Restructuring the U.S. Tax Court: A Reply to Stephanie Hoffer & Christopher Walker's 'The Death of Tax Court Exceptionalism'

Abstract

Stephanie Hoffer and Christopher Walker’s excellent Minnesota Law Review article, The Death of Tax Court Exceptionalism, http://ssrn.com/abstract= 2393412, analyzes the topical and important question of whether the Administrative Procedure Act (APA) governs the standard and scope of review the Tax Court applies to Internal Revenue Service (IRS) decisions. The APA contains provisions for court review of agency decisions but the Tax Court has repeatedly stated that the APA does not apply to it. As a result, the Tax Court has accorded less across-the-board deference to the IRS than APA standards call for.

Professors Hoffer and Walker argue that the Tax Court should cease taking this exceptional position and instead apply the APA. I have long advocated for the abandonment of tax insularity, and the Tax Court’s history makes it of particular concern in this regard. As an Article I court that at one time was an independent agency, it is unclear even in which branch of government this tribunal belongs. The Tax Court is isolated from other courts and judicial institutions such as the Administrative Office of U.S. Courts and the U.S. Judicial Conference, although it is no longer subject to the provisions that govern administrative agencies.

As a result, the question of whether the APA’s “reviewing court” provisions apply to the Tax Court is not as doctrinally obvious as one might imagine, as this Reply demonstrates. Yet, this is primarily a symptom of the larger problem of the Tax Court’s insularity and unclear position in the federal government. Although it would be helpful for the Tax Court to implement APA procedures even without making other structural changes, a piecemeal approach is not particularly efficient. Recent case law suggests that litigants will continue to raise issues about the Tax Court’s unusual structure as long as it is different from other courts. The broad point of this Reply is therefore that it is past time to classify the Tax Court’s place in the federal scheme and treat the court like the judicial body that it is.

Keywords: Tax Court, APA, Admistrative Procedure Act, Standard of Review, Scope of Review, Deference, Record Rule, Attorney General's Manual

JEL Classification: H20, H29, K34, K41