CONGRESS CREATED the “U.S. Board of Tax Appeals” in the Revenue Act of 1924. The Board consisted of “members” whose job it was to make decisions in tax disputes. The members selected one of their own as “chairman” every two years. The Board was an independent agency within the executive branch of the federal government, the same branch as the Department of the Treasury and the IRS.
Revenue Acts Affecting the Tax Court
The Revenue Act of 1942 renamed the board the “Tax Court of the United States.” Members were now called judges and the chairman became the Presiding Judge, but its nature as an administrative agency’s court did not change.
The Tax Reform Act of 1969 renamed the court once again to “The Tax Court” and changed it from an administrative court to a full judicial court under Article I of the Constitution.
Article I and Article III Courts
Article I tribunals differ from full judicial Article III courts in a number of ways. The article numbers refer to the sections of the Constitution from which they derive their authority. Article I of the Constitution grants Congress its general legislative power, while Article III specifically established the judicial branch of government.
Article III courts are the Supreme Court of the United States and the inferior courts. Congress established these courts under constitutional mandate. They make up the judicial branch of the government we learned about in grade school, which along with the legislative and executive branches make up the governing structure of the United States. Whether there are any actual Article III Court still operating in this country is a matter of some conjecture, but it’s a can of worms we won’t be opening here.
Article III courts have jurisdiction to hear cases involving the Constitution or federal law. They may also hear cases involving disputes between citizens of different states or countries.
Article III of the Constitution has provisions designed to insulate the courts from influence by the other branches of government. For example, judges may not have their salaries reduced during their tenure in office, (though it is, of course, all their salaries are reduced by income taxation, making even Article III judges beholden to the IRS) and, except for dismissal for bad behavior or crimes, their appointment is for life. Such behavior is incredibly rare. Only 8 judges have been removed from the federal bench in the entire history of the country.
Article I tribunals consist of certain federal courts and other forms of adjudicative bodies, including Tax Court. These tribunals are also known as legislative courts. They are courts of limited jurisdiction and generally review agency or administrative decisions.
Article I judges do not enjoy Article III protections. They are not appointed for life, for instance, and their salaries may be reduced.
No Constitutional Protections
Congress created the Tax Court as a part of the executive branch of government, rather than the judicial branch. This seemingly trivial detail is important in that it gives the government a venue wherein constitutional rights do not exist. (See Phillips v. Commissioner, 382 U.S. 589 (1931))
The primary, though by no means only, manifestation of this suspension of constitutional protections is the lack of a right to trial by jury in Tax Court. Nevertheless, district courts have held that Tax Court is a constitutional court. (See Stix Friedman & Co. v. Coyle, 467 F.2d 474 (8th Circuit 1972)) Tax Court is the only forum available to taxpayers without first paying the tax.
Tax Court’s jurisdiction is also strictly limited. An excellent summary of the limits of that jurisdiction can be found in the Internal Revenue Manual at IRM 18.104.22.168. The two types of cases that primarily concern us in this book are re-determination of deficiencies under sections 6211-6216, and lien and levy actions under sections 6320 and 6330.
Decisions of the Tax Court may be appealed for final judgment to the Appeals Court of the district in which the decision was made or in D.C. Circuit. That is because only an Article III court may render final decisions regarding life, liberty, and property.
Your right to appeal and the idea that a blatantly illegal or unjust decision will be overturned in district court is the main leverage you have to get a lawful decision from Tax Court. Making your record for appeal is the secondary purpose of every motion you write, every objection you make, every bit of evidence you present.