Interesting Concurring Opinion on Canons (or Maxims) of Statutory Interpretation (5/29/26)

In Flight Options LLC v. United States, ___ F.4th ___ (6th Cir. 2026), CA6 here and GS here [to come], the Court reversed a district court holding that Flight Options, a fractional-share jet company, was liable for withholding tax in the amount of $39 million on fixed fees it charged to pay for the overhead and management of its clients' private jets. The tax involved was the

7.5% excise tax on the “amount paid for” domestic “transportation by air,” 26 U.S.C. §§4261(a), 4262(a)(1), what the statute called a “ticket tax” at all relevant times of this dispute, id. §4261(e)(1)(C), (e)(5) (2012).

Although I do not plan to deal with the substantive merits of the withholding tax in issue, basically a high-level overview is that the tax is easily calculated, collected, and paid over for the travel that most of us experience on commercial airlines where the price of the ticket is all in for cover all associated costs to the airline of providing the air transportation (included quite indirect costs of management and even paying lawyers). Private-jet companies operate differently, not including all costs in a single fare but separately calculating and charging for its costs and profit. So, Flight Options, calculated, collected, and paid over only that ticket tax related to “usage charges for each flight a client takes, not to fixed fees it charges its clients for overhead and management of its fractional jet business.” The latter charges are the types of charges that commercial airliners build into the ticket fare and thus are, for commercial travel, subject to the ticket tax. In effect, the IRS attempted to require private-jet providers to include some of those charges in the base to which the ticket tax, and thus withholding obligation, applied, thus making the ticket tax more comparable in impact between commercial providers and private-jet providers.

The Court of Appeals (Judge Sutton for a unanimous panel) rejects the IRS position the district court sustained. Of course, the issue is to apply the ticket tax designed with the commercial-jet model where all-in costs are included in the ticket price subject to the tax. As noted above, the private-jet providers separately state their costs (with separately stated costs including profit). The effect of the Court’s holding is that private-jet providers get a competitive advantage relative to commercial-jet providers. The Court confers that competitive advantage by deploying the favorite interpretive tool of literalist textualists—Dictionaries. Using those vaunted tools, the Court’s parsing of the tax indicated to the Court that the text was uncertain as to the liability—ambiguous, if you will—and thus it is improper to hold a third-party withholder for a liability that is uncertain. In the process the Court deployed two canons, called “relevant taxpayer canons”: (i) the Pro-Taxpayer Canon, called a general canon, that interprets uncertainty in tax liability in favor of the taxpayer and against the IRS; and (ii) a related canon, called a "specific canon," that to hold a party charged with collecting the tax for the IRS must have “precise and not speculative” instructions in the statute (meaning in his telling that ambiguity is resolved in favor of the putative withholder).

I will not go further into the merits, because I want to focus on the use of canons of construction. Not only does the unanimous opinion discuss them, but Judge Murphy wrote an 11-page concurring opinion (no footnotes), concurred in by Judge Sutton but not joined by Judge Clay, devoted to canons deployed in interpretation of tax statutes. It is not clear who Judge Murphy "targets" in his concurring opinion--perhaps he is signaling to the Supreme Court that it should get this mess cleaned up and provide the Supreme Court with a guide for the clean-up. 

Depending on one’s interpretive predilections, Judge Murphy’s musings are great, not great, or something in between. I think most experienced tax lawyers who have paid attention to tax statutory interpretation over the years were already familiar with the points Judge Murphy makes, although perhaps not with some of the inferences he draws from his historical discussion. For all, whether experienced tax lawyers or not, interested in statutory interpretation of tax statutes, Judge Murphy’s concurring opinion should be a good read, although I do not recommend reading it uncritically.

I offer my comments on Judge Murphy’s concurring opinion:

1. Judge Murphy sets up two opposing canons which he calls the “pro-taxpayer canon” and the “pro-Government canon.” (Slip Op. 21-22.)

2 The Pro-Taxpayer Canon says that interpretive “uncertainty” (which I think is the same as ambiguity) requires a court to adopt and apply an interpretation in favor of the particular taxpayer in the case. Judge Murphy blends into the Pro-Taxpayer Canon the phenomenon of its application to withholding obligations by a third-party (Slip Op. 21), a phenomenon supporting the Pro-Taxpayer Canon. In other words, the reading opposes the IRS interpretation that would, if approved, collect more tax in the particular case, thereby benefitting the IRS.

JAT Musing: The discussion of interpretation of tax statutes seem always to treat the IRS as the beneficiary thus permitting those who dislike the IRS to gravitate to a pro-taxpayer canon or interpretation; this trope does not consider that the real beneficiaries of a taxpayer paying tax are the citizens of the country both by bringing tax funds into the fisc and the larger benefit of having taxpayers pay their dues to a civilized society (in Justice Holmes words in See Compania General de Tabacos de Filipinas v. Collector, 275 U.S. 87, 100 (1927) (Holmes, J., dissenting).

3.  Judge Murphy says that the Pro-Taxpayer Canon operates like the rule of lenity, to provide a tie-breaker in the event of uncertainty (which I think he means the same as ambiguity). (On the relevance of lenity, Judge Murphy asserts that “tax laws share some attributes with criminal laws.” (I prefer Justice Holmes’ characterization of taxes, not as punishment, but as a type of dues for a civilized society.)

4. The Pro-Taxpayer Canon, he asserts, “does not allow courts to depart from the best reading of a tax law.” (Slip Op. 21.) This, of course, evokes the opinion of the Court in Loper Bright Ent. V. Raimondo, 603 U.S. 369 (2024); although evoking Loper Bright, Judge Murphy’s explanation of canons requiring ambiguity seems in tension with Loper Bright’s claim that “statutes, no matter how impenetrable, do— in fact, must—have a single, best meaning.” (603 U.S., at 400.)

5. The “Pro-Government” canon is a canon favoring interpretation in a state of uncertainty (ambiguity) in favor of this IRS. Judge Murphy also calls this canon a “taxpayer-disfavoring” canon. (Slip Op. 20.) This canon includes venerable tax-common law concepts (variously labeled) such as deductions as matters of legislative grace require strict compliance (a taxpayer-unfriendly interpretation), substance over form as in cases such as Gregory v. Helvering (a taxpayer-unfriendly interpretation), etc.

6. Judge Murphy midway in his exegesis states his “tentative conclusions” on the tension between the Pro-Taxpayer Canon and the Pro-Government Canon, arguing that the Pro-Taxpayer Canon trumps. (Slip Op. 21.)

7. I don't know if it is a canon or maxim or other tool of statutory interpretation, but I do think that similarly situated taxpayers should be treated alike. At least in theory, the ticket tax is a tax that is passed to the taxpayer. Yet the effect of the Court's holding is that fractional-jet travers pay less tax than arguably identical (identical for purposes of the tax) commercial-jet travelers. If there is not such a canon or maxim or other tool of statutory interpretation that works to impose the incidence of taxation, well, then, there should be. Of course, the problem in this case was that the actual persons who should have been the taxpayers did not pay and the IRS is seeking to collect a major amount from the party who, it claims, should have withheld. Of course, I suspect that, in pricing for the various components of its service, Flight Options probably factored in its risk of having to pay the withholding tax. To the extent that it did, the passenger taxpayers bore the cost of the tax and, correspondingly, Flight Options gets a windfall because it did not pass it on to the IRS.

8. I end my discussion with something that may be apparent from my perhaps digressive points above. I found Judge Murphy’s opinion a worthy read, even when some of his claims caused me to pause. Being an old-timer in this business, I go back to my law school training where we learned early (and retained) about problems with canons of interpretation. One of the first things we learned about canons is that “there are two opposing canons on almost every point.” Karl N. Llewellyn, Remarks on the Theory of Appellate Decisions and the Rules or Maxims About How Statutes Are to Be Construed, 3 Vand. L. Rev. 395, 401 (1950). In similar vein, other recognized pundits have about maxims (which include canons):

At best such maxims, which Roscoe Pound labeled "minims" because they revealed so little are "singularly unhelpful when it comes to deciding cases,"

United States v. Ingredient Technology Corp., 698 F.2d 88, 94 (2d Cir. 1983) (cleaned up to omit citations). I should caveat, not to make too fine a point on it, that the interchangeability of canons and maxims may be principally for semantic or linguistic canons as opposed to substantive canons (like lenity or Chevron in its day or the type of outcome-determinative tie-breakers Judge Murphy discusses). See William Baude & Stephen E. Sachs, The Law of Interpretation, 130 Harv. L. Rev. 1079. 1088 (2017), here.

9. Another ending thought. Judge Murphy’s concurring opinion was concurred in only by Judge Sutton who wrote the unanimous opinion of the court. That means that Judge Clay did not concur in Judge Murphy’s exegesis. Had Judge Clay concurred in Judge Murphy's concurring opinion, I assume it would have been included in the Opinion of the Court (perhaps with credit given to Judge Murphy). Judge Clay gives no explanation of why he did not concur with the other members of the panel. Perhaps not relevant to the issues I discuss here, the panel’s presidential appointments were: Sutton (Bush), Clay (Clinton), and Murphy (Trump). See Wikipedia page on the Sixth Circuit, here.

10. Still another ending thought. Judge Murphy swipes at use of legislative history in the interpretive process (Slip Op. 26):

But no, the courts should not resort to "legislative history" to clarify the meaning of a text that it finds ambiguous after exhausting all the traditional tools of interpretation. Id. Instead, "the next step" should be to invoke the canon. just as it should be in the rule-of-lenity context. 

I have written before (as have others) that one consequence of Loper Bright might be to encourage the use of legislative history (which is after some evidence of meaning, properly discounted). Update on FTPB Discussion of Legislative History (Federal Tax Procedure Blog 3/18/26), here.