LARRY E. TUCKER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent . 135 T.C. No. 6, July 26, 2010 In the Internal Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub. L. 105-206, 112 Stat. 685, Congress enacted provisions that directly addressed the appeals function. One of the four required features of the plan of reorganization that the IRS was to undertake was that it “ensure an independent appeals function within the Internal Revenue Id., sec. 1001(a)(4), 112 Stat. 689. Explicit Service”. reference to the Office of Appeals was added to the Code not only in the new CDP procedures in sections 6320 and 6330 but also in sections 6015(c)(4)(B)(ii)(I), 7122(d)(2) (now designated (e)(2)), 7123, 7430(c)(2) and (g)(2)(A), and 7612(c)(2)(A). Fourth, the National Taxpayer Advocate or her delegate can issue a Taxpayer Assistance Order (TAO) requiring the IRS to “release property of the taxpayer levied upon” or to “cease any action, take any action as permitted by law, or refrain from taking any action” with respect to its collection activities. See sec. 7811(b); 26 C.F.R. sec. 301.7811-1(c), Proced. & Admin. Regs.; see also IRM pt. 13.1.20.3(1) (Dec. 15, 2007) (”A TAO may be issued for either of two purposes: A. To direct the OD/Function [to] take a specific action, cease a specific action, or refrain from taking a specific action; or B. To direct the IRS to review at a higher level, expedite consideration of, or reconsider a taxpayer's case”). Fifth, by its nature a collection determination could be binding only until there has been a change in the taxpayer's circumstances. The collection issues that the officer or employee may address in the agency-level CDP hearing involve the financial circumstances of the taxpayer that, by their nature, may change after the hearing. See sec. 6330(d)(2)(B); 26 C.F.R. sec. 301.6330-1(e)(1), Proced. & Admin. Regs.; Rev. Proc. 2003-71, sec. 4.03, 2003-2 C.B. 517, 518. To decide whether the IRS ought to proceed with collection, the officer or employee is instructed by agency regulations to request and obtain detailed financial information about the taxpayer during the hearing, and to make a determination on the basis of that information. See 26 C.F.R. sec. 301.6330-1(e)(1), Proced. & Admin. Regs. (”Taxpayers will be expected to provide all relevant information requested by Appeals, including financial statements, for its consideration of the facts and issues involved in the hearing”). However, if and when a taxpayer later becomes ill or loses a job, or when a previously ill or unemployed taxpayer is healed or gets a job, then the position of the tax collector may well change. This reality is reflected explicitly in section 6330(d)(2)(B), which contemplates “a change in circumstances with respect to such person which affects such determination.” Thus, an appeals officer's collection judgments reflected in a notice of determination issued after a CDP hearing are not necessarily the last word, even for the Office of Appeals itself—nor should they be. Instead, the Office of Appeals retains jurisdiction to continue to consider collection issues over time. This flexibility helps to ensure that, on a continuing basis, the IRS will tailor its collection activities to the taxpayer's current circumstances and that the IRS will not take collection action that is arbitrary or which creates unnecessary hardship for the taxpayer. Sixth, if the taxpayer appeals an adverse determination to the Tax Court, then, as we have noted in part II.C. 2 above, the appeals officer's collection decisions are reviewed in litigation. In that context, the determination is of course not binding on the Tax Court, which reviews for abuse of 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 Consequently, the CDP determination of the Office of Appeals is not necessarily the agency's last word on collection issues. b. Underlying liability As we noted above in part II.C.2, a taxpayer who did not have a previous opportunity to dispute the amount of his underlying tax liability may raise such a dispute in the agency- level CDP hearing, pursuant to section 6330(c)(2)(B). In such a circumstance, the officer or employee conducting the hearing for the Office of Appeals will determine the IRS's position on that taxpayer's liability. Respondent explains that, in practice, a settlement officer will conduct the CDP hearing and will refer the case to an appeals officer to consider the issue of underlying liability. When the appeals officer makes a determination with respect to the liability issue, the case is returned to the settlement officer, who addresses any collection issues and makes an initial determination that is subsequently approved or overruled by a team manager, who makes the final determination on behalf of the Office of Appeals. The settlement officer will not reconsider the appeals officer's determination with respect to the liability issue, and generally, neither will anyone else within the Office of Appeals. We noted in Lewis v. Commissioner, 128 T.C. 48, 59 (2007) (quoting 26 C.F.R. sec. 601.106(a)(1)(ii), Statement of Procedural Rules), that "[t]he Appeals officer has the `exclusive 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 [¶88,143 PH Memo TC] (”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 in which the CDP determination of underlying liability may be said to be “final”. i.If the liability determination is favorable to the taxpayer If the liability determination made by the Office of Appeals in the CDP context is favorable to the taxpayer, then the CDP process generally ends with a unilateral agency determination not to proceed with collection. 60 Although the team manager in charge of the case has the authority to execute a closing agreement with the taxpayer under section 7121, see IRS Deleg. Order 97 (Rev. 34), IRM pt. 1.2.47.6 (Aug. 18, 1997), generally no closing agreement is executed, and no litigation ensues. Respondent states that, as with a liability determination in a notice of deficiency, “an underlying liability determination in a CDP case is also binding on the Examination function. The Examination function generally has no opportunity to review Appeals' determination”; and we assume arguendo that this is correct. 61 However, this binding character is limited. First, if it is true (as section 6330(d)(2) provides) that the Office of Appeals “shall retain jurisdiction with respect to any determination” (emphasis added), then it would seem that the Office of Appeals itself must have jurisdiction to reconsider its pro-taxpayer liability determination. Second, if the taxpayer had paid all or part of the liability that had been at issue in a CDP hearing and thereafter sought a refund of it through litigation, no collateral estoppel or res judicata effect to govern the outcome of the refund suit would arise from the prior CDP determination. See Jackson v. Commissioner, supra. The case would be defended not by the IRS but by attorneys of the Department of Justice, see 28 U.S.C. sec. 61 It is not clear why Examination would necessarily be bound by the CDP determination of a liability issue. A liability determination in a notice of deficiency (whether issued by the Office of Appeals or another IRS function) may acquire a quasi- binding character within the agency because section 6212(c) restricts the determination of further deficiencies (though section 6214(a) permits an increased deficiency if the matter is challenged in 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 [7 AFTR 8847] (1929). 516 (2006), 62 which also has settlement authority in such cases, see sec. 7122. 63 But even in refund suits handled by the Department of Justice the IRS must request any counterclaim, see sec. 7403, must give a defense recommendation, see 28 U.S.C. sec. 520 (2006), and must give its views on proposed settle- ments. 64 In that context, it is the Office of Chief Counsel, and not the Office of Appeals, that speaks for the IRS; and Chief Counsel is not bound by the appeals officer's CDP determination. IRM pt. 34.8.2.11.5(4) (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 Appeals but from the Office of Chief Counsel, which must be independent and impartial. 65 Thus, a pro-taxpayer CDP determination on underlying liability has at most a limited “finality” within the agency. ii.If the liability determination is not favorable to the taxpayer If the liability determination made by the Office of Appeals in the CDP context is not favorable to the taxpayer, then there are several contexts in which the IRS may take a position different from that reflected in the CDP determination. (A). CDP litigation 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 39. In Tax Court proceedings the IRS is represented by the Office of Chief Counsel, see sec. 7452, which may re-think the liability issues and may take a position different from that reflected in the notice of determination. See IRM pt. 1.1.6.1 (quoted supra note 65). In addition, the Office of Chief Counsel—not the Office of Appeals—has the authority to settle CDP cases that reach litigation, see sec. 601.106(a)(2)(i), Statement of Procedural Rules; Rev. Proc. 87-24, 1987-1 C.B. 720, and it has the authority to settle CDP cases without the concurrence of the Office of Appeals, see Rev. Proc. 87-24, supra; IRM pt. 35.5.1.4.3(2), 35.5.2.7(2), 35.5.2.14(2)(B) (Aug. 11, 2004). If the taxpayer who receives an adverse notice of determination reflecting the officer's or employee's decision about underlying liability decides not to appeal to the Tax Court, then the IRS may nonetheless meet this taxpayer again in a variety of other circumstances in which, again, the CDP liability determination will not be binding on the IRS: (B). Audit reconsideration Audit reconsideration is a substantive review of the taxpayer's liability that may result in the abatement of an assessed tax liability. Specifically, audit reconsideration “is the process the IRS uses to reevaluate the results of a prior 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 is authorized to abate the unpaid portion of the assessment of any tax or any liability in respect thereof, which—(1) is excessive in amount, or (2) is assessed after the expiration of the period of limitations properly applicable thereto, or (3) is erroneously or illegally assessed.” Audit reconsideration is not precluded by a prior CDP 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 course of an audit reconsideration. (C). District Court collection suit 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) (”the Attorney General *** , at the request of the Secretary, may direct a civil action to be filed in a district court”). It is the Office of Chief Counsel, and not the Office of Appeals, that 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). (D). Request for abatement, refund claim, and refund litigation 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 considers administratively that request for abatement or claim for refund, it is bound by the appeals officer's adverse CDP determination. If the IRS denies a refund claim, 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 and for its views on proposed settlements. In that context, it will be the Office of Chief Counsel, and not the Office of Appeals, that will speak for the IRS, and the Chief Counsel will not be See supra part bound by the appeals officer's CDP determination. 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 tax law, and they affect to a greater or lesser extent the agency's ultimate position with regard to the tax liability and the collection of it. But there are numerous circumstances in which those determinations may not be the IRS's last word. 4. The tax administration context of the CDP “officer or employee” The IRS personnel who are appointed by the President or the Secretary of the Treasury are the Commissioner, see sec. 7803(a)(1), the Chief Counsel, see sec. 7803(b)(1), members of the Internal Revenue Service Oversight Board, see sec. 7802(b)(1), and the National Taxpayer Advocate, see sec. 7803(c)(1). See also supra note 47. Personnel to fill 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, 2008); (iii) the Commissioners of the Wage and Investment Division, the Small Business/ Self-Employed Division, the Tax-Exempt and Government Entities 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, 2005), 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 in 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 pt. 1.1.6.3 (Dec. 16, 2009), and (vi) the Chief of the Office of 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 (Feb. 5, 2008). 66 Lower in the IRS hierarchy, these hired positions include revenue officers (at or above the rank of GS-9 67 ), 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 IRS 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. 1.2.44.4 (Sept. 23, 2005). That is, revenue officers §3132(a)(2) (emphasis added))”). have the power—unless the CDP process intervenes—to effect the actual collection of tax. 5. The administrative law context of the CDP “officer or employee” 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, Then and Now, A Decade of Change” 1992-2002, 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 non- ALJ hearing officers. 68 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 2008). 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 the 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). An 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. 930.204 (2008). The APA generally requires that an ALJ preside over “every case of adjudication 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 cross- examination. 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 “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. 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 Clause 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. A. 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 6330 whose incumbent could be an officer subject to the Appointments Clause. 1. Creation by statute 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 Id. (quoting Freytag v. Appointments Clause jurisprudence.” Commissioner, 501 U.S. at 881). If there were a statutory provision to the effect that “There shall be, within the Internal 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 was “established by Law”. There is no such statute, and this lack is some indication that the position in question is not an office “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, sec. 7803(b)(1), and members of the Internal Revenue Service Oversight Board, sec. 7802(b)(1)—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 Branch that created the IRS Office of Appeals and its personnel 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 Secs. 6320(b)(1), committed the new CDP function to that office. 6330(b)(1), (d)(2). Mr. Tucker contends that the RRA established the pre-existing Appeals Officer position as the CDP hearing officer. The statute does refer to an “appeals officer” 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 to proceed with collection, sec. 6330(c)(3). However, for the following reasons we conclude that section 6330 uses the term “appeals officer” interchangeably with the term “officer or employee”: First, the provisions in the lien statute, section 6320(b)(3), and in the levy statute, section 6330(b)(3), that actually state who shall conduct the hearing state that “the hearing *** 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 an individual in the levy statute. The caption of each paragraph is “Impartial officer”, thereby explicitly indicating that it might 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) (emphasis added), and by understanding the phrase “appeals officer” in section 6330(c)(1) and (3) as shorthand for an officer or 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, 1018 (emphasis added). 71 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 under section 6330(b)(3). 72 The statute thus does not create any positions for the personnel who would perform the CDP function but rather refers to them in a most diffuse manner (”conducted by an officer or employee”). After the enactment of this statute, it was not possible to point 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” yet to be designated, from time to time, within the Office of Appeals. 73 Thus, the mere mention of an “officer or employee” or an “appeals officer” in sections 6320 and 6330 presumes but does not establish any position. 74 In addition to sections 6320 and 6330, however, Mr. Tucker points to a reference to “appeals officer” in a provision of the RRA that has not been codified in the Code. 75 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 in each State. [Emphasis added.] This provision, however, has little to do with the CDP hearing or (Emphasis added.) The its presiding “officer or employee”. 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, as 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”. 2. Creation by regulation 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 be an “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 of 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 61 Fed. Reg. 19 978 (May 3, 1996)). The ARB was created not by statute but by an order of the Secretary of Labor, `regulations' or by `statute,” for which he cites United States v. Mouat, 124 U.S. 303, 307-308 (1888) (”there is no statute authorizing the 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]he head of an Executive department *** may prescribe regulations 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, see Willy v. Admin. Review Bd., 423 F.3d 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 (6th Cir. 1999), approved the creation of the ARB as being within the general authority granted to the Secretary of Labor under 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. 16 (1981), promulgated by the Secretary of HHS, pursuant to 42 U.S.C. sec. 913 (2006), which provides: “The Secretary is authorized to appoint and fix the compensation of such officers 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 “inferior 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 parties and the courts seem to have assumed that if the positions existed, then the positions were “established by Law”. 77 If this assumption is correct, then it would seem that 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 the phrase “established by Law”, if the Appointments Clause would 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 construed 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 provisions involve just this problem—i.e., that Congress took the existing 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 of “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 among the “number of persons” who are employed in that Office “as the Commissioner deems proper for the administration and enforcement 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 is “established by Law”, but there is no office established by statute or regulation to which Congress committed the CDP function. B. Whether the CDP function could constitute an “office” If, however, a position is “established by Law”, the second question in an Appointments Clause inquiry is whether that 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 constitute an office: A position is an office if (i) it is invested with “significant authority pursuant to the laws of the United States”, Buckley v. Valeo, 424 U.S. at 126, and (ii) it is “continuing”, 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 duties Burnap v. United States, 252 U.S. 512, and appointment thereto.” 516 (1920). Therefore, we examine the specific features of the “officer or employee” 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” position A position is “continuing” if it possesses “tenure, duration, emolument, and duties” that are “continuing and 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 is permanently assigned sovereign authority that does not expire, inter alia, upon the passage of time or the completion of a 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 CDP “appeals officer” is a position “established by Law”, then it is 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 States” 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 eight- member 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 Id. 137-141. Amendments of 1974, Pub. L. 93-443, 88 Stat. 1263. 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 whether the powers in each category constituted significant authority: [T]he Commission's powers fall generally into three categories: functions relating to the flow of necessary information—receipt, dissemination, and investigation; functions with respect to the Commission's task of fleshing out the statute— rulemaking and advisory opinions; and functions necessary to ensure compliance with the statute and rules—informal procedures, administrative determinations and hearings, and civil suits. The Supreme Court held that it was constitutionally Id. permissible for the unappointed commissioners to exercise their investigatory and informative powers, because in so doing they were merely aiding Congress in performing its legislative function. Id. at 137-138. Since Congress could delegate those powers to its own committees, the Supreme Court stated “there can 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 “more substantial [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 to enforce the 1971 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 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 Id. at governmental duty exercised pursuant to a public law.” 140-141. From Buckley we therefore draw the general principle that only an “officer” may perform “significant” enforcement and See id. at 124-141. In particular, the interpretive functions. 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 real 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 the two cases most analogous to our facts, the Supreme Court in Freytag and the Court of Appeals for the District of Columbia Circuit in Landry analyzed whether different 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 STJ may be assigned “not only to hear and report on a case but to decide it”. Freytag v. Commissioner, 501 U.S. at 873. In deciding that STJs are “inferior Officers”, the Supreme Court relied on the authority of STJs to render the final decision of this Court in some of the matters that come before them. See id. at 882. In contrast, in Landry v. FDIC, 204 F.3d at 1134, the Court 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, conduct trials, rule on the admissibility of evidence, and have the power 80 (...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”. to enforce compliance with discovery orders.” Id. (quoting Freytag v. Commisioner, supra at 881-882). However, unlike the STJs, the ALJs lacked the power to make final decisions. Id. at 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. Landry v. FDIC, 204 F.3d at 1134. This focus in Landry on final decision-making power is an appropriate application of the Supreme Court's earlier analysis of the FEC's interpretive powers in Buckley v. Valeo, 424 U.S. at 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 decision, 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. See Buckley 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 not an office if the incumbent and her determinations are subject to supervision. See Landry v. FDIC, 204 F.3d at 1133-1134. 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 notice 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 with respect to collection action. Sec. 6330(d)(2). . 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 See supra part II.C.3.b. The Office of Chief or settling cases. 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 the CDP context, with the “final” decision-making power that may be exercised only by an “officer of the United States”. For that reason, settlement officers, appeals officers, and team managers are more analogous to the ALJs in Landry than to the STJs in Freytag . Moreover, non-officer ALJs have the authority to conduct “on the record” hearings, to require attendance at those hearings, to 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 of Appeals for the District of Columbia Circuit held that the ALJs in Landry are not officers because they lack final decision- Landry v. FDIC, 204 F.3d at 1133-1134. 81 making power. In contrast, settlement officers, appeals officers, and team managers lack not only final decision-making power but also these 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. Since we find persuasive the reasoning of the Court of 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 the Commissioner of Internal Revenue. To reflect the foregoing, An appropriate order will be issued. CONTENTS Background .......................... 6 Discussion ......................... 10 I. The Appointments Clause .............. 10 ________________________________________ 10 ________________________________________ 13 ________________________________________ 19 ________________________________________ 21 ________________________________________ 33 ________________________________________ 36 ________________________________________ 36 ________________________________________ 37 ________________________________________ 39 ________________________________________ 65 ________________________________________ 65 ________________________________________ 76 ________________________________________ 87 ________________________________________ 1 Unless otherwise indicated, all section references are to the Internal Revenue Code (”Code”, 26 U.S.C.). ________________________________________ 2 In addition to the motion to remand that we address in this Opinion, there are also pending before us both respondent's motion for summary judgment asking the Court to sustain the supplemental notice of determination and Mr. Tucker's cross- motion for summary judgment asking that we hold that the supplemental notice reflected an abuse of discretion by the Office of Appeals. Those cross-motions address the merits of the CDP determination, and we do not decide them in this Opinion. ________________________________________ 3 The Constitutional Convention did not accept a proposal by James Madison that “Superior Officers below Heads of Departments ought in some cases to have the appointment of the lesser offices.” Freytag v. Commissioner, 501 U.S. 868, 884 [68 AFTR 2d 91-5025] (1991) ________________________________________ 4 See also Edmond v. United States, 520 U.S. 651, 663 (1997) 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”). ________________________________________ 5 See Jerry L. Mashaw, “Recovering American Administrative Law: Federalist Foundations, 1787-1801”, 115 Yale L. J. 1256, 1268 (2006) (”these Federalist-era state builders were not 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 office- holding problematic along multiple dimensions, from the way ________________________________________ 6 Officers of the United States are also “employees” for some purposes—e.g., employment taxes. See sec. 3401(c). However, the case law interpreting the Appointments Clause uses the term ________________________________________ 7 As one mundane example, Article I, Section 5, Clause 3 of the Constitution requires each House to keep and publish “a Journal of its Proceedings,” a function hard to imagine Congress accomplishing without staff. ________________________________________ 8 See “List of Civil Officers of the United States, Except Judges, With Their Emoluments, For the Year Ending October 1, 1792”, at 59 (Feb. 27, 1793), printed in I Documents, Legislative and Executive, of the Congress of the United States, at 57-58 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.” ________________________________________ 9 See U.S. Office of Personnel Management, Federal Employment Statistics, http://www.opm.gov/feddata/html/2009/March/table2.asp. ________________________________________ 10 ________________________________________ 11 Id. secs. 3, 5, 1 Stat. 73, 75; Act of Sept. 29, 1789, ch. 21, sec. 2, 1. Stat. 93. ________________________________________ 10 ________________________________________ 12 ________________________________________ 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. ________________________________________ 14 See Edmond v. United States, 520 U.S. at 660 (”The prescribed manner of appointment for principal officers is also the default manner of appointment for inferior officers”); see also Weiss v. United States, 510 U.S. 163, 187 (1994) (Souter, J., concurring) (”any decision to dispense with Presidential appointment and Senate confirmation is Congress's to make”). ________________________________________ 15 In the early years of the Republic, external and internal revenue employees were more than half the Federal civilian workforce. See Leonard D. White, The Federalists: A Study in 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 administrative system devised by the early Congresses”. Mashaw, supra at 1278. ________________________________________ 16 Act of Sept. 2, 1789, ch. 12, 1 Stat. 65 (1789). Except for the Assistant to the Secretary, who was to “be appointed by the said Secretary”, the statute is not explicit as to who appoints these officers, so the default rule of the Appointments clause applied. The position of Assistant to the Secretary was later replaced by the Commissioner of the Revenue, who was made responsible for “collection of the other revenues of the United States” (i.e., other than “duties on impost and tonnage”). See Act of May 8, 1792, ch. 37, sec. 6, 1 Stat. 280. ________________________________________ 17 See Act of Sept. 11, 1789 (”An Act for establishing the Salaries of the Executive Officers of the Government, with their Assistants and Clerks”), ch. 13, sec. 2, 1 Stat. 68; Act of May 8, 1792, ch. 37, sec. 11, 1 Stat. 281 (”the Secretary of the Treasury be authorized to have two principal clerks”). Consistent with this statutory authorization, the 1792 Roll, at 57-58, lists the officials whose offices were named in the organizing statute, and also lists several “messengers” and “office-keepers”. ________________________________________ 18 Act of Sept. 2, 1789, ch. 12, sec. 2, 1 Stat. 65; see also Act of June 5, 1794, ch. 48, sec. 4, 1 Stat. 376, 378 (”the duties aforesaid shall be received, collected, accounted for, and paid under and subject to the superintendence, control and direction of the department of the 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”). ________________________________________ 19 ________________________________________ 19 ________________________________________ 21 Act of July 31, 1789, Ch. 5, sec. 1, 1 Stat. 29. The statute does not state by whom the “naval officer, collector and surveyor” would be appointed. However, the preamble to the 1802 Treasury Roll, at 261, describes "[t]he officers employed in the collection of the external revenue” as falling into three groups, one of which consisted of “collectors, naval officers, [and] surveyors” who are said to have been “appointed by the President”. The statute also allowed for “other person[s] specially appointed by either” the naval officer, collector, or surveyor to search, seize, and secure concealed goods. Act of July 31, 1789, Ch. 5, sec. 24, 1 Stat. 43 (emphasis added). However, we infer that those “special” appointments were occasional and temporary; and if so then they did not constitute “offices”. See infra part III.B.1. ________________________________________ 22 That position of “principal officer” was established a month later as Secretary of the 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. 3, 3 Stat. 232, constituted appointment by the Secretary for purposes of the Appointments Clause). ________________________________________ 23 ________________________________________ 24 The collector, naval officer, and surveyor were also authorized to name a “deputy” who would serve “in cases of occasional and necessary absence, or of sickness, and not otherwise”, id. sec. 7, 1 Stat. 155, and would serve in the case of their disability or death “until successors shall be duly appointed”, id. sec. 8. See also, to the same effect, Act of June 5, 1794, ch. 49, secs. 1, 12, 1 Stat. 378, 380; Act of Mar. 2, 1799, ch. 22, sec. 22, 1 Stat. 644. Because the deputies' positions were only temporary, we assume that they were not “offices” within the meaning of the Appointments Clause, see infra part II.B.1, and that the clause is therefore not implicated even where those non-appointed deputies were (temporarily) given substantial authority and discretion. ________________________________________ 25 Act of March 2, 1799, ch. 22, secs. 97 and 98, 1 Stat. 699. ________________________________________ 23 ________________________________________ 26 Id. sec. 99, 1 Stat 700. The preamble to the 1802 Roll, at 261, describes "[t]he officers employed in the collection of the external revenue” as falling into three groups, one of which consisted of, inter alia, “masters and mates of revenue cutters” who are said to have been “appointed by the President”. ________________________________________ 27 Id. sec. 101, 1 Stat. 700. The statute also authorized the collectors to hire temporary and occasional inspectors. Id., secs. 14, 19, 38, 53, 1 Stat. 636, 640, 658, 667. ________________________________________ 28 Id., secs. 97 and 98. The 1802 Roll does not list “non- commissioned officers, gunners and mariners” but does refer, at 261, to “bargemen employed by collectors”. We infer that the 1802 Roll's “bargemen” are these employees named in the statute. ________________________________________ 29 ________________________________________ 30 Id. sec. 18, 1 Stat. 203 (emphasis added); see also Act of June 5, 1794, ch. 48, sec. 3, 1 Stat. 377 (referring to “the several officers of inspection acting under” the supervisors). ________________________________________ 31 ________________________________________ 32 ________________________________________ 33 Act of July 11, 1798, ch. 71, sec. 2, 1 Stat. 592; see also Act of Apr. 6, 1802, ch. 19, sec. 5, 2 Stat. 150. In 1805 the Secretary was authorized to employ clerks to serve under the direction of the supervisor of the district of South Carolina. See Act of Jan. 30, 1805, ch. 11, sec. 1, 2 Stat. 311. ________________________________________ 34 Act of July 14, 1798 (”An act to lay and collect a direct tax within the United States”), ch. 75, secs. 1 and 2, 1 Stat. 597, 598. Section 8 of Article I of the Constitution permits Congress “To lay and collect Taxes”; but before the ratification of the 16th Amendment, “No capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.” ________________________________________ 32 ________________________________________ 35 ________________________________________ 36 ________________________________________ 36 ________________________________________ 37 ________________________________________ 36 ________________________________________ 37 ________________________________________ 38 ________________________________________ 39 Act of Jan. 2, 1800, ch. 3, sec. 2, 2 Stat. 4 (emphasis added). See also, to the same effect, Act of May 10, 1800, ch. 53, sec. 2, 2 Stat. 72. ________________________________________ 40 ________________________________________ 41 See Lucius A. Buck, “Federal Tax Litigation and the Tax Division of the Department of Justice”, 27 Va. L. Rev. 873, 875-877 (1941). ________________________________________ 40 ________________________________________ 42 See Act of July 22, 1813, ch. 16, secs. 3, 8, 20-22, 3 Stat. 26, 27, 30, 31 (Assistant Assessors could correct fraudulent property lists without any taxpayer appeal right; Deputy Collectors could seize and sell personal and real property). ________________________________________ 43 See Act of Aug. 5, 1861, ch. 45, secs. 11, 34, 51, 12 Stat. 296, 303, 310 (Assistant Assessors are described with less detail; Assistant Collectors could levy upon property and could arrest and imprison taxpayers who refused to testify); Act of July 1, 1862, ch. 119, secs. 3, 5, 9, 12 Stat. 433-435 (Assistant Assessors and Deputy Collectors with powers similar to those in 1813); Act of June 30, 1864, ch. 173, secs. 8, 10, 13, 14, 52, 118 13 Stat. 224-227, 242, 282 (Assistant Assessors and Deputy Collectors were given powers similar to those in 1862 (but arrest power was replaced with summons authority and power to apply to a judge for arrest for contempt), and both could also administer oaths and take evidence; Assistant Assessor could adjust taxable income upward “if he shall be satisfied” that income was understated, with appeal of any such increase to the assessor); Act of Mar. 3, 1865, ch. 78, 13 Stat. 480 (Assistant Assessor can adjust taxable income upward “if he has reason to believe” that income is understated); Act of July 13, 1866, ch. 184, secs. 4, 9, 14 Stat. 99, 126, (Assistant Assessors could give permits for cigar-making; Deputy Collectors could hold cotton until tax on it had been paid); Act of Mar. 2, 1867, ch. 169, secs. 19, 20, 14 Stat. 482 (any internal revenue officer could be authorized to seize property 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). ________________________________________ 44 See Act of Oct. 3, 1913, ch. 16, 38 Stat. 169, 179 (a Deputy Collector could demand that a taxpayer show cause why the income amount on the return should not be increased and, if no return or a false or fraudulent return had been provided, could make a return based on the best information he could obtain, which return was then to be held prima facie good and sufficient for all legal purposes). ________________________________________ 45 See 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. 1146-1148 (Deputy Collector had powers similar to those in 1913 and 1916, and could administer oaths and take evidence). ________________________________________ 46 ________________________________________ 47 One 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 years. ________________________________________ 48 According to the Internal Revenue Manual (IRM), “The Appeals Mission is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.” IRM pt. 8.1.1.1(1) (Oct. 23, 2007). ________________________________________ 49 The Committee on Appeals and Review was abolished on June 2, 1924, in favor of creating the Board of Tax Appeals because it was thought that a judicial tribunal would better serve taxpayers. IRS Document 7225, History of Appeals, 60th Anniversary Edition 3 (Nov. 1987). However, in response to the rapidly growing docket of the Board of Tax Appeals, the Special Advisory Committee was formed as a part of the Commissioner's office to reprise the role of the Committee on Appeals and Review. Id. This Court is the successor to the (statutory) Board of Tax Appeals, and the Office of Appeals is the successor to the Special Advisory Committee. See id. ________________________________________ 50 Today both CAP and the CDP regime (discussed below) are administered by the Office of Appeals. IRM pt. 8.24.1.1.1 (May 27, 2004). As a result, a taxpayer may be eligible to request either a CAP or CDP hearing with respect to a lien or levy. Id. However, taxpayers are eligible for CAP hearings in more circumstances than CDP hearings. Publication 1660, Collection Appeal Rights 3 (rev. 03-2007). For example, a taxpayer is eligible for a CAP hearing when a CDP hearing is unavailable because the taxpayer already had a CDP hearing or failed to timely request such a hearing. IRM pt. 8.24.1.1.1(6) (May 27, ________________________________________ 50 ________________________________________ 51 Although this case involves only an Office of Appeals determination to sustain a notice of lien and not a determination to proceed with a levy, the function of the “appeals officer” that pertains to levies should be considered in determining the nature of that position. Cf. Freytag v. Commissioner, 501 U.S. at 882 (”The fact that an inferior officer on occasion performs duties that may be performed by an employee not subject to the Appointments Clause does not 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”). ________________________________________ 52 The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub. L. 105-206, 112 Stat. 685, also included three references to “appeals officers” that are not codified in the Internal Revenue Code. RRA Section 3465(b), 112 Stat. 768, 1998-3 C.B. 228, provides: “The Commissioner of Internal Revenue shall ensure that an appeals officer is regularly available within each State”; RRA section 1001(a)(4), 112 Stat. 689, 1998-3 C.B. 149, provides that the reorganization plan should prohibit “ex parte communications between appeals officers and other Internal Revenue Service employees”; and RRA section 3465(c), 112 Stat. 768, 1998-3 C.B. 228, provides that the IRS should “consider the use of the videoconferencing of appeals conferences between appeals officers and taxpayers seeking appeals in rural or remote areas.” (Emphasis added.) ________________________________________ 53 ________________________________________ 54 Mr. Tucker did not challenge his underlying liabilities (which were, in fact, the liabilities that he himself had reported on his late returns). However, as we observed supra note 51, in order to determine the nature of the “appeals officer” position, we should consider all of its functions, not only those that were operative in this case. ________________________________________ 55 even lower pay grade person who the IRS used to call a ________________________________________ 55 even lower pay grade person who the IRS used to call a ________________________________________ 56 In addition, if an agreement embodied in Form 870-AD, “Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and of Acceptance of Overassessment”, is accepted by the IRS and executed with the taxpayer, equitable estoppel may apply to make that agreement binding on all functions of the IRS. See Kretchmar v. United States, 9 Cl. Ct. 191, 198 [57 AFTR 2d 86-306] (1985). ________________________________________ 4 ________________________________________ 13 ________________________________________ 1 ________________________________________ 2 ________________________________________ 57 If 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 IRS 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. ________________________________________ 58 See also H. Conf. Rept. 105-599 at 289 (1998), 1998-3 C.B. 747, 1020 (”A taxpayer could apply for consideration of new information, make an offer-in-compromise, request an installment agreement, or raise other considerations at any time before, during, or after the Notice of Intent to Levy hearing”). ________________________________________ 2 ________________________________________ 59 This provision in the regulations does not actually create “exclusive and final authority” but rather presumes such authority on the part of “the regional commissioner” and then provides that Appeals personnel “represent” the regional commissioner in that authority. It is a provision generally applicable when the Office of Appeals has jurisdiction over a determination of liability. 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. ________________________________________ 60 If a taxpayer in a CDP hearing proposes not a complete concession by the IRS but an offer-in-compromise (OIC) based on doubt as to liability, and if the Office of Appeals accepts the OIC, then the resulting agreement is binding on the IRS. However, that binding effect is not unique to the CDP process; rather, the OIC accepted in the CDP context has the same effect (no more, and no less) as an OIC accepted in any context. In the absence of an OIC or a closing 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 effectuated either by Office of Appeals personnel directly, see IRM pt. 8.22.3.9.3.1 (Oct. 19, 2007) (”APS [Appeals Processing Services] will input adjustments to tax”), 8.22.3.9.3.1.1(2) (Oct. 19, 2007) (”APS will abate the SFR/ASFR assessment and reverse withholding as requested by the hearing officer”), or by 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(1) (Nov. 1, 2007) (”CDP `back-end' work”). ________________________________________ 61 ________________________________________ 62 By regulation, 28 C.F.R. sec. 0.15 (2007), it is the Deputy Attorney General (not one of the “Heads of Departments”, in Appointments Clause parlance) who hires Department of Justice trial attorneys. ________________________________________ 63 An Assistant Attorney General heads the Tax Division and hires the Chiefs of the litigating sections in the Tax Division. See Memorandum of Dec. 29, 1999, to Heads of Department 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. O, subpt. Y, app. ________________________________________ 64 See 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. ________________________________________ 65 See 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”). ________________________________________ 2 ________________________________________ 8 ________________________________________ 66 Justice 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 [Senior Executive Service] officials qualify as `inferior officers,' for their duties, as defined by statute, require them to `direc[t] the work of an organizational unit,' carry out high-level managerial functions, or `otherwise exercis[e] important policy-making, policy-determining, or other executive functions.' ________________________________________ 67 The General Schedule, abbreviated “GS”, is the basic pay schedule for employees of the Federal Government. See 5 U.S.C. sec. 5332 (2006). ________________________________________ 68 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. at ___ (dissenting op. at 30) (Breyer, J., dissenting). ________________________________________ 5 ________________________________________ 5 ________________________________________ 5 ________________________________________ 69 Although 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”. ________________________________________ 70 The National Taxpayer Advocate's predecessor, the Taxpayer Advocate, was appointed by the Commissioner of Internal Revenue, pursuant to former section 7802(d)(1). ________________________________________ 71 See 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)). ________________________________________ 72 See Powers v. Commissioner, T.C. Memo. 2009-229 [TC Memo 2009-229]; Reynolds v. Commissioner, T.C. Memo. 2006-192 [TC Memo 2006-192]. ________________________________________ 73 Mr. 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). ________________________________________ 74 The 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”). ________________________________________ 75 For the two other uncodified references to “appeals officers” in the RRA, see supra note 52. ________________________________________ 76 In 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 ________________________________________ 77 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). ________________________________________ 78 An 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. ________________________________________ 79 The requirements of the Appointments Clause are not implicated unless an “office” exists. Freytag v. Commissioner, 501 U.S. at 880 (citing Buckley v. Valeo, 424 U.S. 1, 126 at 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 special trial judge is only an employee”. Id. Likewise, in Landry v. FDIC, 204 F.3d 1125, 1133-1134 (D.C. Cir. 2000), the 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. ________________________________________ 80 While “significant authority” is an essential character- istic of an “office”, Buckley v. Valeo, 424 U.S. at 126, this proposition cannot be construed to mean that non-officer employees of the Federal Government are insignificant or trivial. Mr. Tucker suggests that treating “appeals officers” as non- officer 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, see 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 insubordination ________________________________________ 80 ________________________________________ 26 ________________________________________ 81 The 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. at 910 (Scalia, J., concurring in part and concurring in judgment)). 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”. ________________________________________ 6