We welcome back frequent guest blogger Carl Smith who writes today in continuation of coverage concerning the status of the Tax Court within the constitutional framework. We especially thank Carl for his timely guest post as Les presents on taxpayer rights in Vienna, Steve shovels out in Philadelphia, and I visit warmer climes for spring break. Keith
In Battat v. Commissioner, 148 T.C. No. 2 (Feb. 2, 2017), on which we blogged here and here, the Tax Court (Judge Colvin) held that there is no constitutional separation of powers problem in the President’s holding a removal power under section 7443(f) with respect to its judges. Battat holds that the Tax Court is not a part of the Executive Branch — unlike the D.C. Circuit in Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014), which held that the Tax Court was still an Executive Branch entity.
Joe DiRuzzo is the lawyer for the Battats and several additional clients in whose cases he raised the same constitutional argument. He has cases that could be appealed to several different Circuits. His cases are before Judges Colvin, Jacobs, and Wherry, and Chief Judge Marvel. After the Battat opinion, Joe moved for permission to file an interlocutory appeal on this separation of powers issue in the cases that are before Judges Colvin, Jacobs, and Wherry. Interlocutory appeal orders are not granted automatically, and must be issued under section 7482(a)(2)(A). The court should grant an interlocutory appeal motion if (1) a controlling question of law is involved, (2) substantial grounds for a difference of opinion are present, and (3) an immediate appeal may materially advance the ultimate termination of the litigation.
In First Western Government Securities v. Commissioner, 94 T.C. 549 (1990), affd. sub nom. Samuels, Kramer & Co. v. Commissioner, 930 F.2d 975 (2d Cir. 1991), the Tax Court had held, unanimously and en banc, that it is a Court of Law for purposes of the Appointments Clause, so there is no problem with the Chief Judge’s appointment of its Special Trial Judges. Despite the absence of any contrary holding at the time, the Tax Court in First Western certified an interlocutory appeal of its holding because of the importance of the issue — eventually leading to the Supreme Court’s opinion in Freytag v. Commissioner, 501 U.S. 868 (1991). See 94 T.C. at 569 (Appendix E) for the interlocutory certification.
On March 14, Judges Colvin, Jacobs, and Wherry each denied Joe DiRuzzo’s motions to certify the Kuretski/Battat issues in his cases for immediate interlocutory appeal. Here’s a link to the order in Battat, though the orders are identical in each case. The orders admit that there is a divergence in the reasoning between the Tax Court and D.C. Circuit as to how both courts get to the conclusion that there is no constitutional problem in the removal power. But, the Tax Court judges do not think that divergence enough to warrant interlocutory appeals. The orders simply state:
The Court of Appeals in Kuretski applied a different analysis, but it rejected, as did this Court, the contention that Presidential removal authority is unconstitutional. Petitioners cite, and we are aware, of no legal authority supporting petitioners’ contention regarding the controlling issue of law in this case. Thus, we conclude that the second requirement of section 7482(a)(2), the presence of “substantial grounds for a difference of opinion”, is not met.
I beg to differ, and so, doubtless, would the late Justice Scalia. He wrote in his concurrence in Freytag:
When the Tax Court was statutorily denominated an “Article I Court” in 1969, its judges did not magically acquire the judicial power. They still lack life tenure; their salaries may still be diminished; they are still removable by the President for “inefficiency, neglect of duty, or malfeasance in office.” 26 U.S.C. § 7443(f). (In Bowsher v. Synar, supra, [478 U.S. 714] at 729 [(1986)], we held that these latter terms are “very broad” and “could sustain removal . . . for any number of actual or perceived transgressions.”) How anyone with these characteristics can exercise judicial power “independent . . . [of] the Executive Branch” is a complete mystery. It seems to me entirely obvious that the Tax Court, like the Internal Revenue Service, the FCC, and the NLRB, exercises executive power.
501 U.S. at 912 (emphasis in original; some citations omitted).
I am surprised that the orders make no mention of the interlocutory appeal certification granted in First Western. I think that this, at the very least, is inconsistent behavior by the Tax Court as to allowing interlocutory appeals.