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What Does It Mean When Former Judge Kroupa Shows Up as Senior Judge Kroupa in the Tax Court’s Report to Congress

Posted on Mar. 15, 2023

The Tax Court posted its annual Congressional Budget Justification on February 1, 2023. One item I perhaps should have noticed before in prior annual reports is that is appears that former/senior Judge Kroupa is listed in the report as a senior judge. This surprised me.

Les and I wrote several blog posts about former/senior Judge Kroupa during her prosecution and leading up to her plea for tax evasion. You can find the posts here, here, here and here. The press release from the US Attorney’s office in Minnesota lays out the details of her “deliberate and brazen tax fraud scheme” in detail. It explains that her conspiracy to “obstruct the IRS from accurately determining their [she filed a joint return with her then husband] joint income taxes” from 2002 to 2012.

There are some relevant dates to keep in mind for later in the post as you can help me understand former/senior Judge Kroupa’s status. She was appointed to the Tax Court on June 13, 2003, for a term of 15 years – the normal term for a Tax Court judge.  Note that at the time she began serving as a Tax Court judge her conspiracy had already begun. A Department of Justice press release states that she was indicted on April 4, 2016, which is slightly more than two years before her 15 year term ended and almost two years after she retired (see below for information about the retirement.) At the time of her indictment the DOJ press release states that she was 60 years old. Because she was born on October 12, 1955, she was 58 at the time of retirement.

Former/senior Judge Kroupa’s Wikipedia page indicates her last day as a judge was June 14, 2014. It also states without any support:

Although under the Internal Revenue Code section 7447 Kroupa didn’t serve the sufficient amount of time (15 years) and was under 65 (minimum retirement age) she retired rather than resigned from the Tax Court on June 16, 2014. If she had resigned she would not be entitled to collect her salary for life. Retired judges collect full salary for life.

Wikipedia also states that she worked for Chief Counsel, IRS and as an attorney/advisor to Judge Joel Gerber prior to her appointment as a Tax Court judge. It’s unclear to me if this prior service matters. At the time of her retirement, she had 11 years of service as a judge. Notice that her retirement came one day after she reached the 11-year anniversary.

There were six counts in her indictment including one conspiracy count, two tax evasion counts, two false return counts and one count for obstructing the IRS audit. She pled guilty to count one as part of a plea agreement. During the plea hearing the judge read to her the six counts. The quote below is from the conspiracy count to which she pled guilty:

Count 1 of the indictment charges you with conspiracy to defraud the United States in violation of Title 18, United States Code, Section 371. Under this provision it is a crime for two or more people to commit a crime. For you to be convicted of this charge — I’m sorry. It’s a crime for two or more people to agree to commit a crime. So, the agreement is the material piece.

For you to be convicted of this charge the government would have to prove beyond a reasonable doubt four elements: First, that beginning on or before 2004 and continuing at least until in or before 2012, in the state and district of Minnesota, you and Robert Fackler reached an agreement to commit the crime of evading the ascertainment and computation of your joint income taxes as alleged in the indictment; second, that you voluntarily and intentionally joined in the agreement either at the time the agreement was reached or at some later time while the agreement was still in effect; third, that at the time you joined in the agreement you knew the purpose of the agreement; and fourth, while the government was — while the agreement was in effect, a person who had joined the agreement knowingly did one or more acts for the purpose of carrying out or carrying forward the agreement.

Former/senior Judge Kroupa was sentenced to 34 months in prison which began in the summer of 2017. I have not followed what happened after the sentencing, but she should have been released from the federal penitentiary no later than 2020.

In the Court’s Congressional Budget Justification, it explains why it needs the money it requests. It states, at page 8 that:

The Court’s FY 2024 budget request includes a total of 46 presidentially appointed judges (a full complement of the statutory 19 presidentially appointed judges, 16 senior judges on recall, and 5 senior judges not recalled) and 6 special trial judges, reflecting an increase of 1 judge from the Court’s FY 2023 planned.

If you go to page 25 of the report, it lists the judges:

Figure: image-6.png

If you look at the lists for senior judges, former/senior Judge Kroupa is listed. If you count the number of senior judges with no asterisk by their name – the judges not serving on recall or subject to recall – there are five judges: Jacobs, Parr, Wells, Chiechi and Kroupa. These five judges appear to be the five judges mentioned in the quote above and included in the 46 presidentially appointed judges for whom the Court seeks funds for its budget.

Former/senior Judge Kroupa receives a pension despite her conviction for a tax crime in one of the most sensational acts committed by a Tax Court judge during its 99-year history. I have to say I am surprised that she is still listed as a senior judge, but I suspect that Tax Court lists her because that’s the appropriate designation and not out a sense of comradery.  It’s not uncommon for retirement eligible federal employees to retire in the face of a potential personnel action that could jeopardize their career and, I suspect, the same is true of private employees. The statute governing the retirement of Tax Court judges makes no mention of forfeiture of pension because of federal tax or other crimes.

Because I didn’t know why former/senior Judge Kroupa was listed as a senior judge and did not know what that might mean with respect to her future service on the Court, I sent a draft of my somewhat confused and rambling post to the court seeking clarification. Since the inquiry involved a personnel matter, I didn’t expect too much but had some hope for clarification. Very quickly I was asked to instead submit questions which I did. Here are the questions I asked:

Did Judge Kroupa resign?

Was Judge Kroupa removed from office by the president pursuant to IRC 7443(f)?

Looking at the list of senior judges on page 25 of the recent budget submission to Congress:

What causes a judge to be listed as a senior judge serving on recall?

What causes a judge to be listed as a senior judge subject to recall?

What cases a judge to be listed as a senior judge neither serving nor subject to recall?

Under what circumstances does a still living Presidentially appointed judge get totally removed from the list of senior judges? For example, B. John Williams resigned from the Court in 1990 and is still alive but is not listed as a senior judge.

Do the senior judges serving on recall receive a salary for doing so or a pension or both?

Do the senior judges subject to recall receive a salary for being subject to recall or a pension or both?

Do the senior judges neither serving on recall nor subject to recall receive a salary or a pension?

If a judge resigned from the Court would that judge be listed as a senior judge? Does it depend on the type of resignation? If so, what are the different ways a judge can resign and the designations that flow from those different types of resignations?

If the President removed a Tax Court judge pursuant to IRC 7443(f) would the judge appear as a senior judge on the Court’s list of senior judges?

If a judge comes to the end of their 15-year term and does not get reappointed, what must the judge do to be listed as serving on recall or subject to recall?

If a judge comes to the end of their 15-year term or if a judge reaches the age 70, what does the judge do to be listed as a senior judge not serving on recall or subject to recall?

Can a senior judge not currently serving on recall of subject to recall switch their designation by making an election with the Court to start serving on recall or start being subject to recall? Has a judge ever done that?

The Court responded by telling me to look at IRC 7447.

Looking at that provision section 7447(a) provides definitions about the court and the term judge that don’t create any controversy.

Section 7447(b)(1) provides that a judge shall retire at age 70. A number of Tax Court judges have retired at this age in the past few years. This provision is not applicable to this situation. Section (b)(2) provides for age and service time periods for retirement. A judge can retire with 11 years of service at the age of 69. This provision does not seem to apply because of former/senior Judge Kroupa’s age at the time of retirement. Section (b)(3) allows a judge to retire at any age upon completion of their 15 year term if the judge advises the President in writing during a specific window of time of their willingness to be reappointed. This provision does not apply since former/senior Judge Kroupa did not complete a 15-year term. Section (b)(4) provides for retirement for any Tax Court judge who becomes permanently disabled. This section may apply though I cannot say with certainty that it does not.

None of the sections regarding retirement seem to apply with the possible exception of disability. In the PT blog posts linked above, there is mention in the workup for her sentencing hearing of significant health issues. Perhaps, those health issues would cause her to qualify for the disability provision in (b)(4).

Section 7447(c) provides for the recalling of Senior Judges stating that individuals who have elected to receive retired pay “may be called upon by the chief judge of the Tax Court to perform such judicial duties with the Tax Court as may be requested….”  I interpret this to mean that a Chief Judge could call upon former/senior Judge Kroupa to perform judicial duties. That is not at all to suggest that a Chief Judge would call upon her for such duties but merely that she appears to be eligible to be called upon.

Section 7447(d) explains the pay a retired judge will receive. If I read it correctly, a retired judge who served 10 years or more receives their full salary and

Such retired pay shall begin to accrue on the day following the day on which his salary as judge ceases to accrue, and shall continue to accrue during the remainder of his life.

Section 7447(e) tells a judge how to elect retirement.

Section 7447(f) describes things that can impact retirement pay. Subsection (f)(1) calls for a forfeiture of one years retirement pay if a recalled judge pursuant to section (c) fails to perform the judicial duties required of them. Subsection (f)(2) calls for a permanent forfeiture if the judge goes into the private practice of law or accounting in the field of taxation. Subsection (f)(3) suspends the retirement pay if the judge enters federal service for pay during the time of that paid federal service. Subsection (f)(4) provides judges with the opportunity to make an election that can allow them to continue to receive a pension when subparagraphs (f)(1) and (2) might otherwise cut it off.

Section 7447(g) coordinates a Tax Court judges retirement as a judge with civil service retirement benefits and generally seems to supplant the civil service benefits with the judicial benefits.

Section 7447(h) describes judges who retire based on permanent disability or who are declared by the President to be retired based on disability.

Section 7447(i) provides a way for a Tax Court judge to revoke their election to receive retired pay.

Section 7447(j) deals with the Thrift Savings Plan.

After going through the statute as suggested by the Court, I confess I am still confused how former/senior Judge Kroupa retired unless she was disabled. Nonetheless, she did retire and is treated as a Senior Judge for purposes of reporting her retirement to Congress in the Court’s budget request. You do not see her listed as a Senior Judge on the Court’s website listing its Senior Judges as the only judges listed there are the ones on recall. The statute suggests to me that she could be recalled although she is one of several judges who seem to be off of the recall list.

Maybe I am none the wiser having wondered why I was seeing former/senior Judge Kroupa listed in the Tax Court’s report to Congress as a Senior Judge and embarking on a review of a statute that means little to me. Without detracting from former/senior Judge Kroupa’s ability to receive a federal pension to which she is entitled, it does seem a little odd to see her name in the court’s list of judges given the crime she committed but that seems just to be a quirk of the way the retirement works and the budget requests are made. I suspect her name will appear for many years to come. Perhaps it serves as an annual reminder to all tax practitioners to properly report their income and not to serve as the example that she became.

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