Appointments Clause Argument?

[LPC]

An unhappy taxpayer has petitioned the Supreme Court claiming that "Appointments Clause" in the Constitution does not allow Appeals Officers to hear collection due process hearings. (Michael Cornwell et al. v. Commissioner, No. 09-704.)

The Appointments Clause in Article II, section 2, clause 2, states that the President shall nominate (and the Senate confirm) "Ambassadors, other public Minsters and Consuls, Judges of the supreme Court, and all other Officers of the United States," but that Congress may "vest the appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments."

In Freytag v. Commissioner, 501 U.S. 868 (1991), the Supreme Court held that Tax Court special trial judges were "inferior Officers" and that the Tax Court was one of the "Courts of Law" that could be authorized to appoint "inferior offices," so the appointment of special trial judges by the chief judge of the Tax Court was constitutional. (Scalia concurred in the result, believing that the Tax Court was a "Department" and not a "Court.")

The petition for certiorari asserts that Appeals Officers who conduct collection due process hearings are "inferior Officers" but that their appointments are unconstitutional because they are appointed by the Commissioner of Internal Revenue, and not the Secretary of the Treasury, and so they are not being appointed by the one of the "Heads of Departments." (Although it's not clear that the word "departments" in the Constitution mean a cabinet-level position. As noted above, Scalia believes that the Tax Court could be a "department" that could have a "head" in the form of a chief judge. But I digress.)

(Another digression: My response to this argument would be that, if the act creating collection due process hearings is unconstitutional, then you're not entitled to any hearing at all, but let's skip over that for now.)

This new argument might sound trivial and arcane, but I think that it might have legs, for the following reasons:

1. Tax deniers love constitutional arguments;

2. Tax deniers love due process arguments;

3. Tax deniers are going to find the Freytag case and are going to love reading that Scalia thinks that the Tax Court is a "department" of the executive branch of the government, and not a "court of law"; and

4. Most tax denial arguments are trivial and arcane, so why should this one be any different?

Although I've found at least one academic who takes this issue seriously. See "Does the Failure to Appoint Collection Due Process Hearing Officers Violate the Constitution's Appointments Clause?" by Carlton M. Smith (Clinical Associate Professor of Law at the Benjamin N. Cardozo School of Law), Journal of Tax Practice and Procedure (October/November 2008), Cardozo Legal Studies Research Paper No. 245.

[Judge Roy Bean]

There indeed may be legs under this one, broken as they might appear to be to some.

Complexity is anathema to those who espouse simple reason but myopic objectives as articulated in tax law override common sense and we all end up with these kinds of conundrums.

A pox on those who help perpetuate this folly.

Then again, careers are at stake; with a simple, straightforward taxation system unemployment would double.

[The Observer]

So delegations of authority from the Secretary to the Commissioner would be a violation of the Appointments Clause?

And is this one of those "magic word" arguments over what the word "Officers" means? By that argument, you could say every levy issued by a Revenue Officer is in violation of the Clause since they are appointed by the Commissioner as well.

I would hazard a guess that "officers" had an entirely different meaning to the framers of the Constitution in terms of authority and responsibility as opposed to the rank and file employees that the IRS hires.

[fortinbras]

In Fr4eytag, one of the important considerations was that it was the Tax Court -- an Article I court, sometimes called a "legislative court", created expressly to serve only one limited purpose and not part of the usual Article III judiciary. Had it been, instead, an Article III court the result might have been different.

[LaVidaRoja]

It is not unknown for 'regular' Appeals Officers to occasionally hear CDP cases. (Settlement Officers are generally promoted from Revenue Officer positions - employees trained in Collection matters. 'Regular' Appeals Officers normally come from Examination -- Revenue Agents and Tax Auditors trained in various lines of income tax determinations.) Would this issue render ALL Appeals personnel unqualified for failure of a proper appointment?

[LPC]

An unhappy taxpayer has petitioned the Supreme Court claiming that "Appointments Clause" in the Constitution does not allow Appeals Officers to hear collection due process hearings. (Michael Cornwell et al. v. Commissioner, No. 09-704.)

The Supreme Court denied cert yesterday (1/25/2010).

According to Tax Analysts, the petition also argued that there is a split among the circuit courts regarding whether the Tax Court's review of collection due process hearings is limited to the administrative record or whether additional evidence may be received. The Supreme Court wasn't interested in that one either.