In Tooke v. Commissioner, 164 T.C. No. 2 (2025), the Tax Court adjudicated a case concerning a taxpayer’s challenge to the IRS Independent Office of Appeals’ structure and staffing. The petitioner, Charlton C. Tooke III, sought review of a Notice of Determination that sustained a federal tax lien and proposed levy action, which stemmed from his unpaid federal income tax liabilities for the years 2012 through 2017. The case is notable for its examination of the Appointments Clause, the separation of powers doctrine, and the specific roles within the IRS Independent Office of Appeals.

Facts of the Case

Mr. Tooke had self-assessed federal income tax liabilities for the taxable years 2012-2017 but had not paid them. The IRS issued a Final Notice of Intent to Levy, and a Notice of Federal Tax Lien Filing, which prompted Mr. Tooke to request Collection Due Process (CDP) hearings. He requested both a section 6320 CDP lien hearing and a section 6330 CDP levy hearing. These requests were combined, and one CDP hearing was conducted.

Initially, Appeals Officer (AO) Kay Pollock was assigned to the case, but it was later transferred to AO Nathan Herring. During the CDP hearing, Mr. Tooke raised constitutional arguments concerning the separation of powers, particularly the Appointments Clause. He argued that the Appeals Office should stay the administrative proceedings until the alleged constitutional defects were remedied, but AO Herring explained that frivolous issues would not be considered. Ultimately, the Appeals Office rejected Mr. Tooke’s proposed offer-in-compromise (OIC) and failed to reach an agreement on an installment agreement (IA).

Following the hearing, AO Herring prepared a draft Notice of Determination, which was then reviewed and approved by Appeals Team Manager (ATM) Rhonda R. Warren. On January 5, 2021, ATM Warren issued the Notice of Determination, sustaining the federal tax lien and the proposed levy action. The Chief of Appeals did not participate in Mr. Tooke’s CDP hearing or the determination.

Mr. Tooke then filed a petition with the Tax Court, seeking review of the Notice of Determination. He also filed two motions: (1) an Appointments Clause Motion, arguing that the Appeals Officers, Appeals Team Managers, and the Chief of Appeals are "Officers of the United States" who must be appointed under the Appointments Clause; and (2) a Separation of Powers Motion, challenging the constitutionality of the IRS Independent Office of Appeals and the removal power of the Chief of Appeals.

Taxpayer’s Arguments

Mr. Tooke’s arguments centered around the premise that the IRS Independent Office of Appeals is staffed by individuals who are not constitutionally appointed, thereby making their actions void. His motions raised the following primary arguments:

Appointments Clause Motion:
- He contended that Appeals Officers, who conduct CDP hearings, are "inferior Officers of the United States" who must be appointed according to the Appointments Clause, as described in Article II, Section 2, Clause 2 of the U.S. Constitution.
- He argued that Appeals Team Managers, who review and approve Notices of Determination, are "principal Officers of the United States" who must be nominated by the President and confirmed by the Senate.
- He also asserted that the Chief of Appeals, who is responsible for supervising and directing Appeals, is an "Officer of the United States" who must be appointed per the Appointments Clause.
- He argued that all actions taken by these "unconstitutional actors" should be voided and that his case should be remanded to Appeals for a constitutionally compliant hearing.
Separation of Powers Motion (Removal Power Motion):
- He argued that the Chief of Appeals is subject to an unlawful removal restriction because the Chief can only be removed for cause. He argued that this unlawful restriction impairs executive oversight and accountability, making the Appeals Office unconstitutional.
- He urged the Court to set aside all agency actions as ultra vires.

In essence, Mr. Tooke sought to invalidate the actions of the IRS Independent Office of Appeals, arguing that the office’s structure and staffing violated the fundamental principles of the Appointments Clause and the separation of powers.

Tax Court’s Analysis and Application of the Law

The Tax Court’s analysis involved a comprehensive examination of several legal principles, including standing, the Appointments Clause, the separation of powers doctrine, and the roles of various officials within the IRS Independent Office of Appeals.

Standing:
- Appeals Officers and Appeals Team Managers: The Court first addressed the issue of standing, noting that Article III of the U.S. Constitution limits judicial power to “cases” and “controversies" and that the standing inquiry requires careful judicial examination of the complaint’s allegations. The Court found that Mr. Tooke had standing to challenge the appointment of Appeals Officers and Appeals Team Managers because he had suffered a direct, concrete injury from their actions. The court reasoned that a plaintiff’s standing to challenge an official’s appointment hinges on whether that official participated in the plaintiff’s case. The Court stated that the injury was the administrative proceeding conducted by officials improperly appointed, referencing Lucia v. SEC, 138 S. Ct. 2044 (2018), Ryder v. United States, 515 U.S. 177 (1995), and Freytag v. Commissioner, 501 U.S. 868 (1991). The Court emphasized that the remedy for an adjudication tainted with an appointments violation is a new hearing before a properly appointed official.
- Chief of Appeals: However, the Court determined that Mr. Tooke lacked standing to challenge the appointment or removal of the Chief of Appeals. The court found that the Chief had not participated in his CDP hearing and therefore did not directly injure Mr. Tooke. The Court rejected Mr. Tooke’s argument that the Chief’s "supervision and direction" of Appeals was sufficient to establish standing, finding it too attenuated. The court specifically rejected Mr. Tooke’s "root-to-branch" theory of causation, noting that there was no evidence the Chief’s tenure affected his hearing or caused prejudice to him. The court also pointed out that previous cases addressing challenges to the appointment or removal power focused on the official who had directly participated in the case. The Court concluded that the Chief’s connection to Mr. Tooke’s case was "purely a creature of statute" and that a showing of a more direct connection was required to establish standing. The Tax Court also emphasized that, to have standing, an injury must be "fairly traceable" to the challenged action of the defendant and redressable by a favorable decision of the court, per Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). Because the Chief did not participate in Mr. Tooke’s hearing, the court found no redressable injury.
Classification Under the Appointments Clause:
- "Officers of the United States" vs. Non-Officer Employees: The Court then analyzed whether Appeals Officers and Appeals Team Managers qualified as “Officers of the United States” who must be appointed per the Appointments Clause. The Court referenced the framework established in United States v. Germaine, 99 U.S. 508 (1878), and Buckley v. Valeo, 424 U.S. 1 (1976). Germaine indicates that “officers” have tenure, duration, emolument, and continuing duties, while Buckley defines an officer as an appointee exercising significant authority. The Court reasoned that “officers of the United States” must be appointed under the Appointments Clause, whereas non-officer employees or “lesser functionaries” need not be. The Court stated that, to be an “Officer of the United States,” an individual’s duties must be “continuing and permanent, not occasional or temporary” and must be “established by Law”, and the individual must exercise “significant authority” pursuant to the laws of the United States.
- "Principal Officers" vs. "Inferior Officers": The Court noted the two types of "Officers of the United States" recognized by the Appointments Clause: principal officers, who are nominated by the President and confirmed by the Senate, and inferior officers, who can be appointed in a manner Congress deems proper. The Court pointed out that an inferior officer is generally directed and supervised at some level by a higher ranking officer and that the default method of appointment for inferior officers is nomination by the President and confirmation by the Senate, though Congress may allow for other modes of appointment.
- Application to Appeals Officers: The Court determined that Appeals Officers do not exercise "significant authority". It noted that Appeals Officers lack the authority to administer oaths, compel witness testimony, subpoena witnesses, or enforce discovery orders, unlike Special Trial Judges (STJs) of the Tax Court and Administrative Law Judges (ALJs) of the SEC who were classified as “officers” in Freytag v. Commissioner, 501 U.S. 868 (1991) and Lucia v. SEC, 138 S. Ct. 2044 (2018), respectively. The Court acknowledged that Appeals Officers do have the power to settle cases and resolve disputes but found this insufficient to qualify them as inferior officers.
- Application to Appeals Team Managers: Similarly, the Court concluded that Appeals Team Managers do not wield "significant authority," noting that they lack the formal powers of ALJs under the Administrative Procedure Act (APA). The Court reasoned that their decisions were subject to review by the Commissioner and other officials. The Court also reasoned that oversight of Appeals Officers does not transform Appeals Team Managers into principal officers. The Court reiterated its prior holding in Tucker v. Commissioner, 135 T.C. 114 (2010), aff’d, 676 F.3d 1129 (D.C. Cir. 2012), that these positions are not “established by Law.”

Ultimate Findings and Application to Specific Facts

Based on its analysis, the Tax Court reached the following conclusions:

Appointments Clause Motion:
- The Court denied Mr. Tooke’s Appointments Clause motion as to the Chief of Appeals, finding that he lacked standing to challenge the Chief’s appointment. The Court did not reach the merits of this claim.
- The Court denied the motion as to Appeals Officers and Appeals Team Managers, holding that they are not “Officers of the United States” and therefore do not need to be appointed according to the Appointments Clause. The Court followed its earlier decision in Tucker v. Commissioner, 135 T.C. 114 (2010) in reaching this conclusion. The Court determined that Appeals Officers and Appeals Team Managers did not exercise "significant authority" under the test established in Buckley v. Valeo, 424 U.S. 1 (1976) and, therefore, do not need to be appointed in a manner prescribed by the Appointments Clause.
Separation of Powers Motion (Removal Power Motion):
- The Court denied Mr. Tooke’s Removal Power Motion in its entirety, finding that he lacked standing to challenge the Chief of Appeals’ removal restrictions. The Court stated that Mr. Tooke did not demonstrate the necessary injury for standing, as the Chief had not participated in his hearing. The Court therefore did not reach the merits of Mr. Tooke’s argument regarding the removal restrictions.

Summary of the Tax Court’s Decision

The Tax Court’s decision upheld the structure of the IRS Independent Office of Appeals, finding that Appeals Officers and Appeals Team Managers are not "Officers of the United States" and that the Chief of Appeals’ position does not violate the Appointments Clause or the separation of powers doctrine. The decision emphasized the importance of a direct injury and connection to the challenged action for standing, and the necessity for individuals to exercise "significant authority" to be considered "officers" under the Appointments Clause. The decision provided a comprehensive analysis of the Appointments Clause, the separation of powers doctrine, and the roles of different officials in the IRS Independent Office of Appeals. The Court’s approach to standing was based on the constitutional requirement for a “case or controversy” and the need for an actual, concrete injury.

In conclusion, the Tax Court denied both of Mr. Tooke’s motions, determining that the personnel of the IRS Independent Office of Appeals do not require appointment under the Appointments Clause, and that the Office’s structure does not violate the separation of powers doctrine. The Court’s decision relied heavily on prior precedent, particularly Tucker I and Supreme Court jurisprudence concerning the Appointments Clause and standing.

Prepared with assistance from NotebookLM.