United States Tax Court

United States Tax Court
Seal of the United States Tax Court.svg
LocationUnited States Tax Court Building
Appeals toUnited States courts of appeals (Geographic circuits)
AuthorityArticle I tribunal
Created byRevenue Act of 1924
Composition methodPresidential nomination
with Senate advice and consent
Judge term length15 years
Chief Judgewww.ustaxcourt.gov

The United States Tax Court (in case citations, T.C.) is a federal trial court of record established by Congress under Article I of the U.S. Constitution, section 8 of which provides (in part) that the Congress has the power to "constitute Tribunals inferior to the supreme Court".[1] The Tax Court specializes in adjudicating disputes over federal income tax, generally prior to the time at which formal tax assessments are made by the Internal Revenue Service.[2] Though taxpayers may choose to litigate tax matters in a variety of legal settings, outside of bankruptcy, the Tax Court is the only forum in which taxpayers may do so without having first paid the disputed tax in full. Parties who contest the imposition of a tax may also bring an action in any United States District Court, or in the United States Court of Federal Claims; however these venues require that the tax be paid first, and that the party then file a lawsuit to recover the contested amount paid (the "full payment rule" of Flora v. United States).[3] Tax Court judges are appointed for a term of 15 years, subject to presidential removal for "inefficiency, neglect of duty, or malfeasance in office...."[4]

The main emblem of the tax court represents a fasces.


President Calvin Coolidge signing the income tax bill which established the U.S. Board of Tax Appeals; Andrew Mellon is the third figure from the right.

The first incarnation of the Tax Court was the "U.S. Board of Tax Appeals", established by Congress in the Revenue Act of 1924[5][6] (also known as the Mellon tax bill) in order to address the increasing complexity of tax-related litigation. Those serving on the Board were simply designated as "members." The members of the Board were empowered to select, on a biennial basis, one of their members as "chairman."[7] The Board originally had 16 members, with Charles D. Hamel serving as the first Chairman.[8] The Board was initially established as an "independent agency in the executive branch of the government."[9] It was housed in the Internal Revenue Service Building in the Federal Triangle.[10] The first session of the Board of Tax Appeals spanned July 16, 1924 to May 31, 1925.[11]

In 1929, the United States Supreme Court indicated that the Board of Tax Appeals was not a "court," but was instead "an executive or administrative board, upon the decision of which the parties are given an opportunity to base a petition for review to the courts after the administrative inquiry of the Board has been had and decided."[12]

In 1942, Congress passed the Revenue Act of 1942, renaming the Board as the "Tax Court of the United States".[13] With this change, the Members became Judges and the Chairman became the Presiding Judge. By 1956, overcrowding and the desire to separate judicial and executive powers led to initial attempts to relocate the court. In 1962, Secretary of the Treasury Douglas Dillon appealed to the U.S. General Services Administration (GSA) to incorporate funds for the design of a new building in its upcoming budget. The GSA allocated $450,000, and commissioned renowned architect Victor A. Lundy, who produced a design that was approved in 1966.[10] However, funding constraints brought on by the Vietnam War delayed the start of construction until 1972.[10]

The Tax Court was again renamed to its current formal designation in the Tax Reform Act of 1969,[14] changing it from an historically administrative court to a full judicial court. The completed United States Tax Court Building was dedicated on November 22, 1974, the fiftieth anniversary of the Revenue Act that created the court.[10]

In 1991, the U.S. Supreme Court in Freytag v. Commissioner stated that the current United States Tax Court is an "Article I legislative court" that "exercises a portion of the judicial power of the United States."[15] The Court explained the Tax Court "exercises judicial power to the exclusion of any other function" and that it "exercises its judicial power in much the same way as the federal district courts exercise theirs...."[16] This "exclusively judicial role distinguishes it from other non-Article III tribunals that perform multiple functions..."[17] Thus, Freytag concluded that the Tax Court exercises "judicial, rather than executive, legislative, or administrative, power."[18] The Tax Court "remains independent of the Executive and Legislative Branches" in the sense that its decisions are not subject to appellate review by Congress, the President, or for that matter, Article III district courts.[17] The President, however, may remove the Tax Court judges, after notice and opportunity for public hearing, for "inefficiency," "neglect of duty," or "malfeasance in office."[4]

Justice Scalia penned a separate concurrence for four justices in Freytag. These justices dissented as to the Court majority's rationale; they would have characterized the Tax Court's power as "executive" rather than "judicial."[19] Scalia said that to him "it seem[ed]... entirely obvious that the Tax Court, like the Internal Revenue Service, the FCC, and the NLRB, exercises executive power."[20] Notwithstanding Scalia's sharp dissents in landmark separation-of-powers cases such as Mistretta v. United States[21] and Morrison v. Olson,[22] Scalia apparently "describe[d] Freytag as the single worst opinion of his incumbency" on the U.S. Supreme Court.[23]

Although the 2008 U.S. government directory of executive and legislative appointed officers ("the Plum Book") categorized the Tax Court as part of the legislative branch,[24] the 2012 revised version removed the Tax Court and listed it under neither the legislative nor the executive branches.[25]

Under an amendment to the Internal Revenue Code of 1986 enacted in late 2015, the U.S. Tax Court "is not an agency of, and shall be independent of, the executive branch of the Government."[26] However, section 7443(f) of the Code still provides that a Tax Court judge may be removed by the President "for inefficiency, neglect of duty, or malfeasance in office".[27]

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