# Estate of Burton W. Kanter, Deceased, Joshua S. Kanter, and Naomi Kanter v. Commissioner of Internal Revenue

> Court of Appeals for the Seventh Circuit · July 24, 2003 · 337 F.3d 833

URL: https://www.frixlaw.com/law-library/cases/9496265

## Case

- **Full name:** Estate of Burton W. KANTER, Deceased, Joshua S. Kanter, Executor, and Naomi Kanter, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee
- **Court:** Court of Appeals for the Seventh Circuit
- **Decided:** July 24, 2003
- **Citations:** 337 F.3d 833; 92 A.F.T.R.2d (RIA) 5459; 2003 U.S. App. LEXIS 14785
- **Precedential status:** Published
- **Opinion:** Concurring in part by Cudahy
- **Judges:** Flaum, Cudahy, Kanne
- **Cited by:** 22 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Reversed on other grounds by Ballard v. Commissioner, 544 U.S. 40 (2005).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9496265

## How later opinions describe it (automated extraction)

- describing the Tax Court's lack of a "formal documented procedure" for amending its Rules as "oddly out of sync with prevailing practices in other areas of the law"

## Opinion text

CUDAHY, Circuit Judge,
concurring in part, dissenting in part.
I concur with the majority’s opinion as to Naomi Kanter’s issues on appeal, but dissent otherwise. I write separately to address Kanter’s threshold argument that the Special Trial Judge’s (“STJ’s”) original report must be made a part of the record on appeal so that this court can determine whether its contents have been adequately considered by the Tax Court judge, whose opinion is before us.
Before I begin the legal analysis that, I believe, demonstrates why the withholding of the report is improper, I want to take a few lines to address the policy concerns that leap to mind when first encountering the suppression of the report. For the Tax Court is “not” merely “unusual;” it is, I believe, unique among all the institutions in the law where one official conducts a trial (and thus hears the witnesses) and prepares a report or other document containing her findings or recommendations based on the trial, and another official or group of officials subsequently makes the operative decision. Even the Commissioner, at oral argument, acknowledged that in every milieu except that of the Tax Court, the document containing the findings or recommendations of the official conducting the trial are available to a court reviewing the operative decision. This includes, for example, the report of a federal magistrate judge to a district court responsible for a decision. This is also the practice under the Administrative Procedure Act which governs practically all federal administrative proceedings and where the hearing officer (usually an administrative law judge) must file a recommended decision which is distributed to both parties, any appellate court conducting a review and to the public at large. Transparency is the universal practice of agencies and courts employing these decisional practices. The question then becomes, if there are policy reasons that dictate transparency for everyone else, why do these reasons not apply to the Tax Court?
*875 The Tax Court has not denied that a document containing the original findings of the STJ exists, yet it- refuses to include this document in the record on appeal. It is no answer at all to claim that the report of the STJ is like a law clerk’s memorandum to a judge or the memorandum of a fellow jurist on a panel — an internal privileged decisional document. The document here is of an official who presided over the trial and heard the witnesses, and it is directed towards an official who has no first hand knowledge of any aspect of that same trial. I am not impugning the integrity of the Tax Court judges here, or at any point in this dissent; I am merely questioning the propriety of their denial of procedural transparency in a circumstance where every other like process known to the law is transparent. If we approve the Tax Court’s practice here, are we not suggesting to the whole administrative array of the federal government that it may seek by available means when statutes permit to deny transparency when engaging in like decisional processes? I believe that the legal analysis of the majority as well as my own must be examined in the context of the larger implications of allowing an administrative body (technically, an Article I court) like the Tax Court to flout the otherwise ubiquitous principle of transparency in its proceedings. That said, I believe there also exist sound constitutional grounds demanding transparency in this instance.
As a threshold matter, everyone agrees that Kanter’s arguments are immaterial if the Tax Court’s opinion is the verbatim reproduction of the STJ’s report, which the majority and the Eleventh Circuit, Ballard v. Commissioner, 321 F.3d 1037 (11th Cir.2003), appear to believe is the case, and which the Tax Court’s opinion superficially purports to be. The Tax Court’s opinion clearly states that it adopts and agrees with the “opinion” of the STJ. If that recital is to be interpreted as meaning that the STJ’s initial report lies before us already, then there is no issue of the Tax Court judge’s according due regard or a presumption of correctness to the STJ’s findings. Deference would not be an issue if there has been outright adoption of the STJ’s findings. This state of affairs would also appear to moot Kanter’s due process argument as well as his Rule 183 argument. Kanter relies on United States v. Raddatz, 447 U.S. 667 , 100 S.Ct. 2406 , 65 L.Ed.2d 424 (1980), to argue that an STJ should be treated the same as a magistrate judge. Using Raddatz , Kanter argues that when the Tax Court reverses an STJ’s credibility findings without having heard the witnesses personally, due process is violated. However, the verbatim adoption of the STJ’s findings by the Tax Court would fully comport with even Kanter’s interpretation of Raddatz’s due process requirements.
But I agree with Kanter that when the Tax Court “agrees with and adopts the opinion of the Special Trial Judge,” it does not mean that the Tax Court opinion is the verbatim reproduction of the original STJ’s report. Kanter argues that the Tax Court routinely reviews and alters STJ reports through an internal process that is concealed in published Tax Court opinions by the language, “agrees with and adopts.” Kanter presented two pieces of evidence to support his claim: 1) Kanter’s attorney allegedly was told informally by Tax Court Judge Julian Jacobs and Chief Special Trial Judge Peter J. Panuthos that the credibility findings of Special Trial Judge Cou-villion on fraud were reversed by Tax Court Judge Dawson; 1 and 2) there exists *876 not a single Tax Court decision since the adoption of current Rule 183 where a Tax Court Judge has purported to modify or reverse a finding of a Special Trial Judge.
What Kanter alleges happened in the present case, and what commonly occurs in the Tax Court, is that a Tax Court'judge takes the STJ’s report (which had been filed with the Chief Judge pursuant to Rule 183) and works together with the STJ to edit it. From this process emerges a final report that may or may not bear any resemblance to the original report, but that still may be called the STJ’s “opinion” (but not the STJ’s “report”) if the STJ agrees to subscribe to it. This modified report is then “adopted” by the Tax Court judge and filed as the Tax Court opinion. This is the reason, Kanter argues, that, in the 880-plus Tax Court decisions since 1983 that I could find that involved an STJ report, the Tax Court judge purported to agree with and adopt the opinion of the STJ in every instance. Never, in any instance since the adoption of the current Rule 183 that I could find, has a Tax Court judge not agreed with and adopted the STJ’s opinion.
I find this extraordinary unanimity telling. It is difficult to believe that over the course of nineteen years (since the amendments giving rise to current Rule 183), not a single Tax Court judge (and there are 19 of them, 26 U.S.C. § 7443 (a)) has ever disagreed with a single original finding of any STJ (and there are about 20 of them). I say with confidence that this degree of unanimity is not only unusual, but impossible in a system of arms-length appellate style review involving 39 independent individuals. I believe that it is highly likely, therefore, that there is some kind of collaborative process involved in the path from STJ report to Tax Court decision. I draw support in this conclusion from the fact that neither the Commissioner nor the Tax Court has ever settled this issue by unambiguously stating otherwise, despite opportunities to do so. Notably, at oral arguments on the present case the Commissioner did not dispute Kanter’s contention that the STJ’s report undergoes some kind of revision during the process of “adoption” by the Tax Court. And in his brief the Commissioner is very careful in stating that the Tax Court adopted the “opinion of the [STJ].” Resp. Br. at 111 (emphasis added). And the Commissioner is just as careful in never stating that the Tax Court adopted the STJ’s “report.” This care mirrors the Tax Court’s own language in its refusal to release the STJ’s report to Kanter.
I believe that the record supports the notion that the Tax Court engages in a quasi-collaborative process of review of the STJ’s report from which a new and frequently different STJ’s opinion emerges to be adopted and agreed with by the Tax Court. If my understanding is correct, there are two “STJ’s reports” in many, if not most (or even all), Tax Court cases— the origina,! “report” filed under Rulé 183 with the Chief Judge of the Tax Court, which is solely the work product of the STJ (and which represented the STJ’s views at the end of trial) and the later “opinion” of the STJ, which is a collaborative effort, but which the Tax Court then “agrees with and adopts” as the opinion of the Tax Court. In any event, I do not claim to know the degree to which the STJ’s original filed report in the present case was altered, and I do not take as determinative of that fact the declaration of Kanter’s attorney regarding his conversations with Tax Court personnel. So, given this interpretation of the Tax Court’s *877 procedure, I want to take a closer look at Ranter’s argument.
Ranter’s argument wraps a number of different issues into one request for the STJ’s report. First, whether or not the Tax Court’s procedure denying access to the STJ’s report violates its own Rule 183. Second, whether the Tax Court’s procedure violates other law, including the Internal Revenue Code (“IRC”). Third, whether the Tax Court’s procedure violates due process protections. Finally, and most importantly, whether Ranter’s due process rights on appellate review by this court are violated when we undertake review of the Tax Court’s decision without the context of the STJ’s original report with respect to credibility findings.
1. Does the Tax Court’s procedure violate Tax Court Rule 183?
I agree with the majority’s determination that Rule 183 imposes no requirement of disclosure or of clearly erroneous deference upon the Tax Court. However, I think some additional discussion of the evolution of Rule 183 into its current form, and why the current rule does not compel production of the STJ’s report nor require any particular deference to the STJ’s report, would be very informative. Ranter points us to Stone v. Commissioner, 865 F.2d 342 (D.C.Cir.1989), where the Court of Appeals for the District of Columbia Circuit found that an STJ’s findings should be reviewed by the Tax Court under a clearly erroneous standard. Id. at 347 . Under a prior version of the Tax Court’s rules (pre-1983 and which governed the case before the Stone court), the STJ’s report was served on each party and each • party had an opportunity to file objections to the report’s findings. See Tax Court Rule 182(b), (c), 60 T.C. 1149 , (1973). The Stone court’s finding that the STJ’s report was owed deference followed from the Tax Court rules, Rule 182(d) at the time, which stated that “[d]ue regard shall be given to the circumstance that the [STJ] had the opportunity to evaluate the credibility of witnesses; and the findings of fact recommended by the [STJ] shall be presumed to be correct.” Tax Court Rule 182(d), 60 T.C. 1150 , (1973). The explanatory notes to this rale prescribed that, in regard to the “special weight” to be given the STJ’s findings, one should look to Court of Claims Rule 147(b). Id. The Stone court found this prescription particularly instructive because Rule 182(d)’s language was lifted practically verbatim from Court of Claims Rule 147(b). Stone, 865 F.2d at 345 . At the time that the language of Court of Claims Rule 147(b) had been adopted for the Tax Court’s rales, the Court of Claims interpreted that language to require review of the findings of its version of an STJ’s report under a clearly erroneous standard. See, e.g., Elmers v. United States, 172 Ct.Cl. 226, 232 (1965). The Stone court found that the language of the rale, the rule’s command to look to the Court of Claims and the Court of Claims’ use of a clearly erroneous standard of review required the use of such a standard in the Tax Court’s review of STJ findings. Stone, 865 F.2d at 347 . However, the Stone court went on to note that
The Tax Court is of course free to make its own rules determining the relation between it and its Special Trial Judges. Moreover, we assume that the Tax Court’s construction of its own rales enjoys the deference, on review in this court, enjoyed by an administrative agency interpreting its own regulations.
Id. The Tax Court did exactly that— changed .its rales. 2 In 1983, the Tax Court *878 amended and redesignated the rale in question, adopting its current form as Rule 183, 3 and noted that “[t]he prior provisions for service of the [STJJ’s report on each party and for the filing of exceptions to that report have been deleted.” 4 81 T.C. 1070 , (1983). The Tax Court has never documented any explanation of why this amendment was undertaken. The Tax Court’s power to prescribe its own rules of procedure is undisputed. 26 U.S.C. § 7453 . And although the Tax Court is no longer an executive agency, see Freytag v. Commissioner, 501 U.S. 868, 887-88 , 111 S.Ct. 2631 , 115 L.Ed.2d 764 (1991) (noting that in 1969 Congress removed the Tax Court from the realm of executive agencies and made it an Article I court), it is clear, and Kanter does not dispute, that the Tax Court’s interpretation of its own rules of procedure receives a great deal of deference. Therefore, the 1983 amendment to the Tax Court rules had the effect of no longer requiring that parties (or the general public or a reviewing court, for that matter) have access to the STJ’s report.
Kanter notes, however, that the language of the earlier rule that prompted the clearly erroneous standard in Stone remains unchanged. The Tax Court judge *879 still “shall” give “[d]ue regard” to the fact that the STJ had the opportunity to hear and evaluate the credibility of the witnesses, and the STJ’s recommended findings of fact still “shall be presumed to be correct.” Tax Court Rule 183(c). This language, according to Kanter, still commands the Tax Court judge to whom the STJ’s report is submitted to adopt the STJ’s findings unless the findings are clearly erroneous. 5 And there certainly appears to be some consensus in the literature that the Rule still embodies a clear error standard. See, e.g., 35 Am.Jur.2d Fed. Tax Enforcement § 905 (2002) (“The Tax Court is required to review a special trial judge’s factual findings according to the clearly erroneous standard, and cannot overturn a special trial judge’s ruling on the basis that the Tax Court finds the testimony credited by the trial judge to be unbelievable.”); 20A Federal Procedure, L.Ed., Internal Revenue § 48:1274 (2000) (same); but see Tax Court Litigation, 630-2nd Tax Mgmt. Portfolio at A-49 n. 599 (1997) (“The D.C. Circuit (but not the Tax Court) has taken the position that the level of deference is to review the Special Trial Judge’s draft opinion on a ‘clearly erroneous’ standard.”). However, I agree with the majority’s conclusion that this is no longer the case, and I have nothing additional to add to its reasoning on the matter.
Therefore, like the majority, I also do not believe that Tax Court Rule 183 requires an STJ’s report to be reviewed under a clearly erroneous standard, nor that Rule 183 is violated by a quasi-collaborative process of revision of an STJ’s report, nor that the Rule requires the production of the report. In spite of this I must again note how remarkable it is that not only is the Tax Court unique in the opacity of its process, but it has arrived at this opaque process by abandoning a transparent process — -an evolution completely counter to the trend towards transparency in analogous areas of the law. See, e.g., Elena Kagan, Presidential Administration, 114 Harv. L.Rev. 2245, 2331-32 (2001) (describing new theory of administrative control in which author notes that transparency is a core value of administrative procedure). There is no public indication why the Tax Court rules and procedures were changed in 1983 to the current system that disadvantages those appealing Tax Court decisions. And, of course, an appellate-style procedure such as that typical in all other areas of federal administrative adjudication would facilitate challenges, whether made by the taxpayer or by the Commissioner. The previous procedure may well have been abrogated for exactly this reason.
2. Is the Tax Court’s procedure otherwise unlawful?
The majority quite ably and clearly outlines why existing rules and statutes do not appear to compel inclusion of the STJ’s report in the record on appeal. In doing so, the majority places significant weight on the Commissioner’s argument analogizing the STJ-Tax Court judge relationship to the division-Tax Court relationship governed by 26 U.S.C. § 7460 , in which a division’s preliminary report is never made public if the Tax Court reviews the case and issues its own opinion. Before moving on to the meatier due process issues, I want to note that this analogy, however, overlooks some important considerations. First, a division whose report is reviewed by the Tax Court has the opportunity to *880 file a dissent from the Tax Court’s final decision and place in that dissent any of its objections — objections that could, in theory, include the division’s overruled findings that were contained in its original report. Thus, those original findings can be made public, albeit in a roundabout manner, if the division wants them to be. An STJ’s original report is never made public.
Second, § 7460 differs significantly from Rule 188 in that it does not require “due regard” for the fact that the division has heard witnesses and evaluated credibility (perhaps because the division may not have been the adjudicator who heard the witnesses), nor does § 7460 require any presumption that the division’s report is correct. In contrast, Rule 183 requires both due regard and a presumption of correctness for the STJ’s report. Therefore, to the extent that the Tax Court’s final opinion must, under Rule 183, accord some kind of respect to the STJ’s original findings, the STJ’s original report has some ongoing significance, whereas the division’s report is of no consequence in the formulation (or appellate review) of the Tax Court’s opinion.
Third, since the division may not have conducted the trial nor heard the witnesses, a policy of deference to such an adjudicator would not necessarily be appropriate. By contrast, an STJ is always the person who hears witnesses and, for that reason, is an adjudicator entitled to deference. Again, this raises the significance of the original STJ’s report to the ultimate adjudication and review of the case in a way not present with a division’s report.
And finally, the relationship between a division and the Tax Court is far different from the relationship between an STJ and the Tax Court. Tax Court judges are all, essentially, equal. They are presidentially appointed for statutorily mandated 15 year terms, and they each have an equal vote in the business of the Tax Court. 26 U.S.C. §§ 7443 , 7444. An STJ is appointed at the discretion of the Chief Judge and has no statutorily mandated term of office. 26 U.S.C. § 7443A. Congress has authorized specific and limited means for removing a Tax Court judge from office: “Judges of the Tax Court may be removed by the President, after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause.” 26 U.S.C. § 7443 (f). There is no such statutory protection for STJs. Ultimately, keeping a division’s preliminary report secret appears less problematic given the division’s almost unfettered ability to make its wishes clearly known in the final opinion without concern for job security or reprisal. However, an STJ serves at the discretion of the Tax Court, and his or her judicial independence is therefore quite circumscribed. Only by allowing access to the original STJ’s report can the Tax Court insulate itself from the perception that an STJ’s “findings” are arbitrarily malleable at the discretion of the Tax Court. 6
*881 In addition, there are other provisions of the Internal Revenue Code that, at the very least, show that Congress did not demonstrate a clear intent to keep STJ reports secret — unlike the clear intent to keep division reports private that is shown in § 7460. 26 U.S.C. § 7459 (b) states that the “Tax Court shall report in writing all its findings of fact, opinions, and memorandum opinions.” Additionally, 26 U.S.C. § 7461 (a) states that “all reports of the Tax Court ... shall be public records,” and 26 U.S.C. § 7462 states that the “Tax Court shall provide for the publication of its reports at the Government Printing Office in such form and manner as may be best adapted for public information and use.... ” While the majority is correct that there are no rules or statutory sections that specifically require that the initial report of the STJ be made public, there are, by the same token, no sections that forbid that the report be made public — in contrast to § 7460’s clear intent to keep private a division report that is reviewed by the full Tax Court. And §§ 7459, 7461 and 7462 appear to establish a strong presumption in the IRC in favor of public dissemination of Tax Court documents that, apparently, could easily apply to the STJ’s report. Only a formalistic interpretation by the Tax Court that the STJ’s report is not a “report of the Tax Court” allows it to avoid such a presumption.
3. Does the Tax Court’s procedure violate due process?
Due process requires that Ranter have been afforded a fair hearing before he is deprived of property. Mathews v. Eldridge, 424 U.S. 319, 333 , 96 S.Ct. 893 , 47 L.Ed.2d 18 (1976). Notice and an opportunity to be heard are the hallmarks of a fair hearing. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313 , 70 S.Ct. 652 , 94 L.Ed. 865 (1950). The Supreme Court in Raddatz reiterated the three part test announced in Mathews for evaluating due process protections:
[Tjhree factors should be considered in determining whether the flexible concepts of due process have been satisfied: (a) the private interests implicated; (b) the risk of an erroneous determination by reason of the process accorded and the probable value of added procedural safeguards; and (c) the public interest and administrative burdens, including costs that the additional procedures would involve.
Raddatz, 447 U.S. at 677 , 100 S.Ct. 2406 (citing Mathews, 424 U.S. at 335 , 96 S.Ct. 893 ). In the context of the present case, one would need to determine whether a quasi-eollaborative process wherein the ultimate finder of fact, who has not heard the witnesses herself, can amend, revise or reverse the preliminary findings of the person who actually heard the witnesses (and never reveal those preliminary findings) without running afoul of the Fifth Amendment. This comprises two separate questions: (1) must the Tax Court review the STJ’s findings with a formal degree of deference (such as clear error); and (2) must the Tax Court itself hear witnesses to determine issues of credibility before reversing the STJ? 7
*882 As Raddatz and Universal Camera make clear, at one end of the due process spectrum — the general administrative law context — due process does not require that the ultimate fact finder be constrained by a formal degree of deference to the original hearing officer. Nor must that fact finder rehear -witnesses before making findings, whether or not the fact finder reverses the original hearing officer’s findings. See id. at 680 , 100 S.Ct. 2406 (“Generally, the ultimate factfinder in administrative proceedings is a commission or board, and such trier has not heard the witnesses testify.... While the commission or board ... may defer to the findings of a hearing officer, that is not compelled.”); Universal Camera Corp. v. NLRB, 340 U.S. 474, 492-94 , 71 S.Ct. 456 , 95 L.Ed. 456 (1951); see also 5 U.S.C. § 557 (b) (“On appeal from or review of the initial decision, the agency has all the powers which it would have in making the initial decision.... ”); Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law § 8.6, at 396 (3d ed.1994) (noting that the command of Morgan v. United States, 298 U.S. 468, 481 , 56 S.Ct. 906 , 80 L.Ed. 1288 (1936), that “the one who decides must hear,” “did not mean that an agency head who decides must listen to the witnesses testify”).
At the other end of the due process spectrum lies the criminal procedure context, where due process protections are the most demanding. First, regarding deference, the Supreme Court in Raddatz did not directly address the issue, but the Federal Magistrates Act under review required the district court to conduct a de novo review of the magistrate judge’s findings, and the Court took no issue with that standard of review, even for credibility findings. This parallels the administrative context, and demonstrates, I believe, that along the full continuum of due process concerns framed by Raddatz and Universal Camera, there is no per se due process violation when the ultimate finder of fact reviews preliminary findings de novo. Therefore, I agree with the majority that the Fifth Amendment does not require that the Tax Court review STJ findings using any particular degree of deference. This means also that there is no constitutional requirement that the Tax Court use an appellate-style review of its STJs’ reports. In this respect, the quasi-collaborative model adopted by the Tax Court is permissible.
Second, what about the rehearing of witnesses in a criminal procedure context? While, under the Mathews analysis, the interests of a criminal defendant in a suppression hearing are not as significant as they may be in a full criminal trial, they are significant enough that the Supreme Court issued a warning that “serious questions” existed in the situation wherein a district court judge reversed a magistrate judge’s dispositive credibility findings without hearing the witness herself. Raddatz, 447 U.S. at 681 n. 7, 100 S.Ct. 2406 . 8 Several of our sister circuits have found that these “serious questions” have a sin *883 gle answer: a district court judge cannot reverse a magistrate’s credibility findings without hearing the witness at issue. See, e.g., United States v. Cofield, 272 F.3d 1303, 1305-06 (11th Cir.2001); Hill v. Beyer, 62 F.3d 474, 482 (3d Cir.1995); United States v. Rosa, 11 F.3d 315, 328-29 (2d Cir.1993); In re Hipp, Inc., 895 F.2d 1503, 1519-21 (5th Cir.1990); see also United States v. Mejia, 69 F.3d 309, 316-20 (9th Cir.1995) (finding that footnote 7 of Rad-datz applied to a suppression hearing where the judge making the ruling received no findings on credibility from the judge who heard the witnesses’ testimony; the court ruled it was a due process violation to make such a ruling without having heard the witnesses).
However, as the Commissioner points out, the interests in Raddatz were more significant because that case involved an aspect of a criminal trial, and the proceedings before the Tax Court are eminently civil. Under the Matheivs framework, the private concerns involved in a civil proceeding are not entitled to the same level of due process protection as the concerns in a criminal proceeding, just as Raddatz notes that within a criminal proceeding a suppression hearing embodies a lower interest than other aspects of a criminal trial. See Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1045 (2d Cir.1992) (“Moreover, we have indicated that the Raddatz dicta may be inapplicable outside the criminal context....”).
While it is not an easy issue, I believe that the interests at stake in a civil tax court proceeding do not rise to the level addressed in Raddatz , and are more analogous to the interests involved in an administrative adjudication. There certainly is some cause for concern that a finding of credibility on a “cold record” as voluminous as the one before us here increases the chance of an erroneous determination, but I do not believe that that possibility in this kind of civil proceeding is as high, nor the costs as great, as would be the case in a criminal milieu. Additionally, I would note that the only fully responsive remedy would be to require the Tax Court itself to rehear the witnesses whose credibility was at issue. Under the third prong of the Mathews test this added procedure would probably be an enormous burden and impose a prohibitive cost. The added value of such procedure under the second prong of Mathews seems insubstantial, especially given that the quasi-collaborative model can provide the Tax Court with ongoing access to the thoughts and impressions of the STJ who actually heard the witnesses. Additionally, I believe that one possible advantage of the quasi-collaborative process (over standard appellate-style review) might be an opportunity for the STJ to have additional input into the decision making process beyond her original report. 9 This opportunity should do something to minimize the risk of an erroneous determination.
Hence, the dictum in Raddatz does not persuade me that the reversal of an STJ’s *884 findings by the Tax Court following a quasi-collaborative procedure violates due process. In a real sense, my writing to this point has been more concurrence than dissent. But I feel it very important to navigate these areas of agreement in order to properly prepare for the pivotal area of disagreement, where I part ways with the majority.
4. Does appellate review of the Tax Court’s findings without access to the STJ’s report violate due process?
There is another stage of procedure involved here (and a key one from my perspective) that requires due process analysis — appellate review of the Tax Court’s decision. Whether or not the STJ’s report is made available to the parties for comment before the Tax Court issues its findings, and whether or not the Tax Court can reverse the STJ’s purportedly disposi-tive credibility findings without having heard the relevant witnesses, the question still remains whether or not the due process rights of the parties before this court are violated when we have no opportunity to review the Tax Court’s factual findings for clear error in light of the STJ’s initial report. See Evitts v. Lucey, 469 U.S. 387, 393 , 105 S.Ct. 830 , 83 L.Ed.2d 821 (1985) (there is no constitutional right to appeal, but once a right of appeal is created, it must comport with due process to be meaningful and effective). This question distinguishes the issue whether the Tax Court’s procedures are intrinsically unfair (which neither I nor the majority believe is true) from the issue whether the Tax Court’s procedures are unreviewable (on which the majority and I disagree). 10 The essential difference is that the Tax Court has the report; we do not.
Our review of the Tax Court is governed by the same standards as those governing our review of a district court’s civil bench trial; this means that legal conclusions are reviewed de novo and findings of fact are reviewed for clear error. See 26 U.S.C § 7482(a); Pittman v. Commissioner, 100 F.3d 1308, 1312-13 (1996). Obviously, we do not need access to the STJ’s report to conduct meaningful de novo review of the Tax Court’s legal conclusions. But clearly erroneous review involves deference to the conclusions of the fact finder — the Tax Court in the present case. This is a deference that the Supreme Court has attributed, in the case of credibility, to the fact finder’s first-hand observations of the witnesses in question.
[A] finding is “clearly erroneous” when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.
When findings are based on determinations regarding the credibility of witnesses, [the clearly erroneous standard] demands even greater deference to the trial court’s findings; for only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding of and belief in what is said.
Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573, 575 , 105 S.Ct. 1504 , 84 L.Ed.2d 518 (1985) (citations omitted). Thus, it is integral to the standard of clear *885 error review that there be deference to the credibility findings of the official who has actually heard the witnesses. Although the Supreme Court in Anderson was discussing the deference due a finder of fact who has, himself, heard the witnesses, I think the Court’s command is also instructive in two ways. First, on its face Anderson instructs that on issues of credibility the opportunity to hear witnesses is significant in a clear error context. Second, Anderson informs that context by impliedly undermining the reliability of findings that reverse the credibility determinations of an official who has actually heard the witnesses. If we are to give “even greater deference” to the findings of a judge who has heard the witness whose credibility is at stake, we must inevitably give less deference to the judge who subsequently reverses those findings.
I find major support for this line of thinking in the administrative law arena. 11 In the administrative context, the Administrative Procedure Act requires that a reviewing court examine an agency determination based on a record that includes any preliminary findings from the hearing officer (like an Administrative Law Judge (ALJ)). 12 5 U.S.C. §§ 557 (b), 706. When a reviewing court reviews agency findings on credibility for substantial evidence, it is strongly influenced by the preliminary findings of the ALJ who actually heard the witnesses — influence that becomes even more significant when an agency has reversed those preliminary credibility findings. See Kopack v. NLRB, 668 F.2d 946, 958 (7th Cir.1982) (“One must attribute significant weight to an ALJ’s findings based on demeanor because neither the [NLRB] nor the reviewing court has the opportunity similarly to observe the testifying witnesses.”); Moore v. Ross, 687 F.2d 604, 609 (2d Cir.1982) (“Accordingly, reviewing courts have often found federal decisions unsupported by substantial evidence when they hinge on assessments of credibility contrary to those made by the ALJ who heard the witnesses.”); Ward v. NLRB, 462 F.2d 8, 12 (5th Cir.1972) (“The preeminence of the Examiner’s conclusions regarding testimonial probity does not amount to an inflexible rule that either the Board or a reviewing court must invariably defer to his decision, thereby effectively nullifying either administrative or judicial review. But when the Board second-guesses the Examiner and gives credence to testimony which he has found — either expressly or by implication — to be inherently untrustworthy, the substantiality of that evidence is tenuous at best.”).
The Supreme Court in Universal Camera best summarized the philosophy be *886 hind this process: “We intend only to recognize that evidence supporting a conclusion may be less substantial when an impartial, experienced examiner who has observed the witnesses and lived with the case has drawn conclusions different from the Board’s than when he has reached the same conclusion.” 340 U.S. at 496 , 71 S.Ct. 456. This is never more the case than when the issue is one of credibility. As the Supreme Court said in Raddatz , it is within the context of credibility that findings based on a “cold record” are most suspect if they differ from the findings of the one who actually heard the witnesses in question.
To be sure, courts must always be sensitive to the problems of making credibility determinations on the cold record. More than 100 years ago, Lord Coleridge stated the view of the Privy Counsel that a retrial should not be conducted by reading the notes of the witnesses’ prior testimony:
“The most careful note must often fail to convey the evidence fully in some of its most important elements.... It cannot give the look or manner of the witness: his hesitation, his doubts, his variations of language, his confidence or precipi-tancy, his calmness or consideration; ... the dead body of the evidence, without its spirit; which is supplied, when given openly and orally, by the ear and eye of those who receive it.” Queen v. Bertrand, 4 Moo.P.C.N.S. 460, 481, 16 Eng.Rep. 391, 399 (1867).
Raddatz, 447 U.S. at 679-80 , 100 S.Ct. 2406 . And unlike Raddatz , in the present case we are dealing with a full trial by a judge on the merits, albeit a civil trial (on the “quasi-criminal” issue of fraud), and not an ancillary motion to suppress. Additionally, the present case was inordinately long and complicated, and the resolution of issues required the synthesis of multiple witnesses’ testimony that was separated by days or even weeks (and by hundreds or thousands of pages in the transcript). Whatever advantage is to be gained by a first-hand observation of witnesses is multiplied exponentially when the trial is so long and the transcript so voluminous. The detailed interconnection of the credibility of different witnesses on different factual issues'makes the accumulated impressions of the presiding officer irreplaceable. I can think of no single item of more significance in evaluating a Tax Court’s decision on fraud than the unfiltered findings of the STJ who stood watch over the trial.
The difficulty comes in determining how and when this concern rises to the constitutional level of due process. No court of which I am aware has ever considered the ramifications of an agency’s swallowing and refusing to regurgitate a preliminary factual finding in the manner done by the Tax Court here. The reason for this is clear: the Administrative Procedure Act requires the publication of such findings for executive agencies. And no court that I could find has ever discussed the availability of preliminary findings as being related to due process protections. Only Universal Camera’s dicta on the value of the preliminary findings comes close, and the Supreme Court there clearly based its decision in the language of the Administrative Procedure Act.
However, under the three-part test of Mathews and Raddatz , I think it not unreasonable to invoke due process in this context at the appellate court level of review. Under the first prong of Mathews , I note again that the quasi-criminal nature of fraud is a more significant private interest than a simple civil determination, but not as weighty an interest as in the criminal suppression hearing in Raddatz . Under the second prong, however, I believe *887 the risk of error here is greater and the value of the added procedural safeguard (the STJ’s report) is higher in this context. Without the STJ’s report we would be reviewing deferentially a credibility finding made by the Tax Court based on a cold record (albeit with the theoretical collaboration of the STJ who actually heard the witnesses) based on our own analysis of that same cold record. The precedents noted in the administrative context (as well as Universal Camera) clearly demonstrate how valuable preliminary findings are for review in cases like the present one. Under the Mathews test’s third prong, the added cost and administrative burden in this instance is de minimis— publishing the STJ’s report. On balance, I believe strongly that the absence of the STJ’s report in the record for our consideration of the Tax Court’s decision creates legitimate due process concerns with respect to our review.
What throws a real analytical monkey wrench into all of this is that the result of the collaborative process in the Tax Court is an opinion that, allegedly, represents the “opinion” of the STJ (but not, I repeat, the “report” of the STJ). What this could mean is that the collaboration of the Tax Court with the STJ has produced an opinion that represents the revised and true legal opinions and findings of the STJ. The original report, by necessity therefore, would no longer be a valid statement of the STJ’s findings inasmuch as it differed from the final opinion. Therefore, to the extent that due process is concerned with the changes that the Tax Court makes to the findings contained in the STJ’s report (which would represent points of disagreement between the Tax Court and the STJ), those concerns are balanced by the fact that the STJ does not actually disagree with those changes and, in fact, has certified to their correctness by signing off on the opinion. I could, in the best of all possible worlds, liken this to a learning process whereby the original impressions of the STJ are tempered through the collaborative process with the Tax Court, and, I would assume, the Tax Court’s opinions would be molded and informed by the first-hand impressions of the STJ. Whatever limitations on review this process entails would be balanced by the fact that the STJ does not still hold opinions or findings in conflict with those represented in the opinion. In such a world, it no longer seems so strange that every Tax Court case involving an STJ resulted in an opinion that agreed with and adopted the opinion of the STJ — the final opinion represents a compromise between the positions both of the Tax Court judge and of the STJ. (This view of things would still remain somewhat disingenuous because the Tax Court opinion’s language clearly seeks to imply that the opinion represents the original report of the STJ.) I believe that this is, more or less, the position taken by the majority.
The obvious rejoinder to this utopian view of the Tax Court’s process is to point out what I have already noted: the STJs are not equal to the Tax Court judges and it might be naive to assume that the STJs have an equal voice in the collaborative process that results in Tax Court opinions. The result is a system whereby the Tax Court maintains total discretionary control over the function of STJs but expects a reviewing court to simply accept at face value the declaration that the opinion is the opinion of the STJ. On the one hand, I certainly do not believe that the Tax Court is prevaricating and forcing STJs to cooperate under the express threat of unemployment. However, judicial independence in the context of due process is not a principle to be taken lightly, and its absence has consequences. The fact is that this entire process of the Tax Court ap *888 pears designed to extract the efficiencies involved in designating cases to be heard by STJs without having to bear any of the procedural costs traditionally- associated with this kind of adjunct decision-making (e.g., transparency). I do not believe that the STJ’s ultimate assent to the final opinion of the Tax Court is protection enough to the parties. The majority does.
Because I dissent, I do not have to articulate a final outcome, but merely note that I find a due process violation. However, the solution is simple in theory. The due process violation is avoided by interpreting 26 U.S.C. §§ 7459 , 7461 and 7462 so as to require publication of the STJ’s original report as a report of the Tax Court. See Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Const. Trades Council, 485 U.S. 568, 575 , 108 S.Ct. 1392 , 99 L.Ed.2d 645 (1988). This appeal would be stayed to allow the STJ’s original report to be made part of the record. It is significant to summarize what I do not say here. I do not believe that due process requires that the parties be allowed to file objections to the STJ’s report before the issuance of the Tax Court’s opinion. Nor do I necessarily believe due process requires that the STJ’s report be made public before the Tax Court issues its ultimate opinion. But by eventually making the STJ’s report public (and part of the available record of the Tax Court on appeal), this court will have an opportunity to conduct meaningful appellate review. Further, this is a procedural result that may benefit all parties, including the Commissioner, not just petitioners like Kanter— Tax Court decisions can very easily reverse findings (credibility- — related and otherwise) of STJs in a manner that is detrimental to the Commissioner as well as to a petitioner.
After all of these pages, what I find most interesting is that I believe the majority and I are in complete agreement on the central issue here — that the views of the STJ matter. When I say that, however, I look at the structure of the process under which the STJ’s views can be discarded without leaving a trace and I find the glass half-empty. The majority sees the verbal formula (“agrees with and adopts”) and finds the glass half-full. I do not believe that the concealment of the Tax Court’s revision process behind that verbal formula allows this court to conduct meaningful appellate review. I appear, at the moment at least, to be alone in that belief. Therefore, I respectfully dissent. 13
. Kanter’s attorney revealed the names of the judges in question when asked at oral argument. The original declaration of Kanter's attorney did not name the Tax Court judges *876 who allegedly made these statements concerning the alteration of the STJ's report. Declaration of Attorney Randall G. Dick, App. at 250-52.
. I have been unable to discover what, if any, formal documented procedure accompanies *878 the adoption, amendment or repeal of a Tax Court rule. There does not exist, I believe, any written description of the process that is available in public records. Informal conversations with a Deputy Clerk of the Tax Court and the Tax Court’s library have indicated that some section of the Tax Court comprises a rules committee that periodically issues rules and rule changes. There is some indication from these informal conversations and my research that proposed rules may be circulated to members of the tax bar for comment. See, e.g., ABA Members Suggest Modifications to Proposed Amendments of Tax Court Rules, 97 Tax Notes Today 167-25 (August 28, 1997). But there is no such requirement within the IRC or the Tax Court’s rules. Like the process by which an STJ’s report is composed and then withheld, I find this rule-making procedure oddly out of sync with prevailing practices in other areas of the law. Compare 28 U.S.C. § 2071 (b) ("Any rule prescribed by a court, other than the Supreme Court, under subsection (a) shall be prescribed only after giving appropriate public notice and an opportunity for comment.”) and Fed. R.App. P. 47(a)(1) ("Each court of appeals acting by a majority of its judges in regular active service may, after giving appropriate public notice and opportunity for comment, make and amend rules governing its practice.”) with 26 U.S.C. § 7453 ("[T]he proceedings of the Tax Court and its divisions shall be conducted in accordance with such rules of practice and procedure (other than rules of evidence) as the Tax Court may prescribe.”) and Tax Court Rule 1(a) ("Where in any instance there is no applicable rule of procedure, the Court or the Judge before whom the matter is pending may prescribe the procedure, giving particular weight to the Federal Rules of Civil Procedure to the extent that they are suitably adaptable to govern the matter at hand.”).
. Current Tax Court Rule 183(c) provides:
Action on the Report: The Judge to whom or the Division to which the case is assigned may adopt the Special Trial Judge’s report or may modify it or may reject it in whole or in part, or may direct the filing of additional briefs or may receive further evidence or may direct oral argument, or may recommit the report with instructions. Due regard shall be given to the circumstance that the Special Trial Judge had the opportunity to evaluate the credibility of witnesses, and the findings of fact recommended by the Special Trial Judge shall be presumed to be correct.
. One interesting detail involves the timing of the Stone decision and the change in current Rule 183. Stone involved events in the 1960s and a Tax Court trial in the 1970s (all events before the 1983 amendment of Rule 183), but the court of appeals decision is from 1989, well after the amendment. So, although the court was dealing with a case where the STJ's report was part of the record, it made the noted comment concerning the Tax Court's ability to amend the Tax Court rules at a time when that court had already done so. But the court of appeals decision made no mention of that amendment.
. The Stone court, in fact, stated in its interpretation of the due regard and presumed correct language, that "until the [tax] court adopts new language, it must hew to the meaning of what it has said.” Stone, 865 F.2d at 347 .
. I am not suggesting that, in this case or in general, the judges of the Tax Court coerce or exert undue influence over STJs. The judicial independence of finders of fact, however, is a structural principle. The statutes and Tax Court Rules establishing and utilizing STJs lack the structure of judicial independence we find in, for example, our Article III courts. One way of imposing a structural modicum of judicial independence on the Tax Court would be through transparency and judicial review — providing access to the STJ's original report would allow for judicial independence without compromising the procedures of the Tax Court. This is the same procedure prescribed by the Administrative Procedure Act, which requires the report of the ALJ who heard the witnesses to be prepared and filed for public enlightenment. To describe the STJ system and lament its lack of structured *881 judicial independence does not suggest that I am impugning the integrity of the distinguished members of the Tax Court. And this dissent should certainly not be interpreted in that way.
. Kanter has separated these two oft intertwined concepts in his arguments when he alleges that 1) the Tax Court owes the STJ a formal degree of deference and 2) the Tax Court cannot change the STJ's findings without having heard the witnesses. Once it is determined that, under the Fifth Amendment, the Tax Court can act as an original fact finder and determine facts de novo, then one must ask whether the method of conducting *882 that factual determination can be done based on a transcript of witness testimony or only by actually hearing the witnesses first hand. The first question may or may not be a pure procedural due process question, but its answer is clear and it serves to frame the more difficult second question for analysis.
. Footnote 7 in Raddatz states in relevant part:
The issue is not before us, but we assume it is unlikely that a district judge would reject a magistrate’s proposed findings on credibility when those findings are dispositive and substitute the judge’s own appraisal; to do so without seeing and hearing the witness or witnesses whose credibility is in question could well give rise to serious questions which we do not reach.
. However, I reiterate that the judicial independence of the STJ, who serves at the discretion of the Tax Court, is suspect. The structure of the STJ process does nothing to expressly preserve the voice or influence of an STJ in the formulation of the final opinion. Therefore, I do not accord a great deal of weight to the influence of the STJ over the Tax Court's review of the STJ’s report. In this way I differ not only from the majority, but also from the conclusion of the Eleventh Circuit, which analogizes a Tax Court judge’s conferring with an STJ to members of an appellate panel conferring with one another. See Ballard, 321 F.3d at 1043 . In the Tax Court situation, only one of the conferees has attended the trial and heard the witnesses and the conferees are not of equal rank nor do they possess an equal degree of judicial independence.
. This question does not depend upon the Tax Court’s being required to give some level of formal deference to the STJ’s report. Although the question before us would be much easier to answer if such a requirement existed, I am asking the more fundamental question whether our clear error review of the Tax Court's findings can be meaningful without the context of the STJ’s report to inform that review.
. Most review of administrative agency determinations or adjudications is done under the "substantial evidence” standard. The clear error standard, which we apply to the review of district court as well as Tax Court factual findings, is virtually indistinguishable from the substantial evidence standard. See School District of Wisconsin Dells v. Z.S., 295 F.3d 671, 674 (7th Cir.2002) (" '[T]he difference [between clear error and substantial evidence] is a subtle one — so fine that ... we have failed to uncover a single instance in which a reviewing court conceded that the use of one standard rather than the other would in fact have produced a different outcome.' "), quoting Dickinson v. Zurko, 527 U.S. 150, 162-63 , 119 S.Ct. 1816 , 144 L.Ed.2d 143 (1999); see also Tripp v. Commissioner, 337 F.2d 432, 434 (7th Cir.1964) (using both "clear error” and "substantial evidence” in reference to review of Tax Court’s findings of fact). Therefore, I look for guidance to the administrative law context, in which reviewing courts examine administrative agency determinations (including adjudications).
. And again, in the administrative context an agency can make factual findings de novo, regardless of any preliminary findings, much as the Commissioner claims the Tax Court can do with respect to an STJ’s report.
. Although, again, I concur as to the part of the opinion concerning the appeal of Naomi Kanter.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9496265. Public record. Not legal advice.