This post originally appeared on the Forbes PT site on May 19, 2015.
Between 1976 and 2013, there were 18 shutdowns of the Federal Government due to spending gaps – an average of almost one shutdown every two years. These shutdowns lasted between 1 and 21 days. As a result of the most recent federal government shutdown in October of 2013, a case has arisen that seeks to establish lines of authority within the IRS impacting tax procedure. During that shutdown, the Commissioner furloughed the National Taxpayer Advocate (NTA) and all of her staff. It also furloughed all of the Automated Call Site employees. These people deal with hardship created by IRS action.
The IRS sent them all home, meaning that taxpayers facing a hardship resulting from IRS action that may have started before the furlough occurred but played out during the time of the furlough faced a very difficult, if not impossible, task in seeking relief from the hardship created during the period of the furlough. Details about this can be found in the most recent National Taxpayer Advocate (NTA) Objectives Report. The write-up in the Objectives Report demonstrates the tax procedure issue at stake. The matter pending before the Federal Circuit set for oral argument in a couple of weeks lays out the authority issues at play when the Government seeks to interpret the Anti-Deficiency Act (the other ADA) in responding to a shutdown for lack of funds. Our collective memory of shutdowns tends to have a very short life span once the Federal Government gets back up and running, but the issue here concerns both lines of authority and what will happen to taxpayers facing hardships the next time Congress decides to cause a shutdown.
Once the furlough ended, all federal employees came back to work, were paid for the days they did not have to work, and the world seemed well again. The NTA, however, did not think that the end of the furlough put the world back into proper alignment. She feels that the Commissioner lacked the authority to furlough her and TAS staff members. Because she felt strongly enough about this, she brought suit before the Merit Systems Protection Board (MSPB). The MSPB ruled last summer that it lacked jurisdiction to hear the case because the furlough ended and restored the NTA to her position with back pay. She disagrees, and the case is set for oral argument before the Federal Circuit on June 2.
To understand the argument of the NTA you must go to the Internal Revenue Code and the creation of her position in 1998. Congress added to the Code section 7803 as it created the new position of NTA. In establishing this position, it created one of only four positions at the IRS specifically mentioned in the Internal Revenue Code – the Commissioner (Section 7803(a)), the Chief Counsel (Section 7803(b)), the head of the Treasury Inspector General for Tax Administration (Section 7803(c)), and the NTA (Section 7803(d)). The statute requires the Secretary of Treasury to choose the NTA in consultation with Congress, the IRS Oversight Board (if he can find them, but that’s a story for another post), and the Commissioner.
When Congress decided to shut down the federal government in the fall of 2013, the Commissioner, as the head of an agency, had to exercise authority under the laws that govern government shutdowns to designate a small, elite number of essential personnel at the IRS to continue working while all other had to leave the office even if they might have donated their time to allow the government to continue to function more efficiently. When the Commissioner made this decision in 2013, he reversed the decisions made in prior shutdowns keeping the NTA working together with 47 members of her staff she deemed essential and determined that the NTA and all of the workers in TAS were non-essential to the function of the IRS under the rules governing government shutdowns.
We could argue about who is essential and who is not essential in such a situation. I had the misfortune in the 1990s to be deemed essential while everyone else in my office received what amounted to a paid vacation for many days. The NTA does not argue that the Commissioner made an incorrect choice under the rules of who should receive the essential designation though she may believe that. Rather, she argues that the Commissioner did not have the authority to furlough her. In her view only the Secretary of Treasury could make that determination since the Secretary, and not the Commissioner, chose her. She argued before the MSPB that it should enter an order stating that the Commissioner lacked authority for his decision and directing the Commissioner to change the shutdown policy going forward arguing that:
[T]he Board has the authority to:
1) order the agency to amend its shutdown policy to include a requirement that it “obtain the personal approval and signature of the Secretary before she is furloughed in any future shutdowns”;
2) order the agency to exempt the appellant and her staff from any future furlough when the IRS “continues to engage in the assessment and collection
of tax, . . . including the provision of relief where the protection of human life and property are implicated, and the protection of taxpayer confidentiality when it is deemed necessary to open mail addressed to the National Taxpayer Advocate and her employees”; and
3) make “a determination that, pursuant to 26 USC §7803(c)(2)(D), the National Taxpayer Advocate is granted sole authority, in consultation with appropriate IRS supervisory personnel, to take personnel action (including dismissals and furloughs) against members of the National Taxpayer Advocate staff and that, as a result, the furlough by the Commissioner of the staff of the National Taxpayer Advocate during the October 1 through 16,2013, shutdown was illegal.”
The administrative law judge at the MSPB took a rather narrow view of the case. In his view, the end of the furlough which brought the NTA back to work and under the terms of which she received full payment for her enforced time off and full benefits for the days missed ended her ability to complain about the decision of the Commissioner. He not only ruled against the NTA saying that the MSPB lacked jurisdiction but also went a bit further:
“Finally, the appellant has failed to provide a citation to any law, rule, regulation, or case that would vest the Board with the authority to award the type of sweeping and prospective relief she seeks in this case. See Prichard, 484 Fed.Appx. 489 (Board does not have authority to award non-pecuniary damages absent statutory or regulatory authorization). Moreover, I find that her requested relief would fail to qualify as “appropriate relief” under any standard and it appears that she is simply using and manipulating the Board process to litigate a policy dispute between herself and the Commissioner.”
The decision of the MSPB came out on July 18, 2014. She timely filed an appeal to the Federal Circuit – the appropriate place to appeal such a decision. She continues to press the same arguments that the MSPB determined it did not have the authority to decide. Before the MSPB, the Commissioner was represented by attorneys from the General Legal Services Division of the Office of Chief Counsel. Before the Federal Circuit attorneys from the Commercial Litigation Division of the Department of Justice represent the Commissioner. Lavar Taylor, a sometime guest blogger with Procedurally Taxing, represents the NTA. Although we have not discussed this case with him, perhaps we will convince him to provide insight on it at a future date.
In her reply brief, the NTA expresses concern that the government continues to view this case as a routine furlough case in which the employee has received the lost benefits through reinstatement to the prior position with back pay and benefits. She continues to press the point that the issue involves important matters on which the MSPB and the Federal Circuit have the authority to decide. From her reply brief:
In her brief, Petitioner showed that:
1. The Civil Service Reform Act ( “the Act”) does not bar the relief sought by Petitioner from the MPSB; neither the Act nor any rule or regulation promulgated under the Act limits to reinstatement with back pay and benefits the relief that may be granted by the MSPB;
2. There exists an actual controversy between Petitioner and the CIR regarding multiple issues, including: a) whether the CIR improperly furloughed Petitioner because Petitioner was exempt from furlough under the standards set forth in the Anti-Deficiency Act, 31 U.S.C. §1342; b) whether the CIR improperly furloughed Petitioner because any authority to furlough Petitioner resided with the Secretary of Treasury, and c) whether the CIR has the authority to furlough employees of the Taxpayer Advocate Services (“TAS”) in light of the fact that Petitioner is vested by statute wit sole authority to take personnel action against TAS employees.
3. Petitioner’s reinstatement with back pay did not render her case moot or deprive the MSPB of jurisdiction over her appeal, since it did not resolve the issues set forth above and thus did not restore the status quo ante. The implementation of the IRS’s FY 2014 Shutdown Contingency Plan was the first time that the CIR had asserted the power to furlough Petitioner or all of her staff. Since the end of the shutdown, the CIR continues to assert that he has the authority to furlough Petitioner and TAS staff.
4. Even if the MSPB did not have jurisdiction to determine whether the Commissioner’s furloughing of Petitioner and TAS staff was unlawful, this Court has jurisdiction to make such a determination; the MPSB thus had jurisdiction to make factual findings so that this Court can rule on the merits of Petitioner’s claim.
Respondent’s Brief (“RB”), in the NTA’s view as stated in her reply brief, is remarkable in several ways. It fails to discuss the underlying facts (except in a perfunctory manner) and it fails to address key issues raised. Taking a crabbed view of the type of relief that the MSPB can grant, Respondent improperly concludes that the MSPB correctly dismissed Petitioner’s appeal for lack of jurisdiction.
The appeal by the NTA offers more than just a close look into the process of sending employees on furlough. If the Federal Circuit gets to the merits of the request, the case offers a glimpse into the authority of the Commissioner and how that authority was impacted or not impacted by the new position of NTA created in 1998. In turn, the power of the NTA impacts tax procedure because so many procedural requests regarding hardship and failure to respond go through that office. When the government shuts down and goes into core function mode yet has sent levies out across the land prior to shutdown, someone needs to be home to deal with the levies creating hardship for certain taxpayers. Hardships created by levy action represent just one very visible function that the NTA and TAS perform. Is fixing problems during a government shutdown an essential government function, or do those harmed during the shutdown just need to sit and suffer? Maybe we will soon find out.