Supreme Court Asked to Review Tax Court Separation of Powers Issue

The question presented is:

Whether the President's authority under 26 U.S.C. § 7443(f) to remove Tax Court judges violates the Constitution's separation of powers.

Respondent, who was the appellee in the court below, is the Commissioner of Internal Revenue, currently John Koskinen, in his official capacity.

                       TABLE OF CONTENTS

The removal provision in Section 7443(f) is a nearly century-old anachronism, enacted before the Tax Court was the Tax Court and before its members were judges. Congress adopted Section 7443(f) to authorize the President to remove members of the Board of Tax Appeals, an entity within the Executive Branch. In 1969, however, Congress replaced the Board of Tax Appeals with the Tax Court. And as this Court has squarely held, the Tax Court is a "Court[ ] of Law" that exercises "a portion of the judicial power of the United States" and does not exercise "executive" or "administrative" power. Freytag v. Comm'r, 501 U.S. 868, 890-91 (1991). Thus, Section 7443(f) today subjects those exercising "the judicial power of the United States," and not any executive power, to removal by the Executive Branch. The Constitution precludes requiring the judicial power to answer to the executive power in that manner. See Bowsher v. Synar, 478 U.S. 714 (1986).

The D.C. Circuit reached the opposite conclusion solely by disregarding this Court's characterization of the Tax Court as exercising only judicial power. Instead, the D.C. Circuit adopted the theory this Court rejected in Freytag: that the Tax Court "exercises Executive authority as part of the Executive Branch." Pet. App. 3a. Because it mischaracterized the nature of the power exercised by the Tax Court, the court of appeals concluded that Section 7443(f) poses no constitutional difficulties.

The question of Section 7443(f)'s constitutionality goes to the heart of the Tax Court's legitimacy and the independence of the judicial power of the United States that the Tax Court exercises. The Tax Court is the primary forum for tax-related disputes between taxpayers and the Executive Branch, hearing tens of thousands of cases each year. Its nationwide jurisdiction extends not only to monetary claims between taxpayers and the government, but also to, inter alia, sensitive and even politically charged disputes regarding the tax-exempt status of non-profit organizations. Under the decision below, judges of the Tax Court must make those decisions knowing that they can be removed from office by one of the litigants: the Chief Executive.

The court of appeals decided an important constitutional question, affecting tens of thousands of persons each year, based on reasoning that directly conflicts with this Court's precedent. This Court should grant certiorari to vindicate taxpayers' right to have their cases heard by judges free from undue influence by the Executive.

1. To understand the roots of the current controversy it is necessary to know the Tax Court's history. The Tax Court replaced the Board of Tax Appeals (the "Board"), which Congress had established in 1924 as an "independent agency in the executive branch of the Government" to provide taxpayers with a forum for pre-payment challenges to proposed tax assessments. Revenue Act of 1924, ch. 234, § 900(a), (e), (k), 43 Stat. 253, 336-38; see Old Colony Trust Co. v. Comm'r, 279 U.S. 716, 721 (1929). The Board's powers were limited: It was empowered to redetermine proposed tax liabilities but it could not enter final judgment on those proposed liabilities. Thus, the losing party (whether the taxpayer or the government) could file suit over those tax liabilities in federal district court, where the Board's decision would be treated only as prima facie evidence of the facts. Revenue Act of 1924, ch. 234, § 900(g), 43 Stat. 253, 337; Harold Dubroff, The United States Tax Court: An Historical Analysis 116 (1979). Board members were appointed by the President with the advice and consent of the Senate, and were removable by the President "for inefficiency, neglect of duty, or malfeasance in office, but for no other reason." Revenue Act of 1924, ch. 234, § 900(b), 43 Stat. 253, 336-37.

Soon after creating it, Congress began altering the nature of the Board, making it less like an administrative body and more like a federal district court. In 1926, just two years later, Congress made Board determinations subject to direct appellate review in the federal courts of appeals, rather than requiring initiation of a suit in the district courts. Revenue Act of 1926, ch. 27, §§ 1001-1003, 44 Stat. 9, 109-10; see United States v. Dalm, 494 U.S. 596, 603 n.4 (1990); Dubroff, supra, at 118-19. This transformation continued in 1942, when Congress changed the name and titles of the Board and its members to reflect their exclusively judicial functions and form. Thus, Congress renamed the Board "The Tax Court of the United States" and redesignated its members as "judges." Revenue Act of 1942, ch. 619, § 504(a), 56 Stat. 798, 957.

In 1969, Congress enacted a large-scale reform "with the express purpose of 'making the Tax Court an Article I court rather than an executive agency."' Freytag, 501 U.S. at 887 (quoting S. Rep. No. 91-552, at 303 (1969)). Congress replaced the provision in the 1924 Act referring to the Tax Court as "an independent agency in the executive branch" with language "establish[ing], under article I of the Constitution of the United States, a court of record to be known as the United States Tax Court." Tax Reform Act of 1969, Pub. L. No. 91-172, § 951, 83 Stat. 487, 730 (codified at 26 U.S.C. § 7441). Congress enacted this change in recognition of the fact that "the Tax Court has only judicial duties." S. Rep. No. 91-552, at 302 (1969) (emphasis added). Congress found it "anomalous to continue to classify [the Tax Court] with quasi-judicial executive agencies that have rulemaking and investigatory functions." Id. Congress also was concerned that the Tax Court's "constitutional status as an executive agency, no matter how independent, raise[d] questions in the minds of some as to whether it is appropriate for one executive agency to be sitting in judgment on the determinations of another executive agency." Id.

The Tax Reform Act of 1969 also gave the Tax Court new powers commensurate with those of the federal district courts. § 956, 83 Stat. 487, 732 (codified at 26 U.S.C. § 7456). Congress authorized the Tax Court to punish contempt with fines or imprisonment and provided that the Tax Court would "have such assistance in the carrying out of its lawful writ, process, order, rule, decree, or command as is available to a court of the United States." Id. Congress awarded these powers because it "seem[ed] inappropriate that the Tax Court [was] required to look to the District Courts to enforce its own authority." S. Rep. No. 91-552, at 302. "In accordance with [the Tax Court's] change [in status], the Tax Court [wa]s given the same powers regarding contempt, and the carrying out of its writs, orders, etc., that Congress ha[d] previously given to the District Courts." Id. at 304.¹

Since 1969, Congress has continued expanding the Tax Court's jurisdiction, consistently enlarging the court's fundamentally judicial powers. The Tax Court is now empowered, for example, to enforce overpayment determinations against the government (26 U.S.C. § 6512(b)), to order the government to refund amounts prematurely collected (id. § 6213(a)), to decide challenges to IRS Office of Appeals decisions in collection actions (id. § 6330(d)(1)), to grant equitable relief to innocent spouses (id. § 6015(e)), to hear disputes regarding awards for whistleblowers exposing violations of the tax laws (id. § 7623(b)(4)), and to issue declaratory judgments in matters ranging from disputes regarding the value of a gift (id. § 7477) to the tax status of state and local government bond interest (id. § 7478).

2. As a result of these many changes since 1924, the Tax Court is today functionally akin to the federal district courts. The Tax Court is an independent tribunal that is not part of the IRS or any other agency.² The court exercises no "executive" powers: It makes no administrative determinations and performs no independent investigations, instead adjudicating based on the evidence presented by litigants. Freytag, 501 U.S. at 891 ("It is neither advocate nor rulemaker."); see Fed. Mar. Comm'n v. South Carolina State Ports Auth., 535 U.S. 743, 777 (2002) (distinguishing Tax Court, "a special Article I court" that exercises the judicial power of the United States, from administrative agencies, which do not) (Breyer, J., dissenting). Tax Court decisions are not subject to review by the Commissioner of Internal Revenue or by anyone else within the IRS. Unless disturbed on appeal, the Tax Court's decisions are binding on the taxpayer as to tax liability and on the federal government as to refunds. 26 U.S.C. § 6512(a), (b)(2). The Tax Court's decisions can be appealed exclusively to the federal courts of appeals, where they are reviewed "in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury," id. § 7482(a)(1), which includes application of the "clear error" standard for factfinding, Fed. R. Civ. P. 52(a). That standard of review sharply contrasts with that which the courts of appeals apply pursuant to the Administrative Procedure Act to agency determinations. Dickinson v. Zurko, 527 U.S. 150, 152-54 (1999) (contrasting court/court and court/agency review); Freytag, 501 U.S. at 892.

The Tax Court's powers and procedures for deciding disputes match those of the federal district courts. Freytag, 501 U.S. at 891 ("[T]he Tax Court exercises its judicial power in much the same way as the federal district courts exercise theirs."). The Tax Court hears evidence, presides over bench trials, and issues opinions and judgments. It applies the doctrine of stare decisis to bring uniformity to its decisions. See Sec. State Bank v. Comm'r, 111 T.C. 210, 213-14 (1998). In deciding cases, the Tax Court's judges possess "the authority to apply the full range of equitable principles generally granted to courts that possess judicial powers." Zapara v. Comm'r, 126 T.C. 215, 226 (2006) (quotation marks omitted), aff'd, 652 F.3d 1042 (9th Cir. 2011); see also 26 U.S.C. § 6214(b) (granting Tax Court power to apply the doctrine of equitable recoupment to the same extent as federal district courts and Court of Federal Claims).

Tax Court judges also exercise the same critical enforcement powers as Article III judges. They can subpoena witnesses, order the production of documents, administer oaths, and examine witnesses. 26 U.S.C. § 7456(a). They can issue injunctions, including those enjoining actions in other courts. Id. § 6213(a). They can punish contempt by fine or imprisonment and have at their disposal "such assistance in the carrying out of [their] lawful writ, process, order, rule, decree, or command as is available to a court of the United States." Id. § 7456(c); see Trohimovich v. Comm'r, 11 T.C. 252 (1981) (ordering taxpayer imprisoned for 30 days for refusing to comply with Tax Court's subpoenas and order to produce). Finally, Tax Court judges can order not just the taxpayer, but also the government, to pay monies owed. 26 U.S.C. § 6512(b)(2).

Within the realm of tax-related issues, the Tax Court's jurisdiction is broad and far-reaching. The Tax Court shares jurisdiction with the federal district courts, the Court of Federal Claims, and the bankruptcy courts over certain matters, such as the classification of tax-exempt organizations. Id. § 7428(a); 28 U.S.C. § 1507. For a wide range of matters, the Tax Court is the exclusive judicial venue for aggrieved petitioners. For example, for litigants who challenge a collection due process determination (26 U.S.C. § 6330(d)), the IRS's refusal to abate interest (id. § 6404(h)), or the IRS's determination of a whistleblower award (id. § 7623(b)(4)), the Tax Court is the only court that is authorized to hear their claims in the first instance. Short of declaring bankruptcy, the only venue for a taxpayer to challenge the validity of a proposed tax deficiency without having to first pay it is the Tax Court. Id. § 6213(a); 11 U.S.C. § 505(a); Flora v. United States, 362 U.S. 145 (1960). And the Tax Court can decide constitutional issues that arise in the cases before it. Infra at 23-24, 27-29.

B. Proceedings In This Case Before The IRS And The Tax Court

This case arose from a dispute between petitioners and the IRS about the collectability of petitioners' 2007 income-tax liability. Petitioners had timely filed their 2007 joint income-tax return, but they were unable to pay the balance of their reported tax liability at that time. C.A. App. A5. The IRS assessed the reported tax liability, added penalties for failing to pay the reported tax liability and for underpayment of estimated taxes, added interest, and then issued each petitioner a Final Notice of Intent to Levy -- i.e., to seize and sell petitioners' property to satisfy the debt. Id. at A13, A17-20.

Petitioners requested Collection Due Process hearings with the IRS Office of Appeals, see id. at A21-24, and submitted an Offer in Compromise, seeking to settle their outstanding tax liability. Id. at A25-28. An IRS settlement officer informed petitioners that the proposed compromise was unacceptable to the IRS but continued communications with petitioners regarding a possible settlement. Id. at A90. Without notice to petitioners of her intent to do so, however, the settlement officer closed the case file and the IRS issued petitioners a Notice of Determination, sustaining the proposed levy. Id. at A94-97.

Petitioners appealed the Notice of Determination to the Tax Court. Id. at A103-04; 26 U.S.C. § 6330(d)(1). The matter proceeded to trial before U.S. Tax Court Judge Robert Wherry, Jr. C.A. App. A105-54. After hearing live testimony and considering documentary evidence, Judge Wherry found, de novo, that petitioners were liable for the entire assessed penalty for failing to pay their reported tax liability but that the IRS had not met its burden to support an additional penalty for underpayment of estimated taxes. He then held that the IRS could proceed with collection by levy of the unpaid principal, late-payment penalty, and accumulated interest (approximately $25,000 at that time). Pet. App. 34a-49a.

Petitioners filed a motion for reconsideration and a motion to vacate. Petitioners argued, inter alia, that the Tax Court's decision should be vacated because the case was heard by a judge who, though exercising the judicial power of the United States, was subject to removal by the President in violation of the Constitution's separation of powers. Petitioners asked the Tax Court to declare 26 U.S.C. § 7443(f) unconstitutional and thereafter rehear their case. Judge Wherry entered an order denying both motions. Id. at 50a-54a.

C. The Decision Below

Petitioners filed a notice of appeal to the D.C. Circuit. C.A. App. A177-80. Before the court of appeals, petitioners again argued that Section 7443(f) violates the separation of powers by granting the President the ability to remove and therefore influence judges exercising the judicial power of the United States.

The court of appeals affirmed in a published opinion. Pet. App. 1a-33a. At the threshold, the court considered and rejected waiver, consent, and standing arguments raised by the government. Id. at 12a-17a. On the merits, the court of appeals concluded that Section 7443(f) does not violate the separation of powers because "Tax Court judges do not exercise the 'judicial power of the United States'" but rather work for the President, "exercis[ing] Executive authority as part of the Executive Branch." Id. at 3a, 27a. According to the court of appeals, "if a President were someday to exercise the authority under 26 U.S.C. § 7443(f) to remove a Tax Court judge for cause, the removal would be entirely consistent with separation-of-powers principles." Id. at 18a.

In Freytag, this Court ruled that the Tax Court "exercises judicial, rather than executive, legislative, or administrative, power. . . ." 501 U.S. at 890-91 (emphasis added); id. at 891 (Tax Court exercises the "judicial power of the United States"). The decision below, however, turned on the D.C. Circuit's conclusion that the Tax Court "exercises Executive authority as part of the Executive Branch." Pet. App 3a. From that fundamental misconception of the Tax Court's power all else followed. Just as this Court held in Bowsher that Congress's for-cause removal power over an official exercising the executive power violated the Constitution's separation of powers, so too does the President's for-cause removal power over Tax Court judges exercising the judicial power. The square conflict between the decision below and this Court's decision in Freytag warrants granting certiorari.

1. Freytag arose in the Appointments Clause context, but its holding necessitated an analysis of the Tax Court's status in the constitutional scheme. Taxpayers in that case sought to invalidate a judgment issued by a Special Trial Judge in the Tax Court because, in their view, the Chief Judge of the Tax Court had no authority to appoint the Special Trial Judge. 501 U.S. at 871-72. Under the Appointments Clause of the Constitution, Art. II, § 2, cl. 2, the appointment of the Special Trial Judge as an "inferior Officer[ ]" of the United States was valid under the Constitution only if the Tax Court is either a "Department" or a "Court[ ] of Law."

To address this issue, the Court exhaustively analyzed the function, form, and powers of the Tax Court -- as described above, supra at 5-10 -- and found that they were all "quintessentially judicial in nature." 501 U.S. at 891. The Court found it instructive that Congress had eliminated the Tax Court's prior explicit classification as an "independent agency in the executive branch," and instead described it as a "court of record under Article I." 501 U.S. at 885; supra at 5. The Court further relied on the fact that the Tax Court performs a "function and role in the federal judicial system [that] closely resemble[s] those of the federal district courts." 501 U.S. at 891.

In the end, the Court concluded that the Tax Court is a "Court[ ] of Law" that "exercises a portion of the judicial power of the United States." Id. at 891-92. The Court could not have been clearer: The Tax Court "exercises judicial, rather than executive, legislative, or administrative, power. . . ." Id. at 890-91 (emphasis added). And the Court rejected the separately concurring Justices' view that the Tax Court is an executive Department. Id. at 885-88.

This Court's subsequent decisions only support Freytag's conclusion that the Tax Court exercises "the judicial power of the United States." Most recently, in Stern v. Marshall, 131 S. Ct. 2594 (2011), the Court confronted the question whether federal bankruptcy judges exercise the judicial power. The Court's reasoning was instructive: The Court concluded that bankruptcy judges exercise judicial power because they have "the power to enter appropriate orders and judgments -- including final judgments -- subject to review only if a party chooses to appeal." Id. at 2619 (quotation marks omitted). The Tax Court likewise has the power to enter final judgments, subject to review only in federal courts of appeals, which treat them identically to judgments by federal district courts entered after bench trials. Supra at 7-8. Stern's reasoning confirms what Freytag held: that Tax Court judges exercise "the judicial power of the United States."

2. "The leading Framers of our Constitution viewed the principle of separation of powers as the central guarantee of a just government." Freytag, 501 U.S. at 870. This Court has long explained that:

The risk posed to the separation of powers by allowing government actors exercising one power to remove actors exercising a separate power was the basis for this Court's decision in Bowsher. That case involved a for-cause removal provision similar to Section 7443(f), one that allowed Congress (which exercises legislative power) to remove the Comptroller General (who was being given executive power) for cause. 31 U.S.C. § 703(e)(1)(B) (allowing removal for, among other things, "inefficiency," "neglect of duty," or "malfeasance").³

The Court held that this inter-powers removal authority violated the Constitution's separation of powers, noting that "to permit an officer controlled by Congress to execute the laws would be, in essence, to permit a congressional veto." Bowsher, 478 U.S. at 726. The Court was concerned not simply with the actual exercise of that removal authority, which Congress had never used, but with the potential of that authority to do much more insidious harm to the separation of powers through the lurking "threat[ ]" of removal. Id. at 726-27 ("Congress could simply remove, or threaten to remove, an officer for executing the laws in any fashion found to be unsatisfactory to Congress.").

The Constitution's separation of powers, of course, is not limited to preventing encroachments by the legislative on the executive power, as in Bowsher. "A Judiciary free from control by the Executive and the Legislature is essential if there is a right to have claims decided by judges who are free from potential domination by other branches of government." United States v. Will, 449 U.S. 200, 217-18 (1980).⁴ '"[T]he "judicial Power of the United States" . . . can no more be shared' with another branch than 'the Chief Executive, for example, can share with the Judiciary the veto power, or the Congress share with the Judiciary the power to override a Presidential veto.'" Stern, 131 S. Ct. at 2608 (quoting United States v. Nixon, 418 U.S. 682, 704 (1974)). This Court has emphasized that even "slight encroachments" on judicial independence threaten the separation of powers. Id. at 2620.

Here, there is much more than a "slight encroachment." Tax Court judges decide complicated, controversial, and even politically charged cases -- e.g., tax exemption for non-profit groups -- and they are forced to do so in the shadow of the Executive's removal power. Whether the President explicitly threatens to use that authority is beside the point; the mere existence of the power is enough to work its insidious effects on decisionmaking and public confidence. Edmond v. United States, 520 U.S. 651, 664 (1997) ("The power to remove officers, we have recognized, is a powerful tool for control."). The Court was therefore correct in Bowsher to observe that the similar limits on Congress's removal power over the Comptroller General, if applied to judges, could not ensure judicial independence. 478 U.S. at 730 ("Surely no one would seriously suggest that judicial independence would be strengthened by allowing removal of federal judges only by a joint resolution finding 'inefficiency,' 'neglect of duty,' or 'malfeasance.'"). Indeed, the concurring Justices in Freytag hinted at Section 7443(f)'s inherent incompatibility with the exercise of judicial power: "How anyone with these characteristics [including removability by the President] can exercise judicial power 'independent . . . [of] the Executive Branch' is a complete mystery." 501 U.S. at 912 (Scalia, J., concurring in part and concurring in the judgment) (quoting the Court's opinion).

In summary, if -- as this Court concluded in Freytag -- the Tax Court "exercises a portion of the judicial power of the United States," and not "executive" or "administrative" power, then the Constitution precludes the President from removing the Tax Court's judges. Section 7443(f) is therefore unconstitutional.

B. The Reasons Given By The Court of Appeals For the Decision Below Are Flawed

The D.C. Circuit did not disagree that, if the Tax Court exercises only judicial power, then the President's removal power under Section 7443(f) is unconstitutional; it never even addressed the point. Rather, its decision turned entirely on its conclusion, flatly inconsistent with Freytag, that the Tax Court does not exercise judicial power, but instead "exercises Executive authority as part of the Executive Branch." Pet. App. 3a. The reasons given by the court of appeals for its conclusion cannot withstand scrutiny.

1. As an initial matter, the court of appeals fundamentally erred by converting the separation-of-powers doctrine into a separation-of-branches analysis. Instead of addressing petitioners' argument that the Tax Court exercises the judicial power of the United States, thus making the President's removal power over its judges unconstitutional, the court of appeals reasoned that the Tax Court resides in the Executive Branch and, due to that formal placement, the President can remove its judges:

That analytical approach does not comport with this Court's separation-of-powers precedent. This Court has explained that it is the separation of powers that concerned the Framers, not strictly the separation of branches. It is entirely permissible to give an official in one branch the authority to remove an official in another branch, but only to the extent that they exercise the same power.⁵ In Mistretta v. United States, 488 U.S. 361 (1989), for example, this Court found no constitutional infirmity with the President's authority to remove Article III judges from the United States Sentencing Commission, even though the Commission is located within the Judicial Branch. Id. at 410-11. As the Court explained, there was no separation-of-powers problem because the Article III judges on the Sentencing Commission were not subject to removal from their Article III role of exercising the judicial power of the United States. Id. They were subject to removal only from their executive-like duties of promulgating sentencing guidelines. Id.

Bowsher likewise disproves any notion that the separation-of-powers doctrine is concerned with the branch in which an official formally resides. As Bowsher observed, the Comptroller General was "an officer of the Legislative Branch," but the challenged statute gave him powers that were executive in nature. 478 U.S. at 731-33. The Court thus found a clear separation-of-powers violation in Congress's ability to remove the Comptroller General despite both entities residing within the same branch. Id. at 734.

In any event, the D.C. Circuit's conclusion that the Tax Court is part of the Executive Branch is wrong. When Congress formally reclassified the Tax Court as an Article I court, the Senate Committee on Finance correctly observed that "the Tax Court has only judicial duties." Supra at 5 (emphasis added).

In Freytag this Court described the Tax Court as one of the "Courts of Law," and stated emphatically that the Tax Court "exercises judicial, rather than executive, legislative, or administrative, power. . . ." 501 U.S. at 890-91 (emphases added). For all practical purposes the Tax Court is akin to a federal district court, with similar legal and equitable authority, including the authority to enter final judgments reviewed in the courts of appeals. Supra at 5-10. There is simply nothing tying the Tax Court to the Executive Branch except the President's removal power. It would be entirely circular to hold that the President's authority to remove Tax Court judges is constitutional because the President has authority to remove Tax Court judges; the removal power cannot be the only basis for its own constitutionality.⁶ Thus, even if the D.C. Circuit's "inter-branch" approach to separation-of-powers analysis is correct, the decision below still must fail because the Tax Court is not in the Executive Branch.

2. The D.C. Circuit also reasoned that the Tax Court cannot exercise judicial power because it is not an Article III court. Pet. App. 17a-21a.⁷ That reasoning is inconsistent with Freytag, which explained that "the judicial power of the United States is not limited to the judicial power defined under Article III" and that "non-Article III tribunals [may] exercise the judicial power of the United States." 501 U.S. at 889.

Freytag was clearly correct in this regard. There are other non-Article III judges, besides Tax Court judges, who exercise "the judicial power of the United States." And tellingly, these other judges, consistent with the separation of powers, are not subject to removal by the Executive. In particular:

• As noted in Freytag, id. at 889, in Williams v. United States, 289 U.S. 553, 565 (1933), this Court held that the Article I Court of Claims "undoubtedly . . . exercise[d] judicial power." So does its modern successor, the Article I United States Court of Federal Claims, but, unlike the Tax Court, the Court of Federal Claims' judges are removable by Article III judges on the Federal Circuit, not the President. 28 U.S.C. § 176.

• Federal magistrate judges exercise the judicial power of the United States: When parties consent, magistrate judges may hold trials (including jury trials), oversee all pretrial matters, and enter final judgments reviewable by the court of appeals directly, without further oversight by a federal district court judge. Id. § 636(c)(1), (3). Magistrate judges have authority to punish contempt by fine, imprisonment, or both. Id. § 636(e). And again, similar to judges on the Court of Federal Claims, magistrate judges are removable by Article III judges on the federal district courts, not the President. Id. § 631(i).

3. The court of appeals placed great weight on the "public rights doctrine," Pet. App. 19a-20a, reasoning that tax disputes between the Executive Branch and taxpayers may be assigned to adjudicatory bodies within the Executive Branch. That reasoning too is flawed, proving both too much and too little.

The Court has acknowledged that its description of what cases fall within the public rights doctrine "has not been entirely consistent" and comprises "various formulations." Stern, 131 S. Ct. at 2611. Roughly speaking, the doctrine applies "to matters that historically could have been determined exclusively by [Executive] departments," N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 68 (1982) (plurality opinion); cases in which '"it depends upon the will of congress whether a remedy in the courts shall be allowed at all,' so Congress could limit the extent to which a judicial forum was available," Stern, 131 S. Ct. at 2612 (quoting Murray's Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272, 284 (1856)); and "cases in which the claim at issue derives from a federal regulatory scheme, or in which resolution of the claim by an expert Government agency is deemed essential to a limited regulatory objective within the agency's authority," id. at 2598. Just because public rights cases could be assigned exclusively to non-Article III tribunals, however, does not mean that they must be. Glidden Co. v. Zdanok, 370 U.S. 530, 549-50 (1962). Article III courts are able to, and do, hear public-rights disputes. N. Pipeline, 458 U.S. at 67-68 ('"congress may or may not bring"' public-rights cases '"within the cognizance of the courts of the United States'" (plurality opinion) (quoting Murray's Lessee, 59 U.S. (18 How.) at 284)). That the Tax Court often hears cases involving public rights thus proves too little; Article III courts can hear public rights cases too.

The appeals court's public-rights analysis also proves too much, for the Tax Court does not hear only public-rights cases. The Tax Court frequently is called upon to enter final judgment on questions of constitutional law and to effectuate those judgments through equitable relief that binds executive officials. See supra at 6-10; infra at 27-29. Such constitutional and equitable matters scarcely qualify as "public rights" that "historically could have been determined exclusively" by the Executive. See, e.g., Crowell v. Benson, 285 U.S. 22, 60 (1932) ("In cases brought to enforce constitutional rights, the judicial power of the United States necessarily extends to the independent determination of all questions, both of fact and law, necessary to the performance of that supreme function."). That some of the Tax Court's jurisdiction involves public rights that could be (but again, need not be) adjudicated by an Executive Branch body scarcely suffices to establish that Executive Branch employees answerable to the President may enter final judgments on constitutional claims and enforce them by way of injunction, as the Tax Court can.

4. Finally, the D.C. Circuit reasoned that the Tax Court is more akin to adjudicative bodies that exercise "executive power" than to Courts of Law. Pet. App. 26a-31a. The court of appeals' reasoning in that regard closely mirrors that of the concurring Justices in Freytag, who opined that the Tax Court should be considered an "administrative" body within the Executive Branch. 501 U.S. at 909 (stating that Tax Court judges, like administrative bodies, "determine facts, apply a rule of law to those facts, and thus arrive at a decision" but stating "there is nothing 'inherently judicial' about 'adjudication'").

But a majority of this Court rejected that characterization of the Tax Court in Freytag. The Court's opinion flatly stated that the Tax Court exercises neither "executive" nor "administrative" power. Id. at 890-91. And correctly so. Key dissimilarities between Tax Court judges and administrative law judges dispel any notion that Tax Court judges are ALJs by another name. Tax Court judges derive their authority from an independent Act of Congress, not from a delegation by the Commissioner of Internal Revenue. That stands in contrast to ALJs, who exercise delegated authority. See, e.g., 12 U.S.C. § 248(k) (authorizing Board of Governors of the Federal Reserve System to delegate their authority to ALJs); 42 U.S.C. § 3608(c) (authorizing Secretary of Housing and Urban Development's to delegate his authority to ALJs). Likewise, Tax Court decisions, unlike many decisions by ALJs, are not subject to review by an executive officer. See, e.g., 10 C.F.R. §§ 2.321, 2.341 (Atomic Safety and Licensing Board decisions reviewed by Nuclear Regulatory Commission); 18 C.F.R. §§ 385.711, 385.712 (opinions (called "initial decisions") of ALJs within the Federal Energy Regulatory Commission are subject to review by the Commission). And ALJs, unlike Tax Court judges, have limited-to-no power to enforce their own subpoenas. Instead, they ordinarily must refer such matters to a federal district court.⁸

The D.C. Circuit thought a comparison of the Tax Court to the territorial courts and the Court of Appeals for the Armed Forces to be particularly apt. Pet. App. 22a-25a, 29a-31a. But that was a mistake. With respect to the Court of Appeals for the Armed Forces, this Court previously has noted the extraordinary authority vested in the Executive Branch over '"the trial and punishment of military and naval offences,"' such that the power to dispense military justice and the judicial power of the United States '"are entirely independent of each other."' N. Pipeline, 458 U.S. at 66 (plurality opinion) (quoting Dynes v. Hoover, 61 U.S. (20 How.) 65, 79 (1857)). And with respect to the territorial courts, the separation of powers simply does not apply: "Art. IV bestowed upon Congress alone a complete power of government over territories not within the States that constituted the United States." Id. at 64-65 (citing Am. Ins. Co. v. Canter, 26 U.S. (1 Pet.) 511 (1828)); McAllister v. United States, 141 U.S. 174, 188 (1891) ("The whole subject of the organization of territorial courts, the tenure by which the judges of such courts shall hold their offices, the salary they receive, and the manner in which they may be removed or suspended from office, was left by the constitution with congress, under its plenary power over the territories of the United States.").

There is no dispute that Executive Branch employees sometimes adjudicate disputes, and no dispute that the President ordinarily must be able to remove members of the Executive Branch. Petitioners therefore do not dispute that some people who happen to be called "judges" could be removed by the President. For the reasons given above, however, the Tax Court is not an adjudicatory body exercising executive power. Therefore, the President's authority to remove Tax Court judges is unconstitutional.

C. The Question Presented Is Important And Warrants Review By This Court

The decision below is clearly in conflict with a decision of this Court, which ruled that Tax Court judges exercise the judicial power of the United States. Freytag, 501 U.S. at 890-91. As a result, the decision below also runs afoul of Bowsher, for it allows one governmental power to remove from office persons exercising a different power. The question presented is a pure question of law that applies to every case decided by the Tax Court. There is little to be gained and much to be lost from waiting to decide it.

1. The Tax Court is an important and busy court; it hears the vast majority of tax-related cases despite sharing jurisdiction over certain matters with the federal district courts, the Court of Federal Claims, and the bankruptcy courts. There were more than 28,000 cases pending in the Tax Court as of September 30, 2013. IRS, Data Book, 2013, at 61 (March 2014), http://www.irs.gov/pub/irs-soi/13databk.pdf. The number of tax cases pending in the Tax Court dwarfs the number of tax cases pending in other courts: Approximately 96 percent of the approximately 30,000 tax cases filed annually are filed in the Tax Court.⁹

At the same time, the Tax Court does not only "interpret[ ] and apply[ ] the internal revenue laws." Pet. App 26a. It also renders opinions on questions of constitutional law in which taxpayers are adverse to the Executive Branch. The Tax Court has been asked to decide whether a regulation defining whether advocacy by an organization is "educational" violates the First, Fifth, and Fourteenth Amendments. Nationalist Movement v. Comm'r, 102 T.C. 558 (1994). It has been asked to decide whether the tax code's treatment of single versus married persons, and same-sex versus opposite-sex married couples, violates the Equal Protection Clause. See, e.g., Kellems v. Comm'r, 58 T.C. 556 (1972) (rejecting constitutional challenge by single person to differential treatment from married couples); Mueller v. Comm'r, 79 T.C.M. (CCH) 1887 (2000) (same, in challenge by same-sex couple).

Unfortunately, the fairness of the application of the nation's tax laws by the IRS is sometimes called into question. Recently, assertions of political retaliation by the IRS against certain groups seeking tax-exempt status have been the subject of headlines, Congressional investigations and hearings, and Presidential statements.¹⁰ Cases challenging adverse tax-exempt status determinations can be and are heard by the Tax Court. E.g., Gen. Conference of The Free Church of Am. v. Comm'r, 71 T.C. 920 (1979) (upholding IRS determination that religious organization does not qualify for 501(c)(3) status). Taxpayers are entitled to know that their challenges to adverse determinations by the IRS will be decided by judges immune from pressure by the very same administration that allegedly reached a politically-biased determination in the first place.

2. The decision below sustains the removal power for all cases that come to the D.C. Circuit. That circuit is the exclusive forum for many taxpayers: For certain categories of cases, the appropriate venue for all Tax Court appeals is the D.C. Circuit. 26 U.S.C. § 7482(b)(1); see Byers v. Comm'r, 740 F.3d 668, 677 (D.C. Cir. 2014) ("Excluding a few exceptions that are not relevant here, the plain text of § 7482(b)(1) says that the proper venue to seek review of a Tax Court decision lies in the D.C. Circuit unless one of the circumstances enumerated in subparagraphs (A)-(F) applies."). For taxpayers who have nowhere else to go, the D.C. Circuit's decision is the final word; for them, no percolation is possible.

3. While Freytag unambiguously ruled that the Tax Court is a Court of Law exercising the judicial power of the United States, this Court did more recently state in Stern that "Article III of the Constitution provides that the judicial power of the United States may be vested only in courts whose judges enjoy the protections set forth in that Article." 131 S. Ct. at 2620. That statement arguably is in tension with Freytag's conclusion that both the Court of Federal Claims and the Tax Court exercise the judicial power. That tension may be resolved -- with respect to some categories of cases heard by the Tax Court -- by the existence of consent to jurisdiction (as with magistrate judges) and/or categorization of claims as falling under the public rights doctrine. Id. at 2614-15 & n.8, 2627-28 (majority and dissent discussing role of consent in allowing cases to be heard by non-Article III judges).¹¹ For purposes of the question raised by this petition -- the constitutionality of the President's removal authority over non-Article III judges exercising the judicial power of the United States -- the resolution of this tension may not be necessary: Even if Tax Court judges, magistrate judges, and Court of Federal Claims judges do not enjoy the full protections of Article III, the Constitution's separation of powers prevents the Executive Branch from removing them. In any event, to the extent resolving such tension as may exist between Freytag and Stern is necessary to decide this case, that is yet another reason why the Court should grant the petition.

The petitioners in Freytag did not raise the separation-of-powers issue presented here, but the concurring Justices nonetheless foresaw that this Court would ultimately need to address it. Although those Justices disagreed with the Court's holding that the Tax Court exercises the judicial power of the United States, they understood that the relief petitioners seek here flows directly from it. Citing Bowsher, they stressed that the President's removal authority over Tax Court judges made it virtually inconceivable that they could exercise their judicial power independent from the Executive Branch. Freytag, 501 U.S. at 912 (Scalia, J., concurring in part and concurring in the judgment). It is important to take this case to resolve this issue left open by Freytag.

4. The separation-of-powers issue raised by this petition is not merely theoretical. At least one call by an unhappy litigant for the President to remove a Tax Court judge has become public in recent years. Sam Young, Kanter Plaintiffs Call for Investigation of Tax Court Judges, Tax Notes Today, Mar. 8, 2010, at 1182.

To be sure, there is no evidence that the President threatened or even considered removing Judge Wherry over petitioners' case, which is small in the grand scheme of things if of tremendous importance to the petitioners personally. But that is beside the point. As discussed above, the President need not exercise -- or even threaten to exercise -- his removal authority for that authority to be struck down as unconstitutional. The separation-of-powers doctrine is compromised by the existence of aggrandizement of power in one branch, regardless of any actual exercise of that power. Supra at 14-17. Thus, this Court typically considers separation-of-powers issues related to an inter-power removal authority in cases that do not actually involve an attempt to exercise that power. See Bowsher, 478 U.S. at 719 (Congress's removal power over Comptroller General not exercised before provision deemed unconstitutional and, in fact, complaint for declaratory relief was filed "within hours of the President's signing of the Act"); Mistretta, 488 U.S. at 408-12 (analyzing President's removal power over Article III judges on the Sentencing Commission prior to any public exercise of that power); Morrison v. Olson, 487 U.S. 654, 685-93 (1988) (analyzing constitutionality of limits on Attorney General's removal power prior to any attempt to exercise that power).

² "In 1974, the Tax Court solidified its independence from the executive branch (and the IRS) by moving its physical location from the National Office of the Internal Revenue Service to its own separate building in Washington, D.C." David Laro, The Evolution of the Tax Court As An Independent Tribunal, 1995 U. Ill. L. Rev. 17, 22. Before the relocation, "[t]he court's independence from the IRS was not apparent to those taxpayers who had to pass through the corridors of the [IRS] to get to the Tax Court facilities." Samuel B. Sterrett, The United States Tax Court: A Tumultuous 20 Years, 57 Tax Notes 949, 949 (1992).

³ The Court described this removal authority -- even for cause -- as "very broad," noting that "as interpreted by Congress, [it] could sustain removal of a Comptroller General for any number of actual or perceived transgressions of the legislative will." Bowsher, 478 U.S. at 729.

⁴ "As Hamilton put it, quoting Montesquieu, '"there is no liberty if the power of judging be not separated from the legislative and executive powers.'"" Stern, 131 S. Ct. at 2608 (quoting The Federalist No. 78, at 466 (Alexander Hamilton) (Clinton Rossiter ed., 1961) (quoting 1 Montesquieu, Spirit of Laws 181)).

⁵ Likewise, it is also, of course, perfectly permissible for those in one branch to remove an officer of another branch by way of the impeachment process set forth in the Constitution.

⁶ Relatedly, there is no need for the President to have removal authority over Tax Court judges because he will not be held accountable for their actions.

⁷ Petitioners did not argue below and do not argue now that the Tax Court is an Article III court. The court of appeals construed petitioners' argument as seeking and requiring that classification. Pet. App. 17a-18a. The court of appeals then proceeded to knock down that straw man and hold that because the Tax Court is in the Executive Branch (regardless of the powers it exercises) there is no separation-of-powers problem with the President's removal authority over its judges. Id. at 17a-27a. Yet where the Tax Court falls in the U.S. government's organizational chart is beside the point. Petitioners are not seeking lifetime tenure and salary protections for Tax Court judges, who currently serve 15-year terms and receive the salary of federal district court judges. 26 U.S.C. § 7443(c), (e). The separation of powers is concerned with just that -- power -- and because Tax Court judges exercise the judicial power of the United States, it is unconstitutional for the Chief Executive to have the power to remove them.

⁸ See, e.g., 15 U.S.C. § 49 (requiring Federal Trade Commission to "invoke the aid of any court of the United States" to enforce subpoenas).

⁹ The 2013 annual report of the Administrative Office of the United States Courts reported 1,113 tax cases filed in the federal district courts and 79 tax cases filed in the Court of Federal Claims, while the IRS's 2013 Data Book reported 29,837 cases filed in the Tax Court. Administrative Office of the United States Courts, Judicial Business of the United States Courts: Annual Report of the Director, Table C-2 (U.S. District Courts -- Civil Cases Commenced, by Basis of Jurisdiction and Nature of Suit, During the 12-Month Periods Ending September 30, 2012 and 2013) (2013), http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2013/appendices/C02Sep13.pdf; id. at Table G-2A (U.S. Court of Federal Claims -- Cases Filed, Terminated and Pending for the 12-Month Period Ending September 30, 2013), http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2013/appendices/G02ASep13.pdf; IRS, Data Book, infra, at 61.

¹⁰ See, e.g., Juliet Eilperin and Zachary A. Goldfarb, IRS Officials in D.C. Implicated, Washington Post, May 14, 2013, at A1 (discussing targeting of conservative groups seeking tax-exempt status by IRS); Examining the IRS Response to the Targeting Scandal: Hearing Before the H. Comm. On Oversight and Gov't Reform, 113th Cong. (2014); The White House, Office of the Press Secretary, Statement by the President, May 15, 2013, http://www.whitehouse.gov/the-press-office/2013/05/15/statement-president.

¹¹ The question whether Article III permits bankruptcy courts to exercise the judicial power of the United States where the parties consent is currently before the Court in Wellness Int'l Network v. Sharif, No. 13-935. See Exec. Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165, 2170 n.4 (2014) (reserving the question "whether Article III permits a bankruptcy court, with the consent of the parties, to enter final judgment on a Stern claim"). That question has no bearing on this petition. Petitioners here do not challenge the Tax Court's authority to adjudicate their dispute despite its judges lacking Article III protections; they challenge only the President's removal power over its judges.