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When a taxpayer requests a Collection Due Process (CDP) hearing, they may want to argue that they do not owe the tax the IRS is trying to collect. Sometimes the law allows them to raise that issue, but it does not if the taxpayer has already received a notice of deficiency or otherwise had an opportunity to challenge the underlying liability, including through the Independent Office of Appeals (Appeals). When taxpayers are allowed to challenge the underlying liability in CDP, it is natural to expect a decision on the merits, either at the Appeals CDP hearing or if necessary from the Tax Court. But after the Supreme Court’s decision in Commissioner v. Zuch, that expectation no longer holds. Under Zuch, a taxpayer can do everything the statute requires and still leave court without a judicial determination as to what they owe. Such a result violates a taxpayer’s rights to pay no more than the correct amount of tax and to challenge the IRS’s position and be heard.
In this post, I walk through what Zuch held, how a recent Tax Court order shows the practical stakes of the decision, and why Congress should take additional actions to fully protect taxpayers. Congress has already taken the first steps to remedy this result through the Taxpayer Due Process Enhancement Act (H.R. 6506), which the Ways and Means Committee advanced on December 10, 2025.
Congress created CDP in 1998 to give taxpayers a meaningful opportunity to contest proposed levies and Notices of Federal Tax Lien. A taxpayer who receives a CDP notice can request a hearing with Appeals, and after Appeals issues a notice of determination, generally may petition the Tax Court within 30 days. In some cases, the taxpayer can also raise the underlying tax liability at that CDP hearing and have the Tax Court review it under IRC § 6330(c)(2)(B).
In Zuch, the Supreme Court adopted a narrow view of the Tax Court’s review in a CDP case, holding that the Tax Court’s jurisdiction under IRC § 6330(d)(1) terminates once the lien or levy is no longer at issue. In Ms. Zuch’s case, the IRS used later year overpayments to fully satisfy the liability at issue and released the levy. Because there was no longer a levy to stop, the majority concluded that the Tax Court lacked jurisdiction to decide anything further, including a determination of the underlying liability.
In his dissent, Justice Gorsuch warned that under this approach the IRS can cut off Tax Court review by choosing when and how to collect. He also noted that telling taxpayers to file a refund suit instead is often unrealistic, especially when strict refund claim deadlines have expired while CDP and Tax Court proceedings are still pending.
On December 4, 2025, the Tax Court issued an order in All Is Well Homecare Services, LLC v. Commissioner that shows how Zuch can produce harsh results for taxpayers.
In this case, the taxpayer was a small home health care business that requested a CDP hearing for employment tax liabilities and indicated it wanted an offer in compromise (OIC). Appeals initially sustained the proposed levy, and the taxpayer petitioned the Tax Court. On remand, the IRS applied credits from later periods, accepted the OIC, and released the liens. Appeals then issued a supplemental notice of determination stating that the proposed levy “is no longer warranted.”
Relying on Zuch, the IRS moved to dismiss, arguing there was no longer a collection action for the court to review. The taxpayer objected, pointing to the risk of future levy if the OIC was later revoked. The taxpayer also asserted that the IRS had misapplied Employee Retention Credits and owed the business a refund, an issue that the taxpayer believed should be resolved in the CDP case.
The Tax Court granted the IRS’s motion to dismiss. The court concluded that once Appeals determined a levy was no longer warranted and the IRS disclaimed any intent to levy, there was no jurisdiction for the Tax Court to address the credit and refund issues under IRC § 6330(d)(1). The practical result was stark: after years of CDP and Tax Court proceedings, the taxpayer did not receive a merits decision on its credit dispute.
Zuch and the recent All Is Well order reveal serious gaps in the protections Congress intended CDP to provide. They make CDP and Tax Court review an unreliable path to a merits-based resolution. A taxpayer can do everything right: request a CDP hearing, raise issues with Appeals, and timely petition the Tax Court yet still never receive a final determination on what they owe if, for example, the IRS fully collects through offsets and then declares that a levy is no longer warranted.
Additionally, as the dissent in Zuch suggests, the fallback remedy of refund litigation may not grant a taxpayer full relief. To pursue a refund suit, a taxpayer must first file a timely administrative refund claim under IRC § 6511. Those deadlines can quietly expire or limit the amount recoverable through the refund claim while a CDP hearing and Tax Court case are pending. A taxpayer must generally pay the liability in full prior to the filing of the refund claim as well as the costs associated with starting a second lawsuit in district court or the Court of Federal Claims, which is an unrealistic option for many small businesses and individual taxpayers.
Zuch raises due process concerns when collection action is withdrawn. A taxpayer typically receives only one CDP hearing for a given tax period and type of collection action. If the IRS abandons collection after that hearing and later restarts collection on the same liabilities, the taxpayer may not get a second CDP hearing with Tax Court review, but only an IRS “equivalent hearing,” which does not provide a right to Tax Court review.
On December 10, 2025, the House Ways and Means Committee approved the Taxpayer Due Process Enhancement Act (H.R. 6506), which takes important steps toward fixing these problems. The bill would accomplish the following:
In short, these reforms would overturn Zuch’s jurisdictional holding in CDP cases, prevent offsets from cutting off judicial review, and help ensure that taxpayers do not lose refund rights while pursuing CDP relief.
Even if Congress enacts H.R. 6506, important gaps would remain. First, the bill does not address the “one hearing” limitation. Again, a taxpayer is generally entitled to only one CDP hearing for a given tax period and type of collection action. As the All Is Well order illustrates, there are real situations where the IRS withdraws or abandons a collection action after a CDP hearing and might later restart collection on the same liabilities, e.g., after an OIC or installment agreement default. In such cases, taxpayers have used their one CDP hearing and are limited to an “equivalent hearing,” which does not carry a right to Tax Court review.
Congress should create an exception to the “one hearing” limitation for cases when the IRS withdraws or abandons collection. If the IRS has effectively reset the collection episode by withdrawing or abandoning the prior levy or lien and later initiates the same collection action for the same tax and period, taxpayers should be entitled to a new CDP hearing with the full protections of IRC § 6330, including Tax Court review.
Second, H.R. 6506 would expressly authorize the Tax Court to review a CDP determination and decide any underlying tax liability that the taxpayer properly disputed in the CDP hearing, and the court would retain that jurisdiction even if the IRS later abandons the collection action. But the bill does not explicitly address what happens if, by the time the court rules, the IRS has already collected more than the correct amount.
Several cases have held that the Tax Court lacks independent authority under IRC § 6330 to determine an overpayment or order a refund for credit. As a result, even after a favorable Tax Court merits determination of the correct liability, taxpayers may still have to rely on the administrative refund process, as protected by H.R. 6506’s refund-deadline suspension and offset limits, or pursue separate refund litigation if the IRS does not make them whole. This gap potentially subjects taxpayers to additional delays, expenses, and uncertainty while waiting for the refund of an overpayment a court has already determined.
Congress should consider clarifying the Tax Court’s remedial authority in CDP cases. When the Tax Court determines the correct amount of the underlying liability in a CDP case, it should also have clear authority to order implementation of that determination, including directing the IRS to reverse or reapply misallocated credits and, where appropriate, pay any resulting overpayment. Without an explicit remedial provision, taxpayers risk duplicative proceedings and may still be forced into separate refund litigation to obtain complete relief.
This approach mirrors the Taxpayer Assistance and Service (“TAS”) Act § 309 (discussion draft) and my recommendation for Tax Court credit and refund jurisdiction in the National Taxpayer Advocate 2026 Purple Book. These measures would avoid duplicative litigation and allow taxpayers to obtain complete relief in a single forum.
After Zuch, taxpayers can invest years in CDP and Tax Court proceedings and still never receive a merits decision on their underlying tax liabilities or their related credit and refund claims. The IRS effectively controls whether and when the Tax Court may act by the timing and form of the agency’s collection efforts, what Justice Gorsuch called a “roadmap for evading Tax Court review.” For many taxpayers, especially small businesses and individuals with limited resources, the theoretical alternative of a separate refund suit is not a realistic remedy.
The Taxpayer Due Process Enhancement Act is an important step toward restoring balance. By giving the Tax Court explicit and retained jurisdiction over underlying liabilities that are properly disputed in CDP and suspending refund claim deadlines during CDP, the bill addresses several of the most troubling consequences of Zuch.
To fully protect taxpayer rights, however, Congress should also ensure that taxpayers are not permanently barred from CDP when the IRS withdraws and later restarts collection and that the Tax Court has clear authority to grant meaningful relief when the IRS has already collected more than the correct amount. With those additional changes, CDP can once again function as Congress intended: as a fair and effective check on IRS collection actions and a reliable pathway to a timely, merits-based resolution of disputes in the Tax Court.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget. NTA Blog posts are generally not updated after publication. Posts are accurate as of the original publication date. Portions of this blog may have been developed with the assistance of artificial intelligence. All AI-assisted content has been reviewed, verified, and approved by the National Taxpayer Advocate or TAS staff to ensure accuracy and integrity.