Battat v. Comm'r

148 T.C. No. 2

UNITED STATES TAX COURT

STANLEY BATTAT AND ZMIRA BATTAT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17784-12. Filed February 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
 -2-

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.

Held, further, Ps’ motion will be denied.

Joseph A. DiRuzzo, III, Jennifer Correa Riera, Christopher J. Rajotte, and

Jeffrey J. Molinaro, for petitioners.

Brian A. Pfeifer, for respondent.
 -3-

OPINION

COLVIN, Judge: This deficiency case1 is before the Court on petitioners’

motion to disqualify all Tax Court Judges (filed as a motion for recusal of Judge)

and to declare section 7443(f)2 unconstitutional. For reasons discussed below we

will deny petitioners’ motion.

In the Background section, we describe: (A) procedures for the removal of

Tax Court Judges; (B) statutory provisions governing the Tax Court and the

Supreme Court’s opinion in Freytag v. Commissioner, 501 U.S. 868, 891 (1991);

(C) caselaw relating to the jurisprudence and status of the Tax Court; and (D)

Kuretski v. Commissioner, 755 F.3d 929, 943-945 (D.C. Cir. 2014), aff’g T.C.

Memo. 2012-262, and the congressional response to Kuretski. In the Discussion

section, we conclude that: (A) under the Rule of Necessity, it is proper for a Tax

Court Judge to rule on petitioners’ motion; (B) procedures for the removal of Tax

Court Judges for cause do not violate separation of powers principles; and (C)

1
Respondent determined a deficiency in petitioners’ income tax for 2008 of
$1,722,175 and an addition to tax under sec. 6651(a)(1) and an accuracy-related
penalty under sec. 6662(a) of $82,337 and $344,435, respectively.
2
Unless otherwise indicated, section references are to the Internal Revenue
Code, as amended. Rule references are to the Tax Court Rules of Practice and
Procedure.
 -4-

petitioners are not entitled to a remedy on the basis of an appearance of bias.

Finally, at Part D we provide a conclusion.

Background

Petitioners resided in Florida when they filed the petition.

A. Procedures for the Removal of Tax Court Judges

Section 7443(f) authorizes the President to remove Judges of the Tax Court

“after notice and opportunity for public hearing, for inefficiency, neglect of duty,

or malfeasance in office, but for no other cause”. The predecessor of section

7443(f) was first enacted as part of the Revenue Act of 1924 (1924 Act), ch. 234,

sec. 900(b), 43 Stat. at 336-337.3

In 2015 Congress extended the judicial conduct and disability procedures of

28 U.S.C secs. 351-364 (2012), to Judges of the Tax Court. Consolidated

Appropriations Act, 2016 (2015 Act), Pub. L. No. 114-113, sec. 431, 129 Stat. at

3125 (2015) (adding section 7466). Under section 7466 and 28 U.S.C. sec. 355, if

the Judicial Conference of the United States (Judicial Conference)4 determines that

3
In 1926 the Presidential removal provision was amended to include the
phrase “after notice and opportunity for public hearing”. Revenue Act of 1926
(1926 Act), ch. 27, sec. 1000, 44 Stat. at 105-106.
4
The Judicial Conference of the United States is the national policymaking
body for the Federal courts. 28 U.S.C. sec. 331 (2012).
 -5-

there are grounds for removal of a Tax Court Judge under section 7443(f), then the

Judicial Conference shall transmit the determination to the President. See Part B,

infra p. 22.

B. Statutory Provisions Relating to the Establishment and Status of the
Tax Court

1. 1924 to 1968

Congress created the Board of Tax Appeals in 1924 to permit taxpayers to

challenge determinations made by the Internal Revenue Service (IRS) of their tax

liabilities before payment.5 The Revenue Act of 1924 provided that “[t]here is

hereby established a board to be known as the Board of Tax Appeals” and “[t]he

Board shall be an independent agency in the executive branch of the

Government.” Revenue Act of 1924, ch. 234, sec. 900(a), (k), 43 Stat. at 336, 338

(emphasis added).

In 1926 Congress made various statutory changes with respect to the Board

of Tax Appeals, but the statute continued to provide that the Board of Tax Appeals

is “an independent agency in the Executive Branch of the Government.” Revenue

Act of 1926, ch. 27, sec. 900, 44 Stat. at 105-106 (emphasis added). In 1939

5
Before 1924 taxpayers who wished to contest a determination made by the
Bureau of Internal Revenue (now the IRS) were required to pay the tax assessed
and then file suit against the Government for a refund. See Flora v. United States,
362 U.S. 145, 151-152 (1960).
 -6-

“[t]he Board of Tax Appeals * * * shall be continued as an independent agency in

the Executive Branch the of Government” (emphasis added) was codified in the

Internal Revenue Code of 1939, ch. 2, sec. 1100, 53 Stat. at 158. In 1942

Congress changed the name of the Board of Tax Appeals to the “Tax Court of the

United States.” After amendment by the Revenue Act of 1942, ch. 619, sec.

504(a), 56 Stat. at 957, section 1100 of the 1939 Code provided as follows:

The Board of Tax Appeals * * * shall be continued as an independent
agency in the Executive Branch of the Government. The Board shall
be known as the Tax Court of the United States and the members
thereof shall be known as the presiding judge and the judges of the
Tax Court of the United States. [Revenue Act of 1942, ch. 619, sec.
504(a), 56 Stat. at 957; emphasis added.]

That provision was also included in section 7441 of the Internal Revenue Code of

1954, which provided as follows:

The Board of Tax Appeals shall be continued as an independent
agency in the Executive Branch of the Government, and shall be
known as the Tax Court of the United States. The members thereof
shall be known as the chief judge and the judges of the Tax Court.”
[Internal Revenue Code of 1954, ch. 76, sec. 7441, 68A Stat. at 879;
emphasis added.]

In Dobson v. Commissioner, 320 U.S. 489 (1944), the Supreme Court held

that, because the Tax Court was (at that time) an administrative body within the

executive branch, decisions of the Tax Court on questions of fact were not

reviewable if supported by any evidence in the record. Dobson was legislatively
 -7-

overturned in 1948 by an amendment to section 7482(a)(1) requiring the U.S.

Courts of Appeals “to review * * * the Tax Court [decisions] * * * in the same

manner and to the same extent as decisions of the district courts in civil actions

tried without a jury”. Act of June 25, 1948, ch. 646, sec. 36, 62 Stat. at 991.6

2. Tax Reform Act of 1969

In the Tax Reform Act of 1969 (1969 Act), Pub. L. No. 91-172, 83 Stat.

487, Congress “transformed” the Tax Court, Freytag v. Commissioner, 501 U.S. at

890-891, through two amendments to section 7441. First, Congress amended

section 7441 to designate the Tax Court as an Article I court. As a result, section

7441 provided: “There is hereby established, under Article I of the Constitution of

the United States, a court of record to be known as the United States Tax Court.

The members of the Tax Court shall be the chief judge and the judges of the Tax

Court.” 1969 Act sec. 951, 83 Stat. at 730. Second, Congress amended section

6
It is now well established that the Tax Court’s findings of fact (like those of
the U.S. District Courts) are accepted by the Courts of Appeals unless clearly
erroneous. Dreicer v. Commissioner, 665 F.2d 1292, 1296 n.36 (D.C. Cir. 1981)
(citing sec. 7482(a) and Commissioner v. Duberstein, 363 U.S. 278, 291 n.13
(1960)), rev’g T.C. Memo. 1979-395.
 -8-

7441 to delete the designation of the Tax Court as an “independent agency in the

Executive Branch of the Government”.7

In its report accompanying the 1969 Act,8 the Senate Committee on Finance

said:

Since the Tax Court has only judicial duties, the committee
believes it is anomalous to continue to classify it with quasi-judicial
executive agencies that have rulemaking and investigatory functions.
* * * [I]ts constitutional status as an executive agency, no matter how
independent, raises questions in the minds of some as to whether it is
appropriate for one executive agency [the pre-1969 tribunal] to be
sitting in judgment on the determinations of another executive agency
[the IRS].

7
The statute as it existed until 1969, providing that the Tax Court was part
of the executive branch, was in keeping with the general understanding of the
branch location of independent agencies. See, e.g., FMC v. S.C. State Ports Auth.,
535 U.S. 743, 773 (2002) (Breyer, J., dissenting) (independent agencies are
“appropriately considered to be part of the Executive Branch”).
8
Despite having observed that the meaning of a statute does not turn on the
intent of individual lawmakers but “only on what intent has been enacted into law
through the constitutionally defined channels of bicameralism and presentment”,
Teva Pharms. USA, Inc. v. Sandoz, Inc., 574 U.S. ___, ___, 135 S. Ct. 831, 845
(2015), the Supreme Court continues to refer to legislative history, see, e.g., Ariz.
State Legislature v. Ariz. Indep. Redistricting Comm’n, 576 U.S. ___, ___, 135 S.
Ct. 2652, 2669 (2015); United States v. Kwai Fun Wong, 575 U.S. ___, ___, 135
S. Ct. 1625, 1632 (2015); Yates v. United States, 574 U.S. ___, ___, 135 S. Ct.
1074, 1084 (2015); Warger v. Shauers, 574 U.S. ___, ___ , 135 S. Ct. 521, 527
(2014); Samantar v. Yousef, 560 U.S. 305, 316 n.9 (2010) (“Our precedents
demonstrate that the Court’s practice of utilizing legislative history reaches well
into its past. * * * ‘We suspect that the practice will likewise reach well into the
future’.” (quoting Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 611-612 n.4
(1991))).
 -9-

* * * * * * *
The amendments are also concerned with making the Tax Court an
Article I court rather than an executive agency and expanding its
powers accordingly. * * *
[S. Rept. No. 91-552, supra at 302-303, 1969-3 C.B. at 614-
615; H.R. Conf. Rept. No. 91-782 (1969), 1969-3 C.B. 644, 645
(“The conference substitute * * * follows the Senate amendment.”).]

Thus, the Senate Committee on Finance intended that the Tax Court no longer be

classified “with” executive branch agencies. S. Rept. No. 91-552, supra at 302,

1969-3 C.B. at 614.9

In 1969 Congress also amended section 7456 to provide Tax Court Judges

with the “quintessentially judicial” power, Freytag v. Commissioner, 501 U.S. at

891, to punish contempt of court by fine or imprisonment and provided that the

Tax Court has “such assistance in the carrying out of its lawful writ, process,

9
The Tax Reform Act of 1969 (1969 Act), Pub. L. No. 91-172, sec. 961, 83
Stat. at 735-736, also provides:

The United States Tax Court established under the amendment
made by section 951 is a continuation of the Tax Court of the United
States as it existed prior to the date of enactment of this Act * * * no
loss of rights or powers, interruption of jurisdiction, or prejudice to
matters pending in the Tax Court of the United States before the date
of enactment of this Act shall result from the enactment of this Act.

See also H.R. Conf. Rept. No. 91-782, at 341 (1969), 1969-3 C.B. 644, 682. This
provision prevented inconvenience to the parties and the public by ensuring the
continuity of cases pending before the Tax Court. It did not diminish the
constitutional significance of the establishment of the Tax Court under Article I.
Burns, Stix Friedman & Co. v. Commissioner, 57 T.C. 392, 395 (1971).
 -10-

order, rule, decree, or command” as is available to Article III judges,10 1969 Act

sec. 956, 83 Stat. at 732 (amending section 7456); see 18 U.S.C. sec. 401 (2012).

As stated supra pp. 7-8, in the 1969 Act Congress deleted the designation of

the Tax Court as an “independent agency in the Executive Branch of the

Government”. The only amendment needed if Congress had intended to establish

the Tax Court as an Article I court located in the executive branch would have

been deletion of the words “as an independent agency”. If only those words had

been deleted, section 7441 would have said the Tax Court “shall be continued

* * * in the Executive Branch of the Government”. But that is not what Congress

did. Congress also deleted from section 7441 the words “in the Executive Branch

of the Government”. That additional change would have been superfluous if

Congress had intended for the Tax Court to remain within the executive branch.

The deletion of words is properly considered in determining the meaning of

10
U.S. Const. art. III, sec. 1 provides:

The judicial Power of the United States, shall be vested in one
supreme Court, and in such inferior Courts as the Congress may from
time to time ordain and establish. The Judges, both of the supreme
and inferior Courts, shall hold their Offices during good Behaviour,
and shall, at stated Times, receive for their Services, a Compensation,
which shall not be diminished during their Continuance in Office.
 -11-

statutes. See, e.g., United States v. Wells, 519 U.S. 482, 492-493 (1997).11 Thus,

the 1969 Act can fairly be read to mean that Congress intended to terminate the

Tax Court’s previously well-understood placement in the executive branch. Soon

after the enactment of the 1969 Act, the Tax Court faced a challenge to the

constitutionality of its exercise of judicial powers as an Article I court. In

upholding the authority of the Tax Court as provided by the 1969 Act, we said:

It is clear from the statutory language and the Senate Committee
report * * * that Congress removed the Tax Court from the Executive
Branch and established it as an article I court primarily for the
purpose of recognizing its status as a judicial body and disposing of
any problems that its status as an executive agency sitting in
judgment on another executive agency might pose. [Burns, Stix
Friedman & Co. v. Commissioner, 57 T.C. 392, 395 (1971); citation
omitted.]

Thus, soon after the repeal by the 1969 Act of the statute designating the Tax

Court as within the executive branch, we observed that, under the 1969 Act, the

Tax Court was no longer within the executive branch.

11
In United States v. Wells, 519 U.S. 482, 493 (1977), the Supreme Court
gave effect to the deletion by Congress of the word “materiality” from the statute
at issue, reasoning that “[t]he most likely inference in these circumstances is that
Congress deliberately dropped the term ‘materiality’” so as to no longer make
materiality a required element of the statute at issue.
 -12-

3. Freytag v. Commissioner

In Freytag v. Commissioner, 501 U.S. at 887-888, the Supreme Court

upheld the authority of the Chief Judge of the Tax Court under section 7443A(a)

to appoint Special Trial Judges12 because the Chief Judge of the Tax Court is the

head of one of the “Courts of Law” and is not one of the “Heads of Departments”

for purposes of the Appointments Clause under Article II.13 In Freytag, the

Supreme Court observed that the Tax Court exercises a portion of the judicial

power of the United States, does not exercise “executive, legislative, or

administrative” power, “remains independent of the Executive and Legislative

Branches”, and closely resembles U.S. District Courts in its function and role in

the Federal judicial scheme. Id. at 890-892. After concluding that the Tax Court

12
The authority of Special Trial Judges in many respects resembles that of
magistrate judges. Sec. 7443A.
13
The Constitution provides:

[The President] * * * shall nominate, and by and with the Advice
and Consent of the Senate, shall appoint Ambassadors, other public
Ministers and Consuls, Judges of the Supreme Court, and all other
Officers of the United States, whose Appointments are not herein
otherwise provided for, and which shall be established by Law: but
the Congress may by Law vest the Appointment of such inferior
Officers, as they think proper, in the President alone, in the Courts of
Law, or in the Heads of Departments. [U.S. Const. art. II, sec. 2, cl.
2.]
 -13-

can be a court of law under the Appointments Clause, id. at 888, the Supreme

Court went on to “define the constitutional status of the Tax Court and its role in

the constitutional scheme” by discussing in detail the statutes establishing the Tax

Court:

Having concluded that an Article I court, which exercises
judicial power, can be a “Cour[t] of Law” within the meaning of the
Appointments Clause, we now examine the Tax Court functions to
define its constitutional status and its role in the constitutional
scheme. See Williams, 289 U.S. at 563-567. The Tax Court
exercises judicial, rather than executive, legislative, or administrative,
power. It was established by Congress to interpret and apply the
Internal Revenue Code in disputes between taxpayers and the
Government. By resolving these disputes, the court exercises a
portion of the judicial power of the United States.

The Tax Court exercises judicial power to the exclusion of any
other function. It is neither advocate nor rulemaker. As an
adjudicative body, it construes statutes passed by Congress and
regulations promulgated by the Internal Revenue Service. It does not
make political decisions.

The Tax Court’s function and role in the federal judicial
scheme closely resemble those of the federal district courts, which
indisputably are “Courts of Law.” Furthermore, the Tax Court
exercises its judicial power in much the same way as the federal
district courts exercise theirs. It has authority to punish contempts by
fine or imprisonment, 26 U.S.C. § 7456(c); to grant certain injunctive
relief, § 6213(a); to order the Secretary of the Treasury to refund an
overpayment determined by the court, § 6512(b)(2); and to subpoena
and examine witnesses, order production of documents, and
administer oaths, § 7456(a). All these powers are quintessentially
judicial in nature.
 -14-

The Tax Court remains independent of the Executive and
Legislative Branches. Its decisions are not subject to review by either
the Congress or the President. Nor has Congress made Tax Court
decisions subject to review in the federal district courts. Rather, like
the judgments of the district courts, the decisions of the Tax Court are
appealable only to the regional United States courts of appeals, with
ultimate review in this Court.[14] The courts of appeals, moreover,
review those decisions “in the same manner and to the same extent as
decisions of the district courts in civil actions tried without a jury.
§ 7482(a). This standard of review contrasts with the standard
applied to agency rulemaking by the courts of appeals under § 10(e)
of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). See
Motor Vehicle Mfrs. Assn. v. State Farm Mut. Automobile Ins. Co.,
463 U.S. 29, 43-44 (1983).

The Tax Court’s exclusively judicial role distinguishes it from
other non-Article III tribunals that perform multiple functions and
provides the limit on the diffusion of appointment power that the
Constitution demands. * * *
[Freytag v. Commissioner, 501 U.S. at 890-892.]

14
Congress has recently reaffirmed this point. Sec. 7482(b)(1)(F), enacted
by the Consolidated Appropriations Act, 2016 (2015 Act), Pub. L. No. 114-113,
div. Q, sec. 423, 129 Stat. at 3123 (2015), provides that spousal relief cases under
sec. 6015 and collection cases under secs. 6320 and 6330 are appealable to the
U.S. Court of Appeals for the circuit in which an individual resides. The
enactment of sec. 7482(b)(1)(F) reaffirms application of the general rule that Tax
Court cases are appealable to the various Courts of Appeals with respect to
spousal relief and collection cases, which are relatively new areas of Tax Court
jurisdiction enacted in 1998. Internal Revenue Service Restructuring and Reform
Act of 1998 (RRA 1998), Pub. L. No. 105-206, secs. 3201 (spousal relief), 3401
(collection cases), 112 Stat. at 735-738, 746-749. This amendment prospectively
changes the result in Byers v. Commissioner, 740 F.3d 668 (D.C. Cir. 2014), aff’g
T.C. Memo. 2012-27, which had held that collection cases are appealable to the
U.S. Court of Appeals for the District of Columbia Circuit.
 -15-

The Supreme Court rejected the Commissioner’s characterization of the Tax

Court as an entity other than a court. Id. at 887-888 (“Treating the Tax Court as

* * * [an executive branch] ‘Department’ * * * would defy * * * the clear intent of

Congress to transform the Tax Court into an Article I legislative court. The Tax

Court is not * * * [an executive] ‘Departmen[t].”).

The Supreme Court’s analysis of the Tax Court in Freytag may be

contrasted with its analysis of the Court of Appeals for the Armed Forces (until

1994 known as the U.S. Court of Military Appeals) in Edmond v. United States,

520 U.S. 651 (1997). Both the U.S. Court of Appeals for the Armed Forces and

the Tax Court are courts of record established under Article I, sec. 7441, 10 U.S.C.

sec. 941 (2012), and the judges of both of those courts are subject to removal for

cause by the President, 10 U.S.C. sec. 942(c); sec. 7443(f). However, differences

in the statutes governing those two Courts led the Supreme Court in Edmond to

conclude that the Court of Military Appeals for the Armed Forces is within the

executive branch and in Freytag to conclude that the Tax Court is independent of

the executive branch.15 First, under 10 U.S.C. sec. 941, “for administrative

15
Cf. Kuretski v. Commissioner, 755 F.3d 929, 944 (D.C. Cir. 2014) (“[T]he
constitutional status of the Tax Court mirrors that of the Court of Appeals for the
Armed Forces. The statutes establishing the status of the two courts precisely
parallel one another”).
 -16-

purposes” the Court of Appeals for the Armed Forces is, by statute, in the

executive branch, specifically, the Department of Defense.16 Edmond, 520 U.S. at

664 n.2. In contrast, the Tax Court’s statutory link to the executive branch was

repealed by the 1969 Act.17

16
Congress made it clear that it did not intend for this phrase to undermine
the judicial nature of the Court of Appeals for the Armed Forces. The House
report accompanying the U.S. Court of Military Appeals Establishment Act states
the following:

One of the purposes of this bill is to make it abundantly clear in
the law that the Court of Military Appeals is a court, although it is a
court under article I of the Constitution. There has been some claim
that the court, having been put under the Department of Defense for
administrative purposes, is in effect an administrative agency. If it
had such status, it would not be able to question any of the provisions
of the Manual for Courts-Martial since the manual had been
promulgated by Presidential order. The bill makes it clear that the
Court of Military Appeals is a court and does have the power to
question any provision of the manual or any executive regulation or
action as freely as though it were a court constituted under Article III
of the Constitution. [H.R. Rept. No. 90-1480, at 2 (1968), 1968
U.S.C.C.A.N. 2053, 2054; in substantial accord S. Rept. No. 90-806,
at 1-2 (1968).]
17
We also note that sec. 7441 (as amended in 2015, after release of the
opinion of the Court of Appeals in Kuretski) provides that the Tax Court is
independent of the executive branch, and, in contrast to administration by the
executive branch, sec. 7470 (also enacted in 2015) authorizes the Tax Court to
exercise the managerial, administrative, and financial authorities provided for the
Article III courts.
 -17-

Second, 10 U.S.C. sec. 946 (2012) requires judges of the Court of Appeals

for the Armed Forces to meet annually with the Judge Advocates General and two

members of the public appointed by the Secretary of Defense to “survey the

operation” of the military justice system. Edmond, 520 U.S. at 664 n.2. This

contrasts with the Tax Court, which “exercises judicial power to the exclusion of

any other function”, Freytag v. Commissioner, 501 U.S. at 891, and which has no

statutory mandate to survey the operation of the IRS or any of its offices.18 These

statutory differences led the Supreme Court to conclude that the Tax Court is

independent of the executive branch and the Court of Military Appeals for the

Armed Forces is within the executive branch.

4. Other Statutory Changes

The Ethics Reform Act of 1989, Pub. L. No. 101-194, sec. 601(a), 103 Stat.

at 1760, 1761, provides that the Judicial Conference of the United States (Judicial

Conference) is the supervising ethics authority for “officers and employees of the

judicial branch”. Tax Court Judges are included in the definitions of “judges” and

18
Although not noted by the Supreme Court in Edmond, the statute
establishing the Court of Appeals for the Armed Forces requires that not more
than three judges of that court be from the same political party. See 10 U.S.C. sec.
942(b)(3) (2012). No similar provision applies to the appointment of Judges of
the Tax Court.
 -18-

“judicial officers”. Id. sec. 202, 103 Stat. at 1724, 1742. The Judicial Conference

is the supervising ethics authority for Tax Court Judges and employees.19

From 2006 to 2015 several provisions were enacted which further distance

the Tax Court from any association with the executive branch and bolster the Tax

Court’s “quintessentially judicial” powers and design. Freytag v. Commissioner,

501 U.S. at 890. In 2006 section 6214 was amended to permit the Tax Court to

apply the doctrine of equitable recoupment20 to the same extent that it may be

applied in Federal civil tax cases by the U.S. District Courts or the U.S. Court of

Claims. Pension Protection Act of 2006, Pub. L. No. 109-280, sec. 858, 120 Stat.

at 1020; S. Rept. No. 109-336, at 97 (2006).

19
In 1985 the Tax Court formally adopted the Code of Conduct for United
States Judges, thus confirming the widely held understanding that the Code of
Conduct applies to Tax Court Judges. See Harold Dubroff & Brant J. Hellwig,
The United States Tax Court: An Historical Analysis 239 (2d ed., Government
Publishing Office 2014) (1979), http://www.ustaxcourt.gov/book/Dubroff_
Hellwig.pdf. The oath of office for Judges of this Court, by Tax Court practice, is
identical to the oath for Article III judges, i.e., a combination of the constitutional
oath, see 5 U.S.C. sec. 3331 (2012), and the oath for judges, see 28 U.S.C. sec.
453 (2012).
20
Equitable recoupment is a judicially created doctrine that in certain
circumstances allows a litigant to avoid the bar of an expired statutory limitations
period. Bull v. United States, 295 U.S. 247 (1935). In the tax context the doctrine
prevents the inconsistent tax treatment of a single transaction, item, or event
affecting the same taxpayer or a sufficiently related taxpayer. Menard, Inc. v.
Commissioner, 130 T.C. 54, 62 (2008).
 -19-

Before 2006 section 1043 provided special rules for recognition of gain on

the sale of property which would present a conflict of interest to “officer[s] or

employee[s] of the executive branch of the Federal Government”. In 2006

Congress amended section 1043 to apply to judicial officers, including Article III

judges and “judges of the * * * Tax Court”. Tax Relief and Health Care Act of

2006, Pub. L. No. 109-432, sec. 418(b), 120 Stat. at 2966. In 2008 Congress

included Tax Court Judges in the definition of “Federal judges” in order to provide

protection against false liens or encumbrances to Tax Court Judges. Court

Security Improvement Act of 2007, Pub. L. No. 110-177, sec. 201(a), 121 Stat. at

2535-2536. Also in 2008 Congress expanded the duties of the U.S. Marshals

Service to include providing security for and enforcing orders of the Tax Court.

Id. secs. 101 and 102, 121 Stat. at 2534-2535.21

In 2011 section 7471(a) was amended to authorize the Tax Court to

establish a personnel system similar to the personnel system for employees of

Article III courts. Act of Jan. 4, 2011, Pub. L. No. 111-366, sec. 1(a), 124 Stat. at

4063. Section 7471(a)(4) provides in pertinent part that “[t]o the maximum extent

21
After the 2008 amendment, 28 U.S.C. sec. 566(a) (2012) provides: “It is
the primary role and mission of the United States Marshals Service to provide for
the security and to obey, execute, and enforce all orders of the United States
District Courts, the United States Courts of Appeals, the Court of International
Trade, and the United States Tax Court, as provided by law.”
 -20-

feasible, the Tax Court shall compensate employees at rates consistent with those

for employees holding comparable positions in courts established under Article III

of the Constitution of the United States.” Under the 2011 amendment, the Tax

Court’s personnel system shall provide that “any individual who would be a

preference eligible in the executive branch” will be given preference “in a manner

and to an extent consistent with preference accorded to preference eligibles in the

executive branch.” Sec. 7471(a)(10)(C). Section 7471(a)(10)(C) would be

superfluous if the Tax Court were in the executive branch.

The 2015 Act22 added several provisions applicable to the Tax Court and

relevant here. First, section 7453 was amended to provide that “the proceedings of

the Tax Court and its divisions shall be conducted in accordance with * * * the

Federal Rules of Evidence.” 2015 Act, div. Q, sec. 425, 129 Stat. at 3125. As a

result of the 2015 Act, the Tax Court, which has applied the Federal Rules of

22
The 2015 Act includes without change the provisions of S. 903, 114th
Cong. (2015) (“Improve Access and Administration of the United States Tax
Court”), reported by the Senate Finance Committee on April 14, 2015 (S. Rept.
No. 114-14 (2015)). The provisions of S. 903 were introduced in the House of
Representatives without change as tit. II, subtit. C, of the Tax Increase Prevention
and Real Estate Investment Act of 2015, by Ways and Means Committee
Chairman Brady on December 7, 2015, and were enacted with the 2015 Act.
 -21-

Evidence since their enactment in 1975,23 see, e.g., Conti v. Commissioner, 99

T.C. 370, 373 (1992), aff’d and remanded, 39 F.3d 658 (6th Cir. 1994), will follow

the Federal Rules of Evidence as applied by the U.S. Court of Appeals to which a

case is appealable, see Golsen v. Commissioner, 54 T.C. 742 (1970), aff’d, 445

F.2d 985 (10th Cir. 1971).24

Second, section 7470 provides that “the Tax Court may exercise, for

purposes of management, administration and expenditure of funds of the Court,

the authorities provided for such purposes by any provision of law * * * to a court

of the United States” as defined in 28 U.S.C. sec. 451 (2012), i.e., the Supreme

Court, the U.S. District Courts, the U.S. Courts of Appeals, and the Court of

International Trade. 2015 Act, div. Q, sec. 432, 129 Stat. at 3126. Third, section

7470A authorizes the Tax Court to hold judicial conferences and to collect

reasonable fees related to those conferences. Id. This authority parallels

authorities provided to the U.S. Courts of Appeals by 28 U.S.C. sec. 333 (2012).

Fourth, section 7473 extends to the Tax Court authority for handling fees similar

23
The Federal Rules of Evidence are considered to be enacted like any
statute. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 587 (1993).
24
Before amendment in 2015, sec. 7453, first enacted in the 1926 Act, ch.
27, sec. 907, 44 Stat. at 107, required the Tax Court to apply the rules of evidence
applicable in bench trials in the U.S. District Court for the District of Columbia.
 -22-

to that provided to U.S. District Courts. 2015 Act, div. Q, sec. 432, 129 Stat. at

3126.25

Finally, section 746626 makes applicable to Tax Court Judges the judicial

conduct and judicial disability procedures established by 28 U.S.C. secs. 351-364

(2012). As a part of these procedures, if the Judicial Conference of the United

States (Judicial Conference) determines that there are grounds for removal of a

Tax Court Judge under section 7443(f), then the Judicial Conference “shall so

certify and transmit the determination and the record of proceedings” to the

President. Sec. 7466(b); 28 U.S.C. sec. 355.27

25
Certain fees paid to U.S. District Courts are deposited into a special fund
of the Treasury to be available to offset funds appropriated for the operation and
maintenance of those courts. 28 U.S.C. secs. 1914(a), 1931 (2012).
26
Sec. 7466 was effective June 15, 2016. Rules implementing sec. 7466 by
the Tax Court were adopted on June 14, 2016. U.S. Tax Court, Rules for Judicial
Conduct and Disability Proceedings for the United States Tax Court,
http://www.ustaxcourt.gov/rules/judicial_misconduct_or_disability/jcd_rules.pdf.
Title 28 U.S.C. sec. 363 (2012) provides that those provisions are applicable to
judges of the Courts of Appeals, the U.S. District Courts, the bankruptcy courts,
the Court of Federal Claims, and to magistrate judges. The Court of Appeals for
Veterans Claims is also subject to those provisions. 38 U.S.C. sec. 7253(g)
(2012).
27
Similarly, under 28 U.S.C. sec. 355, under certain circumstances the
Judicial Conference shall certify and transmit to the House of Representatives the
determination and the record of proceedings where impeachment may be
warranted.
 -23-

Section 7466 provides several powers to the Tax Court identical to powers

provided to Article III courts, including the powers to (1) issue subpoenas in

connection with conduct hearings, see 28 U.S.C. sec. 356(a); (2) punish

noncompliance with those subpoenas by contempt, see id. sec. 332(d)(2); (3)

exercise the authority provided to Article III courts under 28 U.S.C. sec. 1821

(2012); (4) pay the fees and allowances described in that section, see sec.

7466(a)(1); and (5) award reimbursement for reasonable expenses, see 28 U.S.C.

sec. 361.

The trend in the evolution of the Tax Court’s governing statutes from 1969

to 2015 is clear: Congress has continued to provide authority and design to the

Tax Court more like those of other Federal courts and to distance the Tax Court

from any operational or structural similarity to agencies within the executive

branch.

C. Caselaw Relating to the Jurisprudence and Status of the Tax Court

The case or controversy requirement under Article III presumptively applies

in the Tax Court. Antolick v. Commissioner, 422 F. App’x 859, 860-861 (11th

Cir. 2011); Charlotte’s Office Boutique, Inc. v. Commissioner, 425 F.3d 1203,

1211 n.7 (9th Cir. 2005) (“[L]imitations imposed upon Article III courts, such as

the existence of an actual case or controversy, have been presumptively applied to
 -24-

the Tax Court.”), aff’g 121 T.C. 89 (2003); D’Andrea v. Commissioner, 263 F.2d

904, 906 (D.C. Cir. 1959); Anthony v. Commissioner, 66 T.C. 367, 368-370

(1976), aff’d without published opinion, 566 F.2d 1168 (3d Cir. 1977). Because

the Tax Court is not an Article III court, application of case or controversy

principles to the Tax Court results from caselaw, not from constitutional mandate.

Baranowicz v. Commissioner, 432 F.3d 972, 975 (9th Cir. 2005) (stating that as an

Article I court, the Tax Court is not fully constrained by the case or controversy

limitation in Article III); Orum v. Commissioner, 412 F.3d 819, 821 (7th Cir.

2005), aff’g 123 T.C. 1 (2004).

The Tax Court has jurisdiction to decide constitutional disputes arising in

cases over which it has jurisdiction. Estate of Brandon v. Commissioner, 828 F.2d

493, 499 (8th Cir. 1987) (remanding the case to the Tax Court to consider the

constitutionality of an Arkansas dower statute), rev’g 86 T.C. 327 (1986),

remanded to Estate of Brandon v. Commissioner, 91 T.C. 829, 835 (1988)

(holding a gender-based Arkansas statute unconstitutional in the light of, for

example, Frontiero v. Richardson, 411 U.S. 677 (1973)); Rager v. Commissioner,

775 F.2d 1081, 1083 (9th Cir. 1985) (“[W]e have often upheld Tax Court

decisions which were based on a constitutional inquiry.”), aff’g T.C. Memo. 1984-

563; see also Crawford v. Commissioner, 266 F.3d 1120, 1122-1123 (9th Cir.
 -25-

2001) (deciding a separation of powers issue relating to Special Trial Judges),

aff’g T.C. Memo. 1999-361; Wiggins v. Commissioner, 904 F.2d 311, 314 (5th

Cir. 1990) (holding retroactive application of a statute constitutional), aff’g 92

T.C. 869, 871-872 (1989).

Tax Court opinions are subject to stare decisis. Smith v. Commissioner, 926

F.2d 1470, 1479 (6th Cir. 1991) (“We are not unmindful of the heavy burden

placed upon the tax court by the doctrine of stare decisis and that any decision to

depart from the doctrine requires ‘special justification.’”), aff’g 91 T.C. 1049

(1988); see also Estate of Maxwell v. Commissioner, 3 F.3d 591, 599 (2d Cir.

1993) (Walker, J., dissenting) (“It is well established that the Tax Court is

governed by the doctrine of stare decisis. * * * Indeed, the doctrine applies with

special force in the tax context, given the important reliance interests involved.”

(the majority in Estate of Maxwell did not dispute this point)), aff’g 98 T.C. 594

(1992); Sec. State Bank v. Commissioner, 111 T.C. 210, 213-214 (1998), aff’d,

214 F.3d 1254 (10th Cir. 2000); Hesselink v. Commissioner, 97 T.C. 94, 99-100

(1991). This well-established feature of American courts, see, e.g., Hilton v. S.C.

Pub. Rys. Comm’n, 502 U.S. 197, 202 (1991) (“Time and time again, this Court

has recognized that ‘the doctrine of stare decisis is of fundamental importance to

the rule of law.’ * * * [W]e will not depart from the doctrine of stare decisis
 -26-

without some compelling justification.” (quoting Welch v. Tex. Dep’t of

Highways & Pub. Transp., 483 U.S. 468, 494 (1987))), contrasts with the less than

certain state of the law applicable to administrative agencies. Courts of Appeals

have differed on whether the doctrine of stare decisis applies to administrative

decisions. See James E. Moliterno, “The Administrative Judiciary’s Independence

Myth”, 41 Wake Forest L. Rev. 1191, 1198 (2006). Compare Butler Cty. Mem’l

Hosp. v. Heckler, 780 F.2d 352, 355-356 n.3 (3d Cir. 1985) (recognizing agency’s

right to “change course”), and Courier Post Pub. Co. v. FCC, 104 F.2d 213, 218

(D.C. Cir. 1939) (holding the policy of the Commission expressed in decided

cases “is not a controlling factor upon the Commission”), with Teamsters Local

Union No. 455 v. NLRB, 765 F.3d 1198, 1204 (10th Cir. 2014) (holding an

administrative agency “may not * * * depart from a prior policy sub silentio or

simply disregard rules that are still on the books” (quoting FCC v. Fox Television

Stations, Inc., 556 U.S. 502, 515 (2009))), and Mendez-Barrera v. Holder, 602

F.3d 21, 26 (1st Cir. 2010) (“An administrative agency must respect its own

precedent, and cannot change it arbitrarily and without explanation, from case to

case.”).
 -27-

The Tax Court is not subject to the Freedom of Information Act, which by

its terms does not apply to “the courts of the United States”.28 5 U.S.C. sec.

552(f)(1) (2012) (incorporating the definition of “agency” in 5 U.S.C. sec. 551(1)

(2012)); Megibow v. Clerk of the U.S. Tax Court, 432 F.3d 387 (2d Cir. 2005);

Byers v. U.S. Tax Court, No.15-1605 (RC) (D.D.C. Sept. 30, 2016); Ostheimer v.

Chumbley, 498 F. Supp. 890, 892 (D. Mont. 1980) (same), aff’d without published

opinion, 746 F.2d 1487 (9th Cir. 1984).

Tax Court Judges have immunity from liability for damages for acts

committed within their judicial jurisdiction to the same extent as Article III judges

and State court judges instead of the more narrow form of immunity provided for

executive branch officials. Chisum v. Colvin, 276 F. Supp. 2d 1, 3 (D.D.C. 2003)

(Tax Court Judges) (citing Mireles v. Waco, 502 U.S. 9, 9-10 (1991) (per curiam)

(State court judges), and Pierson v. Ray, 386 U.S. 547, 553-554 (1967) (municipal

judges)). In contrast, executive branch employees have limited immunity from

lawsuits challenging actions taken in the course of their official duties, such as

28
Tit. 5 U.S.C. sec. 551 (2012) provides in pertinent part as follows: “For
the purpose of this subchapter--(1) ‘agency’ means each authority of the
Government of the United States, whether or not it is within or subject to review
by another agency, but does not include--(A) the Congress, (B) the courts of the
United States”.
 -28-

torts committed within the scope of their employment under the Federal Tort

Claims Act, 28 U.S.C. sec. 2679 (2012).

D. Kuretski v. Commissioner and Section 7441 as Amended in 2015

In Kuretski v. Commissioner, 755 F.3d at 943-945, the taxpayer contended

that the President’s authority under section 7443(f) to remove Tax Court Judges

for inefficiency, neglect of duty, or malfeasance in office is unconstitutional

because it violates separation of powers principles.29 The Court of Appeals held

that the Tax Court is within the executive branch, making it unnecessary to decide

whether authority for Presidential removal of Tax Court Judges violates separation

of powers principles. Id. at 938-942. However, the following year Congress

amended section 7441 by adding the sentence emphasized below:

There is hereby established, under article I of the Constitution of the
United States, a court of record to be known as the United States Tax
Court. The Tax Court is not an agency of, and shall be independent
of, the executive branch of the Government. The members thereof
shall be known as the chief judge and the judges of the Tax Court.
[2015 Act, div. Q, sec. 441, 129 Stat. at 3126; emphasis added.]

29
In Kuretski v. Commissioner, 755 F.3d at 938, the Court of Appeals said
the taxpayer in that case contended that the Tax Court exercises judicial power
under Article III. It is not apparent to us that the taxpayers in that case made that
obviously incorrect argument. In fact, in their answering brief at p. 11 the
Kuretskis state that they “do not challenge the Tax Court Judges’ non-Article III
status”.
 -29-

In the explanation of the change contained in the report of the Senate Finance

Committee, the Committee said it was--

concerned that statements in Kuretski v. Commissioner may lead the
public to question the independence of the Tax Court, especially in
relation to the Department of Treasury or the Internal Revenue
Service. The Committee wishes to remove any uncertainty caused by
Kuretski v. Commissioner, and to ensure that there is no appearance
of institutional bias. [S. Rept. No. 114-14, at 10, accompanying S.
903.]

The Court of Appeals in Kuretski v. Commissioner, 755 F.3d at 932, said

the Tax Court “exercises executive authority as part of the Executive Branch.” In

contrast, the Supreme Court in Freytag v. Commissioner, 501 U.S. at 891, said the

Tax Court exercises exclusively judicial power and does not exercise executive,

legislative, or administrative power.30 The Court of Appeals in Kuretski v.

Commissioner, 755 F.3d at 943-944, made no constitutional distinction between

the Tax Court and independent executive branch agencies even though, unlike the

Tax Court, independent executive branch agencies exercise executive power under

30
The Court of Appeals in Kuretski v. Commissioner, 755 F.3d at 944, cited
several examples of independent agencies which “sit in ‘independent’ judgment of
other executive actors.” For instance, the Merit Systems Protection Board sits in
judgment of other agencies, 5 U.S.C. sec. 1204(a), as does the Federal Labor
Relations Authority, 5 U.S.C. sec. 7105(g); the Occupational Safety and Health
Review Commission sits in judgment of the Secretary of Labor, 29 U.S.C. sec.
659(c); and the Postal Regulatory Commission sits in judgment of Postal Service,
39 C.F.R. secs. 3001 to 3018.
 -30-

Article II of the Constitution. See also Humphrey’s Ex’r v. United States, 295

U.S. 602, 629-630 (1935); PHH Corp. v. Consumer Fin. Prot. Bureau, No. 15-

1177, slip op. at 4 (D.C. Cir. Oct. 11, 2016). In addition, independent executive

branch agencies perform substantial nonadjudicatory functions, e.g., rulemaking,

while the Tax Court “exercises judicial power to the exclusion of any other

function.” Freytag v. Commissioner, 501 U.S. at 891.31

In considering the relationship between independent executive branch

agencies and other executive branch agencies, the Court of Appeals in Kuretski v.

Commissioner, 755 F.3d at 944, said that Congress may allow independent

executive branch agencies “a measure of independence from other executive

actors”. Presumably, “a measure of independence” means less than total

independence. If the Tax Court were in the executive branch, the relevant “other

executive actor” would be the IRS. Surely any taxpayer would find it repugnant if

31
Unlike the statutes establishing the Tax Court, statutes establishing
independent agencies in the executive branch typically require that appointments
to their policymaking (i.e., quasi-legislative) governing bodies be balanced
between the two major political parties. See, e.g., statutes establishing the Federal
Trade Commission, 15 U.S.C. sec. 41 (2012); the Equal Employment Opportunity
Commission, 42 U.S.C. sec. 2000e-4 (2012); the Federal Communications
Commission, 47 U.S.C. sec. 154(b)(5) (2012); the Securities and Exchange
Commission, 15 U.S.C. sec. 78d(a) (2012); and the Federal Election Commission,
52 U.S.C. sec. 30106 (2012); see also PHH Corp. v. Consumer Fin. Prot. Bureau,
No. 15-1177 (D.C. Cir. Oct. 11, 2016).
 -31-

the Tax Court, which by congressional design is the Federal court which decides

the most taxpayer disputes with the IRS, has only some nebulous “measure of

independence” from the IRS.

According to the specific text added to section 7441 in 2015, particularly in

contrast to the opinion of the Court of Appeals in Kuretski, it appears that in 2015

Congress emphasized the Supreme Court’s characterization of the Tax Court in

Freytag and Congress’ own characterization of the Tax Court in the legislative

history of the 1969 Act as independent of the executive branch. Specifically, by

providing that the Tax Court is not an executive agency and is independent of the

executive branch, the 2015 amendment to section 7441 in substance codifies the

following language in the 1969 Finance Committee report, i.e.: “The committee

believes it is anomalous to continue to classify * * * [the Tax Court] with

quasi-judicial executive agencies”. The 2015 amendment to section 7441 also

codifies a clause from the Supreme Court’s opinion in Freytag v. Commissioner,

501 U.S. at 891, i.e., “[t]he Tax Court remains independent of the Executive * * *

Branch[es]”.

Discussion

Like the taxpayers in Kuretski, petitioners contend that the Tax Court is not

within the executive branch and that the President’s authority under section
 -32-

7443(f)(1) violates separation of powers principles. For reasons discussed below,

we will deny petitioners’ motion.

A. Disqualification Is Not Required.

Petitioners seek rulings that all Tax Court Judges must recuse themselves

from deciding any further cases because, according to petitioners, section 7443(f)

is unconstitutional. We disagree here that recusal is required and below at Part B

that section 7443(f) is unconstitutional.

Courts have occasionally been presented with issues in which all judges of

the court have a conflict of interest or are alleged to be biased, and, because it is

necessary for the work of the court to proceed, have not recused themselves. See

United States v. Will, 449 U.S. 200, 213-216 (1980) (judicial salaries) (“The Rule

of Necessity has been consistently applied in this country in both state and federal

courts.”); Evans v. Gore, 253 U.S. 245 (1920) (taxation of judicial incomes),

overruled by United States v. Hatter, 532 U.S. 557, 571 (2001); Guinn v.

Finesilver, 48 F.3d 1232 (10th Cir. 1995); In re Complaint of Doe, 2 F.3d 308 (8th

Cir. 1993) (recusal not required where a party sues judges who have heard that

party’s case); In re N.M. Nat. Gas Antitrust Litig., 620 F.2d 794, 795 (10th Cir.

1980); In re Va. Elec. Power Co., 539 F.2d 357, 360 (4th Cir. 1976) (utility rates);

Cupp v. Commissioner, 65 T.C. 68, 86-87 (1975) (recusal not required in a Tax
 -33-

Court case brought by a taxpayer who previously sued all Tax Court Judges in

other courts), aff’d without published opinion, 559 F.2d 1207 (3d Cir. 1977).

The Rule of Necessity has been expressed through a maxim of law that

where all are disqualified, none are disqualified. Evans, 253 U.S. at 252-255. We

conclude that under the Rule of Necessity we may properly act on petitioners’

motion. There is indeed a necessity that we do so. Every case before us involves

the issue that petitioners here present, and either we must suspend our activity in

every case (thereby effectively granting petitioners’ motion), or we must go about

our business (thereby effectively denying it). We cannot avoid the question by the

recusal of one Judge in the instant case.

B. Procedures for Removal of Tax Court Judges for Cause Do Not Violate
Separation of Powers Principles.

In this part we conclude that regardless of the branch location of the Tax

Court, provisions authorizing removal of Tax Court Judges are constitutional.

1. Public Rights Doctrine

Although it is universally understood that our system has three branches of

Government, the U.S. Constitution does not use “branch” in that context. Instead

of identifying three branches of Government, the text of the Constitution identifies

three “Power[s]”--i.e., it vests “[a]ll legislative Powers * * * in a Congress”
 -34-

(Article I), “[t]he executive Power * * * in a President” (Article II), and “[t]he

judicial Power” in certain courts presided in by certain judges (Article III). The

President is given only “the executive Power”.32

Beyond what the Constitution expressly permits (such as appointment),

Congress may not authorize the President to impede exercise by the Article III

courts of “the judicial Power of the United States”.

Article III, section 1, vests the power to adjudicate certain disputes solely in

courts whose judges have lifetime appointments. The scope of this exclusive

judicial power has been construed to be “matter[s] which, from * * * [their] nature,

* * * [are] the subject of a suit at the common law, or in equity, or admiralty”; and

32
The only reference to “branch[es]” in the Constitution is to what are
sometimes called the two “houses” of a legislature. See art. I, sec. 2 (“[T]he
Electors in each State shall have the Qualifications requisite for Electors of the
most numerous Branch of the State Legislature.”); amend. XVII (to the same
effect). Similarly, the Federalist Papers sometimes use “branch” to refer to one of
the two legislative houses. See, e.g., The Federalist No. 37 (James Madison) (“the
different legislative branches”), No. 47 (James Madison). The Federalist Papers
sometimes refer to the legislative, the executive, and the judicial “departments”,
see, e.g., id. No. 45 (James Madison) (“the three great departments of the
[governments of the] thirteen States”); id. No. 47 (“the legislative department” in
the Massachusetts Constitution and “the judiciary department” in the New York
Constitution); id. No. 48 (James Madison) (“the legislative, executive, and
judiciary departments”), but also sometimes use “branch” to refer to the executive,
legislative, or judicial branch as we now do, see, e.g., id. No. 41 (James Madison)
No. 45, No. 49 (James Madison or Alexander Hamilton), No. 78 (Alexander
Hamilton).
 -35-

outside that scope are matters that “congress may or may not bring within the

cognizance of * * * [Article III courts], as it may deem proper.” Murray’s Lessee

v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272, 284 (1855).

The adjudication of public rights disputes may, for example, be assigned by

Congress to Article I judges. N. Pipeline Constr. Co. v. Marathon Pipe Line Co.,

458 U.S. 50, 73-74 (1982) (Brennan, J., plurality opinion). While the Tax Court

exercises a portion of the judicial power of the United States, Freytag v.

Commissioner, 501 U.S. at 890, it has jurisdiction to adjudicate only public rights

disputes, see infra pp. 37-38, and thus does not exercise that portion of the judicial

power that is reserved for Article III judges.

In considering the constitutionality of section 7443(f), the question that

arises is: “Does providing to the President the authority to remove Tax Court

Judges give the President any unconstitutional power to interfere with the Article

III judicial power of the United States?” The answer is no; it gives the President

no such unconstitutional power.

In Am. Ins. Co. v. 356 Bales of Cotton, 26 U.S. (1 Pet.) 511 (1828), the

Supreme Court observed that Article IV bestowed upon Congress alone a

complete power of government over territories not within the States and

acknowledged Congress’ authority to create courts for those territories that are not
 -36-

in conformity with Article III. N. Pipeline Constr. Co., 458 U.S. at 63-64. The

Supreme Court followed similar reasoning when it reviewed Congress’ creation of

non-Article III courts in the District of Columbia. Kendall v. United States ex rel.

Stokes, 37 U.S. (12 Pet.) 524, 618-619 (1938). Congress also may assign courts-

martial authority other than to Article III courts. Dynes v. Hoover, 61 U.S. (20

How.) 65 (1857).

The Supreme Court has upheld the validity of statutes which authorize

Article I courts and administrative agencies to decide public rights disputes. Id. at

67-68. In Murray’s Lessee, 59 U.S. (18 How.) at 284, the Court stated: “[T]here

are matters, involving public rights, which may be presented in such form that the

judicial power is capable of acting on them, and which are susceptible of judicial

determination, but which Congress may or may not bring within the cognizance of

the courts of the United States, as it may deem proper.” Because the sovereign

could not be sued at common law (under which the sovereign was immune),

“public rights” cases against the Government are not among the “suit[s] at the

common law, or in equity, or admiralty” that constitute the exclusive sphere of the

Article III courts. Id. The Court later expanded on this as follows:

This [public rights] doctrine may be explained in part by
reference to the traditional principle of sovereign immunity, which
recognizes that the Government may attach conditions to its consent
 -37-

to be sued. * * * But the public-rights doctrine also draws upon the
principle of separation of powers, and a historical understanding that
certain prerogatives were reserved to the political Branches of
Government. The doctrine extends only to matters arising “between
the Government and persons subject to its authority in connection
with the performance of the constitutional functions of the executive
or legislative departments,” * * * and only to matters that historically
could have been determined exclusively by those departments * * *.
The understanding of these cases is that the Framers expected that
Congress would be free to commit such matters completely to
nonjudicial executive determination, and that as a result there can be
no constitutional objection to Congress’ employing the less drastic
expedient of committing their determination to a legislative court or
an administrative agency. [N. Pipeline Constr. Co., 458 U.S. at 67-68
(quoting Crowell v. Benson, 258 U.S. 22, 50 (1932)).]

The Supreme Court has not definitely established in all respects the

distinction between public rights and private rights, see, e.g., Stern v. Marshall,

564 U.S. 462, 490 (2011); however, generally speaking, controversies “between

the government and others” involve public rights and thus may be removed from

Article III courts and delegated to Article I courts or administrative agencies for

their determination, N. Pipeline Constr. Co., 458 U.S. at 69-70 (quoting Ex Parte

Bakelite Corp., 279 U.S. 438, 451 (1929)).

The Tax Court’s jurisdiction is limited to the adjudication of public rights

disputes.33 The Tax Court decides only disputes between the sovereign and the

33
Those disputes relate primarily to tax liability, tax payment obligations,
and the tax status of various entities and transactions. See, e.g., secs. 6214(a)
(continued...)
 -38-

subject which are neither suits at common law, nor in equity, nor admiralty. Under

the Constitution, Congress had the option to grant no remedy at all as to these

matters, and “as a result there can be no constitutional objection to Congress’ * * *

committing their determination to a legislative court or an administrative agency.”

Id. at 68.34

Separation of powers concerns may be implicated if Presidential removal

power could interfere with “the constitutionally assigned mission of” the judicial

branch. Mistretta v. United States, 488 U.S. 361, 411 n.35 (1989). But if the

President sought to exercise the power to remove a Tax Court Judge, the President

would not thereby be affecting any matter within the portion of the “judicial Power

of the United States” that is necessarily exercised by Article III judges. The Tax

Court handles no such matters, and the separation of powers is therefore not

implicated.

33
(...continued)
(deficiency), 6330(d)(1) (collection due process cases), 7623(b)(4) (whistleblower
cases), 6015(e) (relief from joint and several liability), 6226 (final partnership
administrative adjustments), 6404(i) (interest abatement claims), 6110(f)(3)
(disclosure actions).
34
Congress also could have assigned the adjudication of public law disputes
to Article III courts. Art. III, sec. 2, of the Constitution provides in pertinent part:
“The judicial Power shall extend to all Cases * * * arising under * * * the Laws of
the United States, and * * * all * * * Controversies to which the United States
shall be a Party”.
 -39-

2. Interbranch Authority

Interbranch removal is not necessarily constitutionally impermissible. In

Bowsher v. Synar, 478 U.S. 714 (1986), the Supreme Court considered whether

the assignment by Congress to the Comptroller General of the United States (a

legislative branch official, removable for cause by Congress) of certain executive

functions (e.g., reducing spending by each agency in implementing a sequester)

under the Balanced Budget and Emergency Deficiency Control Act of 1985

violated the doctrine of separation of powers. The Supreme Court held that

Congress had violated separation of powers principles in providing that executive

authority to an official subject to removal by the Congress. Id. at 735-736.

However, in discussing its holding in Bowsher in a later case, the Supreme Court

said: “Nothing in Bowsher, however, suggests that one Branch may never

exercise removal power, however limited, over members of another Branch.

Indeed, we already have recognized that the President may remove a judge who

serves on an Article I court.” Mistretta, 488 U.S. at 411 n.35;35 McAllister v.

United States, 141 U.S. 174, 185 (1891).

35
This passage in Mistretta v. United States, 488 U.S. 361 (1989), shows
that Article I judges need not be within the executive branch.
 -40-

In McAllister, the Supreme Court held it was not an unconstitutional

violation of the separation of powers for the President to remove an individual

appointed to a four-year term as a non-Article III District Judge for the District of

Alaska (which was then a territory). In Mistretta, 488 U.S. at 409-411, the

Supreme Court held that the President’s authority to remove Article III judges

from the Sentencing Commission, an independent body which the statute placed in

the judicial branch, see 28 U.S.C. sec. 991 (2012), “for neglect of duty or

malfeasance in office or for other good cause”36 did not violate separation of

powers principles. The Supreme Court also said its “paramount concern in

Bowsher that Congress was accreting to itself the power to control the functions of

another Branch is not implicated by a removal provision, like the one at issue * * *

[in Mistretta], which provides no control in one Branch over the constitutionally

assigned mission of another Branch.” Mistretta, 488 U.S. at 411 n.35 (emphasis

added). Such limited removal power gives the President no control over

judicatory functions. Id.

The authority of the President to remove only for cause, like the removal

provisions upheld in Mistretta, Morrison v. Olson, 487 U.S. 654, 688 (1988), and

36
That provision is similar to the President’s authority 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.” Sec. 7443(f).
 -41-

Humphrey’s Ex’r v. United States, 295 U.S. 602, 630 (1935), is specifically

crafted to prevent the President from exercising “coercive influence” over the

public official who may be removed from office only for good cause. Mistretta,

488 U.S. at 411.

The removal statutes, section 7443(f) and 28 U.S.C. secs. 354(b) and 355,

provide roles for both the President and the Judicial Conference of the United

States, the later of which “shall” recommend removal in appropriate circumstances

on the basis of “inefficiency”, “neglect of duty”, or “malfeasance” by a Tax Court

Judge.”

There is no statutory requirement that the President await action by or defer

to action by the Judicial Conference in the removal of a Tax Court Judge.

However, it appears reasonable to expect that, if the President were to consider a

removal action under section 7443(f), there would at a minimum be interest in

whether the Judicial Conference had found cause for removal. In any event, none

of those issues arose before 2015 when the sole statutory provision relating to

removal of Tax Court Judges referred to the President.

The Supreme Court has said that the terms “inefficiency”, “neglect of duty”,

and “malfeasance” are very broad and could sustain removal for any number of

actual or perceived transgressions. Bowsher, 478 U.S. at 728-730. However, even
 -42-

without considering the potential effect of the Judicial Conference on the removal

process, the President’s authority to remove Tax Court Judges is more

circumscribed than the removal authority at issue in McAllister, where the

President was empowered to remove the judge of a territorial court for any reason

whatever. Limiting removal power to “good cause” is a significant restriction of

the President’s discretion, Wiener v. United States, 357 U.S. 349 (1958), and is

“an impediment to, not an effective grant of, Presidential control”, Morrison, 487

U.S. at 706 (Scalia, J., dissenting) (citing Humphrey’s Ex’r, 295 U.S. at 602).

C. Petitioners’ Request a Remedy Because of an Appearance of Bias.

In addition to voicing objections to section 7443(f), petitioners object to

several features of Tax Court litigation, such as the burden of proof, sec. 7491;

Welch v. Helvering, 290 U.S. 111 (1933); limitation of reimbursement of litigation

costs, sec. 7430; the lack of jury trials, see Rule 74(c) (allowing the taking of

depositions requested by one party without the consent of the other party only as

an extraordinary procedure and when approved by the Court); Wickwire v.

Reinecke, 275 U.S. 101, 105-106 (1929); Swanson v. Commissioner, 65 T.C.

1180, 1181, 1182 (1976). Petitioners contend that these features of Tax Court

litigation are so flawed that the Tax Court should immediately suspend

adjudication of all cases. Petitioners provide no legal justification (other than their
 -43-

constitutionality argument relating to the removal provision rejected above in Part

C) for their request for relief. Absent a finding of unconstitutionality or other

sufficient legal justification, we need not further consider petitioners’ policy-

related arguments.

D. Conclusion

The Court of Appeals in Kuretski had available at least two alternative

routes for deciding the taxpayer’s contentions. First, it could have decided (as it

did) that the Tax Court is within the executive branch, thus mooting the separation

of powers issue. Alternatively, without reaching the branch issue, it could have

decided whether interbranch removal violates separation of powers principles

irrespective of the Tax Court’s branch status.

We have the same choice in acting on petitioners’ motion. In contrast to the

approach taken by the Court of Appeals in Kuretski, we hold in Part B, supra pp.

33-42, that Presidential authority to remove Tax Court Judges for cause does not

violate separation of powers principles. We so conclude because, even though

Congress has assigned to the Tax Court a portion of the judicial power of the

United States, Freytag v. Commissioner, 501 U.S. at 890, the portion of that power

assigned to the Tax Court includes only public law disputes and does not include

matters which are reserved by the Constitution to Article III courts.
 -44-

Courts are reluctant to overturn statutes on constitutional grounds. United

States ex rel. Attorney Gen v. Del. & Hudson Co., 213 U.S. 366, 407-408 (1909).

Petitioners have not met the heavy burden of showing the removal provision is

unconstitutional or has the appearance of being a source of bias. Thus, whatever

the merits of providing for Presidential authority to remove Tax Court Judges, that

authority presents no concerns of constitutional magnitude. Thus we will deny

petitioners’ motion.

The 1969 Act sec. 951, 83 Stat. at 730, deleted from section 7441 the prior

longstanding designation of the Tax Court as an “agency” and the provision that

the Tax Court is “in the Executive Branch of Government”. The deletion of words

is properly considered in determining the meaning of statutes. See Wells, 519

U.S. at 492-493.37 In Freytag the Supreme Court clearly stated the Tax Court’s

relationship to the three powers (executive, legislative, and judicial) identified in

the Constitution. That is, in defining the Tax Court’s “constitutional status and its

role in the constitutional scheme”, the Supreme Court said the Tax Court exercises

only judicial power and does not exercise executive, legislative, or administrative

37
The following year we opined that Congress intended in the 1969 Act to
remove the Tax Court from the executive branch. Burns, Stix Friedman & Co. v.
Commissioner, 57 T.C. at 395. We have not revisited that proposition herein or at
any other time since 1971.
 -45-

power. Freytag v. Commissioner, 501 U.S. at 887-890. In our view, the public

rights holding above resolves the removal issue without requiring that we address

the tension with legislative intent that might be thought to arise under the opinion

of the Court of Appeals in Kuretski. Having decided petitioners’ motion on that

basis, we will follow the lead of Congress and the Supreme Court in Freytag and

not further address the branch placement of the Tax Court here.38

An appropriate order will be issued.

38
For a discussion of the Tax Court’s place in the branches of Government,
see Brant J. Hellwig, “The Constitutional Nature of the United States Tax Court”,
35 Va. Tax Rev. 269 (2015).