Altera Cert Denied (6/22/20)

The Supreme Court denied certiorari in Altera Corp. v. Commissioner, 145 T.C. 91 (2015), which the Ninth Circuit reversed 926 F.3d 1061 (9th Cir. 2019), reh. en banc den. 941 F.3d 1200 (9th Cir. 2019), cert. den. 591 U.S. ___, 141 S.Ct. 131  (2020), here.  I have discussed or mentioned the petition for certiorari in several blogs.  The most recent (with links to the key blogs) is:  Altera Reply Brief on Petition for Certiorari (Federal Tax Procedure 6/7/20; 6/11/20), here (noting inter alia that the petition and reply brief indulge in considerable hyperbole).

The traditional mantra is that a denial of certiorari is not an affirmance on the merits.  All it does is to let the Circuit Court opinion stand without any inference that the Circuit Court opinion is approved.

The key point is that the Ninth Circuit is now binding authority in the Ninth Circuit and its lower courts (including the Tax Court for cases appealable to the Ninth Circuit).  In the Ninth Circuit’s analysis, the Tax Court slipped off the rails in Altera.  The question now is what the Tax Court does with the next case appealable to another Circuit.  Does the Tax Court stick to its guns or does it conform its holding as it did in Graev . Commissioner, 149 T.C. 485 (2017) (reviewed opinion), after being corrected by the Second Circuit?  And, then, more importantly, what the next few Circuits to consider the matter do.

The major issues raised in the Altera petition and the proceedings below involved the Administrative Procedure Act (“APA”), including Chevron which is not directly an APA issue but related to it in some ways.  The Supreme Court had already granted a petition for certiorari in a case involving the interface of tax administration and the APA.  CIC Servs., LLC v. IRS, 925 F.3d 247 (6th Cir. 2019), reh. den. 936 F.3d 501  (6th Cir. 2019), cert. granted ___ U.S. ___, ___ S.Ct. ___ (Dkt. No. 19-930, May 4, 2020).  See Certiorari Granted in CIC Servs on AIA Application to Pre-enforcement Guidance Challenges (Federal Tax Procedure Blog 5/12/20), here.  Maybe granting cert in CIC sated the Supreme Court’s appetite for the interface of tax administration and the APA. [Added 5/18/21: The Supreme Court reversed in 593 U.S. ___, 141 S.Ct. 1582 (2021).  See Supreme Court Holds in CIC Services that IRS Micro-Captive Notice May Be Contested Pre-Enforcement (Federal Tax Procedure Blog 5/17/21; 5/18/21), here.]