Ninth Circuit Declines to Reach Constitutionality of President’s Removal Power Over Tax Court Judges

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Frequent guest blogger Carl Smith brings us up to date on litigation over the constitutionality of IRC section 7443(f), giving the President removal power over Tax Court judges. Christine

In a post from September I alerted PT readers that two of the cases in which Joe DiRuzzo had again raised the issue of the constitutionality of the President’s removal power over Tax Court judges were set for oral argument before the Ninth Circuit. The constitutional separation of powers issue was decided against the taxpayers in both Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014), and Battat v. Commissioner, 148 T.C. No. 2 (2017) – though, on different reasoning as to which Branch of government in which the Tax Court is located, if any.

Well, the Ninth Circuit panel removed both of Joe’s cases from the oral argument calendar, and it just issued two unpublished opinions. In both of the opinions, the Ninth Circuit avoided addressing the constitutional question.

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In Thompson v. Commissioner, Ninth Cir. Docket No. 17-71027 (Nov. 14, 2018), Joe had moved to recuse all Tax Court judges because, in light of the President’s removal power, the judges were being subtlely pressured to rule in favor of the IRS. When the Tax Court denied the motion (citing Battat), Joe brought an interlocutory appeal. Consistent with the results of all other interlocutory appeals that Joe has brought on this issue to date, the Ninth Circuit refused to rule on the constitutional issue. Joe tried to fit this case into an exception from the rule that, ordinarily, interlocutory appeals are prohibited. However, the Ninth Circuit found that no exception applied. Nor did it think a writ of mandamus should issue. The court wrote: “The Thompsons do not explain how their challenge to the constitutionality of the Tax Court cannot be adequately reviewed or possibly corrected on direct appeal.”

In Crim v. Commissioner, Ninth Cir. Docket No. 17-72701 (Nov. 14, 2018), the taxpayer submitted an OIC, and, after it was not accepted, went to Appeals. Appeals confirmed the OIC denial. Despite the fact that the OIC was not part of a Collection Due Process (CDP) hearing, the taxpayer petitioned the Tax Court for review. In the case, Joe also moved for recusal of all Tax Court judges on the constitutional issue. Citing Battat, the Tax Court first denied the constitutional motion in an unpublished order. Then, the court issued a second unpublished order holding that, in the absence of a CDP proceeding, the Tax Court lacked jurisdiction to review Appeals’ denial of an OIC. Crim’s appeal to the Ninth Circuit was thus not an interlocutory one. However, it fared no better. The court did not reach the constitutional issue because it held that the Tax Court had properly dismissed the case for lack of jurisdiction. The Ninth Circuit wrote:

Because Crim has not presented any evidence that the IRS filed a notice of a federal tax lien or a final intent to levy against him, that he requested a collection due process hearing with the IRS Office of Appeals, that he attended an Office of Appeals collection due process hearing, or that the Office of Appeals made any “determination” addressing a disputed lien or levy, the Tax Court lacked jurisdiction over Crim’s petition under 26 U.S.C. § 6320 and § 6330. Any argument that Craig v. Commissioner, 119 T.C. 252 (2002), commands a different result has been forfeited. See Christian Legal Soc’y Chapter of Univ. of Cal. v. Wu, 626 F.3d 483, 487-88 (9th Cir. 2010). Crim also forfeited the arguments raised for the first time in his reply brief that the Administrative Procedures Act, 5 U.S.C. § 706(1), and the All Writs Act, 28 U.S.C. § 1651, provide jurisdiction here. The failure to find jurisdiction on these grounds was not plain error. . . .

Given that the Tax Court lacked jurisdiction over Crim’s petition, we decline to exercise our “discretionary jurisdiction” over the recusal motion. See Gruver v. Lesman Fisheries Inc., 489 F.3d 978, 981 n.4 (9th Cir. 2007).

To get the constitutional issue adjudicated, it looks like Joe or somebody else will have to appeal any Tax Court ruling on the constitutional issue after a final decision is entered in a Tax Court case over which the court clearly had jurisdiction.

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 will be Acting Director from January to June 2019.

Comments

  1. Is DiRuzzo anything more than a gadfly?

    • Joe DiRuzzo is a gadfly, but is far more. Although relatively young (at least compared to me), he is one of the country’s most prolific tax litigators.

      I just checked, and he has been counsel of record in 17 Tax Court cases that have generated an opinion — 6 of those being T.C. opinions. Many of the cases are what you might consider routine in representing taxpayers. See, e.g., Sugarloaf Fund LLC v. Commissioner, 216 T.C. 214 (2013), where he was unsuccessful in having his client participate in a TEFRA partnership litigation involving distressed asset debts.

      He also takes on small-dollar Tax Court cases of low-income taxpayers pro bono, such as Taft v. Commissioner, T.C. Memo. 2017-66 (an innocent spouse case picked up at a calendar call where he succeeded in getting the taxpayer section 6015(b) relief in the form of a refund of $1,570.40) and Philemond v. Commissioner, T.C. Memo. 2012-29 (involving a $3,183 deficiency, where he unsuccessfully argued for HOH filing status, a dependency exemption, a CTC, and an EITC).

      A LEXIS search of court of appeals opinions shows 55 opinions on which he was counsel or co-counsel for a private client. Some of the cases he has done are criminal, and some involve the Virgin Islands (a specialty of his). He has also taken on a number of pro bono appeals, most recently in the whistleblower award case of Myers v. Commissioner, 148 T.C. No. 20 (2017), where the Tax Court dismissed the petition for lack of jurisdiction as untimely, though the “notices of determination” never stated thereon that they could be contested by petitioning the Tax Court.

      I take my hat off to Joe.

  2. “Joe DiRuzzo is a gadfly, but is far more. Although relatively young (at least compared to me), he is one of the country’s most prolific tax litigators.”

    And he loves ferrets, too!

    https://www.courtlistener.com/opinion/854979/jolene-m-villareale-v-commissioner/

  3. What is his record in those 17 Tax Court cases and the 55 Appellate cases?

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