## Facts

- The Commissioner of Internal Revenue determined tax deficiencies against Thomas L. Freytag and other taxpayers arising from a tax-shelter scheme generating roughly $1.5 billion in claimed losses.
- Congress created the United States Tax Court as an Article I “court of record” and later authorized the use of special trial judges (STJs), appointed and assigned by the Tax Court’s Chief Judge.
- Under 26 U.S.C. § 7443A, STJs may enter decisions in certain specified case categories and, in other proceedings designated by the Chief Judge, may conduct trials and prepare proposed findings and an opinion for adoption by a regular Tax Court judge.
- The taxpayers’ cases were reassigned, with their express consent, to an STJ after the originally assigned Tax Court judge became ill and retired.
- The STJ conducted the trial and prepared an opinion adverse to the taxpayers; the Chief Judge adopted the STJ’s opinion as the opinion of the Tax Court.
- The Tax Court upheld the deficiencies, and the court of appeals affirmed.

## Issues

1. Whether 26 U.S.C. § 7443A(b)(4) authorizes the Chief Judge to assign complex, high-dollar cases to an STJ to conduct the hearing and prepare proposed findings and an opinion.
2. Whether STJs are “inferior Officers” under the Appointments Clause whose appointment must comply with Article II, and whether Congress may vest their appointment in the Chief Judge of the Tax Court.
3. Whether the taxpayers’ consent to assignment to an STJ precluded later litigation of an Appointments Clause objection.

## Decision

- The Supreme Court affirmed.
- Section 7443A(b)(4) permits assignment of any Tax Court proceeding to an STJ for hearing and preparation of proposed findings and an opinion, without limits based on complexity or amount in controversy.
- STJs are “inferior Officers,” not mere employees, because their positions are created by statute and they exercise significant authority under federal law.
- Vesting appointment of STJs in the Chief Judge of the Tax Court is constitutional because the Tax Court qualifies as a “Court of Law” for Appointments Clause purposes.
- The Court addressed the Appointments Clause claim despite the taxpayers’ prior consent, treating it as a structural constitutional objection affecting the validity of the proceeding.

## Legal Principles

- Statutory text authorizing assignment to an adjudicative officer in “any other proceeding” may be read to include large and complex cases when the language contains no limiting terms and the final decision remains with the principal adjudicator.
- An “inferior Officer” is an official holding a position established by law who exercises significant authority under the laws of the United States; adjudicative powers, including authority to enter decisions in some cases, support officer status.
- Congress may vest appointment of inferior officers in “Courts of Law” under the Appointments Clause; an Article I tribunal may qualify based on its judicial character and adjudicative function.
- Structural Appointments Clause objections may be considered even when not timely raised or when a party consented, when the challenge implicates the constitutional allocation of appointment power and the validity of the adjudication.

## Conclusion

The Court held that the Tax Court may assign even major cases to special trial judges for proposed findings under § 7443A(b)(4), that special trial judges are inferior officers, and that their appointment by the Tax Court’s Chief Judge is consistent with the Appointments Clause.


Freytag v. Comm’r of Internal Revenue, 501 U.S. 868 (1991)