Eleventh Circuit Eyes Tax Court History Amid Constitutional Test

The Eleventh Circuit appeared ready to side with the government in a case challenging the legitimacy of the judges of the US Tax Court, but not without considering the court’s place in the government.

A US Court of Appeals for the Eleventh Circuit panel prodded counsel for taxpayer Fannie Wright on her argument about the constitutional authority of the Tax Court’s judges, and whether provisions allowing the president to remove them violate the Constitution. Wright, who had petitioned the Tax Court to contest penalties without success, argued Internal Revenue Code Section 7443, which addresses how the Court’s 19 judges are appointed, is flawed.

Either the Tax Court is a part of the executive branch, in which case the president should have more authority over the court than the statue provides; or the tax code section violates the separation of powers by allowing a member of the executive branch to remove a member of the judicial branch, Joseph A. DiRuzzo III of Margulis Gelfand DiRuzzo & Lambson LLC argued for Wright.

At Thursday oral arguments in Miami, DiRuzzo compared the US Tax Court, a court of record in the executive branch, with the US Court of Federal Claims, which is a trial court in the judicial branch.

“I can’t see a world where Tax Court judges adjudicating tax cases and Court of Claims judges adjudicating tax cases, that there’s any-significant or any meaningful difference for constitutional purposes,” DiRuzzo said.

But it was unclear how Wright’s arguments about the constitutionality of the Tax Court translate to compensable harm, said Judge Stanley Marcus, who questioned what kind of remedy would fit if Wright wants a remand and retrial before a new judge. That would return the case to Tax Court, and DiRuzzo said that a new trial was Wright’s goal.

Marcus rejected that the case is similar to other Appointments Clause challenges like US v. Arthrex, where the US Supreme Court determined in 2021 that decisions from judges at the Patent Trial and Appeal Board could be subject to review by the director of the Patent and Trademark Office. A similar arrangement doesn’t make sense between the Tax Court and the IRS or another agency, he said.

Arguing for the IRS, Bethany B. Hauser of the Department of Justice Tax Division said the original Tax Court case was correctly decided and there’s no proof a constitutional question hindered that decision.

“There is no need to delve into the constitutional issues in this case, because there is no showing of compensable harm,” Hauser said.

Court of Record

That doesn’t mean that the judges were unwilling to examine the Tax Court’s history. Judge Kevin C. Newsom said Congress “stuck” the court into the executive branch when it was created as the US Board of Tax Appeals in 1924. Its authority seems to have been retroactively re-thought since then, such as in 2014’s Kuretski v. Commissioner, Newsom said.

In Kuretski, the D.C. Circuit determined the Tax Court was a “court of record” established under Article I that is analogous to the Court of Appeals for the Armed Forces, emphasizing its independence as a court while not removing it entirely from the executive branch.

“It doesn’t seem to me that the fundamentals of the Tax Court have changed from the 20s to now,” Newsom said. “I’m a little suspicious of the ‘say-so’ theory for Congress, like because we’ve decided it’s no longer in the executive branch, it’s no longer in the executive branch.”

Judge Robin S. Rosenbaum said the court needed to look at what the court fundamentally does, not what Congress said. Newsom agreed.

“If I’m being honest with myself, I have to admit to some hypocrisy, because I grant Congress the benefit of the doubt on the front end,” Newsom said. “But why do I let them do it on the front end but not the back end, and what is Congress’ say-so have to do with where this body resides.”

The limitations on presidential removals are unchanged since the court’s inception though, Hauser said, which indicates “something about the court is unchanged,” even if the government has now explicitly held it not to be an agency since Kuretski.

The IRS assessed Wright $6,100 in deficiencies and penalties for 2013 to 2015 after it determined she’d failed to report her Social Security benefits on her joint tax returns for two years. Tax Court upheld those deficiencies, prompting her to appeal and raise the constitutional questions to the Eleventh Circuit.

The case is Wright v. Commissioner, 11th Cir., No. 24-10563, oral arguments 4/3/25.