The US Supreme Court on Monday declined to review a challenge by Herbert and Bonita Hirsch and Harvey and Diane Birdman over more than $15 million in civil tax fraud penalties imposed by the IRS. The move leaves in place a dispute over whether taxpayers facing those penalties can insist on a jury trial.
For Herbert Hirsch, the case turns on a basic question of who decides. The couples argued that fraud penalties assessed under the Internal Revenue Code are covered by the Seventh Amendment and that the US Tax Court was wrong to deny their demand for a jury. The Supreme Court’s refusal to take the case means that argument will not get a hearing there.
The petitioners tried to bolster their challenge by pointing to the high court’s 2024 decision in SEC v. Jarkesy, a ruling they said supports the view that certain civil penalties cannot be imposed without the protection of a jury. That framing made the dispute more than a routine tax fight. It asked whether a constitutional promise to a jury trial reaches deep into IRS fraud penalties that can run into the millions.
What the court left untouched is the Tax Court’s decision to proceed without a jury. That is the friction point in the case: the couples said the Constitution required one, while the Tax Court said no, and the Supreme Court’s Monday action closed the door on review for now. The record does not spell out how the penalties were divided between the two couples or how the Tax Court calculated each assessment.
For now, the result is straightforward. Taxpayers challenging large IRS fraud penalties will still have to confront a legal landscape in which the Supreme Court has declined to say whether the Seventh Amendment gives them a jury right. Herbert Hirsch and the others leave Washington without a ruling that could have reshaped that fight.
