Follow up on Kuretski and Removal Power of Tax Court Judges

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The other day I posted a summary of the separation of powers issue in the Kuretski case.  Here are a few follow up points:

1) I am linking the taxpayers’ initial brief Kuretski Brief the DOJ response; and the reply brief: Kuretski_Reply_Brief_for_Appellants; [update DOJ Brief found here: Kuretski DOJ Brief for Appellee (2)]

2) Jack Townsend in his procedure blog picked up the initial post and raised  other questions, including some broader issues relating to the constitutionality of the Tax Court. Jack’s post has a nice reference to some sources discussing the Tax Court’s overall place in the federal system. For those who want to read more on the broader issues, I recommend  works by Professors Leandra Lederman and Diane Fahey; and

3) I neglected to raise in my initial post the specific relief the taxpayers request in Kuretski. The taxpayers are not challenging the constitutionality of the Tax Court overall. They only claim that the President should not have the power to remove the Tax Court judges under Section 7443(f). Accordingly, the taxpayers urge that Section 7443(f) must be severed from the overall statutory scheme, and request a remand to a Tax Court that is not subject to the removal power.


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Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.


  1. Professor Book,

    Your blog is excellent generally and on this subject.

    My question is that, if all the taxpayers get from excising this provision of the Code, what does that do for them — other than being involved in a constitutionally important case?


    Jack Townsend

    • Thanks Jack; I suspect that if asked at oral argument counsel would reply something to the effect that they have no idea how a Tax Court judge will rule in the case once freed from the threat of Presidential removal, which could be inducing pro-IRS bias. Now, as a practical matter, it seems somewhat of a stretch to see a connection with removal power and the way that a Tax Court judge views a collection alternative. As to whether likelihood, or the perception of that likelihood, is significant as a constitutional matter, I defer to those with more constitutional chops than I (or to a time when I research this).I do take the point, however, that in all likelihood a victory on the constitutional merits alone may be a Pyrrhic victory, though the taxpayers also appeal on the abuse of discretion issues relating to the collection alternative determination.

  2. Hi

    It doesn’t appear the links to the briefs are working.

  3. Richard Jacobus says

    Prof. Townsend asks the right question above. In my view the taxpayers procedurally failed to preserve the constitutional issue (if there is one) for review. Which begs the question — if Kuretski maps out the wrong path for a constitutional challenge to section 7443(f), then what might be the right path to get judicial review?

    • DOJ argues that Kuretski taxpayers waived the constitutional argument by raising it in a post decision motion. That is easy to overcome in a different case, but DOJ also argues that they had no standing to raise because there is no constitutional right to prepayment judicial review of IRS determinations and that Congress can attach conditions “annexed by the Government to the exercise of the privilege.” (from DOJ Brief at 51, citing McElrath v US 102 U.S. 426, 440 (1880)).

      DOJ also states that in cases where there is structural infirmity there can be automatic reversal but “a policy of automatic reversal, however, establishes standing only if the automatic reversal conceivably might do the appellant some good.”(DOJ Brief, p. 54, citing Lujan v Defenders of Wildlife, 504 U.S. 555, 560-561 (1992)).
      DOJ states that here taxpayers prevailing would render the taxpayers without ability to bring his underlying claim, so there would be no good to come to the appellants.

      DOJ does state though that there would be standing to consider this issue if the President did remove a Tax Court judge. (DOJ Brief, at p. 52, n. 10).

      • Carl Smith says

        By way of disclosure, I am one of the attorneys for the Kuretskis.

        In answer to a question posed in Mr. Jacobus’ comment, had the Kuretskis raised the constitutional issue in their petition, the court of appeals would be forced to decide the issue — but only if the Kuretskis did not settle their case and the judge ruled against them after a trial — a rare event in the Tax Court. But, the DOJ would still probably argue that only a Tax Court judge had standing to complain about the removal power.

        But, those who think the Kuretskis waived the constitutional issue by not raising it in the Tax Court until after the court ruled should go read the 1991 Supreme Court case of Freytag. In Freytag, after losing their tax straddle case after a long trial in front of a Tax Court Special Trial Judge (who ruled the market for the straddle securities a factual sham), the taxpayers first complained about the judge’s possible lack of proper appointment under the Appointments Clause in the Court of Appeals (not even in the Tax Court at all — where the Kuretskis raised their constitutional issue post-ruling in a motion to vacate the decision) . The Freytag opinion opens with a long discussion on the issue of waiver in which the 5-member majority essentially says that where a significant separation of powers issue (like the Appointments Clause) is raised after a loss in the trial court, unlike in the normal case of waiver by not raising an argument in the trial court, an appellate court has discretion to consider the argument, since the separation of powers is so important to the structure of the government. The Freytag court then proceeded to decide the constitutional issue — finding the Tax Court to exercise a portion of the judicial power of the U.S. (even though not being part of Article III). Therefore, the Tax Court Chief Judge was treated as “the Courts of Law” — entitled to appoint an inferior officer under the Appointments Clause such as a Special Trial Judge.
        Most likely, in light of Freytag, the D.C. Circuit in Kuretski will hold that it has discretion to consider the removal power constitutional argument because it is also one of separation of powers.

        Indeed, Justice Scalia’s concurrence in the result in Freytag goes on at length setting forth his view that there was a waiver, so the Court shouldn’t have decided the issue. But, of course, he was in the minority.

        Justice Scalia’s opinion in Freytag is actually the source of the argument in Kuretski that the President’s removal power of Tax Court judges is problematic. Scalia said that the Tax Court was still an Executive Department (something the majority rejected, but the DOJ again argues in Kuretski). In scoffing at the majority’s ruling that the Tax Court exercised the judicial power, he noted the incompatibility of placing the judicial power in the Tax Court and the removal power at 7443(f) in the Executive — citing the 1986 opinion of the Court in Bowsher v. Synar. In Bowsher, Congress, in a sequestration bill, gave the Comptroller General what the Court held were Executive powers to make certain decisions as to what government spending would be cut in the event of revenue shortfalls. The Comptroller General was a Congressional employee who was removable for cause (including malfeasance in office — like 7443(f)). In Bowsher, Treasury employees complained that this was an improper inter-branch removal power. Nether (1) the Comptroller General’s power to decide what spending to cut nor (2) Congress’ removal power over the Comptroller had been exercised at the time of the suit, so one could argue that any victory in their case would be pyrrhic. Who knew that the Comptroller would make different rulings about what to cut just by getting rid of the removal power? The Supreme Court did not exercise in a “harmless error” analysis. Rather, it said that a person holding an Executive power who could be removed by the Legislative power (even if only for cause), was constitutionally subservient to the removing person. And that was enough to render the violation one that should be fixed immediately. The Supreme Court derided the dissent’s argument that the for cause limitations could cure the defect. The majority said that “malfeasance” could be made to mean practically anything, and noted, in dicta, that one would hardly think judicial rulings would be enhanced by a removal power over judges held by another branch (i.e., the situation that the Kuretskis face).

        In Bowsher, the Supreme Court in adopting a fix, though, did not get rid of the removal power. Instead, Congress, anticipating the possible constitutional issue, had established a different budget-cutting procedure in the event the Court found a constitutional problem — and the Court decided to direct that Congress’s alternative (constitutional) procedure be used.

        So, the Kuretskis disagree that the Court of Appeals will feel constrained not to hear the constitutional issue because of an alleged waiver. And, they feel that there is no need for a President to first exercise the removal power before anyone has standing to complain about the power. Finally, they don’t see the court using a harmless error analysis — guessing that the judge would rule the same way with or without the removal power. For many years, in cases arising under the Appointments Clause (a separation of powers issue), litigants who have successfully contended that their judge was not properly appointed under the Clause have not been forced to live with the ruling anyway under a “de facto officer” doctrine. In the 1995 Ryder case, the Supreme Court found an Appointments Clause defect and specifically rejected upholding the judge’s ruling on the ground that a properly-appointed judge would likely rule the same way, anyway. Rather, the Court directed a re-trial before a properly-appointed judge.

  4. Eric Rasmusen says

    DOJ sounds sensible, by and large. The argument is that the Tax Court judges are scared of being fired and so ruled against the taxpayer, but that is implausible given the facts. If it was a $1 billion tax bill maybe, or allegations of persecution, but this is less than $100,000.

    I wonder, though, whether on preservation of the issue, it is special here since Tax Court can’t really rule on its own authority to rule— in which case it shouldn’t be important that the issue wasn’t brought up in Tax Court. It would be a waste of time if litigants were required to raise issues that the court in front of them can’t decide and which in many cases wouldn’t be decisive anyway. But that’s just speculation on my part; I’m pretty ignorant on this. ANd as the October 20 Book comment says, there’s a separate standing problem which is hard to get round.

    • Carl Smith says

      In response to Mr. Rasmusen’s comment, in fact Tax Court Judge Wherry gave two grounds for not deciding the constitutional issue (after first noting that he was not going to discuss the IRS’ lack of standing argument): Judge Wherry said that the taxpayers raised the issue too late (something I disagree with in light of Freytag). And, he did appear to express the concern that Mr. Rasmusen raises about his ability to rule on his own bias. In the unpublished order by which he denied the Kuretski’s motion to vacate, he wrote: “A determination by this Court that section 7443(f) is unconstitutional would not be conclusive of that issue. If there is a constitutional problem, such a ruling would not make a second determination of the case on its merits any freer from potential prejudice or duress than our first determination.” I’m not totally sure what the Judge meant by this, but I am thinking that he was positing a situation where he first ruled the removal power unconstitutional and then re-decided the case. In the absence of a higher court ruling that the removal power was void, I think Judge Wherry assumes that the Kuretskis would say he was still biased against them even after finding a constitutional violation because he would not be sure he would be upheld on appeal on the removal power ruling — and thus might still fear presidential removal (until a higher court freed him from that fear).

      On the standing issue, if the Kuretskis don’t have standing to raise a separation of powers problem involving their judge because they waived any problem by petitioning the Tax Court and not paying first and suing for a refund in district court (as the DOJ argues), then how did the Freytag taxpayers have standing to raise their separation of powers problem involving their Tax Court judge after petitioning the Tax Court? Wouldn’t the DOJ say they could have paid and sued for a refund in district court, so have no right to complain about any Tax Court constitutional problems? I simply don’t understand the DOJ argument in light of Freytag (which the DOJ doesn’t cite or discuss in this waiver section of their brief).

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