More on Delegations of Authority, Notices of Deficiency and Consents to Extend (3/18/21)

Yesterday, I posted on a case, Harriss v. Commissioner, T.C. Memo. 2021-31, that led me into a discussion of delegated authority to make deficiency determinations from the Secretary of the Treasury down to employees (by function) in the IRS and related issues, including consents to extend the statute of limitations.  Burden of Persuasion As to Proper Delegated Authority for Statutorily Required IRS Action (Here Notice of Deficiency) (Federal Tax Procedure Blog 3/17/21), here.  A colleague engaged me on a couple of issues from the blog.  I thought I would present the issues here and my cut on the issues.  I have reformulated the issues to better present them here:

Issue 1:  The courts treat the Forms 872 (Consent to Extend the Time to Assess Tax) and its various iterations, such as Form 872-A (Special Consent to Extend the Time to Assess Tax) used for the statute extension authorized by than § 6501(c)(4)(A), here, as unilateral waivers rather than as contracts.

JAT Response to Issue 1:  I again direct readers to the article:  John A. Townsend & Lawrence R. Jones, Jr., Interpreting Consents to Extend the Statute of Limitations, 78 Tax Notes 459 (1998), here.  But the shorter answer is in the statute itself, § 6501(c)(4)(A) (bold-face supplied by JAT):

Where, before the expiration of the time prescribed for the assessment of any tax imposed by this title, except the estate tax provided in chapter 11, both the Secretary and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.

 The emphasized language requires:

1.        Both the IRS and the taxpayer must sign a consent to reflect the agreement.

2.        Both must sign be before the expiration of the period of limitation (even the aborted writing was after the period of limitation in Stearns, so that the facts of would give the victory to the IRS under the statute as written now)..

3.        The consent is an agreement (see “so agreed” in the statute) which certainly connotes something bilateral rather than just a unilateral waiver.  In the law of waiver, waiver is a unilateral not requiring any agreement by the other party.  (Of course, if the other party asserts waiver as a defense, the party may be said to be agreeing with the waiver but agreement is not thought of as an agreement in the way § 6501(c)(4)(A) written.)  In other words, a waiver is truly unilateral and  in the law of waiver there is no requirement that the other party sign or otherwise agree to a waiver for the waiver  to be effective.  All that is required is that the party waiving do the act necessary to constitute a waiver.

Issue 2: How can a Form 872 be a contract when the benefits flow only one-way – i.e., the IRS gets the benefit but the taxpayer gets nothing of benefit? 

Burden of Persuasion As to Proper Delegated Authority for Statutorily Required IRS Action (Here Notice of Deficiency) (3/17/21; 3/19/21)

In Harriss v. Commissioner, T.C. Memo. 2021-31, TN here and GS here, the Tax Court addressed IRS employee authority and the burden on the taxpayer  to prove that the IRS employee taking the critical action, suggesting that the presumption of regularity applies to the authority to issue notices of deficiency.  Professor Bryan Camp has a good blog on this case and the presumption.   Bryan Camp, Lesson From The Tax Court: The Presumption Of Regularity For NODs (Tax Prof Blog 3/15/21), here.  (Professor Camp and I engage on some of the issues in the comments to his blog.)

I was particularly concerned about imposing upon the taxpayer the burden of proof on the taxpayer.  The Court called the burden the burden of proof without distinguishing between burden of persuasion and burden of production, but it is clear that the court is referring to the burden of persuasion.  The Court then thrashes around and ultimately concludes, in effect, that, while the IRS did not show that its own employee issuing the NOD had the properly delegated authority, the taxpayer did not show that she did not and therefore, as with burdens of persuasion in a state where the fact is not proved, the taxpayer loses.  (See more below as to whether the Tax Court was in equipoise as authority or could find that the employee had the delegated authority.)

It just doesn’t sound right to me that the IRS should not be required to prove its employee’s authority to take statutorily required action.

At p. 10 n. 6, the Tax Court distinguished Muncy v. Commissioner, 637 F. App'x 276 (8th Cir. 2016) which reversed a case where the Tax Court record did not indicate the IRS employee’s authority to issue an NOD and remanded for the Tax Court “to determine whether Miller had authority to issue the NOD that is the subject of this  case, and for further proceedings consistent with that determination.”  The implication, not expressly stated, was that the IRS should lose if the record does not show the authority.  Yet, in Harris, the Court seemed to hold that the taxpayer loses if the record does not show that the employee lacked the authority, distinguishing Muncy on the Golsen dodge.

As a matter of what I think is sound procedural practice in allocating burdens in litigation, it seems to me that the burden should be on the IRS.  The IRS is uniquely situated to show its employees’ authorities to undertake action.  The IRS has that evidence; the taxpayer does not have that evidence without substantial effort and perhaps obligatory discovery against the IRS.  (Practice Note: by way of discovery, I suggest request for admission and related interrogatory to force the IRS to show its hand; alternatively, I suggest that the taxpayer requested a stipulation that the IRS has no evidence to show proper authority.)

Here are some key components of the Court’s exegesis:

1. The general overview of delegations (pp. 8-9):

Section 6212(a) provides: “If the Secretary determines that there is a deficiency in respect of any tax imposed by subtitles A or B or chapter 41, 42, 43, or 44 he is authorized to send notice of such deficiency to the taxpayer by certified [*8] mail or registered mail.” Section 7701(a)(11)(B) defines “Secretary” to mean “the Secretary of the Treasury or his delegate.” In this context “delegate” means “any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context”. Sec. 7701(a)(12)(A)(i).

By regulations the Secretary has extended the authority to determine deficiencies and to issue notices of deficiency to the Commissioner of Internal Revenue and to district directors, directors of service centers, and regional directors of appeals. See secs. 301.6212-1(a), 301.7701-9, Proced. & Admin. Regs. These regulations authorize the Commissioner to redelegate the performance of such functions to other officers or employees under his supervision and control; the Commissioner may also authorize further delegation of such authority by his delegates. See sec. 301.7701-9(c), Proced. & Admin. Regs. As permitted by these regulations, the authority to sign and issue notices of deficiency has been redelegated under Delegation Order 4-8, Internal Revenue Manual (IRM) pt. 1.2.43.9(1), (2), and (3) (Sept. 4, 2012). The list of positions authorized under Delegation Order 4-8 includes “Department Managers, Campus [*9] Compliance Services (Small Business/Self-Employed)” and “Director, Return, Integrity and Compliance Services (Wage & Investment).”Id.

The Court cites IRM 1.2.43.9(1), (2), and (3) (Sept. 4, 2012) which provides redelegations or recognizes redelegations made elsewhere.

Court Denies APA Attack on SDP Transition Denial Allegedly Forcing Taxpayers to Accept OVDP Penalty Structure (3/16/21)

 In Harrison v. IRS, 2021 U.S. Dist. LEXIS 45582 (D. D.C. 3/11/21),* here, the taxpayers entered the OVDP program prior to the IRS offering the Streamlined Domestic Procedures (“SDP” program in 2014.  The SDP penalty requirements were less than the OVDP’s penalty requirements and required taxpayers to certify nonwillfulness and provide support for that certification.  Incident to the SDP, the IRS permitted taxpayers then in OVDP to “transition” to SDP.  The transition required (just as the SDP required) that taxpayers certify nonwillfulness and support the certification.  The IRS (through its Central Review Committee, determined that the taxpayers had not established their nonwillfulness and therefore left them in OVDP where the options were (i) accept the OVDP penalty structure which was more than SDP but less than the law could impose outside OVDP or (ii) opt out of OVDP and take their chances on audit.  Rather than take the risk of higher penalties on audit, the taxpayers chose to accept the OVDP penalty structure.  Accepting OVDP required that the taxpayers enter a closing agreement which provided, in part, that the taxpayers would not file a claim for refund of any amounts paid pursuant to the closing agreement.  They did and paid the resulting tax, penalties and interest, including the miscellaneous offshore penalty in lieu of an FBAR penalty in the amount of $519,943.44.

Two years after entering the closing agreement, the taxpayers brought what was in effect a refund suit but, apparently realizing that the closing agreement might be a bar, couched the suit under a mélange of legal theories:  (i) APA claims that the transition rules were adopted without notice and comment and, in any event, were arbitrary and capricious under APA section 706(2)(A); (ii) Due Process claim based on the alleged purported absence of procedural protections; and (iii) duress claim that the Closing Agreement was invalid.

The Court rejected their claims.  The Procedurally Taxing Blog has a good discussion of the APA aspect of the case.  Leslie Book, APA Offers No Avenue For Relief For Challenge to Offshore Transition Rules Penalty Regime (Procedurally Taxing Blog 3/15/21), here.  Basically, the Court held that a refund suit would be an adequate remedy thus precluding subject matter jurisdiction of the APA claims.  I encourage readers to read that blog and will only address here some nuances on the APA claims.  

 In the blog, Professor Book states:  “The needle can still be thread: if someone else  has fully paid and is not subject to a closing agreement they could bring a refund suit in federal court and get a court to consider the merits of the APA challenge.”  That is the part I want to thrash upon further.

Let’s posit that a taxpayer in the situation in the case did not accept the OVDP settlement but instead took their chances on audit and the general maximum 50% penalty was imposed.  No closing agreement is required.  So, in that case, I suppose Professor Book’s statement is that the taxpayers could then pursue their APA claims in the refund suit; alternatively, and more likely, the government would have pursued a collection suit and the taxpayer’s APA arguments could be pursued there (recall that the government must bring that suit within two years of the assessment of the FBAR penalty).  (In considering a refund suit possibility, recall also that full pre-litigation payment may not be required (James R. Malone, Half a Loaf Might Suffice: FBARS, Flora and Federal Jurisdiction (Post & Schell Tax Controversy Posts 2/13/17), here.) and in the collection suit, no pre-litigation payment is required.)  I suppose both of those potential options to present the APA claims might be deemed sufficiently adequate to preclude stand alone jurisdiction to present the APA claims.

 What exactly are those APA claims?

 Failure to adopt with notice and comment rulemaking

Supreme Court Opinion Uses “Cleaned Up” Technique for First Time (3/3/21)

This morning’s NLJ Supreme Court Brief Email had this item (authored by Tony Mauro):  How SCOTUS Finally Got 'Cleaned Up.'  Mauro's article points to this quote from Justice Thomas' unanimous opinion in Brownback v. King, ___ U.S. ___, ___ S.Ct. ___, 2021 U.S. LEXIS 1198 (2021), here (emphasis supplied):

To “trigge[r] the doctrine of res judicata or claim preclusion” a judgment must be “‘on the merits.’” Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U. S. 497, 502 (2001). Under that doctrine as it existed in 1946, a judgment is “on the merits” if the underlying decision “actually passes directly on the substance of a particular claim before the court.” Id., at 501–502 (cleaned up).

Focusing just on the bold-face sentence, here is the sentence from the Semtek opinion:  

The original connotation of an "on the merits" adjudication is one that actually "pass[es] directly on the substance of [a particular] claim" before the court.

The cleaned up quote looks much tidier and accessible to the reader than does the original in the Semtek opinion.  That is the point.

As explained in Mauro's article:

"The court's holding is the words that are used, not the punctuation," said Metzler, who promoted the phrase persistently on his widely-read Twitter feed Supreme Court Places and in an article published in the Journal of Appellate Practice and Process. In that article, Metzler complained that with the traditional clutter, citations "become an unwieldy mess packed with case cites and parenthetical information that tests the reader's ability to remember the point that the author was trying to make by using the quotation in the first place." Metzler is also the editor of previously unshared style guides of the Supreme Court and Solicitor General.

His campaign to propagate the phrase eventually caught on, and it found its way into all federal circuit courts. "We should welcome any effort to make judicial opinions more readable and accessible to every American citizen," said Judge James Ho of the U.S. Court of Appeals for the Fifth Circuit, who has used the phrase. "To paraphrase my friends at the Green Bag, Citations should not look like goulash." Metzler's latest tally found that the phrase was used more than 5,000 times by lawyers and judges alike. But until last week, it never made it to the holy grail of the Supreme Court.

Recently, there had been hints that the high court was paying attention, Metzler said. Phrases like "quotation modified" or "quotation altered" were being used in Supreme Court decisions with the same purpose. Metzler wouldn't speculate on why "(cleaned up)" finally made it to the court and to Justice Clarence Thomas, who wrote the Brownback opinion.

But here is a guess: as of January 13, the Supreme Court has a new Reporter of Decisions named Rebecca Womeldorf. Part of her job is editing-or perhaps cleaning up-the court's opinions.

I have been using the cleaned up technique since I first learned of it from Bryan Garner’s Blog entry titled Law Prose Lesson 303: Cleaned Up Quotations and Citations (Bryan Garner Law Prose Blog June 2018), here.  Readers will recall that, for some time now, I explain the technique in a page link in the right hand column, titled Cleaning Up Quotes and Cites for Readability -- The "Cleaned Up" Technique, here.

Thanks Jack Metzler and thanks Justice Thomas.

This blog post is cross-posted on my Federal Tax Crimes Blog, here.

Taxpayer First Act Report to Congress (2/11/21)

The IRS released the Taxpayer First Act Report to Congress (January 2021), here.  The Report covers considerable ground and, I confess, I have not studied the Report in detail.  Much of it seems on quick overview to be aspirational generalities, sprinkled with some specific recommendations.  I don’t know if I will really give it a detailed study in the future. 

I was pointed to the Report by this practitioner summary of the report:  Steve Toscher and Robert S. Horwitz, Time for Another IRS Reorganization (Tax Litigator Blog 1/24/21), here.  Here is an excerpt from that article that caught my attention (bold face supplied by JAT):

The Compliance Division will be reorganized.  LB&I, SB/SE, Wage & Investment, Exempt Organization will all be gone.  Instead, there will be Criminal Investigation, Whistleblower, Exam and Collection.   Exam will consolidate all exam operations that are currently spread among several units and Collection will be responsible for collection activities from all types of taxpayers (or as the report puts it, “all taxpayer segments”).  This is a similar structure to the one that existed for over 40 years before the 1998 restructuring act, i.e., an Examination Division, a Collection Division and a Criminal Investigation Division. 

The new “org chart” is here.

I suppose this is like “déjà vu all over again.”  (Attributed to Yogi Berra per Wikipedia, here.)

So, one might fairly ask why did the IRS restructure 20 years ago?  The answer is politics.  Readers wanting that history (or at least my version of that history) can see it in my book, Federal Tax Procedure 2020 (Practitioner Ed.), beginning on p. 34, here.

Supreme Court Opinion Syllabus as Persuasive Authority? (2/8/21)

I was working on an article Sunday on the APA and interpretive regulations (on which I have posted before).  In the article, I refer to the "Traditional Understanding" under the APA.  I used the term in   this and an earlier version to describe the understanding of the difference between legislative and interpretive regulations.  One facet of that Traditional Understanding is that legislative regulations and only legislative regulations are said in APA discourse to have the “force of law” or “force and effect of law.”  Interpretive regulations do not have the force of law; the statute is the law, not the interpretation. I was fairly certain that my use of the concept of a “Traditional Understanding” in this respect was appropriate.

Today, I was reviewing the opinion in Chrysler Corp. v. Brown, 441 U.S. 281 (1979).  The opinion uses the term “traditional understanding” but states the traditional understanding most clearly in the Syllabus to the opinion.  So, of course, I had to footnote something on the use of Supreme Court Syllabi because most lawyers of my generation would say that’s a no-no.  (Sort of like lawyers, scholars and courts used to look down on the use of Wikipedia.)  Here is what I say about that (from a footnote):

The Supreme Court called a key component of the Traditional Understanding as I call it–that legislative regulations have force and effect of law–as the “traditional understanding.” Chrysler Corp. v. Brown, 441 U.S. 281, 295-296 (1979) (this may not be as to persons who are not experts in reading Supreme Court opinions, but I think that the clarity is supplied by the Syllabus to the opinion which states the “traditional understanding” (p.  285)): 

properly promulgated, substantive [legislative] agency regulations have the “force and effect of law.” In order for a regulation to have the “force and effect of law,” it must be a “substantive” or “legislative-type" rule affecting individual rights and obligations (as do the regulations in the case at bar), and it must be the product of a congressional grant of legislative authority, promulgated in conformity with any procedural requirements imposed by Congress.

The part of the Chrysler opinion this portion of the Syllabus refers to (pp. 295-303) is not as crisp, but I think it incorporates the same concept.  I recognize that the Supreme Court Syllabi caveat that the Syllabus is not part of the opinion (see also United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337 (1906)) but it is reported that, in modern Supreme practice, the author of the majority opinion or his or her law clerk reads the Syllabus for accuracy.  Carolyn Shapiro, Coding Complexity: Bringing Law to the Empirical Analysis of the Supreme Court, 60 Hastings L.J. 477, 498 (2009).  For an argument that the Syllabus stands for something if not the holding in the case, see Gil Grantmore, The Headnote, 5 Green Bag 2d 157, 161 (2002) noting (emphasis supplied):

As Justice Ginsburg explains, “the justice who wrote the opinion may edit [the syllabus] and sometimes rewrite passages, as I more than occasionally do, mindful that busy lawyers and judges may not read more.” Thus, the syllabus of Detroit Timber days is not the syllabus of today - today's is more widely available and more reliable. The argument for giving the syllabus at least persuasive effect - which is not foreclosed by Detroit Timber anyway - is even stronger today.

Lenity and Chevron Deference - Some Thoughts in a Tax Context (2/7/21)

 I am now working on a larger article that incorporates a discussion of the interface of lenity and Chevron deference, both of which supply rules of interpretation to ambiguous statutory text at least where Chevron can apply (i.e., where the agency has adopted a Chevron-entitled reasonable interpretation that is different than the interpretation the court thinks is the best interpretation).  Basically, I think the law is as of now ambiguous as to how Chevron interfaces with lenity where both may be truly applicable.  I emphasize truly applicable for Chevron because I think much of the commotion about Chevron really does not involve situations where Chevron is truly applicable.  In my analysis earlier in the paper I say Chevron is truly applicable only in what I call Category 5 – where the court believes its own interpretation (after perhaps giving Skidmore deference to the agency interpretation) is still better than the agency reasonable interpretation.

I post below the text (but not the footnotes) to my discussion in the hope that readers may (i) be interested and (ii) can offer constructive comment.  Thanks in advance.

I discussed above the claim that an interpretation which affects penalties is transformed into a legislative rule.  The underlying concern is that Congress alone can enact criminal penalties and the text of criminal statutes (at least as interpreted by the courts) must clearly set the standard of conduct being penalized.  Further, there is the rule of lenity, often described as a canon of construction, that requires that courts interpret ambiguity in criminal statutes in favor of the defendant. The rule of lenity and true Chevron deference (the Category 5 deference) would thus conflict if both were to apply to a criminal statute.  One author has described the conflict as between a “government always loses” standard (lenity) and a “government always wins” standard (Chevron deference).  The answer is less than clear (at least to me) because of the distractive rhetoric that attends discussion of the issue.

Rather than trying to resolve all that rhetoric to some form of black letter law (I think an impossible task on the state of the discussion), I will just try to analyze how the discussion might play out in my area of expertise–tax with a subspecialty in criminal tax. 

Many criminal statutes impose an express element that the defendant have acted “willfully.”  The criminal statutes do not define “willfully,” As authoritatively interpreted by courts, willfully can mean different things in different criminal statutes.  In Bryan v. United States, 524 U.S. 184, 191 (1998), the Court famously noted that noting that the word is a chameleon, “a word of many meanings whose construction is often dependent on the context in which it appears.”  I think that, in Chevron analysis, this is simply to say that when, in a criminal statute, Congress makes willfully an element, there is interpretive space that must be filled to give meaning to the statute as to which of the possible meanings of willfully applies.  Traditionally, that interpretive space in a criminal statute is filled by the courts.  Key Title 26 tax crimes have the requirement that the defendant act “willfully,” interpreted as the highest level of mens rea–that the defendant intended to violate a known legal duty, a standard that is not met just by reckless conduct.  Cheek v. United States, 498 U.S. 192, 196 (1991).  In other criminal contexts where the statute imposes a willfully element, the courts impose, through interpretation, a lesser mens rea standard.  The lower level of mens rea is said to be the general rule for interpreting a statutory willfully element.  The higher level of mens rea applies only to a small subset of crimes where willfully is a statutory element and is said to be an exception to that general rule.  Determining whether the general rule or the exception applies can be a bit esoteric but that need not concern us here.  Suffice it to say for present purposes, Treasury could not, by regulation, authoritatively and binding on the courts interpret the term “willfully” in the elements of tax crimes such as tax evasion to include, for example, a general intent to do some unlawful or reckless conduct without specific intent to violate a known legal duty. I think that is a fair statement of the law.

Tax Court Opinion on Various Aspects of Collection Activity for RBAs and Coordination with DOJ (1/28/21)

 In Reynolds v. Commissioner, T.C. Memo. 2021-10, TC Dkt entry #20 here * and TN here, in a collection due process (“CDP”) case, the Court (Judge Thornton) discussed restitution-based assessment (“RBA”) under § 6201(a)(4).  In the prior criminal case preceding, the sentencing judge (i) imposed tax restitution of $193,812, but waived interest on the restitution based on a finding that the Reynolds could not pay; (ii) ordered payments during imprisonment of $25 per quarter and during supervised release of the greater of $100 or 10% of his monthly income; and (iii) ordered that Reynolds apply income tax refunds and “anticipated or unexpected financial gains.”

The IRS made the RBA in the amount of $193,812 restitution and also assessed interest for the period.  The IRS audited the years 2002 and 2003 and determined deficiencies and civil fraud penalty.  Reynolds petitioned the Tax Court to redetermine the deficiencies.  The decision document reduced the deficiencies and assessed the civil fraud penalty but noted (Slip Op. 5 n. 2) that the civil fraud penalty had been discharged in a bankruptcy proceeding (although there is no further explanation).

In this CDP case, Reynolds complained about the IRS’s collection activity with regard to the RBA.  I will just bullet point some of the key discussion / holdings rather than have a further narrative.

• The opinion discusses the IRS Collection Advisory Group’s role in RBAs which interfaces with IRS Collections.  The opinion describes this group (Slip Op. 6 n 2): 

The IRS Collection Advisory Group coordinates and monitors probation and restitution cases; the advisor serves as a liaison for coordinating such cases with IRS field offices and the Department of Justice (DOJ). See Internal Revenue Manual (IRM) pt. 5.1.5.16 (Oct. 6, 2017); IRM pt. 5.19.23.1(5) (Oct. 27, 2017); IRM pt. 25.26.1.5.2 (Mar. 24, 2014). 

• The opinion discusses the Revenue Officers’ collection activity over a number of years in some detail, mostly after the NFTL.

• Reynolds attorneys apparently believed that once an RBA was made, only the IRS could collect.  However, the IRS position was that there were two separate debts:  the restitution debt that DOJ’s financial unit can collect; and the RBA that the IRS can collect.  Of course, to the extent that restitution and RBA are the same, payments against one are credited against the other so that there is not double payment.  But, DOJ and the IRS can proceed on separate tracks to collect, although there must be some coordination.

• The IRS and the Reynolds tilted during much of the period over Reynolds’ ability to pay more than he was paying.  In the final analysis, the IRS concluded that "this appeal is being maintained primarily for delay."  (Slip Op. 17.)

• The IRS eliminated the restitution interest and failure to pay penalties per Klein v. Commissioner, 149 T.C. 341 (2017 ).

Sunstein Articles Supporting Chevron Deference (1/18/21)

Readers of this blog know that conservative and libertarian judges have noised since around 2000 that the Chevron “Framework” derived from Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) is variously unconstitutional or illegal and should be junked.  The Chevron Framework basically requires, in a two-step format, that courts defer to reasonable agency interpretations of ambiguous statutory text.  The Framework is more nuanced, but I think the description is a sufficient high-level overview of the Framework for purposes of this blog.

 A lot of claims are made about the Chevron Framework being illegal and unconstitutional.  One of the most persistent claims is that Chevron deference violates the APA command that “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”  5 U.S.C. § 706.  Solely on the basis of that statutory text, the anti-Chevronists claim that a court reviewing agency actions based on agency interpretation of ambiguous statutory text must interpret the ambiguous statutory text de novo rather than defer to agency interpretation.

I have argued against this “interpretation” (if you will) of § 706.  See Townsend, John A., The Report of the Death of the Interpretive Regulation Is an Exaggeration (August 23, 2020). Available at SSRN: https://ssrn.com/abstract=3400489.  In that article, I review the history of deference before enactment of the APA in 1946 and after the enactment of the APA.  See pp. 71-79, beginning here.  I further argue that § 706 is not inconsistent with deference to reasonable agency interpretations.  See pp. 92-95, beginning here.  (Note that I err in my opening statement that "Here are my reasons for rejecting any notion that deference is consistent with § 706;"  the correct statement (with correction in red will be corrected in the next draft) is "Here are my reasons for rejecting any notion that deference is inconsistent with § 706;" actually my argument is that deference before and after Chevron is consistent with § 706.)

I write today to advise readers of a recent articles regarding Chevron, one of which covers the same ground.  The two articles are by Professor Cass Sunstein. a leading administrative law scholar (Wikipedia here).  In the first article, Professor Sunstein reviews the same trajectory and arguments I make in my article with the same conclusion – that deference to reasonable agency interpretations is consistent with § 706 (whether referring to the intent of Congress or original public meaning of Congress).   Sunstein, Cass R., Is Chevron Inconsistent with the APA? (December 4, 2020). Available at SSRN: https://ssrn.com/abstract=3742429.  See also my article, p. 94 n. 378, here (citing another Sunstein article, with others, on the basic point that deference is consistent with § 706.

Further, not only is Chevron consistent with § 706, Professor Sunstein also argues in a separate article that even if it arguably were not (or at least could not be conclusively shown to be consistent), rejecting Chevron deference at this date would be imprudent.  Sunstein, Cass R., On Overruling Chevron (November 1, 2020). Available at SSRN: https://ssrn.com/abstract=3723681.  In the article Sunstein concludes (pp. 14-15, footnote omitted):

Outstanding Article on Current State of IRS Voluntary Disclosure Practice (1/16/21)

 This brief blog today is to alert readers to an outstanding article on the current state and some uncertainties and risks of the IRS Voluntary Disclosure Practice (“VDP”).  Scott Michel and Mark Matthews, The 2020 Revision to the Internal Revenue Manual’s Voluntary Disclosure Practice: More Consistency with Greater Risk (Bloomberg Daily Tax Report 1/12/21), here.  The article is prompted by recent changes to the IRM provisions on the VDP.  IRM 9.5.11.9(1) (09-17-2020), Voluntary Disclosure Practice, here.

This blog post is cross-posted on my Federal Tax Crimes Blog, here.