U.S. seeks $5.1 million from Sen. Jim Justice and spouse in federal tax lawsuit

The U.S. Department of Justice on Monday filed a civil action against Sen. Jim Justice, R-W.Va., and his wife, Cathy Justice, seeking to collect $5,164,739.75 in federal income taxes, penalties and interest linked to the couple’s 2009 tax return.

The complaint, lodged in U.S. District Court in Beckley, West Virginia, states that the Internal Revenue Service assessed the liability on Nov. 25, 2015 and later issued formal notices and demands for payment. According to the filing, the Justices “have neglected or refused” to satisfy the outstanding balance, which the government calculated through Aug. 4, 2024.

Hours after the lawsuit was entered on the court’s docket, attorneys for both parties submitted a joint motion for a consent judgment. If approved by a judge, the order would formally recognize the debt but does not specify when or how the amount would be remitted.

Background of the tax dispute

The litigation arrives less than two months after the IRS recorded three federal tax liens against the senator in Greenbrier County, West Virginia, where he resides. The agency listed:

• Approximately $3 million tied to the 2009 tax year—the same liability cited in Monday’s lawsuit.
• Nearly $5 million for the 2017 tax year.
• About $11,000 for the 2024 tax year.

The first lien was assessed on the same date as the 2009 liability referenced in the current court action. Under IRS rules, the agency generally has 10 years to collect an assessed tax debt. That period for the 2009 assessment is set to expire on Tuesday, Nov. 25, 2025, marking 10 years from the original assessment date.

Political and business context

Justice, a billionaire coal industry heir, was elected to the U.S. Senate in November 2024, succeeding independent Sen. Joe Manchin. He took office in January after serving as West Virginia’s governor from 2017 until his Senate term began. Justice was first elected governor as a Democrat but switched parties in 2017.

The pending tax case adds to a series of legal challenges facing the senator. In late October, a federal judge in Tennessee held Justice personally liable for more than $29 million in damages and prejudgment interest owed to Lexon Insurance Co. The judgment stemmed from a breached surety-bond contract related to his coal operations.

CNBC sought comment from Justice’s Senate office and from legal representatives who have appeared for him in previous matters. No response had been received by the time of publication.

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Details of the government’s claim

According to the complaint, the IRS initially assessed the 2009 tax liability following standard examination procedures. Penalties and interest continued to accrue because the debt remained unpaid. The Justice Department’s Tax Division, acting on behalf of the IRS, is asking the court to:

• Enter judgment against Jim Justice and Cathy Justice for the full $5,164,739.75.
• Authorize the United States to apply additional interest that may accrue until the judgment is satisfied.
• Award any other relief the court deems appropriate.

If the judge signs the proposed consent order, the ruling would convert the tax assessment into an enforceable court judgment. Such judgments can facilitate collection efforts, including wage garnishment or seizure of assets, should voluntary payment not occur.

Next steps in court

The joint motion for a consent judgment is pending before the district court. The document, filed shortly after the lawsuit, indicates that the Justices do not contest the government’s calculations. However, it provides no timetable or installment plan for remittance.

The court will now decide whether to approve the consent order or set additional proceedings. In the absence of a signed order, the litigation would proceed under the Federal Rules of Civil Procedure.

Crédito da imagem: Chris Dorst / Charleston Gazette via AP