Battat v. Comm'r of Internal Revenue

John O. Colvin, Judge.

ORDER

John O. Colvin, Judge.

On July 18, 2023, petitioners filed a Motion to Declare 26 U.S.C. § 7443(f) Unconstitutional. On September 15, 2023, respondent filed an objection to petitioners' motion. On September 21, 2023, petitioners filed a reply to respondent's objection. We will deny petitioners' motion for reasons discussed below.

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." Petitioners challenge the constitutionality of this removal provision, arguing either that it provides an impermissible interbranch removal power or that it provides an impermissible limit on the President's removal power.

The United States Court of Appeals for the D.C. Circuit has twice held that section 7443(f) is constitutional. Petitioners in Kuretski v. Commissioner first raised the constitutionality of section 7443 in a motion to vacate our decision in that case. We denied that motion because those petitioners could have raised, but did not raise, the issue before we entered decision in that case. Kuretski v. Commissioner, Order, No. 18545- 10 (March 4, 2013). In a thorough opinion, the D.C. Circuit wrote: "To our knowledge, this is the first case in any court of appeals to present the question of whether 26 U.S.C. § 7443(f) infringes the constitutional separation of powers. We answer that question in the negative." Kuretski v. Commissioner, 755 F.3d 929, 932 (D.C. Cir. 2014). The D.C. Circuit revisited this question in Crim v. Commissioner, 66 F.4th 999 (D.C. Cir. 2023). The petitioner in Crim argued that a 2015 amendment to section 7441 changed the constitutional analysis. The 2015 amendment added the following sentence to the end of section 7441, "The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government." Consolidated Appropriations Act, Pub. L. No. 114-113, § 441, 129 Stat. 2242, 3126 (2015). After acknowledging this amendment, the D.C. Circuit held, "Crim has not demonstrated that congressional action has undermined the separation of powers analysis adopted in Kuretski." Id. at 1001.

We have previously held that section 7443(f) is constitutional, albeit relying on a different rationale. See Battat v. Commissioner, 148 T.C. 32 (2017). As in Kuretski and Crim, petitioners in this case challenged the constitutionality of section 7443(f). Relying on Freytag v. Commissioner, 501 U.S. 868 (1991), we observed that this Court exercises a portion of the judicial power of the United States, regardless of its placement among the branches of Government. Battat, 148 T.C. at 32. We went on to hold that the President's removal power was constitutionally permissible. Id. at 55-57.

Petitioners' reliance on Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S.Ct. 2183 (2020), decided after Battat, supra, is misplaced. Seila Law addressed the constitutionality of limits on the President's removal power as it related to the Director of the Consumer Financial Protection Bureau (CFPB). The Supreme Court distinguished its existing precedent, noting that the CFPB wielded "significant executive power." Id. at 2201. It did not disturb its own precedent in Humphrey's Ex'r v. United States, 295 U.S. 602 (1935), which permitted for-cause removal protections for appointees who exercise judicial functions and not any executive power. Seila Law, 140 S.Ct. at 2199. In finding section 7443(f) constitutional, we likewise relied on Humphrey's Executor. Battat, 148 T.C. at 56-57.

Our prior opinion deciding petitioners' constitutional claim in Battat continues to provide the controlling precedent for petitioners' motion. The petition states that petitioners resided in Florida when they filed the petition in these cases. Thus, appeal of these cases would lie with the United States Court of Appeals for the Eleventh Circuit. I.R.C. § 7482(b)(1). Under Golsen v. Commissioner, "where the Court of Appeals to which appeal lies has already passed upon the issue before us, efficient and harmonious judicial administration calls for us to follow the decision of that court." 54 T.C. 742, 757 (1970). The Eleventh Circuit has not passed upon the issue before us. In a situation in which the Court of Appeals to which a case is appealable has not spoken on the issue before us, Golsen also instructs us on how to proceed. Golsen clarified Lawrence v. Commissioner, in which we wrote, "Congress expected the Tax Court to set precedents for the uniform application of the tax laws, insofar as it would be able to do that." Lawrence v. Commissioner, 27 T.C. 713, 718 (1957) citing Hearings Before Ways and Means Committee, Revenue Act of 1926, pp. 10, 869, 878, 911, 926, 932; H. Rept. No. 1, 69th Cong., 1st Sess., pp. 17-19; 67 Cong. Rec. 1136-7, 3749 (1925). We accomplish that uniformity by adhering to our own precedent except when "the Golsen rule" applies. As we wrote in Golsen,

We shall remain able to foster uniformity by giving effect to our own views in cases appealable to courts whose views have not yet been expressed, and, even where the relevant Court of Appeals has already made its views known, by explaining why we agree or disagree with the precedent that we feel constrained to follow.

Golsen, 54 T.C. at 757. In Battat, we held that the presidential removal power of section 7443(f) is constitutional. Because the views of the U.S. Court of Appeals for the Eleventh Circuit have not yet been expressed, we continue to give effect to our own views in Battat. Accordingly, it is

ORDERED that petitioners' Motion to Declare 26 U.S.C. § 7443(f) Unconstitutional is denied.