EXXON MOBIL CORP. & AFFILIATED COS., f/k/a Exxon Corp. & Affiliated Cos. v. COMMISSIONER OF INTERNAL REVENUE
Docket Nos. 11-2814, 11-2817
United States Court of Appeals, Second Circuit
Aug. 8, 2012
689 F.3d 191
Argued: April 25, 2012.
Tо summarize, we conclude that venue in the Southern District of New York for prosecution of the attempted Hobbs Act robbery in Elmont, Long Island, was supported by a preponderance of the evidence showing that (1) the robbery would have affected commerce directly in the Southern District of New York, where defendant Davis reasonably could have foreseen that the robbery target dealt the drugs and earned the drug proceeds that were the object of the robbery; and (2) after Davis had already taken a substantial step toward committing the attempted Elmont robbery only to have his plans stalled by the failure of confederates to appear on the scene, Davis used a telephone to reach into the Southern District of New York to procure thе immediate assistance necessary to allow the crime to go forward.
For this reason and those stated in the related summary order filed today, the judgments of conviction entered against Davis and Gunn are AFFIRMED.
1. The Clerk of Court is respectfully directed to amend the caption as set forth above.
Jennifer M. Rubin (Richard Farber, on the brief, Tamara W. Ashford, Deputy Assistant Attorney General, of counsel), U.S. Department of Justice, Tax Division, Washington, D.C., for Respondent-Appellant.
Before: WINTER, WALKER, and CABRANES, Circuit Judges.
JOSÉ A. CABRANES, Circuit Judge:
Under
Along with
Accordingly, we affirm the judgment of the Tax Court in favor of appellees Exxon Mobil Corp. and Affiliated Companies (jointly, “Exxon“).
BACKGROUND
I. Section 6621(d) and the Special Rule
As part of the
Even as it introduced the interest rate differential, Congress recognized that it was inequitable for a taxpayer to be liable for interest owed to the Treasury when no net tax is due. In the Conference Report accompanying the TRA, Congress directed the Internal Revenue Service (“IRS“), by the close of a three-year transition period, to implement[] the most comprehensive [interest] netting procedures that are consistent with sound administrative practice. H.R.Rep. Nо. 99-841, pt. 2, at 785 (1986), 1986 U.S.C.C.A.N. 4075, 4873. Over the years, as Congress revisited (and increased) the interest rate differential, it reiterated its expectation that the IRS would institute global interest-netting procedures that would result in no net interest being owed whenever no net tax is owed. See, e.g., H.R.Rep. No. 101-964, at 1101 (1990), 1990 U.S.C.C.A.N. 2374 (accompanying the
The IRS had still not implemented global interest netting by 1996 when, as part of the Taxpayer Bill of Rights, Congress directed the Secretary of the Trea-
The Treasury Report acknowledged that Congress has repeatedly instructed [the IRS] to implement the most extensive interest netting procedures possible, consistent with sound administrative practice, but reiterated the IRS‘s previously stated position that it lacked adequate statutory authority to institute global interest netting without еxpress authorization. Id. at 40. The Treasury Report proceeded to offer several suggested limitations in the event that Congress acted to expressly authorize global interest netting.
First, it recommended that global interest netting should be implemented legislatively through an interest equalization approach, rather than through a credit/offsetting approach. Id. at 41. As explained elsewhere in the Treasury Report, under the interest equalization approach, a zero net interest rate can be achieved by crediting the taxpayer with a rate equalization amount equivalent to the interest rate differential for the period and amount of mutual indebtedness. Id. at 32. In other words, interest equalization works either by increasing the interest rate applied to the taxpayer‘s overpayment or by decreasing the interest rate applied to the taxpayer‘s underpayment. See id. at 31-32. According to the IRS, employing the interest equalization approach would require that at least one “leg” of the overlap have an outstanding balance. Id. at 41.
Citing the IRS‘s interests in finality and ease of administration, the Treasury Report proceeded to recommend that global interest netting should apply only to tax years that are not barred by statute. Id. at 42. In addition, the Treasury Report recommended that global interest netting be limited to income taxes only, id. at 41; that the taxpayer should have the burden of requesting, and demonstrating entitlement to, global interest netting, id. at 42; and that Congress make additional appropriations to cover thе costs to the Treasury associated with the implementation of global interest netting, id. at 43.
When Congress enacted the RRA, it rejected, in whole or in part, most of the suggestions contained in the Treasury Report. Section 3301(d) of the RRA, codified as
Elimination of interest on overlapping periods of tax overpayments and underpayments.—To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period.
Congress did, however, accept the Treasury Report‘s suggestion that global interest netting be achieved through the interest-equalization approach, albeit without requiring that there be a balance outstanding for one leg of the overlap period. See H.R.Rep. No. 105-599, at 257 (1998), 1998 U.S.C.C.A.N. 288 (describing establishment of a net interest rate of zero... [w]here interest is payable and allowable on equivalent amounts of underpayment and overpayment (emphasis added)); Rev.Proc. 99-43, § 4.04, 1999-2 C.B. 579 (1999) (describing IRS‘s method for applying the net rate of zero, either by decreasing underpayment interest owed by the taxpayer or increasing overpayment interest owed to the taxpayer, depending on which period of limitation is open at the time the claim for interest netting is filed).
As noted above, the enactment of
SPECIAL RULE. Subject to any applicable statute of limitation not having expired with regard to either a tax underpayment or a tax overpayment, the amendments made by this section shall apply to interest for periods beginning before the date of the enactment of this Act if the taxpayer—
(A) reasonably identifies and establishes periods of such tax overpayments and underpayments for which the zero rate applies; and
(B) not later than December 31, 1999, requests the Secretary of the Treasury to apply section 6621(d) of the Internal Revenue Code of 1986... to such periods.
II. Procedural History
Over a period of years beginning in the 1980s, the IRS conducted an examination of Exxon‘s federal tax returns for the taxable years of 1975 through 1980. The result of the audit—as tempered by numerous administrative and cоurt challenges by Exxon—revealed that Exxon had underpaid its income tax liabilities for the tax years 1975 through 1978 and overpaid its income tax liabilities for the tax years 1979 and 1980. It is not disputed that, as a result, Exxon owed no net tax. The IRS had already collected interest from Exxon on its underpayments, however, even though those underpayment liabilities were offset by Exxon‘s overpayments. Accordingly, in December 1999, Exxon requested administrative interest netting relief by filing Form 843 with the IRS, pursuant to the guidance of IRS Revenue Procedure 99-43. See Rev.Proc. 99-43, § 5, 1999-2 C.B. 579 (setting forth proce-
On February 28, 2005, after a final ruling by the Tax Court in related litigation, Exxon filed a motion pursuant to
The Tax Court sided with Exxon, holding that the special rule applies when at least one leg of the period of overlapping indebtedness remains open. It rejected the Commissioner‘s argument that the special rule constituted a waiver of sovereign immunity that must be strictly construed in the government‘s favor. Exxon, 136 T.C. at 118-19. Rather, the Tax Court construed the provision broadly, in view of the fact that it is a remedial provision, designed to prоvide the maximum feasible relief to taxpayers who owe no net tax. Id. at 118. Accordingly, the Court concluded: After considering the statutory text, legislative history and relevant policies surrounding
The Commissioner timely appealed. Before us, the Commissioner argues primarily that the Tax Court erred in failing to recognize that the special rule is a waiver of sovereign immunity and therefore must be construed narrowly in favor of the government. Like the Tax Court, we reject this argument. We further hold, with the Tax Court, that the structure, context,
DISCUSSION
In reviewing a decision of the United States Tax Court, we accept the stipulated facts the parties submitted to the Tax Court as true and review the Tax Court‘s legal conclusions de novo. Nathel v. Comm‘r, 615 F.3d 83, 87 (2d Cir.2010).
As noted above, whether Exxon is entitled to a zero net interest rate on its overlapping periods of reciprocal indebtedness with the IRS depends upon the meaning of the uncodified special rule included in the RRA alongside
I. The Language of the Special Rule is Ambiguous
As in all statutory construction cases, we begin with the language of the statute. Townsend v. Benjamin Enters., Inc., 679 F.3d 41, 48 (2d Cir.2012) (internal quotation marks omitted). Every court to have considered the special rule has found that its language is ambiguous. See Fannie Mae II, 379 F.3d at 1307 ( [T]he language at issue... is equally subject to both proffered interрretations, the parties’ efforts to persuade us to the contrary notwithstanding. ); Exxon, 136 T.C. at 116 ( We also find the ‘subject to’ language susceptible to either interpretation and cannot determine, from the language itself, which interpretation Congress intended. ); Fed. Nat‘l Mortg. Ass‘n v. United States ( Fannie Mae I ), 56 Fed.Cl. 228, 234 (2003) ( [I]t is impossible to tell from the plain language of the statute whether Congress intended that the expiration of any statute of limitations renders a claim beyond the purview of the special rule, or that as long as any statute of limitations remains open, the special rule is applicable. ). We agree that the provision is susceptible to both proffered interpretations and that the intended meaning of the special rule cannot be derived from the text alone. It is necessаry, therefore, to consult the provision‘s structure, historical context, and purpose—as well as applicable canons of statutory construction—in order to determine its meaning.
In so doing, we are particularly mindful of the longstanding canon of construction that where the words [of a tax statute] are doubtful, the doubt must be resolved against the government and in favor of the taxpayer. United States v. Merriam, 263 U.S. 179, 188, 44 S.Ct. 69, 68 L.Ed. 240 (1923).
In an earlier case involving the same issue we face here, the Commissioner advanced two arguments in favor of its interpretation of the special rule, each of which was rejected, first, by the Court of Federal Claims and, on appeаl, by the Court of Appeals for the Federal Circuit. See Fannie Mae II, 379 F.3d at 1307-09; Fannie Mae I, 56 Fed.Cl. at 234-38.
The Commissioner pointed, first, to IRS Revenue Procedure 99-43, which states that the special rule requires that both periods of limitation applicable to the tax underpayment and to the tax overpayment... have been open on July 22, 1998, Rev.Proc. 99-43, § 4.01, 1999-2 C.B. 579 (1999), and argued that the revenue procedure is entitled to administrative deference. The Court of Claims and the Federal Circuit rejected this argument, concluding that an agency pronouncement not promulgated pursuant to an explicit or implicit congressional delegation of law-making authority is not entitled to deference under Chevron.12 Fannie Mae II, 379 F.3d at 1307 (citing Fannie Mae I, 56 Fed.Cl. at 235 (in turn citing United States v. Mead Corp., 533 U.S. 218, 229 (2001))); see also Christensen v. Harris County, 529 U.S. 576, 587 (2000) ( Interpretations such as those in opinion letters—like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do not warrant Chevron-style deference. ). These courts similarly rejected the Commissioner‘s argument that Revenue Procedure 99-43 is entitled to Skidmore deference,13 concluding that, because it sets forth no reasoning in support of its conclusion regarding the introductory language of the special rule, Fannie Mae II, 379 F.3d at 1309, cannot claim validity as a long-standing interpretation, and arguably conflicts with other IRS statements of procedure, Fannie Mae I, 56 Fed.Cl. at 237, the revenue procedure is entitled to little, if any, deference.14
We register our agreement with the rejection of these arguments. However, it appears in any event that the Commissioner has abandoned these arguments in this appeal. Instead, the Commissioner relies on a separate argument, which was raised sua sponte by the Court of Appeals for the Federal Circuit in Fannie Mae II—namely, that thе special rule is a waiver of sovereign immunity because it authorizes recovery of certain retroactive refund claims for overpaid interest and thus ‘discriminates between those claims for overpaid interest Congress has authorized and those it has not.’ Gov‘t‘s Br. at 12-13 (quoting Fannie Mae II, 379 F.3d at 1310). Like the Tax Court in the instant case, we reject the view that the special rule amounts to a waiver of sovereign immunity, and we therefore decline to strictly construe it in the government‘s favor.
III. The Special Rule is not a Waiver of Sovereign Immunity
Under settled principles of sovereign immunity, the United States, as sovereign, is immune from suit, save as it consents to be sued.... United States v. Dalm, 494 U.S. 596, 608 (1990) (internal quotation marks omitted). Moreover, the terms of its consent to be sued in any court define that court‘s jurisdiction to entertain the suit. Id. (internal quotation marks omitted). It is true, as the Commissioner argues, that [a] waivеr of the Federal Government‘s sovereign immunity must be unequivocally expressed in statutory text and will be strictly construed, in terms of its scope, in favor of the sovereign. Lane v. Pena, 518 U.S. 187, 192 (1996). These well-established principles do not pose an obstacle in this case, however, for the simple reason that the special rule is not a waiver of sovereign immunity.
A waiver of sovereign immunity is a consent on the part of the government to be sued. Dalm, 494 U.S. at 608. It authorizes—in a necessarily unequivocal way—an aggrieved party to make a claim against the United States. See id. The special rule at issue here does no such thing. It does not create jurisdiction or authorize claims against the United
The Supreme Court has madе clear that where one statutory provision unequivocally provides for a waiver of sovereign immunity to enforce a separate statutory provision, that latter provision ‘need not... be construed in the manner appropriate to waivers of sovereign immunity.’ Gomez-Perez v. Potter, 553 U.S. 474, 491 (2008) (quoting United States v. White Mountain Apache Tribe, 537 U.S. 465, 472-73 (2003) (additional internal quotation marks omitted)); see also United States v. Mitchell, 463 U.S. 206, 218-19 (1983) (where one statute supplies a waiver of sovereign immunity for a specific type of claim, related statutes and regulations need not provide a second waiver of sovereign immunity, nor need they be construed in the manner appropriate to waivers of sovereign immunity ). Here,
We therefore respectfully disagree with the conclusion of the Court of Appeals for the Federal Circuit that the special rule must be strictly construed in favor of the Commissioner.
IV. The Structure, Historical Context, and Purpose of Section 6621(d) as a Whole Favors Broad Application
Having declined the Commissioner‘s invitation to strictly construe the special rule pursuant to the sovereign-immunity-waiver canon, we turn to other means of interpreting the provision.
As stated above, the language of the special rule is ambiguous. But, as with any provision, the meaning of the special rule is informed by its context. See Brown v. Gardner, 513 U.S. 115, 118 (1994) ( [T]he meaning of statutory language, plain or not, depends on context[.] (internal quotation marks omitted)). Interpretation of a word or phrase depends upon
The structure of
Indeed, the IRS explicitly allows for prospective interest netting when a taxpayer files an application for interest netting on or before the date on which the last applicable period of limitation... closеs. Rev.Proc. 2000-26, § 4.01, 2001-1 C.B. 1257 (2000) (emphasis added). Section 6621(d) itself contains no basis for distinguishing between its prospective and retrospective application. The primary basis advanced by the Commissioner for distinguishing retrospective from prospective netting is that Congress intended to ease the administrative difficulty of netting interest in long-past tax years. But Congress accommodated this concern by requiring that the taxpayer bear the burden of requesting the application of
A review of the historical context from which
It thus seems clear that
CONCLUSION
For the foregoing reasons, we hold that, although the language of the special rule is ambiguous, it is clear from the structure, historical context, and purpose of
Accordingly, we AFFIRM the judgment of the United States Tax Court in Exxon‘s favor.
Notes
Section 6621 provides, in relevant part, as follows:
(a) General Rule.
(1) Overpayment rate. The overpayment rate established under this section shall be the sum of—
(A) the Federal short-term rate determined under subsection (b), plus
(B) 3 percentage points (2 percentage points in the case of a corporation).
To the extent that an overpayment of tax by a corporation for any taxable period exceeds $10,000, subрaragraph (B) shall be applied by substituting “0.5 percentage point” for “2 percentage points“.
(2) Underpayment rate. The underpayment rate established under this section shall be the sum of—
(A) the Federal short-term rate determined under subsection (b), plus
(B) 3 percentage points.
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(c) Increase in underpayment rate for large corporate underpayments.
(1) In general. For purposes of determining the amount of interest payable under section 6601 on any large corporate underpayment for periods after the applicable date, paragraph (2) of subsection (a) shall be applied by substituting “5 percentage points” for “3 percentage points“.
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(3) Large corporate underpayment. For purposes of this subsection—
(A) In general. The term “large corporatе underpayment” means any underpayment for any taxable period if the amount of such underpayment for such period exceeds $100,000.
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(d) Elimination of interest on overlapping periods of tax overpayments and underpayments. To the extent that, for any period, interest is payable under subchapter A and allowable under subchapter B on equivalent underpayments and overpayments by the same taxpayer of tax imposed by this title, the net rate of interest under this section on such amounts shall be zero for such period.
As initially adopted, the special rule provided as follows:
SPECIAL RULE.—The amendments made by this section shall apply to interest for periods beginning before the date of the enactment of this Act if the taxpayer—
(A) reasonably identifies and establishes periods of such tax overpayments and underpayments for which the zero rate applies; and
(B) not later than December 31, 1999, requests the Secretary of the Treasury to apply section 6621(d) of the Internal Revenue Code of 1986, as added by subsection (a), to such periods.