FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL A. ZAPARA; GINA A. 

ZAPARA,

No. 08-74173 Petitioners-Appellees,

Tax Ct. No.

v.  9480-02L

COMMISSIONER OF INTERNAL OPINION REVENUE,

Respondent-Appellant. 

Appeal from a Decision of the

Tax Court

Argued and Submitted

February 17, 2011—San Francisco, California

Filed July 18, 2011

Before: Mary M. Schroeder and Sidney R. Thomas,

Circuit Judges, and Lynn S. Adelman,

District Judge.*

Opinion by Judge Thomas

*The Honorable Lynn S. Adelman, District Judge for the U.S. District

Court for Eastern Wisconsin, Milwaukee, sitting by designation. 

9691
COUNSEL

Nathan J. Hochman, Assistant Attorney General; Gilbert S.

Rothenberg, Acting Deputy Assistant Attorney General;

ZAPARA v. CIR 9693
Michael J. Haungs and Steven Parks, Attorneys, Tax Division, Department of Justice; Washington, D.C., for the appellant.

Paul J. Katz, Munger, Tolles & Ollson LLP; San Francisco,

California, for the appellees.

OPINION

THOMAS, Circuit Judge:

This appeal presents the question, inter alia, of whether the

Tax Court had jurisdiction in a hearing conducted pursuant to

26 U.S.C. § 6330 to review the Internal Revenue Service’s

failure to comply with its statutory mandate under 26 U.S.C.

§ 6335(f). We conclude that it did, and we affirm the judgment of the Tax Court.

I

Michael and Gina Zapara owe the IRS over $450,000 for

failing to report income derived from a fraudulent checkcashing scheme. To recover these funds, the IRS issued a levy

on accounts the Zaparas opened with a securities investment

company, into which the Zaparas had deposited approximately $450,000. Because the Zaparas did not use their names

to identify the accounts, the IRS believed the Zaparas were

attempting to conceal their ownership. The IRS therefore

issued a Notice of Jeopardy Levy, as authorized under 26

U.S.C. § 6330(f). 

Under the traditional levy process described in § 6330, the

IRS may place a levy on taxpayer property, but it must give

the taxpayer thirty days notice before imposition of the levy.

26 U.S.C. § 6330(a). Upon receiving this notice, the taxpayer

has a right to request a collection due process (CDP) hearing

9694 ZAPARA v. CIR
with the IRS Office of Appeals. Id. § 6330(b).1

 Under the

jeopardy levy provision, however, the IRS may impose a levy

before a hearing if it finds that “collection of tax is in jeopardy.” Id. § 6330(f). In such a case, the taxpayer must be given

the same CDP hearing “within a reasonable period of time

after the levy.” Id. During the CDP hearing, the Appeals Officer must “obtain verification from the Secretary that the

requirements of any applicable law or administrative procedure have been met.” Id. § 6330(c)(1). Additionally, the taxpayer may “raise at the hearing any relevant issue relating to

the unpaid tax or the proposed levy.” Id. § 6335(c)(2). Once

the hearing has been conducted and the Office of Appeals

issues a Notice of Determination, the taxpayer may appeal the

determination to the Tax Court. Id. § 6330(d)(1). 

After receiving notice of the jeopardy levy on their stock

accounts, the Zaparas invoked their right to a CDP hearing.

During this hearing, they requested that the IRS sell the stock

and apply the proceeds to their outstanding tax liabilities.

Under 26 U.S.C. § 6335(f), “[t]he owner of any property

seized by levy may request that the Secretary sell such property within 60 days after such request . . . .” Once that request

has been made, “[t]he Secretary shall comply with such

request unless the Secretary determines . . . that such compliance would not be in the best interests of the United States.”

Id. § 6335(f). Without mentioning the Zaparas’ request to sell,

the Appeals Officer issued a Notice of Determination concluding that the Zaparas were precluded from challenging

their underlying tax liabilities and that the jeopardy levy

would not be withdrawn. The Zaparas appealed to the Tax

Court. 

The Tax Court conducted a trial and issued an opinion

1CDP hearings are typically informal and may simply consist of one or

more written or oral communications between an Appeals Officer and the

taxpayer or the taxpayer’s representative. 26 C.F.R. § 301.6330-1(d)(2)

Q&A D-6. 

ZAPARA v. CIR 9695
affirming the Notice of Determination on the Zaparas’ inability to challenge the underlying tax liability. However, the Tax

Court found the IRS had violated § 6335(f) by failing to sell

the Zaparas’ stock within sixty days. To remedy this violation, the Tax Court ordered the IRS to credit the Zaparas’ tax

deficiency for the value of the stock sixty days after the sale

request. The Tax Court then remanded to the Appeals Office

to establish the value of the stock accounts on that date. The

IRS moved for reconsideration of the Tax Court’s decision,

arguing that the Zaparas did not make a sufficient request to

sell the stock. The Tax Court denied the motion, concluding

that the Zaparas appropriately requested a sale under

§ 6335(f). Based on the Appeals Office’s valuation of the

stock sixty days after August 23, 2001, the Tax Court ordered

the IRS to credit $47,501.06 against the Zaparas’ outstanding

tax liabilities. The IRS filed a timely appeal to this court. We

review the Tax Court’s order de novo, Kelley v. Comm’r, 45

F.3d 348, 350 (9th Cir. 1995), and we affirm.

II

[1] Because the Tax Court is an Article I “court of limited

jurisdiction and lacks general equitable powers,” Comm’r v.

McCoy, 484 U.S. 3, 7 (1987) (per curiam), its subject matter

jurisdiction is “defined and limited by Title 26 of the United

States Code,” Gorospe v. Comm’r, 451 F.3d 966, 968 (9th

Cir. 2006). As such, we must first determine whether Congress authorized the Tax Court to review the IRS’s failure

during a CDP hearing to comply with its statutory mandate

under 26 U.S.C. § 6335(f). The first step in this analysis is to

determine “whether the language at issue has a plain and

unambiguous meaning with regard to the particular dispute in

the case.” Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997)

(internal quotation marks omitted). 

[2] Section 6330 grants the Tax Court jurisdiction because,

barring certain exceptions not relevant here, see 26 U.S.C.

§ 6330(c)(4), it allows the taxpayers to raise “any relevant

9696 ZAPARA v. CIR
issue relating to the unpaid tax or proposed levy” in the CDP

hearing, id. § 6330(c)(2)(A) (emphasis added). The IRS

focuses on the word “proposed” to argue that taxpayers may

not raise issues related to levies that have already been completed. This ignores the unique situation of a jeopardy levy.

Under the IRS’s reasoning, taxpayers subject to a jeopardy

levy would never be able to raise any issue, because the levy

will never be merely proposed. 

[3] A better construction of § 6330 is that the word “proposed” serves only to clarify that the hearing should be about

the specific levy at issue, as opposed to a past levy on other

property. To be sure, when a jeopardy levy is involved, the

levy has always already been imposed. Yet the intent of the

statute remains clear: that the hearing address the specific

levy in question. As such, the plain language of § 6330 authorizes a taxpayer to raise any relevant issue in a CDP hearing

as long as the issue concerns the imposed jeopardy levy. 

[4] Congressional intent to give the Tax Court jurisdiction

to review IRS violations of the Code is also evidenced by the

fact that § 6330(c)(1) requires the Appeals Officer to “obtain

verification . . . that the requirements of any applicable law or

administrative procedure have been met,” regardless of

whether the taxpayer raises the issue. Compare id.

§ 6330(c)(1) (requiring investigation by Appeals Officer),

with id. § 6330(c)(2) (listing the issues the taxpayer may raise

at the hearing). Because the Appeals Officer’s determination

is required to take into account § 6330(c)(1)’s verification

requirement in addition to any issues raised under

§ 6330(c)(2), id. § 6330(c)(3), and because the Tax Court has

jurisdiction over “such determination,” id. § 6330(d), Congress seemingly intended the Tax Court to review any failure

to verify under § 6330(c)(1). See also 26 C.F.R. § 301.6330-

1(f)(2) Q&A F-3 (explaining that when a taxpayer disagrees

with a Notice of Determination, the taxpayer may ask the Tax

Court to consider the issues that were properly raised in the

CDP hearing). 

ZAPARA v. CIR 9697
[5] Tax Court review is critical to the jeopardy levy process, which imposes the levy before providing the taxpayers

a forum in which to challenge the action. Indeed, the entire

purpose behind the creation of the CDP hearing was to provide taxpayers with greater due process to contest the IRS’s

levy and sale of their property. See S. Rep. No. 105-174, at

67 (1998) (“The Committee believes that taxpayers are entitled to protections in dealing with the IRS . . . . Accordingly,

the Committee believes that the IRS should afford taxpayers

adequate notice of collection activity and a meaningful hearing before the IRS deprives them of their property . . . .

[F]ollowing procedures designed to afford taxpayers due process in collections will increase fairness to taxpayers.”). As

such, the Tax Court had jurisdiction to review the IRS’s failure to comply with § 6335(f).

III

[6] Tax Courts have “the authority to apply the full range

of equitable principles generally granted to courts that possess

judicial powers.” Estate of Branson v. Comm’r, 264 F.3d 904,

908 (9th Cir. 2001); see also Dixon v. Comm’r, 316 F.3d

1041, 1047 & n.11 (9th Cir. 2003) (acknowledging Tax Court

discretion to fashion an appropriate remedy). The Tax Court

properly exercised this authority in ordering the IRS to credit

the value of the stock against the Zaparas’ outstanding tax liabilities.2

 A similar remedy has been utilized by the Seventh Cir2The Tax Court’s remedy does not violate the doctrine of sovereign

immunity. Because § 6330 waives sovereign immunity with respect to any

issue relevant to the unpaid tax or proposed levy, the waiver extends “to

achieve its remedial purpose” of providing due process for taxpayers

whose property is levied on by the IRS. In re Town & Country Home

Nursing Servs., Inc., 963 F.2d 1146, 1151 (9th Cir. 1992). Furthermore,

as discussed in greater detail below, because this is not a claim for monetary relief, the action is authorized under the Administrative Procedure

Act. See 5 U.S.C. § 702 (“A person suffering a legal wrong because of

agency action . . . is entitled to judicial review thereof. An action in a court

of the United States seeking relief other than money damages . . . shall not

be dismissed . . . on the ground that it is against the United States

. . . .”). 

9698 ZAPARA v. CIR
cuit and provides support for the Tax Court’s action. In

United States v. Pittman, 449 F.2d 623, 625 (7th Cir. 1971),

the IRS imposed a levy on properties owned by Pittman to

satisfy Pittman’s outstanding tax liabilities. Instead of offsetting Pittman’s liabilities by selling the property, the IRS collected the rents from the tenants living on the properties. Id.

After the property value significantly deteriorated, the IRS

asserted that it was seizing “only the rentals and not the property itself—the fruit but not the tree.” Id. at 626. The Pittman

court disagreed with this approach, explaining that a levy was

a “seizure . . . tantamount to a transfer of ownership,” and

concluding that “if there was a valid levy, Pittman is entitled

to credit on his tax liability for the seized property.” Id.

The IRS attempts to distinguish Pittman by emphasizing

that, in Pittman’s case, the IRS “went well beyond the mere

service of a notice levy and actually seized control and

dominion” over the property. Id. at 627. However, the “control and dominion” language is not a necessary holding of the

decision. The Pittman court explained that even if the IRS had

not collected rents from the tenants, the IRS was responsible

for the decline in value because the Tax Code mandates sale

of the property after the levy. Id. In Pittman’s case, as in the

instant case, the IRS “did not follow through and sell the

property, as required by the Code. Instead, it held it and permitted it to deteriorate in value.” Id. at 628. In other words,

the Pittman court held that by failing to sell the property once

it was levied, as required by statute, the IRS assumed the risk

that the property would decline in value. Id.; see also United

States v. Barlows, Inc., 53 B.R. 986, 989 (E.D. Va. 1984),

aff’d, 767 F.2d 1098 (4th Cir. 1985) (“By its actions, which

were inconsistent with the statute, the IRS assumed any risk

with respect to Western’s failure to pay.”).

[7] Certainly, giving notice of an intent to levy under

§ 6330 does not immediately transfer ownership to the IRS or

constitute a payment of outstanding tax liabilities.3 However,

3The IRS argues that § 6330 does not authorize the Tax Court to credit

a taxpayer’s liabilities for the value of property the IRS has not sold

ZAPARA v. CIR 9699
when the IRS acts contrary to its statutory mandate, it

assumes the risk of depreciation in the value of levied property. Because § 6335 only mandates sale “as soon as practicable” after a seizure, 26 U.S.C. § 6335(a), the IRS generally

does not assume the risk of depreciation if it sells the property

as soon as practicable. Here, however, the Zaparas requested

a sale of their property under § 6335(f) and the IRS did not

comply. It is at that point, when the IRS violated its statutory

mandate, that the IRS became responsible for any decrease in

stock price. See Pittman, 449 F.2d at 628; Barlows, 53 B.R.

at 989. Violation of a statutory mandate is the crucial factor

that also distinguishes the other cases relied upon by the IRS.

See, e.g., Stead v. United States, 419 F.3d 944, 948 (9th Cir.

2005) (determining that the taxpayer had “pointed to no affirmative negligence on the part of the IRS that might shift the

risk of loss to the government”); Cash v. United States, 961

F.2d 562, 596 (5th Cir. 1992) (finding that the IRS’s failure

to collect the levied accounts receivable did not shift the risk

of loss because “[n]o statute or case law imposes such a

requirement”). 

[8] Finally, the Tax Court correctly concluded that 26

U.S.C. § 7433, which provides “the exclusive remedy for

recovering damages” resulting from violations of the Code

did not preempt the specific remedy imposed in this case. The

resolution of this issue requires defining what is meant by

“damages” in the context of § 7433. We agree with the Tax

Court that damages refers to compensatory damages, which

because a tax must be paid in money, not by an in-kind transfer of property. This argument misses the point. The IRS is not being asked to accept

the stock as payment, but instead the monetary value of the stock on the

date it should have been sold. Such a form of payment—transferring personal property into cash in order to pay tax liabilities—is not only

allowed, the levy process specifically contemplates and authorizes such an

arrangement. Even though the stock no longer holds the monetary value

it once did, the IRS assumed this loss, and the reduction in value does not

change the payment into a transfer in-kind. 

9700 ZAPARA v. CIR
substitute for a plaintiff’s loss, as opposed to specific remedies, which give the plaintiff exactly what he should have

received. See Bowen v. Massachusetts, 487 U.S. 879, 895

(1988) (“Damages are given to the plaintiff to substitute for

a suffered loss, whereas specific remedies are not substitute

remedies at all, but attempt to give the plaintiff the very thing

to which he was entitled.” (internal quotation marks and citations omitted)). 

In this context, the IRS’s reliance on Great-West Life &

Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) is inapposite. Unlike Bowen, in which the Court analyzed the meaning

of the phrase “money damages”,4 the Great-West Court analyzed the meaning of the phrase “equitable relief.”

5

 This varying language was critical to the Great-West Court’s decision.

See Great-West, 534 U.S. at 212; see also Dep’t of Army v.

Blue Fox, Inc., 525 U.S. 255, 261 (1999) (“Bowen’s interpretation of § 702 . . . hinged on the distinction between specific

relief and substitute relief, not between equitable and nonequitable categories of remedies.”). 

[9] Here, as in Bowen, the relief granted by the Tax Court

was a specific remedy because it does the very thing required

by § 6342: reducing the Zaparas’ outstanding tax liabilities by

the value of the levied stock accounts. See 26 U.S.C. § 6342.

4The specific issue in Bowen was whether the reimbursement of Medicaid funds constituted “money damages” under § 702 of the APA. See 5

U.S.C. § 702 (“An action in a court of the United States seeking relief

other than money damages . . . shall not be dismissed nor relief therein be

denied on the ground that it is against the United States . . . .”). 

5The specific issue in Great-West was whether § 502(a)(3)(B) of

ERISA, which authorizes actions to obtain “appropriate equitable relief,”

allows a suit to recover payment of money due under a contract. See 29

U.S.C. § 1132(a)(3) (“A civil action may be brought . . . by a participant,

beneficiary, or fiduciary (A) to enjoin any act or practice which violates

any provision of this subchapter or the terms of the plan, or (B) to obtain

other appropriate equitable relief (i) to redress such violations or (ii) to

enforce any provisions of this subchapter or the terms of the plan.”). 

ZAPARA v. CIR 9701
As such, the award does not constitute “damages” as used in

§ 7433.

IV

The Tax Court had jurisdiction under 26 U.S.C. § 6330 to

review the IRS’s failure during a CDP hearing to comply with

its mandate under 26 U.S.C. § 6335(f). When the IRS violated

its statutory mandate, it assumed the risk of devaluation in the

levied property, and the Tax Court appropriately ordered it to

credit the Zaparas’ outstanding tax liabilities. Because this

relief was a specific remedy, 26 U.S.C. § 7433 does not preempt the award.

AFFIRMED.

9702 ZAPARA v. CIR