The Congressional Revenue Service

Congress established a permanent Joint Committee on Taxation (the JCT) as part of the Revenue Act of 1926. Initially, the JCT was granted the broad oversight authority typically enjoyed by congressional committees. Under the 1926 Act, the JCT would investigate the operation of the tax laws and examine how the tax system affected the public. In the Revenue Act of 1928,Congress charged the JCT with an additional role in tax administration. Under that act, the JCT would review any large refund that the IRS proposed to issue to a taxpayer. The statute (now codified in § 6405(a) of the Internal Revenue Code) did not grant the JCT any explicit power to prevent the issuance of large refunds, but instead simply required that the IRS give the JCT thirty days’ notice before issuing any of those refunds. Over time, the JCT has come to play more than a purely advisory role, and the IRS will not issue refunds without JCT approval.This Article suggests that Section 6405(a) raises separation of powers questions because it mandates systematic congressional involvement in tax refund determinations, a task long considered inherently executive. Constitutional issues related to the JCT’s involvement in refund determinations have gone largely unexplored in the scholarly literature, thought a few commentators have briefly analyzed the refund review function under INS v. Chadha. Commentators apparently agree that the refund review function poses no constitutional problems because the JCT lacks a statutory veto over IRS refunds.This Article argues that the absence of a statutory veto does not automatically validate the JCT refund review function, and that § 6405(a)’s thirty-day holding period instead violates the separation of powers. In reaching this conclusion, this Article uses a largely formalist, text-centered approach to separation of powers questions. Under this approach, § 6405(a) violates the separation of powers because it goes outside of the “legislative power” granted to Congress in Article I.

The full text of this Article is available to download as a PDF.