Saturday, February 4, 2017
Battat v. Commissioner, 148 T.C. No. 2 (Feb. 2, 2017):
Ps filed a motion to disqualify all Tax Court Judges and to declare unconstitutional I.R.C. sec. 7443(f), which authorizes the President to remove Tax Court Judges “after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause.”
In the Tax Reform Act of 1969 (1969 Act), Pub. L. No. 91-172, sec. 951, 83 Stat. at 730, Congress deleted from I.R.C. sec. 7441 the designation of the Tax Court as an independent agency within the executive branch. In 1971 we said that under the 1969 Act the Tax Court is no longer within the executive branch. Burns, Stix Friedman & Co. v. Commissioner, 57 T.C. 392 (1971). Ps also adopt the view that the Tax Court is not within the executive branch and contend that, as a result, the President’s limited removal authority violates separation of powers principles. In Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014), the Court of Appeals held that the Tax Court is within the executive branch. The following year Congress amended I.R.C. sec. 7441 because of concerns about statements made by the Court of Appeals in Kuretski.
Held: Under the Rule of Necessity, it is proper for a Tax Court Judge to rule on Ps’ contention that I.R.C. sec. 7443(f) is unconstitutional.
Held, further, Presidential authority to remove Tax Court Judges for cause does not violate separation of powers principles. We so hold because, while Tax Court Judges exercise a portion of the judicial power of the United States, Freytag v. Commissioner, 501 U.S. 868, 890-891 (1991), its Judges exercise no portion of the judicial power reserved to Article III judges. Thus, Presidential removal authority cannot interfere with the Article III judicial power regardless of the Tax Court’s placement in the branches of Government.