sequence of an implied exemption from the APA; rather, it is the consequence of the application of APA section 706(2)(F), which, as discussed above, provides that a reviewing court shall set aside agency action that is "unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court." Both the House report and the Senate report accompanying the APA point to "tax assessments”, which "may involve a trial of the facts in the Tax Court", as an example of the type of agency action to which APA section 706(2)(F) applies. S. Rept. 752, 79th Cong., 1st Sess. 28 (1945); H. Rept. 1980, 79th Cong., 2d Sess. 45 (1946). Thus, while it may be accurate to say that the enactment of the APA had no practical effect on our scope of review in deficiency cases, the majority's claim that the APA "does not apply" to such cases is erroneous.6 In support of its premise that the judicial review provisions of the APA do not apply to deficiency cases in this Court, the majority primarily relies on O'Dwyer v. Commissioner, 266 F.2d 575 (4th Cir. 1959), affg. 28 T.C. 698 (1957).7 The taxpayer in O'Dwyer sought to compel the IRS to produce its entire administrative file, based in part on language in APA section 706 directing the reviewing court to "review the whole record". Id. at 578-580. Perhaps out of concern that judicial review of the "whole record" within the meaning of APA section 706 would be inconsistent with the established Tax Court practice of not "looking behind" statutory notices of deficiency, the court felt compelled to conclude that the Tax Court is not a reviewing court for purposes of the APA. Id. at 580. The court based that conclusion on the premise that the APA judicial review provisions (APA sections 701706) apply only to "formal" adjudications (i.e., those subject to the procedures set forth in APA sections 554, 556, and 557). Id. Given subsequent caselaw establishing that the judicial 8 6 The distinction is important in terms of context. Once it is conceded that the Tax Court has never been "exempt" from the APA judicial review provisions, our conclusion that those provisions have practical consequences in relation to our recently granted jurisdiction to review sec. 6015(f) adjudications does not seem revolutionary. 7 The majority also cites Nappi v. Commissioner, 58 T.C. 282 (1972). In Nappi, the Court simply concluded that the Tax Court is not an "agency" that is subject to the administrative procedure (as opposed to judicial review) provisions of the APA (APA secs. 551–559). Id. at 284. 8 To the extent the Court was so concerned, such concern appears to have been unfounded. See S. Rept. 752, 79th Cong., 1st Sess. 28 (1945); H. Rept. 1980, 79th Cong., 2d Sess. 46 (1946) (stating that the requirement of review upon the whole record means simply "that courts may not look only to the case presented by one party, since other evidence may weaken or even indisputably destroy that case"). review provisions of the APA apply to informal, as well as formal, adjudications, e.g., Fla. Power & Light Co. v. Lorion, supra at 744, the continuing relevance of the APA discussion in O'Dwyer is dubious at best.9 3. Applicability of the APA to Section 6015(f) Cases Given the legislative history discussed above (and the questionable relevance of the O'Dwyer case), the majority's premise that the judicial review provisions of the APA do not apply to deficiency cases in this Court cannot stand. Furthermore, APA section 559 would seem to preclude the possibility that such provisions do not apply to our relatively new jurisdiction to to review section 6015(f) adjudications: “[A] [s]ubsequent statute may not be held to supersede or modify *** chapter 7 * * * except to the extent that it does so expressly." Section 6015(e), of course, makes no mention of the APA (or the appropriate standard or scope of review, for that matter). We would therefore hold that the APA judicial review provisions apply to section 6015(f) cases as well as deficiency cases. C. APA Section 706(2)(A) vs. APA Section 706(2)(F) 1. The Majority Opinion Assuming the applicability of the APA judicial review provisions in this case, the relevant inquiry becomes whether Congress intended (as it clearly did in the context of deficiency proceedings) our review of section 6015(f) adjudications to fall into the "trial de novo" category of APA section 706(2)(F). The majority, while framing the issue in terms of the propri 9 In his concurring opinion, Judge Thornton supplements his reliance on the O'Dwyer case with statutory analysis. He implies that the import of APA sec. 704 (which provides in part that "agency action for which there is no other adequate remedy in a court are subject to judicial review") is that, where there is an existing “adequate remedy in court", the APA is inapplicable. Concurring op. p. 50. However, as Judge Thornton himself recognizes, the Supreme Court has characterized the import of the above-quoted portion of APA sec. 704 as follows: "When Congress enacted the APA to provide a general authorization for review of agency action in the district courts, it did not intend *** to duplicate the previously established special statutory procedures relating to specific agencies." Bowen v. Massachusetts, 487 U.S. 879, 903 (1988). Thus, for example, a taxpayer who disagrees with a deficiency notice does not have a separate cause of action in Federal District Court under the APA. It does not follow that the APA is "inapplicable" to deficiency cases (see discussion of APA sec. 706(2)(F) above). Similarly, in Beall v. United States, 336 F.3d 419 (5th Cir. 2003), another case cited by Judge Thornton which refers to the Bowen discussion of APA sec. 704, the court merely made the technical point that the taxpayer's interest abatement claim was cognizable as a refund suit under sec. 7422 rather than as a separate cause of action under the APA. Id. at 427 n.9. ety of de novo proceedings rather than the applicability of APA section 706(2)(F), concludes that "Congress intended that we provide an opportunity for a trial de novo in making our determinations under section 6015(f)." Majority op. p. 39. The majority bases that conclusion on the similarity between the words "determine" and "redetermination" appearing in sections 6015(e) and 6213(a), respectively. Specifically, the majority reasons that: (1) Section 6213(a), which establishes our jurisdiction over deficiency cases, uses the term "redetermination", and (2) deficiency cases in this Court are decided by trial de novo, so (3) section 6015(e), which uses the term "determine", must reflect a congressional intent for us to review section 6015(f) adjudications by trial de novo. In other words, the majority assumes that, when Congress uses the word "determine" (or a variation thereof) in the context of Tax Court review, such word signifies a trial de novo. 2. Use of the Word "Determine" in Section 6015(f) Does Not Signify De Novo Proceedings a. Legislative History of Other Tax Provisions The legislative history of certain declaratory judgment provisions of the Code contradicts the majority's assumption regarding Congress's use of the word "determine”. As the majority recognizes, this Court has jurisdiction to issue declaratory judgments in several situations. Majority op. p. 39 note 7. For example, we have jurisdiction under section 7476 to make a declaration with respect to the initial or continuing qualification of certain retirement plans. In that regard, we have stated that "it is clear that Congress did not expect the Tax Court to conduct a trial de novo and make an independent examination of the facts to determine if the subject plan was qualified." Tamko Asphalt Prods., Inc. v. Commissioner, 71 T.C. 824, 837 (1979), affd. 658 F.2d 735 (10th Cir. 1981); see also Rule 217(a) and Explanatory Note, 68 T.C. 1031, 1047. While the majority notes that section 7476 authorizes us to make a "declaration" rather than a “determination", majority op. p. 39 note 7, the House report explaining section 7476 describes the provision in part as follows: The Court is to base its determination upon the reasons provided by the Internal Revenue Service in its notice to the party making the request for a determination, or based upon any new matter which the Service may wish to introduce at the time of the trial.[10] The Tax Court judgment, however, is to be based upon a redetermination of the Internal Revenue Service's determination and not on a general examination of the provisions of the plan or related trust. *** * *** In order to provide the Court with flexibility in carrying out this provision, the bill authorizes the Chief Judge of the Tax Court to assign the Commissioners of the Tax Court to hear and make determinations with respect to petitions for a declaratory judgment, subject to such conditions and review as the Court may provide. [H. Rept. 93-779 at 107, 108 (1974), 1974-3 C.B. 244, 350, 351 (emphasis added).] See also S. Rept. 93-383 at 114, 115 (1974), 1974-3 C.B. (Supp.) 80, 193, 194 (similar). Similar language appears in committee reports describing section 7428 (declaratory judgments relating to section 501(c)(3) status) and former section 7477 (declaratory judgments relating to section 367 transfers). See H. Rept. 94-658 at 244, 245, 285, 288 (1975), 1976– 3 C.B. (Vol. 2) 695, 936, 937, 977, 980; S. Rept. 94-938, at 266, 267, 588, 591 (1976), 1976-3 C.B. (Vol. 3) 49, 304, 305, 626, 629. The foregoing would seem to deflate the notion that Congress equates the word "determine" (and variations thereof) with de novo proceedings in the context of Tax Court review. b. Use of the Word "Determination" Elsewhere Congress's use of the word "determination" in a similar, nontax context is also instructive. Section 636(b)(1) of the Federal Magistrates Act, 28 U.S.C. secs. 631-639 (2000), provides that, in the case of certain "dispositive" motions assigned to a magistrate, a district judge "shall make a de novo determination of those portions of the [magistrate's] report" to which objection is made. In interpreting that provision, the Supreme Court stated: 10“In raising new matters in a declaratory judgment proceeding under section 7476, the matters are to be based on information contained in the administrative record, not on facts gathered after the administrative record has closed." Halliburton Co. v. Commissioner, T.C. Memo. 1992 It should be clear that on these dispositive motions, the statute calls for a de novo determination, not a de novo hearing. We find nothing in the legislative history of the statute to support the contention that the judge is required to rehear the contested testimony in order to *** make the required "determination." *** [United States v. Raddatz, 447 U.S. 667, 674 (1980).] The Court quoted the following language from the House report accompanying the bill that became the Federal Magistrates Act: The use of the words "de novo determination" is not intended to require the judge to actually conduct a new hearing on contested issues. Normally, the judge, on application, will consider the record which has been developed before the magistrate and make his own determination on the basis of that record, without being bound to adopt the findings and conclusions of the magistrate. *** [Id. at 675 (quoting H. Rept. 94-1609, at 3 (1976)).] Thus, Congress has used the phrase "de novo determination" in the context of other (nontax) trial court proceedings to signify an independent determination (i.e., without deference to the result reached by the initial decisionmaker) by the trial court that is nonetheless based on the record developed by the initial decisionmaker.11 D. The "Abuse of Discretion" Standard of Review in Tax 1. The Majority Opinion The majority acknowledges that the standard of review in this case is abuse of discretion. As discussed above at I.A.3., regardless of the applicability of the APA, the abuse of discretion standard traditionally has been associated with the application of the record rule. The majority therefore is forced to take the position that the abuse of discretion standard of review has different evidentiary consequences in the 11 In his concurring opinion, supra p. 52, Judge Thornton concludes that the following statutory language renders our pre-APA de novo trial procedures applicable to sec. 6015(f) cases: "This subchapter, [and] chapter 7 *** do not limit or repeal additional requirements imposed by statute or otherwise recognized by law." APA sec. 559. We agree that the enactment of the APA in 1946 did not preempt this Court's existing de novo trial procedures. See supra note 6 and accompanying text; see also supra note 9. We do not agree that our jurisdiction to review sec. 6015(f) adjudications, created in 1998, can be stitched to our pre-APA deficiency jurisdiction for these purposes. Specifically, we emphatically do not agree that sec. 6015 is "part and parcel" of the "specific statutory framework for reviewing deficiency determinations of the Internal Revenue Service." Concurring op. p. 52; see infra discussion at I.D.2. |