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Tax Court Lacks Jurisdiction Over Seriously Delinquent Tax Debt Notice Requirement

(Parker Tax Publishing June 2023)

The Tax Court held that the liabilities of a taxpayer who owed more than $100,000 in unpaid taxes and penalties relating to eight tax years constituted a "seriously delinquent tax debt" under Code Sec. 7345 and the IRS's certification of such debt to the Secretary of State for action with respect to the denial, revocation, or limitation of the taxpayer's passport was not erroneous. The court also held that the jurisdiction granted to it under Code Sec. 7345(e) does not extend to challenges to the IRS's compliance with the requirement under Code Sec. 7345(d) that the IRS notify the taxpayer of the certification. Meduty v. Comm'r, 160 T.C. No. 13 (2023).


Prince Amun-Ra Hotep Ankh Meduty failed to file timely tax returns for the 2003-07, 2009, and 2012 tax years. For each of these years except 2007, the IRS prepared a substitute for return under Code Sec. 6020(b) and later assessed the tax shown on the substitute for return with penalties and interest. Meduty filed a belated tax return for 2007, and the IRS assessed the amount shown on that return. The IRS also assessed frivolous tax return penalties against Meduty with respect to his 2005-08 tax years.

In an effort to collect these liabilities, the IRS levied against Meduty's right to receive his state income tax refunds on a rolling basis from 2012 through 2018 as liabilities for various periods were assessed. On July 3, 2018, the IRS sent via certified mail to Meduty's last known address a notice of intent to levy with respect to his outstanding liabilities. Although the IRS received a signed return receipt three days later, Meduty did not request a collection due process (CDP) hearing or otherwise contest the levy. The IRS recorded an "initial levy" transaction code with respect to each of the periods and liabilities at issue on August 31, 2018.

On October 1, 2018, the IRS certified Meduty as an individual owing a seriously delinquent tax debt arising from tax years 2003, 2004, 2005, 2006, 2007, 2008, 2009, and 2012. The IRS concurrently sent Meduty, at his last known address, a Notice CP508C, Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the State Department. At that point, Meduty's assessed liabilities totaled $106,346.

Approximately three years later, Meduty petitioned the Tax Court to review the certification of his debt as seriously delinquent tax debt. In addition to various frivolous arguments, Meduty also raised one nonfrivolous argument - that the IRS did not send him proper notice of the certification consistent with Code Sec. 7345(d).

Under Code Sec. 7345(a), if the IRS certifies to the Treasury Secretary that a taxpayer has "a seriously delinquent tax debt," such certification shall be transmitted to the Secretary of State for action with respect to denial, revocation, or limitation of the taxpayer's passport. Generally, a "seriously delinquent tax debt" is a federal tax liability that has been assessed, exceeds $50,000 (adjusted for inflation), and is unpaid and legally enforceable. In addition, the IRS must show that either (1) a notice of lien has been filed pursuant to Code Sec. 6323 and the administrative rights under Code Sec. 6320 with respect to such filing have been exhausted or have lapsed, or (2) a levy is made pursuant to Code Sec. 6331.

Code Sec. 7345(d) provides the IRS must notify the taxpayer of the Code Sec. 7345(a) certification, and such notification must include a description in simple and nontechnical terms of the right to bring a civil action under Code Sec. 7345(e). Code Sec. 7345(e)(1) permits a taxpayer who has been certified as having a seriously delinquent tax debt to petition the Tax Court to determine whether the certification was erroneous or whether the IRS has failed to reverse the certification. If the Tax Court finds that a certification was erroneous, it may order the IRS to notify the Secretary of State that the certification was erroneous. The statute specifies no other form of relief that the Tax Court may grant.


The Tax Court held that Meduty's liabilities constituted a seriously delinquent tax debt under Code Sec. 7345, and the certification to the Secretary of State was not erroneous. The court further held that it lacks jurisdiction under Code Sec. 7345(e) to review challenges to the IRS's compliance with the notification requirement set forth in Code Sec. 7345(d).

The court found that the IRS met the criteria to certify that Meduty had a seriously delinquent tax debt based on the Forms 4340, Certification of Assessments, Payments, and Other Specified Matters for Meduty's liabilities for 2003, 2004, 2005, 2006, 2007, 2009, and 2012. Although Meduty contested the validity of the underlying liabilities (primarily referencing run-of-the-mill tax-protester arguments), the court noted that it does not have jurisdiction to review such underlying liabilities. The court further found that, with respect to each year and type of liability, a levy was made under Code Sec. 6331. Thus, on the record before it, the court determined that at the time of certification Meduty's liabilities met the statutory definition of "seriously delinquent tax debt."

In addition, the court found that the jurisdiction Congress conferred in Code Sec. 7345(e) does not extend to the review of the IRS's compliance with Code Sec. 7345(d). The court noted that the text of Code Sec. 7345(e) focuses exclusively on the IRS's actions certifying seriously delinquent tax debts and authorizes the Tax Court (and district courts) to determine whether those actions were erroneous. The court noted that in McNeil v. U.S., 2021 PTC 85 (D. D.C. 2021), a district court found that Code Sec. 7345 does not say that a flawed or failed notice renders a certification erroneous. In the view of the Tax Court, the structure of Code Sec. 7345 confirms this result. Subsections (a) and (b) describe when the IRS must transmit certification to the Secretary of State and identify which debts qualify as "seriously delinquent tax debt." The court noted that neither suggests that notice is a prerequisite to a proper certification by the IRS of a "seriously delinquent tax debt." To the contrary, the court found that Code Sec. 7345(d) says that notice to the taxpayer should be contemporaneous with certification to the Secretary of State, so it logically cannot be a prerequisite to that certification.

The court struggled to see any prejudice adhering to a taxpayer who does not receive proper notice of the certification contemplated in Code Sec. 7345(d). The court observed that Code Sec.7345(e) supplies no period of limitations, and a taxpayer such as Meduty who does not receive proper notice (accepting his factual allegations in their most favorable light) is nonetheless able to challenge a certification. The court concluded that it did not believe its jurisdiction to determine whether a certification is erroneous encompasses patrolling compliance with the requirement in Code Sec. 7345(d) to provide notice to a taxpayer of the right to bring a civil action under Code Sec. 7345(e).

For a discussion of IRS certifications of seriously delinquent tax debts, see Parker Tax ¶262,190.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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