Everyone knows robbery is wrong. However, when the IRS was confronted by a taxpayer who invoked a court process to halt an IRS levy, the IRS simply seized that taxpayer’s refunds from subsequent tax years. Worse, the IRS is now demanding that the case be dismissed, since its action mooted the case. In a brief we filed today with the U.S. Supreme Court, we argue that the IRS action is unlawful and undermines a 1998 law that allows taxpayers to challenge a levy prior to the levy actually being collected. The IRS cannot now try to institute a workaround to Congress’s protection by collecting money from another source.
The IRS argues that, because it took money from the taxpayer’s other sources, it no longer intends to apply the levy and the taxpayer’s pre-levy challenge is therefore moot. No, we argue: just because the IRS seized another pot of the taxpayer’s money in the exact amount it claims is owed in this case, and then voluntarily ceased its attempt to apply a levy, does not mean the underlying issue is resolved. As we explained, “every year Respondent will have to file tax returns and state that she made payments to the IRS. The IRS, in turn, will continue to issue deficiencies, and this cycle will occur year after year until the ultimate question of whether the IRS rightfully collected on the pre-levy is resolved.” We also argue that no case can be moot where a remedy still exists, and here the lower court can order the IRS to return the amount collected to the taxpayer.
The case is Commissioner of Internal Revenue v. Zuch, No. 24-416. The case will be argued on April 22, 2025.