Case Law Spotlight: SEC v. Jarkesy – Potential Ripple Effects in U.S. Tax Enforcement

In SEC v. Jarkesy (2024), the U.S. Supreme Court ruled that when the government seeks civil fraud penalties, the Seventh Amendment entitles defendants to a jury trial — even in cases traditionally handled by administrative agencies.

While the case arose in the securities context, the decision is already influencing tax controversy. Taxpayers facing civil fraud penalties under the Internal Revenue Code are beginning to argue for jury trials rather than solely Tax Court or administrative resolution.

Why this matters for tax enforcement:

- IRS strategy shift – The ruling could alter how the IRS pursues civil fraud cases, potentially increasing the role of federal district courts.

- Litigation complexity – Jury trials change the evidentiary and procedural dynamics, requiring different defense strategies.

- Resource implications – More jury trials could slow the resolution of high-stakes tax disputes, impacting both the IRS and taxpayers.

At THEVOZ & Partners, we advise on complex tax controversies from both a U.S. and international perspective, ensuring clients are prepared for evolving enforcement landscapes.