On the Tax Court's Golsen Rule (12/3/23; 12/5/23)

In Kraske v. Commissioner, 161 T.C.___ No. 7 (2023), GS here, the Court provides a good application of its Golsen rule. Golsen v. Commissioner, 54 T.C. 742, 756-58 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971), cert. denied, 404 U.S. 940 (1971). The Golsen rule, in brief, is that, in the case before it, the Tax Court will adopt a square prior holding of the court of appeals to which the case is appealable even if the Tax Court believes that Circuit's prior holding is wrong. Kraske gives me an opportunity to expound briefly on Golsen. 

Short statements about the Golsen Rule.

• The rule prior to Golsen was called the Lawrence rule. Lawrence v. Commissioner, 27 T.C. 713, 718 (1957), rev’d, 258 F.2d 562 (9th Cir. 1958). The Lawrence rule was that the Tax Court should apply the interpretation it felt best regardless of appeal to a Circuit which, through prior precedent, was likely to reverse. Golsen is a rule of judicial expedience.
• In determining whether there is such a conflict between the Tax Court’s best interpretation and the relevant Circuit Court’s holding, the Tax Court should determine whether the court of appeals decision at issue “is so clearly on point that it would be futile” to issue a decision contrary to it. See Sanders v. Commissioner, 161 T.C. ___ No. 8, *6-*7 (2023) here (reviewed opinion on the jurisdictional issue). I analogize this review to the much-ballyhooed Chevron Footnote 9 rigorous statutory interpretation to eliminate ambiguity at Chevron Step One. If by vigorous review of the Circuit’s case authority, the Tax Court finds that the authority is not squarely on point (meaning, I think, that the authority can be meaningfully distinguished or otherwise not applicable), the Tax Court can then apply its own best interpretation.
• Professor Camp says that the Golsen rule requires that the Tax Court “basically decide the likelihood that the Circuit Court of Appeals would reverse the Tax Court in the case at hand.” Bryan Camp, Lesson From The Tax Court: The Rules For Penalty Approval Depend On Geography (Tax Prof Blog 10/30/23), here, discussing Kraske. That raises the question whether a trial court such as the Tax Court can reasonably predict that a higher court would reverse; after all, the Circuit could reconsider and reverse its prior holding. That’s a judgment call which I don't think factors in that possibility. If the Tax Court makes the wrong judgment, I’m sure the Circuit Court will let it know.
• Where the Circuit’s interpretation is not squarely in point, concerns for “uniformity in interpretation” throughout the country require that the Tax Court apply its own best interpretation. Lardas v. Commissioner, 99 T.C. 490, 494-5 (1992).

A related issue is the effect of contrary case authority in other Circuits. Such case authority is not controlling in the Tax Court case at hand but they may be considered by the Tax Court in reaching its own best interpretation. In a way, this is like Skidmore respect (not deference) that respects a noncontrolling agency interpretation if it is persuasive. See Sanders v. Commissioner, 161 T.C. ___ No. 8, *6-*7 (11/2/23) here (reviewed opinion) (in a case appealable to the 4^th Circuit, Tax Court’s best interpretation (considering inter alia stare decisis) is that § 6213(a)’s 90-day time period is jurisdictional despite the 3^rd Circuit’s prior holding in Culp v. Commissioner, 75 F.4th 196, 205 (3d Cir. 2023)).

For discussion on Golsen, see James S. Halpern, What Has the Tax Court Been Doing? An Update, Tax Notes 1277, 1286-1287 (May 30, 2016)

Added 12/5/23 11:15 am:

I noted in the second bullet point above that Golsen requires that the Tax Court make a rigorous interpretation of the Circuit precedent to see if it is directly in point and therefore should be controlling over the Tax Court’s own best interpretation. (As stated this is like a Chevron analysis where the reasonable but not best agency interpretation controls over the court’s best interpretation; of course, Golsen does not ask whether the Circuit Court precedent is reasonable, but only if it is directly in point.)

Echoes of this analysis surfaced in Ohio v. Becerra,87 F.4th 759  (6th Cir. 11/30/23), CA6 here and GS here, a case laden with Chevron discussion, the Court addressed whether the lower court could apply controlling Supreme Court precedent where other cases seemed to have eroded the foundation of the controlling precedent. The Court discussed (pp. 769-770) the uncertainty in the status of Chevron after the recent cases avoiding Chevron and the Court’s acceptance of certiorari on the Chevron issue. The Court then said (p. 770):

Despite this uncertainty, the Supreme Court has instructed that when one of its precedents "has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions." Agostini v. Felton, 521 U.S. 203, 237 (1997) (quoting Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989)). In other words, we apply directly applicable Supreme Court precedent as it currently stands, without projecting where we think it may be headed.