Freytag v. Commissioner Of Internal Revenue

501 U.S. 868 (1991)


Commissioner (D) made determinations of federal income tax deficiencies against the several Ps, who had deducted on their returns approximately $1.5 billion in losses allegedly realized in a tax shelter scheme. Ps sought review in the Tax Court, but their assigned judge became ill, and the Chief Judge of the Tax Court assigned Special Trial Judge Carleton D. Powell to preside over the trial as evidentiary referee, with the proceedings videotaped. The judge concluded that the tax shelter scheme consisted of sham transactions and that Ps owed additional taxes. The Chief Judge adopted this opinion as that of the Tax Court. Ps appealed to the Court of Appeals. Ps contend that the assignment of cases as complex as theirs to a special trial judge was not authorized by § 7443A and that this violated the Appointments Clause of the Constitution, Art. II, § 2, cl. 2. The appeals court rejected Ps' claims on the merits and concluded that the Code authorized the Chief Judge of the Tax Court to assign a special trial judge to hear cases and that Ps had waived any constitutional challenge to this appointment by consenting to the trial. The Supreme Court granted certiorari.