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135 T .C .

UNITED STATES TAX COUR T

LARRY E . TUCKER, Petitioner v .

COMMISSIONER OF INTERNAL REVENUE, Responden t

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 "conducted by an officer

or employee" of the IRS Office of Appeals, I .R .C .

sec . 6320(b)(3), and which is to conclude with a

"determination by an appeals officer", I .R .C .

sec . 6330(c)(3) . P's .CDP hearing was conducted by a .

settlement officer in the IRS Office of Appeals, . .and

after the CDP hearing a team .manager in that office

issued to Pa notice of determination upholding the

NFTL . P filed with the Tax Court a timely appeal

pursuant to I .R .C . sec . 6330(d)(1) : After initial

proceedings, this Court ordered a remand to the Office

of Appeals for further consideration . A second CDP

hearing was conducted by another settlement officer,

and the team manager issued a supplemental notice of

determination again upholding the NFTL . The team

SERVED Jul 26 2010

manager and both settlement officers had been hired by

the Commissioner pursuant to I .R .C . sec . 7804(a) and

were not appointed by the President or the Secretary of

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

CDP hearing could be conducted by, and a notice of

determination issued by, an officer appointed by the

President or the Secretary of the Treasury, in

compliance with the Appointments Clause . See U .S .

Const .,art . If, sec . 2, ci . 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 .

CONTENT S

Background

Discussio n

A ., The purposes of the Appointments Clause

. . .

B . The distinctions in the Appointments Clause : .

"Officers" ., "inferior Officers", and

non-officer, employees

. . . . . . .

.10

I . The Appointments Clause

. . .

;6 1 .

."Principal" officers vs . "inferior"

officers

. . . . . . .

. . . . . .

2 . "Officers" vs . non-officer employees

C .,

Modes of. appointment under the

Appointments Clause

. .

*Brief sjamicus curiae were . filed by A . Lavar Taylor as

counsel for the Center for the Fair Administration of Taxes .

the late

Appointment oErrevenue personnel' i

18th century

1 . The Department of the Treasury "

.2 . -External .revenue collectio n

Internal revenue collectio n

Subsequent appointment of internal revenu e

personnel

II . The Internal Revenue Service Office of . .Appeals

A . The legal'basis_for .the Office of :Appeals 36

B . A brief history of the Office-of Appeals 37

C . "Appeals'-Officers" in the Office_of Appeals 39

1 . The Pre-CDP Role-of the"Appeals= "

. . . .

. . .

Officer ."

. . .

2 . "Collection Due . Process" .procedures r

added to the Code in 1998 . .

. 45

Post-CDP

hearing

procedures

3 .

The

tax

administration

context

CDP'"officer or employee "

5 . The administrative law context of the

'6 3

. . .• .{

CDP,"officer or employee"

III . The status of the CDP "officer or employee" arid

"appeals officer" under the Appointments Clause .

. 65

A . . Whether the position is "established by Law"

. 65

,7 2

1 . Creation by . statut e

2 . Creation by regulatio n

B . Whether the CDP function could constitut e

an "office"

1 . Whether the CDP provisions created a

"continuing" position

. ' .

2 . Whether the CDP hearing officer ha s

"significant authority"-

- 4 .OPINION

GUSTAFSON, Judge : This case . is an appeal, pursuan t

section 6330i(d)(1),' by which petitioner Larry E . Tucker seek s

this Court's~review of a determination by the'Office of Appeals

of the Internal Revenue Service (IRS) to sustain the filing of

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 supple .mental CDP hearing pursuant'to a remand of this Court . . The

determination was reflected in an initial "Notice of Determina-

tion ConcernLng .Collection Action(s )

Under Section 6320 and/ o

6330" .and in~a "Supplemental Notice of Determination Concernin g

Collection Action(s), Under Section 6320 .and/or 6330!1 .

We will

eventually review the merits of that collection determination . 2

Currently before us, however, is Mr . Tucker's motion fo r

remand . . That motion presents a,question not about Mr . Tucker's

tax liabilities nor-about the collection decisions of .-the Office

1Unlessjotherwise indicated, all section references are to

the Internal Revenue Code ("Code", 26 U .S .C .) .

2In 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

supplemental notice of determination and Mr . Tucker's cross

motion for summary judgment asking that we hold'that the

supplementalnotice reflected an abuse of discretion by the

Office of Appeals . Those cross-motions address the merits of the

CDP determination, and we do not decide them in this opinion .

5 -

of Appeals in this case but about the constitutional validity-of

that Office' .s staffing of_CDP proceedings that it conduct s

pursuant to section 6330(c) The settlement officers wh o

conducted Mr . Tucker's :CDP hearings and the teammanager wh o

signed and issued the notices-of : determination were ,alljhired .by

the Commissioner of Internal Revenue pursuant to, section 7804(a) .

and were not appointed by the President or the . .Secretary of th e

Treasury .

Tucker contends, .however,•that the,"appeal s

officer" in section 6330(c) is an "Officer` of the Unite d{ ;States".. .

who, according to the Appointments Clause of Article 11,4{ Section

2, of the-U . S . Constitution, must-be appointed either by .the

President or by one of "the Heads of Departments" (in this case, .

the Secretary of the Treasury) . Because .the :settlement~ .officers

who handled Mr .,Tucker's .CDP proceeding were not :so...appointed,

Mr . Tucker contends that . hehas not yet . been given the CDP

hearing that Congress mandated,=and heaasks us to, remand the

matter for a valid hearing before .a,duly .appointed officer .A

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

6336(c)(1) _

Appointments'Clause,l for two reasons : First,-there is no office

"established by Law" to which the clause applies ; and :second, the

- 6 CDP,hearing officer does not exercise the "significant authority"

that definesG.an "office :' according to the relevant case law .

Background

The facts pertinent to Mr . Tucker's motion to remand can be

stated very . succinctly :` He properly requested a CDP hearin g

pursuant to section 6320, and the employees of the office of

Appeals who conducted his CDP hearings and issued his notices o f

determination were not appointed by the -President or the

Secretary oflt'the Treasury .

Those facts can be elaborated in somewhat more detail

without any dispute, on the basis of the=pleadings, the parties'

motion papers, and the supporting exhibits .'attached thereto .

Tax years 2000, 2001, and 200 2

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 assessedthe income tax liabilities that Mr . Tucker had selfreported but'inot 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",

6330(a)(1) and 6331(d)(1),

pursuant to section s

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 .

July 22 .,

2004, the . IRS sent to .M

Tucker a "Notice .of Federa l

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 .200 2

CDP hearin g

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 Hearing The

CDP hearing was held as a telephone conference 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 OI C

On July 25, 2005, Mr . Tucker's counsel sent to the,

settlement officer a Form 656, "Offer in Compromise" (OIC), .tha t

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, 200 .1, 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 determinatio n

After filing his petition, Mr . Tucker filed a motion fo r

summary 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 o f

determination no later than October 16, 2 006 .

The Office of Appeals then assigned a settlement office r

(i .e ., a different settlement officer from the one who ha d

conducted Mr ;,. Tucker's initial CDP hearing) to .conduct a

supplemental . 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 officer

and Mr . Tucker's counsel . On September 12,

2006,

the same tea m

manager who had issued the first notice of determination 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 Commissioner pursuant to

section 7804(a) .

Mr . Tucker's motion to reman d

.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 motio n

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 addres s

Mr . Tucker's motion for remand .

Discussion

To consider the applicability of the . Appointments Clause . t o

the "officer1or 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 o f

Appeals and its CDP function, and then apply Appointments Clause

analysis to the role of the CDP "officer or employee" .

The Appointments Claus e

The purposes of the Appointments Claus e

The framers of the . United States Constitution divided the

power of the Federal Government among three branches-legislative,1 ;,executive, and judicial--as a safeguard-agains t

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 hithe r

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 Appointments 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 Consuls, Judges

of the supreme Court, and all other Officers of the

11 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-President alone, in the Courts of Law,

or in the Heads of Departments .

The Constitution itself provided explicitly for the appointment

of very few Federal officials, and it left to future political

process the creation of the great majority of "Officers of the

United States" in the executive and the judiciary . It provided

that their offices would be "established" by the Congress 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 creat e

and fill governmental off ices -a reflection of the separation-ofpowers framework of the U .S . Constitution . See Freytacr'v .

Commissioner , 501 U .S . 868, 878 (1991) ; The Federalist No . 47

(James Madison), No . 77 (Alexander .Hamilton) .

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 appointment power

to inappropriate members of the Executive Branch" .

Freytag v .

Commissioner , 501 U .S . 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,

- 12 it again has' adopted a more diffuse and less accountable mode of

appointment than the Constitution requires") . When Congress

establishes an "inferior officer" in the Executive Branch, it ca n

vest the appointment power for that officer no further from th e

President than the Head of a Department whom the President

himself has appointed . There is, so to speak, only one degree of

separation between any duly appointed officer and the President ,

thus maintaining the locus of executive power in the President

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,' the

Framers sought to "ensure that those who wielded it were

accountable to political force and the will of the people . "

Freytag v . Commissioner , 501 U .S . at 884 .4 James Madison argue d

3The 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 Revenue), 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 .

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

(the Appointnents .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 i n

(continued . . .) .

13 -

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 themselves" .

.Fourth :

This disposition was also designed to .assure a higher

quality of appointments : The Framers anticipated that

the President would be less vulnerable 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,

reputation .. "

Edmond v . United States , 520 U .S . 651, 659 (1997) (quotin g Th e

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

Beloff Ed .

1987)) .

The distinctions in the Appointments Clause :

"Officers", "inferior Officers", and non-officer

employee s

1 .

"Principal" officers vs . "inferior" officer s

The rules of the Appointments Clause apply to " all othe r

Officers of the United States" (emphasis added), i .e . ,

officers other than those whose-appointment is provided elsewhere

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 .

4( . . . continued )

the . quality of the individuals they appoint ; and * * * they are

directly answerable to the President, who is responsible{ to his

constituency for their appointments and has the motive and means

to assure faithful actions by his direct lieutenants") .

- 14 Germaine ., 99. U .S . 508, 510 (1879) (emphasis added) . As a general

rule, then, :hall "officers" must be nominated 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 la w

applying this exception distinguishes these "inferior officers "

from "principal officers" . The term "principal officer" is not

in the Appoilntments 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 conceives of

"principal officers", who must in every case be nominated 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 the y

[in Congress] think proper, in the President alone, in the Court s

of Law, or in the Heads of Departments ."

Id .

2 (emphasi s

added) .

"The line between

`inferior' and `principal'

officers is one

that is far from clear , and the Framers provided little guidance

into where it . should be drawn ."

Morrison v . Olson , 487 U .S . 654,

671 (19188) ., Bu in this case Mr . Tucker contends only tha t

,1 1

- 15 -

appeals officers are inferior officers , not that they are

principal officers , so that the principal-inferior distinction is

not at issue .

"Officers" vs . non-officer employee s

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 th e

United States

* * *,

Employees are . lesser functionarie s

5See Jerry L . Mashaw, "Recovering American Administrative

Federalist Foundations, 1787-1801", 115 Yale L . .J .1256,

Law

1268 (2006) ("these Federalist-era state builders were not

operating 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 ambiguity made the legal structure of of ficeholding . 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

;, be

superiors, to the means and extent to which they should .

. id . at 1319 .

legally responsible in court")

16- -

subordinate r to officers of the United States

Id .' .at 12 6

n . .162 . 6

Mr . Tucker does not dispute the existence of this subofficer 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 .Constitu`tion suggests that non-officer employees cannot

properly exi'st .in the Executive Branch, or that they cannot be

numerous, it,,should be noted that the same question could arise

with'respectto the other two branches of Government . The

Constitution has no explicit provision whatever that authorize s

6Officers 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 at n .162 (1976) . Whatever its

apparent connotation, that phrase simply starts with the wor d

functionary'--which comprehends 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 functionaries named, is a matter resting in the

discretion of Congress")--and observes that employees subordinate

to those functionaries are "lesser functionaries" . The Buckley

court distinguished "Officers of=the United States", who are

subject to the Appointments Clause,-from non-officer . employe es

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 .

17 -

Senators, Representatives,-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 .' For many years congressional employees were

few in number--but .there were always at least a few : By 1 .792 the

list of personnel for the House included the clerk of the Hous e

of Representatives, a principal . clerk, two engrossing clerks ,

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

door-keeper, and the list for the Senate included the secretary- .

of the Senate, two clerks, ,a door-keeper, and .an assistant doorkeepere--a total of thirteen, none of whom were explicitl y

7As 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 .

'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, 1 .793), printed .in I Documents, Legislativ e

and Executive, of the Congress of the . United States, at 57-58

(Gales & Seaton, 1834) (hereinafter,,"1792 Roll") . Treasury

Secretary Alexander .Hamilton submitted the 1792 Roll,to,the

Senate 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 .

(continued . . . )

18 -

authorized in the .Constitution . 4Currently, the total employmen t

of-the Senate and . House numbers in the thousands . 9

For the'~ .judicial branch the Constitution does include an

explicit provision for,subordinate personnel, in . that . th e

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 Officers" . The

Judiciary Act of 1789,

enacted by the first Congress, provided . .

for clerks of court and, marshals, 10 and . the 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 function s

for which additional employees beyond "inferior officers"

would,

seem to be inevitable, if not initially then at least eventually .

,( . . ..continued)

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

transmitted it to Congress and called it "a roll of the persons

having office or employment under the United States ."

'See U .S . . Office of Personnel Management, Federal Employment

Statistics ,

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

10Act of~Sept . 24,', 1785,

ch . 20, secs . 7 .,

27,1 Stat . 76,

97 .

11 Id . secs . 3, 5, 1 Stat . . 73, . 75 ;,Act .of Sept . 29, 1789,

ch . .21,' sec .,~2, 1 . Stat . 93 .

- 19 -

Currently the Judicial Branch employs thousands of nonofficers .1 2

.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 constitutionall y

possible (they are), but whether .CDP "officer [s] or employee[s] "

are properly among their number . .

Modes of appointment under the Appointments Clause

The Appointments Clause provides three modes of appointment

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 impart I .B .l,,whil e

12See 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 .

( .2010) (slip op . at 30) (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 Secretary .

Respondent. does not contend that the IRS itself is a Department

nor that the Commissioner 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

supervision of the Secretary of the Treasury ." Sec . 7801(a) ; see

Freytag v . Commissioner , 501 .U .S . at 886 ("the term `Department'

refers only to '"a part or division of the executive government ,

(continued . . .)

- 20 -

the Appointments Clause does allow an'exception for inferior

officers to be appointed by the President alone or by th e

Secretary, the terms of that exception are that " Congress may by

Law vest the Appointment" in the President alone or the Head of a

Department . Where Congress has not made any such exception "by

Law",-then the default rule applies .14 Section 7804(a )

I .

authorizes the Commissioner to appoint IRS personnel "[u]nless

otherwise prescribed by the Secretary" .

We assume that, by tha t

statutory phrase, Congress has, for purposes of the Appointments

Clause, 'ves't[ed]" in the Secretary the power to appoint IRS

personnel ifl`he chooses to so "prescribe" . Therefore, if a given

IRS positionP(such as a CDP hearing officer) were found to

constitute an "inferior office[]" requiring constitutiona l

13( . . .continued)

as the Department * * * of the Treasury,"' expressly 'creat[ed]'

and `giv[en] . . . the name of a department' by Congress .

Germaine , 99U .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 .

UnitedState`s , 400 .U .S . 517, 534 (1971) ("the Internal Revenue

Service is organized to carry out the broad responsibilities of .

the Secretary of the Treasury under § 7801(a) of the 1954 Code

for the'admihistration and enforcement of the internal revenue

laws") ; LaSalle Rolling Mills, Inc . v . U . S . Dept . of Treasury ,

832, F .2d 390 1M, 392 (7th Cir : 1987) ("the IRS * * * is an agency of

the Treasury Department") .

14See 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") .

21 -

appointment, 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 fulfilled .

However, respondent does not contend that the Secretary has made

any such prescription or has appointed any :personnel inithe

Office of Appeals .

.Consequently, their hiring does not ;conform

to the Appointments Clause .

Appointment of revenue personnel in the

late 18th . century

To apply the Appointments Clause to internal revenue

personnel who are affected by the 1998 CDP provisions, we tak e

instruction from the manner in which internal revenue personnel

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 .

(2 .010) (slip op . at 30),

particularly where it concerns revenue personnel, who were by no

means an outlying example of early Federal employment . On the

contrary, in that era revenue collection was a significant and

conspicuous Federal effort--both quantitatively and

- 22 -

qualitatively ." Nonetheless, very few internal revenue

personnel were appointed under the Appointments Clause .

1 .'.

The-Department of the Treasur y

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 ." Nine days later Congress authorize d

the Secretary to "appoint such clerks * * * as * * * [he] shal l

find necessary" .'.' The organizing Act charged the Secretary "t o

15In 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

Administrative 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

administratiye system devised by the early Congresses" . Mashaw,

supra at 1278 .

16Act 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

responsible for "collection of the other revenues of the United

States" (i .eI ., other than "duties on impost and tonnage") . See

Act of May 8, 1792, ch . 37, sec . 6, 1 Stat . 280 .

17See 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 o f

May 8, 1792,Ich . 37, sec . 11, 1 Stat .'28l ("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"

23 -

superintend the collection of the revenue",18 a_function that

would obviously require anumerous staff . However, in 1792 the

entire staff of the Treasury Department--from Secretary down t o

"messenger and office-keeper" consisted of 110 persons .

The personnel actually employed in the collection of revenue

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 collectio n

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 eac h

port "a naval officer., collector 1201 and surveyor shall b e

18Act 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 treasury, 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") .

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

36-37 .

20These Presidentially appointed external revenue

"collectors" were different from the internal revenue

"collectors" authorized in 1798 and appointed by "supervisors" ,

as discussed infra p . 30 .

- 24 -

appointed", presumably by the .President .21 It was the duty o f

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" .2 2

The next year, 1790, Congress provided that, for the .

collection of import duties, "there shall be established and

appointed, districts, ports and officers", with one or mor e

21Act 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 falling into three groups,

one of whichIconsisted of "collectors, naval officers, [and]

surveyors" who are said to have been "appointed by the

President" . 1i 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, 178,9, 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 .l .

22That position of "principal officer" was established a

month later as Secretary of the Treasury .

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 Congress " vest[ed] * * * in the Heads of Departments" . See

4 Op . Atty . Gen . 162 (1843) ("approbation" of the Secretary

required for "inspectors of the customs " in Act of Mar . 3, 1815,

ch . 94, sec . . i'3, 3 Stat . 232 , constituted appointment by the

Secretary for purposes of the Appointments Clause) .

districts in every State .23 The\,Presidentially appointed posts .,

"collector;, naval officer and surveyor" .were-retained• in thi s

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'previous .year' s statute

had required .2

In 1799 Congress authorized the President . to buildiasmany

as ten ships called "revenue cutters", .each tobe•manned by ."one

captain or master, and not more .than three lieutenants or mates,

first, second,and third, : and not ;. more than seventy'men, t

including non-commissioned officers gunners .rand .mariners ."25

(Emphasis added .) The statute provided that the .President

.appointed the°"officers" of the-revenue cutters, such as th e

captains ..or .masters, but-did not appoint the numerous others, .

23Act of Aug . 4, 1790,

ch . .35, sec .

.24The 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 .cas e

of their disability or death "until ,~successors shall belduly .,

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

deputies' positions were only temporary, we assume ,that1they were

.not "offices" within the meaning of the Appointments Clause, se e

infra part II .B .1, and-that the clause is therefore not

implicated even where those non-appointed deputies were,,

(temporarily) given substantial author-ity"and discretion .

25Act of March 2, :1799, ch . 22, secs .: 97-and `98 ,

1 Stat . 699 .

26 .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 .

supr a

note 24 .

Thus, almost all of the persons employed for external

revenue 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 persons "specially

appointed") . : The only permanent non-appointed positions

referenced in the statutes were the "non-commissioned officers,

gunners and mariners" for revenue cutters .2 8

26 Id .

se1c . 99., 1 Stat 700 . The preamble to the 1802 Roll,

at 261, describes "[t]he officers employed in the collection o f

!the external,revenue" as falling into three groups, one of which

consisted of, inter alia, "masters and mates of revenue cutters"

who are saidlito have been "appointed by the President" .

27 2d .

se'~c . 101, 1 Stat . 700 . The statute also authorized .

the collectors to hire temporary and occasional inspectors .

Id . . ,

secs . 14, 1911; 38, 53, 1 Stat . 636, 640, 658, 667 .

28 Id ., secs . 97 and,98 . The 1802 Roll does not list "noncommissionedl!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 .

27 Thus the Department of the Treasury and its external revenue

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 collectio n

In 1792 Congress established the office of the Commissioner

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 authorized for each district "a

.supervisor" and "inspectors" who were to be appointed by th e

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 directionof th e

{

supervisors and inspectors of the revenue, and .other officers o f

29Act 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) .

- 28

inspection" .," A similar act in 1796, also imposing duties o n

carriages, referred to "officers or persons employed under" the

supervisors and inspectors .32 In 1798 the supervisors were

authorized to hire clerks .33 These "proper officers" (authorized

in 1791), "other officers of inspection" (authorized in 1794),

"officers orpersons 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 July11798 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 valuations . . Act of July 9, 179 8

("An Act to provide for the valuation of Lands and DwellingHouses, and the enumeration of Slaves within the United States "

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

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

33Act of July 11, 1798, ch . 71, sec . 2, 1 Stat . 592 ; se e

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

direction of ;;the supervisor of the district of South Carolina .

See Act of. Jan . 30, 1805, ch . 11, sec . 1, 2 Stat . 311 .

34Act 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 .llay and collect Taxes" ; but before the ratificatio n

-of the 16th Amendment, "No capitation, or other direct, Tax shall

be laid, unless in• proportion to the Census or Enumeration herein

before directed to be taken ."

-• 2 9

ch . 70, sec . 1, 1 Stat . 580 . For revenue purposes Congres s

subdivided the States into various "divisions",

id . , and provided

that the President would appoint a "commissioner" for each

division,' id . .sec . 3, 1 Stat . 584 . (Each of the commissioners

was authorized to appoint a clerk,

id .

sec .

and as is noted

below, each commissioner was authorized in_18 .00 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 districts,

within each of which they shall appoint one respectable ;

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 assessor s

(appointed not by the-President or the Secretary but byrth e

Presidentially appointed commissioners )

were "to value an d

enumerate the•said dwelling-houses, lands and slaves" ,

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) 1

* * * involved a wide area of official discretion .! It

required a valuation .o,f 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 .

30 Leonard White, The Federalists : A Study in Administrative

History, 452' (1948) .

For the,tcollection itself, the 1798 Act provided that the

supervisors i,(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 . ., 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 collect 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

Presidentially appointed commissioner, but the commissioner . did

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 valuation di d

35 The 1802 Roll, at 261, confirms that the "collectors and

auxiliary officers [were] appointed by the supervisors" .

36See, to the same effect , Act of Jan . 2, 1800, ch . 3,

(continued .

have an exception : Where a property owner had submitte d

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 supervisors

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 position

different from the "surveyors" appointed by the President

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 .

36(

sec . 25 . (In 1800 the surveyor of the revenu e

. . .continued)

sec . 1, 2 Stat . 4 .

37See also Act of Jan . 30, 1805, ch . 11, sec . 2, 2 Stat .

312 .

32-

was also empowered, when property had been omitted from-the

lists, to "make a list and valuation thereof" .31 )

In 1800 the Presidentially appointed commissioners were

permitted to hire "such assistants as they shall find necessary,

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 byjthe President or the Secretary (and whose positions

were not temporary, like .the deputies') :

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

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

• "olfficers or persons employed under" the supervisors

and inspectors, Act or 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,

chi . 70, sec . 24 ; an d

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

39Act of Jan . 2, 1800, ch . 3, sec . 2, 2 Stat . 4 (emphasis

added) . See also, to the same effect, Act of May 10, 18 .00,

ch . .53, sec .°2, .2 Stat . 72 .

- 33 • -"assistants" to .the commissioners, Act of Jan . . 2, 1800,

ch . 3, sec . 2 .

The 1802 Roll, at 280-288, lists 16 Supervisors and 2 4

Inspectors, thus totaling 40 Presidentially appointed internal

revenue . personnel . It also lists 40 clerks, 361 collectors, 3 4

collectors' clerks, and 102 "Auxiliary officers" (apparently a

generic term for the other personnel authorized in the statutes) .

The "collectors and auxiliary officers,

supervisors ", . id .

appointed by the

at 261 (emphasis added), are significantly mor e

numerous than the Presidentially appointed supervisors and

inspectors .

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 ;" and the pattern of appointment s

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 ministeria l

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

41See Lucius A . Buck, "Federal Tax Litigation .and the Tax

Division of the Department of Justice", 27 Va . L . Rev . 8,73,

875-877 (1941) .

- 34 responsibility in internal revenue statutes enacted during the

War of 1812,42 during the Civil War and Reconstruction,43 afte r

42See 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) ,

43See Act of Aug . 5, 1861, ch . 45, secs . 11 ; 34, 51, 12

Stat . 296, 3,03, 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 .i.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 properlty 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 inspectors) .

- 35 -

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 i s

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 Secretary .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" . Seca 7804(a) .

44See 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 sufficient

for all legal purposes) .

45See Act of Sept . 8, 1916, ch . 463 ; secs . 16-22, 39 Stat .774-776 (Deputy Collector had powers similar to those in 1913) ;

Act of Feb . 24, 1919, ch . 18, sec . 1317, 40 Stat . 1146-114 8

(Deputy Collector had powers similar to those in 1913 and 1916,

and .could administer oaths and . take evidence) .

- 36 II .

The Internal Revenue Service Office of Appeals

The legal basis for the office of Appeal s

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 Code in 1998 ,

nor by the several other provisions of the Code that mention the

Office of Appeals .". Rather, all these statutory provisions

presume its prior existence . In its current form the office o f

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

personsias the Commissioner deems proper for the

administration and enforcement of the internal revenuelaws, and the Commissioner shall issue all necessary

directions, instructions, orders, and rules applicable

to such persons .

.Congress thus provided that, except as the Secretary otherwise

prescribes, it is the Commissioner and not the Secretary who

shall "employ" (not "appoint") other personnel in the Internal

46See 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 dispute 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 confidential information on taxpayer

software) . Mr . Tucker describes-section 7122(e) as if it

provides fora "right to appeal * * * to an Appeals Officer", but

the statute mentions no officer .

Revenue Service .47 Pursuant to this congressional mandate, the

Commissioner established the Office of Appeals and employed

personnel to staff . that office . . The stated mission 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) . 4 8

B .

A brief history of the Office of Appeal s

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 submitted to it by the

'Commissioner .- The Advisory Tax . .Board was soon replaced by the

Committee on Appeals and Review, which was given the authority to

hear administrative appeals from taxpayers and redetermine their

deficiencies pursuant to the Revenue Act of 1921, ch . 36, 4 2

47One exception to this general rule is present in 5 .U .S .C .

section 9503(a) (2006), which authorizes 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 individuals were not IRS

employees before June 1, 1998, and that their appointments ' are

limited to no more than .4 .year s

"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) .

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 th e

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

AnniversaryEdition 3-6 (Nov . 1987) .

Howeverr, 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 appeal s

function . One of the four required features of the plan o f

reorganization that the IRS was to undertake was that it "ensure

an'independent appeals function within the Internal-Revenu e

Service" .

Id . , sec . . 1001(a)(4), 112 Stat . 689 . Explici t

reference to: the Office of .Appeals was added to the Code not onl y

in,the new CDP procedures in sections 6320 and 6330 but also in

sections 6015(c)(4)(B)(ii)(I), 7122(d)(2) (now designate d

(e) (2)) , 7123, 7430(c.)(2) and (g)(2) (A) , and 7612(c) (2) (A) .

49The 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 i Appeals, and the office of Appeals is the successor

to the Special Advisory Committee . See id .

39 C.

"Appeals Officers" in the Office of Appeal s

1 .

The Pre-CDP Role of the "Appeals Officer "

The position of "Appeals Officer" has existed within th e

Office of Appeals since 1978 . IRS Document 7225 .,

supra at 3-5 .

.Mr . Tucker does not argue that any office of Appeals' personne l

were "inferior Officers" before the passage of the RRA, but he

asserts that as a result of the RRA those positions possessed

authority that may be consitutionally exercised only by .a n

"officer of the United States" .

The position of "Appeals Officer"--as well as earlier

positions within the Office of Appeals and its predecessors--had

the authority to make deficiency determinations and, hea r

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

which enacted the CDP regime ., The appeals function had the

authority to redetermine deficiencies since 1921 . IRS Document

7225,

supra at 3 . And it had the authority to hear collection-

related appeals under the collection appeals program (CAP) since

1996 .50 IRM pt . 8 .24 .1 .1 .1 . (May 27, 2004) .

50Today 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

Id .

either a CAP or CDP,hearing with respect to a lien or levy .

However, taxpayers are eligible for CAP hearings in more

circumstances than CDP hearings . Publication 1660, Collection

Appeal Rights 3 (rev . 03-2007) . For example, a taxpayer is

eligible fora CAP hearing when a CDP hearing is unavailable

because the taxpayer already had a CDP hearing or failed to

timely request such a hearing . IRM pt . 8 .24 .1 .1 .1(6) (May 27 ,

(continued . . .)

40 "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, 20014) . In 1997 CAP was expanded to implement the

Taxpayer Bill of Rights,2, Pub . L . 104-168, .110 Stat . 145 7

(1996), in order to provide taxpayers with the right to appea l

the proposed', termination of'installment agreements . IRM pt .

8 .24 .1 .1 .1(2') (May 27, 20. 04) ; see also sec . 7122(e)(2) . Althoug h

Congress did . not codify CAP, the legislative 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 .1'

"Collection Due Process" procedures added to

the Code in 199 8

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 )

50 ( , . continued)

2004) .

41 -

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 subchapter 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 . Explici t

.mention of "appeals officers" was introduced by the RRA into

these CDP provisions .52 In the following brief description o f

"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 perform s

duties that may be performed by an employee not subject to .the

Appointments Clause does not transform 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") .

52The 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 conferences

between appeals officers and taxpayers seeking appeals in rural

or remote areas ." (Emphasis added .)

- 42

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 IR S

must provide written . notice of that filing to the taxpayer . Sec .

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

an administrfative hearing to "be held by the Internal Revenue

Service Office of Appeals ."53 Sec .

Similarly,

6320(b)(1)

(emphasis added), .

before proceeding with a levy, the IRS must- issue a

final notice of intent-to levy and must notify the taxpayer of

the right town administrative hearing to " be held by th e

Internal Revenue Service Office of Appeals ." Sec . 6330(a) and

(b)(1) (emphasis added) . Section 6330'(b)(3), entitled "Impartial

officer " (emphasis added), provides that "[t]he hearing unde r

this subsection shall be conducted by an

officer or employee wh o

has had no prior involvement with respect to the unpaid tax" at

issue (emph Li.sis 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 )

53To 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) .

- 43

(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 appropriateness of the

collection action and offers of collection alternatives .

Sec . 6330(c)(2)1(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 a n

opportunity to dispute the tax liability .54 Sec . 6330(c)(2),(B) .

Section 6330(c)(3) then provides, "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 intrusive than necessary .

The authority to conduct CDP hearings and make

determinations 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, IR M

54Mr . 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 functions, not

only those that were operative in this case .

15 Mr . Tucker complains that "AARS is a fancy title for an

.(continued . . .)

- 44 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 subsequently approved o r

.overruled by a team manager,, who makes the final determination o n

behalf of the office of Appeals .

If the taxpayer is not satisfied with the determination h e

receives from the Office of Appeals, the taxpayer may "appea l

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

challenges to the underlying liability are at issue (under

section 6330(c)(2)(B)), the Tax Court reviews the determinatio n

de novo .

Davis v . Commissioner , 115 T .C . 35, 39 (2000) . Fo r

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, 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) .

55(

. .continued)

even lower pay grade person who the IRS used to call a

.'screener"''land, 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 hearings to employees untrained in or incapable of the task,

their inadequate performance would be subject to review by this

Court .

-'4 5

Congress enacted these procedures in order to grant

taxpayers "'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- :oremployee who conducts the CDP hearing i s performing a critica l

role in an important tax proceeding .

3 .

Post-CDP hearing procedure s

However, because the "finality" of an office of Appeals

determination is,relevant to the :appealsofficer''s status as an,

"officer" under the Appointments Clause ., it is pertinent to note

the circumstances in which the IRS may face again the sam e

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),

Collection issue s

If the CDP officer or employee enters into an installmen t

agreement under section 6159, a closing agreement under section

- 46 7121, or an OIC under section 7122 with the taxpayer, then of

course the agency will be bound under general contract principles

to honor the]]agreement .56 However the agency is also bound t o

honor such agreements that it enters into outside of the CD P

context, whether by the office of Appeals or by another branch of

the IRS . Consequently ; the authority to enter into suc h

agreements on behalf of the .IRS is not peculiar to an officer or

employee conducting. a CDP hearing .

Howeverl, 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 b e

put in "currently not collectible" (CNC) status, see IRM pt .

8 .22 .2 .4 (Mar . 11, 2009) 1 _ 8 .23 .3 .13 (Aug . 28, . 2009) ,

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

IRM pt . 8 .221 . 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 b e

released, see sec . 6343 ; IRM pt . 8 .22 .3 .9 .5 (Apr . 8, 2009) . W e

find no authority addressing any binding character of thes e

"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

accepted byIthe 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) .

-'_47 determinations, 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--

collection actions taken or

(A)

proposed with respect to such determination ;

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 jurisdiction hearing .

Even so, the sense in which Appeals' collection determination can

be said . to be binding is qualified in .several significant .

respects :

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

functions . The Office of Appeals itself, if it "retains

jurisdiction", must retain jurisdiction to modify its

determination .

- 48 -

Second,'! if the Office of Appeals sustains the notice of lie n

or intent to ; levy, there are circumstances in which the IRS57

thereafter may forgo collection or make accommodations

nonetheless .,, Collection personnel may perform the investigation

required by section 6331(j) and decide not to proceed with a lev y

against specific property . Collection personnel retain the power

to withdraw a notice of lien pursuant . to sections 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 proposal of an installmen t

agreement or an OIC, and those personnel have authority . to accept

that new proposal notwithstanding the Office of, .Appeals'

rejection ofi the taxpayer's prior proposal . See IRM pt .

1 .2 .44 .2 .5 8

Third, !on the other hand, if the Office of Appeal s

determined not to sustain the notice of lien or of proposed lev y

571f the taxpayer challenges the validity of a lien in .an

action .to quiet title under 28 U .S .C . section 2410 in Federal

District Court, the Government will be represented not by the IR S

attorneys in" the office of Chief Counsel but by the Department of

Justice, pursuant to 28 U .S .C . section 516 . If the Department of

Justice concludes that the lien is . not valid, then there is no

apparent basis-for arguing that the Government is bound by the

Office of Appeals' contrary determination sustaining the lien .

58See 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") .

- 49 that was challenged in a CDP hearing ,

IRS collection personnel

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 o r

employee may address in the agency-level CDP hearing 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 .

50 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 th e

IRS ought toproceed with collection, the officer or employee is .

instructed by agency regulations to request and obtain detaile d

financial information about the taxpayer during the hearing, an d

to make a determination on the basis of that information . See 26

C .F .R . sec . 301 .6330-1(e)(1), Proced . & Admin . Regs . ("Taxpayer s

will be expe cted to provide all relevant information requested b y

Appeals, inc,

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 . . Thi s

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 the y

be . Instead, the Office of Appeals retains jurisdiction to

continue tojlconsider collection issues over time . This

flexibility'ihelps to ensure that, on a continuing basis ; the IRS

will tailor'I its collection . activities to the taxpayer's current

circumstances and that the IRS will not take collection actio n

- 51 -

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 i n

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

binding on the Tax Court, which reviews for abuse of discretion .

More important for evaluating "finality" ., however, is the fact

that even the IRS as a litigant is not . bound by the position 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 position--in the litigation

or in the settlement of it--that is different from the position

reflected in the Office of Appeals's .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' determination 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 .

- 52 -

Consequently,'the CDP determination of the Office of .Appeal s

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 hi s

underlying tax liability may raise such a dispute in the agencylevel CDP hearing, pursuant to section 6330(c)(2)(B) . In such a

circumstance, the officer or employee conducting the . hearing .for

the'Office o;f Appeals will determine the IRS's position on tha t

taxpayer's 1piability . Respondent explains that, in practice, a

settlement officer will conduct the CDP hearing and will refe r

the case toi an appeals officer to consider the issue o f

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 determination that is subsequently

approved orM'overruled by a team manager, who makes the final

determination on behalf of the Office of Appeals . The settlemen t

officer will not reconsider the appeals officer's determination

with respect to the liability issue, . and generally, neither wil l

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 o f

Procedural Rules), that "[t]he Appeals officer has the `exclusive

53 and final authority' to determine the liability ."59 On the 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 determinations, 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 determinations 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 subsequent years") . We must therefore discern the sense i n

59This provision in the regulations does not actually create

"exclusive and final authority" but rather presumes suchauthority 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 . . 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 deficiency determination . If the

delegated authority to make the IRS's "exclusive and final" .

determination 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 .

54 which the CDIP determination of underlying liability may be said

to be "final" .

If the liability determination is

favorable to the taxpaye r

• If the liability determination made by the office of Appeals

in the CDP context is favorable to the taxpayer, then the CD P

process generally ends with a unilateral agency determination not

to proceed with collection .60 Although the team manager i n

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), generall y

no closing agreement is executed, and no litigation ensues .

Respondent states that, as with a liability determination in

'notice of deficiency, "an underlying liability determination in a

CDP case is also binding on the Examination function . The

.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 tolliability, 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 agreement, 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 effelctuated 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 .1ii; .1(2) (Oct . 19, 2007) ("APS will abate the SFR/ASFR

assessment and reverse withholding as requested by the hearing

officer"), or by collection 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(l)

(Nov . 1, 200',7) ("CDP `back-end' work") .

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) tha t

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 , sura . The case would be defended not by the IRS

but by attorneys of the Department of Justice,

see 28 .U .1S .C . sec .

"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 quasibinding 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 Tax Court) ; but the CDP determination may arise in

the absence of a notice of deficiency (as when a taxpayer

disputes 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)

516 (2006),62 which also has settlement authority in such cases,

see sec . 7122 .63 But even .in refund suits handled by th e

Department df Justice the IRS must request any counterclaim, se e

sec . 7403, must give a defense recommendation, see 28 U .S .C .

sec . 520 (2006), and must give its views on proposed settlements .64 Inithat context, it is the Office of Chief Counsel, and

not the Office .of Appeals, that speaks for the IRS ; and Chie f

. .Counsel is not bound by the appeals officer's CDP determination .

IRM pt . 34 .81 .2 .11 .5(4) (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 sustain, taking its cue not from the Office of Appeal s

62By 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 .

63An 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

Components 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 Directive No . 135, reprinted in 28 C .F .R . pt . 0 ,

subpt . Y, app

64See id . (delegating settlement authority only .in cases in

which the agency agrees, and thereby 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 .

57 -

but from the Office of Chief Counsel, which must be independent

and impartial .6 5

Thus, a pro-taxpayer CDP determination on underlying

liability has at most a limited "finality" within the agency .

ii .

If the liability determination is no t

favorable to the taxpaye r

If the liability determination made by the Office of Appeal s

in the •CDP context is not favorable to the taxpayer, then there

are several contexts in which the IRS may take a position

different from that reflected in the CDP determination .

(A) .

CDP litigatio n

The taxpayer .may appeal the adverse CDP liability

determination 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 3 9

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 o f

65See IRM pt . 1 .1 .6 .1 (July 29, 2005) ("Counsel must

interpret the law with complete impartiality so that the American

pubic will have confidence that the tax law is being applied with

integrity and fairness") .

- 58 Procedural Rules ; Rev . Proc . 87-24, 1987-1 .C .B . 720, and it ha s

the authority to settle CDP cases without the concurrence of the

Office of Appeals, see Rev . Proc . 87-24,

35 .5 : 1 .4 .3(2),, 35 .5 .2 .7(2),

supra ; IRM pt .

35 .5 .2 .14(2)(B) (Aug . 11, 2004) .

If the ,`taxpayer who . receives an adverse notice o f

determination reflecting the officer's or employee's decisio n

about underlying liability decides not to appeal to the Ta x

Court, then the IRS may nonetheless meet this taxpayer again in a

variety of other circumstances in which, again, the CDP liability

determination will not be binding on the IRS :

(B) .

Audit reconsideratio n

Audit reconsideration is a substantive review of th e

taxpayer's liability that may result in the abatement of an

assessed tax liability . Specifically, audit reconsideration "i s

the process the IRS uses to reevaluate the results of a prio r

audit where additional tax was assessed and remains unpaid, or a

tax credit was

reversed ." IRM pt . . 4 .13 .1 .2 (Oct . 1, 2006) . The

IRS's authority to conduct an audit reconsideration is grounded

in section 6404(a), which provides that "[t]he Secretary i s

authorized to abate the unpaid portion of the assessment of any

tax or any liability in respect thereof, which--(1) is excessive

in amount, O r (2) is assessed after the expiration of the perio d

of limitations properly applicable thereto, or (3) is erroneously

or illegally assessed ."

Audit reconsideration ..is not precluded by a'prior°CD P

determination . See IRM pt . 4 .13 .1 .8 (Oct . 1, 2006) (listing

circumstances in which "a request for

[ audit] reconsideration

will not be considered" ; prior CDP hearing .is .not listed) .

Therefore ,

a taxpayer who has received . an adverse CDP

determination with respect .to his underlying liability could

nonetheless have his liability redetermined in•the'cours,e of an

audit reconsideration .

District Court collection sui t

If the taxpayer does not pay the,tax, the IRS may .request .

the Department of Justice to file a collection suit against the

taxpayer in Federal District Court . See sec . . 7403(a) ("th e

Attorney General * .*

* at the request of-the Secretary, ma y

direct a civil action to be filed in a . district court") . .- It is

that

{

the Office of Chief . Counsel,,and~not the Office of Appeals,

decides for the IRS whether to make that request, and the Chief

Counsel is not bound,by the appeals officer' .s CDP determination

of liability . See General Counsel Order No . 4 (rev . Jan . 19',

2001) .

Request for abatement , refund

claim -and refund litigatio n

The taxpayer may request an abatement of tax, .or he may pay

the tax and claim a refund We are aware . of no reason or rule

requiring that, when the IRS-then considersadministratively tha t

request for abatement or claim , for refund ,

it is bound by the

- 60

appeals officer ' s adverse CDP determination .

refund claim ,

If the IRS denies a

the taxpayer may file a refund suit in Federal

District Court ., or the Court of Federal . Claims . As we noted

above, the IRS will be asked for its defense recommendation an d

for its views on proposed settlements .

be the . Office of Chief Counsel ,

In that context , it will

and not the office of Appeals ,

that will speak for the IRS, and the Chief Counsel will not be

bound by the appeals officer's CDP determination .

See supra part

II .C .3 .b .i .

In sum, the collection and liability determinations made in

CDP hearings by officers and employees of the office of Appeals

are an important aspect of the agency's administration of the ta x

law, and they affect to a greater or lesser extent the agency's

ultimate positio n with regard to the tax liability and th e

collection . of it .

But ther e are numerous circumstances in which

those determinations may not be the IRS's last word .

4!!

The tax administration context of the CD P

"officer or employee "

The IRS personnel who are appointed by the President or the

Secretary of the Treasury are the Commissioner, se e

sec . 7803(a)„(1), the Chief Counsel, see sec . .7803(b)-(1), members

of the Internal Revenue Service Oversight Board,_see ,

sec . 7802(b)E(1), and the National Taxpayer Advocate, see

sec . . 7803(c)ik(1) . See also supra note 47 . Personnel to fill

- 61 other positions in the IRS are hired by the Commissioner pursuant

to section'7804(a) .

These hired, .non-appointed positions include (i) the Deputy

Commissioner for Services and Enforcement, who is delegated the

authority to oversee the four primary operating divisions of .the

IRS, see IRM pt . 1 .1 .5 .3 (Oct . 28, 2008) ; (ii) the Deputy

Commissioner for operations Support, who-is delegated the

authority to oversee the integrated support functions .of; the IRS,

see IRM pt . 1 .1 .5 .4 (Oct .-28, 2 .008) ; -(iii) the Commissioners of

the Wage and Investment Division, the Small Business/

Self-Employed Division, the Tax-Exempt and .Government .Entitie s

Division, and the Large and Mid-Size Business Division, who are

delegated the authority to supervise and manage those divisions,

see IRM pt . 1 .1 .13 .1 (Sept . 1, 200 .5), 1.1 .16 .1 (March 1, 2007),

1 .1 .23 .2 (Feb . 1, 2007), 1` . .1.24 .1 (Nov . 1, 2006) ; (iv) the Deputy

Chief Counsel (Technical), who serves as"the principal deputy to

the Chief Counsel, acts as Chief Counsel when that office is

vacant, maintains jurisdiction over legal issues arising i n

published guidance, letter rulings, . technical advice, and other . .

processes, and participates in the interpretation and development

of internal revenue laws, see IRM pt . 1 .1 .6 .2 (Dec . 16, 2009) ,

(v) the Deputy Chief Counsel (Operations), who maintains

jurisdiction over . issues arising in litigation nationwide and

participates in the formulation of tax litigation policy, see IRM

62 pt . 1 .1 .6 .3 (Dec . 16, 2009), and (vi) the Chief of the Office*o f

Appeals, who is delegated the authority to plan, manage, direct ,

and execute .the nationwide activities of that .office,

see IRM pt .

1 .1 .7 .1 ( Felj . 5, 2008) ,6 6

Lower in the IRS hierarchy ,

these hired positions includ e

revenue officers (at or above the rank of GS -967) , who 'are

delegated the authority (i) to issue, .serve, and enforce

summonses, to set the time and place for appearance, to take

testimony under oath of the person summoned, and to receive and

examine data produced in compliance with the summons, see IR S

Deleg . Order 25-1 (formerly IRS Deleg . Order 4 (Rev . 23), 55 Fed .

Reg . 7626) ; (ii) to issue notices of levy, see IRS Deleg . Order

5-3 (Rev . 1), ;, IRM pt . 1 .2 .44 .3 (Nov . 8, 2007) ; and (iii) to issue

notices of Federal tax lien, see Delegation Order 5-4 (Rev, 1),

IRM pt . l .2 .44 .4(Sept .'23, 2005) . . That is, revenue officer s

66Justice Breyer would evidently characterize many of these

personnel as' "officers" . See Free Enter . Fund v . PCAOB , supra ,

561 U .S . at (dissenting op . at 29) (Breyer, J ., dissenting)

("by virtually any definition, essentially all .SES [Senio r

Executive Service] officials qualify as `inferior officers,' for

their duties, as defined by statute, require them to `direc[t] .

the work of 'lan organizational unit,' carry out high-level

managerial functions, or ` otherwise exercis[e] important

policy-making policy-determining or other executive functions .'

§3132 (a) (2) (emphasis added )

67The General Schedule, abbreviated "GS", is the basic pay

schedule for'employees of the Federal Government . See 5 U .S .C .

sec . 5332 (2006) .

have the power -- unless the CDP process intervenes -- to effect the

actual collection of tax .

The administrative law context of the CDP

or employee "

" officer

Today the Federal Government employs a corps of about 5,000

hearing officers who adjudicate cases for dozens of its agencies .

Raymond Limon ,

Office of Admin . Law Judges, Office of Pers .

Mgmt ., "The Federal Administrative Judiciary ,

Decade of Change" 1992-2002,

Then and Now, A

at .3 ( Dec . 23, 2002 ) .

Fewer than a

third of those positions are classified as administrative law

judges

( ALJs )

under the Administrative Procedure Act (APA), and

the remainder of those positions are commonly referred to as

ALJ hearing officers .68

non-

Over 80 percent of ALJs are currently

employed by the Social Security Administration

( SSA) . OPM Report

(showing the SSA employed 1,128 of 1,388 ALJs in June 20,08) .

None of the SSA's ALJs are appointed by the Commissioner of the

SSA, who serves as the department head .

See Soc . Sec .

Admin .,

ODAR Redelegations . of Personnel , and Equal Employment Opportunity

Authorities

( September 2006 ) .

Instead, the authority to appoint

ALJs for the SSA is delegated to the Deputy Commissioner for th e

"Id . at 1-4 (showing that the Federal Government employed

1,351 ALJs and 3,370 non-ALJ hearing officers in 2002) ; see also

Office of Pers . Mgmt ., Federal Administrative Law Judges, By

Agency and Level, CDPF Status Report as of June 2008 (OPM Report)

(showing the Federal Government employed 1,388 ALJs in June

2008) . Justice Breyer determined that there are currently 1,584

ALJs . See Free Enter . Fund v . PCAOB , 561 U .S . a t

(dissenting op . at 30) (Breyer, J ., dissenting) .

- 64 -

Office of Disability Adjudication and Review of the SSA .

Id .

Therefore,-the great majority of ALJs are not appointed pursuant

to the Appointments Clause .

ALJs are hired pursuant to 5 U .S .C . sec . 3105 (2006) .

agency may appoint an individual as an ALJ only after the Office

of Personnel Management certifies that individual as eligible for

the position . 5 C .F .R . sec . 93,0 .204 (2008) . The APA generally

.11

requires that an ALJ preside over "every case of adjudication

'I!

required by statute to be determined on the record after

opportunity for an agency hearing" . 5 U .S .C . sec . 554 (2006) .

If the adjudication is a so-called "on the record" hearing, then

the hearing 'is a "formal adjudication" that must adhere to the

formal hearing procedures of the APA, which provide, inter alia ,

that each party is entitled to present oral or documentary

evidence, submit rebuttal evidence, and conduct crossexamination . 5 U .S .C . secs . 554-557 . When presiding over an "on

the record" hearing, ALJs have the authority to require

attendance at the hearing, to administer oaths and affirmations,

to issue subpoenas, to rule on offers of proof and receive

evidence, and to order depositions .

Id .

However, if the relevant statute does not require an "on the

record" hearing, then the formal hearing procedures of the APA do

not apply and a non-ALJ hearing officer may preside over the

adjudication . See id .

Sections 6320 and 6330 do not require an

65 " on the record"

CDP hearing ,

see Davis v . Commissioner , 115 T .C .

at 41-42 (citing 26 C .F .R . sec . 601 .106(c), Statement of

Procedural Rules) ; and thus even apart from section 6330(b)(3)'

(allowing a CDP hearing before "an officer or employee"), APA

procedures would not require the IRS to use ALJs to conduct CDP,

hearings . Therefore, the appeals officer who conducts and

adjudicates a CDP hearing is more comparable to a non-ALJ hearing

officer than to an ALJ . r

The CDP hearing officer, hired and not constitutionally

"appointed", is by no means unique . in the context of

administrative adjudication .

III .

The status of the CDP "officer or employee" and "appeals

officer" under the Appointments Claus e

In order to .determine whether the "officer or employee" .(or

the "appeals officer") of section 6330 is an "inferior Officer"

who must be appointed in compliance with the Appointments :Clause,

we consider the two issues prompted by the text of the clause .

Whether the position is "established by Law "

"[T]he threshold trigger for the Appointments Clause" is

that an office be `established by Law .'"

Landry v . FDIC , 204

F .3d at 1133 . We hold that there is no CDP hearing officer

position "established by Law" under sections 6320 and 63,30 whose

incumbent could be an officer subject to the Appointments Clause .

66 1

Creation by statut e

Where "the `duties, salary, and means of appointment' for

the office- were specified by statute", that is considered "a

factor that~ has proved relevant in the [Supreme] Court's

Appointments Clause jurisprudence ."

Id .

(quoting Freytag v . .

Commissioner , -501 U .S . at 881) . If there were a statutory

provision to the effect that "There shall be, within the Interna l

Revenue Service Office of Appeals, officers designated as Appeals

Officers, who shall conduct CDP hearings", etc ., then that would

be some indication that the Appeals Officer position wa s

"established by Law" . There is no such statute, . and this lack is

some indication that the position in question is not an offic e

"established by Law" .

The IRS Office of Appeals was not, in its current form,

initially created by the .Internal Revenue Code , 69 nor were its

"Appeals Officers" .

Congress did explicitly " establish" in the

Internal Revenue Code certain officers who are to be appointed by

the President ,

with the advice and consent of the Senate -- i .e . ,

the Commissioner, sec . 7803 (a)(1), the Chief Counsel ,

69Althogh the office of Appeals was originally a creature

of regulation, the multiple references to it that were added to

the Code in 1998, see part II .B„above, make it at least arguable

that the Office of Appeals is now required by statute . However,

there is no~constitutional issue as to whether the Office of

Appeals itself was "establish[ed] by Law" ; rather, the issue is

whether there are, within the office of Appeals, personnel who

are "officers" whose positions are "established by Law

sec . 7803(b)(1), and members of the Internal Revenue Service

Oversight Board, sec . 7802(b)(l)--and the National Taxpayer

Advocate (sec . 7803(c)(1)), who is appointed by the Secretary of

the Treasury .70 Otherwise, the employment of ."Other Personnel"

is authorized in Section 7804(a), which, as we noted above,

simply provides that "the Commissioner of Internal Revenue is

authorized to employ such number of persons as the Commissioner

deems proper" . Congress thus left to the Executive Branch almost

the entire personnel structure of the IRS and refrained from

establishing other particular offices within it .

As is shown above in part II .B, it was the Executive Branc h

,that created the IRS Office of Appeals and its personnels

structure, pursuant to that authority in section 7804(a) . When

Congress enacted in 1998 the CDP provisions in sections 6320 and

6330, it employed that pre-existing Office of Appeals and

committed the new CDP function to that office . Secs . 6320(b)(1) ,

6330(b)(1), (d)(2) . Mr . Tucker contends that the RRA establishe d

the pre-existing Appeals' Officer position as'the CDP hearing

officer . The statute does refer to an -"appeals officerll~ as the

person who "obtain[s] verification * * * that the requirements of

any applicable law or administrative procedure have been met",

sec . 6330(c)(1), and who makes the "determination" whether t o

.70The National Taxpayer Advocate' .s predecessor, the Taxpayer

Advocate, was appointed by the Commissioner of Internal Revenue,

pursuant to former section 7802(d)(1) .

- 68 proceed with collection,

sec . 6330 (c)(3) . However, for th e

following reasons we .conclude that section 6330 uses the term

"appeals officer" interchangeably with the term "officer o r

employee" :

First, the provisions in the lien statute, sectio n

6320(b)(3),

and in the levy statute, section .6330(b)(3), tha t

actually state who shall conduct the hearing state that "the

hearing * *ji* shall be conducted by an officer or employee who

has had no prior involvement with respect to the unpaid tax" .

(Emphasis added .) This is the first .and only mention of an

individual in the lien statute and the first mention of a n

individual in the levy statute . The caption of each paragraph is

"Impartial officer ", thereby explicitly indicating that it migh t

be an "officer or employee " who serves as the "Impartial

officer " . . (Emphasis added .) This shows that Congress did not

use the term "officer" in any specialized sense . The phrase "or

employee" is so contrary .to Mr . Tucker's position that he is

forced to declare the phrase "mere surplusage" . However, we

decline to read words out of the statute ; rather, we attempt to

give meaning to every word that Congress enacted, and, here that

is best accomplished by taking at .'face value the phrase "officer

or employee " in sections 6320(b)(3) and 6330(b)(3) (emphasi s

added) ; and by understanding the phrase "appeals officer" in

section 6330(c) (1) and (3) as shorthand for an officer o r

- 69 -

employee in the Office of Appeals . If Congress had intended to

assign CDP duty to a particular rank of "Appeals officer", it

would not have added the phrase "or employee" ; and it could have

used language like that which it used simultaneously in RRA

section 3105 where it provided that a bond issuer could appeal an

adverse ruling "to a senior officer of the Internal Revenue

Service Office of Appeals" . (Emphasis added . )

Second, the conference report describing the provision does

on one occasion use the designation " appeals officer" but almost

immediately thereafter uses the designation " appellate officer" .

H . Conf . Rept . 105-599, at 264 (1998), 1998-3 C .B . 747, 101 8

(emphasis added) .7 1

Neither the statute itself nor the legislative history shows

that Congress intended to ascribe any particular importance or

significance to the term "appeals officer" . We hold that, for

purposes of section 6330(c)(1) and (3), an-appeals officer" is

any "officer or employee" in the IRS Office of Appeals to whom is

assigned .the task of conducting .a CDP hearing unde r

section 6330(b)(3) . 7

71See also S . Rept . 105-174, at 68 (1998), 1998-3 C .B . 537,

604 ("The determination of the . appeals officer" ; "the

determination of the appellate officer" ; the appellate officer's

determination" (emphasis added)) .

72See Powers v . Commissioner , T .C . Memo . 2009-229 ;

v . Commissioner , T .C . Memo . 2006-192 .

Reynolds

- 70 The .statute thus does not create any positions for the

personnel who would perform the CDP function but rather refers t o

them in a most diffuse manner ("conducted by an officer o r

employee") .11 After the .enactment of this statute, it was no t

possible tojlpoint to a position responsible for conducting CDP

hearings and to question whether the person in that position was

an "inferior Officer" ; instead the hearings would be conducted by

"employees"wyet to be designated, from time to time, within the . . .

Office of Appeals .73 Thus, the mere mention of an "officer o r

employee" or an "appeals officer" in sections 6320 and 633 0

presumes but does not establish any position .74 In addition to

sections 6320 and 6330, however, Mr . Tucker points to a referenc e

.to "appeals,,„officer" in a provision of the RRA that has not bee n

73Mr . Tucker sets out an elaborate hypothetical

circumstance, intended to show the importance of appeals

officers, in which an appeals officer could end up holding

jurisdiction over the three major U .S . car manufacturers and

thereby "effectively become the United States `Car Czar'" ; "she

could effectively end the United States domestic automobile

industry" ; "She could be in charge of the companies' fates for

years" . Among the reasons that we are not influenced by this

possibility is that . it is the Office of Appeals, and not an

individual officer or employee, that retains jurisdiction under

section 6330(d)(2) .

74The mere mention of an office in the Code evidently does

not establish that office or guarantee its continuance .- Other

administratively created IRS positions have been mentioned from

time to time in sections of the Code but have thereafter been

abolished by agency restructuring and their functions delegated

to other personnel . See, .e .g ., sec . 6334(e)(2)(A) (mentioning

"district director") ; sec . 7611(b)(3)(C) (mentioning "regional

commissioner") .

,71

112 Stat .

768 ,

The Commissioner of Internal Revenue shall ensure

tha t

codified in the Code . 75

RRA section 3465 ( b),

1998-3 C .B . 228, provide s :

an appeals officer is regularly available in eac h

State . [Emphasis added . ]

This provision, however, has little to do with the CDP hearing or

its presiding "officer or employee " . (Emphasis added .) The

statute certainly does not establish (or .even imply) a CDP

hearing officer "in each State" . That is, even if the statute

were read to mean that "There shall be, and is hereby

established, an IRS official known as `Appeals Officer' in each

State", the Congress would not, by creating such an official,

establish a CDP-hearing officer,las Mr . Tucker's argument would :

require . Whatever that "appeals officer * * * in'each state"

might be .tasked with doing, Congress made clear in sections

6320(b)(3) and 6330(b)(3) that a CDP hearing can be staffed by an

"officer or employee " . (Emphasis added . )

We therefore hold that the RRA did not establish the

position of a CDP "appeals officer" .

75For the two other uncodified references to "appeals

officers" in the RRA, see supra note 52 .

72 2iik

Creation by regulatio n

However, Mr . Tucker contends, in effect, that proper

Appointments Clause analysis must consider both statute and

regulations" We therefore consider whether an office might be

"established" by the RRA taken together with the regime for the

Office of Appeals that is established in the regulations . It is

true that the case law does not posit a bright-line rule that

would require an explicit statutory creation of an office before

there can bean "officer" for purposes of .the Appointments

Clause . Opinions of the .Courts of Appeals for the Third, Fifth,

and Sixth Circuits seem to tend to the contrary :76

The . Administrative Review Board (ARB) of the Department of

Labor, . composed of three "members" appointed by the Secretary o f

Labor, . "`issu[es] final agency decisions on questions of law and

fact arising in review or on appeal' in whistleblower

cases . "

Willy v . Admin . Review Bd . , 423 F .3d 483, 491 (5th Cir . 2005)

(quoting 6111I,Fed . Reg . 19 978 (May 3, 1996)) . The ARB was created

not by statute but by . an order of the Secretary of Labor ,

76In Free Enter . Fund v . PCAOB , 561 U .S . at (dissenting

op . at 27) (Breyer, J ., dissenting), Justice Breyer asserts

explicitly that an "office" can be "created either by

`regulations' or by 'statute,'" for which he cites United States

v . Mouat , 124 U .S . 303, 307-308 (1888) ("there is no statute

authorizing'lthe secretary of the navy to appoint a pay-master's

clerk, nor is there any act requiring his approval of such an

.appointment, and the regulations of the navy do not seem to

require any such appointment or approval for the holding of that

position ., The claimant, therefore, was not an officer" (emphasis

added)) .

pursuant to 5 U .S .C . sec . 301 (2006), which provides that "[t]h e

head of an Executive department * * .

may prescribe regulation s

for the government of .-his department, the conduct of its ;

employees, [and] the distribution and performance of its

business" . Both the Courts of . Appeals for the Fifth Circuit, se e

Willy v . Admin . Review Bd . , 423 F .c3d at 491-492, and the Sixth

Circuit, see Varnadore v . Sec . of Labor , 141 F .3d 625, 631

(6th

Cir . 1998), and Holtzclaw v . Sec . of Labor , 172 F .3d 872 (6t h

Cir . 1999), approved the creation of the ARB as being within the

general authority granted to the Secretary of Labor unde r

5 U .S .C . sec . 301 (2006), analyzed the position of member on the

ARB under the Appointments Clause and found it to be an "inferior

Officer", and held that Congress, by 5 U .S .C . .sec . 301, had

authorized the Secretary to make the appointments, which

satisfied the requirements of the Appointments Clause .

Similarly, . the Appeals Board of . the Department of Health and

Human Services (HHS), composed of members appointed by the

Secretary of HHS, resolves disputes under the Child Support

Enforcement Act, 42 U .S .C . secs .. 651-669(b) (2006) .

Pennsylvania

v . HHS , 80 F .3d 796, 800 `(3d Cir . 1996) . The Appeals Board was

created not by statute but by regulation, 45 C .F .R . Pt . 1 6

(1981), promulgated,by the Secretary of HHS, pursuant t

42 U .S .C . sec . 913 (2006), which provides : "The Secretary is

authorized to appoint and fix the compensation of'such officers

- 74 and employees, and to make such expenditures as may be necessary

for carrying out the functions of the Secretary under this

chapter ." The Court of Appeals for the Third Circuit approved

the creation of the Appeals Board as being within the general

authority granted to the Secretary of HHS under 42 U .S .C .

sec . 913, analyzed the position of member on the Appeals Board

under the Appointments Clause and found it to be an "inferio r

Officer", and held that Congress, by 42 U .S .C . sec . 913,, had

authorized the Secretary to make the appointments, which

satisfied the requirements of the Appointments Clause .

Pennsylvania v . HHS , 80 F .3d at 804-805 .

None of these opinions suggests that .any party had argued

that the positions under review were not "established by Law" .

Rather ; the :i~parties and the courts seem to-have assumed that i f

the positions existed, then the positions were "established by

Law" ."

.If this assumption is correct, then it would seem tha t

any "Office", that actually exists in the Federal Government is

arguably "established by Law" .

The Supreme Court has not so ; held, and the assumption is

problematic, in that it risks reading out of the Constitution th e

phrase "established by Law", if the Appointments Clause woul d

"For a " defense of this . position , see Stephen G . Bradbury,

"Officers of the United States Within the Meaning of the

Appointments Clause", 31 Op Off . Legal Counsel, at * 36-38, 2007

OLC LEXIS 3 ; *117-123 ( Apr . 16, 2007) .

- 75 -

mean the same thing with or without that phrase . One could argue

instead that only a position created by a statute can be .

"established by Law" for purposes of the Appointments Clause . If

a position is created not by Congress but by the Executive, then

by definition there is no possibility that Congress both created

and filled that position, which is the chief danger against which

the clause is a safeguard .

However, if the phrase "established by Law" were construe d

to mean that the Appointments Clause can apply only to a position

expressly created by a statute, then abuses could arise . For

example, Congress could take a pre-existing low-level position

(which had been created by the Executive Branch pursuant to a

general authorization like section 7804(a), and which was not

subject to appointment by the President or a Head of .a

Department) and could invest it with significant additional

power, thus evading the Appointments Clause by seeming to avoid

"establishing" the office .78 Where such a pattern existed,,the

courts would have to see through the subterfuge and enforce the

Appointments Clause . Mr . Tucker argues that the CDP provision s

78An analogous abuse via "indirection" was hypothesized in

Springer v . Govt . of the Philippine Islands , 277 U .S . 189, 202

(1928), when the Court stated : "the legislature cannot ingraft

executive duties upon a legislative office, since that would be

to usurp the power of appointment by indirection" . The Court did

go on to observe that "the case might be different if the

additional duties were devolved upon an appointee of the

executive", id . , but it did . not elaborate on this scenario .

involve just this .problem--i .e ., that Congress took the existin g

Appeals Officer position and invested it with the "significant

authority" -(discussed below in part II .B .2) of the CDP process .

The argument fails, however, because Congress has assigned

the CDP hearing function not to a particular rank or title o f

"Appeals officer" nor to any other identifiable office-holder but

generally to the Office of Appeals and, within it, to any

"officer or employee", secs . 6320(b)(3), 6330(b)(3), from amon g

.the "numberillof persons" who are employed in that office "as the

Commissioner deems proper for the . administration and enforcemen t

,of the internal revenue laws", sec . 7804(a) .

.Likewise, even

under the regulations the CDP responsibility does not inhere in

any specific office or position . Pursuant to the administrative

arrangements of the Office of Appeals, 250 employees are

designated to perform that CDP function, but it is within the

agency's authority under section 6330 to allocate the function as

it will among its 1,100 settlement officers and Appeals Officers .

The Appointments Clause applies only when an office i s

"established .by Law", but there is no office established by

statute or regulation to which Congress committed the CDP

function .

Whether the CDP function could constitute an . "office "

If, however, a position is "established by Law", the-secon d

question inlan Appointments Clause inquiry is whether that .

77 position constitutes an office of the United States . Only

"offices" are subject to. the requirements of the clause ,

and not

every position that is "established by Law" is an office .79 See

Freytag v .

Commissioner ,

501 U .S . at 880 - 881 . Assuming , arguendo

that the CDP function prescribed under sections 6320 and 6330 and

the regulations thereunder is committed to a position

"established by Law ",

we must determine whether that position

could constitute an "office" .

The Supreme Court has articulated two essential

characteristics that a position must have in order to constitut e

an officer A position is an office if (i) .it is invested with

"significant .authority pursuant to the laws of the Unite d

79The requirements of the Appointments Clause are not

Freytag V . Commissioner,

.implicated unless an "office" exists .

Valeo

, 424 U .S . 1, 126 at

501 U .S . at 880 (citing Buckley v

n .-162 (1976)) . Even if the position of a non-officer employee is

clearly established by law, i .e ., "the duties, salary, and means

of appointment * * * are specified by statute", id . , at 881 ,

appointments to that position need not conform to the

Appointments Clause, id . at 880-881 . In Freytag , the Supreme

Court noted that .the position of Special Trial Judge on this

Court is "established by Law", but nonetheless stated that

Special Trial Judges "need not be selected in compliance with the

strict requirements of [the clause]" "if we * * * conclude that a

Likewise, in

Id .

special trial judge is only an employee" .

Cir

. 2000), the

Landry v . FDIC , 204 F .3d 1125, 1133-1134 (D

Court of Appeals for the District of Columbia Circuit noted that

the position of ALJ for the Federal Deposit Insurance Corporation

is "established by Law", but held that the position does not

constitute an office . Moreover, the history of internal revenue

collection in the United States is replete with officials whose

positions were specified by statute, but were not appointed

pursuant to the requirements of the clause . See supra pt .

II .C .2 .c .

78 States",

Buckley v . . Valeo , 424 U .S . at 126,

"continuing',,

and (ii) it i s

Auffmordt v . Hedden , 137 U .S . 310, 326--328 (1890) ;

United States v . Germaine, 99 U .S . at 511-512,

United States v .

Hartwell , 73 U .S . 385, 393 ( 1868 ) . Whether a position possesses.

these characteristics and thus constitutes an office "is

determined by the manner in which Congress has specifically

provided for the creation of the several positions, their dutie s

and appointment thereto ."

51 .6

Burnap v . United States , 252 U .S . 512 ,

(1920) . ;; Therefore, we examine the specific features of th e

"officer orjlemployee"

position within the CDP function to

determine whether it is a "continuing" office invested with

"significant authority".

1 .

Whether the CDP provisions created a

"continuing" positio n

A position

is "continuing"

if it possesses "'tenure,

duration, emolument, and duties'" that are "`continuing an d

permanent, not occasional or temporary .'"

Auffmordt v . Hedden ,

137 U .S . at ;327 (quoting United States v . Germaine , 99 U .S . at

511-512) . A position is most clearly "continuing" if it i s

permanently assigned sovereign authority that does not expire,

inter alia, upon the passage of time or the completion of

discrete task . See Auffmordt v . Hedden , 137 U .S . at 326-328 ;

United States v . Germaine , 99 U .S . at 511-512 ;

United States v .

Hartwell , 73 U .S . at 393 . Respondent concedes that, if the CD P

"appeals officer " is a position "established by Law", then it is

79 a "continuing" position ; and we therefore proceed to consider

whether that . position is given "significant authority", so that

the person holding that position would be an officer (i .e ., an

"inferior officer") rather than a non-officer employee . ,

2 .

Whether the CDP hearing officer has

"significant authority "

In Buckley v . Valeo , . 424 U .S . at 126, the Supreme Court held

.that a position invested with "significant authority" is an

office :

We think that the term "Officers of the United Stages

as used in Art . II, defined to include "all persons who

can be said to hold an office under the government" in

United States v . Germaine , supra , is a term intended to

have substantive meaning . We think its fair import is

that any appointee exercising` significant authority

pursuant to the laws of the United States is an

"Officer of the United States,""and must, therefore, be

appointed in the manner prescribed by § 2, cl . 2, of

that Article .

In that case the Supreme Court examined the powers of the .eightmember Federal Election Commission'(FEC) established under the

Federal Election Campaign Act of 1971 (1971'Act), Pub . L . 92-225,

86 Stat . 3, as amended by the Federal Election Campaign Act

Amendments of 197 .4, . . Pub . L . 93-443, 88 .Stay . 1263 . ' Id .

137-141

The Supreme Court'concluded that none of the FEC's commissioners

were appointed in conformity with the clause, and thus, none of

them were constitutionally permitted to exercise "significant

authority" .

Id .

at 137 . It . then sorted the FEC's statutorily

authorized powers into three-categories in order to determine

80 -

whether thej ;powers in each category constituted . significan t

authority :

[T]he Commission's powers fall generally into three

categories : functions relating to the flow of

necessary information--receipt, dissemination, an d

investigation ; functions with respect to the

Commission's task of fleshing out the statute-rulemaking and advisory opinions ; and function s

Id .

necessary to ensure compliance with the statute and

rules-N'informal.procedures ,

' administrative

determinations and hearings, .and civil suits .

The Supreme Court held that it was constitutionall y

permissible 'ffor the unappointed commissioners to . exercise . their

investigatory and informative powers, because in so doing they

were merely,aiding Congress in performing its legislativ e

.function .

Id .

at 137-138 . Since Congress could delegate those

powers to its own committees, the Supreme Court stated "there ca n

be no question" that Congress could delegate them to the FEC by

statute .

Id . .

However, the Supreme Court held that it was not permissible

for the unappointed commissioners to exercise their "mor e

substantiall[enforcement and interpretive] powers" .

Id .

at 138 .

First, the Supreme Court held that only "Officers of the United

States" could exercise the commissioners' power to bring suit t o

enforce the,j1971 Act, because that power "is-the ultimate remedy

for a breach of the law" and belongs to the Executive--not

Legislative--Branch .

Id .

at 138-140 . Second, the Supreme Court

held that only "Officers of the United States" could exercise the

- 81

commissioners' power to interpret the entire 1971 Act through

rulemaking, advisory opinions, and determinations--without

supervision from either Congress or the Executive Branch--because

that power "represents the performance of a significant

governmental duty exercised pursuant to a public law ."

Id .

140-141 . From Buckley we therefore draw the general principle

that only an "offi-cer" may perform "significant" enforcement and

interpretive functions . See

id .

at 124-141 . In .particular, the

powers (i) to bring suit to enforce an Act of Congress and (ii)

to issue regulations, advisory opinions, and determinations

without supervision under an Act of Congress both constitute

"significant authority" .

The Supreme Court has yet to fully define the term

"significant authority" 80 ; and "ascertaining the test's rea l

"While "significant authority" is an essential characteristic of an "office", Buckley .v . Valeo , 424 U .S . at-126, this

proposition cannot be construed to mean that non-office r

employees of the Federal Government are insignificant or trivial .

Mr . Tucker suggests that treating "appeals officers" as nonofficer employees not subject to the Appointments Clause is to

regard them as "unimportant" . We disagree . For example,

military ranks reflect the same distinction between officers who

are appointed in compliance with the Appointments Clause, se e

10 U .S .C . secs . 531, 571,•624 (2006), and non-officers who are .

not . However, those non-officers include "noncommissioned

officers" (sergeants, corporals, and petty officers) who are

promoted (not appointed) from among enlisted personnel . See,

e .g ., Army Regulation .600-8-19 ("Enlisted Promotions and

Reductions"), ch . 3 ("Semicentralized Promotions (Sergeant and

Staff Sergeant)"), sec . 3 .1 . No one could reasonably call the

role of noncommissioned officers "insignificant" . They have

command of the enlisted personnel under them, and insubordinatio n

(continued . . .)

- 82 meaning requires a look at the roles of the employees whose

status was at issue in other cases ."

Landry v . FDIC , 204 F .3d at

1133 . In tYe,two cases most analogous to our facts, the Supreme .

Court in Freytaq and the Court of Appeals for the District of

Columbia Circuit in Landry analyzed whether differen t

adjudicative positions constituted "offices" . In Freytag the

Supreme Court faced . the . question whether a Special Trial Judge

(STJ) of the Tax Court is . an "inferior Officer" ; and it observed

that in some matters the STJ will "only hear the case and prepare

proposed findings and an opinion" while in other matters the ST J

may be assigned "not only to hear and report on .a case but to

.decide it" .

Freytag v . Commissioner , 501 U .S . at 873 . I n

deciding that STJs are "inferior Officers", the Supreme Cour t

relied on the authority of STJs to render the final decision o f

this Court i n some of the matters that come before them . See id .

at 882 .

In contrast, in Landry v . FDIC , 204 F .3d at 1134, the Cour t

of Appeals decided that ALJs for the Federal Deposit Insurance

Corporation (FDIC) are not inferior officers . Both'the ALJs in

Landry and the STJs on this Court "'take testimony, conduc t

trials, rule on the admissibility of evidence, and have the powe r

8° ( . . . continued )

or . disobedience of their commands is punishable by court-martial .,

See 10 U .S .C . sec . 891 (2006) . Thus, the issue here is not

whether appeals officers are unimportant, but whether they are

"Officers of the United States" .

- 83

to enforce compliance with discovery orders .'"

Freytag .v . Commisioner ,

supra at

881-882) .

Id .

(quoting

However, unlike the

STJs, the ALJs-lacked .the power to . make . final decisions .

Id .

1133 . Instead, ALJs file a recommended . decision, 12 C .F .R . sec .

308 .38 (1996), which the FDIC's board of directors reviews de

novo before it issues the final decision of the agency,

id .

sec ..

308 .40(a), (c) . This lack of finality led the Court of Appeals

to conclude that the ALJs-in question are not officers .

Landrv

v . FDIC , 204' F .3d at 1134

.in Landrv .Thisfocu on final decision-making power is a n

appropriate application of the Supreme Court's earlier analysis

of the FEC's interpretive powers in Buckley v . Valeo , 424 U .S .

140-141, which held that the power to interpret the 1971 Act'

"free from day-to-day supervision of either Congress or the

Executive Branch" constitutes significant authority . ,The power

to make a final .d

.ecision, which .the Supreme Court described as

"independent authority" in Freytag v . Commissioner , 501 U .S . at

882, is a species of the power to act without supervision . SeeBuckley v . Valeo , 424 U .S . at 141 . Therefore, a position that is

invested with broad adjudicative powers, like the position of

STJ, may be an office if the incumbent can act free of

.supervision'or has the final say within the agency . See Freytag

v . Commissioner , 501 U .S . at 882 . However, such a position is

84 not an office if the incumbent and her determinations are subject

to supervision . See Landry v . FDIC , 204 F .3d at 1133-1134 .

Mr . Tucker and the amicus .contend that . the positions of

settlement officer and team manager within the office of Appeals

are invested with "significant authority" . In particular ,

Mr . Tucker posits that "Settlement Officers, and/or Appeals team

managers holding CDP hearings are so similar to Special Tria l

Judges in all ways that mattered to the Supreme Court in it s

Freytact Appointments Clause analysis that any differences are not

of Constitutional significance ." We disagree .

While settlement officers, appeals officers, and team

managers can be said to possess adjudicative powers to conduct

hearings and to issue determinations to resolve those hearings,

none possess the power to make final decisions for the IRS .

Contrary to Mr . Tucker's assertion that ."[n]otices of

determination issued by Appeals . personnel after CDP hearings are

final and binding on the IRS", determinations by settlement

officers and Appeals team managers are not

"final" in the sense

that is relevant to the Appointments Clause . They review only a

particular collection episode--a given notice of lien or notic e

of proposed levy . As is-discussed above in part II .C .3 .a, in the

absence of a written agreement with the taxpayer, the Office of

Appeals (not the appeals officer) . retains jurisdiction to

reconsider and overturn its personnel's determinations wit h

85 respect to collection action . Sec . 6330(d)(2) . If. Mr . Tucker's

circumstances were to change, and it became clear that he could

never repay the IRS, nothing would prevent collection personnel

from relenting or prevent the office of Appeals from holding

supplemental CDP hearing and revising its personnel's prior

determination to uphold the tax lien .

Even determinations with respect to underlying liability by

the personnel of the Office of Appeals are not binding on the IRS

and may be overturned during audit reconsideration or-overruled

by the IRS Office of Chief Counsel in taking litigation positions

or settling cases . See supra part II .C .3 .b . The Office of Chief

Counsel, not the office, of Appeals, .has authority to " [n]egotiate

or make a-settlement in any case docketed . in the .Tax Court if the

* * * determination was issued by Appeals officials" . 26 .C .F .R .

sec . 601 .106(a)(2)(i), Statement of Procedural Rules . Here, the

Office of Chief Counsel was free to contest or settle Mr .

Tucker's case, notwithstanding the team manager's determinations

to uphold the tax lien at issue .

No position within the office of Appeals is invested, in th e

CDP context, . with the "final" decision-making power that maybe .

exercised only by an "officer of the United States" . For that

reason, settlement officers, appeals officers, and team manager s

are more analogous to the ALJs .in Landry than to the STJs i n

Freytag .

86 -

Moreover, non-officer ALJs have the authority to conduct "o n

the record" hearings, to require attendance at those hearings, t o

administer oaths and affirmations, to issue subpoenas, to rule on

.offers of proof and receive evidence, and to order depositions .

5 U .S .C . secs . .554-557 . Despite this authority, the Court o f

Appeals for~the District of Columbia Circuit held that the ALJ s

in Landry are not officers because they lack final decisionmaking power :

Landry v . FDIC , 204 F .3d at 1133-1134 .81 In

contrast, settlement officers, appeals officers, and team

managers lack not only final decision-making power but also thes e

formal powers granted to ALJs under the Administrative Procedure

Act . See 26 C .F .R . sec . 301 .6330-1(d)(2), Q&A-D6, Proced . &

Admin . Regs . CDP hearings are "informal in nature" and do not

even require a face-to-face meeting .

Id .

'81The-status of ALJs as employees .or "Officers of the United

States" is "disputed" .

Free Enter . Fund v . PCAOB , 516 U .S .

at n .10, slip op . at 26 (citing Landry v . FDIC , 204 F .3d 1125

(D .C . Cir . 2000)) . In Landry v . FDIC a divided panel of the

Court of Appeals for the D .C . Circuit held that ALJs for the FDIC

are not officers . However, in Free Enter . Fund v . PCAOB ,

dissenting Justice Breyer apparently indicates that he would hold

that all ALJs are officers . 516 U .S . at (dissenting op .

at 28) (Breyer, J ., dissenting) (citing Freytag v . Commissioner ,

501 U .S . at11910 (Scalia, J ., concurring .in part and concurring in

judgment)) .11 No court has held contrary .to Landry , and we follow.

it . However, even assuming arguendo that ALJs are "Officers of

the United States", it does not follow that CDP hearing officers

are likewise "officers" . CDP hearing officers lack not only

final decision-making power but also the formal powers granted to

ALJs . Whether or not the position of ALJ constitutes an

"Office[] of the United States", the lesser position of CDP

"appeals officer" is not an "office" .

87 -

Since we find persuasive the reasoning of the Court o f

Appeals for the District of Columbia Circuit in its determination

that ALJs for the FDIC do not exercise "significant authority",

we hold that the lesser position of CDP "appeals officer" ("or

employee") within the Office of Appeals likewise does not

exercise "significant authority" . We therefore hold that the

.positions of settlement officer, appeals officer, and team

manager are not invested with "significant authority" under

Buckley v . Valeo , 424 U .S . at 126 .

Conclusion

An "officer or employee" of the IRS Office of Appeals who

conducts CDP hearings has neither a position "established by Law"

nor "significant authority" that is characteristic of an "officer

of the United States" for purposes of the Appointments Clause . .

Without at all minimizing the importance of conducting a CDP

hearing, that function does not involve an authority more

"significant" than the authority exercised by other personnel

important to tax administration (whether the Chief of the Office

of Appeals (their superior), . other high-ranking officials in the

IRS, or many internal revenue collection personnel over the past

200 years) or as significant as . the authority exercised by ALJs

in many other agencies . To survey these thousands of employees .

important to the administration of law and single out IRS

"appeals officers" as somehow requiring constitutional

appointment .would be unwarranted . They are instead properly

hired, pursuant to section 7804(a), under the authority of th e

Commissioner of Internal Revenue .

To reflect the foregoing,

An appropriate order will b e

issued .

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.