On Appeal from the United States Tax Court, Tax Court Nos. 19368-84, 26149-84, 29669-84 and 39130-84.
Greenberg and Hutchinson, Circuit Judges, and Ackerman, District Judge*fn*
GREENBERG, Circuit Judge.
This is an appeal by the Commissioner of Internal Revenue from a decision of the Tax Court allowing certain deductions for contributions to individual retirement accounts (IRA).*fn1 88 T.C. 548 (1987). Appellees Arlin M. Adams and William J. Nealon, Jr. served respectively as judges of the United States Court of Appeals for the Third Circuit and the United States District Court for the Middle District of Pennsylvania and appellees Clarence C. Newcomer and Daniel H. Huyett, 3rd served as judges of the United States District Court for the Eastern District of Pennsylvania during 1980 and 1981.*fn2 Each judge's term of office under Article III, section 1, of the Constitution was for his life at a salary which could not be diminished, unless he was removed by impeachment.
The judges each established an IRA as defined in 26 U.S.C. § 408(a) and in 1980 or 1981 made contributions to the accounts not in excess of the applicable limits which they deducted on their individual income tax returns. Subsequently, the Commissioner of Internal Revenue assessed deficiencies against the judges as he determined that the deductions were proscribed by provisions of the Internal Revenue Code then in effect disallowing deductions if the taxpayer
was an active participant in -- . . .
a plan established for its employees by the United States. . . .
26 U.S.C. § 219(b)(2)(A)(iv) (contributions by an individual for his own benefit); 26 U.S.C. § 220(b)(3)(A)(iv) (contributions for the benefit of an individual and his spouse). Appellees disputed these deficiencies and petitioned the United States Tax Court for a redetermination of the deficiencies.*fn3
The Tax Court held that the judges' income tax returns did not contain deficiencies. The court centered its analysis on whether the judges were "employees" of the United States and, by use of the common law control test, found that the judges were officers but not employees. Thus, as they were not active participants in a plan established by the United States for its employees they could take deductions for their IRA contributions. We will affirm, though for reasons other than those relied upon principally by the Tax Court.
There can be no doubt that the plan referred to in 26 U.S.C. § 219(b)(2)(A)(iv) and 26 U.S.C. § 220(b)(3)(A)(iv) is a retirement plan. See 26 C.F.R. § 1.219-1(b)(2)(i)(A)(4) (1987). Thus, regardless of whether or not judges are employees of the United States, unless the benefits accruing as a consequence of their tenure status or other law can be characterized as a retirement plan, the judges were entitled to take the deductions. Accordingly, we consider what benefits are provided for judges.
Inasmuch as the Constitution makes no provision for retirement of judges, the lifetime appointments of Article III judges may not be shortened by Congress. While the record is silent on the point, it seems that necessarily this constitutional plan must have originally resulted in judges continuing to serve at ages when their capacities were diminished. In 1869 Congress enacted legislation providing for the voluntary resignation of Article III judges. Act of April 10, 1869, ch. 22, § 5, 16 Stat. 44, 45. Under this Act a judge who attained 70 years of age with ten years of service could resign and receive his final salary for the rest of his life. Later, this law was amended to allow a judge who attained a certain age with specified periods of service either to resign or transfer from active status to senior status while still earning his salary. See Act of Feb. 25, 1919, ch. 29, § 6, 40 Stat. 1156, 1157.
At the times material to this case, the following statutory provisions for resignation with salary and retirement were effective for Article III judges. A judge who attained 70 years of age with at least ten years of service could resign and continue to receive the salary he was receiving when he resigned. 28 U.S.C. § 371(a). A judge with that age and record of service or a judge who attained 65 years of age with 15 years of service could retire but continue to hold office and receive the salary of the office. 28 U.S.C. § 371(b).*fn4 A judge could retire because of disability and receive for his lifetime the salary of the office or one-half of that amount depending upon whether he had ten years of service. 28 U.S.C. § 372(a). If a judge retired under any of these provisions, the President could appoint a successor with the advice and consent of the Senate. If a judge was eligible to retire by reason of disability but did not do so, after certain procedures were followed the President could appoint an additional judge with the advice and consent of the Senate. 28 U.S.C. § 372(b).
While these provisions do give judges options, it is clear that they cannot force a judge to relinquish his office or assume a new one. As the Supreme Court has ...