Jarkesy and the IRS: Is There a Seventh Amendment Right to a Jury for Tax Penalties?

Two years after SEC v. Jarkesy, the Seventh Amendment still hasn’t put a jury in front of most IRS civil penalties. The Tax Court has now twice refused in published opinions, and the Supreme Court’s June 2026 decision in an FCC case strengthened the government’s position. A narrow argument for a jury trial on IRS civil penalties survives, though, for penalties the IRS assesses and collects without ever going to court. Taxpayers significant penalties should preserve it.

What Jarkesy Decided

The Supreme Court decided SEC v. Jarkesy on June 27, 2024. By a 6–3 vote, it held that when the SEC seeks civil penalties for securities fraud, the defendant gets a jury. Because those penalties punish and deter, they resemble common-law fraud remedies, and the Court refused to stretch the “public rights” exception to cover them. As some have recognized, the ruling opened the door to constitutional challenges in the tax context. That’s true. But the same opinion listed revenue collection among the historical public-rights categories, and subsequent tax cases have leaned into that exception.

The Tax Court Says “No”

In Silver Moss Properties, LLC v. Commissioner, 165 T.C. No. 3 (Aug. 21, 2025), the full Tax Court voted 17–0 that a taxpayer contesting the section 6663 civil fraud penalty has no jury right. Its reasoning: A Tax Court case is a suit against the sovereign, and Congress never provided a jury there.  (A friendly observation from your author: No jury because Congress did not statutorily provide for something that the Constitution guarantees??  And soverign immunity is a whole other topic….  A doctrine that is not textually housed in the Constitution, but derived from structural inference.)   The court placed tax penalties inside the public-rights exception under Helvering v. Mitchell, and it distinguished Jarkesy because that fraud victimized private investors, not the Treasury. Four months later, Riddle Aggregates, LLC v. Commissioner, 165 T.C. No. 12, applied the same reasoning to the 20 percent accuracy-related penalty.

And the Supreme Court passed on review, so it has not spoken directly. On June 22, 2026, it denied certiorari in Hirsch v. U.S. Tax Court, No. 25-739, where two couples facing more than $15 million each in fraud penalties had sought a jury through mandamus.

IRS Penalties and Juries

The government’s best answer to Jarkesy is that a right to a jury already exists, just not in the Tax Court. A taxpayer who pays and sues for a refund in federal district court can demand a jury trial under 28 U.S.C. section 2402. A Pennsylvania federal court used that logic in HDH Group, Inc. v. United States (W.D. Pa. Sept. 23, 2025), upholding a $6.6 million section 6700 penalty because the refund suit gives de novo review before a jury.  One just needs a measly $6-plus million (or whatever the assessment is in any given case) to access that Constitutional right.

Then came FCC v. AT&T, Inc., decided June 4, 2026. By an 8–1 vote, the Court held that FCC forfeiture orders issued without a jury don’t violate the Seventh Amendment, because the FCC can’t collect on them—it has no legal right to. The government must sue in that context, and that suit is tried de novo before a jury. The opinion never mentions the IRS or tax penalties.

Where the Argument Survives

Here’s the rub. An FCC forfeiture order effectively sits on a shelf until the government files a suit. But an IRS assessment doesn’t. Once the IRS assesses a section 6038 penalty for a missing Form 5471 or a section 6672 trust fund recovery penalty, it can file liens and levy bank accounts — no court involvement is necessary. If the Seventh Amendment requires a jury before liability becomes final, a self-executing assessment seems like a good place to test it.

One court, however, got it right (and I happen to be counsel to the taxpayer in that case). In United States v. Sagoo, No. 4:24-cv-01159-O (N.D. Tex. Sept. 19, 2025), the court dismissed a government suit to collect about $1.02 million in willful FBAR penalties, reasoning that the IRS had acted as prosecutor, jury, and judge. The government appealed, and we are currently up before the Fifth Circuit.

Preserving the Jury Argument

With tax penalties, raise the Seventh Amendment in the protest and again in any Tax Court petition, so the argument isn’t waived if a circuit court moves in the right direction. For a divisible penalty like the trust fund recovery penalty, choosing the refund forum by paying the amount tied to one worker for one quarter and suing for a refund puts the case before a jury without paying the full assessment first.  So the right is there.  But in principle, the system is still effectively requiring you to pay to access that Constitutional right to a jury.  That will never sit right with me, and it hints at one of the underlying problems in the Flora line of cases.  More to come on that soon.

For those facing international information return and FBAR penalties, there is another constitutional line of attack. The Eleventh Circuit held in Schwarzbaum that willful FBAR penalties can violate the Excessive Fines Clause, and that argument needs no jury. Our primer on IRS penalties and IRS penalty defense practice cover the other 150-plus.

For now, the jury box in a tax case sits in district court, and the price of admission is payment of the assessment. Jarkesy didn’t change that.  But it may ultimately change what the IRS can collect before a jury trial on IRS civil penalties.