We welcome back frequent guest blogger Carl Smith. Carl writes today about an issue of power – the power to remove – who should have it which implicates where the Tax Court lands in the various branches of government. All of this seems like an academic exercise until it doesn’t and then the discussion of the issue will have importance. My former colleague at Villanova, Tuan Samahan, raised this issue early. He recently wrote a symposium piece on the topic for the law review at my alma mater. Keith
PT readers are familiar with the argument, raised in Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014), that the President’s removal power over Tax Court judges at section 7443(f) violates the separation of powers. In Kuretski, the D.C. Circuit rejected that argument, finding no constitutional problem because the Tax Court was located in the Executive Branch. Congress responded to Kuretski by amending section 7441 to add the following: “The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.”
In response to this, Florida attorney Joe DiRuzzo, in a number of his Tax Court cases appealable to various Circuits, made motions to recuse all Tax Court judges, contending that the judges suffered from the same separation of powers problem – particularly in light of the amendment to section 7441. In Battat v. Commissioner, 148 T.C. No. 2 (2017), the Tax Court denied that motion and refused to certify an interlocutory appeal of the ruling under the procedures at section 7482(a)(2). The Tax Court disagreed with the D.C. Circuit that it was located in the Executive Branch, refused to say in which Branch the Tax Court was located, and found no constitutional problem because the Tax Court only dealt with public rights controversies, unlike Article III courts. The Tax Court then entered unpublished interlocutory orders citing Battat in Joe’s other cases.
Despite the Tax Court’s refusal to certify immediate appeals, Joe appealed to a number of Circuit courts of appeal anyway (including the 11th Circuit in Battat). All attempts so far to do interlocutory appeals have failed, though in non-precedential unpublished opinions of the Circuit courts issued without oral argument. See, e.g., Teffeau v. Commissioner, 709 Fed. Appx. 170 (4th Cir. 2017); and the unpublished opinion in Elmes v. Commissioner, Eleventh Cir. Docket No. 17-11648-DD (June 20, 2017).
Another one of those interlocutory appeals is now before the Ninth Circuit in a case named Thompson v. Commissioner, Ninth Cir. Docket No. 17-71027. Unlike in the prior interlocutory appeals, however, Thompson will be getting oral argument in Seattle on November 9, with the court allocating the parties 15 minutes per side. Thompson has already generated a Tax Court opinion, T.C. 148 T.C. No. 3 (2017), which also denied an Eight Amendment Excessive Fines Clause argument against the section 6662A penalty, but the current interlocutory appeal is limited to the section 7443(f) issue.
The oral argument in Thompson will be immediately preceded by oral argument in another of Joe’s cases, Crim v. Commissioner, Ninth Cir. Docket No. 17-72701. In Crim, the taxpayer submitted an OIC, and, after it was not accepted, went to Appeals. Appeals confirmed the OIC denial. Despite the fact that the OIC was not part of a Collection Due Process (CDP) hearing, the taxpayer petitioned the Tax Court for review. In the case, Joe also moved for recusal of all Tax Court judges on the constitutional issue. Citing Battat, the Tax Court first denied the constitutional motion in an unpublished order. Then, the court issued a second unpublished order holding that, in the absence of a CDP proceeding, the Tax Court lacked jurisdiction to review Appeals’ denial of an OIC. Crim’s appeal to the Ninth Circuit is thus not an interlocutory one, since there is nothing more to be done in the Tax Court case. It seems much more likely that the Ninth Circuit in Crim will reach the constitutional issue, though the DOJ argues that the court still need not do so. The court has allocated the parties 10 minutes per side for oral argument.
For those interested in the briefs, I attach here the Thompson appellant, appellee, and reply briefs and the Crim appellant, appellee, and reply briefs.