Paul L. Caron

Monday, October 22, 2012

The President's Authority to Remove a Tax Court Judge

Tax Court Logo 2From Carlton Smith (Cardozo):

This is to let everyone know of a pending challenge in the Tax Court to the President's power to remove a Tax Court judge.

In Freytag, 501 U.S. 868 (1991), the Supreme Court, in the course of solving an Appointments Clause conundrum regarding Special Trial Judges, held that the Tax Court held part of "the judicial power of the United States". In his concurrence, Justice Scalia noted the inconsistency of the ruling in that, by statute, the President could still remove (for cause) Tax Court judges under § 7443(f). He pointed out the oddity of this result, since, in Bowsher v. Synar, 478 U.S. 714 (1986), the Court had held that a similar interbranch removal power was unconstitutional under the separation of powers doctrine.

In 2010, disappointed Kanter petitioners in the Ballard case, 544 U.S. 40 (2005), called for President Obama to investigate Judge Dawson for possible removal. When that happened, I not only spoke up for Judge Dawson on the record in Tax Notes Today (2010 TNT 44-1), but I told myself that I would try to do something in the appropriate case to try to end any President's power to remove a Tax Court judge. The removal power is a vestige of the 1924 establishment of the Board of Tax Appeals in the Executive Branch. In 1924, Board of Tax Appeals rulings did not bind the parties. In 1926, Congress made Board of Tax Appeals rulings binding and directly subject to judicial review in the Circuit Courts. In 1969, Congress moved the Board's successor, the Tax Court, out of the Executive Branch altogether.

Villanova Professor Tuan Samahon -- a separation of powers scholar -- has argued that Justice Scalia was right in Freytag, and he believes that no Supreme Court case law since has eliminated Justice Scalia's concern. Earlier this year, Professor Samahom published a law review article arguing that the President's removal power of Tax Court judges is unconstitutional. Blackmun (and Scalia) at the Bat:  The Court's Separation-of-Powers Strike Out in Freytag, 12 Nev. L.J. 691 (Summer 2012) (Note that Article I Court of Federal Claims judges are not removable by the President, but by the Article III judges of the Federal Circuit -- which is a constitutionally permissible removal power if the Court of Federal Claims also holds part of the judicial power, as the Supreme Court has held that its predecessor, the Court of Claims, did.)

Last week, Janet Spragens Award Winner Frank Agostino and I (with the assistance of Prof. Samahon and and John Miscione of Frank's office) timely filed a motion to vacate a recent Collection Due Process Tax Court decision in a case named Kuretski that Frank had tried pro bono. In the accompanying opinion at T.C. Memo. 2012-262 (Sept. 11, 2012) (which we also timely moved to reconsider), Judge Wherry had upheld an Appeals Team Manager's overruling of a Settlement Officer who had agreed to remove all penalties and enter into an installment agreement. Instead, the Team Manager forced the issuance of a notice of determination upholding all penalties and upholding a notice of intention to levy. While we recognize the (appropriately) uphill battle it is to get a Tax Court judge to reconsider his opinion, we have included in the motion to vacate the additional ground that Judge Wherry was subject to an improper interbranch removal power when he made his original ruling, and so was potentially improperly influenced by the threat of Presidential removal. Bowsher v. Synar itself says that a removal power for cause with wording similar to § 7443(f) is unconstitutional when held by another branch because of the power to misuse it or to merely threaten its use.

Judge Wherry has ordered the IRS to respond to the motions by Nov. 26.

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