Intermountain Insurance Service of Vail, Ltd. Liability Co. v. Commissioner

The statute as it require stands does not Department State certification, and we therefore hold in favor of Mr. Abdel- Fattah. foregoing,

To reflect the appropriate

An order will be issued, and decision will be entered under Rule 155. INTERMOUNTAIN INSURANCE SERVICE OF VAIL, LIMITED Liability Thomas A. Davies, Company, Tax Matters

Partner, Petitioner v. Commissioner Respondent*

Internal Revenue, Docket No. 25868-06. May 6, Filed 2010.

Steven R. petitioner. Anderson, for

Gary J. respondent. Merken, for

SUPPLEMENTAL OPINION Judge: opinion We issued an Wherry, and entered our decision in September this case on Relying 2009. on Energy Partners, LP v. Bakersfield Commissioner, 128 T.C. affd. 2009), F.3d 767 we decided adjustments that respondent’s made partnership final adjustment administrative (fpaa) on which this case is based general 3-year barred period of limitations in sec 6501(a).1 tion See Intermountain Ins. Serv. Vail, LLC v. Commissioner, T.C. Memo. Respondent 2009-195. subse quently issued two regulations, sections 301.6229(c)(2)-1T 301.6501(e)-1T, Temporary Proced. & Regs., Admin. Reg. 74 Fed. (Sept.

LLC v. Rules of *This and in amended Unless otherwise Practice Opinion supplements effect indicated, Procedure. T.C. Memo. 2009 — 195. our all section references are to the year previously issue, filed references are to and all Rule the Tax Court opinion Intermountain Ins. Serv. of Internal Revenue Code of Vail, regula- application of those basis decision our vacate motions case, filed to this tions Court the before now issue sole opinion.2 The our reconsider grant compel us temporary the is whether respondent’s motions.

Background place in took case this of heart at the transactions The Part- 1065, U.S. 1999 Form reported the on were and Insurance Intermountain of Income, nership of Return September 15, (Intermountain), filed on Vail, of Service LLC largely irrelevant are transactions of the details 2000. pre- say in the that today. it to Suffice face we issues the viously September on respondent issued that mentioned FPAA transactions the respondent determined 2006, economic lacked sham, a “were shelter a tax characterized * * * * * * purpose of principal [had] a and substance [reducing] * * * [Inter- of present substantially value the liability”. Criti- tax aggregate federal partners’ mountain’s] Inter- around revolved respondent’s cally, determination partnership basis. of alleged overstatement mountain’s of the review for petitioned timely this Petitioner ground that judgment the summary for moved FPAA 3-year general beyond the the FPAA issued respondent had Intermountain 6501(e)(1)(A)applied, his tax not issued was filed there 3-year period whichever utable ship item 301.6501(e)-1T, refer to “The ship applies when supra, ion, tions Respondent has not In period return, return and in tandem. is no the FPAA our could to this because or 3 partnership items. See adjustments made is later. within period Sept. temporary whichever limitations affect years 2009), affg. of Ins. Serv. case. Proced. Temporary limitations time sec. See sec. after Respondent limitations T.C. issued, 6501(e)(1)(A) applicable periods regulations in tandem. is later. outcome remains of provided arguments T.C. Vail, LLC v. opinion, for apply 6229(a). last in an FPAA running from the Memo. 534-535, assessing within period will has of this open generally day, support & suggested sec. follow the only petitioner’s 1999 tax we Sec. Admin. disregarding 2007-289; Rhone-Poulenc at least of limitations sec. which Commissioner, case if 6501(a). noted tax addressed 6229(c)(2) Curr-Spec 301.6501(e)-1T, Respondent Regs., 6to the Commissioner time barred that he for 3 parties’ his that, filing partner’s For years extensions, years after argument 74 Fed. an omission extends Partners, meant of that although respondent tax attributable supra n.3. Sec. lead assessing from states year”. Temporary period Reg. and refer the sec. return. for the due L.P. in his cite sec. Surfactants must issue For filing the partner tax date sec. limitations Nevertheless, 6229(a) period. 6501(e)(1)(A) motion Intermountain’s against Commissioner, Proced. date to a 6229(c)(2) purposes 6501(e)(1)(A) or sec. level partnership partnership return an & or partnership argued that sec. to reconsider a (Sept. & Admin. Specialties, L.P. FPAA, partner the date if the partner was instead. extends Although still FPAA partner return, regula parties attrib of Regs., Opin item, open See is period of assessing limitations for against tax Intermoun- partners. tain’s 6229(a), 6501(a). See secs. Respondent con- 3-year ceded that period limitations expired had but argued that 6-year period extended applied limitations instead as a result of Intermountain’s basis overstatement.3 6229(c)(2), 6501(e)(1)(A). See secs. dispute A proper over the interpretation 6229(c)(2) 6501(e)(1)(A) sections ensued. Generally, 6-year period limitations triggered when a taxpayer partnership gross “omits from income an amount properly includible therein which is in percent excess of 25 gross of the amount of income stated in the return”. Sec. 6501(e)(1)(A) (taxpayer); 6229(c)(2) see sec. (partnership). parties’ The focus of dispute was whether an overstate- ment of basis constitutes an gross omission from income for purposes triggering of 6-year period. limitations This was not an issue impression. of first In Bakersfield Energy Partners, LP v. supra, Commissioner, we held that a basis overstatement was not an gross omission from income purposes 6229(c)(2) of sections 6501(e)(1)(A). and In reaching our applied conclusion, we holding Colony, of Inc. v. Commissioner, 357 U.S. 28, 33 in which the Supreme Court was faced with language identical in section 6501(e)(1)(A)’s predecessor 275(c) of —section the Internal Revenue Code of 1939. See Energy Partners, LP Bakersfield v. (“We supra Commissioner, at unpersuaded by respondent’s attempt distinguish and diminish the Supreme holding Court’s Colony, in Commissioner”). Inc. v. Supreme The holding, Court’s as we it, described was “that period the extended of applies limitations to situations where specific receipts income gross have been left computa out’ in the tion of income and not when an understatement of gross income resulted from an overstatement of basis.” at Id. 213. Court had legisla reviewed the statute’s history tive and determined that had not intended 3The bar of the period of limitations is an affirmative defense, and petitioner bore the burden tions with respect to any partner remained mountain Commissioner, LLC, supra Serv. Vail v. Ins. or the ent to establish that there was a greater-than-25-percent pired as of the date the PPAA was issued in this case, and respondent conceded as much. Ac Petitioner established a cordingly, and because proof. partnership’s return. See See Rules 142(a); respondent never prima facie case that see also Highwood Highwood suggested Partners v. Commissioner, open, Partners general any other reason burden n.2. omission of v. 3-year period of limitations Commissioner, going gross forward shifted to respond supra why income at 9; see also Inter period T.C. 1, 9 aon partner’s had limita ex gross income. omission overstatement basis supra 33, 36. Commissioner, Colony, v. Inc. See Energy Part- in precedent to our Bakersfield adhered We Sep- our issued supra, we when ners, LP Ins. See Intermountain case. opinion this tember 2009-195. Memo. Commissioner, T.C. Vail, LLC Serv. of decision, and 2009, order September 1,

Accordingly, in our judgment summary and motion petitioner’s granted were respondent’s FPAA adjustments decided period. That was 3-year general limitations by the barred matter, however. the end order our after a month than 2009, less September 24, On Treasury respondent case, decision

and Department sections regulations under temporary issued 301.6229(c)(2)-lT and 6501(e)(1)(A). secs. 6229(c)(2) supra. Regs., Admin. & 301.6501(e)-lT, Temporary Proced. simultaneously issued regulations were These 7805(e). September 28, On sec. regulations. See proposed sought for were comments published and 2009, notice 301.6501(e)-l, Proposed 301.6229(c)(2)-l sections Rulemaking Proposed Regs., see Notice Admin. & Proced. Reg. Fed. Regulations, 74 Temporary Cross-Reference regulations were (Sept. 28, 301.6229(c)(2)-lT Register, secs. see Federal published in Regs., Admin. & 301.6501(e)-lT, Temporary Proced. and supra. part, pertinent provide, in temporary The resulting an from gross income amount

“an understated constitutes basis other or cost unrecovered overstatement * * * [sections purposes of gross income omission 301.6229(c)(2)-1T 6501(e)(1)(A)].” secs. 6229(c)(2) and Regs., & Admin. Temporary 301.6501(e)-1T, Proced. and regula temporary by espoused interpretation supra. by adopted interpretation contrary runs tions Commissioner, Partners, Energy LP in Bakersfield Appeals for the by (2007), Courts and 128 T.C. Energy Partners, in Circuits Federal and Bakersfield Ninth 2009),4 Cir. F.3d Commissioner, 568 LP awith ners, biguity According T.D. LP v. suggestion statutory language by U.S. Court may I.R.B. make Appeals 551, 552, the the statutes the Ninth 2009), affg. susceptible to temporary Circuit 128 T.C. Bakersfield reinterpretation are Energy Part consistent through am Salman Ranch (Fed. Ltd. v. United States, 573 F.3d 1362 2009), respectively. See T.D. 9466, 2009-43 I.R.B. 551, (“The Treasury Department and the Internal Revenue disagree Service these courts that the Court’s reading predecessor 6501(e) to section Colony applies 6501(e)(1)(A) 6229(c)(2).”). sections by Bolstered temporary regulations, respondent, lodged October 16, 2009, on November 25, 2009, —and permitted to file—an otherwise late motion to vacate our September 1, 2009, decision and a motion to reconsider September our opinion. 1, 2009, moving As party, respondent bears proving the burden of entitlement to relief. See Kraasch v. Commissioner, 70 T.C. 623, 626 Respondent urges us to reconsider the case, this time eschewing prior precedent our in favor of the regulations. Petitioner counters regula- tions are inapplicable, either invalid, or otherwise not enti- tled to deference. On November 25, 2009, par- we ordered the ties to file briefs. Pursuant to our parties order, the filed opening January briefs on 5, 2010. respondent Petitioner and reply filed January briefs on February 1, 2010, respectively.

Discussion I. Motions To Reconsider To Vacate Motions to reconsider governed and to vacate Rules respectively. and 162, filing Those rules establish dead- provide lines guidance but no on when the Court should grant deny such In motions. specific absence more guidance, look caselaw and the Federal Rules of Civil 1(b). Procedure. See Rule grant

The decision to motions to reconsider and to vacate lies within the discretion of the Court. Estate Quick v. of (motion (1998) Commissioner, 110 T.C. 440, 441 to reconsider); Kun v. Commissioner, T.C. Memo. 2004-273 (motion vacate). to Motions generally to reconsider are “intended to correct substantial errors of fact or and law the newly allow introduction of discovered evidence that the moving party could not by have introduced the exercise of regulations. We address this note 24. infra

216 v. Commis proceeding.” Knudsen prior diligence the due not (2008). the “Reconsideration T.C.

sioner, legal rejected rehashing previously appropriate forum end the legal to reach tendering theories new arguments or v. Quick party.” moving Estate by the desired result gen vacate to Motions supra 441 — 442. at Commissioner, showing cir unusual granted erally absent not inadvertence, e.g., mistake, error, or substantial cumstances fraud, evidence, newly neglect, discovered surprise, excusable P. Civ. e.g., R. Fed. See, justifying relief. reason other T.C. Commissioner, 69 Shawnee, Inc. v. 60(b); Brannon’s of warrant change can intervening law in the an Importantly, to a motion reconsider a motion both granting of 2008-185.5 Memo. Commissioner, T.C. v. Alioto See vacate. 2006-199, Court Memo. Commissioner, T.C. v. In Alioto section “stand-alone” jurisdiction over it lacked that held jurisdic- expanded Court’s 6015(f) After cases. Care Health Relief Tax see cases, such to include tion 3061, 408, Stat. C, sec. 109-432, div. L. 2006, Pub. Act of vacate, timely to reconsider taxpayer motions filed T.C. Commissioner, v. granted. Alioto See Court which correctly applied (“We agree that Memo. Alioto issued the Court time existed as it the caselaw for reconsideration disagree motion that however, we I; I Alioto decision the Court’s After denied. should omitted.)). (Fn. changed.” ref. jurisdiction Court’s and the law in the vacate grant motion Respondent us asks “may grant motion justice” so that “interests Memo. Commissioner, T.C. Citing v. Alioto reconsideration.” of the the issuance asserts respondent further 2008-185, war- circumstance” “unusual opinion. September our ranting reconsideration distinguish v. Alioto attempts disagrees Petitioner noting it involved 2008-185, T.C. Memo. ** regulation issued [Cjongress *, act of “an Along these litigant case.” awas Respondent, who Respondent’s Motion “Granting petitioner warns lines, Respondent give would case circumstances under Nix, 1986); McGrath also Servants F.3d 1329, 1332-1333 Potash, the Paraclete v. Does, 204 1997); (D.C. Cir. Matarese F.3d LeFevre, F.2d 2000); Cornell (2d Cir. v. litigation license to render futile” every because “In case * * * where [respondent] receives an adverse decision, Respondent simply could [sic] restate its argu- unsuccessful ment temporary as regulation, request and then upon reconsideration based temporary regulation.” Petitioner’s concerns noteworthy;6 they however, do persuade deny respondent’s us to motions without first considering the applicability potential impact of the tem- porary regulations. Ignoring temporary regulations at dispel time would not evils petitioner. envisioned respondent Indeed, appeal September could our 1, 2009, deci- sion appellate and ask the court to consider the issue of the temporary regulations in the Respondent first instance. has already done so in more By than one neglecting case.7 temporary regulations at this time we would pro- not be tecting integrity judicial system, of the petitioner sug- as gests, merely failing but fully complete our work. We see compelling no reason to wield our discretion to that end. question Moreover, petitioner’s we attempt distinguish Alioto v. Commissioner, T.C. Memo. 2008-185, in this con- text. Accordingly, proceed to consider applicability potential impact temporary to this If, case. petitioner contends, temporary regulations do not apply, are invalid, or are otherwise not entitled to deference, deny we will respondent’s motions point- because it would be grant less to If, them. on the other hand, regu- apply, lations are valid, and are entitled to deference, we required would to ascertain whether, considering after all respondent’s other factors, granted. motions should be We turn first to whether apply to this case.

file out of time the motions to reconsider and to vacate. our Nov. courts, thereby rendering Cir., (5th Cir., courage taxpayers tioner If the 8See, e.g., Smiley Tax Feb. and/or the law is Brief litigation 25, 2009, 3,Mar. 16, 2010); allowed to limited order expensive, Brief Appellant v. Citibank asserting in this liability change their for the Petitioner at victory Pyrrhic, case (S.D.), N.A., their retroactively company respondent Salman granting rights or its under Ranch, litigates respondent’s after a 17-18, members must perverse Ltd. v. Commissioner taxpayer then-existing taxpayer-provided Oct. 744 n.3 result has 16, 2009, litigate will law. prevailed M.I.T.A., tobe with their own funds. motions for No. 09-9015 which we cited in funds while significantly in one or more No. 09-60827 leave peti dis Regulations Temporary the Applicability

II. The of temporary determining the whether issue in threshold The regu- temporary the is whether apply case to this regulations “Effective/applicability The by terms. apply their own lations provide regulations that temporary the provisions of date” respect years with apply to taxable section of this rules “The not assessing did tax period for applicable the which to 301.6229(c)(2)-lT(b) Secs. September 24, 2009.” expire before Regs., & Admin. Temporary Proced. 301.6501(e)-lT(b), supra. provision is regulatory interpreting a starting point for The Secy. Labor, Co. meaning. Stone Walker plain of

its meaning 1998) (“When of the F.3d regulation face, the its provision is clear regulatory a meaning.”). We plain its with in accordance enforced must be general opinion the 2009, September 1, our in concluded 3-year 6501(a) the period section limitations it assessing case in this tax period for applicable plain The September 14, 2006. expired time before some had provisions effective/applicability date meaning the apply to this regulations do not temporary the indicates case. begs doing the contrary so in argues Respondent interpretation notably advancing convoluted a question9 provisions: effective/applicability date of the under applicable regulations temporary whether determine To six-year a whether determine must Court provision, date effective issue, as year at the taxable open for be would of limitations statute applying what standard regard to 2009, 24, without September could period six-year limitations If the might be. limitations statute temporary 2009, 24, then September as standard under open some apply. regulations depart must interpretation, Court respondent’s Under Energy Partners, LP precedent our Bakersfield affd. T.C. porary of limitations under sections expire decision See IRS temporary has been Chief respect 6229(c)(2) regulations assessing Counsel entered. apply Notice tax tax did apply any 6501(e)(1)(A), year CC—2010-001 docketed not taxable issue, expire Tax as years before before interpreted (Nov. with September September case respect 2009) in the in which stating: which 2009. and which Accordingly, period of limitations regulations, applicable no did period tem- final 3-year period a which held that limitations

applies under the circumstances of this case. We must then quest hypothetical launch for some standard that could trigger 6-year period. limitations If we discover such a conveniently standard —and the supply apply us with one—then we must that standard to period determine whether of limitations this case open September could If have been 2009. the limita- period open hypothetical tions could have been under the temporary regulations apply standard, then the to this case. Essentially, key, according respondent, to is not period actually open Sep- whether the limitations then-applicable 24, 2009, tember under law but whether the period open limitations could have been on that date under hypothetical respondent’s further, law. Distilled even suggests temporary regulations apply rationale to application trigger 6-year this case because their would period. Respondent phrased argument limitations had simply temporary more in his motion to reconsider: “The regulations apply petitioner’s year, 1999 tax because the 6229(c)(2) period limitations under sections 6501(e)(1)(A), interpretated, regulations, in the remains added.)10 open year.” respect (Emphasis with to that Ordinarily, agency’s interpretation regulation of its own controlling “plainly is it unless erroneous or inconsistent regulation.” Robbins, with Auer v. 519 U.S.

(1997) (internal omitted).11 quotation Here, however, marks respondent’s interpretation the Court concludes that of the temporary regulations’ effective/applicability provisions date regulations. Specifi- is erroneous and inconsistent with the cally, interpretation irreparably by find the to be marred logic circular, result-driven and the wishful notion that temporary regulations apply should to this case because Intermountain he was involved what believes was an abu- reasons, sive tax transaction. For these we refuse to accord respondent’s interpretation deferential treatment. sioner,

v. Summit Treasury regulations”). that the See also Ariz. Pub. Serv. T.C. Memo. 2006-56 supra judiciary Contractors, Inc., note 9. should accord substantial deference to the Commissioner’s (“Our Co. v. U.S. view is farther EPA, supported F.3d 2009); Estate the well-established n.5 Focardi v. Commis interpretation 2009); principle Solis regulations’ meaning temporary plain effective/ of the provisions

applicability indicates date applicable regulations apply this case because the do not September expired period It 24, 2009.12 of limitations before grant respondent’s motions therefore be futile to would premised on the vacate, and to both which reconsider application to this case. While of the against ground foregoing plausible rule establishes a compelling respondent’s when combined motions, it becomes our discussion below.13 III. Judicial Deference temporary regulations, if next turn to whether

We long judicial applicable, held deference. Courts have deserve degree tax are entitled some that Federal “Congress recognition of the fact that deference. This is [Secretary Treasury delegated and his dele- of the has gate, the] [of Revenue], Internal not to Commissioner regula- prescribing all needful rules courts, the task Revenue Code.” the enforcement of the Internal tions for 440 Association, States, Inc. v. United Dealers Natl. Muffler omitted). (1979) (internal quotation Yet, marks 472, U.S. 477 regula- to Federal tax the exact amount of deference owed a source of debate. tions remains only are

Petitioner asserts that the Co., & 323 entitled to deference under Skidmore Swift (1944), they interpretive regula- are 134, U.S. 140 because Respondent counters the more deferential tions. field Ltd. Appeals bility tion”). tion to kersfield tion. 43 F.3d Sept. decisions, expired amended United ^[12] meaning We also The Court n.9 v. United Energy Respondent, date Thus we believe our States, Bakersfield (1984) before and Salman Ranch results our rationale 2009. provisions, provisions recognize Partners, of statutes. See Chevron U.S.A. although supra, (stating Sept. States, recognizes Supreme however, Energy thereby 24, 2009, we conclude and file renewed motions to 573 F.3d 1362 LP v. that “The he cites the Court still to be heard respondent position cites no court authorities Partners, extending Commissioner, do respondent may argue judiciary not, that the temporary regulations, LP v. (Fed. appropriate. in his could amend the is the final 3-year dispute Commissioner, supra, opinion, Inc. v. Natural Res. 2009), holding from, may, limitations We address in section III below reconsider and to vacate based on those equivalent make it so. authority yet that the decisions we ^[767] another respondent’s courts have by accepting period applied that the limitations Cir. on issues of to those of There regulations’ effective/applica case. Murrell v. Def. and Salman Ranch Ltd. v. traditionally view, Council, as settled and Salman Ranch statutory rely 11 other Courts of to this also appellate 467 U.S. upon, beg why law the Ba determined case period construc Shalala, Bakers before ques addi court had standard in Chevron U.S.A. Inc. v. Council, Natural Res. Def. (1984), applies 467 U.S. that, if not, then temporary regulations at least fall under Natl. Muffler parties’ Association, Dealers Inc. We need not resolve the dis pute temporary regulations on this issue because, even if the they are entitled to review under Chevron, face a formidable Colony, obstacle Inc. v. Commissioner, 357 U.S. deference — (1958).14 temporary regulations were not issued on a blank opinion Colony, Supreme slate. In its 1958 Inc., the interpreted statutory language the same and held that a gross basis overstatement not an omission from income. years respondent Id. More than Treasury later, and the Department temporary regulations issued the and reached opposite question conclusion. The is whether we are by agency’s bound construction of the statute in the tem- porary regulations prior Court’s deter- congressional mination of intent and the Internal Revenue requirements, Colony, Assuming Code’s as set forth in Inc. respondent temporary regulations is correct that the are enti- tled to question Chevron deference, the answer to this lies in Cable Natl. & Telecomms. Association v. Brand X Internet Servs., 545 U.S. prior judicial

“A court’s trumps construction of a statute agency construction otherwise entitled to Chevron deference only prior if the court decision holds that its construction fol- unambiguous lows from the terms of the statute and thus agency no holding, leaves room for discretion.” In so Id. Supreme Court reasoned as follows:

Am. hashing line of to this history those The We Court] Court’s trol missioner, and in our any event, 14Respondent held otherwise in the T.C. Supreme Express, opinions. decisions, Court the has direct behind the ruling Colony. interpretation them now even in 440, T.C. the Sept. Inc., Court has advised ^[441] Supreme Memo. 2009-195. maintains that 1, the prerogative application (1998). 2009, opinion Colony * * ** Bakersfield of Court’s and See Intermountain Ins. Serv. secs. As we decision [lower this context is not in a 6229(c)(2) overruling Colony, in this case. See lower courts that “If noted courts] We Energy case, provides respondent’s rejected respondent’s Inc. v. previously, yet appears should follow the case which Partners, its own decisions.” further, We rule that our 6501(e)(1)(A), necessary. constructions are not Intermountain contradict the we are hesitant to LP v. and we believe to rest on reasons of a Vail, precedent Commissioner, arguments see T.D. Rodriguez Estate LLC v. analysis Ins. Serv. of this Court determinative, of 9466, Commissioner, supra directly controls, necessarily Quick in the de rejected here of the 128 T.C. 207 of Quijas supra, Vail, v. process, Commissioner, in some other [the does not con v. Shearson/ LLC v. Com inconsistent. support legislative Supreme Supreme that, and re leaving (2007), n.5. interpreting an agency an precedent to foreclose [Allowing judicial a * * * interpretation to override allow court’s

ambiguous would statute courts, to fill agencies, not it is for premise is that agency’s. Chevron’s * * * judicial interpretations con rule is to hold statutory gaps. The better step standard demanding Chevron one precedents to the same tained in on a blank reviewing agency’s construction the applies if the court is unambiguously holding that the statute Only judicial precedent slate: gap for the contains no interpretation, and therefore agency’s forecloses the [Id. at 982- conflicting agency construction. fill, displaces a agency to 983.15] by step apply one Chevron directed to are therefore

We Colony, determining Supreme Inc. v. Court in whether statutory provision supra, at issue found the Commissioner, gap unambiguous. the tem- no left for so, If there is to be statutory provi- respect porary to the fill with two-step step anal- in Chevron’s The first at issue here. sions directly spoken Congress ysis to the has to ask “whether is question precise Inc. v. Natural Chevron U.S.A. at issue.” Congress supra “If intent of Council, at 842. Res. Def. court, as matter, for the well the end of the clear, that is unambiguously expressed give agency, effect to must Congress.”16 Id. at 842-843. intent of Congress’ determining instructs us intent, Chevron When statutory employ Id. at construction.” tools of “traditional Appeals including Many the Courts courts, 843 n.9. accepted might appealed,17 use have this case be which history important element in Chevron as an be plies (2005) guity.” apply Carlson, applicability disapproval, applicable In a whether the when (Stevens, J., Natl. second 547 F.3d concurring opinion, of Brand X. Cable & Telecomms.Association to a decision that the U.S. Court of step prior judicial judicial concurring). of Chevron Although precedent Justice construction is the specifies Justice Stevens’ Court that would that debate is still Stevens at issue is that of a lower Appeals as follows: 2008) (“[W]e suggested for the Tenth Circuit has v. Brand X Internet suggestion Supreme presumably conclude largely open, that this has indeed Court’s. See Hernandez-Carrera that the court or the holding remove Servs., sparked held that Brand X does holding note, any pre-existing “would not 545 U.S. without debate over the of Brand necessarily approval Court.”). X ambi ap Def. If, however, biguous issue, may mountain swer is based on a essary question In our Council, the court does not in the absence of an administrative appealable Ins. Serv. Sept. 1, the court determines 467 U.S. at respect proper 54 T.C. permissible venue Vail, 843; opinion, simply impose specific and do not do so now. LLC v. fn. construction of the statute. refs, we indicated issue, Appeals Commissioner, omitted.] affd. 445 its own construction on interpretation. has not for the question that, F.2d 985 Id. absent T.C. Memo. 2009-195 Eighth, directly for the court is whether Rather, [Chevron stipulation Tenth, addressed if the statute is silent or am- U.S.A. Inc. v. Natural or D.C. Circuit. See 1971)). statute, n.4 precise question We contrary, as would be nec- (citing did not answer agency’s Golsen this case Inter Res. an-

223 step e.g., Dept. See, one. v. 422 Labor, Anderson U.S. F.3d (10th 2005) (“To Cir. determine whether precise question issue, had an intent on the courts utilize statutory including construction, the traditional tools of statutory language legislative history.”).18 determining Supreme

Therefore, in whether Court in Colony, (1958), Commissioner, Inc. v. 357 U.S. 28 found the statutory provision unambiguous, at issue to be we will con- analysis statutory language sider the Court’s both legislative history.19 Respondent its calls attention to the Supreme “Although Court’s statement we are inclined to plausibly think that the statute on its face lends itself more taxpayer’s interpretation, it cannot be said that language unambiguous.”20 Colony, Inc. v. Commissioner, supra doing respondent ignores Supreme so, at 33. In subsequent Court’s of, on, review and reliance the statute’s legislative history. Although Supreme initially statutory provision ambiguous, only found the that was preliminary considering legis- conclusion before the statute’s history. thoroughly reviewing lative After his- tory,21 Supreme Congress’ Court concluded that intent Miccosukee Tribe Bankers Negusie Land recent F.3d v. U.S. legislative history, is in foreclose an ing tach Tube Co. v. United 89 v. (1934); Rept. 704, Olson v. Ctrs. Medicare & Medicaid of 1954.” Cir. step applying short of 73d U.S.A. Inc. v. Natural Res. 21Hearings ^[18] 19Although Chevron See Catawba Both Cong., 2009); one. In Chevron meaning 8, harmony Dept. of Educ., Sys., Supreme opinions, H. Dept. 22-23 Life employing Brand we see no reason Colony, parties Natural Res. 2d Sess. 43-44 Holder, Inc. v. step agency’s preferred interpretation despite & Cas. to that statement. we have found no Before the House (1st with the X, Health & Human Servs.' Court has sent mixed and we deduce that it intends to continue this one—would not Inc. v. also refer to the County EPA, Cir. Cline, traditional tools of States, Indians v. United Co. United 550 U.S. itself, 73d purpose 2005). U.S. _, _, unambiguous language Def. 540 U.S. Cong., v. 495 F.3d the Court considered Def. Council v. U.S. But see United makes clear what its text leaves 2d Sess. 35 also Council, Comm, opinion 1939-1 C.B. States, 571 F.3d 581, why 1355, consider it when States, statutory signals 357 U.S. at 37. We decline both 587 — Servs., 129 S. Ct. a court —if it considers Admin, in which a court considered 467 U.S. at 862. It has continued to do so in more 1359-1360 20, (1934), 590, EPA, Court’s observation that “the Ways States (Part 2) 566 F.3d Nevertheless, about the use of ^[35] 403 F.3d legislative history construction, 973, 526 F.3d § (D.C. 1939-1 C.B. 6501(e)(1)(A) v. Children & (2004); such textual applying (Fed. Geiser, 1257, Means, Cir. 537, 619. 591, Cir. on 2009) (“To see also Zuni Pub. Sch. Dist. No. 539-540 527 F.3d including legislative history. ^[1273] Brand X. (2009) occasion, opaque.”); (Part 2) legislative history 73d 2007); legislative history Families, of the Internal Revenue Code practice. ambiguities (11th Cong., part (Thomas, J., legislative history (8th 288, Succar v. parties’ requests 554, 580; the Court has Cir. Cir. North Dakota ex rel. conclusion we sure, 556 F.3d See Gen. Cir. 2d Sess. step 2008); 2009); if its 2005); (3d a statute Ashcroft, one. Chevron S. when dissenting). in Chevron Wheatland Rept. 90, New York Dynamics structure, see also stopped ^[97] apply 2008); to at reach when may (2d unambiguous. statutory provision was clear and that the

was 33, 36. Id. at legislative Supreme

Specifically, found the his- addressing Congress tory “persuasive that evidence to be actually taxpayer specific situation where itself to the computation receipt accrual in his omitted some income generally gross in that com- to errors income, and not more (emphasis arising putation causes.” Id. at from other added). history to our that “this shows It further indicated Congress exception to the intended an satisfaction only three-year in the restricted statute of limitations usual type [an already item omission of an of situation described enacting gross income].” § think that in Id. at 36. “We of 275(c) give purpose no than to manifested broader investigate years tax the Commissioner an additional two taxpayer’s where, of a omission returns in cases because special report is at a item, the Commissioner some taxable disadvantage detecting in errors.” Id. holding, Supreme Court found that statute’s

In so ambiguous history and, text clarified its otherwise meaning explicated Congress’ result, intent and statutory Supreme opinion provision. Thus, the Court’s “unambiguously supra, Colony, fore- Commissioner, Inc. 6229(c)(2) agency’s interpretation” of sections closes 6501(e)(1)(A) respondent’s temporary regula- displaces Brand & Telecomms. Association v. tions. See Natl. Cable supra Consequently, Servs., at 983. X Internet regulations23 to deferential are invalid and are not entitled treatment.24

Energy Brand X Internet may in order for that ony, the best say standards U.S.A. 195 n.3. 24Respondent 22We Appeals the tax temporary regulations. Inc. v. have the so Inc. v. Natural Res. Partners, recognize supra reading1 many magic against code, for the Fourth Commissioner, supra, authority note suggests even if its LP v. holding of the Servs., supra, which its 2; Intermountain words Colony, provision.” to be that the U.S. Court of Circuit, promulgate The Court of interpretation Def. that its opinion Inc. v. binding so that the Council, supra, found sec. which stated that Bakersfield holding Ins. would be tested. Commissioner, 568 F.3d a reasonable on an Appeals acknowledged Serv. of runs is the Supreme 275(c) agency.” Energy contrary Vail, Appeals and Natl. only permissible interpretation of reinterpretation 357 U.S. 28 “[w]e We Court could not have been aware LLC v. Partners, Fernandez v. ambiguous for the Ninth agree, * * * Cable & Telecomms.Association v. Commissioner, that the LP v. do however, invited not hold that a court must Keisler, of an and stated that “The IRS Commissioner, supra Supreme predated Circuit, Court’s ambiguous with the U.S. Court respondent 502 F.3d T.C. Memo. ‘opinion both Court in Col Bakersfield provision Chevron to issue statute 2009- of the as to Retroactivity IV. petitioner’s

We next turn to concern that impermissible would have an retroactive effect if applied Respondent attempts them in this case. to defuse petitioner’s by arguing temporary regula- concern applied tions “are not retroactive as in this that, case” but they they permissibly were, even if would be retroactive. emerge: Thus, temporary regu- two issues First, whether the applied lations would have retroactive effect if case, this second, and so, if whether the retroactive effect would be permissible. light holdings However, in the of our above regarding regulations’ validity, effective date and their questions we respondent’s need not answer these to resolve motions this case. We therefore leave them for another day.

Conclusion light holdings, In unnecessary of the above we find it petitioner’s respect address other concerns with to the temporary regulations. The Court has considered all of respondent’s arguments, requests, contentions, and state- ments. To the extent not discussed herein, we conclude that they are meritless, moot, or irrelevant. foregoing,

To reflect the appropriate

An order will be issued. by Reviewed the Court. JJ.,

Colvin, Wells, Vasquez, Goeke, Kroupa, Paris, and agree with this majority opinion. lation to the

regulation late as would possibly tion of the case, we are not bound consider one]”.), Chevron (quoting actually Court of with Schneider v. step unresolved issue of subverts the statutory contrary, Natl. one. precise trump Appeals Compare Cable history language meaning to that court. See Golsen v. very did not indicate & Chertoff, that court’s caselaw because this case is not under the Telecomms. Association v. Brand X Natural Res. intent of the whether and its of the Court of 450 F.3d Court’s first legislative legislative Def. Nursing definitively prong prior Council v. Appeals’ statement, history 955 n.15 judicial history should be considered when Relief Chevron, whether assists us in Act.”). construction. This * * * EPA, supra any In 54 T.C. at 757. any event, particularly such 2006) (“Although this inquiry appealable, note that the Secretary’s Internet Servs., at 603 may we will not 545 U.S. at when, (“An flow from [Chevron absent we cannot examina- applying specu- stipu- step this JJ., did not participate in the Morrison,

GUSTAFSON of this opinion. consideration concurring: in the result in this case. J., I concur Cohen, grounds result, however, narrower

I would reach same untimely relating reconsider or to vacate and to motions adopt peti- pleadings. Moreover, I would motions to amend Commissioner, T.C. Memo. tioner’s distinction of Alioto congressional emphasizing the difference between 2008-185, occurred here. action there what the difficult and divisive issues I defer discussion of would temporary regulations regarding regulations, retroactive opportunity promulgated comment, notice and an without degree these of deference to which Many Treasury regulations generally entitled. cases to be including appeal, future, now on will decided in the those necessarily present petitioner should not those issues. This relitigating playing on a field bear the burden of unilaterally redesigned by case petitioner party

the adverse after prevailed has at this level. agree JJ., this Gale, Thornton, Marvel,

concurring opinion. concurring only: JJ., in the result Halpern Holmes,

I. Introduction justice”,

Respondent that, asks “in the interests of may our our order and decision so that we reconsider vacate resulting opinion “to correct a substantial error law” Secretary’s issuing circumstance” of the tem- “unusual ostensibly overruling authority porary regulations on days deciding earlier this case.1 which we relied 23 Understandably, arguing petitioner foul, cries first and fore- respondent high most that cannot meet the standards estab- granting vacate, lished this Court for either a motion to Taylor Commissioner, 1987-403, T.C. Memo. or a see 1T and 1The 301.6501(e)-1T, temporary Temporary question Proced. (the & Admin. temporary Regs., regulations) 74 Fed. Reg. are secs. (Sept. 301.6229(c)(2)- motion to reconsider, see Quick Estate majority 110 T.C. finds no reason to argument, resolve the merits of that however, because, it says, deny ground, even if it were to the motions on that respondent might appeal “[b]y neglecting our and, decision temporary regulations time[,] we would not be * * * protecting integrity judicial system of the but merely failing fully complete Majority op. p. our work.” majority proceeds 217. The then to hold that (and prospective are inapplicable both therefore case) they unambiguously to this and, because in conflict Principles judicial with the statute, invalid. restraint against making unnecessarily pronouncements counsel broad fully ground. when a can case resolved on a narrower Cf. Greater New Association, Orleans Broad. Inc. v. United (1999) (discussing States, 527 U.S. constitutional interpretation). by discrediting Moreover, the substance of temporary regulations majority themselves, has petitioner trip Appeals assured might to a Court of that he simply stamp avoid were we the motions denied or to dis- pose grounds particular of them Judge case, to this suggests.2 Cohen majority

Since the has chosen to address the effective date temporary regulations of the validity, and their substantive compelled persuaded by we feel to comment. We are neither majority’s analyses addressing of the any would, before aspect validity, logically of substantive consider first prior question procedural validity of of the regulations. respect question, With to that we believe that petitioner argument. has the better Applicability Temporary Regulations

II. the of majority plain meaning The concludes: “The of the effec- tive/applicability provisions date indicates that the tem- porary regulations apply Majority op. p. do not to this case.” temporary regulations provide: fact, 218. In the “The rules of apply years respect this section to taxable to which the applicable period assessing expire Sep- for tax did not before Memo. 217. ^[2] In its haste to majority 2008-185, “question[s]” but it does not protect petitioner’s attempts integrity stop of the explain judicial to or to resolve those distinguish system Alioto to questions. fully complete Majority its op. p. work, T.C.

228 301.6501(e)- 301.6229(c)(2)-lT(b), 24, 2009.” Secs. tember Reg. Regs., Fed. 74 lT(b), Temporary Admin. & Proced. fol- are as (Sept. dates The relevant 28, lows: year .

Tax 15, Sept. filed . Return 14, Sept. FPAA mailed. 4, Dec. filed . Petition 1, Sept. . Order/decision 24, Sept. . regs. effective date Temp. 6229(a) provided except provides otherwise that, as Section making assess- period for of limitations section, the in the years. partnership Section respect items is ments with 6229(c)(2) years years of a in the case for 3 substitutes making period for income. The omission substantial by years suspended years assessments —whether —is the case becomes mailing our decision until FPAA petition expires) period (or, petition filed, the if no final 6229(d). year Because See sec. for 1 thereafter. decision, our deci- respondent’s order and to vacate motion yet become final. case has not in this sion meaning temporary plain majority “The claims: The provisions effective/applicability indicates regulations’ date apply to this case do not that expired period before applicable of limitations because According p. Majority op. 220. September 24, 2009.” expire period applicable did not respondent, of limitations the tem- September a result of 2009, because, 24, before assessing period applicable tax” regulations, porary “the 6229(c)(2), 6- period which 6-year prescribed section is the year period September 2006, 14, when had not run suspended petition filing then mailed. The FPAA September beyond 6-year period running Sep- majority in our “We concluded counters: 2009. September [which opinion antedates tember 3-year general regulations] limita- 6501(a) period applicable period was the of section tions expired some time assessing it and that had in this case tax op. p. Majority 218. It September adds: 14, 2006.” before provi- meaning effective/applicability plain date of the “The apply temporary regulations do indicates sions op. p. Majority 218. case.” to this temporary regulations

Since the do not define the term “applicable period assessing (by stating for tax” whether the regulation determining itself is to be taken into account in applicable period), meaning of the term is less than plain, ground so it must be construed. What there, then, majority for the language to conclude that the effective date temporary regulations precludes of the application their to expression case? In other words, how can it construe the applicable period assessing “the 3-year for tax” to mean “the period assessing Perhaps majority tax”? has in mind 7805(b), applicable temporary section regulations.3 to the applicable, As so the section reads: 7805(b). Rulings Retroactivity Regulations SEC. —The Sec- or

retary may prescribe extent, any, any if ruling regulation, which relating laws, to the internal revenue shall applied without retroactive 7805(b) [Sec. effect. (pre-1996).] 7805(b) [pre-1996], We have said: “Under section there is a presumption every regulation operate retroactively, will Secretary specifies unless the Corp. otherwise.” UnionBanCal (1999), v. Commissioner, 113 309, T.C. affd. 305 F.3d 976 undoubtedly, Secretary specify Here, did something respect retroactivity (applicability) with to the temporary regulations; “apply viz, the rules therein years respect applicable period taxable to which the assessing expire September tax did not before 24, 2009.” 301.6229(c)(2)-1T(b), 301.6501(e)-1T(b), Secs. Temporary Regs., supra. Perhaps majority Proced. & Admin. believes Secretary regulations drafted the intending retroactivity years to limit for which the taxable 3-year period expired September of limitations had not 24, (unlike majority) meaning but he realizes that that plain changed is less than and now has his mind and is taking advantage clarity pull of his lack of a fast one. issued under the The 1996 Proced. & Admin. 74 Fed. enacted on or after (and enacted before that date. Sec. 1101(a), In Reg. 110 Stat. 1468 majority amendment is effective with since the sec. 49322. 7805(b) authority does not Regs., supra, July statutory provisions was amended of both secs. dispute) 1996. See id. sec. 301.6229(c)(2)-1T,Temporary to limit the retroactive was issued that the 1996 amendment does not respect 6230(k) solely 1101(b), question, Taxpayer under the 110 Stat. 1469. The application Treasury secs. Bill of while sec. Proced. & Admin. 6229(c)(2) that relate to authority Rights 2, 301.6501(e)-1T, Temporary of sec. 7805. T.D. apply Pub. L. parties statutory provisions 6501(e)(1)(A), Regs., supra, tax seem to 104-168, regulations. agree were sec. support that dubious to no evidence course

There is of temporary Secretary the theory. meant the that believe We 6-year period 3-year apply or regulations the if either to September he open 2009, but that 24, on limitations were by supported reading saying is a so. Such inartful in IRS (Nov. 2009), which, in CC-2010-010 Counsel Notice Chief part, states: relevant respect years which apply to taxable regulations temporary

The expire before assessing tax did not for period of limitations applicable the any regulations apply to temporary Accordingly, the 2009. September under sections period limitations case in which the Tax Court docketed regulations, 6501(e)(1)(A), temporary 6229(c)(2) interpreted in the issue, September year at respect to the tax expire with did before added.] [Emphasis entered. has been decision no which final ground Secretary can meant, what then the If that what temporary majority the to conclude that for the there be applicable apply “the case because to this do not expired 3-year period assessing that period tax” was appear possibilities to be September 24, 2009? before (1) Secretary majority has that the believes either the any authority to overrule circumstance under no (which implicates interpretation a statute Supreme Court’s & Telecomms. Supreme in Natl. Cable decision Court’s (2005)), U.S. 967 Servs., 545 X Brand Internet Association retroactively (2) authority Secretary overrule has no (3) (also X), if implicating even Supreme Brand Court law of authorities, under so-called does have those he regu- acknowledge the doctrine, need not we case any majority of those believes If the case. lations in this explain it should things, not, If then itself. then should it (which majority analysis itself date its effective abandon respond- against ground only plausible to rule as “a describes 220) petitioner’s majority op. p. and address motions”, ent’s satisfy respondent argument cannot well-founded granting either Court high established standards simply reconsider or or a motion a motion vacate (which question) for ground its reason its decision finding invalid.

III. The Muddle Deference Energy In Partners, LP v. Commissioner, 568 Bakersfield 2009), affg. (2007), 128 T.C. 207 acknowledged

Ninth Circuit Colony, Inc. v. Commissioner, had rejected the interpretation same proposing IRS is in this case. The IRS may have authority promulgate reinterpretation reasonable of an ambiguous provision code, of the tax interpretation even if its runs con trary Supreme to the “opinion Court’s as to the best reading” of provi sion. Nat’l Cable & Telecomms. Ass’n Servs., v. Brand X Internet 545 U.S. 967, 982-83, 125 S.Ct. (2005); L.Ed.2d 820 accord Swallows Holding, Comm’r, (3d Ltd. F.3d We do not. signal

We think this is a especially that courts should be deferring careful regulations about to new that address problem. this majority old engages Instead, the in a fullblown analysis validity of the substantive of the even concluding they after apply do not because the prospective only. analysis parts; The has three (cid:127) Sidestepping longrunning Treasury issue of whether regulations are entitled to deference under U.S.A., Chevron Inc. v. Natural (1984), Res. Council, 467 U.S. 837 Nat. Def. Association, Dealers Inc. v. United States, 440 U.S. Muffler (1979), merely Skidmore v. Co.,& 323 U.S. 134 Swift (1944); (cid:127) an step assertion that Chevron perhaps one allows, and requires, legislative history determining consideration spoken “whether directly precise has ques- tion at issue”, Chevron, 842-843;

(cid:127) analysis an question of the additional we have to answer after X, Supreme Brand 545 U.S. at 984: Did Court hold Colony interpretation that key phrase its of the “omits gross from properly income an amount includible therein” is only permissible reading” “the of the statute? agree majority

We with the that it is wise for us aas trial court to avoid the give issue of what level of deference to regulation. Holding, See Swallows Ltd. v. Commissioner, 126 (2006) (Holmes, T.C. 96, dissenting) (listing J., cir- conflicts), (3d cuit vacated and remanded 2008) (holding regulations deference). entitled to Chevron particularly We are majority’s possible cautious about the Rodriguez Quijas reliance on Express, de v. Shearson/Am. op. majority 14, as an note see Inc., 490 U.S. regulations. invalidating We justification for additional agree lower advised has Court “the that of course * * * direct has precedent of this a ‘if courts rejected reasons yet appears on to rest application case, ain ** * courts] [lower decisions, line other in some majority directly controls”. which the case follow should alluded Circuit Ninth rule, which op. But this 14. note our is not here. It at issue what is not Bakersfield, into reaching conclu- Secretary, a different iswho Court, but the amount gross an phrase income “omits sion about regulation validity properly therein”. includible prior entirely depend whether cannot X Brand after Cir- regulation. Tenth theAs a later conflicts caselaw tentatively an resolves a court recently “When reasoned: cuit empowered to agency is ambiguity statute until an lawof the force carries a resolution administer, such interpretation kind agency definitive issues Hernandez- ordinarily deference.” Chevron warrant would 2008) (10th Cir. 1237, Carlson, 547 F.3d v. Carrera (upholding contrary Supreme decision regulation Z). reasonably assert, simply can’t applying We Brand after X, Brand now, after and, quarter-century Chevron after meaning of traditionally determined have “courts that an mean majority op. if note statutes,” definitively resolve power regulatory cannot agency statutory language.4 ambiguous legislative his- problems to use of how think that

We X on analysis Brand effect of and the tory in a Chevron much are both Supreme cases reinterpreting Court tax old majority on. lets complicated than more

A. Step quite simple. Determine one: seems test The Chevron ques- precise directly spoken Congress has “whether Res. USA, v. Natural Inc. Chevron issue.” tion Def. Congress Step stop. If two: so, If at 842. Council, 467 U.S. it has said question ifor what directly spoken has not that we take case to test 4Hernandez-Carrera assert the Brand Xs contrary position no view effect Carlson, on the question another, on Supreme 547 F.3d majority in one Court precedent. op. footnote, note 14. majority But we op. ought note seems to to simply while be the first seeming state ambiguous, is then agency’s determine if the interpretation permissible is “based on a construction of the statute.” Id. at 843. simplicity

But Chevron's ends there.5 We focus legislative first on the history use in Chevron step one: Chevron tells lower courts to use the “traditional statutory tools of construction” to determine if has spoken precise on the issue. Id. at 843 n.9. But how does Congress “speak”? only Is it in the language enacted and its context within a statute, or does it include committee reports, speeches, floor staff-prepared material, postenactment commentary Congresses? in later And if employ courts are directed to history, when can they only do if ambiguous; the text only if it so— shows congressional clearly contrary intent plain meaning to the the text; or whenever it helpful would be figuring out the meaning, maybe purpose, of the act?

These are far-from-settled issues. As other courts have noted, the Court itself has sent what seem to be signals: mixed

(cid:127) No step consideration at Alaska, one—Coeur Inc. v. Se. Alaska Conservation Council, 557 U.S. _, _, 129 S. Ct. (2009) (implying statutory text is how Con gress speaks directly issue); on an Passenger Natl. R.R. Corp. Corp., Boston (1992) Me.& U.S. (comparing agency’s only construction statutory step text at one); Corp. K Mart (1988) v. Cartier, Inc., (“If agency regulation is not in plain conflict with the lan guage of reviewing the statute, a give court must deference agency’s interpretation (citing the statute.” United Boyle, v. States 469 U.S. (1985))); 241, 246 n.4 (cid:127) only consideration if the text is unclear —Zuni Pub. Sch. Dist. Dept. No. v. (2007) (“if 89 of Educ., 550 81, U.S. 93 of intent is unambiguously clear and expressed ments”, “confusing L. Rev. cial Beermann, “End Can Geo. L.J. 5Commentators Treasury’s Deference, Agency and Should 76 Geo. 187, Court 1083, mess”). ^[221] (Lack of) Wash. Rev. of Treatment ^[1157] Be the Failed Chevron (2006) (caselaw have not Overruled”, (2008) (caselaw L. Commitment, Compliance with Administrative been kind Agency 1153, 42 Conn. L. Rev. in “chaos”); Eskridge Baer, ^[1200] and Force Experiment “a to Statutory judges. See, mess”); (2008) Interpretations Hickman, (Hickman, 779, Now: How Chevron Has Law”, e.g., ^[808] & 66 Ohio St. L.J. Sunstein, Procedure (2010) “A Problem “A Problem of from Chevron to “The Continuum of Deference: (“confusing”); “Chevron Act of Rulemaking Remedy: Remedy”) mess”); Failed Step Zero”, Murphy, “Judi ^[1022] Hamdan”, Responding (“a (2005) (a Require Why 92 Va. ^[96] It

234 of our end be the language issue, that would statutory at (2002) 132 U.S. Rucker, 535 Dept. analysis.”); v. HUD inappropriate history when (“reference legislative is Air unambiguous”); United v. Sutton is the statute text (1999) (declining to consider 471, 482 U.S. Lines, Inc., 527 clear); history legislative text was when step tool— traditional history as a one (cid:127) at legislative used Corp., 529 U.S. Tobacco & Williamson v. Brown FDA U.S. BethEnergy Mines, Inc., 501 (2000); Pauley v. Corp. LTV v. (1991); Guar. Pension 680, 697-699 Benefit 633, 649-650 Corp., 496 U.S. it difficult make of cases number a fair are even There history legislative consulting is whether to discern step step two.6 one or difficulty, acknowledge but discerns majority does way history using legislative in some toward trend a recent less matter is op. think the majority 18. We note step one, in court breakdown: circuit the current Here’s clear. n.2 45, 50 F.3d Chavez, 394 (cid:127) v. First Circuit — Perez-Olivo * * * “merely 2005) to confirm

(1st step (okay one in Cir. ambiguity”); [statutory] v. Succar not resolve it does 2005) one); (1st step (okay in Cir. 8, 22-23 F.3d 394 Ashcroft, Morgan Co., 498 & (cid:127) Chase v. JP Circuit — Cohen Second rely 2007) (2d (noting reluctance Cir. 111, 122-124 F.3d it); doing history step one, but then legislative in F.3d Geiser, 527 (cid:127) v. States Third Circuit — United one); history step 2008) (excludes (3d legislative in Cir. Res., v. United Compare Inc. (cid:127) Dominion Fourth Circuit — 2000) one), (4th (okay step Cir. 359, States, 219 F.3d Corp. FDA, 153 F.3d Tobacco & Williamson Brown 1998) (same), affd. 155, 1398, U.S.P.Q.2d Shalala, Granutec, Inc. v. decision) two); (only step 1998) (unpublished necessarily v. Natural of the 474 U.S. tent guage does not foreclose steps, 118, 127-129 As but “without language, numerous commentators Res. in a consistent part (2d history Def. policies, Cir. (1985) Congress.”). attaching Council, Inc., 2004) or the (“our direction. (describing agency’s primacy” purpose legislative review have 470 U.S. generally See, is limited concluded, view of and structure in step the problem history e.g., Coke one), the statute. United States vacated (1985) application Long question the statute Act”); considering legislative We should defer (“we Island Care at ^[546] v. Riverside Chem. whether it U.S. conclude of Chevron clearly ^[1147] Manufacturers that the Bayview Home, Ltd., reveal reasonable, has developed history a contrary statutory Homes, Inc., view Association in both unless light lan in

235 (cid:127) Fifth Circuit — Sierra Club v. U.S. FWS, 245 F.3d 434, (5th 2001) 443 n.51 (okay step Cir. (citing in one INS v. (1987))); Cardoza-Fonseca, 480 U.S. 421, 449 (cid:127) Compare Sixth City Johnson Med. Ctr. v. Circuit — (6th 1993) States, United (okay 999 F.2d 973, step 976 Cir. in clear), one even if statute is Cmty. with Alliance Media (6th 2008) (consider v. FCC, F.3d 763, 529 778 step Cir. in two); (cid:127) Compare Seventh Hosps. Univ. Chi. United v. Circuit — (7th 2008)

States, 545 F.3d (refusing 564, 569 Cir. to consider legislative history finding unambiguous), after statute with (7th 2008) (“we Khan v. States, United 549, 548 F.3d 556 Cir. * * * proceed to step. Chevron’s step, second In this we can take into account legislative extrinsic sources such as his tory.”); (cid:127) Eighth Compare Ark. AFL-CIO v. 11 FCC, F.3d Circuit — (8th 1993) (allows Cir. history step in only

one, but if intent plain clear from the statute’s language), Mayo Found. Med. & Educ. Research v. (8th (consid 2009) States, United 568 675, F.3d 681-682 Cir. ering legislative history step two); in (cid:127) Compare Ninth Council, Natural Res. Inc. Circuit — Def. (9th 2008) v. EPA, 526 591, (considering F.3d Cir. legislative history one), step in with Schneider v. Chertoff, (9th 2006) (courts 944, 450 F.3d 955 n.15 Cir. cannot con legislative history one); step sider in

(cid:127) Tenth Circuit — Anderson v. U.S. DOL, 422 F.3d 1155, (10th 2005) (okay step one); Cir. Synfuel Corp. Cliffs (10th 2002) v. Norton, 291 (same); 1250, F.3d Cir. Utah 1995) Babbitt, v. (same); 1145, 53 F.3d Cir. (cid:127) Eleventh Ryan, Servs., Circuit — Guar. Fin. Inc. v. 1991) (use F.2d step 1003-1004 Cir. after one finding ambiguous); statute (cid:127) D.C. Circuit — Sierra Club EPA, v. F.3d

(D.C. 2008) (legislative history okay Cir. step even one ambiguity); create Am. Bankers Association Natl. Credit (D.C. 2001) Admin., Union (same); F.3d Cir. Natural Council, Res. Inc. v. Browner, 57 F.3d Def. (D.C. 1995) (same); 1126-1127

(cid:127) Federal Circuit — Amber-Messick States, United (Fed. 2007) (used steps); in both 414 F.3d States, Associates, LP United Star-Glo one). 2005) (used step (Fed. in

B. one it’s not area —and problem in fundamental possibly our own—is on solve can court aas trial that we statutory of tool history “traditional legislative ais that language aof commonly the when used interpretation” most language of point. the But if ambiguous on some is statute ambi- that read ambiguous, tells us to Chevron is a statute resulting gap authority fill delegation to guity of as a Colony’s way, resort regulation. at this Looked awith gap Sec- place that the a history shows first legislative in the Supreme so, If then ipso to fill. retary facto allowed is language is that said “it cannot sentence Court’s Colony, unambiguous”, Inc. legislative his- only look at own

triggered that Court’s regula- Secretary authority issue tory, of but us. have before tion we using legislative his- many way decisions to read

One agency on check another step is tory of Chevron one ambiguity in finding way lack a discretion —another area becomes in this confusion congressional But the intent. pre- analysis whether in the one adds muddle when analysis history legislative is an precedent uses that X Brand by made precludes choice X, Brand that, under pas- Pay particular regulation. attention agency in a p. majority op. quotes, majority sage X that from Brand trumps a statute judicial prior construction “A 221: court’s def- Chevron entitled agency otherwise construction an its construc- holds that only prior decision if court erence unambiguous the statute terms from tion follows X, agency Brand discretion.” room for leaves no thus added). (emphasis U.S. at language emphasized is a possible that at least

It prece- pre-Brand distinguish X courts to lower direction history legislative from those resorted dents distinguishing way analysis as a plain-language relied regulatory own their precedents allow between suggest in this It would that do not. supersession those case the history Court’s Colony use of trump agency would not construction. (E.D. Supp.

Consider AARP v. EEOC, 390 F. 2d 437 Penn. (3d grounds affd. on other 489 F.3d 558 In an earlier case, the Third Age Circuit held that the Discrimi- Employment nation treating Act banned retirees who were eligible differently for Medicare from those who were not in providing County health benefits. See Erie Retirees Associa- (3d County 2000). tion v. Erie, 220 F.3d 193 Cir. The Court of carefully legislative history reviewed the to reach its conclu- sion. See id. at 205-208. popped contrary

Then regulation out a from the EEOC. The judge District Court regulation-vs.-precedent with faced question reasoned that X

Brand. clarified the Chevron standard In applying itself. Chevron’s first step regulation at X, issue in Brand Court did not ask merely Congress whether “spoken had precise question issue,” at * * * Chevron, 467 U.S. at but rather “whether plain the statute’s ‘directly terms precise question address X, issue.’” at Brand 125 S.Ct. * * * [AARP EEOC, Supp. F. 445.] 2d at analyzed pre-regulation District then prece point, dent on arguments and concluded that “Like its * * * legislative history, [Third Circuit’s] appeals gen congressional eral balancing intent competing and the of policy unnecessary considerations would seem if its decision only permissible were the construction of the statute.” Id. at e.g., Mayo n.10; also, see Found. Med. Educ. & (D. Research v. Supp. States, United 503 F. 2d 2007) (drawing Minn. light X), similar distinction in of Brand revd. certainly possible AAlRP is not the last word this sub- ject. may There using legisla- well be a distinction between history supply meaning particular tive phrase a of word or using legislative history purpose to discern the goal Congress placed the statute in which that word or phrase so particular as to be able to best construe it in Judge case. taxonomy Easterbrook, in his landmark on uses legislative history, In Sinclair, re 870 F.2d 1989), suggested legislative history may be used as dictionary Congress’s objective of sorts—to determine (“‘we subjective rather than intent. Id. at ask, not what in mean would those words meant, what but this man using cir- English, them in speaker of a normal mouth (quoting Holmes, they used.’” were in which cumstances Interpretation”, L. Rev. Legal 12 Harv. Theory of “The history legislative (1899))). light, should this Seen in meaning”, “original rather the statute’s to discover used congressman. at 1343 Id. of the individual intent than the (“An revealing would poll opinion the wishes rules”). legal translate may step history one way, in this

Used Colony, Rereading Inc. v. Commis- problems. present fewer mind distinction sioner, 357 U.S. legisla- using Court was might conclude one to lead ambiguous reading statu- history best discern the tive specific problems drafters its light language tory Colony holding of so, the 33-35. If id. at mind. See had in par- necessarily aof “omission means “omission” not that reading until only the best that’s item”, but ticular ambiguity of clarifying regulation the admitted unless properly includible gross an amount income “omits validly issued. is therein” employed this explicitly considered

New courts have necessarily advocate would possible distinction, and we simply that draw is we would The conclusion here. its use quite X are precedents Brand reexamining after the rules capability beyond it believe We don’t uncertain. necessary sub- with the issues such to address Tax Court try. majority tlety, even doesn’t but firmer prefer onto to climb try we either, since We won’t ground. Regulations Temporary Validity Procedural

IV. concur are able ground, and the reason firmer That proce- regulations colleagues’ is that these result, in our Act Procedure durally the Administrative under invalid (West Supp. & 551-559, 701-706 secs. (APA), 5 U.S.C.A. by & Affordable Protection Patient as amended Stat. 111-148, sec. L. Act, Pub. Care Secretary. rulemaking governs even which contemplated publish rules to agencies requires The APA content their public comments to make allow 553(b) (c) (2006). effect. 5 U.S.C. sec. To ensure meas- rulemaking, ured, agency informed required is then take those comments into promulgating consideration before 553(c). publication a final rule. Id. sec. The of the rule must days occur “not less than 30 before its effective date”. Id. sec. 553(d). agency provide The must legal also “reference to the authority under proposed”. which the rule is Id. sec. 553(b)(2). requirements And may these minimum be modified superseded only Congress if expressly. does so Id. sec. 559. regulations,

In the case of Secretary these stated his legal authority 6501(e) regulation the rules —the section under issued regula- section 7805 and the section 6229 6230(k). tion was issued under sections 7805 and The Sec- retary publish days didn’t before their respondent effective argues date, but majority —and essentially Secretary’s power concedes—that to make 7805(b) retroactive rules (pre-1996) under applies. section Secretary But the did not publishing seek comments before temporary regulations, these good nor did he claim cause for skipping step.7

Respondent argues first the APA itself excuses his put failure to through notice and comment. 553(b), Administrative Act, Procedure 5 U.S.C. section provides:

this subsection does not apply— (A) interpretative rules, general policy, statements or rules of * * *

agency organization, procedure, practice or provides The APA exemptions prepublication similar from the 553(d). requirement. Id. sec.

Respondent rely any does argument not that these regulations are policy mere of statements or rules of Treas- ury’s organization, procedure, practice. regulations or For the they valid, to be then, interpretive we must find are rules, accept respondent’s we or argument have alternative that from these Revenue Manual 5to U.S.C. in (Sept. ance. the When Accordingly, regulations: Treasury regulation 2009). regulations 553(b) Respondent pt. good and “‘These 32.1.5.4.7.5.1(4) (c)”\ cause or the related regulations This concedes is drafters find found thin (Aug. in his for a Treasury justification dispensing necessary reply good 2004) See T.D. Decision. cause to brief that he might with notice and directs them to include the provide skip or might taxpayers is notice and not not public relying work, with immediate 74 Fed. comment comment, on this but following it is Reg. exception. pursuant Internal absent guid text requirement notice-and-comment the waived APA’s regulations. temporary tax Exception Interpretive

A. The regulations, containing without the Treasury Decision The been has exception,8 “It also states: claiming particular * * * 553(b) does of that section determined [APA] Reg. 49321, Fed. 9466, 74 regulations.” T.D. apply these 2009). argues is because Respondent this (Sept. 28, (as legis- opposed to interpretive rules regulations are these phrase clarifying merely rules), substantive lative existing changing law. gross without income” from “omitted interpre- regulations are argues that these Respondent also grant general pursuant they issued were tive because specific under a than authority rather in section of regula- Secretary directing issue authority grant of specified content. tion regula- “interpretive” those as often labels Tax Court The authority general Secretary under issues tions regulations, “legislative” 7805(a), in contrast section regulations specialists those mean tax other which Congress.9 authority specific a more under issued something in adminis- different “interpretive” means But Regulations: A Berg, to Tax Deference “Judicial law. trative Cable, Light Swallows of National Reconsideration 481, 486- Developments”, Law. 61 Tax Holding, Other (“the draws (2008) Act Procedure Administrative (apa) differently regulations other between the line omitted)). (fn. law, In law].” administrative [than ref. tax regulations “advise “interpretive” a label reserved is agency’s statutes construction public Dept, Justice, Clark, U.S. it administers.” rules which was the tax-law two sources Temporary erns partnerships, largely pation Swallows Berg, the statutory provisions. the APA Even by the Secretary’s “Judicial been Treasury Holding, Proced. doesn’t require sense. limited Adoption authority Deference bright-line Decision Though and Other meaning & Admin. attempt —section Temporary does T.D. rule, however, to claim the Tax Developments”, explicit Regs. parties say ^[7805] issued Regulations: thafc assertion Tax refer regulation majority solely Fed. interpretive Regulations”, to the two 6230(k). 61 Tax Reg. applicable under Reconsideration A op. applicable Law. interpretive-rule note section 7805. exception, 44 Tax Law. regulation contain a tax-law 2. This here 485-486 (Sept. but definition regulation “reasonable interpretation” isn’t section tandem, it makes little Light exception. Asimow, (2008). clearly interpretive ^[358] of interpretive of National 301.6229(c)(2)-1T, section (1991); see “Public Partici issued under Perhaps difference Cable, gov this also has

241 Attorney General’s Manual on the Administrative Procedure Act 39 available at http://www.law.fsu.edu/library/ definitions).10 (providing admin/1947cover.html working Sub legislative or stantive rules, on the other hand, are “rules, * * * organizational other than procedural issued an agency pursuant statutory authority implement and which * * the statute *. Such rules have the force and effect of law.” Id.; see also Batterton v. Francis, 432 425 n.9 (1977) (and cited). cases legislative In other words, rules are binding. Chrysler those that are Corp. v. Brown, 441 U.S. (1979); 301-302 & n.31 “Coloring Hickman, Outside the (Lack Examining of) Treasury’s Lines: Compliance With Administrative Rulemaking Procedure Act Requirements”, 82 (2007) Notre Dame L. Rev. 1727, (Hickman, “Coloring Lines”); Outside the “Agency Merrill & Watts, Rules With the Original Force of Law: The Convention”, 116 Harv. L. Rev. 467, 476-477 applied

Courts have distinguish various tests to between legislative interpretive rules, but the D.C. Circuit’s test Mining Cong. in Am. Safety v. Mine & Health Admin., 995 (D.C. F.2d 1106 Cir. has become the “dominant standard”. “Coloring Hickman, supra Outside the Lines”, 1766; see also 1 Pierce, Administrative Law Treatise, sec. (5th 2010) 6.4, at 454 (citing adoption ed. of the test in six including Circuits).11 circuits the Tenth and D.C. Am. Mining Cong. Safety v. Mine & Health Admin., 995 F.2d at relying on both Attorney caselaw and the General’s Manual, held that a rule is given if has agency authority to issue rules with the force law and agency intended authority. to use that The court listed ways agency four could legisla- show it intended to issue tive rules:

Hoctor v. Hosp., lachian States ual as “the Government’s own most authoritative (D.C. F.3d 775 have useful as near-contemporaneous 10Though the See Warder v. 1995); repeatedly Cir. 488 U.S. (10th USDA, 1998); N.Y. Low-Level City Cir. given great weight”, Aulenback, Inc. v. Fed. Attorney Shalala, Employees’ 1998); (1988) (Scalia, Radioactive General’s Truckers Ret. F.3d 73 constructions of the Cir. Sys. Manual citing examples). United Waste J., Highway 1996); (1st concurring) SEC, Commn. v. Cir. Chen Zhou Safety Admin., 1998); interpretation F.3d 7 source of (referring v. Fed. APA. See Bowen v. Mission O’Leary, (2d Chai F.3d 156 Highway binding Group Kan., 93 F.3d Carroll, the APA Attorney law, its (D.C. Admin., 139 48 F.3d Georgetown Cir. Inc. v. * * ^[*] General’s (3d definitions 1997); Cir. Riley, which we F.3d Appa 1996); Man Univ. adequate an be not would the rule there of (1) the absence in whether confer to agency action other or action for enforcement

legislative basis (2) agency has the duties, whether of performance the or ensure benefits (3) the whether Regulations, of Federal the in Code rule the published (4) authority, or legislative general its invoked explicitly has agency If the answer legislative rule. prior effectively a amends the rule whether not an legislative, a affirmative, we have questions is any of these to 1112.] [Id. at interpretive rule. developed over have finding agency intent ways of four These rejected the Circuit D.C. subsequent in case A time. merely “snippet a publication the CFR calling in way, second rules rejecting that a claim agency intent”, and of of evidence Ins. Health publication alone.12 legislative based were (D.C. 412, 423 F.3d Shalala, 23 v. Am., Inc. Association of a whether into 1994). look a added Circuit The Ninth Cir. Thomp- Erringer v. agency.” outside “tribunals rule binds 2004) Hemp (9th (citing Indus. Cir. 625, 631 F.3d son, 371 F.3d Admin., 333 Drug v. Association Enforcement upon 2003)). a cri- (9th relied have cases Other Cir. Mining if applied in American not but —that discussed terion legislative rule, the interpreting a rule agency a issues an open-ended vague or too legislative rule cannot underlying Oregon, e.g., v. interpretation. Gonzales See, support the to 546 U.S. accepted, universally Mining’s, test is Though American accepted precedents well reconciles case See, here. appellate courts potential three two of least 29, 34-35 F.3d FCC, v. e.g., Association Telecomm. U.S. Riley, Group Kan., v. 2005); Inc. (D.C. Mission Cir. 1998).13 (10th Cir. Administrative Drake the court effect” tion that a similar '“has the T.C. Memo. issued without law, ury, its conclusions its But Howard law-making regulations”), One 917 F.2d see in Eighth Honeywell, scholar id. force of the CFR didn’t want approach (“Congress 1998-318, interpretive rule authority. without Law specific Circuit noted that law, E. (and Inc., Treatise, Clendenen, appeared looking further addressed authority considered recognized this discourage Id. creates new Eighth it at 607-608. F.2d 603 sec. merely sources). was common Inc. 6.4, do give then-existing Circuit not have agency’s reminds at 453 characterization (8th law them practice phrase Similarly, Cir. may (5th imposes legal intent and parties the force was broader some have because law — ed. effect, Eighth Circuit 2010). Nw. new In a brief 207 F.3d held agencies namely, of existing interpretive it is whether id. Natl. rights law, though than at 1075 beneficial to Section Bank v. discussion, or duties.’” duties while relied on publish the “force versus (citing agency 402(e)(3), together with it to did refer any it the familiar Dept. of appeared had public. 1 rule with law”), legislative rule 2000), affg. to them delegation the Treas Secretary rules distinc Pierce, “legal adopt Secretary 1. Does the Authority Have To Issue Rules With the Force Law? Mining

American asks first particular agency whether a authority has the having issue rules the force of law. The Secretary Congress delegated authority to him in var does— ious Code sections to regulations. create rules and Sec 7805(a) tion contains the broadest of delegations, these allowing promulgation of “all regulations needful rules and (“[T]his the enforcement of this title”. title” in section 7805(a) Code.) refers the entire Internal regu Revenue Such carry lations the force of law, imposes because pen the Code l failing alties for to 6662(b); follow them. Sec. see also Merril supra & Watts, at 477.

And it is regulations also obvious that in this case, if valid, respondent would bind petitioner. both and We have held that both regulations and final have the force give law, and we both weight. the same Schaefer Commissioner, 105 T.C. 227, 229 Both and regulations give final penalties. rise to 6662(b); Sec. sec. 1.6662-3(b)(2), Regs.; Income Tax “Coloring Hickman, Out- side supra the Lines”, at general- 1738-1739. And both and specific-authority regulations give penalties, also rise to so Secretary’s regulations issuance of these under section 7805 makes no difference. “Coloring Hickman, Outside the supra Lines”, (“Regulations at 1762-1763 that bind both the government regulated parties and legislative, whether promulgated pursuant specific general statutory authority.” (citing Guernsey Shalala Hosp., Meml. 514 sources)). and several other

We would therefore 7805(a) conclude that both section specific the various more delegate Code sections authority Secretary. Secretary

2. Did Regulations Intend To Issue With the Force Law? part

The second Mining the American test asks whether agency regulations intended the to have the force of law. go If through we Mining’s American specific ways list of the agency an can show it intends rule to have the law, force of present find that two are here. The Secretary’s first is general invocation of authority his regulations, to issue regula- containing the Treasury Decision plainly noted regulations are Respondent claims themselves. tions Secretary’s source cited APA, but interpretive under promul- sentiment —he quite authority match doesn’t section explicitly under gated these one section section both under the other alone sec- these under regulations issued knowing 6230(k), carry of law. force tions (or changed effectively these is that The second Mining existing American change) law. tried least legislative rule.” prior amending “a phrased factor unanswered question left another leads This require an X majority: Brand Does by the unaddressed legislative rather ain embodied interpretation agency’s judicial existing trump an interpretive rule than interpretation can agency assuming an interpretation? Even Hernandez-Carrera Court’s, see Supreme displace the answer think we F.3d Carlson, 547 binding is otherwise there part when yes, because be must asserting a con- interpretation agency precedent, an judicial change Cer- law.14 in the ato interpretation trary amounts Bakersfield, recognized in tainly, Ninth Circuit as the Colony such as decision Court a 768, 778, F.3d at something changes. until least at courts lower binds decision, final otherwise our vacate us to Respondent wants implying do without logically ask us not he could which have rules new Secretary these that intended that law. force of Mining American puzzle out. this need we don’t But questions affirma- any is these the answer “If tells us: interpretive Am. rule.” legislative, not an have tive, reasoning this our if even 1112. So Mining, wrong, true it remains agency finding intent way second authority legislative explicitly his Secretary invoked that the Congress entrusted regulations promulgating these legislative. power. them makes That that him with judicial Natl. to Chevron that years The Brand if an Cable interpretation earlier, agency deference. & Telecomms. X framework wants Court said Christensen v. against Association trump judicial also “an interpretive agency suggests Harris v. Brand precedent, it has to construction rules —those this County, X Internet result. otherwise In Brand lacking Servs., issue the force entitled X, legislative rules. U.S. to Chevron law—aren't seems It weighed (2005). deference”. to follow entitled prior Just although Thus, may “interpretive” according to usage the common in the they sense that set respondent’s forth interpretation the underlying statutes, “interpretive” according to usage tax-law in the sense that one of them was issued under section they 7805 alone, “interpretive” are not exception under the APA’s to the notice- requirements and-comment they because are meant to bind public, Secretary which the power has the to do.15 7805(e) B. Section and the APA

Though Secretary subject did notice and comment, he did proposed issue regula- identical tions and a Proposed Notice of Rulemaking (NPRM) at the same time as the regulations, required by sec- 7805(e)(1). tion This section Secretary, directs the when issuing temporary regulations, to issue a simultaneous NPRM 3-year expiration sets a date for all regula- tions. The history of that respondent says, section, shows that Secretary’s aware of procedures issuing temporary regulations that were effective imme- diately but without notice says and comment.16 He that Con- gress implicitly okayed process by limiting the tem- porary regulations years to 3 ensuring the Sec- retary issued an NPRM at the though same time. Even justifies violates the he arguing it APA, section 7805(e) conflicts with the APA, and in the battle of the stat- specific utes, a trumps general statute one. See Bulova Watch Co. v. United States, 365 U.S. 758 agree. We do not First we nothing note that in the of text suggests the statute that the require- notice-and-comment ment has been waived, legislative nor does history the state legislative that it has. The history does note that the Sec- ABA, Memo. ulation whelming weight Several lations rules courts were Treasury regulations, though ^[16] Prior 15Nearly supra (2004);Asimow, and are Section of writers without commentators law had beginning exempt years ago, Taxation, “Report ever (relying of curtailing allowed precedent finalizing from to notice a suggest temporary at 363-364. the APA’s this Wing 25-year-old from later deemed to have the that or practice. pattern of the Task v. repealing regulations Commissioner, requirements. years temporary regulations of See them. Hickman, counsels us not to followit. Force on Secretary’s to actually force of linger In See, 81 T.C. context, “A Judicial for a e.g., Fleming aiming growing law, Problem of very this was still for substantiation Deference”, to reliance on long restrict the qualify Remedy,” v. time, dictum, we Law. 57 Tax temporary regu mentioned “interpretative” Treasury’s supra and the over standards). point at 1209; that T.C. that reg imme- regulations with commonly

retary issued Congress meant hardly suggests alone this effect, but diate regulations.17 all comment and notice to waive APA, and history mention even legislative does The provide that itself and APA both less inferred —much be cannot terms exceptions the APA’s history: legislative in the absence an inferred approach to maintaining a uniform importance Recognizing *** closely examined have action of administrative judicial review *** [Congress * has ** uniformity. that exception claim held to shall subsequent legislation “no that APA specified] in that extent except to the Act provisions modify the supersede * * * APA was 559. § 5 USC expressly.” so do legislation shall such * * * diversity. variation full uniformity to a field bring meant (1999).] 150, 154 — 155 Zurko, U.S. v. [Dickinson 7805(e) spe- him makes may section think Respondent clear it rulemaking, makes but APA it comes when cial not. he is through participate opportunity to public Giving legit- giving important comment notice Corp., U.S. Mead v. imacy. States United County, U.S. Harris (2001); Christensen also 316; see at Corp. Brown, 441 Chrysler (2000); Treasury’s Remedy: Responding to “A Problem Hickman, (Lack Act Procedure of) Compliance Administrative with Rev. L. Wash. Requirements”, 76 Rulemaking Geo. (“The Remedy”) (Hickman, (2008) Problem APA “A rulemaking procedures reflect notice-and-comment its government facilitating simultaneously goals of congressional through public rights protecting rulemaking individual ideal, (“While than perhaps less id. participation.”); judicial coupled process, with notice-and-comment APA aas process, serves agency’s adherence review Treasury process when proxy for the second-best public agency to bind any seeks other or having they purport to the statutes effect force interpret.”). lations porary Though respondent’s regulations would already issuing argument, fit a simultaneous into an normally exception be NPRM expected may have APA, especially intended emergency seeking post-effective good-cause considering apply only comments situations. to need consistent for tem regu Giving public only a chance to making comment after regulations comply effective does not with the See, APA. e.g., Chrysler Corp. v. Brown, 441 U.S. at 315; Paulsen v. (9th 2005) ("It

Daniels, 413 F.3d 999, 1005 Cir. is antithetical to the purpose structure and agency the APA for an implement a rule later.”). first, and then seek comment And courts regulations invalidate even final agency when an does e.g., this.18 See, Corp. U.S. Steel v. U.S. EPA, 595 F.2d (5th 1979). Cir. Express But see Fed. Corp. v. (D.C. Mineta, 373 Cir. regulations Because these were issued under sections

6230(k) they and/or binding as a matter of administrative law. We would therefore invalidate procedural them grounds comply for failure to with the APA.

A court entirely should ignore not regula- invalidated give tions —but we cannot binding them Chrysler force.19 See Corp. v. Brown, 441 (“regulations subject at 313 to the APA cannot be afforded the ‘force and effect of law’ if not promulgated pursuant statutory procedural minimum Act”); found in that Hickman, Remedy”, “A supra Problem of at 1197 (suggesting n.199 regulations may invalidated similar proposed regulations, force to which set forth the agency’s courts). views but do not Respondent’s bind problem here already is that we have position considered his in other rejected cases, and we have it. Energy Partners, Bakersfield LP v. (2007); Commissioner, 128 T.C. 207 Intermountain Ins. Vail, Serv. LLC v. Commissioner, T.C. Memo. 2009-195. He needs to have new binding that do have force. point. regulations in revg. T.C. Memo. 1998-92, but in these cases APA serted as we did in UnionBanCal 19If Fed. undergoing Respondent 2002), affg. had successfirlly respondent Reg. good-cause these notice and comment, see does 113 T.C. 309 (Nov. exception cases. T.D. point Corp. 1984) some (1999); the APA’s notice-and-comment requirement when he issued the (UnionBanCal). cases where temporary promulgated Kikalos v. UnionBanCal Fed. Reg. interpretive rules, we would reach this same Commissioner, compliance Commissioner, 305 F.3d 976 Corp. T.C. at 317 n.8, that (Dec. wasn’t 190 F.3d 1987) challenged. were relied upon despite (Kikalos); We also note, Secretary T.D. 7991, as compelling reason no see therefore don’t, and

These reason, we For in Intermountain. decision our vacate majority’s result. concur Summitt, D. Petitioners L. Jennifer

Mark Revenue, of Internal Commissioner Respondent May 2010. Filed 13893-07.

Docket No.

Case Details

Case Name: Intermountain Insurance Service of Vail, Ltd. Liability Co. v. Commissioner

Court Name: United States Tax Court

Date Published: May 6, 2010

Citation: 2010 U.S. Tax Ct. LEXIS 14

Docket Number: Docket 25868-06

Court Abbreviation: Tax Ct.