Freytag v. Commissioner

501 U.S. 868, 111 S. Ct. 2631 (1991)



26 U.S.C.S. § 7443A(b) specifically authorizes the chief judge of the tax court to assign four categories of cases to special trial judges: (1) any declaratory judgment proceeding, (2) any proceeding under 26 U.S.C.S. § 7463, (3) any proceeding in which the deficiency or claimed overpayment does not exceed $ 10,000, and (4) any other proceeding which the chief judge may designate. In the first three categories, the chief judge may assign the special trial judge not only to hear and report on a case but also to decide it. 26 U.S.C.S. § 7443A(c). In the fourth category, the chief judge may authorize the special trial judge only to hear the case and prepare proposed findings and an opinion. The actual decision then is rendered by a regular judge of the tax court.


Freytag and several other defendants were charged with using a tax shelter to avoid paying roughly $1.5 billion in taxes. They consented to have their case heard by a special trial judge. The trial judge eventually drafted an opinion unfavorable to their position, which was reviewed and adopted by the Chief Judge. They then appealed the case, arguing that their case was too complex to assign to a special trial judge under section 7443A. Congress's decision to allow the Chief Judge to make such an assignment, they argued, violated the Appointments Clause of the Constitution (Article II Section 2), which provides that Congress may "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." Freytag asserted that the "Courts of Law" referred to there were only Article III courts (Federal District Courts, Circuit Courts of Appeals, and the Supreme Court, all of which have judges with lifetime tenure), and that the Chief Judge was part of an Article I court, meaning that Congress could not assign him the power of appointment. The Fifth Circuit Court of Appeals rejected that argument, affirming the Tax Court's decisions.


Was the Federal Constitution's appointments clause (Art II, 2, cl 2) violated by 26 USCS 7443A, which authorizes chief judge of United States Tax Court to appoint special trial judges?




Article I Courts, like Article III Courts, exercised the judicial power of the United States and were therefore "Courts of Law" for purposes of Article II Section 2. While they may have been more dependent on Congress than the other branches, they were nevertheless independent, and it therefore did not violate the separation of powers to allow them to make appointments.

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