The U.S. Supreme Court ruled against a taxpayer, finding that an IRS decision to abandon a collection method and seize taxpayer assets in another way deprived a lower court of authority to hear her appeal.

The nation’s highest court issued an 8–1 ruling in Commissioner of Internal Revenue v. Zuch on June 12, with Justice Amy Coney Barrett writing the majority opinion.

Justice Neil Gorsuch filed a dissenting opinion.

The appeal centers on the authority that the tax code provides the IRS to impose a levy to collect unpaid taxes.

A levy is a document issued by the IRS that allows the agency to seize property to satisfy a tax debt. Methods of seizure may include wage garnishment, taking money from a bank account, and taking and selling personal property such as a vehicle or real estate.

Before a levy proceeds, the taxpayer has a right to demand a hearing to dispute it. If an IRS appeals officer upholds the levy, the taxpayer has the right to seek review from the U.S. Tax Court, Barrett wrote in the new opinion.

In 2012, Jennifer Zuch and her then-husband, Patrick Gennardo, filed separate federal income tax returns for 2010. Zuch didn’t owe money, but Gennardo did. He filed an offer in a compromise document regarding the $50,000 in estimated tax payments that the couple had already made to the IRS. The IRS applied the payments to his account as a married-filing-separate taxpayer, which settled his account, the opinion states.

Weeks later, Zuch amended her 2010 return to report an extra $71,000 she had taken from a retirement account, which generated an approximately $28,000 tax liability. Zuch said the $50,000 in estimated tax payments should go toward her account, which she said would entitle her to a net refund of about $22,000, according to the opinion.

The IRS declined to apply the estimated tax payments to Zuch, informing her that it planned to levy against her property to collect the unpaid taxes it deemed owing. At a hearing, she said the IRS should have credited her for the estimated tax payments. An appeals officer with the IRS Independent Office of Appeals ruled against her, the opinion states.

Zuch appealed to the tax court, which sent the case back to the Office of Appeals with fact-finding instructions. The office upheld the levy, and the appeal resumed at the Tax Court, the opinion states.

Several years passed, and Zuch repeatedly filed income tax returns claiming she had overpaid and was entitled to a refund. Eventually, when her balance owed was zero, the IRS asked the Tax Court to dismiss the proceeding, arguing that the court no longer had jurisdiction because Zuch did not owe any money and there was no reason for a levy, the opinion states.

Jurisdiction refers to the legal authority of a court to hear a case.

The Tax Court sided with the IRS, finding it lacked jurisdiction. This meant that if Zuch wanted to get her overpayments back, she would have to start the legal process over, according to the opinion.

Zuch appealed to the U.S. Court of Appeals for the Third Circuit. That court vacated the dismissal by the Tax Court and found that the IRS’s decision to not move forward with the levy did not deprive the Tax Court of jurisdiction, the opinion states.

Barrett wrote in the opinion that the Tax Court ceased to have jurisdiction over Zuch’s appeal as soon as the possibility of a levy was gone.

A court’s authority to block a levy “necessarily includes the ability to make declarations about the validity of the tax obligations underlying it,” the justice wrote.

“But not when there is no levy. Without a levy, the Tax Court has no authority to render such conclusions,” she wrote.

Barrett wrote that Zuch may still sue the IRS for a refund and noted that she filed suit in the federal district court in New Jersey this past March.

The Supreme Court vacated the judgment of the Third Circuit and returned the case to that court “for further proceedings consistent with this opinion.”

Justice Gorsuch Dissents

In his dissent, Gorsuch said that after Zuch’s then-husband paid her 2010 tax bill, the IRS applied the payment to his separate tax debt even after he “insisted the money was meant for her tab, not his.”

Gorsuch said the IRS then filed a levy against her property, and Zuch spent more than a decade fighting that decision. Just when the Tax Court was about to rule, the IRS moved to dismiss the case without admitting “its mistake in crediting her husband’s payment to the wrong account.”

Instead, the IRS stated that Zuch had overpaid her taxes in subsequent years, so it had decided to retain—instead of refund—those overpayments to satisfy her disputed debt from 2010. IRS told the Tax Court that because the levy was withdrawn, the court no longer had jurisdiction over the case, the justice said.

The problem is that Zuch still had a live claim pending in the Tax Court, and if she had prevailed, the IRS would have had no reason for retaining the overpayments she made in subsequent years, Gorsuch said.

“Today’s decision holding otherwise leaves Ms. Zuch with no meaningful way to pursue her argument that the IRS erred or to recoup the overpayments she believes the IRS has wrongly retained,” Gorsuch said.

“Along the way, the Court’s decision hands the IRS a powerful new tool to avoid accountability for its mistakes in future cases like this one.”

Joe Bishop-Henchman, executive vice president of the National Taxpayers Union Foundation, told The Epoch Times that the majority opinion was “disappointing,” but he was glad Gorsuch dissented so he could explain “the danger of the majority’s reading of the law.”

The group filed a friend-of-the-court brief in support of Zuch.

“Ms. Zuch was about to win her case in Tax Court when the IRS invented this way for them to win by default. They seized other assets of hers and then said the original levy was no longer necessary,” Bishop-Henchman said.

“They’ll keep doing it unless Congress changes the law.”

Natalie Baldassare, senior media affairs manager at the Department of Justice, which represents the IRS, told The Epoch Times the department had no comment on the new ruling.

The Epoch Times sought comment from Zuch’s attorney, Shay Dvoretzky of Skadden Arps in Washington. No reply was received by publication time.

This article by Matthew Vadum appeared June 13, 2025, in The Epoch Times. It was updated June 15, 2025.