Court Opinion

ID: 4474539
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:00.045424+00
Date Added: 2024-06-11T14:53:52.339600
License: Public Domain

Thornton, J., concurring: I agree with the majority and write separately to address certain points regarding the application of the Administrative Procedure Act (APA), 5 U.S.C. secs. 551-559, 701-706 (2000), to Tax Court proceedings and our application of the abuse of discretion standard in cases for spousal relief under section 6015. Since its enactment in 1946, the APA has never governed proceedings in this Court (or in its predecessor, the Board of Tax Appeals). See, e.g., O’Dwyer v. Commissioner, 266 F.2d 575, 580 (4th Cir. 1959) (“The Tax Court * * * is a court in which the facts are triable de novo * * * . We agree that the Tax Court is not subject to the Administrative Procedure Act.”), affg. 28 T.C. 698 (1957). This long-established practice comports with the provisions of the APA and its history. As a statute of general application, the APA does not supersede specific statutory provisions for judicial review. APA section 704 provides: “Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review.” 5 U.S.C. sec. 704 (2000). APA section 703 governs the form and venue of judicial review under the apa. See 5 U.S.C. sec. 703 (2000). The legislative history of apa section 703 makes clear that where there is a special statutory review proceeding relevant to the subject matter, that special statutory review “shall not be disturbed”. S. Comm, on the Judiciary, 79th Cong., 1st Sess., Administrative Procedure Act (Comm. Print 1945), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 37 (1946);1 see H. Rept. 1980, 79th Cong. 2d Sess. (1946), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 276 (1946) (same). As the U.S. Supreme Court stated in Bowen v. Massachusetts, 487 U.S. 879, 903 (1988): “When Congress enacted the APA to provide a general authorization for review of agency action in the district courts, it did not intend that general grant of jurisdiction to duplicate the previously established special statutory procedures relating to specific agencies.” Applying these principles, the U.S. Court of Appeals for the Fifth Circuit has indicated that the APA is not an appropriate vehicle for challenging the Commissioner’s denial of a request to abate interest under section 6404. See Beall v. United States, 336 F.3d 419, 427 n.9 (5th Cir. 2003) (“review under the APA is accordingly available only where ‘there is no other adequate remedy in a court.’ ”). Similarly, in an unpublished opinion involving the validity of the Commissioner’s issuance of a notice of deficiency, the Court of Appeals for the Seventh Circuit concluded: “The apa is irrelevant, however, because the IRS’s issuance of a notice of tax deficiency and the Tax Court’s review of it are governed by the Internal Revenue Code and the rules and procedures of the Tax Court * * * and not by the APA.” Bratcher v. Commissioner, 79 AFTR 2d 97-3110, at 97-3112, 97-2 USTC par. 50,495, at 89,016 (7th Cir. 1997), affg. T.C. Memo. 1996-252; see also Am. Gen. Ins. Co. v. FTC, 359 F. Supp. 887, 893 (S.D. Tex. 1973) (rejecting a jurisdictional claim under the APA because there was no final agency action and plaintiff had an adequate remedy at law under the Clayton Act), affd. 496 F.2d 197 (5th Cir. 1974); Armstrong & Armstrong, Inc. v. United States, 356 F. Supp. 514, 521 (E.D. Wash. 1973) (“As relief is at least available * * * under 28 U.S.C. § 1491 (1970), judicial review may not be predicated on the Administrative Procedure Act.”), affd. 514 F.2d 402 (9th Cir. 1975); Poirier v. Commissioner, 299 F. Supp. 465, 466 (E.D. La. 1969) (rejecting taxpayer’s claim that review to restrain enforcement of irs summons is governed by APA sections 703 and 704 because sections 7602 and 7604 and Reisman v. Caplin, 375 U.S. 440 (1964) “[provide] an adequate remedy”).2  The Code has long provided a specific statutory framework for reviewing deficiency determinations of the Internal Revenue Service. Section 6015 is part and parcel of this statutory framework. This Court’s de novo review procedures emanate from this statutory framework. Accordingly, the APA judicial review procedures do not supplant this Court’s longstanding de novo review procedures in cases arising under section 6015. Moreover, the fact that section 6015 postdates the APA does not render the APA judicial review procedures applicable here. APA section 559 provides that the APA does “not limit or repeal additional requirements imposed by statute or otherwise recognized by law.” 5 U.S.C. sec. 559 (2000). When the APA was enacted in 1946, this Court’s de novo procedures for reviewing IRS functions were well established and “recognized by law” within the meaning of APA section 559.3 See, e.g., Phillips v. Commissioner, 283 U.S. 589, 598, 600 (1931) (stating that in deficiency proceedings before the Board of Tax Appeals, “there is a complete hearing de novo * * *. The adequacy of the scope of review * * * is now thoroughly established.”); Blair v. Oesterlein Machine Co., 17 F.2d 663, 665 (D.C. Cir. 1927) (“the Board [of Tax Appeals] is vested with full reviewing jurisdiction over the findings of the Commissioner * * *. The appellate power includes the authority, not only to review, but to investigate de novo, the matters in controversy between the government and the taxpayer”).4 These de novo trial procedures, which have remained essentially unchanged since the APA’s enactment, provide a stricter scope of review of the Commissioner’s determinations than would obtain under APA review procedures. Consequently, pursuant to APA section 559, the APA does not limit or repeal “additional requirements” arising from this Court’s de novo review procedures. The legislative history of the APA confirms this understanding. See S. Comm, on the Judiciary, 79th Cong., 1st Sess., Administrative Procedure Act (Comm. Print 1945), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 22 (1946) (stating that there are exempted from APA formal adjudication requirements matters that are subject to de novo review of facts and law such “as the tax functions of the Bureau of Internal Revenue (which are triable de novo in The Tax Court)”); S. Rept. 752, 79th Cong., 1st Sess. (1945), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 214 (1946) (explaining that pursuant to APA provisions governing the scope of judicial review, courts establish facts de novo where the agency adjudication is not subject to apa formal adjudication provisions “such as tax assessments * * * not made upon an administrative hearing and record, [where] contests may involve a trial of the facts in the Tax Court”); H. Rept. 1980, 79th Cong., 2d Sess. (1946), reprinted in Administrative Procedure Act Legislative History, 1944-46, at 279 (1946) (same). The mere fact that judicial review is for abuse of discretion in a spousal relief case arising under section 6015(f) does not trigger application of the APA record rule or preclude this Court from conducting a de novo trial. As the majority opinion correctly notes, this Court has a long tradition of providing trials when reviewing the Commissioner’s determinations under an abuse of discretion standard. For example, when reviewing for abuse of discretion the Commissioner’s refusal to abate interest under section 6404, this Court has consistently conducted trials. See, e.g., Goettee v. Commissioner, T.C. Memo. 2003-43; Jean v. Commissioner, T.C. Memo. 2002-256; Jacobs v. Commissioner, T.C. Memo. 2000-123. In sum, the APA does not disturb or supersede this Court’s longstanding de novo judicial review procedures for cases involving spousal relief under section 6015. This is not to say, however, that this Court could not or should not, in appropriate circumstances, borrow principles of judicial review embodied in the APA. Indeed, on occasion this Court has done so. For instance, in Dittler Bros., Inc. v. Commissioner, this Court looked to APA caselaw in adopting a “substantial evidence” rule as the appropriate measure for reviewing the reasonableness of the Commissioner’s determination as to tax avoidance in a declaratory judgment action arising under former section 7477. Dittler Bros., Inc. v. Commissioner, 72 T.C. 896, 909 (1979), affd. without published opinion 642 F.2d 1211 (5th Cir. 1981). The Court based its decision partly on the legislative history of former section 7477, which made it “clear that Congress did not intend the Court’s judgment to be a mere de novo redeter-mination” but rather a review of the Commissioner’s determination. Id.] see also Mailman v. Commissioner, 91 T.C. 1079, 1082 (1988) (holding that the Commissioner’s exercise of administrative discretion in failing to waive additions to tax under former section 6661 is subject to judicial review); Estate of Gardner v. Commissioner, 82 T.C. 989, 994 (1984) (looking to principles of administrative law, “now incorporated into the Administrative Procedure Act”, as supporting a presumption that the Commissioner’s discretionary actions in denying a request for a filing extension under section 2032A were subject to judicial review). As the majority opinion notes, this Court’s Rules regarding declaratory judgments involving retirement plans and exempt organizations generally require these actions to be disposed of on the basis of the administrative record. See Rule 217(a). Again, much as in Dittler Bros., Inc. v. Commissioner, supra, the reason for this limited review procedure lies in a legislative directive that “The court is to base its determination upon the reasons provided by the Internal Revenue Service in its notice to the party making the request for a determination, or based upon any new matter which the Service may wish to introduce at the time of trial.” H. Rept. 93-807, at 108 (1974), 1974-3 C.B. (Supp.) 236, 343; see Rule 217(a), Explanatory Note, 68 T.C. 1048.5  By contrast, Congress has not imposed a restrictive standard for this Court’s review of the Commissioner’s determinations under section 6015. Clearly, when it enacted section 6015, Congress was aware that this is a trial court that has historically resolved cases hy taking evidence and has never been governed by the apa. Nothing in the statute or the legislative history indicates that the APA is to apply to section 6015 cases or that we are to restrict our review to the administrative record. Section 6015 expanded the Court’s jurisdiction to review all denials of relief from joint and several liability. As described in the conference report, the House bill “specifically provides that the Tax Court has jurisdiction to review any denial of innocent spouse relief.” H. Conf. Rept. 105-599, at 250 (1998), 1998-3 C.B. 747, 1004. Similarly, under the Senate amendment, “The Tax Court has jurisdiction of disputes arising from the separate liability election.” Id. at 251, 1998-3 C.B. at 1005. The conference agreement “follows the House bill and the Senate amendment in establishing jurisdiction in the Tax Court over disputes arising in this area.” Id. The legislative purpose in enacting section 6015 was to provide spouses with broader access to relief from joint and several tax liabilities. See id. at 249, 1998-3 C.B. at 1003. In light of that fact, it seems unlikely that Congress would have intended Tax Court review of a spouse’s claim to be governed by the more restrictive APA judicial review procedures rather than by the Tax Court’s customary de novo review procedures. In conclusion, I believe that the majority opinion, in its rejection of the APA record rule and in its application of the abuse of discretion standard, is consistent with this Court’s well-established practice and appropriately implements legislative intent to provide spouses open and neutral consideration of their claims under section 6015. Wells, Cohen, Swift, Gerber, Laro, Vasquez, Gale, Marvel, Haines, Goeke, and Colvin, JJ., agree with this concurring opinion.   The Senate Judiciary Committee Print is part of the legislative history of the Administrative Procedure Act (APA). See Dept. of Labor v. Greenwich Collieries, 512 U.S. 267, 278 (1994); Darby v. Cisneros, 509 U.S. 137, 147-148 (1993); Grolier, Inc. v. FTC, 615 F.2d 1215, 1220 (9th Cir. 1980); Marathon Oil Co. v. EPA, 564 F.2d 1253, 1260 n.25 (9th Cir. 1977); see also Carter/Mondale Presidential Comm., Inc. v. Fed. Election Commn., 711 F.2d 279, 284 n.9 (D.C. Cir. 1983); WWHT, Inc. v. FCC, 656 F.2d 807, 813 n.8 (D.C. Cir. 1981).    Similarly, it is well established that the APA does not override sec. 7421(a) (known as the Anti-Injunction Act, 26 U.S.C. sec. 7421(a) (2000)), which provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person”. This provision is “part of a specific statutory framework intended by Congress as limitations not negated by the APA.” Fostvedt v. United States, 978 F.2d 1201, 1204 (10th Cir. 1992); see McCarty v. United States, 929 F.2d 1085, 1088 (5th Cir. 1991) (precluding relief under the APA because sec. 7421 is a specific statute that bars the requested relief); Lonsdale v. United States, 919 F.2d 1440, 1444 (10th Cir. 1990) (“Congress has provided express methods by which proposed deficiencies, assessments, or collections of taxes may be challenged, and express prohibition in the Anti-Injunction Act, 26 U.S.C. § 7421(a) against suits brought for the purpose of restraining the assessment or collection of any tax except in the prescribed manner.”); cf. 5 U.S.C. sec. 702 (2000) (“Nothing herein * * * confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.”).    When the APA was enacted, this Court had jurisdiction not only to redetermine deficiencies, but also to determine certain overpayments, to redetermine excessive profits on defense contracts as previously determined by the Secretary of the Treasury, and to hear claims for refunds of processing taxes; all these matters were reviewed de novo. See Revenue Act of 1943, ch. 63, sec. 701(e), 58 Stat. 86 (excessive profits); Revenue Act of 1942, ch. 619, secs. 504, 510(b), 56 Stat. 957, 967 (refunds of processing taxes); Revenue Act of 1926, ch. 27, sec. 284(e), 44 Stat. 67 (overpayments); Revenue Act of 1924, ch. 234, sec. 274, 43 Stat. 297 (deficiencies).    In one of its earliest decisions, the Board of Tax Appeals characterized its scope of review in deficiency proceedings as follows: When a taxpayer brings his case before the Board he proceeds by trial de novo. The record of the case made in the Internal Revenue Bureau is not before the Board except in so far as it may be properly placed in evidence by the taxpayer or by the Commissioner. The Board must decide each case upon the record made at the hearing before it, and, in order that it may properly do so, the taxpayer must be permitted to fully present any questions relating to his tax liability which may be necessary to a correct determination of the deficiency. To say that the taxpayer who brings his case before the Board is limited to questions presented before the Commissioner, and that the Board in its determination of the case is restricted to a decision of issues raised in the Internal Revenue Bureau would be to deny the taxpayer a full and complete hearing and an open and neutral consideration of his case. [Barry v. Commissioner, 1 B.T.A. 156, 157 (1924).]    When Congress acted in 1976 to expand this Court’s declarator judgment jurisdiction to include matters involving exempt organizations, the report of the Senate Finance Committee stated: “The judgment of the court in a declaratory judgment proceeding is to be * * * based upon the facts as presented to the court”. S. Rept. 94-938, pt. 1, at 588 (1976), 1976-3 C.B. (Vol. 3) 49, 626. In a footnote to this sentence, the report added: “In many cases, this would be essentially the administrative record before the Internal Revenue Service” and cited the notes to the Tax Court’s Rules. Id. n.7, 1976-3 C.B. (Vol. 3) at 626. Notably, the legislative history makes no reference to APA procedures, from which we infer that Congress did not contemplate that APA procedures would apply.