Byers v Comm’r – CDP Venue In Courts Of Appeals May Be Upended

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The following post is by Carlton Smith, Guest Blogger.

There is an interesting case in the D.C. Circuit that gives the impression of a game of three dimensional chess.  On the top board, the case is to decide only the issue of the correct venue on appeal from Tax Court cases involving the Tax Court’s Collection Due Process (CDP) jurisdiction under section 6330(d)(1).  That seems an important enough issue.  But, on a lower, more important level, the outcome of the case impacts the Robinette issue – i.e., the so-called “record rule” in CDP Tax Court cases.  If the recent oral argument in Byers v. Commissioner, D.C. Cir. Docket No. 12-1351, in the D.C. Circuit (Oct. 25, 2013) is any guide, it looks like the IRS and DOJ are about to lose a number of pieces on both levels of the chess board – including three Circuit Court opinions (bishops?). Below, I will first discuss the Robinette issue.  Then, I will discuss the venue facts and argument in the Byers case.  Oddly enough, his case is not one where the Robinette issue is being contested.  Full disclosure:  I submitted an amicus brief on the venue issue in support of Mr. Byers’ venue argument.


 In Robinette v. Commissioner, 123 T.C. 85 (2004), the Tax Court held that a CDP proceeding in the Tax Court is a trial de novo as to evidence (though limited to the issues raised at the Appeals Office CDP hearing).  However, the Eight Circuit reversed the Tax Court in Robinette, holding that a Tax Court CDP proceeding is generally limited to the administrative record. 439 F.3d 459 (8th Cir. 2006).  Two other Circuits have agreed with the Eighth Circuit.  See Murphy v. Commissioner, 469 F.3d 27, 31 (1st Cir. 2006), and Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009).  None of the other regional Circuits or the D.C. Circuit has ruled one way or the other on this Tax Court CDP “record rule” issue.

Under its Golsen doctrine (Golsen v. Commissioner, 54 T.C. 742, 757 (1970), affd. on other issue, 445 F.2d 985 (10th Cir. 1971)), the Tax Court follows its own precedent — except in the case where a court of appeals to which the Tax Court case is appealable has ruled to the contrary.  Ever since it decided Robinette, the Tax Court has applied its Golsen rule such that it follows its own precedent (i.e., trial de novo) in CDP proceedings where the taxpayer lives in the D.C. Circuit or the eight other regional Circuits that have not decided the issue and follows the rule limiting its CDP proceedings to the administrative record for taxpayers who reside in the First, Eighth, and Ninth Circuits.  The Tax Court has done so under the undiscussed assumption that venue on appeal from one of its CDP decisions is to the regional Circuit in which the taxpayer lives.  The regional Circuits are where, since 1999, nearly every one of the 600-plus CDP appeals has been taken.  The Byers case challenges the assumption that regional Circuits are the correct Circuits for CDP appeals.

Byers argues that the correct venue on appeal from Tax Court CDP decisions is only in the D.C. Circuit (at least, absent the parties stipulating to another Circuit under section 7482(b)(2)).  Thus, even though he lives in the Eighth Circuit, he appealed his Tax Court loss in T.C. Memo. 2012-27 to the D.C. Circuit.  The DOJ moved to transfer the appeal to the Eight Circuit, arguing that CDP appeals only go to the regional Circuit of residence.

Byers’ facts are as follows:  He got notices of deficiency for the years 1999-2002, which he litigated and lost in the Tax Court at T.C. Memo. 2007-331 under the Tax Court’s deficiency jurisdiction at section 6213(a).  As a result, the taxes in the notices were assessed — even though Byers appealed the deficiency case loss to the Eighth Circuit.  Before the Eighth Circuit deficiency case appeal was decided, the IRS issued a notice of intention to levy to him for the 1999-2002 taxes plus an assessment for 2003.

Byers timely filed a CDP hearing request, asking that no levy be done because he expected to win the Eight Circuit appeal and because, he argued, the IRS had committed a procedural failure with respect to the 2003 year – i.e., it had never issued a notice of deficiency for that year, though one was required to precede the assessment that was made.  Before he asked for a collection alternative or submitted information as to his current financial status, the Eighth Circuit affirmed the Tax Court, and the hearing officer promptly thereafter issued a notice of determination saying that levy could go forward for all four years.  At this point, Byers “appealed” the determination to the Tax Court under section 6330(d)(1), commencing a new Tax Court case.  In the new case, he argued that no notice of deficiency had been issued for 2003.  The IRS attorney agreed and successfully moved to strike the 2003 year from the case as moot because the IRS was eliminating the erroneous assessment.  Byers also argued that he hadn’t been given enough time to request and prove his entitlement to a collection alternative and that the Appeals Settlement Officer engaged in prohibited ex parte communications with the IRS lawyer who had handled his deficiency case.

The IRS successfully moved for summary judgment, which was granted by Senior Status Judge Swift of the Tax Court. Byers timely moved that Judge Swift vacate his decision — requesting that another, regular Tax Court Judge decide the issue of whether Judge Swift’s performance of the role of Tax Court Senior Status Judge violated the Constitution’s Appointments Clause (Art. II, sec. 2, cl. 2) because Judge Swift had not been presidentially appointed to what Byers argued was a new position of Senior Status Judge.  Judge Swift denied the motion.  Then, Byers took a timely appeal to the D.C. Circuit.

The D.C. Circuit did not grant or deny the DOJ’s motion to transfer the case, but told the parties to put the issue in their main briefs.  The DOJ requested oral argument on this venue issue and requested that the D.C. Circuit issue a precedential opinion, since Byers was not the first to make this venue argument.  Others, like me, seemed to be interested in making it.  The DOJ wanted to put a stop to the argument.

The reason that Byers wanted to go to the D.C. Circuit was his belief that it is a court that, because it reviews more agency actions than the usual Circuit, would give him a better shot at success on the merits of his case.  But, the IRS and DOJ quickly recognized that a victory by Byers on the venue issue could undo its three court of appeals victories on the “record rule”, since, if the D.C. Circuit was the correct venue for all CDP appeals from the Tax Court, then, since the D.C. Circuit had not decided the record rule issue, the Tax Court – in future case, and citing Golsen – would simply follow its own precedent for people living anywhere in the U.S.  The three Circuit Court opinions in the First, Eighth, and Ninth Circuits – having been decided by courts that were not the normally-correct venue – would never bind the Tax Court under Golsen.  In effect, these would be treated as cases where the parties had stipulated a different venue than was required by the venue statute.

So, what is the problem in the venue statute that gives rise to Byers’ argument?  Well, section 7482(b)(1) has flush language at its end that says that, absent a stipulation to the contrary under section 7482(b)(2), all appeals from the Tax Court are to be brought in the D.C. Circuit unless one of six lettered subparagraphs applies.  The vast bulk of Tax Court decisions are in deficiency jurisdiction cases.  Section 7482(b)(1)(A) says that for Tax Court cases involving petitions by individuals for “redetermination of tax liability”, appeals go to the Circuit in which the taxpayer resided when he or she filed the Tax Court petition.  Subparagraph (A) (drafted in 1966 – long before CDP was enacted) clearly covers deficiency cases.  But does it also cover CDP cases?  The IRS concedes that no other subparagraph directly discusses CDP petitions.  At oral argument, the DOJ attorney’s argument was that, since CDP cases in the Tax Court can sometimes involve “challenges” to underlying tax liability (under section 6330(c)(2)(B)), all CDP cases should be treated as subsumed within the language “redetermination of tax liability”.  The DOJ also argued that “liability” in subparagraph (A) should be read expansively to include not just the amount of the tax, but which items of property the tax could be collected from.  (I find this last argument a bit curious, since CDP does not involve litigation of the attachment of any particular levy or lien to any particular property – just the general authority of the IRS to go start levying or to file a public notice of the existence of a tax lien on all the taxpayer’s property.)

Both the DOJ and I (as an amicus) urged in our briefs that the D.C. Circuit decide the venue issue such that all CDP cases either go to the D.C. Circuit or go to the regional Circuits.  We thought it impractical to have a rule that if a particular CDP proceeding in the Tax Court involves a challenge to the underlying liability, then it should go to the regional Circuit, but if not, the appeal should go to the D.C. Circuit.  We wanted to spare the appellate courts motions to transfer because taxpayers were confused about whether or not there was an underlying liability challenge in their case – often a difficult issue to decide.

At oral argument, it appeared that the DOJ lawyer was on the ropes.  Two of the D.C Circuit judges repeatedly asked her, “Where was the challenge to the underlying liability in Byers’ cases, since that challenge was precluded both by section 6330(c)(2)(B) (because he had received a notice of deficiency) and by res judicata or collateral estoppel?”  They appeared to be strongly leaning toward allowing appeals in the D.C. Circuit at least in CDP cases like Byers’ that did not present a challenge to the underlying liability.

This fascinating case bears watching.  Of course, if Byers wins, then at least some CDP cases will go to the D.C. Circuit on appeal.  And, until the D.C. Circuit issues its own ruling on the Robinette issue, taxpayers countrywide (at least where they don’t raise an underlying tax liability issue) will now get a trial de novo as to evidence on all issues raised in a CDP hearing.  Continuing the analogy to a game of chess, even if the DOJ loses its venue argument, it can still get out of check by raising and winning the Robinette issue eventually in the D.C. Circuit.  Whoever wins that issue in a later case has checkmated the losing party.

And, oh, by the way:  For those of you who say, “But, I don’t want to appeal my CDP loss in Tax Court to the D.C. Circuit, since I live far away (i.e., it is inconvenient)”, my answer is that you should ask the DOJ to stipulate venue in your local Circuit.  Indeed, that is current policy in the Manual.  I.R.M § (rev. 5-2-12), states:  “Although none of subparagraphs (A)-(F) expressly mentions a decision in a CDP case, the Department of Justice should not be asked to object to venue when a taxpayer appeals a CDP decision to the court of appeals of the taxpayer’s residence or principal place of business, which is the rule for deficiency cases. . . .”  So long as the IRS and DOJ don’t change that policy, one can still appeal a CDP case to one’s regional Circuit – particularly one can ask for a stipulation of venue there under section 7482(b)(2).

The final thing of interest in the Byers case is the Senior Status Judge issue.  If the appeal goes forward in the D.C. Circuit and Byers loses on all of the CDP issues (i.e., the court feels it must affirm the Tax Court’s rulings), then it will likely decide the constitutional Appointments Clause issue, even though it was raised after Judge Swift ruled.  In Freytag v. Commissioner, 501 U.S. 868 (1991) — recently discussed under posts about the Kuretski case — the Supreme Court considered an Appointments Clause issue first raised at the court of appeals level, since Appointments Clause issues (as separation of powers issues) are so important to the structure of government that they are not automatically waived if not made before trial.


Carlton Smith About Carlton Smith

Carlton M. Smith worked (as an associate and partner) at Roberts & Holland LLP in Manhattan from 1983-1999. From 2003 to 2013, he was the Director of the Cardozo School of Law tax clinic. In his retirement, he volunteers with the tax clinic at Harvard, where he was Acting Director from January to June 2019.


  1. Bob Kamman says

    This does not look like chess to me. This looks like paper, scissors and rock.

  2. Peter Gibson says

    If only for political reasons, the D.C. Circuit should hold in Byers v. Commissioner that primary appellate venue in CDP cases lies there.

    Senate Republicans want to strip the D.C. Circuit of 3 of its allotted 11 judges because, they say, that Court has more judges than their workload merits. But if the D.C. Circuit holds in Byers that it has primary Collection Due Process appellate venue, then it can blunt the Senate Republicans’ political attack. The Court could then plausibly claim their coming increased workload, in the all-important matter of federal tax collection, warrants their maintaining 11 judges.

    Also, Byers is right: the D.C. Circuit is more apt to hold a federal agency to account than is any other federal circuit court. So if he wins on venue, the Court should provide him with a fair decision on the merits.

    • Thanks for the comment, Peter. This week’s Summary Opinions/Weekly Roundup will touch on the DC Circuit judge issue you raised.

      • Carl Smith says

        Mr. Byers was aware of the discussion about the D.C. Cir. being not that busy. He thought about mentioning this issue in his brief, but he decided not to — in part at my suggestion. I don’t think the judges would have liked a party to talk politics. They know what’s going on, though. We pointed out that 50 additional cases a year (if everyone took their CDP appeals to the D.C. Cir.) would hardly swamp the court.

  3. John A. Dalton says

    If the D.C. Circuit accepts venue in Byers, then how do you believe it will address his prohibited ex parte communications issue? In my experience, that issue plagues more CDP cases than one might believe. Can you elaborate on the nature of those communications in his case?

    I would favor a change in CDP venue to the D.C. Circuit if it would eliminate the too frequent prohibited ex parte communications engaged in by these allegedly “independent” Appeals Officers.

    I think Byers going to the D.C. Circuit is a smart move because it handles the large majority of federal agency adjudications. He, and other CDP requesters, ought to receive a better outcome in that court. I hope he prevails so that we can have an additional, and better, avenue for redress.

  4. Carl Smith says

    I am not sure what the D.C. Cir. will do about the ex parte communications issue Mr. Byers raised. He points out that not all of the communications are in the administrative record, so how does one know they were innocuous? Some of the 22 communications in the record are brief e-mail exchanges between the SO and the IRS lawyer simply about locating the alleged 2003 notice of deficiency — one that could never be found. At one point, the SO says she is very excited, since she thinks she locate the notice of deficiency. That later proved wrong. Mr. Byers makes much of the “excited” comment. An unbiased SO, he says, should not be eager to find facts against the taxpayer. But, I am not sure that any bias necessarily indicates prohibited ex parte communications. I am sympathetic to Byers’ argument that, at least, given the lack of the missing communications, the Tax Court shouldn’t simply have taken the word of an affidavit from the government that no prohibited ex parte communications occurred and granted summary judgment against him.

  5. I’m interested in the Tax Court senior judge issue. I’d never thought of it before. It makes sense, though. The law permits term-limited Tax Court judges to become “senior judges”–even when their term has expired. That makes no sense.

    Although I see some possible policy benefit to having them,Tax Court senior judges definitely run afoul of the Appointments Clause. Unlike the Tax Court’s Special Trial Judges at issue in Freytag, the Tax Court’s senior judges are not even appointed. Yet the law endows those senior judges with the power and authority of a Tax Court judge. And that power and authority is greater than those a Tax Court special trial judge possesses. As I view it, if a Tax Court Special Trial judge must be appointed, then so must a Tax Court senior judge.

    This Tax Court senior judge argument seems to be a strong one. Did the D.C. Circuit have anything to say about it?

    • Carl Smith says

      The oral argument in the D.C. Cir. focused most on venue and a little on the underlying CDP case. The parties didn’t get to the Senior Status Jude issue at oral argument, though they argued it in their briefs.

      I am also a fan of having Senior Status Judges, but leaning toward feeling there is a problem with their lack of further appointment. Senior Status Judges clearly are principal officer under the Constitution who can only be appointed by the President with the advice and consent of the Senate. “Recalling” them by the Chief Judge cannot be a sufficient new appointment. The only way they are constitutional is if the D.C. Cir. rules that a second appointment by the President and Senate confirmation is not necessary because their initial term in effect never ends because of the Congressional authorization of them to act after their nominal term ends.

      Of course, the government, in its brief, totally ignored and did not cite Freytag, when it stated that Mr. Byers raised his Appointments Clause argument too late (post ruling). But, Freytag considered the STJ Appointments Clause issue, even though it was first raised at the Court of Appeals level. The government should be ashamed of misleading the D.C. Cir. by not mentioning Freytag in connection with the timeliness question. (Mr. Byers did not cite Freytag for the timeliness of his argument in his brief, but I hope the D.C. Cir. reads it and realizes his argument is timely enough.)

      BTW, Article III district court or court of appeals judges don’t suffer from a similar problem when they continue to hear some cases after they “retire” because they are appointed for life. In effect, there is no end to their term.

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