SCOTUS Reports

Tag: Appointments Clause

  • Tooke v. Commissioner, 164 T.C. No. 2 (2025): Appointments Clause and Separation of Powers in Administrative Proceedings

    Tooke v. Commissioner, 164 T. C. No. 2 (2025)

    In Tooke v. Commissioner, the U. S. Tax Court upheld the constitutionality of the IRS Independent Office of Appeals, rejecting arguments that its officers’ appointments violated the Appointments Clause and that the Chief’s removal restrictions infringed on separation of powers. The court found that Appeals Officers and Team Managers are not “Officers of the United States,” and thus do not require formal appointment under the Constitution. This ruling clarifies the status of administrative adjudicators and supports the IRS’s current structure for handling collection due process hearings.

    Parties

    Charlton C. Tooke III (Petitioner) v. Commissioner of Internal Revenue (Respondent). The case was filed in the U. S. Tax Court, Docket No. 398-21L.

    Facts

    Charlton C. Tooke III filed federal income tax returns for the years 2012 through 2017 but did not pay the assessed taxes. The IRS issued a Notice of Federal Tax Lien Filing and a Final Notice of Intent to Levy. Tooke requested a Collection Due Process (CDP) hearing with the IRS Independent Office of Appeals (Appeals). During the hearing, Tooke raised constitutional arguments concerning the separation of powers, specifically the Appointments Clause and removal power of Appeals Officers, Appeals Team Managers, and the Chief of Appeals. The Appeals Officer rejected these arguments, and the Appeals Team Manager issued a Notice of Determination sustaining the tax lien and proposed levy action. Tooke subsequently filed a petition in the U. S. Tax Court challenging the constitutionality of the Appeals process.

    Procedural History

    Tooke timely filed a petition in the U. S. Tax Court challenging the Notice of Determination issued by the IRS Independent Office of Appeals. He filed two motions: an Appointments Clause Motion asserting that the Appeals Officers, Appeals Team Managers, and the Chief of Appeals were unconstitutionally appointed, and a Separation of Powers Motion asserting that the Chief’s removal restrictions violated constitutional principles. The Tax Court considered these motions under the standard of review applicable to summary judgment.

    Issue(s)

    Whether Appeals Officers and Appeals Team Managers are “Officers of the United States” under the Appointments Clause, requiring formal appointment? Whether Tooke has standing to challenge the appointment and removal of the Chief of Appeals?

    Rule(s) of Law

    The Appointments Clause of the U. S. Constitution, Article II, Section 2, Clause 2, requires that all “Officers of the United States” be appointed by the President with the advice and consent of the Senate, or by Congress vesting the appointment of inferior officers in the President alone, the courts of law, or the heads of departments. “Officers of the United States” are those who hold a continuing position, exercise significant authority pursuant to the laws of the United States, and are established by law.

    Holding

    The U. S. Tax Court held that Appeals Officers and Appeals Team Managers are not “Officers of the United States” and thus do not need to be appointed under the mandates of the Appointments Clause. The court also held that Tooke lacked standing to challenge the appointment and removal of the Chief of Appeals.

    Reasoning

    The court reasoned that Appeals Officers and Appeals Team Managers do not wield significant authority as defined by Supreme Court precedents in cases like Buckley v. Valeo, Freytag v. Commissioner, and Lucia v. SEC. Appeals Officers lack the power to take testimony, issue subpoenas, or enforce compliance with discovery orders, powers that are characteristic of officers. Their decisions are subject to review by Appeals Team Managers and the Commissioner, further diminishing their authority. The court also found that the positions of Appeals Officers and Team Managers are not “established by Law” as required by the Appointments Clause, citing the diffuse statutory language in sections 6320 and 6330 of the Internal Revenue Code. Regarding standing, the court determined that Tooke’s injury was not traceable to the Chief of Appeals, who did not participate in Tooke’s CDP hearing, and thus Tooke lacked standing to challenge the Chief’s appointment and removal. The court rejected Tooke’s “root-to-branch” theory of causation, which argued that the Chief’s unconstitutional appointment tainted the entire Appeals process.

    Disposition

    The court denied Tooke’s Appointments Clause Motion as to the Chief of Appeals and his Separation of Powers Motion. The court also denied Tooke’s Appointments Clause Motion as to Appeals Officers and Appeals Team Managers, finding that they are not “Officers of the United States. “

    Significance/Impact

    The decision in Tooke v. Commissioner affirms the constitutionality of the IRS Independent Office of Appeals’ current structure and operations. It clarifies that Appeals Officers and Team Managers do not require formal appointment under the Appointments Clause, upholding the IRS’s authority to conduct CDP hearings without constitutional challenge. The ruling also sets a precedent for standing requirements in challenges to the appointment and removal of high-level administrative officials who do not directly participate in a taxpayer’s case. This case may influence future challenges to the constitutionality of administrative adjudicators and the separation of powers doctrine in tax administration.

  • Tucker v. Commissioner, 135 T.C. 114 (2010): Appointments Clause and IRS Appeals Officers

    Tucker v. Commissioner, 135 T. C. 114, 2010 U. S. Tax Ct. LEXIS 22, 135 T. C. No. 6 (U. S. Tax Court, July 26, 2010)

    In Tucker v. Commissioner, the U. S. Tax Court ruled that IRS Appeals Officers conducting Collection Due Process (CDP) hearings are not “inferior Officers of the United States” under the Appointments Clause. This decision affirms that such officers, not being appointed by the President or the Secretary of the Treasury, can still legally perform their duties, which include reviewing tax liens and levies. The ruling clarifies the scope of the Appointments Clause and impacts how federal agencies structure their personnel to handle administrative appeals.

    Parties

    Larry E. Tucker, the petitioner, challenged the authority of IRS Appeals Officers in his CDP hearing. The respondent, the Commissioner of Internal Revenue, defended the hiring practices and the legal standing of the Appeals Officers involved in Tucker’s case.

    Facts

    Larry E. Tucker filed late tax returns for the years 2000, 2001, and 2002, reporting tax liabilities but failing to pay them. The IRS assessed these liabilities and issued a notice of federal tax lien (NFTL) to Tucker. He requested a CDP hearing under I. R. C. sec. 6320, which was conducted by an IRS settlement officer. After the hearing, a team manager issued a notice of determination upholding the NFTL. Tucker then appealed to the Tax Court, arguing that the settlement officers and team managers, hired by the Commissioner under I. R. C. sec. 7804(a), lacked the authority to conduct the hearing because they were not appointed by the President or the Secretary of the Treasury as required by the Appointments Clause.

    Procedural History

    Tucker timely requested a CDP hearing, which resulted in an initial determination upholding the NFTL. He then filed a petition with the Tax Court. After initial proceedings, the Tax Court remanded the case to the IRS Office of Appeals for further consideration. A supplemental CDP hearing was conducted by another settlement officer, and a supplemental notice of determination again upheld the NFTL. Tucker moved for a second remand, arguing that the hearing should be conducted by an officer appointed in compliance with the Appointments Clause.

    Issue(s)

    Whether the “officer or employee” of the IRS Office of Appeals who conducts CDP hearings under I. R. C. sec. 6320 and 6330 is an “inferior Officer of the United States” subject to the Appointments Clause?

    Rule(s) of Law

    The Appointments Clause of Article II, Section 2 of the U. S. Constitution requires that all “Officers of the United States” be appointed by the President with the advice and consent of the Senate, or by the President alone, the courts of law, or the heads of departments, as Congress may by law vest. An “officer” is defined as any appointee exercising significant authority pursuant to the laws of the United States.

    Holding

    The Tax Court held that the IRS Appeals Officers conducting CDP hearings are not “inferior Officers of the United States” under the Appointments Clause. The court found that the position of a CDP hearing officer is not “established by Law” and that such officers do not exercise “significant authority” as required to be considered “officers. “

    Reasoning

    The court reasoned that the IRS Appeals Officers’ positions were not explicitly established by statute, but rather by the Commissioner under I. R. C. sec. 7804(a). The court also examined the nature of the authority exercised by these officers, concluding that they lack the final decision-making power that would characterize them as “officers. ” The court distinguished between “principal” and “inferior” officers, and between “officers” and non-officer employees, noting that the Appeals Officers’ determinations are subject to review and can be overturned within the IRS. The court further analyzed historical and current practices within the IRS and other federal agencies, finding that the Appeals Officers’ role is consistent with that of non-appointed employees throughout government history. The court rejected Tucker’s argument that the Appeals Officers should be treated similarly to Special Trial Judges, noting that unlike the latter, Appeals Officers do not have the authority to make final decisions.

    Disposition

    The Tax Court denied Tucker’s motion for a second remand, affirming that the IRS Appeals Officers conducting CDP hearings are properly hired by the Commissioner and not subject to the Appointments Clause.

    Significance/Impact

    This ruling clarifies the application of the Appointments Clause to IRS Appeals Officers and affirms the legality of the current structure of the IRS Office of Appeals. It impacts how federal agencies can delegate authority to non-appointed employees and reinforces the distinction between “officers” and “employees” in federal law. The decision also provides guidance on the scope of authority that can be exercised by non-appointed personnel within administrative agencies, particularly in the context of tax collection and appeals.

  • First Western Government Securities, Inc. v. Commissioner, 94 T.C. 549 (1990): Authority of Tax Court Chief Judge to Appoint Special Trial Judges

    First Western Government Securities, Inc. v. Commissioner, 94 T. C. 549 (1990)

    The Tax Court’s Chief Judge has the authority to appoint special trial judges, who are inferior officers under the Appointments Clause of the U. S. Constitution.

    Summary

    The case of First Western Government Securities, Inc. v. Commissioner addressed whether the Chief Judge of the U. S. Tax Court could constitutionally appoint special trial judges under Section 7443A of the Internal Revenue Code. The court held that special trial judges are inferior officers, and thus, the Chief Judge’s authority to appoint them is consistent with the Appointments Clause. The court also ruled that the Tax Court, as an Article I court, qualifies as a “court of law” under the Constitution, thereby permitting such appointments. This decision has significant implications for the efficient management of the Tax Court’s caseload and the delegation of judicial duties.

    Facts

    The petitioners, involved in over 3,000 tax shelter cases, challenged the assignment of their cases to Special Trial Judge Powell. They argued that Section 7443A of the Internal Revenue Code did not authorize the Chief Judge to assign cases involving more than $10,000 to special trial judges and that such appointments violated the Appointments Clause of the U. S. Constitution. The Tax Court, dealing with a large volume of cases, had historically utilized special trial judges to manage its workload efficiently.

    Procedural History

    The petitioners filed motions to vacate the assignment of their cases to a special trial judge. The Tax Court consolidated these motions for consideration. The respondent objected to the motions, and the court issued an opinion upholding the authority of the Chief Judge to assign cases to special trial judges. The court also certified the case for interlocutory appeal to address the constitutional question.

    Issue(s)

    1. Whether Section 7443A of the Internal Revenue Code authorizes the Chief Judge of the Tax Court to assign cases involving more than $10,000 to special trial judges.
    2. Whether special trial judges appointed by the Chief Judge of the Tax Court are inferior officers under the Appointments Clause of the U. S. Constitution.
    3. Whether the Tax Court, as an Article I court, is a “court of law” under the Appointments Clause, thereby permitting the Chief Judge to appoint inferior officers.
    4. Whether the Chief Judge’s authority to appoint special trial judges violates the Appointments Clause.

    Holding

    1. Yes, because Section 7443A(b)(4) allows the Chief Judge to assign any proceeding to special trial judges, subject to review by a Tax Court judge.
    2. Yes, because special trial judges exercise significant authority and are subject to the Chief Judge’s power to appoint and remove them.
    3. Yes, because the Tax Court is a duly constituted tribunal administering U. S. laws, fitting within the definition of “courts of law. “
    4. No, because the Chief Judge’s authority to appoint special trial judges is consistent with the Appointments Clause.

    Court’s Reasoning

    The court analyzed the statutory language and legislative history of Section 7443A, concluding that the Chief Judge could assign any proceeding to special trial judges, provided a Tax Court judge reviewed the decision. The court also determined that special trial judges are inferior officers because their duties are limited and subject to the Chief Judge’s authority. The court interpreted the term “courts of law” in the Appointments Clause to include Article I courts like the Tax Court, as they exercise judicial power. The court rejected the petitioners’ argument that the Chief Judge, as a legislative officer, could not appoint inferior officers, emphasizing that Tax Court judges are judicial officers appointed by the President. The court’s decision was unanimous, and it certified the issue for interlocutory appeal due to its importance to the functioning of the Tax Court.

    Practical Implications

    This decision affirms the Chief Judge’s authority to appoint special trial judges, allowing the Tax Court to efficiently manage its large caseload. Practitioners should be aware that special trial judges can handle cases involving any amount, provided a Tax Court judge reviews the decision. The ruling may influence how other Article I courts delegate judicial duties. Businesses and taxpayers involved in tax disputes should understand that the use of special trial judges does not violate their constitutional rights. Subsequent cases, such as Freytag v. Commissioner, have applied this ruling, confirming the role of special trial judges in the Tax Court’s operations.