<em>Jarkesy</em>, the Seventh Amendment, and Tax Penalties

In 2024, in the Jarkesy case, a divided Supreme Court held unconstitutional a provision of the Dodd-Frank Act that allowed the SEC to assert securities law anti-fraud penalties through administrative proceedings subject to judicial review. The Jarkesy majority concluded that the invalidated procedure violated the Seventh Amendment’s guarantee of jury trial in some civil cases. The dissent predicted that the reasoning of Jarkesy could be applied outside of the securities law area, putting hundreds of other statutes at peril of constitutional invalidation. This Article examines one such possible “spillover.” The Article explores whether Jarkesy threatens the current procedures by which federal civil tax penalties are determined and assessed.

These procedures typically do not provide for jury trials. Are they therefore suspect on Seventh Amendment grounds? This issue is important to the viability of the tax system that underlies all the federal Government does. The issue also is timely because Jarkesy arguments already have been raised—but not yet definitively resolved—in federal tax penalty cases.