Sen. Jim Justice of West Virginia and his wife, Cathy, reached an agreement with the I.R.S. to pay over $5 million in back federal income taxes. This agreement comes hours after the Department of Justice’s Tax Division filed a civil lawsuit in federal court against the Justices for the unpaid taxes. The senator claims that the lawsuit was politically motivated.
Justice, a Republican, took office in January 2025, replacing Democrat-turned-independent Joe Manchin who chose not to run for reelection. Prior to that, he was the governor of West Virginia, initially as a Democrat and then switching to the Republican party.
The complaint filed on November 24, 2025, alleges that the Justices owe $5,164,739.75 for income taxes from 2009 that were assessed on November 25, 2015. In 2009, Justice sold one of his coal companies to Russian coal company Mechel for $436 million in cash and shares.
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Looking at the dates may raise questions. First, if the income tax was from 2009, why was it assessed on November 25, 2015? In most cases, the taxes are assessed when the taxpayer files their tax returns, with the earliest date being April 15 of the following year. Some people file extensions and file by October 15 of the following year.
If the tax was assessed five years after the due date, it is usually because the tax returns were filed five years late or because there was a reassessment due to a tax audit. Since the case has been settled, it is assumed that the Justices are not challenging the assessment date.
The next popular question would be whether the IRS can legally collect on a tax that is 15 years old. By law, the IRS has 10 years from the date of assessment to collect the balance in full. The date of assessment is used instead of the due date of the tax return because the tax amount due is unknown until the taxpayer files the tax return. In rare cases of habitual nonfilers, the IRS can issue substitute for returns (SFR) which acts as a substitute return without claiming any eligible deductions. When these SFRs are filed by the IRS, that becomes the assessment date and the 10-year time limit begins then.
The 10-year limit is administratively extended in certain circumstances, usually when the IRS is forbidden by law to collect. The two most common cases are when the taxpayer files bankruptcy and when the taxpayer files an Offer in Compromise which proposes to settle the debt for less than they owe. When either a bankruptcy or Offer in Compromise is filed, collection actions are stopped until bankruptcy is lifted or a settlement offer is rejected.
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But in extreme cases, the government can extend the 10-year collection statute of limitations by filing and winning a civil lawsuit, which is what they did with the Justices. The 2009 tax was assessed on November 25, 2015, and the lawsuit was filed on November 24, 2025, one day before the collection statute would have expired.
In recent years, the IRS has respected the 10-year statute of limitations. The IRS seldom resorts to civil lawsuits in order to extend the collection time limit. The IRS must consider resolving a debt internally, in addition to the economic value of the lawsuit. If the IRS feels a lawsuit is appropriate, they refer the case to the Tax Division of the Department of Justice, which also considers the feasibility of the lawsuit before doing so.
So was this lawsuit politically motivated? The senator did not provide details or evidence to support this claim.
But Sen. Justice’s public image may have played a part in the IRS decision. According to the IRS Internal Revenue Manual, once a decision is made to litigate, collection personnel should take every effort to ensure its success. Because they believe a timely and successful court action can have a positive impact on voluntary compliance.
While the case has been settled hours after it began, it is unclear when the tax will be paid.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.