Tax Court denies constitutional challenge to IRS Appeals officers’ and supervisors’ appointments

The Tax Court rejected a taxpayer’s arguments that officers and team managers in the IRS Independent Office of Appeals are officers of the United States under the U.S. Constitution’s Appointments Clause. Thus, the court denied the taxpayer’s motion that his Collection Due Process (CDP) hearing before Appeals should be set aside because of their participation in the hearing and that he should be granted a new hearing.

Facts: Throughout 2012 to 2017, Charlton C. Tooke III filed his federal income tax returns but failed to pay the tax he reported due. To collect the tax he owed, the IRS issued him a final notice of intent to levy (Sec. 6330) as well as a notice of federal tax lien filing (Sec. 6320).

In response, Tooke requested a CDP hearing with the Independent Office of Appeals under Secs. 6320 and 6330. He proposed collection alternatives including an offer in compromise (OIC) and an installment agreement.

The Appeals officer rejected the OIC, and the parties were unable to agree on the terms of an installment plan. The Appeals officer issued a notice of determination sustaining the tax lien and the proposed levy, which was reviewed and approved by an Appeals team manager.

Tooke petitioned the Tax Court to review Appeals’ determinations in the notice. However, instead of challenging those determinations, Tooke instead made two motions raising constitutional arguments about the staffing and structure of Appeals. In his first motion (Appointments Clause motion), Tooke argued that the Appeals officer and Appeals team manager, as well as the chief of Appeals, served in violation of the Appointments Clause because they were acting as “officers of the United States.”

Under the Appointments Clause (Article 2, Section 2, Clause 2), all “officers of the United States” must be appointed by the U.S. president and confirmed by the Senate. The Appeals officer, the Appeals team manager, and the chief of Appeals in Tooke’s case were not appointed by the president or confirmed by the Senate, so Tooke claimed they had not been properly appointed under the Appointments Clause. Because of these alleged constitutional violations, Tooke asked the court in the motion to set aside the determinations made by Appeals and remand his case for a new hearing.

Tooke also made a motion based on a separation-of-powers argument regarding the power of removal of the chief of Appeals (removal power motion). Tooke asserted that Appeals, codified at Sec. 7803(e)(1), is a de facto independent agency whose head, the chief of Appeals, a position codified at Sec. 7803(e)(2)(a), is subject to an unlawful removal restriction. Under 5 U.S.C. Section 7513, the chief of Appeals can be removed only “for such cause as will promote the efficiency of the service.” Therefore, the chief of Appeals is subject to an impermissible restriction on the president’s ability to remove executive officials. Again, Tooke asked the court in the motion to set aside the determinations made by Appeals and remand his case for a new hearing.

Issues: First, the Tax Court had to decide whether Tooke had standing to challenge the appointment of Appeals officers and Appeals team managers and the appointment and removal of the chief of Appeals. The Supreme Court has established that, at an irreducible constitutional minimum, standing requires three elements: (1) an “injury in fact,” meaning an invasion of a legally protected interest that is “concrete and particularized” and actual or imminent, not conjectural or hypothetical; (2) causation, meaning that the injury is “fairly … trace[able]” to the challenged action of the defendant; and (3) redressability, meaning that the injury is “likely” to be “redressed by a favorable decision” of a court (Lujan v. Defenders of Wildlife, 504 U.S. 555, 560—61 (1992) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 41 (1976))).

For the standing inquiry, the Tax Court assumed that Appeals officers, Appeals team managers, and the chief of Appeals are officers of the United States. However, the court concluded, “Gleaning and extrapolating from the principles set forth in the available guidance, the throughline is that a plaintiff’s standing to challenge an official’s appointment or removal hinges on whether that official participated in the plaintiff’s case.”

The Tax Court, after reviewing the facts, found that while the Appeals officer and the Appeals team manager participated in Tooke’s case, the chief of Appeals did not. Thus, it held that Tooke had standing to challenge the appointments of the Appeals officer and the Appeals team manager but not to challenge either the appointment or removal provisions of the chief of Appeals.

The Tax Court then analyzed the appointments (or lack of them) and roles of the Appeals officer and team manager who were directly involved in Tooke’s case to determine whether they were required to be appointed within the mandates of the Appointments Clause. Tooke argued they were and therefore were required to be nominated by the president and confirmed by the Senate.

The Tax Court, in its decision in Tucker, 135 T.C. 114 (2010), aff’d, 676 F.3d 1129 (D.C. Cir. 2012), held that Appeals officers and team managers are not “officers of the United States,” nor can they act as such, because they do not exercise significant authority. Instead, the court held in Tucker that they were lower-level employees under the IRS commissioner’s general hiring authority.

Tooke contended that provisions of the Taxpayer First Act, P.L. 116-25, which established the current structure and operation of Appeals, combined with subsequent court holdings since Tucker, required the court to find that Appeals officers and team managers are “officers of the United States.” The IRS countered that Tucker still controlled because Appeals officers and team managers do not occupy positions established by law and they do not wield significant discretion in their decision-making or have authority to make final decisions.

Holding: The Tax Court denied both of Tooke’s motions. While, for the Appointments Clause motion, the court determined that Tooke had standing to challenge the Appeals officer’s and team manager’s appointments, the court denied the motion because they were not “officers of the United States” under the Appointments Clause, following its holding in Tucker. The court denied the removal power motion because Tooke lacked standing to challenge the Appeals chief’s removal provisions.

Tooke, 164 T.C. No. 2 (2025)

— Matthew Tardif is a student, and Thomas Godwin, CPA, CGMA, Ph.D., and John McKinley, CPA, CGMA, J.D., LL.M., are professors of the practice in accounting and taxation, all in the SC Johnson College of Business at Cornell University. To comment on this column, contact Paul Bonner, the JofA‘s tax editor.