Vivian Ruesch v. Commissioner, 154 T.C. 13

The IRS assessed $160,000 in penalties under I.R.C. § 6038 against Vivian Ruesch for 2005–2010 and sent Notice CP508C certifying her as having a "seriously delinquent tax debt" under I.R.C. § 7345.
Ruesch filed a Tax Court petition challenging (a) the penalties (underlying liability) and (b) the correctness of the § 7345 certification.
Ruesch had timely requested a collection due process (CDP) hearing regarding a lien notice; collection is suspended when a CDP hearing is timely requested, which excludes the debt from being "seriously delinquent."
The IRS initially reversed its certification (due to miscoding), then recertified, and later concluded the CDP request was timely and again reversed the certification and notified the State Department.
The IRS moved to dismiss for lack of jurisdiction (as to the underlying penalty liability) and for mootness (as to the certification), arguing the Court has only limited review authority under § 7345 and that reversal supplied the requested relief.
The Tax Court held it lacks jurisdiction to redetermine the underlying § 6038 liability here; it does have jurisdiction under § 7345(e) to review certifications, but Ruesch’s certification challenge is moot because the IRS reversed and notified the State Department; the case was dismissed.

Issue	Ruesch's Argument	Commissioner’s Argument	Held
Whether the Tax Court may redetermine underlying liability for § 6038 penalties in this § 7345 passport action	Ruesch: Court can decide underlying liability here	IRS: § 7345 authorizes only limited review of certification, not redetermination of liability	No jurisdiction to decide underlying § 6038 liability in this case
Whether the Tax Court has jurisdiction to review whether the § 7345 certification was erroneous	Ruesch: Certification was erroneous and should be reversed	IRS: Court may review certification under § 7345(e) but cannot decide unrelated liability	Court has jurisdiction under § 7345(e) to review certification correctness
Whether the case is moot after the IRS reversed the certification and notified the State Department	Ruesch: Reversal is voluntary cessation and insufficient; relief incomplete absent abatement and lien withdrawal	IRS: Reversal and notification furnished all relief the Court could grant under § 7345	Moot — reversal and notice removed any live controversy under the Court’s § 7345 authority
Whether a later certification could be barred by res judicata such that dismissal now would deny future review	Ruesch: Certification can be litigated only once; res judicata would block a second challenge	IRS: Each certification is time-specific; later certifications can be challenged then	Res judicata does not bar future challenges to a subsequent certification

City of Erie v. Pap’s A.M., 529 U.S. 277 (2000) (defining when parties retain legally cognizable interest for Article III purposes)
County of Los Angeles v. Davis, 440 U.S. 625 (1979) (explaining mootness and voluntary cessation doctrine)
Wright v. Commissioner, 571 F.3d 215 (2d Cir. 2009) (Tax Court is a court of limited jurisdiction)
Naftel v. Commissioner, 85 T.C. 527 (1985) (jurisdiction continues until controversy is disposed)
Vigon v. Commissioner, 149 T.C. 97 (2017) (CDP case discussing mootness when IRS abates penalties)
Willson v. Commissioner, 805 F.3d 316 (D.C. Cir. 2015) (dismissing Tax Court case as moot despite other disputes outside its jurisdiction)
Qassim v. Bush, 466 F.3d 1073 (D.C. Cir. 2006) (voluntary cessation may not moot a case if recurrence is reasonably expected)
McCleskey v. Zant, 499 U.S. 467 (1991) (res judicata does not bar claims when subsequent events create a new case)
Kasper v. Commissioner, 137 T.C. 37 (2011) (Court cannot expand its statutorily limited jurisdiction)