THOMAS L. FREYTAG, ET AL., PETITIONERS V. COMMISSIONER OF INTERNAL
REVENUE

   No. 90-762

   In The Supreme Court Of The United States

   October Term, 1990

   On Writ Of Certiorari To The United States Court Of Appeals For The
Fifth Circuit

   Supplemental Brief For The Respondent

   Pursuant to Rule 25.5 of the Rules of this Court, the Solicitor
General wishes to inform the Court that the Second Circuit rendered a
decision on April 2, 1991, in the related cases of Samuels, Kramer &
Co. v. Commissioner, Nos. 90-4060 & 90-4064.  The Second Circuit's
opinion addresses two of the three questions before the Court in
Freytag;  it is reprinted as an appendix to this brief.

   Samuels, Kramer sought the Tax Court's redetermination of
deficiencies arising out of the same tax shelter scheme as the one in
which petitioners invested;  in fact, Samuels, Kramer is one of the
principal promoters of that scheme.  Samuels, Kramer's cases -- unlike
petitioners' -- were not selected by the Tax Court as test cases and
no proceedings have been held on the merits.  By orders dated January
5, 1988, and August 30, 1989, the Tax Court chief judge assigned
Samuels, Kramer's cases to a special trial judge under 26 U.S.C.
7443A(b)(4).  Unlike petitioners, Samuels, Kramer objected to that
assignment in the Tax Court on the ground that it exceeded the
authority conferred by Section 7443A(b)(4).  Again unlike petitioners,
Samuels, Kramer also argued in the Tax Court that the Tax Court chief
judge's appointment of the special trial judge violated the
Appointments Clause, Art. II, Section 2, Cl. 2.  In an opinion
reviewed by the full court, the Tax Court rejected both contentions:
it held that Section 7443A(b)(4) authorized the assignment and that
the special trial judge was appointed in accordance with the
Appointments Clause because the Tax Court is a "Court( ) of Law" which
can appoint inferior Officers.

   The Second Circuit affirmed the Tax Court's interlocutory ruling.
First, the court of appeals held that "the plain language of section
7443A and its legislative history" authorizes "the Chief Judge of the
Tax Court to assign any tax case, regardless of complexity or amount
in controversy to a special trial judge for adjudication." App.,
infra, 13a;  see Gov't Br. 10-20.  Second, the court of appeals held
that the Tax Court chief judge's appointment of special trial judges
does not violate the Appointments Clause.  Although the court held
that Samuels, Kramer did not waive this challenge, App., infra,
15a-18a, /1/ and that special trial judges are inferior Officers, id.
at 18a-21a;  but see Gov't Br. 28-32, it concluded that the Tax Court
is a "Department( )" in the Executive Branch and that the chief judge
is its "Head( )," App., infra, 31a-40a;  see Gov't Br. 38-48.  /2/

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   APRIL 1991

   /1/ The court of appeals "distinguish(ed)" Samuels, Kramer from
this case because Samuels, Kramer -- unlike petitioners -- "challenged
the assignment of its cases to a special trial judge from the outset."
App., infra, 15a.  The argument in Samuels, Kramer was the quite
different one that the taxpayer had waived its objection by electing
to proceed in the Tax Court, rather than paying the deficiency and
seeking a refund in the District Court.  Ibid.  The holding in
Samuels, Kramer thus does not speak to the waiver question before the
Court in this case, although the Second Circuit did read this Court's
decision in CFTC v. Schor, 478 U.S. 833 (1986), as supporting the
proposition that "(s)tructural protections such as thos embodied in
the Appointments Clause" cannot be waived, App., infra, 17a;  but see
Gov't Br. 23-28.

   /2/ The court of appeals rejected the Tax Court's ruling and amicus
curiae Erwin N. Griswold's contention that the Tax Court is a "Court(
) of Law" within the meaning of the Appointments Clause.  App., infra,
26a-31a;  see Gov't Br. 35-38.

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