claim that the issue is rare was incorrect. According to the agency, the scenario arises regularly when disagreements over proposed levies cease.
“There are tens of thousands of Section 6330 proceedings each year,” the IRS said.
The U.S. Department of Justice, which represents the government, did not immediately respond to requests for comment. Similarly, attorneys for Zuch were unavailable for comment.
The government’s legal team includes Solicitor General Elizabeth Prelogar and David A. Hubbert, Curtis E. Gannon, Frederick Liu, Francesca Ugolini, Jennifer M. Rubin, and Julie Ciamporcero Avetta from the Department of Justice, Tax Division.
