Let's Get Rid Of Tax Court

[The Observer]

In the case of Stanley Battat & Zmira Battat v. Commissioner of Internal Revenue, the petitioners filed a motion to disqualify all Tax Court Judges and to declare unconstitutional I.R.C. sec. 7443(f), which authorizes the President to remove Tax Court Judges "after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause."

I have not provided the text of the Tax Court decision because (1) it was very lengthy, (2) there was no mention in the case of frivolous argumets or the filers being tax protesters, and (3) I could not find any evidence of the petitioners being protesters. However, the premise of the plaintiffs seems to be "out there" in terms of the belief that they can suddenly eliminate a court system that is provided for by the Constitutuion. The Battat's argument is that the power of the President to remove Tax Court judges somehow violates the "separation of powers" principle; this is a silly argument for a number of obvious reasons.

[Cpt Banjo]

The petitioners seemed to overlook the fact that if all of the Tax Court judges were disqualified the deficiency asserted against them by the IRS would remain. So what was the purpose in filing a petition in the Tax Court in the first place, other than to obtain a ruling that not only doesn't help their tax situation but has the adverse consequence of forcing them to pay the deficiency and sue for a refund in a District Court or the Court of Federal Claims?

[Burnaby49]

Same in Canada. Under law once the Canada Revenue Agency reassesses a tax return the reassessment is legally binding unless overturned through a successful appeal to the Tax Court of Canada. Under current legislation only the Tax Court can hear appeals from reassessments. No other court has jurisdiction. So if the Tax Court suddenly disappeared there would be no way to challenge assessments until such time as the federal government enacted new legislation.

[Dr. Caligari]

However, the premise of the plaintiffs seems to be "out there" in terms of the belief that they can suddenly eliminate a court system that is provided for by the Constitutuion.

The Tax Court was not "created by the Constitution", nor was it it even created by Congress under Article III of the Constitution, which authorizes Congress to create courts inferior to the U.S. Supreme Court. The constitutionality of the Tax Court has been upheld by prior cases but, if this were a new question, the constitutional validity of the Tax Court would present a serious, non-frivolous issue.

The Battat's argument is that the power of the President to remove Tax Court judges somehow violates the "separation of powers" principle; this is a silly argument for a number of obvious reasons.

Not silly at all, actually. Under Article III of the Constitution, the President cannot remove federal judges, who serve for life unless impeached. Tax Court judges are removable because the courts have held that the Tax Court is a sort-of court, but not a real Article III court. The argument is probably foreclosed by precedent but again, as a new question, would be far from frivolous.

[fortinbras]

Decisions of the US Tax Court are appealable. The Tax Court is an Article I court created by Congress, and one of the very very few courts (the Court of Veterans Claims is another) where nonlawyers may represent litigants. The decisions of the Tax Court generally articulate the reasoning for the decision, esp if it goes against the taxpayer, which is sometimes enough to discourage that person from attempting an appeal.

[Duke2Earl]

There is another very important aspect of Tax Court. It is the only way to judicially question the IRS assessment without paying up first. If not for Tax Court, the only way to get a judicial adjudication of an IRS assessment would be to pay up first, every cent they claimed, and then sue for a refund.

[Famspear]

There is another very important aspect of Tax Court. It is the only way to judicially question the IRS assessment without paying up first. If not for Tax Court, the only way to get a judicial adjudication of an IRS assessment would be to pay up first, every cent they claimed, and then sue for a refund.

Or, without first paying, file a bankruptcy petition and try to obtain a Court determination under 11 USC section 505(a).

[The Observer]

The Tax Court was not "created by the Constitution"...

I am not sure where you are quoting from, I had said "provided for by the Constitution" which I think is more accurate since court rulings have confirmed that Congress has the power to create an Article 1 court.

Not silly at all, actually.

Except it is silly since, regardless of whether this is a "new" question, the outcome was predictable. In addition, as others have pointed out, elimination of the court would not have been in the petitioners' long term interest.

[fortinbras]

The Constitution (Art. I, sec. 8, cl. 9) gives Congress the power "to constitute tribunals inferior to the Supreme Court;...."
and (Art. III, sec. 1) "... such inferior [to the Supreme Court] courts as the Congress may from time to time ordain and establish."

It is perfectly clear that the US Tax Court is a tribunal inferior to the Supreme Court and thus complies with both provisions.

[notorial dissent]

IIRC the Tax Court(s) started life as an administrative board, U.S. Board of Tax Appeals, created by Congress in 1924, to administratively hear tax claims, as was the case with many Federal agencies, primarily to give an administrative recourse, which is what they still are, and make it less complicated than having to go to court right off the bat, which is what they still do. In 1942 Congress changed them in to Tax Court of the United States. They were and are the administrative remedy provided that needs to be exhausted before actually going to Dist court. At some point, and I remember hearing the reason why, but don't remember it, it was decided to fancy up their names and title and call them courts instead of a board

[Dr. Caligari]

It is perfectly clear that the US Tax Court is a tribunal inferior to the Supreme Court and thus complies with both provisions.

It is certainly clear that the Tax Court is not created under Article III, because its judges do not have the protections Article III gives to all judges of the "inferior courts," including life tenure.

it has been held that the Tax Court is a valid "Article I court," and I am not suggesting that any court today would hold differently. But I am not sure that the Founders actually contemplated Congress creating courts under Article I that weren't also "courts" under Article III.

[jcolvin2]

In 1942 Congress changed them in to Tax Court of the United States. They were and are the administrative remedy provided that needs to be exhausted before actually going to Dist court. At some point, and I remember hearing the reason why, but don't remember it, it was decided to fancy up their names and title and call them courts instead of a board

The Tax Court was never part of the administrative remedies that needed to be exhausted before going to district court. I think even the old BTA cases were appealed to the Circuit Courts if Appeal.

If a case is brought in Tax Court, the court gains jurisdiction over the entire year, and a later refund suit cannot be brought in district court. The converse is not true. A district court only gains jurisdiction over the refund claim. Accordingly, even after a district court rules on a refund claim, it is possible for the government to issue a SNOD and Tax Court litigation to ensue (though claim or issue preclusion would almost certainly apply to matters decided before the district court)

[The Observer]

Moved this thread to a more appropriate forum.

[jcolvin2]

Some analysis of the Battat decision:

http://procedurallytaxing.com/tax-court ... al-part-i/