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The Kuretskis Seek Certiorari

Posted on Dec. 2, 2014

We welcome back frequent guest blogger Carl Smith. Carl assisted the team that brought this case to the D.C. Circuit. He explains below the new player on the team and the goal of the request for cert. Keith

There have been several blog posts over the past year on the case of Kuretski v. Commissioner, a Collection Due Process case in which the taxpayers asked the D.C. Circuit to declare unconstitutional a provision of the Code that subtly pressures Tax Court judges to rule in favor of the IRS — i.e., the President’s power to remove Tax Court judges under section 7443(f).  See Potential Storm Over Removal Power of Tax Court Judges (Oct. 16, 2013); Follow up on Kuretski and Removal Power of Tax Court Judges (Oct. 18, 2013); Kuretski, the Tax Court, and the Administrative Procedure Act (June 23, 2014). This past June, the D.C. Circuit ruled that there was no separation of powers issue because (1) the Tax Court, while defined as an Article I (Congressional) court in section 7441, was really, for most constitutional purposes, an Article II Executive Agency exercising executive functions, and (2) there is no problem in the President, who heads the Executive Branch, ever having the power to remove officers of an Executive Agency.  Kuretski v. Commissioner, 755 F.3d 929 (D.C. Cir. 2014).  In the Tax Court and the D.C. Circuit, the Kuretskis were represented by Prof. Tuan Samahon of Villanova, Frank Agostino and his associate, John Miscione, and me.  Realizing that it would be wise to add more skilled Supreme Court litigators if the Kuretskis were to seek review there, we approached Goodwin Procter LLP to see if its Appellate Litigation Practice would take the lead before that Court – also pro bono.  A team of six lawyers from that firm’s practice volunteered.  Last week, the taxpayers in the case filed a petition for certiorari, listing William Jay of Goodwin Procter as lead attorney.  Mr. Jay has previously clerked for Justice Scalia and worked as an Assistant to the Solicitor General.  He frequently argues cases before the Court.  This blog post is to provide a link to the complete petition and to quote the petition’s introduction for those seeking an executive summary.

Section 7443(f) provides:  “Judges of the Tax Court may be removed by the President, after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause.”  In the absence of this provision, Tax Court judges could be removed during their fifteen-year terms only by Congressional impeachment and trial.

The Introduction to the petition reads as follows:

Tens of thousands of taxpayers each year litigate questions of federal law against the Executive Branch in the United States Tax Court.  And in each of those cases, the Chief Executive enjoys a degree of power over the decisionmaker:  A federal statute allows the President to remove Tax Court judges for specified cause. 26 U.S.C. sec. 7443(f).  The question presented is whether the separation of powers permits giving the President the power to remove these judicial officers.

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.  It 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.

The D.C. Circuit was the first circuit to rule on section 7443(f)’s constitutionality, so there is no circuit split – the usual way to obtain Supreme Court review.  However, the Court has granted review before on separation of powers questions where non-governmental litigants have consistently lost below.  See, e.g., Freytag v. Comm’r, 501, U.S. 868 (1991).

A principal dispute in Kuretski involves whether Freytag‘s statements about the Tax Court exercising the judicial power of the United States were confined to the Court’s interpretation of “Courts of Law”, as used in the Appointments Clause (the D.C. Circuit’s view), or were, instead, applicable, generally, across all constitutional provisions and doctrines (the Kuretskis’ view).

Secondly, the Kuretskis argue that the D.C. Circuit has misconstrued the Supreme Court’s separation of powers case law into rules that only enforce separation of Branches.  The Kuretskis point to case law of the Court, including Bowsher v. Synar, 478 U.S. 714 (1986) and Mistretta v. United States, 488 U.S. 361 (1989), considering whether a removal power can run afoul of the separation of powers when actors in one Branch are given powers that are ordinarily held by officers in other Branches.  Most apt is Bowsher, where a Congressional employee, the Comptroller General, was given certain executive powers concerning a balanced budget law.  Congress had long held a for cause removal power over the Comptroller General, which would not have been a problem had the Comptroller General held only legislative powers.  The Court held that the removal power became improper once the Comptroller General acquired executive powers under the balanced budget law.  Thus, the Kuretskis argue, it is not enough to say that there can be no separation of powers issue if both the subject of the removal power and its holder are in the same Branch of government, as the D.C. Circuit asserted.  Instead, the nature of the respective powers held by the two actors – regardless of Branch – is key.

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