We previously blogged the case of Kuretski v Commissioner here and here, a CDP case where the taxpayer argues that the presidential right of removal of Tax Court judges under Section 7443(f) violates separation of powers under the Constitution. Yesterday was oral argument at the DC Circuit Court of Appeals; audio of the argument can be found here.
I will not discuss the merits at length; I previously outlined the arguments and have linked the briefs. Some highlights and observations follow:
A very hot bench pressed counsel for Kuretski on the merits and the implications of the argument. Fair to say that some of the judges on the panel pointed to the executive’s limited removal powers over other judicial tribunals as suggestive that the executive’s Tax Court removal powers did not rise to the level of a constitutional infirmity. In addition, there was a spirited discussion about severability, that is, if the DC Circuit found that the removal power was unconstitutional whether it could sever 7443(f) from the Tax Court’s overall statutory scheme. Counsel for Kuretski emphasized that the rationale of the majority opinion in Freytag, and its framing of Tax Court judges as exercising the judicial power in a constitutional sense, highlights the unconstitutionality of the executive branch’s limited removal powers over Tax Court judges.
DOJ framed the case as a linguistic conundrum, claiming that Freytag’s delineation of the Tax Court’s judicial power was not meant to define “the” judicial power for purposes of separation of powers jurisprudence. By identifying the Tax Court as exercising judicial power but not judicial power in the sense of the term for separation of powers purposes, DOJ suggested that the Tax Court in fact exercises executive power for separation of powers purposes. In addition, at the panel’s prompting, DOJ argued that the executive’s limited removal power does not get at the Tax Court’s (or any non-Article III adjudicative bodies) exercise of judicial power, to the extent that the Tax Court does exercise judicial power for separation of powers purposes.
DOJ also hit the waiver point hard, emphasizing that the taxpayer’s raising the issue in a Tax Court motion to vacate was a way for the court to not consider the separation of powers argument.
It is hard to read tea leaves on an oral argument– assuming that the DC Circuit gets around the waiver issue, the DC Circuit has an opportunity to situate the Tax Court within the overall constitutional framework.