Tualatin Valley Builders Supply, Inc. v. United States

Clause, consider we don’t and Immunities argument under alternative plaintiffs’ of the Four- Equal Protection Clause Id. at Amendment.

teenth

1156(after concluding statute violated the immunities clause the Court

privileges argu- equal protection

did not consider Friedman, *,

ment); n. 487 U.S. at 63 (same).

IV. Conclusion standing because she suf-

Restrepo injury, which is caused section

fers an

680A.300, a favorable decision and which redresses.

invalidating provision claims are not moot because

Restrepo’s effects on her remain

section 680A.300’s 680A.300 vio-

legally significant. Section Privileges and Immunities Clause

lates li- against Nevada’s discrimination

because closely agents is not

censed nonresident for that

related to a substantial reason beyond the mere fact

discrimination

they are citizens of other states. REMANDED for fur-

AFFIRMED and injunction on the proceedings

ther stayed pending appeal.

TUALATIN VALLEY BUILDERS

SUPPLY, INC., Plaintiff-

Appellant, America,

UNITED STATES

Defendant-Appellee.

No. 05-36173. Appeals, States Court of

United

Ninth Circuit.

Argued and Submitted Dec. April

Filed Sellers, K. Schwabe Williamson &

Marc Portland, OR, P.C., plain- Wyatt, tiff-appellant. Lambert, A. I. Pincus and Samuel

David Justice, Division, Department Tax DC, defendant-appel- Washington, for lee. F.

Before: DIARMUID GRABER, O’SCANNLAIN, P. SUSAN CALLAHAN, M. and CONSUELO Judges. Circuit GRABER; Specia; Opinion Judge by Judge O’SCANNLAIN. Concurrence GRABER, Judge: Circuit is whether question main before us (“IRS”) ex- the Internal Revenue Service pro- statutory authority when ceeded its 2002-40.1 mulgated Revenue the IRS acted within its hold We Plaintiff Tualatin Val- authority. Because Inc., failed to meet ley Supply, Builders Procedure’s deadline the Revenue five- claiming temporary benefit carryback, we af- year summary grant of firm the district court’s to the United States. judgment PROCEDURAL FACTUAL AND

BACKGROUND dispute. are not The material facts Oregon corporation Plaintiff is dissolved Chapter bankrupt- completed that has C.F.R.) (d)(2)(i)(b). (26 "Reve- Reg. 601.601 Procedure is a "statement of 1. A Revenue rights usually or duties of reflect the contents procedure that affects nue Procedures public documents, but, members of the management or other where internal related statutes or infor- under the Code and they also to an- appropriate, are that, necessarily although not affect- mation guid- practices procedures for nounce public, ing rights should and duties (d)(2)(vi). public.” 601.601 ance Id. knowledge.” public be a matter of Treas. time) tax- year ing filing extensions Plaintiffs 2001 ey proceeding. payer’s year its 2001 return for the taxable 2001. On on March ended 102(b), return, in Decem- net loss.” Id. timely filed income tax codified made, Once the elec- Plaintiff claimed a net ber tion would be irrevocable. Id. million.2 loss of about $5 that it filed its 2001 Because the JCWA Act amended the date On same return, for a Internal Revenue Code March 2002 but tax Plaintiff filed income applied years ending Plain- to tax in 2001 and year for tax 1999.3 “quick refund” a some Plaintiff —al- application refund used quick tiffs 1999 —like ready positions had their tax carryback loss from 2001. established operating net mid-2002, therefore, for 2001 or 2002. In application, Plaintiff filed that its When released loss could be carried IRS Revenue Procedure operating 2001 net 172(b)(1)(A) 2002-40, § im- years. procedures which outlined for only two I.R.C. back (2001).4 five-year carryback plementing period Plaintiffs tenta- The IRS allowed Proc.2002-40, taxpayers. for those Rev. adjustment tive for 1999. §§ Generally, taxpayers wishing 4-7. to 9, 2002, a months after On March few change positions required their tax were 2001 income tax return Plaintiff filed its do on or October 2002. Id. so before refund, quick a Con- application § 7.03. § 172 of the Internal Reve- gress amended 7, 2003, five-year operat- January a net On more than two provide nue Code years by tax months after the deadline established ing carryback period loss Procedure, the Revenue Plaintiff filed an in 2001 and 2002. Job Creation ending corporate tax Assistance Act of 2002 amended 1996 income return and Worker (“JCWA Act”), oper- in which it carried back its 2001 net Pub.L. No. return, 102(a), that ating § at I.R.C. loss. On amended 116 Stat. codified 172(b)(1)(H).5 taxes, Plaintiff claimed a refund of income provided § also interest, applying after a could elect not to take with taxpayer that a 2001 net loss. five-year carryback carryback operating the new of its advantage of claim would be al- The IRS disallowed Plaintiffs refund provision. Such election already Plaintiff had elected pre- “in such manner as because lowed operating 2001 net loss to by Secretary Treasury] carryback [of scribed (inelud- Plaintiff faded to year date tax had and shall be made the due application given "quick to an taxpayer’s operating for a 3. A refund” refers 2.A net adjustment Form for tentative on IRS year is the excess of deductions over taxable Application Re- (26 "Corporation for Tentative gross Code income. Internal Revenue (b)(1). fund,” §Reg. under Treas. 1.6411-1 U.S.C.) (I.R.C.) 172(c). § Internal Reve- carryback permits taxpayer a a nue Code § amended Although I.R.C. 172 has been prior net loss to tax and car- subparagraph that the text of the since ry-forward a net loss to future tax carryback period provides two-year rule, 172(b)(1)(A). general § years. Id. As a unchanged. Compare I.R.C. remains years and a a is limited to two 172(b)(1)(A) (2001) § cariy-forward years. limited to 20 Id. The Therefore, 172(b)(1)(A) (2007). § unless the carrybacks carry- operating loss total net otherwise, year requires we omit the context given year are as a forwards for a tax allowed from our citations. of the I.R.C. against taxable income. Id. deduction stated, 172(a). Simply has a briefing, government aptly de- In its year may “essentially tax a tem- loss for scribes JCWAAct 102 as only prior years, statutory provision applies to porary use that loss to offset income years.” years, two later or both. 6511(d)(2)(A) of the Internal Rev- 31, under position October change file a argu- this part As second enue Code.6 by Revenue Procedure required ment, Plaintiff contends plan Through liquidation 2002^0. 6511(d)(2)(B)(i), mandates that a action, which brought then Plaintiff agent, if be allowed even 1346(a)(1), generally refund should seeking pursuant to 28 U.S.C. or rule prevented by operation otherwise for 1996. refund law, Procedure 2002- trumps Revenue summary judg- cross-motions for On 31, 2002. deadline of October 40 and its ment, denied Plaintiffs the district court argues that government response, The court held for a refund. claim is entitled to 31, 2002, Procedure 2002-40 validly the October the IRS set U.S.A., Chevron, Inc. v. under in Revenue Procedure deadline Council, Inc., Resources Natural explaining: Defense 837, 843-44, 2778, 81 S.Ct. U.S. language [in court construes this The (1984). The Revenue Proce- L.Ed.2d 694 172(j)] election shall be —“such contends, dure, pursu- promulgated it pre- manner as made in such ” authority; delegation of express ant to an Secretary (emphasis by the scribed event, and, later author- any Congress bestowing upon plainly provided)—as Procedure, the Revenue ized and endorsed authority to explicit deter- the IRS the deadline, it amended when including can and when such elections mine how five-year carryback part rule as by publishing The IRS did so be made. Act of Families Tax Relief Working in- Procedure 2002-40. The 108-311, 403(b)(2), 118 Stat. Pub.L. No. Secretary by the prescribed structions argues government The also 1187. the deadline of October establish (d)(2)(B)(i) specific serves five-year electing to invoke operating loss permitting net purpose to meet this carryback. Plaintiff failed by litigation, carryback year to a closed deadline. the situation here. which is not timely appealed. Plaintiff Procedure A. Revenue 2002-10 OF REVIEW STANDARD begins with the Statutory interpretation both a district review de novo We Walker, enactment. Duncan text of the summary judgment grant court’s 167, 172, 121 533 U.S. of the Inter interpretation district court’s (2001). di- “Congress If has L.Ed.2d 251 Abelein v. United nal Revenue Code. at precise question to the rectly spoken (9th Cir.2003). States, 1210, 1213 matter; issue[,] ... that is the end court, DISCUSSION agency, as the must as well expressed unambiguously to the give effect argu- Plaintiff makes two appeal, On Chevron, 467 at Congress.” U.S. intent of First, that Revenue argues ments. If 104 S.Ct. impermissible 2002-40 was an directly precise question to the spoken not authority and an exercise of the issue, weight much at we must decide how Act interpretation incorrect of JCWA agency’s interpretation. to accord an that, Second, Plaintiff contends § 102 creates a text of JCWA Act if 2002-40 is val- The even Revenue Procedure operating pe- loss id, timely a refund claim net Plaintiff filed 6511(d)(2)(A) year generating the the return is due for the allows a 6. Section claim due to a net loss file a refund net loss. carryback within three of the date when year in tax arising riod for losses 2001 or But agency not all determinations gives taxpayers 2002 and an opportunity to are accorded Chevron “[A]gen- deference. five-year period. elect out of that charged stat- cies applying a statute neces silent, though, ute is on sarily how treat tax- all make sorts of interpretive payers already two-year choices, who had elected a ... not all of those choices carryback. Both I.R.C. bind judges to follow them.” United 172(j) Congressional and a related Let- States v. Corp., 218, 227, Mead 7 gave authority ter promul- (2001). to the IRS to 150 L.Ed.2d 292 gate implementing rules. See I.R.C. Even where not binding, agency those § 172(j)(providmg that a taxpayer’s “elec- choices “certainly may influence courts fac tion shall be made such manner ing questions agencies already have prescribed by Secretary”); Congres- answered.” instance, Id. In such an “[t]he sional Letter (stating “it is the fair intent measure of deference to an agency that such revocation be administering made its own statute has been un prescribed by such manner as vary the Sec- derstood to with circumstances.” Id. retary” and “[w]e trust this letter 121 S.Ct. 2164. Generally referred provides deference, sufficient clarification so that to as Skidmore the weight giv guidance can be issued in a manner that en to the agency’s interpretation depends intent”). fully Congressional reflects on degree care, “the of the agency’s consistency, formality, and expert relative Generally, when has “ex ness, persuasiveness and to the of the plicitly a gap agency fill, left (footnotes omitted) agency’s position.” Id. express there is an delegation authority of (citing Co., Skidmore v. & Swift to the agency to elucidate a specific provi 134, 139-40, 65 S.Ct. 89 124 L.Ed. sion of the regulation,” statute and (1944)). legislative regulations given “[s]uch are controlling weight they unless are arbi Our case law leaves unresolved the trary, capricious, manifestly contrary question whether a procedure revenue Chevron, 843-44, the statute.” 467 U.S. at should receive Chevron or Skidmore defer 104 government S.Ct. 2778. The contends ence. Compare Schuetz v. Banc One (9th Revenue Procedure Mortgage 2002-40 satisfies Corp., 292 F.3d requirements for, Cir.2002) the to, and is entitled (granting Chevron deference to Chevron government deference. If the policy is an informal statement from the De correct, may then “a court partment not substitute Housing of and Develop Urban ment), its own construction statutory provi States, v. Omohundro United (9th Cir.2002) sion for a interpretation reasonable made (per curiam) by the administrator agency.” of an Id. at (applying Skidmore deference to 844, 104 S.Ct. 2778. ruling).8 IRS revenue We need not Comm, Act, cus, Shortly Chair, Finance; passage after of the JCWA Rep. and on Charles Comm, response Member, Treasury Department inquiry, to a Rangel, Ranking B. Ways on Means; ranking the chairs and members Grassley, of the House and Sen. Charles E. Rank- Comm, Ways Member, Finance, ing and Means Committee and the Senate on to Mark A. joint (Tax Finance Committee Weinberger, sent a letter to the Sec’y Policy), Assistant Treasury Department 2002). "provide Dep't Treasury (Apr. sufficient of the Treasury Department clarification so that the guidance reflecting can issue Congres- the ruling interpreta- 8. A revenue is “an official Congression- sional intent of [the Act].” JCWA tion the Service that has been Thomas, Chair, Rep. al Letter from Bill the Internal Revenue Bulletin ... the in- Comm, Means; Ways on guidance Sen. Max Bau- taxpayers, formation and of Internal States, 461 Bob Jones Univ. United e.g., Schuetz tension between

resolve assuming that Even U.S. here. Omohundro (1983) (analyzing congression- un- appropriate, is not L.Ed.2d deference analysis, implicitly whether stringent Skidmore al action to determine less

der the 2002—40 ruling). Procedure that Revenue IRS revenue we hold ratified an deference significant receive should still 172(j) that neither Plaintiff contends valid. the Revenue Procedure and that Letter directs Congressional nor the us to con- requires Skidmore related to specifically rules IRS to issue factors, as the variety is, sider position in Plaintiffs taxpayer —that validity agency’s thoroughness tenta- application that filed consistency reasoning, the two-year net adjustment under the tive formality agen- interpretation, rule and now carryback loss action, give and all those factors cy’s apply seeks to lacking persuade, if power it the may be Although rule. Corp., 533 U.S. to control. Mead power so, the IRS broad fac- Skidmore 121 S.Ct. 2164. Some implementing rules authority to issue respect to to assess with tors difficult are 7805(a)(“[T]he Secre- tax laws. is no 2002—40: There Procedure rules and prescribe all needful tary shall history to interpretive later prior or of this ti- the enforcement regulations for Act 102 or Revenue JCWA necessary by tle, including ... as reasoning ac- analysis or and no of law relation any alteration reason proce- the Revenue Procedure’s companied revenue.”). author- That broad to internal The balance prescriptions. dural au- specific grant of ity supplements the however, factors, reveal Skidmore in IRS Congress gave the thority that persua- a Procedure 2002-40 is Revenue 102(b). § JCWA Act The IRS— interpretation sive law. issue ambiguity precise on a Silence interpretation and authority on the the a does general ambit of statute within the the Revenue Internal application accord no deference that courts not mean Procedure promulgated Revenue Code— that interpretation of stat- an of con- express grant 2002-40 under an contrary, Congress’ silence ute. On the only authority. The IRS did so gressional ambiguity an for this created situation from guidance further requesting after a seeking In to find bal- IRS resolve. In addi- concerning its intent. finality of income ance between tion, enact- the amendments statute, and a retroactive elections Procedure publication of Revenue ed after a provides taxpayers Procedure Revenue proce- were consistent with 2002-40 one, time, a limited period of albeit by the established and deadlines dures modify prior a one. election to make new Act Working Families Tax Relief IRS. See October by to decide Requiring technical amendments 403(b)(2)(enacting § apply the 31, 2002, they would whether Act). sug- That sequence to the JCWA carryback pe- loss operating net ratified gests Congress implicitly with the text riod consistent its was consistent Revenue by See, implicitly and was ratified Act. JCWA Act passing intentions JCWA ..., precedents officials, provide con- bul are others Revenue Service and cases, (d)(2)(i)(a). disposition in the of other Reg. § to be used Treas. 601.601 cerned.” upon for that may be cited and relied rulings “do not have the force (d)(2)(v)(d). § Regulations purpose.” Id. 601.601 Treasury Department effect Act in need not decide it amended the We whether Congress when 6511(d)(2)(B)® precedence takes over

Revenue Procedure 2002-40 because the 6511(d)(2)(B)(i) Simply put, two be harmonized. Rev- B. I.R.C. enue Procedure 2002-40 did not shorten argues Plaintiff next filing an period for amended return. (d)(2)(B)(i) Revenue Proce trumps § 6511 Under I.R.C. Plaintiff still could three-year 2002-40’s reduction of the dure any file an amended return time within within which a can file period years three from the date its 2001 return carrying oper back a net amended return due, carrying was back its net 6511(d)(2)(B)(i) pro ating loss. Section years; simply loss two Plaintiff could vides: not its 2001 net loss If the allowance of a credit or refund of years having without also complied five overpayment of tax attributable to a requirements with the notice of Revenue carryback ... is oth- Procedure 2002-40. Had Plaintiff prevented operation erwise timely the IRS notice of an election to any law or rule of law other than section change previously posi- established tax (relating to compromises), tion, years it would had have three to file a may be allowed or credit or refund claim for 1996 means of an amended made, if claim within the therefor is filed return. (A) period provided subparagraph three-year paragraph [providing CONCLUSION period filing of an amended re- It is well established that “[w]hether turn]. to what extent deductions shall be allowed government contends depends upon legislative grace.” New Co- 6511(d)(2)(B)® serves a far narrower Helvering, Ice lonial Co. U.S. namely, ensuring oper that a net purpose, (1934). 440, 54 78 L.Ed. 1348 carryback is available even if the ating loss Congress provided eligible taxpayers with carryback year litigated and closed. it enacted Act windfall when JCWA government legis cites the support, the 102, extending from two to five history the to precursor lative in 2001 and 2002 years period the which 6511(d)(2)(B)® § from the Income Tax operating net losses could be carried back Corp. Code of 19399 and Mar Monte and deducted. did not act fast (9th States, United Cir. such as enough preempt taxpayers to 1974), recognized in contrary which we establishing po- Plaintiff from tax 6511(d)(2)(B)® congressional sitions, IRS, § gen- reflected the both so it authorized might that a taxpayer erally specifically, promulgate concern otherwise rules carrying five-year carryback back a net implementing be foreclosed from the new year previously a tax did so in Revenue Proce- period. loss to IRS 2002-40, an Octo- litigated. dure which established Court, overpay- Report Ways 9. A and Means Tax credit or refund of House discussing 322(g), predeces- § carry-back may Committee be ment attributable to a 6511(d)(2)(B)(i), made, § sor statute to stated: credit allowed or claim for or if period prescribed within the refund is filed (g) proposed [U]nder subsection 322(b)(6).... Code, in section though § 322 of the even the tax (1945), H.R.Rep. reprinted No. 79-849 in liability year, for a taxable for exam- ple, already litigated been before the 1945 C.B. authority Supreme Court in inconsistent with 31, 2002, taxpayers deadline ber I explain, con- sense. As I That deadline is and with common position. Plaintiffs case, and the defer- the text of the statute in this Chevron sistent with believe conferred on the authority Congress has must apply. ence Moreover, rati- Congress implicitly IRS. 2002-40 when Revenue Procedure

fied I leaving § 102 while JCWA Act amended Revenue the Internal Prior its Procedure and Revenue untouched the carry taxpayers to back allowed Code Proce- Revenue Because prescriptions. particular accrued in a prohibit not dure 2002-40 does years. 26 by a maximum of two year tax ab- refund in the filing a claim for from 172(b)(1)(A). 2002, Congress In U.S.C. Proce- compliance, Revenue sence of As- and Worker enacted the Job Creation period filing shortens dure neither (“JCWA Act”), Pub.L. Act of 2002 sistance under or credit a claim for refund 102(a), 107-147, § co- 116 Stat. No. 6511(d)(2)(A) nor conflicts 172(b)(1)(H), which at 26 U.S.C. dified 6511(d)(2)(B)(i). carryback period temporarily extended the sum, deference to giving appropriate Id. The new years. to five from two Procedure we hold Revenue only to tax carryback applied five-year to file either required Plaintiff was addition, in 2001 or 2002. In years ending refund or an for tentative application taxpayers provided the JCWA Act or October tax return on before amended carryback, opt could out of 31, 2002, 2001 net in order to taxpayer’s “election shall stating that the year. It did loss to its 1996 pre- manner as be made agree we with the Accordingly, not do so. Secretary.” 26 U.S.C. scribed claim that Plaintiffs refund district court The Internal Revenue Service untimely. for 1996was (“IRS”) specific delega- responded AFFIRMED. authority by promulgating tion of things, Among 2002^40. other Procedure O’SCANNLAIN, Judge, Circuit required the Revenue concurring: specially five-year carry- wishing opt out of the in its conclusion that join I the court to make their election on before back a valid ex- Revenue Procedure 2002-40 is appeal, 2002. In this we must October of the Internal Revenue Service’s ercise its au- whether the IRS exceeded decide notes, majority authority. Yet as the thority imposed when it this deadline. law as to there is tension our case prescribed whether the level of II U.S.A., Inc. v. Nat. Res. Def. matter, Act an initial the JCWA As Inc., 2778, Council, 467 U.S. 104 S.Ct. Secretary unequivocally that the states (1984), 694 or Skidmore 81 L.Ed.2d of elections. prescribe the manner shall Co., 134, 65 S.Ct. 89 & 323 U.S. Swift Thus, 172(j). Con- 26 because U.S.C. (1944), agen- 124 should to the apply L.Ed. “directly spoken precise to the gress has Thus, I cy’s in this case. while action issue,” Chevron, at 467 U.S. majority that Revenue Pro- agree with the than the I look no further would scrutiny 2002-40 withstands under cedure scope of ascertaining text in the statute’s standard, separately I write because either rulemaking authority Congress intend- tension, unresolved, the left I believe this I Accordingly, the IRS. delegate that is ed to to path lead our court down could 945 Congressional the Letter Revenue do not believe Procedure 2002-40 was by majority is relevant discussed the Bulletin, in the Internal Revenue which (cit- Maj. at 940-41 analysis. Op. our See serves as “the authoritative instrument of Bill ing Congressional Rep. Letter from the Commissioner for the announcement of Comm, Chair, Thomas, Ways on decisions, official rulings, opinions, and Comm, Baucus, Chair, Means; Max Sen. procedures, publication and for the Finance; Rep. Rangel, on Charles B. Treasury decisions, ... and other items Comm, Member, Ranking Ways on and pertaining to internal revenue matters.” Means; Grassley, E. Ranking Sen. Charles 601.601(d)(1). Reg. § Treas. Importantly, Comm, Member, Finance, on to Mark A. however, revenue procedures pro- are not (Tax Weinberger, Sec’y Policy), Assistant through duced formal notice-and-comment 2002)). Dep’t Treasury (Apr. rulemaking adjudication. or formal Although Congressional Letter recites majority points The out that our case Secretary Congress intended law is unclear as to whether a revenue elections, prescribe the manner of such procedure should receive Chevron or Skid- plain intent is made (cit- Maj. more Op. deference. at 941-42 Congress unambiguously ex- Where States, ing Omohundro v. United statute, presses its intent in the text of the (9th Cir.2002) (applying 1065 Skidmore unnecessary I believe it to entertain corre- deference ruling) IRS revenue spondence signed by legisla- a handful of v. Banc Mortgage Corp., Schuetz One tors to confirm that meant what (9th Cir.2002) F.3d (applying taxpayer’s it said—a “election shall be a Department Housing deference to pre- made in manner as statement)). Development policy Urban Secretary.” scribed 26 U.S.C. majority declines to resolve this ten- 172Q).

sion, concluding instead that Revenue Pro- Ill cedure 2002-40 is valid even under the less just But what level of deference should analysis. Maj. Op. deferential Skidmore Revenue Procedure 2002-40 receive? In at 941-42. I agree majority with the Corp., United States v. Mead 533 U.S. inconsistent, precedents our but I are be- (2001), 150 L.Ed.2d majority lieve presents question we Supreme explained that an Court required are not to ask. Mead does not implementation of a statute will receive pro- instruct to decide whether us revenue appears Chevron deference where it cedures, class, subject as a are to one level delegated authority agen- to the Instead, another. Su- cy carrying to “make rules the force of preme requires only Court us to determine law,” agency interpretation and where “the whether this is enti- Revenue Procedure claiming promulgated deference was in the tled to deference under Skidmore or under that authority.” exercise of Id. at Chevron. Agency 121 S.Ct. 2164. action that does Mead, explained the Court subjected not meet this test is less formality particular agency action is analysis prescribed by deferential Skid- important determining factor in wheth- Mead, more. See er it receives Chevron or defer- Skidmore S.Ct. 2164. ence, not a determinative one. The but

A fair Court noted that is to assume “[i]t case, ad- generally Congress contemplates In that agency interpretation claiming law procedure. deference is revenue ministrative action with the effect of

946 rulemaking in must be relatively formal tained an informal provides for a when Mead, 533 procedure.” in administrative the level of deference set forth accorded And, 230, as a 1067-68(eitations at 121 S.Ct. 2164. U.S. at Skidmore.” 300 F.3d num- overwhelming the “the consequence, added). omitted) (emphasis applying cases Chevron of[the Court’s] ber statements in Schuetz and Omohun- Our of no- have reviewed the fruits deference Moreover, irreconcilable. our dro are formal rulemaking or tice-and-comment flatly in contradicts statement Omohundro omitted). (citations Id. adjudication.” in Supreme Court’s instructions Wal- Still, emphasized “[djelega- the Court Walton, at ton and Mead. See 535 U.S. in authority may be shown tion of such Mead, 1265; at 122 S.Ct. 533 U.S. power variety ways, as of Indeed, 230-31, the Court S.Ct. adjudication in or notiee-and- engage significant other rulemaking, emphasized eomment or some that “as as no- congressional comparable indication of a in pointing tice-and-comment is to Chevron 2164(empha- intent.” Id. at S.Ct. ... authority, procedure the want of that added); Holding, sis also Swallows see case,” not decide the for the Court does (3d Comm’r, Ltd. v. 169-71 found reasons for Chevron has “sometimes Cir.2008) (citing proposition Mead for the even when no administra- determining whether Con- “[w]hen formality required and none was tive action to gress particular agency intends Mead, 230-31, 121 533 U.S. at afforded.” law, carry inquiry of our does not force N.C., 2164(citing NationsBank S.Ct. agency action hinge solely type on the Co., Annuity N.A. Ins. v. Variable Life involved.”). 251, 256-57, 115 S.Ct. 513 U.S. are in point, Yet on this our own cases (1995)). L.Ed.2d 740 Schuetz, applied conflict. In we majority that agree I with the Department Housing and deference to a satisfy Procedure 2002-40 would even (“HUD”) Policy Development Urban and, such, I under- Skidmore deference Statement, though even it was not the majority’s not to resolve stand decision rulemaking adjudica- result formal or the conflict between Schuetz Omohun- doing, we tion. 292 F.3d so in I am dro this case. Yet convinced directly quoted Supreme from the Court’s Walton, that all informal Omohundro’s statement in decision Barnhart defer- rulemaking 152 L.Ed.2d 330 must receive Skidmore (2002), Agency pre- that “the fact that the with the ence cannot be reconciled Su- through viously interpretation reached its preme holdings Court’s Walton means less formal than notice and com- Mead. automatically rulemaking ment does not Accordingly, hope might I this court one judicial deprive interpretation day clarify confront Omohundro Schuetz, deference otherwise due.” action, formality particular agency Walton, (quoting F.3d at 1012 535 U.S. at alone, standing does not determine the 1265) (internal quotation level of deference it receives. This was omitted). only marks But a few months and, my path we followed Schuetz Omohundro, applied later in we Skidmore view, that should be fol- path this is ruling which deference to IRS revenue framework, I lowed here. Under such rulemaking product

was not the of formal is one believe Revenue Procedure 2002-40 adjudication, interpreted because we rulemaking which example of informal holding Mead as that “an administrative a statute con- entitled to Chevron deference. agency’s interpretation of still B The same considerations counsel in fa- First, vor Chevron deference here. “explicitly left When Revenue Procedure 2002-40 supported fill, agency to “there is an gap” for by Secretary’s rulemaking broad au- authority express delegation of to the 7805(a) § thority under specific his agency specific provision to elucidate a authority 172(j). Second, § under the IRS by regulation,” the statute and “[s]uch published Revenue Procedure 2002-40 legislative regulations given are control- the Internal Finally, Revenue Bulletin. ling weight they arbitrary, unless are ca- notice-and-comment would have im- been manifestly contrary pricious, or to the practicable this case because time was Chevron, at statute.” 467 U.S. of the essence for the IRS exercise its Congress has empowered 104 S.Ct. 2778. power delegated by 172(j) § to establish and, Secretary Treasury his five-year the manner of elections out of the delegation, the IRS with the au- broad carryback. majority As the explains, Con- thority “prescribe all needful rules and gress enacted the JCWA Act on March Code, regulations” including to enforce the 2002. The Act created a regulations “all rules and be nec- years for tax end- essary by any reason of alteration of law ing in 2001 and 2002. 26 U.S.C. in relation to internal revenue.” 172(b)(1)(H). § It 7805(a). provided further proce- Most revenue U.S.C. taxpayers opt could elect to out of the new promulgated pursuant dures are to this carryback, but left manner of election 172(j), Yet in general delegation. Con- Secretary. to the Id. Yet gress specifically delegated to the Secre- law, many taxpayers time the Act became tary authority prescribe the manner already had filed their tax returns of elections. Revenue Procedure 2002-40 Maj. Op. at 939- rulemaking is the of that authori- product taxpayers Such were faced with an ty. view, In my specific delegation problem awkward Act allowed them strongly resulting indicates that the IRS —the opt carryback, they out of the but had and, carry action would the force of law way doing Secretary no so until the told thus, receive Chevron deference. See By April ranking them how. Mead, S.Ct. 2164. Ways members of the House and Means comparison A instruc- Schuetz is Committee and the Senate Finance Com- case, In that tive. we cited several rea- recognized mittee the dilemma and sent applying to the sons Chevron deference Secretary “issue requesting letter Policy though Statement HUD even was guidance under which are First, not formal action. the statute at to, among until 2002” other November prescribe issue authorized HUD to rules things, opt make an election to out. Con- regulations interpret and to the stat- Letter, gressional supra at 944-45. (citing ute. 292 F.3d at 1012 12 U.S.C. factors, light response of these the IRS’s 2617(a)). Second, Policy Statement in Revenue Procedure 2002-40 was enti- in the Register. Federal tled to Chevron deference. Finally, Id. we noted that notice-and-com- distinguishable. In that Omohundro is rulemaking imprac- ment have would been case, applied we Skidmore deference to an ticable because issued a Confer- ruling interpreted IRS revenue Report ence which directed HUD to issue 6511(a). 300 F.3d at 1067-68. policy days statement within 90 to re- U.S.C. ruling pur- While the revenue was issued ambiguity solve the statute. Id. at 1009,1012. powers under suant to the IRS’s broad children, and 7805(a), their minor Stefan product not two was rulemaking authority Andrej Bozinovski; Ivanoska, of

specific delegation Vesena provided as the one personal rep surviving spouse and as addition, is no evidence that the rev- there of Branko resentative of Estate was issued un- ruling enue Omohundro Ivanovski, guardian deceased and as as the one der a time constraint such children, Marta of their two minor Thus, despite facing the IRS here. Omo- Andrej Ivanovski; Mir Ivanovska and interpretation of Mead hundro’s strained Glavcic-Krestevska, surviving jana as inconsistency inter- and its with our earlier spouse personal representative and of Schuetz, several facts that pretation Krestevski, of Mile de Estate here counsel favor of Chevron deference Krestevski, ceased; surviv Vladimir not the court in that case. were before Krestevski, deceased; ing Mile child of Markovska, surviving as Violeta IV spouse personal representative and of I in the reached concur result Markovski, of Marko de Estate 2002-40 majority —Revenue ceased; Markovski; Zoran Goran a valid and enforceable exercise of the Markovski, surviving children of Mar authority. majority But while the IRS’s Markovski, deceased; Traj ko Vilma necessary specify level of declines kovska, surviving spouse per and as deference, I defer- apply would representative sonal of the Estate of particular agency action. The ence Trajkovski, deceased, and Boris as impor- positions distinction between our children, guardian their minor of two Supreme tant because the Court has made Trajkovska Trajkov and Sara Stefan rulemaking clear that sometimes informal ski; Velinova, surviving Zlatka as may still lead to deference under Chevron. personal representative spouse and I believe this is such case. Velinov, deceased; Boris Estate of Velinov; Olga Velinova, sur Jovance viving parent Velinov, of Boris de ceased, Plaintiffs-Appellants, BLAZEVSKA, surviving Slobodanka COMPANY, a RAYTHEON AIRCRAFT spouse personal representative and Corporation, Defendant- Kansas Blazevski, the Estate of Risto de Appellee. ceased; Blazevska, surviving Eleonora Blazevski, deceased; No. 06-16028. child of Risto Di Blazevski, surviving mitar child of Appeals, States Court of United Blazevski, deceased; Dragan Risto Ninth Circuit. Boskovik, surviving spouse per as representative sonal of the Estate of Argued and Submitted Feb. Ilkovka-Boskovik, deceased, Dimka April Filed guardian their and as minor child Boskovik; Boskovik, Ana sur Veselin

viving child of Dimka Ilkovka-Bosko

vik, deceased; Biljana Bozinovska, as

surviving spouse personal repre Ace

sentative of Estate of Bozi

novski, guardian deceased

Case Details

Case Name: Tualatin Valley Builders Supply, Inc. v. United States

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Apr 10, 2008

Citation: 522 F.3d 937

Docket Number: 05-36173

Court Abbreviation: 9th Cir.