District Court Holds Tax Court Exempt From FOIA as a “Court of the United States”

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We welcome back frequent guest blogger Carl Smith.  Today Carl writes about a recent case looking at whether FOIA applies to the Tax Court.  Les

In June 2015, I did a post warning readers that the litigious Mr. Ronald Byers was about to bring a FOIA suit against the Tax Court. Previously, Mr. Byers had gotten a ruling from the D.C. Circuit in a Collection Due Process (CDP) levy case allowing all CDP cases not involving challenges to underlying tax liability to be appealed from the Tax Court to the D.C. Circuit. See Byers v. Commissioner, 740 F.3d 668 (D.C. Cir. 2014) (venue ruling legislatively overruled going forward in December 2015). Mr. Byers is currently in the midst of a CDP lien case in the Tax Court. In 2015, he made a FOIA request to the Tax Court for various unpublished documents. The Tax Court refused the request, saying that it was exempt from FOIA because it was one of the “courts of the United States”, within the meaning of 5 U.S.C. § 551(1)(B).

Mr. Byers had a hard time intellectually reconciling (1) the holding in Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014), that the Tax Court, for constitutional purposes, is located in the Executive Branch with (2) the idea that the Tax Court is one of the “courts of the United States” for purposes of the FOIA exemption. So, he brought suit against the Tax Court in the district court for the District of Columbia, arguing that the Tax Court is an Executive agency or other entity covered by FOIA and is not described in the exemption to FOIA for “courts of the United States”. In an opinion from the district court issued on September 30, the court agrees with the Tax Court that FOIA doesn’t apply to the Tax Court. Byers v. United States Tax Court.

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5 U.S.C. sec. 552(a) requires that “[e]ach agency shall make available to the public information . . . .”   An “agency,” for purposes of FOIA, “as defined in section 551(1) of this title includes any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency.”  5 U.S.C. sec. 552(f)(1).  5 U.S.C. sec. 551(1), in relevant part, states that “‘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– . . . (B)  the courts of the United States”.  IRC sec. 7441 establishes the Tax Court as a “court of record” under Article I.

Byers argued that the Tax Court – per Kuretski – was either an agency or “other establishment in the executive branch of the Government”. Essentially, the district court agreed with Byers on this point, but it noted that the D.C. Circuit in Kuretski speculated that the Tax Court might be one thing for constitutional purposes, yet another thing for statutory purposes, and left open that question.  This district court opinion decided the question left open in Kuretski.

However, the district court held that the Tax Court was exempt from FOIA, holding that it is one of the “courts of the United States”. Byers argued that the phrase “courts of the United States” was a term of art in several places of the United States Code that limited the phrase to Article III courts.

The opinion correctly notes that two courts in other Circuits have previously decided that the Tax Court is exempt from FOIA as one of the “courts of the United States”.   Megibow v. Clerk of the United States Tax Court, 432 F.3d 387 (2d Cir. 2005), aff’g 94 AFTR 2d 5804 (S.D.N.Y. 2004 (holding that the Tax Court is not an “agency” for purposes of FOIA); Ostheimer v. Chumbley, 498 F.Supp. 890,892 (D. Mont. 1980) (same), aff’d, 746 F.2d 1487 (9th Cir. 1984). Thus, the D.C. district court Byers opinion does not break new ground in its holding. No court has held otherwise. At least one of those courts relied, in part, for its holding that the Tax Court was a “court”, on the functional analysis that the Supreme Court did of the Tax Court for constitutional purposes in Freytag v. Commissioner, 501 U.S. 868 (1991). In Freytag, the Supreme Court held that the Tax Court, despite not being an Article III court, held a portion of the judicial power of the United States. The district court in Byers supported its holding, as well, in part by the Freytag functional analysis of the Tax Court.

However, unlike the prior court opinions on this FOIA issue, the D.C. district court in Byers had to deal with the December 2015 amendment to IRC § 7441 that added the following sentence to respond to the Kuretski opinion:  “The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.”  Of course, the D.C. Circuit in Kuretski held that the Tax Court was part of the Executive Branch for constitutional purposes.  The Byers district court agreed with the Tax Court’s argument that this added sentence did nothing to change existing law or overrule Kuretski.  Interesting for the Tax Court to make that argument, since it must have been the Tax Court that asked Congress to amend § 7441.  Why make a pointless amendment?  I think the answer may be for public perception – i.e., individuals reading the Code should learn of the Tax Court’s independence from the Executive Branch (i.e., independence from the IRS) not by having to read and parse Freytag and Kuretski (which only lawyers would do).

The Byers district court also rejected applying to FOIA the definition of “the courts of the United States” in 28 U.S.C. § 451 – one that limits that phrase only to Article III courts. The district court noted that the § 451 definition is explicitly limited in effect to Title 28, so does not apply to Title 5, where FOIA is located.

The Byers district court still had to deal with two provisions of the IRC that also seem to use the phrase “courts of the United States” to refer only to Article III courts:

In footnote 6, the district court wrote:

Section 7457 provides for witness fees and mileage in the Tax Court that are the same as those provided for “witnesses in courts of the United States.” 26 U.S.C. § 7457(a). Mr. Byers argues that this statute shows that the Tax Court is not one of the “courts of the United States.” See Compl. Ex. C at 27. But the Court is persuaded by the Tax Court’s argument that this provision was enacted when the precursor to the Tax Court was still an “independent agency,” thus requiring the comparison to existing courts. See Def.’s Mem. At 16–17; see also Internal Revenue Code of 1954, Pub. L. No. 83-591, § 7457, 68A Stat. 730, 886 (1954); supra Part II.B (explaining that the Tax Court was not “established” as an Article I court until 1969).

Of course, the response to the district court’s statement is that Congress continued the language in § 7457 after it adopted the 1969 amendments, thus suggesting that, after 1969, Congress still did not feel that the Tax Court was one of the “courts of the United States” for Title 5 FOIA exemption purposes.

On page 17, the Byers court noted “possible contradictions in the recent legislation”, since in December, Congress newly adopted § 7470, which provides:

Notwithstanding any other provision of law, 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 (including any limitation with respect to such provision of law) applicable to a court of the United States (as that term is defined in section 451 of title 28, United States Code), except to the extent that such provision of law is inconsistent with a provision of this subchapter.

The court thinks the amendment of § 7441 essentially trumps the implication of § 7470 that the Tax Court is an agency of the United States that did not already have the powers of management give in § 7470 because the Tax Court isn’t a court of the United States.

Mr. Byers tells me that he plans to appeal the district court’s ruling to the D.C. Circuit, perhaps after filing a motion for reconsideration.

 

 

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