Tucker v. Commissioner

LARRY E. TUCKER, PETITIONER v. COMMISSIONER OF

INTERNAL REVENUE, RESPONDENT

Docket No. 3165–06L. Filed 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 ‘‘con-

ducted 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 ‘‘deter-

mination 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 pursu-

ant 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 Sec-

retary of the Treasury. P moved for a second remand so that

a CDP hearing could be conducted by, and a notice of deter-

mination 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.

*The following students assisted Professor Smith: Tanyika Brime, Anya Ferris, Lisa Gordon,

Marisa Harris, Samir Ismayilov, Shay Moyal, Cheryl Scher, Elisa Vega, Scott Weese, and Jer-

emy Zenilman.

Briefs amicus curiae were filed by A. Lavar Taylor as counsel for the Center for the Fair Ad-

ministration of Taxes. The following students assisted Professor Taylor: Joe Bosik, Habbib

Hanna, and Kelly Regan.

114

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(114) TUCKER v. COMMISSIONER 115

CONTENTS

Background ............................................................................................. 117

Discussion ................................................................................................ 119

I. The Appointments Clause ............................................................ 120

A. The purposes of the Appointments Clause ............................. 120

B. The distinctions in the Appointments Clause: ‘‘Officers’’,

‘‘inferior Officers’’, and non-officer employees .................... 122

1. ‘‘Principal’’ officers vs. ‘‘inferior’’ officers ............................. 122

2. ‘‘Officers’’ vs. non-officer employees ..................................... 123

C. Modes of appointment under the Appointments Clause ....... 125

D. Appointment of revenue personnel in the late 18th century 126

1. The Department of the Treasury ......................................... 127

2. External revenue collection .................................................. 127

3. Internal revenue collection ................................................... 129

E. Subsequent appointment of internal revenue personnel ...... 133

II. The Internal Revenue Service Office of Appeals ....................... 134

A. The legal basis for the Office of Appeals ................................ 134

B. A brief history of the Office of Appeals .................................. 135

C. ‘‘Appeals Officers’’ in the Office of Appeals ............................ 136

1. The Pre-CDP Role of the ‘‘Appeals Officer’’ ........................ 136

2. ‘‘Collection Due Process’’ procedures added to the Code

in 1998 ............................................................................... 137

3. Post-CDP hearing procedures .............................................. 140

4. The tax administration context of the CDP ‘‘officer or

employee’’ ........................................................................... 149

5. The administrative law context of the CDP ‘‘officer or

employee’’ ........................................................................... 151

III. The status of the CDP ‘‘officer or employee’’ and ‘‘appeals

officer’’ under the Appointments Clause .............................. 152

A. Whether the position is ‘‘established by Law’’ ....................... 152

1. Creation by statute ............................................................... 152

2. Creation by regulation .......................................................... 156

B. Whether the CDP function could constitute an ‘‘office’’ ........ 159

1. Whether the CDP provisions created a ‘‘continuing’’

position ............................................................................... 160

2. Whether the CDP hearing officer has ‘‘significant

authority’’ ........................................................................... 160

Conclusion ............................................................................................... 165

OPINION

GUSTAFSON, Judge: This case is an appeal, pursuant to sec-

tion 6330(d)(1), 1 by which petitioner Larry E. Tucker seeks

this Court’s review of a determination by the Office of

1 Unless otherwise indicated, all section references are to the Internal Revenue Code (‘‘Code’’,

26 U.S.C.).

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116 135 UNITED STATES TAX COURT REPORTS (114)

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 ‘‘Supple-

mental Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330’’. We will eventu-

ally 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 man-

ager 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 con-

tends, 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. Con-

stitution, must be appointed either by the President or by

one of ‘‘the Heads of Departments’’ (in this case, the Sec-

retary 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

2 In addition to the motion to remand that we address in this Opinion, there are also pending

before us both respondent’s motion for summary judgment asking the Court to sustain the sup-

plemental notice of determination and Mr. Tucker’s cross-motion for summary judgment asking

that we hold that the supplemental notice reflected an abuse of discretion by the Office of Ap-

peals. Those cross-motions address the merits of the CDP determination, and we do not decide

them in this Opinion.

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(114) TUCKER v. COMMISSIONER 117

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 ‘‘signifi-

cant authority’’ that defines an ‘‘office’’ according to the rel-

evant case law.

Background

The facts pertinent to Mr. Tucker’s motion to remand can

be stated very succinctly: He properly requested a CDP

hearing pursuant to section 6320, and the employees of the

Office of Appeals who conducted his CDP hearings and issued

his notices of determination were not appointed by the Presi-

dent or the Secretary of the Treasury.

Those facts can be elaborated in somewhat more detail

without any dispute, on the basis of the pleadings, the par-

ties’ motion papers, and the supporting exhibits attached

thereto.

Tax years 2000, 2001, and 2002

Mr. Tucker failed to timely file tax returns for 2000, 2001,

and 2002. In June 2003 he filed untimely Forms 1040, ‘‘U.S.

Individual Income Tax Return’’, for those years, but he failed

to pay any of the income tax liability shown on those returns.

The IRS assessed the income tax liabilities that Mr. Tucker

had self-reported but not paid. Almost a year later, on May

8, 2004, the IRS sent to Mr. Tucker a ‘‘Final Notice—Notice

of Intent to Levy and Notice of Your Right to a Hearing’’,

pursuant to sections 6330(a)(1) and 6331(d)(1), advising him

of the IRS’s intent to levy upon his property. Mr. Tucker did

not timely request a hearing under section 6330 with respect

to that notice. On July 22, 2004, the IRS sent to Mr. Tucker

a ‘‘Notice of Federal Tax Lien Filing and Your Right to a

Hearing’’, pursuant to section 6320(a)(1), advising him that

the IRS had filed a notice of tax lien against him. Both

notices reflected the income tax liabilities for 2000, 2001, and

2002.

CDP hearing

In response to the lien notice (but not the earlier notice of

levy), Mr. Tucker submitted to the IRS on August 11, 2004,

a Form 12153, ‘‘Request for a Collection Due Process

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118 135 UNITED STATES TAX COURT REPORTS (114)

Hearing’’. The CDP hearing was held as a telephone con-

ference on May 31, 2005, between an IRS settlement officer

and Mr. Tucker and his counsel; and subsequently, numerous

letters were exchanged between the settlement officer and

Mr. Tucker’s counsel.

Mr. Tucker’s OIC

On July 25, 2005, Mr. Tucker’s counsel sent to the settle-

ment officer a Form 656, ‘‘Offer in Compromise’’ (OIC), that

proposed to settle Mr. Tucker’s income tax liabilities for

1999, 2000, 2001, 2002, and 2003 for $36,772 payable in

monthly payments of $317 over 116 months. In a letter dated

November 18, 2005, the settlement officer rejected the OIC.

The notice of determination, and the commencement of this

case

On January 9, 2006, a team manager in the Office of

Appeals issued to Mr. Tucker a ‘‘Notice of Determination

Concerning Collection Action(s) under Section 6320 and/or

6330’’, which determined to uphold the filing of a tax lien as

to Mr. Tucker’s income tax liabilities for 2000, 2001, and

2002. In response, Mr. Tucker timely filed a petition with

this Court.

Previous Tax Court proceedings, remand to the Office of

Appeals, and supplemental notice of determination

After filing his petition, Mr. Tucker filed a motion for sum-

mary judgment on June 9, 2006. Respondent opposed that

motion and filed a motion for remand on July 17, 2006. By

our order of July 27, 2006, we denied Mr. Tucker’s motion for

summary judgment and granted respondent’s motion to

remand the case to the IRS’s Office of Appeals for further

consideration of Mr. Tucker’s July 2005 OIC and for issuance

of a supplemental notice of determination no later than

October 16, 2006.

The Office of Appeals then assigned a settlement officer

(i.e., a different settlement officer from the one who had con-

ducted Mr. Tucker’s initial CDP hearing) to conduct a supple-

mental CDP hearing and to reconsider Mr. Tucker’s July 2005

OIC. The supplemental CDP hearing was held as a telephone

conference on September 11, 2006, between the settlement

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(114) TUCKER v. COMMISSIONER 119

officer and Mr. Tucker’s counsel. On September 12, 2006, the

same team manager who had issued the first notice of deter-

mination issued a ‘‘Supplemental Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or

6330’’, which determined to reject Mr. Tucker’s July 2005 OIC

and to uphold the filing of a tax lien as to Mr. Tucker’s

income tax liabilities for 2000, 2001, and 2002.

The hiring of the settlement officers and team manager

Respondent concedes that, to date, no appeals officer,

settlement officer, or team manager in the Office of Appeals

has been appointed by the President, with or without the

advice and consent of the Senate, or by the Secretary of the

Treasury. Instead, the Office of Appeals personnel who were

involved in Mr. Tucker’s case were all hired by the Commis-

sioner pursuant to section 7804(a).

Mr. Tucker’s motion to remand

In response to the supplemental notice of determination,

on November 21, 2006, Mr. Tucker filed an amendment to

petition with this Court in order to appeal the supplemental

notice of determination. On November 29, 2007, respondent

filed a motion for summary judgment asking the Court to

sustain the supplemental notice of determination. Mr. Tucker

filed a cross-motion for summary judgment on February 27,

2008, and filed a motion for remand on September 2, 2008.

We reserve the issues raised by the parties’ cross-motions for

summary judgment, and we now address Mr. Tucker’s

motion for remand.

Discussion

To consider the applicability of the Appointments Clause to

the ‘‘officer or employee’’ under sections 6320(b)(3) and

6330(b)(3), we first analyze the origin and purposes of the

Appointments Clause, then describe generally the Office of

Appeals and its CDP function, and then apply Appointments

Clause analysis to the role of the CDP ‘‘officer or employee’’.

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120 135 UNITED STATES TAX COURT REPORTS (114)

I. The Appointments Clause

A. The purposes of the Appointments Clause

The framers of the United States Constitution divided the

power of the Federal Government among three branches—

legislative, executive, and judicial—as a safeguard against

tyranny. The former British colonies had experienced (in the

words of the Declaration of Independence) ‘‘a long train of

abuses and usurpations’’ by the British monarch, including

the abuse that ‘‘He has erected a multitude of New Offices,

and sent hither swarms of Officers to harass our people and

eat out their substance.’’ The framers guarded against this

particular instance of tyranny—i.e., the power both to erect

offices and to send out the officers—in the so-called Appoint-

ments Clause in Article II, Section 2, of the Constitution,

which provides for the appointment of ‘‘Officers of the United

States’’:

[The President] shall nominate, and by and with the Advice and Consent

of the Senate, shall appoint Ambassadors, other public Ministers and Con-

suls, Judges of the supreme Court, and all other Officers of the United

States, whose Appointments are not herein otherwise provided for, and

which shall be established by Law: but the Congress may by Law vest the

Appointment of such inferior Officers, as they think proper, in the Presi-

dent alone, in the Courts of Law, or in the Heads of Departments.

The Constitution itself provided explicitly for the appoint-

ment of very few Federal officials, and it left to future polit-

ical process the creation of the great majority of ‘‘Officers of

the United States’’ in the executive and the judiciary. It pro-

vided that their offices would be ‘‘established’’ by the Con-

gress but ‘‘appoint[ed]’’ by persons outside the Congress.

The Appointments Clause has four related but distinct

purposes. First, as we have already noted, the clause is a

safeguard against Congress’s taking to itself the power to

create and fill governmental offices—a reflection of the sepa-

ration-of-powers framework of the U.S. Constitution. See

Freytag v. Commissioner, 501 U.S. 868, 878 (1991); The Fed-

eralist No. 47 (James Madison), No. 77 (Alexander Ham-

ilton).

Second, the Appointments Clause protects the power of the

executive by ‘‘preventing the diffusion of the appointment

power’’, that is, by ‘‘forbid[ding] Congress to grant the

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(114) TUCKER v. COMMISSIONER 121

appointment power to inappropriate members of the Execu-

tive Branch’’. Freytag v. Commissioner, supra at 878, 880; see

also Weiss v. United States, 510 U.S. 163, 188 n.3 (1994)

(Souter, J., concurring) (‘‘if Congress, with the President’s

approval, authorizes a lower level Executive Branch official

to appoint a principal officer, it again has adopted a more dif-

fuse and less accountable mode of appointment than the Con-

stitution requires’’). When Congress establishes an ‘‘inferior

Officer’’ in the Executive Branch, it can vest the appointment

power for that officer no further from the President than the

Head of a Department whom the President himself has

appointed. There is, so to speak, only one degree of separa-

tion between any duly appointed officer and the President,

thus maintaining the locus of executive power in the Presi-

dent himself.

Third, the Appointments Clause has a closely related

democratic purpose: ‘‘by limiting the appointment power’’ to

the President and his own immediate and principal

appointees, 3 the Framers sought to ‘‘ensure that those who

wielded it were accountable to political force and the will of

the people.’’ Freytag v. Commissioner, supra at 884. 4 James

Madison argued in The Federalist No. 39 that, because of the

Appointments Clause, the ‘‘officers of the Union, will * * *

be the choice, though a remote choice, of the people them-

selves’’.

Fourth:

This disposition was also designed to assure a higher quality of appoint-

ments: The Framers anticipated that the President would be less vulner-

able to interest-group pressure and personal favoritism than would a

collective body. ‘‘The sole and undivided responsibility of one man will

naturally beget a livelier sense of duty, and a more exact regard to reputa-

tion.’’

3 The Constitutional Convention did not accept a proposal by James Madison that ‘‘ ‘Superior

Officers below Heads of Departments ought in some cases to have the appointment of the lesser

offices.’ ’’ Freytag v. Commissioner, 501 U.S. 868, 884 (1991) (quoting 2 Records of the Federal

Convention of 1787, at 627–628 (M. Farrand ed. 1966)). Non-officer employees may be hired by

‘‘Superior Officers below Heads of Departments’’ (e.g., by the Commissioner of Internal Rev-

enue), but under the Appointments Clause as promulgated by the Convention and ratified by

the States, ‘‘Officers of the United States’’ may not be so hired.

4 See also Edmond v. United States, 520 U.S. 651, 663 (1997) (the Appointments Clause was

‘‘designed to preserve political accountability relative to important Government assignments’’);

Freytag v. Commissioner, 501 U.S. at 907 (Scalia, J., concurring) (‘‘the heads of departments

* * * possess a reputational stake in the quality of the individuals they appoint; and * * * they

are directly answerable to the President, who is responsible to his constituency for their appoint-

ments and has the motive and means to assure faithful actions by his direct lieutenants’’).

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122 135 UNITED STATES TAX COURT REPORTS (114)

Edmond v. United States, 520 U.S. 651, 659 (1997) (quoting

The Federalist No. 76, at 387 (Alexander Hamilton, M. Beloff

Ed. 1987)).

B. The distinctions in the Appointments Clause: ‘‘Officers’’,

‘‘inferior Officers’’, and non-officer employees

1. ‘‘Principal’’ officers vs. ‘‘inferior’’ officers

The rules of the Appointments Clause apply to ‘‘all other

Officers of the United States’’ (emphasis added), i.e., to offi-

cers other than those whose appointment is provided else-

where in the Constitution. As a result, ‘‘all persons who can

be said to hold an office * * * were intended to be included

within one or the other of these modes of appointment’’.

United States v. Germaine, 99 U.S. 508, 510 (1879) (emphasis

added). As a general rule, then, all ‘‘officers’’ must be nomi-

nated by the President and confirmed by the Senate.

The Appointments Clause makes an explicit distinction of,

and includes an exception for, ‘‘inferior Officers’’. The case

law applying this exception distinguishes these ‘‘inferior offi-

cers’’ from ‘‘principal officers’’. The term ‘‘principal officer’’ is

not in the Appointments Clause but is borrowed from the

immediately preceding clause (i.e., U.S. Const. art. II, sec. 2,

cl. 1), which provides that ‘‘The President * * * may require

the Opinion in writing, of the principal Officer in each of the

executive Departments, upon any Subject relating to the

Duties of their respective Offices’’. The Constitution thus con-

ceives of ‘‘principal officers’’, who must in every case be nomi-

nated by the President and confirmed by the Senate, and

‘‘inferior Officers’’, for whom an exception is allowed. In the

case of these inferior officers, ‘‘Congress may by Law vest’’

their appointment, ‘‘as they [in Congress] think proper, in

the President alone, in the Courts of Law, or in the Heads

of Departments.’’ Id. cl. 2 (emphasis added).

‘‘The line between ‘inferior’ and ‘principal’ officers is one

that is far from clear, and the Framers provided little guid-

ance into where it should be drawn.’’ Morrison v. Olson, 487

U.S. 654, 671 (1988). But in this case Mr. Tucker contends

only that appeals officers are inferior officers, not that they

are principal officers, so that the principal-inferior distinction

is not at issue.

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(114) TUCKER v. COMMISSIONER 123

2. ‘‘Officers’’ vs. non-officer employees

A distinction implicit in the Appointments Clause is

between ‘‘Officers’’, to whom the clause applies, and those

employees who are not officers, to whom it does not apply.

‘‘The line between ‘mere’ employees and inferior officers is

anything but bright’’, Landry v. FDIC, 204 F.3d 1125, 1132

(D.C. Cir. 2000), 5 but it is the line that must be drawn in

this case. The Supreme Court has broadly defined the term

‘‘Officer of the United States’’ as ‘‘any appointee exercising

significant authority pursuant to the laws of the United

States’’, Buckley v. Valeo, 424 U.S. 1, 126 (1976), and ‘‘all

appointed officials exercising responsibility under the public

laws of the Nation’’, id. at 131. The Court has explained,

however, that the term ‘‘does not include all employees of the

United States * * *. Employees are lesser functionaries

subordinate to officers of the United States’’. Id. at 126

n.162. 6

Mr. Tucker does not dispute the existence of this sub-

officer category of ‘‘lesser functionaries’’; he does not argue

that all Federal employees are officers who must be

appointed. However, lest it be thought that the lack of

explicit warrant in the Constitution suggests that non-officer

employees cannot properly exist in the Executive Branch, or

that they cannot be numerous, it should be noted that the

5 See Jerry L. Mashaw, ‘‘Recovering American Administrative Law: Federalist Foundations,

1787–1801’’, 115 Yale L. J. 1256, 1268 (2006) (‘‘these Federalist-era state builders were not oper-

ating with a twenty-first-century kit of administrative understandings either. The idea of ‘office,’

for example, was highly ambiguous—an unsettled blend of public and private stations. This am-

biguity made the legal structure of office-holding problematic along multiple dimensions, from

the way ‘officers’ should be remunerated, to whether and how they were subject to hierarchical

direction and control by administrative superiors, to the means and extent to which they should

be legally responsible in court’’); id. at 1319.

6 Officers of the United States are also ‘‘employees’’ for some purposes—e.g., employment

taxes. See sec. 3401(c). However, the case law interpreting the Appointments Clause uses the

term ‘‘employee’’ to refer to non-officers, and we follow that usage here. The case law also uses

the term ‘‘lesser functionary’’ from Buckley v. Valeo, 424 U.S. 1, 126 n.162 (1976). Whatever its

apparent connotation, that phrase simply starts with the word ‘‘functionary’’—which com-

prehends principal officers and inferior officers, see Ex parte Siebold, 100 U.S. 371, 397–398

(1880) (‘‘as the Constitution stands, the selection of the appointing power, as between the func-

tionaries named, is a matter resting in the discretion of Congress’’)—and observes that employ-

ees subordinate to those functionaries are ‘‘lesser functionaries’’. The Buckley court distin-

guished ‘‘Officers of the United States’’, who are subject to the Appointments Clause, from non-

officer employees who fill ‘‘ ‘offices’ in the generic sense’’, 424 U.S. at 138. That is, not every

employee with the word ‘‘officer’’ in his job title is subject to the Appointments Clause, see Steele

v. United States, 267 U.S. 505, 507 (1925) (‘‘the expression ‘civil officer of the United States duly

authorized to enforce, or assist in enforcing, any law thereof,’ as used in the Espionage Act, does

not mean an officer in the constitutional sense’’), and Mr. Tucker does not contend that ‘‘appeals

officers’’ are subject to the Appointments Clause simply because of their job title.

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124 135 UNITED STATES TAX COURT REPORTS (114)

same question could arise with respect to the other two

branches of Government. The Constitution has no explicit

provision whatever that authorizes Senators, Representa-

tives, or congressional committees to hire employees of any

sort, whether officers, inferior officers, or lesser functionaries,

but it would be absurd to interpret the constitutional silence

on this matter as a bar to the legislature’s hiring personnel

necessary for its constitutionally mandated functions. 7 For

many years congressional employees were few in number—

but there were always at least a few: By 1792 the list of per-

sonnel for the House included the clerk of the House of Rep-

resentatives, a principal clerk, two engrossing clerks, a chap-

lain, a sergeant-at-arms, a door-keeper, and an assistant

door-keeper, and the list for the Senate included the sec-

retary of the Senate, two clerks, a door-keeper, and an assist-

ant door-keeper 8—a total of thirteen, none of whom were

explicitly authorized in the Constitution. Currently, the total

employment of the Senate and House numbers in the thou-

sands. 9

For the judicial branch the Constitution does include an

explicit provision for subordinate personnel, in that the

Appointments Clause itself provides that ‘‘Congress may by

Law vest the Appointment of such inferior Officers, as they

think proper, in * * * the Courts of Law’’. That is, it is

explicit that ‘‘the Courts of Law’’ may appoint ‘‘inferior Offi-

cers’’. The Judiciary Act of 1789, enacted by the first Con-

gress, provided for clerks of court and marshals, 10 and the

7 As one mundane example, Article I, Section 5, Clause 3 of the Constitution requires each

House to keep and publish ‘‘a Journal of its Proceedings,’’ a function hard to imagine Congress

accomplishing without staff.

8 See ‘‘List of Civil Officers of the United States, Except Judges, With Their Emoluments, For

the Year Ending October 1, 1792’’, at 59 (Feb. 27, 1793), printed in I Documents, Legislative

and Executive, of the Congress of the United States, at 57–58 (Gales & Seaton, 1834) (herein-

after, ‘‘1792 Roll’’). Treasury Secretary Alexander Hamilton submitted the 1792 Roll to the Sen-

ate with the statement that it constituted ‘‘statements of the salaries, fees, and emoluments

* * * of the persons holding civil offices or employments under the United States’’. Id. at 57.

A decade later, in 1802, the combined staff consisted of 14 persons. See ‘‘Roll of the Officers,

Civil, Military, and Naval, of the United States’’, at 302 (Feb. 17, 1802), printed in I Documents,

Legislative and Executive, of the Congress of the United States, at 260–319 (Gales & Seaton,

1834) (hereinafter, ‘‘1802 Roll’’). Treasury Secretary Albert Gallatin transmitted the list to the

President with the statement that it was ‘‘the list of the several officers of Government * * *

as compiled in this or received from the other Departments.’’ President Thomas Jefferson trans-

mitted it to Congress and called it ‘‘a roll of the persons having office or employment under the

United States.’’

9 See U.S. Office of Personnel Management, Federal Employment Statistics, http://

www.opm.gov/feddata/html/2009/March/table2.asp.

10 Act of Sept. 24, 1789, ch. 20, secs. 7, 27, 1 Stat. 76, 97.

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(114) TUCKER v. COMMISSIONER 125

1792 Roll, at 59–60, does show such personnel on the list.

However, the courts had to maintain courthouses, keep

records, and collect fees, 11 functions for which additional

employees beyond ‘‘inferior Officers’’ would seem to be inevi-

table, if not initially then at least eventually. Currently the

Judicial Branch employs thousands of non-officers. 12

In any event, the courts have acknowledged the practical

necessity for and the propriety of non-officer employees in all

three branches, including the executive. Therefore, in this

case we do not decide whether such employees are constitu-

tionally possible (they are), but whether CDP ‘‘officer[s] or

employee[s]’’ are properly among their number.

C. Modes of appointment under the Appointments Clause

The Appointments Clause provides three modes of appoint-

ment for executive officers—i.e., by Presidential nomination

and Senate confirmation, by the President alone, or by the

Head of a Department. 13 However, as we noted above in part

I.B.1, while the Appointments Clause does allow an exception

for inferior officers to be appointed by the President alone or

by the Secretary, the terms of that exception are that ‘‘Con-

gress may by Law vest the Appointment’’ (emphasis added)

in the President alone or the Head of a Department. Where

Congress has not made any such exception ‘‘by Law’’, then

11 Id.

secs. 3, 5, 1 Stat. 73, 75; Act of Sept. 29, 1789, ch. 21, sec. 2, 1. Stat. 93.

12 See U.S. Office of Personnel Management, Federal Employment Statistics, http://

www.opm.gov/feddata/html/2009/March/table2.asp.

13 For purposes of the Appointments Clause, a department is a ‘‘ ‘freestanding, self-contained

entity in the Executive Branch’ ’’. Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561

U.S. ll, ll, 130 S. Ct. 3138, 3162 (2010) (quoting Freytag v. Commissioner, 501 U.S. 868,

915 (1991) (Scalia, J., concurring in part and concurring in judgment)). The parties agree that

the ‘‘Department’’ at issue is the Department of the Treasury (created not in Title 26 of the

United States Code but in Title 31 (‘‘Money and Finance’’), chapter 3), whose head is its Sec-

retary. Respondent does not contend that the IRS itself is a Department nor that the Commis-

sioner is a ‘‘Head’’ who can make appointments under the exception in the Appointments

Clause. The IRS operates not under the direct supervision of the President but ‘‘under the su-

pervision of the Secretary of the Treasury.’’ Sec. 7801(a); see Freytag v. Commissioner, supra

at 886 (‘‘the term ‘Department’ refers only to ‘‘ ‘a part or division of the executive government,

as the Department * * * of the Treasury,’ ’’ expressly ‘creat[ed]’ and ‘giv[en] . . . the name of

a department’ by Congress. Germaine, 99 U.S. at 510–511. * * * Accordingly, the term ‘Heads

of Departments’ does not embrace ‘inferior commissioners and bureau officers.’ Germaine, 99

U.S. at 511’’); Donaldson v. United States, 400 U.S. 517, 534 (1971) (‘‘the Internal Revenue Serv-

ice is organized to carry out the broad responsibilities of the Secretary of the Treasury under

§ 7801(a) of the 1954 Code for the administration and enforcement of the internal revenue

laws’’); LaSalle Rolling Mills, Inc. v. U.S. Dept. of Treasury, 832 F.2d 390, 392 (7th Cir. 1987)

(‘‘the IRS * * * is an agency of the Treasury Department’’).

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126 135 UNITED STATES TAX COURT REPORTS (114)

the default rule applies. 14 Section 7804(a) authorizes the

Commissioner to appoint IRS personnel ‘‘[u]nless otherwise

prescribed by the Secretary’’. We assume that, by that statu-

tory phrase, Congress has, for purposes of the Appointments

Clause, ‘‘vest[ed]’’ in the Secretary the power to appoint IRS

personnel if he chooses to so ‘‘prescribe’’. Therefore, if a given

IRS position (such as a CDP hearing officer) were found to con-

stitute an ‘‘inferior Office[ ]’’ requiring constitutional appoint-

ment, then the Secretary could presumably prescribe that

the Secretary would appoint personnel to fill that office, and

the requirements of the Appointments Clause would be ful-

filled. However, respondent does not contend that the Sec-

retary has made any such prescription or has appointed any

personnel in the Office of Appeals. Consequently, their hiring

does not conform to the Appointments Clause.

D. Appointment of revenue personnel in the late 18th

century

To apply the Appointments Clause to internal revenue per-

sonnel who are affected by the 1998 CDP provisions, we take

instruction from the manner in which internal revenue per-

sonnel were appointed and hired in the years immediately

after the Constitution was ratified. Of course, the earliest

Congresses and executive administrations were not infallible

in their adherence to the Constitution, and their example

cannot be followed uncritically; but we do properly note ‘‘the

early practice of Congress’’, Free Enter. Fund v. Pub. Co.

Accounting Oversight Bd., 561 U.S. ll, ll, 130 S. Ct.

3138, 3162 (2010), particularly where it concerns revenue

personnel, who were by no means an outlying example of

early Federal employment. On the contrary, in that era rev-

enue collection was a significant and conspicuous Federal

effort—both quantitatively and qualitatively. 15 Nonetheless,

14 See Edmond v. United States, 520 U.S. at 660 (‘‘The prescribed manner of appointment for

principal officers is also the default manner of appointment for inferior officers’’); see also Weiss

v. United States, 510 U.S. 163, 187 (1994) (Souter, J., concurring) (‘‘any decision to dispense with

Presidential appointment and Senate confirmation is Congress’s to make’’).

15 In the early years of the Republic, external and internal revenue employees were more than

half the Federal civilian workforce. See Leonard D. White, The Federalists: A Study in Adminis-

trative History 123 (1948). Revenue statutes make up, by pages, roughly 40 percent of the first

volume of Statutes at Large. ‘‘The revenue statutes were the most complexly articulated admin-

istrative system devised by the early Congresses’’. Mashaw, supra at 1278.

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(114) TUCKER v. COMMISSIONER 127

very few internal revenue personnel were appointed under

the Appointments Clause.

1. The Department of the Treasury

The Act that established the Department of the Treasury

on September 2, 1789, created only six offices—the Secretary,

an Assistant to the Secretary, a Comptroller, an Auditor, a

Treasurer, and a Register. 16 Nine days later Congress

authorized the Secretary to ‘‘appoint such clerks * * * as

* * * [he] shall find necessary’’. 17 The organizing Act

charged the Secretary ‘‘to superintend the collection of the

revenue’’, 18 a function that would obviously require a

numerous staff. However, in 1792 the entire staff of the

Treasury Department—from Secretary down to ‘‘messenger

and office-keeper’’—consisted of 110 persons.

The personnel actually employed in the collection of rev-

enue were much more numerous and fell into two categories,

external and internal. The manner of appointment used in

these two categories was notably distinct.

2. External revenue collection

Before establishing the Treasury Department, Congress

had already provided five weeks earlier, in July 1789, for

some of the personnel necessary for collection of ‘‘external

revenue’’, i.e., duties on imports. 19 Congress had provided

that for each port ‘‘a naval officer, collector [20] and surveyor

16 Act of Sept. 2, 1789, ch. 12, 1 Stat. 65 (1789). Except for the Assistant to the Secretary,

who was to ‘‘be appointed by the said Secretary’’, the statute is not explicit as to who appoints

these officers, so the default rule of the Appointments clause applied. The position of Assistant

to the Secretary was later replaced by the Commissioner of the Revenue, who was made respon-

sible for ‘‘collection of the other revenues of the United States’’ (i.e., other than ‘‘duties on impost

and tonnage’’). See Act of May 8, 1792, ch. 37, sec. 6, 1 Stat. 280.

17 See Act of Sept. 11, 1789 (‘‘An Act for establishing the Salaries of the Executive Officers

of the Government, with their Assistants and Clerks’’), ch. 13, sec. 2, 1 Stat. 68; Act of May

8, 1792, ch. 37, sec. 11, 1 Stat. 281 (‘‘the Secretary of the Treasury be authorized to have two

principal clerks’’). Consistent with this statutory authorization, the 1792 Roll, at 57–58, lists the

officials whose offices were named in the organizing statute, and also lists several ‘‘messengers’’

and ‘‘office-keepers’’.

18 Act of Sept. 2, 1789, ch. 12, sec. 2, 1 Stat. 65; see also Act of June 5, 1794, ch. 48, sec.

4, 1 Stat. 376, 378 (‘‘the duties aforesaid shall be received, collected, accounted for, and paid

under and subject to the superintendence, control and direction of the department of the treas-

ury, according to the authorities and duties of the respective offices thereof ’’); Act of May 8,

1792, ch. 37, sec. 6, 1 Stat. 280 (‘‘the Secretary of the Treasury shall direct the superintendence

of the collection of the duties on impost and tonnage as he shall judge best’’).

19 Act of July 31, 1789, ch. 5, secs. 5, 6, 8, 1 Stat. 36–37.

20 These Presidentially appointed external revenue ‘‘collectors’’ were different from the internal

Continued

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128 135 UNITED STATES TAX COURT REPORTS (114)

shall be appointed’’, presumably by the President. 21 It was

the duty of the collector ‘‘to employ proper persons as

weighers, gaugers, measurers and inspectors * * *, together

with such persons as shall be necessary to serve in the boats

* * * with the approbation of the principal officer of the

treasury department’’. 22

The next year, 1790, Congress provided that, for the collec-

tion of import duties, ‘‘there shall be established and

appointed, districts, ports and officers’’, with one or more dis-

tricts in every State. 23 The Presidentially appointed posts of

‘‘collector, naval officer and surveyor’’ were retained in this

regime, and once again they were to employ ‘‘weighers,

gaugers, measurers and inspectors’’, id. sec. 6, 1 Stat. 154,

presumably with the approval of the Secretary as the pre-

vious year’s statute had required. 24

In 1799 Congress authorized the President to build as

many as ten ships called ‘‘revenue cutters’’, each to be

manned by ‘‘one captain or master, and not more than three

lieutenants or mates, first, second, and third, and not more

revenue ‘‘collectors’’ authorized in 1798 and appointed by ‘‘supervisors’’, as discussed infra p.

131.

21 Act of July 31, 1789, ch. 5, sec. 1, 1 Stat. 29. The statute does not state by whom the ‘‘naval

officer, collector and surveyor’’ would be appointed. However, the preamble to the 1802 Treasury

Roll, at 261, describes ‘‘[t]he officers employed in the collection of the external revenue’’ as fall-

ing into three groups, one of which consisted of ‘‘collectors, naval officers, [and] surveyors’’ who

are said to have been ‘‘appointed by the President’’. The statute also allowed for ‘‘other person[s]

specially appointed by either’’ the naval officer, collector, or surveyor to search, seize, and secure

concealed goods. Act of July 31, 1789, ch. 5, sec. 24, 1 Stat. 43 (emphasis added). However, we

infer that those ‘‘special’’ appointments were occasional and temporary; and if so then they did

not constitute ‘‘offices’’. See infra part III.B.1.

22 That position of ‘‘principal officer’’ was established a month later as Secretary of the Treas-

ury. See also, to the same effect, Act of Mar. 2, 1799, ch. 22, sec. 21, 1 Stat. 642. Consistent

with the 1789 statute, the preamble to the 1802 Treasury Roll states that ‘‘port inspectors,

weighers, and gaugers’’ are ‘‘appointed by the collectors, with the approbation of the Secretary

of the Treasury’’. We assume that, by virtue of this required ‘‘approbation’’ of the Secretary,

these appointments satisfied the Appointments Clause as among those appointments that Con-

gress ‘‘vest[ed] * * * in the Heads of Departments’’. See 4 Op. Atty. Gen. 162 (1843) (‘‘approba-

tion’’ of the Secretary required for ‘‘inspectors of the customs’’ in Act of Mar. 3, 1815, ch. 94,

sec. 3, 3 Stat. 232, constituted appointment by the Secretary for purposes of the Appointments

Clause).

23 Act of Aug. 4, 1790, ch. 35, sec. 1, 1 Stat. 145.

24 The collector, naval officer, and surveyor were also authorized to name a ‘‘deputy’’ who

would serve ‘‘in cases of occasional and necessary absence, or of sickness, and not otherwise’’,

id. sec. 7, 1 Stat. 155, and would serve in the case of their disability or death ‘‘until successors

shall be duly appointed’’, id. sec. 8. See also, to the same effect, Act of June 5, 1794, ch. 49,

secs. 1, 12, 1 Stat. 378, 380; Act of Mar. 2, 1799, ch. 22, sec. 22, 1 Stat. 644. Because the depu-

ties’ positions were only temporary, we assume that they were not ‘‘offices’’ within the meaning

of the Appointments Clause, see infra part II.B.1, and that the clause is therefore not implicated

even where those non-appointed deputies were (temporarily) given substantial authority and

discretion.

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(114) TUCKER v. COMMISSIONER 129

than seventy men, including non-commissioned officers, gun-

ners and mariners.’’ 25 (Emphasis added.) The statute pro-

vided that the President appointed the ‘‘officers’’ of the rev-

enue cutters, such as the captains or masters, but did not

appoint the numerous others, such as the non-commissioned

officers. 26 The same statute authorized the local collectors to

‘‘provide and employ such small open row and sail boats, in

each district, together with the number of persons to serve

in them, as shall be necessary for the use of the surveyors

and inspectors in going on board of ships or vessels and

otherwise, for the better detection of frauds’’, but to do so

‘‘with the approbation of the Secretary’’, which we take to

constitute an appointment by the Secretary. 27 Cf. supra note

24.

Thus, almost all of the persons employed for external rev-

enue collection under the early statutes either were

appointed by the President or the Secretary, or else were

temporary (i.e., the deputies, occasional inspectors, and per-

sons ‘‘specially appointed’’). The only permanent non-

appointed positions referenced in the statutes were the ‘‘non-

commissioned officers, gunners and mariners’’ for revenue

cutters. 28

Thus the Department of the Treasury and its external rev-

enue staff were virtually all ‘‘appointed’’. However, the

internal revenue personnel (the predecessors of today’s IRS)

were treated differently, as we now show.

3. Internal revenue collection

In 1792 Congress established the office of the Commis-

sioner of the Revenue, who was responsible for collection of

internal revenue. See supra note 16. In the previous year

Congress had already provided that the United States was

divided into fourteen districts for the purpose of collecting

Federal revenue, both internal and external, and it had

25 Act

of March 2, 1799, ch. 22, secs. 97 and 98, 1 Stat. 699.

26 Id.

sec. 99, 1 Stat 700. The preamble to the 1802 Roll, at 261, describes ‘‘[t]he officers em-

ployed in the collection of the external revenue’’ as falling into three groups, one of which con-

sisted of, inter alia, ‘‘masters and mates of revenue cutters’’ who are said to have been ‘‘ap-

pointed by the President’’.

27 Id. sec. 101, 1 Stat. 700. The statute also authorized the collectors to hire temporary and

occasional inspectors. Id. secs. 14, 19, 38, 53, 1 Stat. 636, 640, 658, 667.

28 Id. secs. 97 and 98. The 1802 Roll does not list ‘‘non-commissioned officers, gunners and

mariners’’ but does refer, at 261, to ‘‘bargemen employed by collectors’’. We infer that the 1802

Roll’s ‘‘bargemen’’ are these employees named in the statute.

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130 135 UNITED STATES TAX COURT REPORTS (114)

authorized for each district ‘‘a supervisor’’ and ‘‘inspectors’’

who were to be appointed by the President with the advice

and consent of the Senate. 29 However, that 1791 Act had

also provided ‘‘[t]hat the supervisor of each district shall

appoint proper officers to have the charge and survey of the

distilleries within’’ the district, 30 with no requirement that

the Secretary’s approval be obtained.

A 1794 internal revenue statute that imposed duties on

carriages provided for duties to ‘‘be levied, collected, received

and accounted for, by and under the immediate direction of

the supervisors and inspectors of the revenue, and other offi-

cers of inspection’’. 31 A similar act in 1796, also imposing

duties on carriages, referred to ‘‘officers or persons employed

under’’ the supervisors and inspectors. 32 In 1798 the super-

visors were authorized to hire clerks. 33 These ‘‘proper offi-

cers’’ (authorized in 1791), ‘‘other officers of inspection’’

(authorized in 1794), ‘‘officers or persons employed under’’

them (referred to in 1796), and clerks (authorized in 1798)

were thus not appointed by the President nor by the Head

of a Department.

In July 1798 Congress imposed a direct tax of $2 million,

apportioned among the States, to be assessed on ‘‘dwelling

houses, lands and slaves’’. 34 In the same month Congress

provided for the appointment of additional internal revenue

personnel to perform the necessary enumerations and valu-

ations. Act of July 9, 1798 (‘‘An Act to provide for the valu-

ation of Lands and Dwelling-Houses, and the enumeration of

Slaves within the United States’’), ch. 70, sec. 1, 1 Stat. 580.

For revenue purposes Congress subdivided the States into

various ‘‘divisions’’, id., and provided that the President

would appoint a ‘‘commissioner’’ for each division, id. sec. 3,

29 Act

of Mar. 3, 1791, ch. 15, sec. 4, 1 Stat. 199.

30 Id.

sec. 18, 1 Stat. 203 (emphasis added); see also Act of June 5, 1794, ch. 48, sec. 3, 1 Stat.

377 (referring to ‘‘the several officers of inspection acting under’’ the supervisors).

31 Act of June 5, 1794, ch. 45, sec. 2, 1 Stat. 374.

32 Act of May 28, 1796, ch. 37, sec. 11, 1 Stat. 481.

33 Act of July 11, 1798, ch. 71, sec. 2, 1 Stat. 592; see also Act of Apr. 6, 1802, ch. 19, sec.

5, 2 Stat. 150. In 1805 the Secretary was authorized to employ clerks to serve under the direc-

tion of the supervisor of the district of South Carolina. See Act of Jan. 30, 1805, ch. 11, sec.

1, 2 Stat. 311.

34 Act of July 14, 1798 (‘‘An act to lay and collect a direct tax within the United States’’), ch.

75, secs. 1 and 2, 1 Stat. 597, 598. Section 8 of Article I of the Constitution permits Congress

‘‘To lay and collect Taxes’’; but before the ratification of the 16th Amendment, ‘‘No capitation,

or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein be-

fore directed to be taken.’’

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(114) TUCKER v. COMMISSIONER 131

1 Stat. 584. (Each of the commissioners was authorized to

appoint a clerk, id. sec. 5; and as is noted below, each

commissioner was authorized in 1800 to appoint his own

‘‘assistant’’.) The commissioners within the several States

were authorized collectively to ‘‘divide their respective states

into a suitable and convenient number of assessment dis-

tricts, within each of which they shall appoint one respect-

able freeholder to be principal assessor, and such number of

respectable freeholders to be assistant assessors, as they shall

judge necessary for carrying this act into effect’’. Id. sec. 7

(emphasis added). These assessors and assistant assessors

(appointed not by the President or the Secretary but by the

Presidentially appointed commissioners) were ‘‘to value and

enumerate the said dwelling-houses, lands and slaves’’, id.

sec. 8, 1 Stat. 585, in order to establish the tax base against

which the tax would be collected. One commentator observed:

The tax on land, dwellings, and slaves (1798) * * * involved a wide area

of official discretion. It required a valuation of property * * * for which

Congress formulated some general rules that left the assessment largely

to the judgment of local assessors—but subject to an administrative

review.

Leonard White, The Federalists: A Study in Administrative

History, 452 (1948).

For the collection itself, the 1798 Act provided that the

supervisors (Presidentially appointed) were ‘‘authorized and

required to appoint such and so many suitable persons in

each assessment district within their respective districts, as

may be necessary for collecting the said tax’’. Act of July 14,

1798, ch. 75, sec. 4, 1 Stat. 599. If a property owner did not

pay the tax upon demand, then the ‘‘collector’’ (again,

appointed not by the President or the Secretary but by the

Presidentially appointed supervisors) 35 could ‘‘proceed to col-

lect the said taxes, by distress and sale of the goods, chattels

or effects of the persons delinquent’’. Id. sec. 9, 1 Stat. 600.

Another statute from 1798 allowed a property owner who

disputed a valuation to appeal the matter to the principal

assessor. Act of July 9, 1798, ch. 70, secs. 19 and 20, 1 Stat.

588. (No provision is made for a further appeal to the Presi-

dentially appointed commissioner, but the commissioner did

35 The 1802 Roll, at 261, confirms that the ‘‘collectors and auxiliary officers [were] appointed

by the supervisors’’.

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132 135 UNITED STATES TAX COURT REPORTS (114)

have the power ‘‘to revise, adjust and vary the valuations

* * * as shall appear to be just and equitable’’. Id. sec. 22,

1 Stat. 589. 36) The right of appeal from an assessor’s valu-

ation did have an exception: Where a property owner had

submitted a property list that a court found to be ‘‘false and

fraudulent’’, the assessor was authorized to make a valuation

and enumeration ‘‘from which there shall be no appeal’’.

This 1798 Act provided for an additional official appointed

neither by the President nor by the Secretary: The super-

visors and inspectors (i.e., created in the 1791 and 1794 Acts)

were authorized ‘‘to depute one skilful and fit person, in each

assessment district, to be surveyor of the revenue’’. Id. sec. 24

(emphasis added). 37 A ‘‘surveyor of the revenue’’ was a posi-

tion different from the ‘‘surveyors’’ appointed by the Presi-

dent pursuant to the original 1789 Act. The principal duties

of the surveyor of the revenue were: (1) to preserve ‘‘the

records of the lists, valuations and enumerations’’ made

pursuant to the Act; (2) to make appropriate charges and

credits when property was sold; (3) to apportion value when

property was divided; (4) to value and assess newly built

houses; and (5) subject to the approval of the (Presidentially

appointed) inspector of the survey, to reduce valuations when

property was damaged or destroyed. Id. sec. 25. (In 1800 the

surveyor of the revenue was also empowered, when property

had been omitted from the lists, to ‘‘make a list and valu-

ation thereof ’’. 38)

In 1800 the Presidentially appointed commissioners were

permitted to hire ‘‘such assistants as they shall find nec-

essary, and appoint for that purpose’’, i.e., for the purpose of

completing additions to or reductions of assessments that the

commissioner has directed. 39

In sum, the early internal revenue statutes authorized the

employment not only of Presidentially appointed supervisors

and inspectors but also of the following personnel who were

not appointed by the President or the Secretary (and whose

positions were not temporary, like the deputies’):

36 See,

to the same effect, Act of Jan. 2, 1800, ch. 3, sec. 1, 2 Stat. 4.

37 See

also Act of Jan. 30, 1805, ch. 11, sec. 2, 2 Stat. 312.

38 Act of May 13, 1800, ch. 60, sec. 1, 2 Stat. 80.

39 Act of Jan. 2, 1800, ch. 3, sec. 2, 2 Stat. 4 (emphasis added). See also, to the same effect,

Act of May 10, 1800, ch. 53, sec. 2, 2 Stat. 72.

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(114) TUCKER v. COMMISSIONER 133

• ‘‘proper officers to have the charge and survey of the

distilleries’’, Act of Mar. 3, 1791, ch. 15, sec. 18;

• ‘‘officers or persons employed under’’ the supervisors

and inspectors, Act of May 28, 1796, ch. 37, sec. 11;

• ‘‘clerks’’ hired by the supervisors and commissioners,

Act of July 11, 1798, ch. 71, sec. 2; Act of Apr. 16, 1802, ch.

19, sec. 5;

• ‘‘principal assessors’’ and ‘‘assistant assessors’’, Act of

July 9, 1798, ch. 70, sec. 7;

• ‘‘collectors’’, Act of July 14, 1798, ch. 75, secs. 4, 9;

• ‘‘surveyors of the revenue’’, Act of July 9, 1798, ch. 70,

sec. 24; and

• ‘‘assistants’’ to the commissioners, Act of Jan. 2, 1800,

ch. 3, sec. 2.

The 1802 Roll, at 280–288, lists 16 supervisors and 24

inspectors, thus totaling 40 Presidentially appointed internal

revenue personnel. It also lists 40 clerks, 361 collectors, 34

collectors’ clerks, and 102 ‘‘Auxiliary officers’’ (apparently a

generic term for the other personnel authorized in the stat-

utes). The ‘‘collectors and auxiliary officers, appointed by the

supervisors’’, id. at 261 (emphasis added), are significantly

more numerous than the Presidentially appointed super-

visors and inspectors.

E. Subsequent appointment of internal revenue personnel

In his first inaugural address, President Thomas Jefferson

called for the repeal of the original internal revenue taxes,

and that repeal took place in 1802. 40 Thereafter there were

four iterations of the internal revenue tax, before the modern

regime that is still in place today; 41 and the pattern of

appointments that had been set for internal revenue in the

late 18th century was followed in those four subsequent

internal revenue statutes. That is, non-appointed personnel

hired by persons inferior to the Secretary of the Treasury

had more than ministerial responsibility in internal revenue

statutes enacted during the War of 1812, 42 during the Civil

40 SeeAct of Apr. 6, 1802, ch. 19, 2 Stat. 148.

41 SeeLucius A. Buck, ‘‘Federal Tax Litigation and the Tax Division of the Department of Jus-

tice’’, 27 Va. L. Rev. 873, 875–877 (1941).

42 See Act of July 22, 1813, ch. 16, secs. 3, 8, 20–22, 3 Stat. 26, 27, 30, 31 (Assistant Assessors

could correct fraudulent property lists without any taxpayer appeal right; Deputy Collectors

could seize and sell personal and real property).

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134 135 UNITED STATES TAX COURT REPORTS (114)

War and Reconstruction, 43 after the ratification of the 16th

Amendment, 44 and in connection with the first World War. 45

The pattern set in the late 18th century persists today:

The general authority of the Secretary of the Treasury is

described in 31 U.S.C. sec. 321 (2006), and it does not include

employment or appointment of internal revenue personnel.

‘‘The Secretary of the Treasury is authorized to appoint

* * * such attorneys and other officers and employees as he

may deem necessary’’ in the Customs Service for external

revenue collection, 19 U.S.C. sec. 2072(a) (2006); but the Sec-

retary does not generally make appointments for internal

revenue collection. Rather, ‘‘the Commissioner of Internal

Revenue is authorized to employ such number of persons as

the Commissioner deems proper for the administration and

enforcement of the internal revenue laws’’. Sec. 7804(a).

II. The Internal Revenue Service Office of Appeals

A. The legal basis for the Office of Appeals

The Office of Appeals is a component of the IRS within the

Department of the Treasury. The Office of Appeals was not

created by the CDP provisions at issue here (i.e., sections

6320 and 6330), which were added to the Internal Revenue

43 See Act of Aug. 5, 1861, ch. 45, secs. 11, 34, 51, 12 Stat. 296, 303, 310 (Assistant Assessors

are described with less detail; Assistant Collectors could levy upon property and could arrest

and imprison taxpayers who refused to testify); Act of July 1, 1862, ch. 119, secs. 3, 5, 9, 12

Stat. 433–435 (Assistant Assessors and Deputy Collectors with powers similar to those in 1813);

Act of June 30, 1864, ch. 173, secs. 8, 10, 13, 14, 52, 118, 13 Stat. 224–227, 242, 282 (Assistant

Assessors and Deputy Collectors were given powers similar to those in 1862 (but arrest power

was replaced with summons authority and power to apply to a judge for arrest for contempt),

and both could also administer oaths and take evidence; Assistant Assessor could adjust taxable

income upward ‘‘if he shall be satisfied’’ that income was understated, with appeal of any such

increase to the assessor); Act of Mar. 3, 1865, ch. 78, 13 Stat. 480 (Assistant Assessor can adjust

taxable income upward ‘‘if he has reason to believe’’ that income is understated); Act of July

13, 1866, ch. 184, secs. 4, 9, 14 Stat. 99, 126, (Assistant Assessors could give permits for cigar-

making; Deputy Collectors could hold cotton until tax on it had been paid); Act of Mar. 2, 1867,

ch. 169, secs. 19, 20, 14 Stat. 482 (any internal revenue officer could be authorized to seize prop-

erty and could seize barrels if they had reason to believe that taxes on them had not been paid);

Act of July 14, 1870, ch. 255, sec. 36, 16 Stat. 271 (weighers, gaugers, measurers, and inspec-

tors).

44 See Act of Oct. 3, 1913, ch. 16, 38 Stat. 169, 179 (a Deputy Collector could demand that

a taxpayer show cause why the income amount on the return should not be increased and, if

no return or a false or fraudulent return had been provided, could make a return based on the

best information he could obtain, which return was then to be held prima facie good and suffi-

cient for all legal purposes).

45 See Act of Sept. 8, 1916, ch. 463, secs. 16–22, 39 Stat. 774–776 (Deputy Collector had pow-

ers similar to those in 1913); Act of Feb. 24, 1919, ch. 18, sec. 1317, 40 Stat. 1146–1148 (Deputy

Collector had powers similar to those in 1913 and 1916, and could administer oaths and take

evidence).

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(114) TUCKER v. COMMISSIONER 135

Code in 1998, nor by the several other provisions of the Code

that mention the Office of Appeals. 46 Rather, all these statu-

tory provisions presume its prior existence. In its current

form the Office of Appeals exists pursuant to section 7804(a),

which provides:

SEC. 7804. OTHER PERSONNEL.

(a) APPOINTMENT AND SUPERVISION.—Unless otherwise prescribed by the

Secretary, the Commissioner of Internal Revenue is authorized to employ

such number of persons as the Commissioner deems proper for the

administration and enforcement of the internal revenue laws, and the

Commissioner shall issue all necessary directions, instructions, orders, and

rules applicable to such persons.

Congress thus provided that, except as the Secretary other-

wise prescribes, it is the Commissioner and not the Secretary

who shall ‘‘employ’’ (not ‘‘appoint’’) other personnel in the

Internal Revenue Service. 47 Pursuant to this congressional

mandate, the Commissioner established the Office of Appeals

and employed personnel to staff that office. The stated mis-

sion of the Office of Appeals is to resolve tax controversies

without litigation. This mission as well as the operating

directives and guidelines of the Office of Appeals are set

forth in the Internal Revenue Manual (IRM). 48

B. A brief history of the Office of Appeals

The first precursor to the Office of Appeals was established

by statute—i.e., by the Revenue Act of 1918, ch. 18, 40 Stat.

1057. Then known as the Advisory Tax Board, it had the

authority only to offer its recommendation on cases sub-

mitted to it by the Commissioner. The Advisory Tax Board

was soon replaced by the Committee on Appeals and Review,

46 See secs. 6015(c)(4)(B)(ii)(I) (innocent spouse relief), 6603(d)(3)(B) (deposits), 6621(c)(2)(A)(i)

(interest rates), 7122(e)(2) (taxpayer appeal of denial of offer-in-compromise), 7123 (Appeals dis-

pute resolution procedures), 7430(c)(2), (c)(7), (g)(2) (reasonable administrative and litigation

costs), 7522(b)(3) (content of letter of proposed deficiency), 7612(c)(2)(A) (protection of confiden-

tial information on taxpayer software). Mr. Tucker describes section 7122(e) as if it provides for

a ‘‘right to appeal * * * to an Appeals Officer’’, but the statute mentions no officer.

47 One exception to this general rule is present in 5 U.S.C. sec. 9503(a) (2006), which author-

izes the Secretary of the Treasury to appoint up to 40 individuals to critical administrative,

technical, and professional positions in the IRS before July 23, 2013, provided that such individ-

uals were not IRS employees before June 1, 1998, and that their appointments are limited to

no more than 4 years.

48 According to the Internal Revenue Manual (IRM), ‘‘The Appeals Mission is to resolve tax

controversies, without litigation, on a basis which is fair and impartial to both the Government

and the taxpayer and in a manner that will enhance voluntary compliance and public confidence

in the integrity and efficiency of the Service.’’ IRM pt. 8.1.1.1(1) (Oct. 23, 2007).

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136 135 UNITED STATES TAX COURT REPORTS (114)

which was given the authority to hear administrative

appeals from taxpayers and redetermine their deficiencies

pursuant to the Revenue Act of 1921, ch. 36, 42 Stat. 227.

The name and structure of the appeals function of the IRS

has changed several times since then, 49 but its mission to

resolve tax controversies without litigation has remained the

same. See IRS Document 7225, History of Appeals, 60th

Anniversary Edition 3–6 (Nov. 1987).

However, in the Internal Revenue Service Restructuring

and Reform Act of 1998 (RRA), Pub. L. 105–206, 112 Stat.

685, Congress enacted provisions that directly addressed the

appeals function. One of the four required features of the

plan of reorganization that the IRS was to undertake was

that it ‘‘ensure an independent appeals function within the

Internal Revenue Service’’. Id. sec. 1001(a)(4), 112 Stat. 689.

Explicit reference to the Office of Appeals was added to the

Code not only in the new CDP procedures in sections 6320

and 6330 but also in sections 6015(c)(4)(B)(ii)(I), 7122(d)(2)

(now designated (e)(2)), 7123, 7430(c)(2) and (g)(2)(A), and

7612(c)(2)(A).

C. ‘‘Appeals Officers’’ in the Office of Appeals

1. The Pre-CDP Role of the ‘‘Appeals Officer’’

The position of ‘‘Appeals Officer’’ has existed within the

Office of Appeals since 1978. IRS Document 7225, supra at 3–

5. Mr. Tucker does not argue that any Office of Appeals’ per-

sonnel were ‘‘inferior Officers’’ before the passage of the RRA,

but he asserts that as a result of the RRA those positions pos-

sessed authority that may be consitutionally exercised only

by an ‘‘officer of the United States’’.

The position of ‘‘Appeals Officer’’—as well as earlier posi-

tions within the Office of Appeals and its predecessors—had

the authority to make deficiency determinations and hear

collection-related appeals long before the passage of the RRA,

which enacted the CDP regime. The appeals function had the

49 The Committee on Appeals and Review was abolished on June 2, 1924, in favor of creating

the Board of Tax Appeals because it was thought that a judicial tribunal would better serve

taxpayers. IRS Document 7225, History of Appeals, 60th Anniversary Edition 3 (Nov. 1987).

However, in response to the rapidly growing docket of the Board of Tax Appeals, the Special

Advisory Committee was formed as a part of the Commissioner’s office to reprise the role of the

Committee on Appeals and Review. Id. This Court is the successor to the (statutory) Board of

Tax Appeals, and the Office of Appeals is the successor to the Special Advisory Committee. See

id.

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(114) TUCKER v. COMMISSIONER 137

authority to redetermine deficiencies since 1921. IRS Docu-

ment 7225, supra at 3. And it had the authority to hear

collection-related appeals under the collection appeals pro-

gram (CAP) since 1996. 50 IRM pt. 8.24.1.1.1 (May 27, 2004).

‘‘CAP is an administrative review program not required by

statute.’’ Offiler v. Commissioner, 114 T.C. 492, 494 (2000).

In 1996 the IRS created CAP to provide taxpayers with the

right to appeal lien, levy, and seizure actions. IRM pt.

8.24.1.1.1(1) (May 27, 2004). In 1997 CAP was expanded to

implement the Taxpayer Bill of Rights 2, Pub. L. 104–168,

110 Stat. 1457 (1996), in order to provide taxpayers with the

right to appeal the proposed termination of installment

agreements. IRM pt. 8.24.1.1.1(2) (May 27, 2004); see also sec.

7122(e)(2). Although Congress did not codify CAP, the legisla-

tive history of the RRA shows that Congress was aware of CAP

when it enacted the CDP regime (discussed below). See S.

Rept. 105–174, at 92 (1998), 1998–3 C.B. 537, 628.

2. ‘‘Collection Due Process’’ procedures added to the Code

in 1998

If a taxpayer fails to pay any Federal income tax liability

after notice and demand, chapter 64 of the Code provides two

means by which the IRS can collect the tax: First, section

6321 imposes a lien in favor of the United States on all the

property of the delinquent taxpayer, and section 6323(f)

authorizes the IRS to file notice of that lien; second, section

6331(a) authorizes the IRS to collect the tax by levy on the

taxpayer’s property. 51

However, in 1998 Congress added to chapter 64 of the

Code certain provisions (in subchapter C, part I, and in sub-

50 Today both CAP and the CDP regime (discussed below) are administered by the Office of

Appeals. IRM pt. 8.24.1.1.1 (May 27, 2004). As a result, a taxpayer may be eligible to request

either a CAP or CDP hearing with respect to a lien or levy. Id. However, taxpayers are eligible

for CAP hearings in more circumstances than CDP hearings. Publication 1660, Collection Ap-

peal Rights 3 (rev. 03–2007). For example, a taxpayer is eligible for a CAP hearing when a CDP

hearing is unavailable because the taxpayer already had a CDP hearing or failed to timely re-

quest such a hearing. IRM pt. 8.24.1.1.1(6) (May 27, 2004).

51 Although this case involves only an Office of Appeals determination to sustain a notice of

lien and not a determination to proceed with a levy, the function of the ‘‘appeals officer’’ that

pertains to levies should be considered in determining the nature of that position. Cf. Freytag

v. Commissioner, 501 U.S. at 882 (‘‘The fact that an inferior officer on occasion performs duties

that may be performed by an employee not subject to the Appointments Clause does not trans-

form his status under the Constitution. If a special trial judge is an inferior officer for purposes

of * * * [some of his duties], he is an inferior officer within the meaning of the Appointments

Clause and he must be properly appointed’’).

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138 135 UNITED STATES TAX COURT REPORTS (114)

chapter D, part I) as ‘‘Due Process for Liens’’ and ‘‘Due

Process for Collections’’. The IRS must comply with those

provisions after filing a tax lien and before proceeding with

a levy. Explicit mention of ‘‘appeals officers’’ was introduced

by the RRA into these CDP provisions. 52 In the following brief

description of those CDP procedures, we emphasize phrases

from the statute that are important to the later analysis in

this Opinion.

Within five business days after filing a tax lien, the IRS

must provide written notice of that filing to the taxpayer.

Sec. 6320(a). After receiving such a notice, the taxpayer may

request an administrative hearing to ‘‘be held by the Internal

Revenue Service Office of Appeals.’’ 53 Sec. 6320(b)(1)

(emphasis added). Similarly, before proceeding with a levy,

the IRS must issue a final notice of intent to levy and must

notify the taxpayer of the right to an administrative hearing

to ‘‘be held by the Internal Revenue Service Office of

Appeals.’’ Sec. 6330(a) and (b)(1) (emphasis added). Section

6330(b)(3), entitled ‘‘Impartial officer’’ (emphasis added), pro-

vides that ‘‘[t]he hearing under this subsection shall be con-

ducted by an officer or employee who has had no prior

involvement with respect to the unpaid tax’’ at issue

(emphasis added).

The pertinent procedures for the agency-level CDP hearing

are set forth in section 6330(c). First, the statute provides,

‘‘The appeals officer shall at the hearing obtain verification

from the Secretary that the requirements of any applicable

law or administrative procedure have been met.’’ Sec.

6330(c)(1) (emphasis added). Second, the taxpayer may ‘‘raise

at the hearing any relevant issue relating to the unpaid tax

or the proposed levy,’’ including challenges to the appro-

52 The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub. L. 105–

206, 112 Stat. 685, also included three references to ‘‘appeals officers’’ that are not codified in

the Internal Revenue Code. RRA section 3465(b), 112 Stat. 768, 1998–3 C.B. 228, provides: ‘‘The

Commissioner of Internal Revenue shall ensure that an appeals officer is regularly available

within each State’’; RRA section 1001(a)(4), 112 Stat. 689, 1998–3 C.B. 149, provides that the

reorganization plan should prohibit ‘‘ex parte communications between appeals officers and

other Internal Revenue Service employees’’; and RRA section 3465(c), 112 Stat. 768, 1998–3 C.B.

228, provides that the IRS should ‘‘consider the use of the videoconferencing of appeals con-

ferences between appeals officers and taxpayers seeking appeals in rural or remote areas.’’ (Em-

phasis added.)

53 To the extent practicable, a CDP hearing concerning a lien under section 6320 is to be held

in conjunction with a CDP hearing concerning a levy under section 6330, and the conduct of

the lien hearing is to be in accordance with the relevant provisions of section 6330. See sec.

6320(b)(4), (c).

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(114) TUCKER v. COMMISSIONER 139

priateness of the collection action and offers of collection

alternatives. Sec. 6330(c)(2)(A). Additionally, the taxpayer

may contest the existence and amount of the underlying tax

liability, but only if he did not receive a notice of deficiency

or otherwise have an opportunity to dispute the tax

liability. 54 Sec. 6330(c)(2)(B). Section 6330(c)(3) then pro-

vides, ‘‘The determination by an appeals officer under this

subsection shall take into consideration’’ (emphasis added)—

(1) the verification that he obtained, (2) the issues raised by

the taxpayer, and (3) a balancing of the need for efficient tax

collection with concerns that the collection be no more intru-

sive than necessary.

The authority to conduct CDP hearings and make deter-

minations under sections 6320 and 6330 has been delegated

to three positions within the Office of Appeals: (i) ‘‘Appeals

Officers’’, (ii) ‘‘Settlement Officers’’, and (iii) ‘‘Appeals Account

Resolution Specialists’’. 55 Appeals Delegation Order 8–a, IRM

Exhibit 8.22.2–4 (Nov. 1, 2006). The authority to review and

approve those determinations is delegated to team managers.

Id. Today, in practice, settlement officers conduct CDP

hearings and make an initial determination that is subse-

quently approved or overruled by a team manager, who

makes the final determination on behalf of the Office of

Appeals.

If the taxpayer is not satisfied with the determination he

receives from the Office of Appeals, the taxpayer may ‘‘appeal

such determination to the Tax Court’’. Sec. 6330(d)(1). Where

challenges to the underlying liability are at issue (under sec-

tion 6330(c)(2)(B)), the Tax Court reviews the determination

de novo. Davis v. Commissioner, 115 T.C. 35, 39 (2000). For

other disputes, the Tax Court reviews the determination for

abuse of discretion, Sego v. Commissioner, 114 T.C. 604, 610

(2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000)—that

is, to determine whether the determination was arbitrary,

54 Mr. Tucker did not challenge his underlying liabilities (which were, in fact, the liabilities

that he himself had reported on his late returns). However, as we observed supra note 51, in

order to determine the nature of the ‘‘appeals officer’’ position, we should consider all of its func-

tions, not only those that were operative in this case.

55 Mr. Tucker complains that ‘‘AARS is a fancy title for an even lower pay grade person who

the IRS used to call a ‘screener’ ’’ and that AARSs are ‘‘now holding CDP hearings in certain

low-dollar situations’’. However, no CDP determination is issued until it has been reviewed and

approved by a higher ranking team manager. If the Office of Appeals were to assign CDP hear-

ings to employees untrained in or incapable of the task, their inadequate performance would

be subject to review by this Court.

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140 135 UNITED STATES TAX COURT REPORTS (114)

capricious, or without sound basis in fact or law, see Murphy

v. Commissioner, 125 T.C. 301, 320 (2005), affd. 469 F.3d 27

(1st Cir. 2006).

Congress enacted these procedures in order to grant tax-

payers ‘‘protections in dealing with the IRS that are similar

to those they would have in dealing with any other creditor’’,

that is, in order to ‘‘afford taxpayers adequate notice of

collection activity and a meaningful hearing before the IRS

deprives them of their property.’’ S. Rept. 105–174, supra at

67, 1998–3 C.B. at 603. It is fair to say that the officer or

employee who conducts the CDP hearing is performing a crit-

ical role in an important tax proceeding.

3. Post-CDP hearing procedures

However, because the ‘‘finality’’ of an Office of Appeals

determination is relevant to the appeals officer’s status as an

‘‘officer’’ under the Appointments Clause, it is pertinent to

note the circumstances in which the IRS may face again the

same taxpayer whose collection issues and underlying

liability have been previously considered by the Office of

Appeals in a CDP hearing, and to discern the extent, if any,

to which the IRS will be bound to the determination made in

the CDP context—either a determination on a liability issue

(whether the tax is owed) or determination on a collection

issue (whether and how the tax will be collected).

a. Collection issues

If the CDP officer or employee enters into an installment

agreement under section 6159, a closing agreement under

section 7121, or an OIC under section 7122 with the taxpayer,

then of course the agency will be bound under general con-

tract principles to honor the agreement. 56 However the

agency is also bound to honor such agreements that it enters

into outside of the CDP context, whether by the Office of

Appeals or by another branch of the IRS. Consequently, the

authority to enter into such agreements on behalf of the IRS

56 In addition, if an agreement embodied in Form 870–AD, ‘‘Offer of Waiver of Restrictions

on Assessment and Collection of Deficiency in Tax and of Acceptance of Overassessment’’, is ac-

cepted by the IRS and executed with the taxpayer, equitable estoppel may apply to make that

agreement binding on all functions of the IRS. See Kretchmar v. United States, 9 Cl. Ct. 191,

198 (1985).

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(114) TUCKER v. COMMISSIONER 141

is not peculiar to an officer or employee conducting a CDP

hearing.

However, the CDP hearing may yield a determination by

the Office of Appeals that is not embodied in one of those

agreements, such as a determination that the taxpayer

should be put in ‘‘currently not collectible’’ (CNC) status, see

IRM pt. 8.22.2.4 (Mar. 11, 2009), 8.23.3.13 (Aug. 28, 2009), or

that a lien should be released or subordinated, see sec. 6325;

IRM pt. 8.22.3.9.6.1 (Apr. 8, 2009), 8.22.3.9.6.2 (Oct. 19, 2007),

8.22.2.4.6 (Dec. 1, 2006), or that a levy should be released,

see sec. 6343; IRM pt. 8.22.3.9.5 (Apr. 8, 2009). We find no

authority addressing any binding character of these deter-

minations, but we assume that their force is enhanced by

section 6330(d)(2), which provides:

(2) JURISDICTION RETAINED AT IRS OFFICE OF APPEALS.—The Internal

Revenue Service Office of Appeals shall retain jurisdiction with respect to

any determination made under this section, including subsequent hearings

requested by the person who requested the original hearing on issues

regarding—

(A) collection actions taken or proposed with respect to such deter-

mination; and

(B) after the person has exhausted all administrative remedies, a

change in circumstances with respect to such person which affects such

determination.

That is, we assume that the retention of ‘‘jurisdiction’’ by the

Office of Appeals ‘‘with respect to any determination’’ would

bar IRS collection personnel from contradicting Appeals’

collection determination. If collection personnel undertook

collection action in violation of Appeals’ determination, then

that action could be halted by Appeals in a retained jurisdic-

tion hearing. Even so, the sense in which Appeals’ collection

determination can be said to be binding is qualified in sev-

eral significant respects:

First, section 6330(d)(2) would bind only non-Appeals func-

tions. The Office of Appeals itself, if it ‘‘retains jurisdiction’’,

must retain jurisdiction to modify its determination.

Second, if the Office of Appeals sustains the notice of lien

or intent to levy, there are circumstances in which the IRS 57

57 If the taxpayer challenges the validity of a lien in an action to quiet title under 28 U.S.C.

sec. 2410 in Federal District Court, the Government will be represented not by the IRS attor-

neys in the Office of Chief Counsel but by the Department of Justice, pursuant to 28 U.S.C.

sec. 516. If the Department of Justice concludes that the lien is not valid, then there is no ap-

Continued

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142 135 UNITED STATES TAX COURT REPORTS (114)

thereafter may forgo collection or make accommodations

nonetheless. Collection personnel may perform the investiga-

tion required by section 6331(j) and decide not to proceed

with a levy against specific property. Collection personnel

retain the power to withdraw a notice of lien pursuant to sec-

tions 6323(j), to release a lien pursuant to section 6325, and

to release a levy pursuant to section 6343. The taxpayer is

always free to submit to IRS collection personnel another pro-

posal of an installment agreement or an OIC, and those per-

sonnel have authority to accept that new proposal notwith-

standing the Office of Appeals’ rejection of the taxpayer’s

prior proposal. See IRM pt. 1.2.44.2. 58

Third, on the other hand, if the Office of Appeals deter-

mined not to sustain the notice of lien or of proposed levy

that was challenged in a CDP hearing, IRS collection per-

sonnel would be free to issue another notice of lien or intent

to levy, as long as the period of limitations for collection, see

sec. 6502, remained open. The subject matter of a CDP

hearing is the particular notice of lien or intent to levy that

the taxpayer challenged under section 6320(a)(3)(B) or

6330(a)(3)(B).

Fourth, the National Taxpayer Advocate or her delegate

can issue a Taxpayer Assistance Order (TAO) requiring the

IRS to ‘‘release property of the taxpayer levied upon’’ or to

‘‘cease any action, take any action as permitted by law, or

refrain from taking any action’’ with respect to its collection

activities. See sec. 7811(b); 26 C.F.R. sec. 301.7811–1(c),

Proced. & Admin. Regs.; see also IRM pt. 13.1.20.3(1) (Dec.

15, 2007) (‘‘A TAO may be issued for either of two purposes:

A. To direct the OD/Function [to] take a specific action, cease

a specific action, or refrain from taking a specific action; or

B. To direct the IRS to review at a higher level, expedite

consideration of, or reconsider a taxpayer’s case’’).

Fifth, by its nature a collection determination could be

binding only until there has been a change in the taxpayer’s

circumstances. The collection issues that the officer or

employee may address in the agency-level CDP hearing

parent basis for arguing that the Government is bound by the Office of Appeals’ contrary deter-

mination sustaining the lien.

58 See also H. Conf. Rept. 105–599, at 289 (1998), 1998–3 C.B. 747, 1020 (‘‘A taxpayer could

apply for consideration of new information, make an offer-in-compromise, request an installment

agreement, or raise other considerations at any time before, during, or after the Notice of Intent

to Levy hearing’’).

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(114) TUCKER v. COMMISSIONER 143

involve the financial circumstances of the taxpayer that, by

their nature, may change after the hearing. See sec.

6330(d)(2)(B); 26 C.F.R. sec. 301.6330–1(e)(1), Proced. &

Admin. Regs.; Rev. Proc. 2003–71, sec. 4.03, 2003–2 C.B. 517,

518. To decide whether the IRS ought to proceed with collec-

tion, the officer or employee is instructed by agency regula-

tions to request and obtain detailed financial information

about the taxpayer during the hearing, and to make a deter-

mination on the basis of that information. See 26 C.F.R. sec.

301.6330–1(e)(1), Proced. & Admin. Regs. (‘‘Taxpayers will be

expected to provide all relevant information requested by

Appeals, including financial statements, for its consideration

of the facts and issues involved in the hearing’’). However, if

and when a taxpayer later becomes ill or loses a job, or when

a previously ill or unemployed taxpayer is healed or gets a

job, then the position of the tax collector may well change.

This reality is reflected explicitly in section 6330(d)(2)(B),

which contemplates ‘‘a change in circumstances with respect

to such person which affects such determination.’’ Thus, an

appeals officer’s collection judgments reflected in a notice of

determination issued after a CDP hearing are not necessarily

the last word, even for the Office of Appeals itself—nor

should they be. Instead, the Office of Appeals retains juris-

diction to continue to consider collection issues over time.

This flexibility helps to ensure that, on a continuing basis,

the IRS will tailor its collection activities to the taxpayer’s

current circumstances and that the IRS will not take collec-

tion action that is arbitrary or which creates unnecessary

hardship for the taxpayer.

Sixth, if the taxpayer appeals an adverse determination to

the Tax Court, then, as we have noted in part II.C.2 above,

the appeals officer’s collection decisions are reviewed in

litigation. In that context, the determination is of course not

binding on the Tax Court, which reviews for abuse of discre-

tion. More important for evaluating ‘‘finality’’, however, is the

fact that even the IRS as a litigant is not bound by the posi-

tion in the Office of Appeals’ notice of determination. In

defending against that CDP appeal, the IRS (acting through

its attorneys under the Chief Counsel) may re-think the

appeals officer’s collection decisions and may take a posi-

tion—in the litigation or in the settlement of it—that is dif-

ferent from the position reflected in the Office of Appeals’s

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144 135 UNITED STATES TAX COURT REPORTS (114)

CDP determination. See 26 C.F.R. sec. 601.106(a)(1)(i), (d),

Statement of Procedural Rules; Rev. Proc. 87–24, 1987–1

C.B. 720; General Counsel Order No. 4. (Jan. 19, 2001). It is

the experience of this Court that the Office of Chief Counsel

sometimes does not defend the Office of Appeals’ determina-

tion but rather admits an abuse of discretion and moves the

Court to remand the case to the Office of Appeals for a

supplemental CDP hearing. In those instances the agency’s

position (as taken by Chief Counsel) contradicts the notice of

determination, to which the agency is manifestly not bound.

Consequently, the CDP determination of the Office of

Appeals is not necessarily the agency’s last word on collection

issues.

b. Underlying liability

As we noted above in part II.C.2, a taxpayer who did not

have a previous opportunity to dispute the amount of his

underlying tax liability may raise such a dispute in the

agency-level CDP hearing, pursuant to section 6330(c)(2)(B).

In such a circumstance, the officer or employee conducting

the hearing for the Office of Appeals will determine the IRS’s

position on that taxpayer’s liability. Respondent explains

that, in practice, a settlement officer will conduct the CDP

hearing and will refer the case to an appeals officer to con-

sider the issue of underlying liability. When the appeals

officer makes a determination with respect to the liability

issue, the case is returned to the settlement officer, who

addresses any collection issues and makes an initial deter-

mination that is subsequently approved or overruled by a

team manager, who makes the final determination on behalf

of the Office of Appeals. The settlement officer will not

reconsider the appeals officer’s determination with respect to

the liability issue, and generally, neither will anyone else

within the Office of Appeals.

We noted in Lewis v. Commissioner, 128 T.C. 48, 59 (2007)

(quoting 26 C.F.R. sec. 601.106(a)(1)(ii), Statement of Proce-

dural Rules), that ‘‘[t]he Appeals officer has the ‘exclusive

and final authority’ to determine the liability.’’ 59 On the

59 This provision in the regulations does not actually create ‘‘exclusive and final authority’’ but

rather presumes such authority on the part of ‘‘the regional commissioner’’ and then provides

that Appeals personnel ‘‘represent’’ the regional commissioner in that authority. It is a provision

generally applicable when the Office of Appeals has jurisdiction over a determination of liability.

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(114) TUCKER v. COMMISSIONER 145

other hand, it is clear that such determinations are not

absolutely ‘‘final’’. See Jackson v. Commissioner, T.C. Memo.

1988–143 (‘‘Determinations by the Commissioner are not

judicial in nature, but rather are administrative determina-

tions, and are not res judicata to bind him for subsequent

years, or for that matter, the same taxable year’’); 1B J.

Moore, Moore’s Federal Practice, par. 0.422[2], at 3403 (2d

ed. 1974) (‘‘It is axiomatic to the doctrines of res judicata and

collateral estoppel that only judicial decisions are given

conclusive force in subsequent legal proceedings. Thus deter-

minations made by the Commissioner of Internal Revenue

are not judicial in nature but administrative and are not res

judicata to bind him for the same taxable year or for subse-

quent years’’). We must therefore discern the sense in which

the CDP determination of underlying liability may be said to

be ‘‘final’’.

i. If the liability determination is favorable to the taxpayer

If the liability determination made by the Office of Appeals

in the CDP context is favorable to the taxpayer, then the CDP

process generally ends with a unilateral agency determina-

tion not to proceed with collection. 60 Although the team

manager in charge of the case has the authority to execute

a closing agreement with the taxpayer under section 7121,

see IRS Deleg. Order 97 (Rev. 34), IRM pt. 1.2.47.6 (Aug. 18,

1997), generally no closing agreement is executed, and no

litigation ensues. Respondent states that, as with a liability

determination in a notice of deficiency, ‘‘an underlying

It does apply when underlying liability is properly at issue in the CDP context, but its most

frequent application must be in the non-CDP cases that come to the Office of Appeals for a defi-

ciency determination. If the delegated authority to make the IRS’s ‘‘exclusive and final’’ deter-

mination of a taxpayer’s liability caused the Office of Appeals personnel to be ‘‘inferior Officers’’,

then it would pose questions about the necessity of appointing even the Appeals personnel who

handle non-CDP matters and the regional commissioners who possess this authority in the first

instance and from whom the Office of Appeals receives this authority only derivatively.

60 If a taxpayer in a CDP hearing proposes not a complete concession by the IRS but an offer-

in-compromise (OIC) based on doubt as to liability, and if the Office of Appeals accepts the OIC,

then the resulting agreement is binding on the IRS. However, that binding effect is not unique

to the CDP process; rather, the OIC accepted in the CDP context has the same effect (no more,

and no less) as an OIC accepted in any context. In the absence of an OIC or a closing agree-

ment, the non-liability determination is simply reflected in the notice of determination, see IRM

pt. 8.22.3.9(1) (Oct. 19, 2007) (‘‘Abatement of Tax’’), and then is effectuated either by Office of

Appeals personnel directly, see IRM pt. 8.22.3.9.3.1 (Oct. 19, 2007) (‘‘APS [Appeals Processing

Services] will input adjustments to tax’’), 8.22.3.9.3.1.1(2) (Oct. 19, 2007) (‘‘APS will abate the

SFR/ASFR assessment and reverse withholding as requested by the hearing officer’’), or by col-

lection personnel, see IRM pt. 5.1.9.3.10(6) (Dec. 15, 2003), 5.19.8.4.9(2) (Nov. 1, 2007),

5.19.8.4.14(1) (Nov. 1, 2007) (‘‘CDP ‘back-end’ work’’).

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146 135 UNITED STATES TAX COURT REPORTS (114)

liability determination in a CDP case is also binding on the

Examination function. The Examination function generally

has no opportunity to review Appeals’ determination’’; and

we assume arguendo that this is correct. 61 However, this

binding character is limited.

First, if it is true (as section 6330(d)(2) provides) that the

Office of Appeals ‘‘shall retain jurisdiction with respect to

any determination’’ (emphasis added), then it would seem

that the Office of Appeals itself must have jurisdiction to

reconsider its pro-taxpayer liability determination.

Second, if the taxpayer had paid all or part of the liability

that had been at issue in a CDP hearing and thereafter

sought a refund of it through litigation, no collateral estoppel

or res judicata effect to govern the outcome of the refund suit

would arise from the prior CDP determination. See Jackson

v. Commissioner, supra. The case would be defended not by

the IRS but by attorneys of the Department of Justice, see 28

U.S.C. sec. 516 (2006), 62 which also has settlement authority

in such cases, see sec. 7122. 63 But even in refund suits han-

dled by the Department of Justice the IRS must request any

counterclaim, see sec. 7403, must give a defense rec-

ommendation, see 28 U.S.C. sec. 520 (2006), and must give

its views on proposed settlements. 64 In that context, it is the

Office of Chief Counsel, and not the Office of Appeals, that

speaks for the IRS; and Chief Counsel is not bound by the

appeals officer’s CDP determination. IRM pt. 34.8.2.11.5(4)

61 It is not clear why Examination would necessarily be bound by the CDP determination of

a liability issue. A liability determination in a notice of deficiency (whether issued by the Office

of Appeals or another IRS function) may acquire a quasi-binding character within the agency

because section 6212(c) restricts the determination of further deficiencies (though section

6214(a) permits an increased deficiency if the matter is challenged in the Tax Court); but the

CDP determination may arise in the absence of a notice of deficiency (as when a taxpayer dis-

putes tax assessed pursuant to his own return) and does not result in the issuance of a notice

of deficiency—so that section 6212(c) is not implicated. Amicus observes that the point has not

been litigated but concludes that the liability determination in a CDP hearing is probably not

binding elsewhere, citing Botany Worsted Mills v. United States, 278 U.S. 282, 289 (1929).

62 By regulation, 28 C.F.R. sec. 0.15 (2007), it is the Deputy Attorney General (not one of the

‘‘Heads of Departments’’, in Appointments Clause parlance) who hires Department of Justice

trial attorneys.

63 An Assistant Attorney General heads the Tax Division and hires the Chiefs of the litigating

sections in the Tax Division. See Memorandum of Dec. 29, 1999, to Heads of Department Com-

ponents from then-Deputy Attorney General Eric Holder, available at http://www.usdoj.gov/jmd/

ps/sesdelegmemo.htm. Settlement authority is delegated to those Chiefs. See Tax Division Direc-

tive No. 135, reprinted in 28 C.F.R. pt. O, subpt. Y, app.

64 See id. (delegating settlement authority only in cases in which the agency agrees, and there-

by requiring solicitation of IRS views to settle tax cases); see also ‘‘Department of Justice Tax

Division Settlement Reference Manual’’, at 5–6, 16, available at http://www.usdoj.gov/tax/

readingroom/foia/tax.htm.

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(114) TUCKER v. COMMISSIONER 147

(Aug. 11, 2004). The Government might therefore resist the

refund claim—and might even plead a counterclaim—by

asserting liabilities that the Office of Appeals did not sus-

tain, taking its cue not from the Office of Appeals but from

the Office of Chief Counsel, which must be independent and

impartial. 65

Thus, a pro-taxpayer CDP determination on underlying

liability has at most a limited ‘‘finality’’ within the agency.

ii. If the liability determination is not favorable to the

taxpayer

If the liability determination made by the Office of Appeals

in the CDP context is not favorable to the taxpayer, then

there are several contexts in which the IRS may take a posi-

tion different from that reflected in the CDP determination.

(A). CDP litigation

The taxpayer may appeal the adverse CDP liability deter-

mination to the Tax Court, pursuant to section 6330(d). If

the taxpayer does appeal, then the Tax Court reviews the

liability issues de novo. Davis v. Commissioner, 115 T.C. at

39. In Tax Court proceedings the IRS is represented by the

Office of Chief Counsel, see sec. 7452, which may re-think

the liability issues and may take a position different from

that reflected in the notice of determination. See IRM pt.

1.1.6.1 (quoted supra note 65). In addition, the Office of Chief

Counsel—not the Office of Appeals—has the authority to

settle CDP cases that reach litigation, see sec. 601.106(a)(2)(i),

Statement of Procedural Rules; Rev. Proc. 87–24, 1987–1

C.B. 720, and it has the authority to settle CDP cases without

the concurrence of the Office of Appeals, see Rev. Proc. 87–

24, supra; IRM pt. 35.5.1.4.3(2), 35.5.2.7(2), 35.5.2.14(2)(B)

(Aug. 11, 2004).

If the taxpayer who receives an adverse notice of deter-

mination reflecting the officer’s or employee’s decision about

underlying liability decides not to appeal to the Tax Court,

then the IRS may nonetheless meet this taxpayer again in a

65 See IRM pt. 1.1.6.1 (July 29, 2005) (‘‘Counsel must interpret the law with complete impar-

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