Conor Desmond Comments on Jarkesy Opinion in Law360

As lower courts have begun to weigh the U.S. Supreme Court's 2024 ruling that the SEC's imposition of civil penalties without a jury trial was unconstitutional, attorneys say the decision could reshape tax disputes and potentially force the IRS to reconsider its approach to enforcement.

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The Jarkesy opinion "breathed new life into the Seventh Amendment argument" against certain IRS penalties, Conor Desmond of Caplin & Drysdale said.

Tax as a means to collect federal revenue has in recent history generally been considered exempt from the Seventh Amendment's right to a jury, which foreclosed a lot of tax-related litigation under the public rights exception, according to Desmond.

There is a "very, very fine line between what is a public right and what is not," Desmond said. "And, historically, tax has fallen in that" public rights exception, he said.

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