IRS Rebuffed by Appeals Court on Mooting of Tax Collection Case

The IRS can’t kill a taxpayer’s lawsuit challenging her tax bill by withholding the taxpayer’s refund and applying it to the disputed liability, a federal appeals court ruled Friday.

The Third Circuit’s decision overturned the US Tax Court’s 2022 ruling that Jennifer Zuch’s case was moot after the IRS applied her 2018 refund to the remaining 2010 taxes it claimed she owed. The agency did so after Zuch filed her suit and then successfully moved for the court to dismiss her case.

“When Congress grants taxpayers the right to challenge what the Internal Revenue Service says is owed to the ...