Professor Yin Article on the Tax Legislation Process and Legislative History (12/17/22)

George Yin, a retired UVA law professor (bio here) has published an article that takes on some of the conventional wisdom of jurists and scholars who reject or are at least suspicious of legislative history as useful for statutory interpretation. Those jurists (including most prominently the late Justice Scalia) and scholars often are considered textualists, although that is a broader category than those who reject or are suspicious of legislative history. Yin calls the subcategory “new textualists” or sometimes just textualists.  Yin’s article is George K. Yin, Textualism, Textualism, the Role and Authoritativeness of Tax Legislative History, and Stanley Surrey (December 4, 2022). Law and Contemporary Problems, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4286174.

Here is the SSRN Abstract description of the article:

When Stanley Surrey died in 1984, the school of thought sometimes known as the “new textualism” that has gained such influence in the United States over the last three decades had not yet emerged. Surrey would have been very interested in this development. As revealed in his recently published memoirs, he had extensive first-hand experience with the tax legislative process and recognized early on the connection between that process and statutory interpretation. He would have been surprised by some of the assumptions about the process underlying the new textualist claims as well as recent empirical findings about the process reported by scholars.

This essay aims to fill in some of Surrey’s missed engagement. Drawing on his memoirs and other sources, the essay describes aspects of the tax legislative process—the preparation of tax statutes and legislative history—of significance to statutory interpretation and the positions of the new textualists. Importantly, the description is at the granular level at which Surrey experienced it, material not generally included in standard political science or legal scholarship on the topic. After considering the on-the-ground realities of the tax legislative process, this essay contends that in interpreting tax statutes, courts should rely upon both textual canons and other common tools of judicial interpretation (questioned by recent scholar-empiricists) and legislative history (questioned by textualists). The essay also explains why, contrary to the claims of textualists, committee reports are authoritative evidence of statutory meaning.

Yin’s article is particularly directed to interpretation of federal tax statutes (i.e., principally the Codes in 1939, 1954 and 1986 iterations). Yin is former Chief of Staff of the Joint Committee on Taxation, which is heavily involved in the tax legislative process and in producing legislative history. He knows the process and knows that the claims these textualists make about legislative history are not true for tax legislation.

The process Yin describes for tax legislation--but apparently perhaps to a lesser degree for other legislation-- involves both tax legislation experts (the JCT) and each House’s legislative counsel who bring statutory drafting expertise to the table that the tax Committees and their members usually lack.

I have written on the use of legislative history before. See the following that I think relate to the topics in Yin’s new article:

Tax Court Holds that § 6213(a) Time Deadline for Petitions for Redetermination Is Jurisdictional, Thus Not Subject to Equitable Relief (12/13/22)

I have not yet written on Hallmark Research Collective v. Commissioner, 159 T.C. 126 (2022)  (unanimous reviewed opinion), TCPamphlet here & GS here.

The holding is that the § 6213(a) 90-day / 150-day period for petitions to redetermine deficiencies is jurisdictional, meaning that there is no equitable relief to file out-of-time petitions. I won’t analyze the holding because the opinion speaks for itself and makes, perhaps, the best case for the holding. (That is not a statement that it is a correct holding.) The issue was whether § 6213(a) was subject to the recent trend to treat time statutory time deadlines as claims processing rules rather than jurisdictional requirements (meaning must be met). The most relevant and recent iteration is Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022), where the Court held that the § 6330(d)(1) 30-day CDP deadline was not jurisdictional, thus subject to equitable relief.

Readers interested in this area of law have already seen several, perhaps many, comments on the Hallmark holding. I don’t think I have anything to add to those commentaries. Perhaps the longest and strongest criticism of the Hallmark opinion is in a series of posts by Carl Smith on the Procedurally Taxing Blog titled What’s Wrong with the Tax Court’s Hallmark Opinion: Part 1 ….., here (I think there are more Parts to come, but the link is a search link and should pick up the later Parts). 

I am agnostic as to the resolution of the issue of whether the § 6213(a) deadline must be met (jurisdictional) or not (claims processing subject to equitable relief). However, I do note that there are some consequences if that particular deadline is deemed to be claims processing rather than jurisdictional that should be considered given the collateral provisions (such as statute of limitations suspension while the taxpayer can file a petition, etc.); I am not sure they have been fully dealt with in the Hallmark opinion, perhaps because the Court held that the deadline was jurisdictional; still they should be considered as perhaps reasons that the deadline must be jurisdictional in order to make the parts of the superstructure work.

Supreme Court Grants Cert in Polselli on Issue of a Collections Summons to Third Party Requires Notice to Taxpayer (12/10/22)

The Supreme Court granted the petition for writ of certiorari in Polselli v. IRS (Sup. Ct. Case No. No. 21-1599).  The opinion of the Sixth Circuit in the case is at Polselli v. Dept. of Treasury, 23 F.4th 616 (6^th Cir. 2022), GS here.  The Order granting cert is dated December 9, 2022, here.  The documents are not consistent as to the case name, but I infer that the case name is Polselli v. IRS as stated on the docket here.  See discussion in the Note at the end of this blog.

The question presented in the petition is (with introduction) (Pet p. i):

            The Internal Revenue Code generally requires the IRS, when it serves a summons on a third-party recordkeeper for records pertaining to a person “identified in the summons,” to give that identified person notice of the summons. I.R.C. § 7609(a)(1). If the IRS issues a summons directing a bank to produce an accountholder’s records, for example, it must generally notify that accountholder of the summons. Section 7609 then provides that “any person who is entitled to notice of a summons under subsection (a) shall have the right to begin a proceeding to quash” that summons in district court. Id. § 7609(b)(2); see id. § 7609(h)(1). In other words, only a person entitled to notice of a summons can seek judicial review of that summons.

            There are a few exceptions to the notice requirement. As relevant here, the IRS need not provide notice of “any summons … issued in aid of the collection of (i) an assessment made or judgment rendered against the person with respect to whose liability the summons is issued; or (ii) the liability at law or in equity of any transferee or fiduciary of any person referred to in clause (i).” Id. § 7609(c)(2)(D).

            The question presented is whether the § 7609(c)(2)(D)(i) exception applies only when the delinquent taxpayer owns or has a legal interest in the summonsed records (as the Ninth Circuit holds), or whether the exception applies to a summons for anyone’s records whenever the IRS thinks that person’s records might somehow help it collect a delinquent taxpayer’s liability (as the Sixth Circuit, joining the Seventh Circuit, held below).

JAT Notes:

Law Prof Article on the APA Tax Revolution and My Extended Comments (12/1/22; 12/3/22)

Readers of this blog may be interested in a recent article by Professor Reuven S. Avi-Yonah (Michigan Law bio here), The APA Tax Revolution, 177 Tax Notes Fed. 981 (Nov. 14, 2022), here. He says there is an APA Tax Revolution, I think principally started by Professor Kristin Hickman (bio here). Professor Avi-Yonah pronounces: "Hickman has won the debate, and the APA revolution in tax law is here to stay." The debate is grounded in her claim that there are no interpretive Treasury regulations and extensions of that claim (including that Treasury's Temporary Regulations have historically violated the APA, hence Treasury has routinely in the past violated the APA). Professor Hickman and I disagree on that point. See The Report of the Death of the Interpretive Regulation Is an Exaggeration  117-118 (SSRN December 14, 2021), here. Professor Hickman's claim is bottomed on various developments post-Chevron that, she claims, eliminate the interpretive regulation category. (I find Professor Hickman somewhat elusive about those developments; I deal in my article with those rabbit trails I could identify.)

To be sure, there is a lot of commotion on the point, with many scholars and courts accepting Professor Hickman's premises. For the reasons noted in my article, I think they do so without fully thinking through the point from historical perspective as to the meaning of the APA. (See my concluding points about APA original meaning below.)

Most importantly, the Supreme Court has not spoken in a precedential holding on the key issue of whether there are interpretive regulations, so we don't know what the Supreme Court would say on that issue. (See also my concluding points about APA original meaning below.)

There have been contrary Supreme Court voices on that issue. I go into detail in my article. I won't repeat that detail here but ask readers to consider the background and two examples:

Background: As I note in my article, Professor Hickman claims that there are no longer any interpretive Treasury regulations which, if true, would mean there are no other agency interpretive regulations. (Remember her drumbeat claim that tax is not exceptional.) At our ABA Tax panel presentation in October, I asked Professor Hickman whether the regulation considered in Chevron was a legislative regulation. She said yes, an answer I knew she would have to give because she has said too often that there are no longer interpretive regulations. (To be fair, in most of our discussions, Professor Hickman claims that post-Chevron developments are the bases for her claim, but she did say on the panel that Chevron was a legislative regulation under her claim.)  Consider her answer against the following:

Illustrative examples of important voices claiming Interpretive regulations exist: