Nos. 03-184 and 03-1034
`
`In the Supreme Court of the United States
`CLAUDE M. BALLARD AND MARY B. BALLARD,
`PETITIONERS
`v.
`COMMISSIONER OF INTERNAL REVENUE
`
`ESTATE OF BURTON W. KANTER, ET AL.,
`PETITIONERS
`v.
`COMMISSIONER OF INTERNAL REVENUE
`
`ON WRITS OF CERTIORARI
`TO THE UNITED STATES COURTS OF APPEALS
`FOR THE ELEVENTH AND SEVENTH CIRCUITS
`
`BRIEF FOR THE RESPONDENT
`
`PAUL D. CLEMENT
`Acting Solicitor General
`Counsel of Record
`EILEEN J. O’CONNOR
`Assistant Attorney General
`THOMAS G. HUNGAR
`Deputy Solicitor General
`RICHARD T. MORRISON
`Deputy Assistant Attorney
`General
`TRACI L. LOVITT
`Assistant to the Solicitor
`General
`KENNETH L. GREENE
`STEVEN W. PARKS
`Attorneys
`Department of Justice
`Washington, D.C. 20530-0001
`(202) 514-2217
`
`

`
`QUESTIONS PRESENTED
`When a case is assigned to a special trial judge of the
`United States Tax Court, the special trial judge is required
`to make a “report, including findings of fact and opinion, to
`the Chief Judge, and the Chief Judge will [then] assign the
`case to a Judge or Division of the Court.” Tax Ct. R. 183(b).
`The Judge to whom the case is assigned “may adopt the
`Special Trial Judge’s report or may modify it or may reject it
`in whole or in part.” Tax Ct. R. 183(c). The questions
`presented are:
`1. Whether the Due Process Clause requires that the
`“original” report of a special trial judge be made public by
`inclusion in the record so as to facilitate appellate review.
`2. Whether 26 U.S.C. 7459(b), 7461(a), (b), or 7482
`requires that the “original” report of a special trial judge be
`made public by inclusion in the record so as to facilitate
`appellate review.
`
`(I)
`
`

`
`TABLE OF CONTENTS
`
`Opinions below ...............................................................................
`Jurisdiction ......................................................................................
`Constitutional and statutory provisions involved ...................
`Statement ........................................................................................
`Summary of argument ..................................................................
`Argument:
`I.
`Petitioners’ challenges to the Tax Court’s
`practices are not properly presented in these
`cases .................................................................................
`A. The STJ’s recommended findings were not
`reversed or set aside, but were instead
`adopted and disclosed in the Tax Court’s
`decision ....................................................................
`B. Petitioners’ claims thus reduce to an imper-
`missible attempt to compel disclosure of
`the Tax Court’s internal deliberative
`processes .................................................................
`1. Petitioners’ claim of improper influence
`on STJ Covillion lacks factual support .........
`2. As a matter of law, judicial misconduct
`will not be presumed .......................................
`3. Disclosure of an “original” report could
`not benefit petitioners absent further
`unacceptable intrusions into the Tax
`Court’s deliberative process ..........................
`II. The Tax Court’s procedures comport with
`due process .....................................................................
`A. Disclosure of an “original” STJ report is
`unnecessary for effective appellate review ......
`1. The Tax Court judge, not the STJ,
`determines facts and legal conclusions ........
`
`Page
`1
`1
`2
`2
`10
`
`13
`
`13
`
`16
`
`17
`
`19
`
`22
`
`24
`
`24
`
`24
`
`(III)
`
`

`
`IV
`
`Table of Contents—Continued:
`
`Page
`
`2. The Tax Court is not required by its
`rules to review STJ reports for clear
`error ...................................................................
`B. The Tax Court’s practice is neither unpre-
`cedented nor unjustified ......................................
`C. Deference to an STJ’s credibility
`determinations is not constitutionally
`compelled ................................................................
`D. Disclosure is not required by Mathews v.
`Eldridge ..................................................................
`III. Disclosure of STJ reports is not compelled
`by the Internal Revenue Code ...................................
`A. Disclosure is not required under
`Section 7482(a)(1) ..................................................
`B. Disclosure is not required under
`Section 7459 or 7461 ..............................................
`C. There is no common law right to disclosure
`of STJ reports and no cause for an exercise
`of the Court’s supervisory powers .....................
`Conclusion .......................................................................................
`Appendix .........................................................................................
`
`TABLE OF AUTHORITIES
`
`Cases:
`Ash Anlagen-Und Sanierungstechnik, GMBH, Appeal
`of, No. DAJA76-87-C-0467, 2003 WL 22230677
`(Armed Serv. Bd. Cont. App. Sept. 24, 2003) ...................
`Atchison, Topeka & Santa Fe Ry. v. Wichita Bd. of
`Trade, 412 U.S. 800 (1973) ...................................................
`BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) ..........
`Bakelite Corp., Ex parte, 279 U.S. 438 (1929) ....................
`Ballard, In re, No. 00-14762-H (11th Cir. Oct. 23,
`2000) .........................................................................................
`
`25
`
`30
`
`36
`
`39
`
`41
`
`41
`
`43
`
`46
`47
`1a
`
`32
`
`31
`37
`31
`
`7
`
`

`
`V
`
`Cases—Continued:
`Brooks, In re, No. 03-5047, 2004 WL 2032521 (D.C. Cir.
`Sept. 14, 2004) .........................................................................
`C. Blake McDowell, Inc. v. Commissioner,
`67 T.C. 1043 (1977), vacated and remanded, 576
`F.2d 718 (6th Cir.), on remand, 71 T.C. 71 (1978),
`aff ’d, 652 F.2d 606 (6th Cir. 1980) .......................................
`Charles G. Williams Constr. v. White, 326 F.3d 1376
`(Fed. Cir. 2003) .......................................................................
`Checkosky v. SEC, 23 F.3d 452 (D.C. Cir. 1994) ..............
`Cheney v. United States District Ct., 124 S. Ct. 1391
`(2004) ........................................................................................
`Chicago, Burlington & Quincy Ry. v. Babcock,
`204 U.S. 585 (1907) .................................................................
`Cook, In re, 49 F.3d 263 (7th Cir. 1995) ...............................
`Bill J. Copeland, No. 2003-124-R, 2003 WL 1740503
`(Dep’t of Agric. Bd. Cont. App. Feb. 20, 2003) .................
`Crowell v. Benson, 285 U.S. 22 (1932) .................................
`Dante v. Commissioner, 37 T.C.M. (CCH) 556
`(1978) ........................................................................................
`Davis v. Michigan Dep’t of Treasury, 489 U.S. 803
`(1989) ......................................................................................
`Dickerson v. United States, 530 U.S. 428 (2000) ............
`Dobson v. Commissioner, 320 U.S. 489 (1943) .............
`Ducar v. Commissioner, 36 T.C.M. (CCH) 1278
`(1977) ........................................................................................
`Dusenberry v. United States, 534 U.S. 161 (2002) ...........
`Erhard v. Commissioner, 46 F.3d 1470 (9th Cir.
`1995) .........................................................................................
`Estate of Lisle, In re, No. 00-60637 (5th Cir. Sept. 18,
`2000) .........................................................................................
`Estate of Lisle v. Commissioner, 341 F.3d 364
`(5th Cir. 2003) ...........................................................
`Estate of Marcello v. Commissioner, 36 T.C.M.
`(CCH) 1408 (1977) ..................................................................
`Estate of Thurner v. Commissioner, 37 T.C.M.
`(CCH) 981 (1978) ....................................................................
`
`Page
`
`20
`
`18
`
`33
`21
`
`20
`
`16
`16
`
`33
`30
`
`18
`
`29-30
`46-47
`42, 43
`
`18
`41
`
`20
`
`7
`
`8, 10, 15, 29
`
`18
`
`18
`
`

`
`VI
`
`Cases—Continued:
`Estate of Varian v. Commissioner, 396 F.2d 753
`(9th Cir.), cert. denied, 393 U.S. 962 (1968) .......................
`Fayerweather v. Ritch, 195 U.S. 276 (1904) ..................
`Freidus v. Commissioner, 39 T.C.M. (CCH) 740
`(1979) ........................................................................................
`Freytag v. Commissioner, 904 F.2d 1011 (5th Cir.
`1990), aff ’d, 501 U.S. 868 (1991) .................................
`Freytag v. Commissioner, 501 U.S. 868 (1991) ......
`G.M. Leasing Corp. v. United States, 429 U.S. 338
`(1977) ........................................................................................
`Goetz v. Crosson, 41 F.3d 800 (2d Cir. 1994), cert.
`denied, 516 U.S. 821 (1995) ...................................................
`Goldberg v. Kelley, 397 U.S. 254 (1970) .............................
`Gonzales v. United States, 348 U.S. 407 (1955) ................
`Graham v. Commissioner, 35 T.C.M. (CCH) 1315
`(1976) ........................................................................................
`Heim v. Commissioner, 251 F.2d 44 (8th Cir. 1958) .......
`Hilton v. Commissioner, 74 T.C. 305 (1980) .....................
`Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) ...............
`Investment Research Ass’ns, In re, No. 00-3369
`(7th Cir. Dec. 15, 2000) ..........................................................
`InverWorld, Ltd. v. Commissioner, 979 F.2d 868
`(D.C. Cir. 1992) .......................................................................
`Jacqueline, Inc. v. Commissioner, 36 T.C.M. (CCH)
`1363 (1977), modified, 37 T.C.M. (CCH) 937 (1978) .........
`Kansas City S. Ry. v. Commissioner, 76 T.C.
`1067 (1981) ...............................................................................
`Karme v. Commissioner, 73 T.C.M. 1163 (1980), aff ’d,
`673 F.2d 1062 (9th Cir. 1982) ...............................................
`Kentucky v. Indiana, 474 U.S. 1 (1985) .............................
`La Fargue v. Commissioner, 73 T.C. 40 (1979) ................
`Lockheed Martin Tactical Def. Sys., No. 39-86-C-0452,
`2000 WL 626879 (Armed Serv. Bd. Cont. App.
`May 3, 2000) ............................................................................
`
`Page
`
`31
`16, 23
`
`18
`
`26, 28, 29
`20, 24, 34
`
`31
`
`16
`41
`45
`
`18
`31
`18
`30
`
`7
`
`43
`
`18
`
`18
`
`18
`33
`18
`
`32
`
`

`
`VII
`
`Page
`
`18, 44
`13, 23, 39
`
`18
`
`Cases—Continued:
`Louisville & Nashville R.R. v. Commissioner,
`66 T.C. 962 (1976), aff ’d and rev’d in part and
`remanded, 641 F.2d 435 (6th Cir. 1981) .........................
`Mathews v. Eldridge, 424 U.S. 319 (1976) ...............
`McKinley v. Commissioner, 37 T.C.M. (CCH) 1769
`(1978) ........................................................................................
`Morgan v. United States:
`298 U.S. 468 (1936) .......................................................
`304 U.S. 1 (1938) .................................................................
`Moyer v. Peabody, 212 U.S. 78 (1909) ................................
`Murray’s Lessee v. Hoboken Land & Improvement
`Co., 59 U.S. (18 How.) 272 (1855) .............................
`NLRB v. Mackay Radio & Telegraph Co.,
`304 U.S. 333 (1938) .................................................................
`Narver v. Commissioner, 75 T.C. 53 (1980) ......................
`Northern Pipeline Constr. Co. v. Marathon Pipe
`Line Co., 458 U.S. 50 (1982) ............................................
`Ocean Sands Holding Corp. v. Commissioner,
`41 T.C.M. (CCH) 1 (1980), aff ’d, 701 F.2d 163 (4th Cir.),
` cert. denied, 464 U.S. 827 (1983) ........................................
`Perrett v. Commissioner, 74 T.C. 111 (1980), aff ’d,
`679 F.2d 900 (9th Cir. 1982) .................................................
`Phillips v. Commissioner, 283 U.S. 583 (1931) .................
`Peretz v. United States, 501 U.S. 923 (1991) .....................
`Richardson v. Town of Eastover, 922 F.2d 1152
`(4th Cir. 1991) .........................................................................
`Rosenbaum v. Commissioner, 45 T.C.M. (CCH)
`825 (1983) .............................................................................
`Sao Paulo State of Federative Republic of Brazil v.
`American Tobacco Co., 535 U.S. 229 (2002) ....................
`Smith & Oby Co. v. General Servs. Admin.,
`No. 15336, 2003 WL 22100648 (Gen. Servs. Bd. Cont.
`App. Sept. 5, 2003) .................................................................
`Stone v. Commissioner, 865 F.2d 342 (D.C. Cir.
`1989), rev’g sub nom. Rosenbaum v. Commissioner,
`45 T.C.M. (CCH) 825 (1983) .................................................
`
`37, 38, 40
`21, 45
`37
`
`30, 31, 37
`
`38
`18
`
`30-31
`
`18
`
`18
`41
`39
`
`20
`
`27, 28
`
`20
`
`32
`
`28
`
`

`
`VIII
`
`Cases—Continued:
`Taylor v. Commissioner, 41 T.C.M. (CCH) 539
`(1980) ........................................................................................
`Thomas v. Arn, 474 U.S. 140 (1985) ...................................
`The Monrosa v. Carbon Black, Inc., 359 U.S. 180
`(1959) ........................................................................................
`United States v. Crouch, 566 F.2d 1311 (5th Cir.
`1978) .........................................................................................
`United States v. Morgan, 313 U.S. 409 (1941) ..............
`
`Page
`
`18
`33
`
`14
`
`16
`16, 17,
`21, 22, 23
`United States v. Raddatz, 447 U.S. 667 (1980) ..
`12, 37, 38, 39
`United States v. Rodgers, 461 U.S. 677 (1983) ..................
`41
`Universal Camera Corp. v. NLRB, 340 U.S. 474
`(1951) ........................................................................................
`Ward v. Commissioner, 37 T.C.M. (CCH) 928
`(1978) ........................................................................................
`
`34
`
`18
`
`Constitution, statutes, regulations and rules:
`U.S. Const.:
`Art. I ........................................................................................
`3, 46
`Art. III .......................................................
`12, 30, 31, 34, 37, 40
`Amend. V (Due Process Clause) ............................
`2, 11, 38, 39
`Administrative Procedure Act, 5 U.S.C. 551 et seq.:
`5 U.S.C. 554(d)(2) ...................................................................
`5 U.S.C. 554(d)(2)(C) .............................................................
`5 U.S.C. 557(b) ........................................................................
`5 U.S.C. 557(c) (Ch. 324, § 8(b), 60 Stat. 242) ....................
`5 U.S.C. 557(c) ........................................................................
`Contract Disputes Act, 41 U.S.C. 607 ...................................
`Internal Revenue Code (26 U.S.C.):
`§ 2071(a) ...................................................................................
`§ 2072(a) ...................................................................................
`§ 7443 ........................................................................................
`§ 7443(e) ...................................................................................
`§ 7443(f ) ...................................................................................
`§ 7443A(a) ............................................................................
`§ 7443A(b)(1)-(3) (1994) .........................................................
`
`46
`46
`35
`3
`3
`19, 33
`3
`
`21
`21
`33
`34
`34
`32
`
`

`
`IX
`
`Page
`
`3
`
`Statutes, regulations and rules—Continued:
`§ 7443A(b)(4) (1994) ....................................................
`passim, 1a
`§ 7443A(b)(5) ...........................................................................
`4
`§ 7443A(c) (1994) ..............................
`3, 4, 24, 25, 34, 42, 45, 1a
`§ 7453 ....................................................................................
`33, 46
`§ 7456 (a) ..................................................................................
`42
`§ 7459(a) ..............................................................
`2, 42, 44, 45, 2a
`§ 7459(b) ...................................................
`2, 13, 41, 42, 43, 44, 2a
`§ 7460(b) ..............................................................
`25, 31, 33, 2a-3a
`§ 7461(a) ...........................................................................
`2, 43, 3a
`§ 7462 ....................................................................................
`45, 3a
`§ 7482(a)(1) ..............................................
`2, 13, 41, 42, 43, 3a-4a
`Internal Revenue Service Restructuring and Reform
`Act of 1998, Pub. L. No. 105-206, § 3401(c), 112 Stat.
`749-750 .....................................................................................
`Revenue Act of 1924, ch. 234, § 900(h), 43 Stat. 337 ..........
`Revenue Act of 1926, ch. 27, § 1003(b), 44 Stat. 110 ...........
`Revenue Act of 1928, ch. 852, § 601, 45 Stat. 871 ................
`Revenue Act of 1942, ch. 619, § 504(a), 56 Stat. 957 ..........
`Taft-Hartley Act, ch. 120, § 10(c), 61 Stat. 148 ....................
`Tax Reform Act of 1969, Pub. L. No. 91-172, § 951,
`83 Stat. 730 ..............................................................................
`Tax Reform Act of 1984, Pub. L. No. 98-369, § 464(a),
`98 Stat. 824 ..............................................................................
`28 U.S.C. 636(b)(1)(A) ..............................................................
`7 C.F.R.:
`Section 24.2 .............................................................................
`Section 24.3 .............................................................................
`Section 24.21 ...........................................................................
`38 C.F.R.:
`Section 1.781 ...........................................................................
`Section 1.783 ...........................................................................
`Sup. Ct. R. 14.1(a) .....................................................................
`Fed. R. Civ. P. R. 53(g)(3) .......................................................
`General Servs. Admin. Board of Cont. Apps. R.:
`Rule 101(e) ..............................................................................
`Rule 122(c) ...............................................................................
`
`4
`3
`43
`31
`3
`34
`
`3
`33
`
`32
`32
`32
`
`32
`32
`46
`33
`
`32
`32
`
`

`
`X
`
`30
`21
`
`30
`43
`
`Page
`
`Regulations and rules—Continued:
`Rule 129 ...................................................................................
`32
`Tax Ct. General Order No. 5 (Oct. 1, 1976) ................
`36, 8a-10a
`Tax Ct. R.:
`Rule 180 ...................................................................................
`19
`Rule 182 (1974) ........................................................
`17, 27, 29, 5a
`Rule 182 note (1974) ..............................................................
`27
`Rule 182(a) ..............................................................................
`26
`Rule 182(b) (1974) ........................................................
`17, 26, 5a
`Rule 182(b) note (1974) .........................................................
`27
`Rule 182(c) (1974) ...............................................................
`26, 6a
`Rule 182(d) (1974) ..............................................................
`26, 6a
`Rule 183 note (1984) ..............................................................
`26
`Rule 183 ..................................................................
`passim, 4a-5a
`Rule 183(b) ........................................................................
`2, 4, 4a
`Rule 183(c) ......................................
`2, 4, 25, 26, 29, 35, 39, 4a-5a
`Miscellaneous:
`A. Carter, A History of the English Courts
`(7th ed. 1944) ...........................................................................
`Black’s Law Dictionary (7th ed. 1999) .................................
`1 W. Holdsworth, A History of English Law
`(1926) ........................................................................................
`H.R. Rep. No. 2087, 80th Cong., 2d Sess. (1948) .................
`Allen D. Madison, Revisiting Access to the Tax
`Court’s Deliberate Process, Tax Notes (May 10,
`2004) .........................................................................................
`S. Rep. No. 398, 68th Cong., 1st Sess. Pt. 2 (1924) ..............
`Treasury, Postal Service, and General Government
`Appropriations for Fiscal Year 1984: Hearings Before
`the Subcomm. of the House Comm. on Appropriations,
`98th Cong., 1st Sess. Pt. 4 (1983) ........................................
`Treasury, Postal Service, and General Government
`Appropriations for Fiscal Year 1987: Hearings
`Before the Subcomm. of the House Common
`Appropriations, 99th Cong., 2d Sess. Pt. 4 (1986) ..........
`
`35
`44
`
`35
`
`35
`
`

`
`In the Supreme Court of the United States
`
`No. 03-184
`CLAUDE M. BALLARD AND MARY B. BALLARD,
`PETITIONERS
`v.
`COMMISSIONER OF INTERNAL REVENUE
`
`No. 03-1034
`ESTATE OF BURTON W. KANTER, ET AL.,
`PETITIONERS
`v.
`COMMISSIONER OF INTERNAL REVENUE
`
`ON WRITS OF CERTIORARI
`TO THE UNITED STATES COURTS OF APPEALS
`FOR THE ELEVENTH AND SEVENTH CIRCUITS
`
`BRIEF FOR THE RESPONDENT
`
`OPINIONS BELOW
`The opinion of the court of appeals in No. 03-184 (Ballard)
`(Pet. App. 1a-18a) is reported at 321 F.3d 1037. The opinion
`of the Tax Court (Pet. App. 19a-306a) is unofficially reported
`at 78 T.C.M. (CCH) 951.
`The opinion of the court of appeals in No. 03-1034 (Kanter)
`(Pet. App. 1a-97a) is reported at 337 F.3d 833. The opinion of
`the Tax Court (Pet. App. 98a) is unofficially reported at 78
`T.C.M. (CCH) 951.
`
`JURISDICTION
`The judgment of the court of appeals in No. 03-184 was
`entered on February 13, 2003. A petition for rehearing was
`denied on May 5, 2003 (Pet. App. 307a). The petition for a
`
`(1)
`
`

`
`2
`
`writ of certiorari was filed on August 4, 2003, and was
`granted on April 26, 2004.
`The judgment of the court of appeals in No. 03-1034 was
`entered on July 24, 2003. A petition for rehearing was de-
`nied on October 21, 2003 (Pet. App. 115a). The petition for a
`writ of certiorari was filed on January 20, 2004, and was
`granted on April 26, 2004.
`The jurisdiction of this Court rests on 28 U.S.C. 1254(1).
`CONSTITUTIONAL AND STATUTORY
`PROVISIONS INVOLVED
`The Fifth Amendment to the United States Constitution
`is set forth at 03-1034 Pet. App. 116a. Sections 7443A,
`7459(a) and (b), 7461(a), and 7482(a)(1) of the Internal Reve-
`nue Code, 26 U.S.C. 7443A, 7459(a) and (b), 7461(a),
`7482(a)(1), and Tax Court Rule 183 are set forth in the
`appendix to this brief. App., infra, 1a-9a.
`STATEMENT
`Under Section 7443A(b)(4) of the Internal Revenue Code,
`the Chief Judge of the United States Tax Court may
`designate a special trial judge (STJ) to hear, but not decide,
`any proceeding. Where an STJ hears a case under that
`provision, Tax Court Rule 183 requires the STJ to prepare
`and submit a report of the proceeding, including recom-
`mended factual findings and legal conclusions, to the Chief
`Judge, who then assigns the case for decision to a regular
`judge of the Tax Court. See Tax Ct. R. 183(b). The judge to
`whom the case is assigned “may adopt the Special Trial
`Judge’s report or may modify it or may reject it in whole or
`in part,” and gives “[d]ue regard” to the STJ’s role as hear-
`ing examiner and “presum[es]” that the STJ’s factual find-
`ings are “correct.” Tax Ct. R. 183(c).
`In the proceedings below, the courts of appeals held that
`where a regular Tax Court judge adopts an STJ’s report and
`publishes the report in an opinion, any “original” report that
`
`

`
`3
`
`the STJ may have submitted that differs from the STJ’s final
`published report need not be disclosed to the parties or
`included in the record. Those decisions are correct: Well-
`settled principles of constitutional law and the longstanding
`interpretation of Tax Court procedures make clear that such
`disclosure is not required.
`1. The Tax Court was first established in 1924 as the
`Board of Tax Appeals, an independent agency in the exe-
`cutive branch of the Government that exercised limited
`jurisdiction over certain tax disputes prior to the payment of
`the disputed tax. See Revenue Act of 1924, ch. 234,
`§ 900(h), 43 Stat. 337. The Board became the Tax Court of
`the United States in 1942, see Revenue Act of 1942, ch. 619,
`§ 504(a), 56 Stat. 957, but remained an executive agency until
`1969. In that year, Congress formed the modern Tax Court
`as a legislative tribunal under Article I of the Constitution
`with authority to adjudicate specific income, estate, and gift
`tax disputes before payment of the tax. See Tax Reform Act
`of 1969, Pub. L. No. 91-172, § 951, 83 Stat. 730; 26 U.S.C.
`7441. The court is composed of 19 regular judges who are
`appointed for 15-year terms but may be removed by the
`President for “inefficiency, neglect of duty, or malfeasance in
`office,” 26 U.S.C. 7443(e) and (f ), and several STJs who are
`periodically appointed by the Chief Judge. See Tax Reform
`Act of 1984, Pub. L. No. 98-369, § 464(a), 98 Stat. 824; 26
`U.S.C. 7443A(a).
`STJs have statutory authority to hear cases and enter the
`decision of the Tax Court in declaratory judgment proceed-
`ings, “small tax cases,” and levy and lien proceedings. See 26
`U.S.C. 7443A(b)(1)-(3) and (c) (1994). STJs may also exercise
`authority under Section 7443A(b)(4) of the Internal Revenue
`Code to “hear” “any other proceeding which the chief judge
`may designate,” but may not enter decisions in those cases.
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`4
`
`See 26 U.S.C. 7443A(b)(4) and (c) (1994).1 If an STJ hears a
`case pursuant to Section 7443A(b)(4), Tax Court Rule 183
`requires the STJ to prepare a report, which is transmitted to
`the Chief Judge of the Tax Court, who then assigns the case
`to a regular Tax Court judge for decision. See Tax Ct. R.
`183(b). The Tax Court judge may “adopt the Special Trial
`Judge’s report” or “modify it” or “reject it in whole or in
`part,” and gives “[d]ue regard * * * to the circumstance
`that the Special Trial Judge had the opportunity to evaluate
`the credibility of witnesses, and the findings of fact recom-
`mended by the Special Trial Judge shall be presumed to be
`correct.” Tax Ct. R. 183(c).
`2. This case arises out of a tax dispute between the gov-
`ernment and Burton Kanter, Claude Ballard, and a third
`party, Robert Lisle. The late Burton Kanter was a well-
`known attorney and academic with expertise in federal in-
`come and estate taxation. 03-184 Pet. App. 45a-46a.2 Claude
`Ballard is a former senior vice-president of Prudential In-
`surance Co. of America (Prudential), a position in which he
`exercised influence over Prudential’s purchase and develop-
`ment of real estate, as well as Prudential’s choice of builders
`and contractors for construction projects. Id. at 46a-47a.
`Like Ballard, Robert Lisle was a former Prudential vice-
`president, a capacity in which he exercised authority over
`
`
`1 Section 7443A(b)(4) has been re-designated as 26 U.S.C. 7443A(b)(5).
`See Internal Revenue Service Restructuring and Reform Act of 1998,
`Pub. L. No. 105-206, § 3401(c), 112 Stat. 749-750. Because this case was
`decided under the previous version of the Code, we will refer only to that
`version in this brief.
`2 As the court below observed, “from 1979 to 1989 Kanter, the highly
`successful tax attorney, who hobnobbed with Pritzkers and Hollywood
`producers and who participated in countless extremely large and lucrative
`business ventures, reported a negative adjusted gross income each year
`on his federal tax return and paid no federal income taxes.” 03-1034 Pet.
`App. 2a-3a.
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`5
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`the award of Prudential loans and construction contracts. Id.
`at 47a.
`Sometime between 1968 and 1970, Kanter met Ballard and
`Lisle, and the three agreed that Kanter would sell Ballard’s
`and Lisle’s influence over Prudential business and launder
`the proceeds through a complex network of corporations and
`trusts controlled by them. 03-184 Pet. App. 48a. Specifi-
`cally, Kanter arranged for five individuals seeking Pruden-
`tial business to pay kickbacks to an entity he controlled,
`called Investment Research Associates, Ltd. (IRA), or to
`one of IRA’s subsidiaries, and those funds would then be
`commingled with other money in an account controlled by a
`different Kanter entity. Id. at 48-49a. Some of the funds
`were then distributed to Kanter, Ballard, and Lisle as
`“commissions, consulting fees, or directors fees.” Id. at 49a.
`Larger portions of the payments were “distributed to three
`of IRA’s subsidiaries; more specifically, 45 percent to Carlco,
`Inc. (Carlco) (controlled by Lisle), 45 percent to TMT, Inc.
`(TMT) (controlled by Ballard), and 10 percent to BWK, Inc.
`(controlled by Kanter).” Ibid. By the end of 1983, IRA had
`accumulated $4,771,445 in payments from the five bribers,
`which were distributed in the 45-45-10 ratio to TMT, Carlco,
`and BWK but not reported on Kanter’s, Ballard’s, or Lisle’s
`tax returns. Id. at 5a.
`After discovering the scheme, the Commissioner of
`Internal Revenue issued notices of deficiency to Ballard,
`Kanter, and Lisle, seeking unpaid taxes and, later, civil fraud
`penalties in connection with the millions of dollars of
`unreported kickbacks. 03-184 Pet. App. 5a. All three sought
`review in the Tax Court, and their cases were consolidated
`for hearing before STJ D. Irvin Couvillion pursuant to
`Section 7443A(b)(4). Id. at 33a. After a lengthy trial, in
`which thousands of exhibits consuming hundreds of thou-
`sands of pages were placed in evidence, STJ Couvillion
`submitted a report of the proceedings to then-Chief Judge
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`Cohen, who referred the case to Tax Court Judge Howard A.
`Dawson for decision. Id. at 5a-6a, 311a; 03-1034 Pet. App. 3a.
`On December 15, 1999, Judge Dawson issued an opinion
`for the Tax Court, holding Kanter, Ballard, and Lisle liable
`for underpaid taxes and assessing a fraud tax penalty
`against them. 03-184 Pet. App. 19a-306a. Judge Dawson’s
`opinion states that the Tax Court “agrees with and adopts
`the opinion of the Special Trial Judge,” which the court
`“set[s] forth” in the margin of its opinion. Id. at 33a. The
`STJ opinion, in turn, analyzes the documentary and other
`evidence in painstaking detail and carefully traces the mil-
`lions of dollars paid to IRA and its subsidiaries through the
`web of corporations and entities controlled by Kanter, Bal-
`lard, and Lisle, see id. at 49a-229a. The STJ opinion con-
`cludes that Kanter, Ballard, and Lisle had “entered into ar-
`rangements pursuant to which [Kanter] would use his
`business and professional contacts, including his relation-
`ships with * * * Ballard, and Lisle, to assist individuals
`and/or entities in obtaining business opportunities or in rais-
`ing capital for business ventures” with Prudential in return
`for kickbacks, which Kanter would launder through “a com-
`plex organization of corporations, partnerships, and trusts,”
`but not report as income for tax purposes. Id. at 48a.
`3. On April 20, 2000, Kanter, Ballard, and Lisle filed a
`motion seeking access to “all reports, draft opinions or simi-
`lar documents prepared and delivered to the Court pursuant
`to Rule 183(b)” by STJ Couvillion, or in the alternative for
`the court to include a copy of those materials in the record
`transmitted to the appellate court. 03-1034 Pet. App. 107a-
`108a.
`The Tax Court denied the motion. 03-1034 Pet. App. 107a-
`112a. It observed that STJ Couvillion’s report “ultimately
`became the Memorandum Findings of Fact and Opinion
`(T.C. Memo. 1999-407) filed on December 15, 1999,” see id. at
`108a, and that the procedures followed in the case complied
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`7
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`with Internal Revenue Code Section 7443A(b)(4) and Tax
`Court Rule 183. Id. at 108a-109a. Because the STJ lacked
`authority “actually to decide” the case, moreover, the Tax
`Court concluded that the motion amounted to an improper
`request for access to “confidential” materials that “relate to
`the internal deliberative processes of the Court.” Id. at 109a.
`Ballard, Kanter, and Lisle subsequently filed a motion for
`reconsideration, citing an affidavit from Randall G. Dick,
`counsel for Kanter. 03-1034 Pet. App. 99a-100a, 101a. The
`affidavit asserts that two or three judges of the Tax Court
`had informed counsel that the “original report” that STJ
`Couvillion submitted to the Chief Judge concluded, contrary
`to the report ultimately set forth in the Tax Court’s decision,
`that the petitioners should not have been assessed a tax or a
`fraud penalty. Id. at 101a-102a.
`In an opinion signed by Chief Judge Wells, Judge Dawson
`and STJ Couvillion, see 03-184 Pet. App. 315a-316a, the court
`again denied the motion. Id. at 312a-316a. The court’s order
`states that “[t]he only official Memorandum Findings of Fact
`and Opinion by the Court in these cases is T.C. Memo. 1999-
`407, filed on December 15, 1999, by Special Trial Judge Cou-
`villion, reviewed and adopted by Judge Dawson, and re-
`