There are some interesting developments percolating in Congress. In addition to a hearing today which features former Senators Bradley and Packwood and is meant to highlight lessons on tax reform from the 86 Tax Reform Act, Congress is considering a few procedural issues in less controversial bills. Specifically the Senate Finance Committee has scheduled for tomorrow a mark up of a number of relatively noncontroversial measures, including a grab bag of procedural provisions.
The Joint Committee has summarized those measures, under a title that pegs the changes to proposals relating to access and administration of the Tax Court. I have not yet seen language in the bill, but there are three items in particular that have received a fair bit of coverage in Procedurally Taxing over the past year. These items relate to venue of appeals of CDP cases, interest abatement disputes and the fallout from last year’s Kuretski litigation.
One of the proposals addresses the venue issue for CDP and innocent spouse cases we have discussed previously in the context of last year’s DC Circuit Byers case. The Joint Committee summary states that the provision “amends section 7482(b) to clarify that Tax Court decisions rendered in cases involving petitions under sections 6015, 6320, or 6330 follow the generally applicable rule for appellate review. That rule provides that the cases are appealable to the U.S. Court of Appeals for the circuit in which is located the petitioner’s legal residence in the case of an individual or the petitioner’s principal place of business or principal office of agency in the case of an entity other than an individual.”
I am not sure that I agree with the notion that this is a clarification of current law; seems to me the DC Circuit’s analysis in Byers is persuasive that venue absent a legislative change for CDP cases not involving liability issues is the DC Circuit irrespective of the petitioner’s residence. Be that as it may, this will bring some certainty into an area that could use some certainty.
The Joint Committee also summarizes a proposal that would provide that a taxpayer can petition Tax Court even in the absence of a determination 180 days after an abatement request; a separate proposal would allow a taxpayer to elect small case procedures for abatement requests when the “total amount of interest for which abatement is sought does not exceed $50,000.”
Kuretski , or Where Does the Tax Court Belong?
We and others have discussed Kuretski and related cases on numerous occasions this past year. The Joint Committee indicates that the bill Senate Finance is considering would purport to essentially attempt to overturn the DC Court of Appeals holding that found (at least for some purposes) that the Tax Court is part of the Executive Branch. Here is the entire language (absent footnotes though we did enjoy that the Joint Committee Report dropped a footnote to Procedurally Taxing in its description):
The Tax Court was created in 1969 as a court of record established under Article I of the U.S. Constitution with jurisdiction over tax matters as conferred upon it under the Code. It superseded an independent agency of the Executive Branch known as the Tax Court of the United States, which itself superseded the Board of Tax Appeals.
As judges of an Article I court, Tax Court judges do not have lifetime tenure nor do they enjoy the salary protection afforded judges in Article III courts. They are subject to removal only for cause, by the President. The authority to remove a judge for cause was the basis for a recent unsuccessful challenge to an order of the Tax Court, in which the taxpayer claimed that the removal authority was an unconstitutional interference of the executive branch with the exercise of judicial powers. In rejecting that challenge, the Court of Appeals for the District of Columbia held that the Tax Court is not part of the Article III Judicial Branch and is an independent Executive Branch agency, while acknowledging that the Tax Court is a “court of law” for purposes of the Appointments Clause.
Description of Proposal
The proposal clarifies that the Tax Court is not within the Executive Branch.
The provision is effective upon the date of enactment.
I will reserve comment on this proposal until I see the bill.
For those interested in this issue, and the confusion as to where the Tax Court fits, I commend readers to an excellent piece called Where the Bough Breaks: The U.S. Tax Court’s Branch Difficulties by Professor Leandra Lederman in the recent ABA Tax Section Newsquarterly. Professor Lederman is one of the (if not the) top tax procedure scholars in the country. This entertaining and well-researched piece shows how schizophrenic the government itself has been in describing where the Tax Court belongs.