How much further down the trunk do the roots start? For immediate triage, you need to protect and seal the trunk from further damage. Tree Seal or Pruning Sealer Paint applied to the bare area is a good start.

axtrader, I'd guess the roots start another one or two inches down; I'll check for sure tomorrow when it's light out.

Is there a reasonable chance that this tree could survive and grow normally, even with the bark layer gone at the base? Right now it seems to be reasonably healthy, but if it's most likely going to suffer or die, I'd just as soon replace it now.

mc510: if the other side of the trunk looks like the side I can see, I'd say its time to replace it since it is "girdled" and thus lacks a layer of living tissue in a complete ring around the trunk. This is necessary for the tree to survive. If, on the other hand, you have a strip of bark that covers still living tissue over something like a 1/4 or more of the trunk's circumference, it might make it, but it will be weakened. As it is an outdoor tree, that is really asking a lot of it.

The girdling process often results in a slow death, since the outer layer is used to transport food down to the roots, whereas the intact wood transports water and nutrients up to the leaves. Until the roots starve and die off they will continue to do their job. This basically helps explain why a partial girdling can create a much weakened tree: the sugar flow down to the roots (the food they need) is partially cut off, and thus at least some of the roots are likely to weaken or die.

Hope this helps, even if it disappoints.

Please note that tree paint or wound sealant does nothing to protect a plant from 'damage. Though still on the market, this product has been proved to be not only useless in instances like this but may even slow down a tree's natural healing processes. It's a myth that needs to go away.

Certainly at this stage in the game, this tree is most likely a goner. Trees don't 'suffer' but decline over a short or long period of time. Humans are the ones who suffer (probably) by looking at trees going through the process. I know it bothers me like crazy to see a severely damaged tree dieing a slow death.

If it makes you feel any better, planting too deeply is probably the number one 'rookie' planting error, followed closely by adding amendments to the back fill and planting hole. Trees, EXPECIALLY citrus, to be planted high.

Okay; I got the message. Just ran out and bought a new one and will plant it today ... and I'll plant it good and high! I'm just glad I caught this now rather than several years from now. Thanks, all.

Judging from the extent of the problem that I see in the image, I would have expected your tree to croak this summer. As Don explained, without that essential layer of phloem located just under the bark, there is no way for the plant to transport photosynthates from the leaves to the roots (or to anywhere else in the plant). Without that energy source, your tree would have soon used up stored resources.

I'm so glad that you got another tree. We all learn from our mistakes, and your question probably prevented others from doing the same thing you did. So, thanks for posting!

Good thing that you are going to replace it - no point wasting valuable grow space on a tree which you are not sure is going to make it or not. When you plant again, it is good to plant 1 to 1.5 inches above ground level because the trees have a tendency to settle over time. Also, please use the original soil in the hole to backfill without any amendments.
Out of academic interest, I would suggest that you put that original eureka tree in a pot to see if it survives or not.
Good luck.
(BTW/ 11 years ago I made the same rookie mistake of planting my first Meyer Lemon in a hole 3 inches below soil level and backfilled with soil liberally amended with compost. Needless to say, that tree languished. I have since come a long way and gained valuable knowledge from this and other forums. I dug out that tree and replaced it. But, put the original stunted tree in a pot, with free draining mix and it has grown remarkably and produced a lot of fruit.)