Tucker v. Comm'r of Internal Revenue

• Court: U.S. Tax Court
• Writing for the Court: GUSTAFSON
• Citation: Tucker v. Comm'r of Internal Revenue, 135 T.C. 114, 135 T.C. No. 6 (T.C. 2010)
• Decision Date: 26 July 2010
• Docket Number: No. 3165–06L.,3165–06L.
• Parties: Larry E. TUCKER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

135 T.C. 114

135 T.C. No. 6

Larry E. TUCKER, Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 3165–06L.

United States Tax Court.

July 26, 2010.

P filed income tax returns for 2000, 2001, and 2002 that reported tax due; but he did not pay the tax. The Internal Revenue Service (IRS) assessed the tax and issued to P a notice of the filing of a tax lien (NFTL). P timely requested a collection due process (CDP) hearing, which is to be “conducted by an officer or employee” of the IRS Office of Appeals, I.R.C. sec. 6320(b)(3), and which is to conclude with a “determination by an appeals officer”, I.R.C. sec. 6330(c)(3). P's CDP hearing was conducted by a settlement officer in the IRS Office of Appeals, and after the CDP hearing a team manager in that office issued to P a notice of determination upholding the NFTL. P filed with the Tax Court a timely appeal pursuant to I.R.C. sec. 6330(d)(1). After initial proceedings, this Court ordered a remand to the Office of Appeals for further consideration. A second CDP hearing was conducted by another settlement officer, and the team manager issued a supplemental notice of determination again upholding the NFTL. The team manager and both settlement officers had been hired by the Commissioner pursuant to I.R.C. sec. 7804(a) and were not appointed by the President or the Secretary of the Treasury. P moved for a second remand so that a CDP hearing could be conducted by, and a notice of determination issued by, an officer appointed by the President or the Secretary of the Treasury, in compliance with the Appointments Clause. See U.S. Const., art. II, sec. 2, cl. 2.

Held: An “officer or employee” or an “appeals officer” under I.R.C. sec. 6320 or 6330 is not an “inferior Officer of the United States” for purposes of the Appointments Clause. P's motion to remand will be denied.

Carlton M. Smith, for petitioner.

Matthew D. Lucey, for respondent.

OPINION

GUSTAFSON, Judge:

+-----------------------------------------------------------------------------+
                ¦CONTENTS                                                                     ¦
                +-----------------------------------------------------------------------------¦
                ¦Background                                                                ¦6 ¦
                +--------------------------------------------------------------------------+--¦
                ¦Discussion                                                                ¦10¦
                +--------------------------------------------------------------------------+--¦
                ¦¦I.  ¦The Appointments Clause                                             ¦10¦
                ++----+--------------------------------------------------------------------+--¦
                ¦¦    ¦A.¦The purposes of the Appointments Clause                          ¦10¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦B.¦The distinctions in the Appointments Clause: “Officers”,         ¦13¦
                ¦¦    ¦  ¦“inferior Officers”, and non-officer employees                   ¦  ¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦  ¦1. ¦”Principal” officers vs. “inferior” officers                 ¦13¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦2. ¦”Officers” vs. non-officer employees                         ¦15¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦C.¦Modes of appointment under the Appointments Clause               ¦19¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦D.¦Appointment of revenue personnel in the late 18th century        ¦21¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦  ¦   ¦1.  ¦The Department of the Treasury                          ¦22¦
                ++----+--+---+----+--------------------------------------------------------+--¦
                ¦¦    ¦  ¦   ¦2.  ¦External revenue collection                             ¦23¦
                ++----+--+---+----+--------------------------------------------------------+--¦
                ¦¦    ¦  ¦   ¦2.  ¦Internal revenue collection                             ¦27¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦E.¦Subsequent appointment of internal revenue personnel             ¦33¦
                ++----+--------------------------------------------------------------------+--¦
                ¦¦II. ¦The Internal Revenue Service Office of Appeals                      ¦36¦
                ++----+--------------------------------------------------------------------+--¦
                ¦¦    ¦A.¦The legal basis for the Office of Appeals                        ¦36¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦B.¦A brief history of the Office of Appeals                         ¦37¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦C.¦”Appeals Officers” in the Office of Appeals                      ¦39¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦  ¦1. ¦The Pre–CDP Role of the “Appeals Officer”                    ¦39¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦2. ¦”Collection Due Process” procedures added to t he Code in    ¦40¦
                ¦¦    ¦  ¦   ¦1998                                                         ¦  ¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦3. ¦Post–CDP hearing procedures                                  ¦45¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦4. ¦The tax administration context of the CDP “officer or        ¦60¦
                ¦¦    ¦  ¦   ¦employee”                                                    ¦  ¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦5. ¦The administrative law context of the CDP “officer or        ¦63¦
                ¦¦    ¦  ¦   ¦employee”                                                    ¦  ¦
                ++----+--------------------------------------------------------------------+--¦
                ¦¦III.¦The status of the CDP “officer or employee” and “appeals officer”   ¦65¦
                ¦¦    ¦under the Appointments Clause                                       ¦  ¦
                ++----+--------------------------------------------------------------------+--¦
                ¦¦    ¦A.¦Whether the position is “established by Law”                     ¦65¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦  ¦1. ¦Creation by statute                                          ¦66¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦2. ¦Creation by regulation                                       ¦72¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦B.¦Whether the CDP function could constitute an “office”            ¦76¦
                ++----+--+-----------------------------------------------------------------+--¦
                ¦¦    ¦  ¦1. ¦Whether the CDP provisions created a “continuing” position   ¦78¦
                ++----+--+---+-------------------------------------------------------------+--¦
                ¦¦    ¦  ¦2. ¦Whether the CDP hearing officer has “significan t authority” ¦79¦
                +--------------------------------------------------------------------------+--¦
                ¦Conclusion                                                                ¦87¦
                +-----------------------------------------------------------------------------+
                

This case is an appeal, pursuant to section 6330(d)(1), ¹ by which petitioner larry e. tucker seeks this court's reVIEW OF A determination by the Office of Appeals of the Internal Revenue Service (IRS) to sustain the filing of a notice of lien in order to collect Mr. Tucker's unpaid income taxes for the years 2000, 2001, and 2002. That determination was made after the Office of Appeals conducted a collection due process (CDP) hearing pursuant to section 6330(c) and a supplemental CDP hearing pursuant to a remand of this Court. The determination was reflected in an initial “Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330” and in a “Supplemental Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330”. We will eventually review the merits of that collection determination.²

Currently before us, however, is Mr. Tucker's motion for remand. That motion presents a question not about Mr. Tucker's tax liabilities nor about the collection decisions of the Office of Appeals in this case but about the constitutional validity of that Office's staffing of CDP proceedings that it conducts pursuant to section 6330(c). The settlement officers who conducted Mr. Tucker's CDP hearings and the team manager who signed and issued the notices of determination were all hired by the Commissioner of Internal Revenue pursuant to section 7804(a) and were not appointed by the President or the Secretary of the Treasury. Mr. Tucker contends, however, that the “appeals officer” in section 6330(c) is an “Officer of the United States” who, according to the Appointments Clause of Article II, Section 2, of the U.S. Constitution, must be appointed either by the President or by one of “the Heads of Departments” (in this case, the Secretary of the Treasury). Because the settlement officers who handled Mr. Tucker's CDP proceeding were not so appointed, Mr. Tucker contends that he has not yet been given the CDP hearing that Congress mandated, and he asks us to remand the matter for a valid hearing before a duly appointed officer.

We will deny Mr. Tucker's motion to remand. We hold that the “officer or employee” in section 6320(b)(3) or 6330(b)(3), also referred to as an “appeals officer” in section 6330(c)(1) and (3), is not an “Officer of the United States” subject to the Appointments Clause, for two reasons: First, there is no office “established by Law” to which the clause applies; and second, the CDP hearing officer does not exercise the “significant authority” that defines an “office” according to the relevant case...