Second Circuit Says § 6751(b) Means What It Says-Appeals Officer in CDP Appeal Must Verify the Supervisor Approval Requirement (6/30/29)

In Besicorp v. Commissioner, ___ F.4th ___ (2d Cir. 2026), 2Cir here and GS here [to come], the Court held that, in a CDP Appeals Office Conference, the Appeals Officer must verify the IRS’s compliance with § 6751(b)’s written supervisor approval requirement for penalties. The Court says that in 29 pages cogently, if not succinctly, traversing the applicable statute and other authority. Those 29 pages are not all fluff without lessons for students and practitioners, so I address certain key points.

1. I open with a comment I make in a soon to be published article. Section 6751(b) is nonsensical and a textual mess. That comment was focused on the courts’ flailing around to make sense of the mess and was an argument for courts to approve the regulations adopted in December 2024 to make sense of key components of § 6751(b). However, as to the text in § 6751(b) that Besicorp interprets and applies, the text is clear, so Besicorp is correct that CDP Appeals Office proceedings require verification of the written supervisor approval requirement. (I except from that the possible application of res judicata discussed below in ¶ 5.) That is a textualist reading of the text; I don’t see any reasonable mode of interpretation that would reach a different conclusion.

2. Of course, in making that verification, the Appeals Officer must wade into the mess of the other components of § 6751(b) which are a mess with differing interpretations by the courts. I suppose, the Appeals Officer might rely upon the § 6751(b) regulations, either proposed or permanent, although the Besicorp Appeals Office hearing likely occurred before the regulations were proposed or adopted. (In this regard, the Second Circuit argument in Besicorp was 2/5/24; and Besicorp (and consolidated cases) were filed in the Tax Court in 2017. See T.C. dkt. Entries here, before the 2024 regulations were even a twinkle in the Commissioner’s eye.

3. The income tax liabilities in Besicorp and consolidated cases arose from bullshit tax shelters. The Court says the tax and interest (Slip Op. 3) reporting and tax savings from “tax shelter transactions designed to avoid the payment of taxes,” as determined by the IRS. The tax shelter transactions were of the “intermediary tax shelter” aka Midco ilk. (Slip Op. 10.) Besicorp’s deficiency was $50 million. (Slip Op. 5.) And, being a category of bullshit tax shelters, the IRS also asserted the 40% penalty which for Besicorp was “roughly $20 million penalty on a $50 million deficiency for its accuracy-related gross valuation misstatements,” citing § 6662(h). (Slip Op. 5.)

4. The taxpayers involved in Besicorp and consolidated cases may have been affiliated with the promoters who promoted the bullshit tax shelters. Indeed, from my work in this area, I found it was not uncommon for the promoters who “earned” very large amounts from promoting the fake tax savings (a price taxpayers were willing to pay for fraud insurance) to themselves then “shelter” their income with their own bullshit tax shelters (always permitting some variance in the smoke and mirrors game). I note in this regard that one of the attorneys for the taxpayers was also an attorney for at least one promoter and related corporation.

Wherefore Art Thou Tax Court? (6/29/26; 6/20/26)

In two cases today, the Court held that

• The general rule is that (i) the President can fire executive agency personnel at will even if the statute says that they can only be removed for cause or for some other similarly worded reason  Trump v. Slaughter, 609 U. S. ___ (2026) (stating the general rule); but
• An exception to the general rule in the case  of members of the Board of Governors of the Federal Reserve where the statute requires “for cause” removal. Trump v. Cook, 609 U. S. ____ (2026) (stating the exception).

The opinions may be viewed and downloaded here: Trump v. Slaughter, SC Slip Op. here and GS here [to come]; and Trump v. Cook, SC Slip Op. here and GS here [to come]. 

Of course, the general rule (concocted under the “unitary executive” theory) and the exception require a definition of an executive agency subject to the respective rule and exception. In other words, it is not clear that Cook states a single exception applicable to the Federal Reserve. 

In the tax world, the Tax Court is potentially implicated in this brouhaha. Consider the following statutory text:

26 U.S. Code § 7441 – Status
There is hereby established, under article I of the Constitution of the United States, a court of record to be known as the United States Tax Court. The members of the Tax Court shall be the chief judge and the judges of the Tax Court. The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.

26 U.S. Code § 7443 - Membership
* * * *
(f)Removal from office
Judges of the Tax Court may be removed by the President, after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause.

A strict textual reading of § 7441 specifically states that the Tax Court is not an executive body (agency in administrative law lingo). The President has the power to appoint Tax Court Judges, “by and with the advice and consent of the Senate, solely on the grounds of fitness to perform the duties of the office.”  § 7443(b). (That may suggest that politics should not be involved, but babies come in baskets (although politics is involved some of the Tax Court Judges are exceptional on the metric of “fitness to perform”).) Then, once the Senate has advised and consented, the President alone has the power to remove Tax Court Judges but only, to repeat, “after notice and opportunity for public hearing, for inefficiency, neglect of duty, or malfeasance in office, but for no other cause.”

Supreme Court Denies Cert in Murrin on Issue of Whether Taxpayer's Fraud is Required for § 6501(c)(1) Unlimited Statute of Limitations (6/22/26)

Today, the Supreme Court denied the petition for certiorari in Murrin v. Commissioner (Sup. Ct. No. 25-988), docket here. See Order List dated 6/22/26, here at p.3, The Third Circuit opinion from which Murrin sought cert was Murrin v. Commissioner, 158 F.4th 527 (3rd Cir. 2025), here.

The question presented in the petition here was:

Whether, under 26 U.S.C. § 6501(c)(1), the IRS may assess tax beyond the Code’s three-year limitations period based solely on the fraudulent intent of a third-party, even when the taxpayer herself neither intended to evade tax nor knew of any wrongdoing.

The question as framed by the SG in the Commissioner’s Brief in Opposition here was:

Whether the indefinite limitations period in 26 U.S.C. 6501(c)(1) applies to a false or fraudulent return prepared by a tax return preparer who acted with the intent to evade tax.

Tax Court Sustains IRS Interpretation for the Research Credit as Best Interpretation or, Possibly, with Loper Bright Deference from § 7805(a) (6/19/26)

In Smith v. Commissioner, T.C. Memo. 2026-50, TC No, 13382-17 here at #286 dated 6/16/26 and GS here, the Court sustained a regulations interpretation of the research credit over the taxpayers’ Loper Bright objections. Readers will recall that Loper Bright rejected Chevron deference for agency interpretations, exhorting courts to determine and apply the “best” interpretation. “Best interpretation” was not an inflexible command; Loper Bright permitted deference to agency interpretations when delegation was expressly or impliedly granted by Congress and courts might still find the agency interpretation persuasive under Skidmore.

A number of pre-Loper Bright cases sustained the applicable agency regulation by applying Chevron deference. In Smith, the taxpayers argued that (*30) “under the Supreme Court's landmark decision in Loper Bright, Treasury Regulation § 1.41-4A(d) is no longer the single best reading of section 41(d)(4)(H).”

One problem with the taxpayers’ argument was that prior cases had sustained the interpretation under Chevron. The Smith opinion mentions (*31) “statutory stare decisis” which Loper Bright expressly approved for pre-Loper Bright cases applying (or appearing to apply) Chevron deference. Smith concludes that discussion (*33):

           Thus, we find that the holdings in our prior cases and the aforementioned decisions of the Federal Circuit and Federal Claims continue to remain in effect. See Diversified Grp. Inc. v. Commissioner, Nos. 17038-18L, et al., 166 T.C., slip op. at 21–22 (2026); see also, e.g., Garcia Pinach v. Bondi, 147 F.4th 117, 121, 131–33 (2d Cir. 2025) (analyzing Loper Bright and the doctrine of statutory stare decisis and leaving undisturbed the holding of a prior panel opinion).

More importantly, Smith reasons (*33-*34, emphasis supplied by JAT):

          Moreover, we find respondent’s power to persuade argument compelling. In reaching a conclusion on the validity of a regulation we may give “[c]areful attention to the judgment of the Executive Branch.” Loper Bright, 144 S. Ct. at 2273. For the views of Treasury in this context “constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” Id. at 2262 [*34] (quoting Skidmore, 323 U.S. at 140). “The weight of such a judgment in a particular case,” of course, “depend[s] upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Id. at 2259 (quoting Skidmore, 323 U.S. at 140); see also Varian Med. Sys., 163 T.C. at 106. Congress has delegated authority to Treasury under section 7805(a) to define criteria for Congress’s funded research exclusion found in section 41(d)(4)(H). Here, Treasury has exercised that authority and issued longstanding and favorable administrative guidance that offers both clarity and certainty for taxpayers.

Considering the foregoing, we conclude the regulatory requirements found in Treasury Regulation § 1.41-4A(d) used to determine whether research is funded are reasonably related to and otherwise consistent with the intent of section 41(d)(4)(H). Accordingly, we reject petitioners’ contention that the Supreme Court’s decision in Loper Bright undermines the prior decisions that relied on Treasury Regulation § 1.41-4A(d) and their effects as precedent in these cases. Further, we reject petitioners’ reading of the phrase “to the extent funded by any grant, contract, or otherwise” found in section 41(d)(4)(H) to mean only “a sum of money set apart for a specific objective” and likewise determine our reading of this phrase would not be as beneficial as the Treasury regulation requirements. In other words, we find no benefit to petitioners’ argument, should we be inclined to reject respondent’s reading of the Code for our own.

          On the basis of the foregoing, we decline to invalidate Treasury Regulation § 1.41-4A(d) and the requirements for determining funded research under section 41(d)(4)(H) incorporating both “contingent on success” and “substantial rights” elements.

As I read this, Smith is saying that, although the prior cases may have noised about Chevron deference and in some cases even appeared to apply Chevron deference, in truth and might pass muster under statutory stare decisis, the IRS interpretation was the “best” interpretation, passing muster under Loper Bright’s de novo interpretation imperative.

Smith muddles on the point of best interpretation by citing § 7805(a) as a Congressional delegation of interpretive authority for the substantive Code provision. Is Smith suggesting in citing § 7805(a) that the interpretive regulation was a delegation qualifying for Loper Bright deference? If so, since Smith seems to have determined the agency interpretation was the best, was the citation of § 7805(a) necessary or even appropriate?

One side note on § 7805(a): Throughout its history, § 7805(a) has been authority for interpretive regulations. That authority was muddled by those claiming that interpretive regulations when applied by courts using Chevron deference meant that the interpretive regulation was transformed into a legislative regulation. That claim was always nonsense (even when made by Justice Scalia); with the demise of Chevron deference, courts are free to get past the nonsense. 

D.C. District Court Vacates IRS Notice Limiting Test for Clean Energy Credit (6/18/26)

In Oregon Env. Council v. IRS, ___ F.Supp.3d ___ (D. D.C. 6/6/26), CL here and GS here, the Court rejected the IRS attempt to eliminate one of the tests the IRS had used to satisfy the “beginning of construction” dates for clean energy tax credits. For a long time, the IRS had Notices permitting “beginning of construction” to be tested under the “Physical Work Test” and the ”Five Percent Test” (or “Safe Harbor”). By Notice 2025-42, 2025-36, IRB 351 (2025), the IRS eliminated the Five Percent Test.

The Notice was based on the President’s Executive Order No. 14,315, titled  "Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources," directing the IRS to "take all action as the [Secretary] deems necessary and appropriate to strictly enforce the termination of the clean electricity production and investment tax credits under sections 45Y and 48E of the Internal Revenue Code for wind and solar facilities." Soon after the Executive Order but before Notice 2025-42, reacting to the Executive Order, “multiple interested parties,” filed comments. Some commenters urged the IRS to retain the existing tests, called the “Physical Work Test” and the ”Five Percent Test” (or “Safe Harbor”) or make any new test only prospective. Prominent Congressmen offered comments, some supporting the existing Tests. The IRS then issued Notice 2025-42, 2025-36, IRB 351 (2025) providing that the “beginning of construction” requirement will be based only on the Physical Work Test, thus eliminating the “Five Percent Test.”

The Plaintiffs (“a collection of governmental and private organizations”) sued alleging “that the Notice is harming them” in specific ways outlined in the opinion (but not relevant to this blog entry). Among the claims made was that the Notice violated the APA reasoned decisionmaking requirement for valid agency rules. See Motor Vehicle Manufacturers Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52 (1983).

After extensive analysis, the Court held (Slip Op. 49):

Notice 2025-42 falls short of these standards. The Notice’s elimination of the Five Percent Safe Harbor is a significant change in the IRS’s position on what it means to “begin construction” for purposes of clean energy tax credits. This changed position implicates “serious reliance interests,” which the agency actively invited by repeatedly restating its prior approach. See Encino Motorcars, 579 U.S. at 221–22. Although the record shows that the Defendants received clear warnings about those reliance interests before adopting the Notice, the agency failed to justify its decision to change course. Because neither the Notice nor the administrative record provides an explanation from which “the agency’s path may reasonably be discerned” in light of all the facts and circumstances, the Notice is arbitrary and capricious. See State Farm, 463 U.S. at 43.

On Legislative History—Supreme Court Faceoff Between Conservative and Liberal Justices with Comments (6/16/26)

In FS Credit Opportunities Corp.v. Saba Capital Master Fund, Ltd., 608 U. S. ____ (2026), decided June 22, 2026, SC here* and GS here**, the conservative and liberal Justices fussed about the proper role of legislative history in statutory interpretation. That fussing interested me because I had recently made substantial revisions to that fuss in my 2026 Working Draft of my Federal Tax Procedure book (Student and Practitioner Editions). I don’t think the fussing in FS Credit adds anything meaningful to the discussion, but it does offer a handy opportunity for those interested in the issue to be up to date on the Supreme Court’s views. So, I thought that, in addition to notifying readers and providing links to the Opinions, I would offer the current treatment of the issue from the Working Draft (due for publication on the SSRN platform in early August 2026). The Practitioner Working Draft (with text and footnotes) may be viewed or downloaded here. The Student edition is the Practitioner Edition text without the footnotes, so for readers generally I just copy and paste here the text only:

(5)    Legislative History in Statutory Interpretation.

           The pre-enactment history of enacted statutory text may be important in interpreting the enacted text (just as, for example, the history of the drafting and ratification of the Constitution may guide its interpretation). Relevant history is often discussed in two broad categories: Statutory History and Legislative History. (Actually, statutory history (defined below) is a subset of legislative history, but it is not uncommon to treat the two as separate categories.) Both types of history stop upon enactment of the statutory text being interpreted; at least conceptually, since the focus is on the meaning of the text upon enactment, there is no such concept as subsequent legislative history which at best would be comments on the meaning of the previously enacted text. (I return to subsequent legislative history below, beginning on p. 34.)

           Statutory history can include two broad categories: (i) enacted text only, including enacted text that has been revised by enacted text over time (call this category “enacted statutory history”); and (ii) the changes in the text of bills as they move through the legislative process to enactment (“drafting history”). Enacted statutory history considers only enacted text and any interpretive inferences that may be drawn from enacted text; drafting history also considers drafts of the text as it moved and changed through the legislative process. Textualists use enacted statutory history to draw inferences of enacted text meaning. Sometimes, textualists resort to drafting history treating it somewhat like enacted statutory history in drawing interpretive inferences.

           Legislative History includes all documents the legislature may have generated or considered in enacting the statutory text that might permit inferences as to the meaning of the enacted statutory text. Legislative history is the course of congressional consideration in identifying the need for legislation, drafting or revising the bills (the “drafting history” and statutory history for enacted statutory text), expressions by persons involved in the process as to how they understood the text of the bills, and the final statutory text. The principal sources of legislative history for statutes are the drafting history and the committee reports which I discuss below. (For tax legislation, the legislative history may also include proposals from Treasury (analogous to drafting history) and Treasury’s explanation of the proposals, most commonly along with Treasury’s annual budget request with tax proposals referred to as the Green Book.) Other sources include committee hearings, statements made on the floor of Congress in debating the legislation, and submissions to Congress by the executive branch. There is a long and substantial history of judicial use of legislative history in statutory interpretation, particularly in the tax area.

Tax Court Holds that IRS Must Prove Return Fraud After a Convicted Spouse is Convicted for Tax Evasion (5/30/26)

In Li v. Commissioner, T.C. Memo. 2026-42 (T.C. Case 12133-23 at #35, here, at #35, and GS here [to come], the Court addressed proof issues for applying the unlimited statute of limitations for a joint return spouse (“unconvicted spouse”) after the other spouse was convicted of tax evasion (“the convicted spouse”). Of course, as to the convicted spouse, collateral estoppel will apply to establish fraud for the unlimited statute of limitations (§ 6501(c)(1)) and the civil fraud penalty (§ 6663). Li addresses the issue of the effect of the convicted spouse’s conviction on the unconvicted spouse’s statute of limitations (§ 6501(c)(1)),

The background is the Allen issue. In Allen v. Commissioner, 128 T.C. 37 (2007), the Court held that fraud on a return by a return preparer without the taxpayer’s personal fraud invoked the unlimited statute of limitations in § 6501(c)(1). The issues Allen raises are discussed in several blog entries over the years, but I think they are presented in my most recent blogs: Update on Murrin Petition for Cert re Unlimited Civil Statute of Limitations for Non-Taxpayer Fraud Reported on Tax Return (Federal Tax Procedure Blog 5/19/26), here; and Further on Murrin and Allen and the Unlimited Statute of Limitations for Fraud on the Return (Federal Tax Procedure Blog 4/30/26), here.

Stripped down to basics, the current status of the Allen issue is as follows:

• for courts applying the Allen holding (that the preparer’s fraud alone will suffice to the unlimited statute of limitations; the taxpayer’s fraud is not required). This includes all courts addressing the issue except the Federal Circuit.
• the Federal Circuit held that the taxpayer’s fraud is required, at least in a context where the fraud on the return was not the preparer’s fraud (although the Federal Circuit did not intimate that preparer fraud would suffice).

Li dealt with the unlimited statute of limitations for the unconvicted spouse after the convicted spouse’s tax evasion conviction. The holding was that, as to the unconvicted spouse, the IRS must prove fraud on the return by clear and convincing evidence of fraud on the return (which need not necessarily be the unconvicted spouse’s personal fraud). In the Li facts, that means that the unconvicted spouse is not subject to collateral estoppel for the convicted spouse's conviction. Li does not address the issue I discuss in the first blog above as to whether fraud on the return committed by others than the tax return preparer (e.g., tax shelter promoters) will suffice.

I have synthesized the Li Opinion in my working draft for the Federal Tax Procedure Editions for 2026 (to be published in early August). I offer that synthesis here in the paragraph after discussing the Allen issue (note that the footnotes are presented after the text; the numbering on the footnotes will not be the same in the working draft or the final 2026 Practitioner Edition):

Interesting Concurring Opinion on Canons (or Maxims) of Statutory Interpretation (5/29/26; 6/1/26)

In Flight Options LLC v. United States, ___ F.4th ___ (6th Cir. 2026), CA6 here and GS here, 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. (Added 4:50 pm: To put that another way, for a pro rata tax, private-jet flyers pay less than commercial-jet flyers. Think about that.)

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).

Adding to my FTPB Discussion of Civil Suits for Disclosure of Return Information for the Trump "Settlement" (5/26/26; 5/29/26)

Added 5/27/26 7:00pm and 5/28/26 3:30pm: I have added new matters at the end of this blogging. Since the issue is developing, I may update on the developments by additions below or by separate blog.

I have just finished a first draft of the portion of the working draft of my Federal Tax Procedure book 2026 discussing the civil remedy for improper disclosures of tax return information under § 7431. In the 2025 version, I have a paragraph discussing the settlement with Ken Griffin regarding disclosures of prominent (meaning wealthy) taxpayers' return information. I have not changed that paragraph, but have added immediately after it a discussion of the Trump v. IRS § 7431 suit and the settlement of Trump’s suit that has been so much in the news recently. I suspect most, perhaps all, the readers will already know the basics of the settlement that I offer. I link here a pdf with redline of the new discussion with footnotes. I copy and paste below the discussion (text only) with the new material after the Griffin paragraph (which I do not redline here).

           A prominent example of this remedy is a suit brought by a Kenneth Griffin, reputedly a hedge fund billionaire. An employee of a third party contractor to the IRS, Booz Allen Hamilton, Inc., illegally accessed and disclosed the tax return information of Griffin and others to a news organization, ProPublica, which in turn published some of the tax return information. Griffin sued the IRS under (i) § 7431, alleging violation of § 6103, and (ii) the Privacy Act. The employee was prosecuted and pled guilty, receiving a five-year sentence. Griffin and the IRS settled the civil action resulting in a dismissal with prejudice. All of the terms of the settlement are not available, but the IRS agreed to and did issue a public apology. Another reputed billionaire brought related action against the employee’s employer, Booz Allen Hamilton, Inc.

           An even more prominent example arising from the same mass disclosures is a 2026 suit Donald J. Trump filed in his personal (rather than Presidential) capacity for $10 billion damages (asserting both the minimum $1,000 per disclosure with disclosures at $1,000 justifying $10 billion or actual damages of $10 billion) and for punitive damages in an amount not stated. The parties plaintiff also included Trump related persons and entities. The Judge in the case asked the parties to brief whether, given Trump’s control over the Government parties (IRS and DOJ) and personal interest as Plaintiff, the case met the required Article III case or controversy requirement. The Court also appointed distinguished amicus to provide here independent briefing on that issue. Before the parties presented their briefing but after the amicus provided its initial briefing, the Trump parties moved to dismiss requiring the Court to dismiss with prejudice under FRCP Rule 41(a)(1)(A)(i); as required by that Rule, on 5/18/26, the Court dismissed with prejudice, the Court noted:

           Because the Notice does not reference any settlement or include a stipulation of settlement, there is no settlement of record. Additionally, Defendants—federal agencies represented by the Department of Justice, which has an independent obligation to uphold the “public’s strong interest in knowing about the conduct of its Government and expenditure of its resources” and the “fair administration of justice,” 28 C.F.R. §§ 50.9, 50.23—neither submitted any settlement documents nor filed any documents ensuring that settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed.

In short, the Court smelled a rat but under the Rule was required to dismiss with prejudice.

Re-Working the Chevron/Loper Bright Discussion in the FTP Books (Student and Practitioner Editions) (5/25/26)

I recently spent some time and mental energy on an article on Chevron and Loper Bright. Incident to rethinking the issues, I have decided to substantially reduce the space I devote to Chevron and Loper Bright in my Federal Tax Procedure Book working draft for the 2026 editions (due in early August on SSRN). I will first excerpt the current discussion offering more (particularly with footnotes) and print that discussion separately for publication on SSRN. I will then re-work the discussion to provide more compact summaries of the key points, hopefully keeping the discussion to 5 pages with footnotes in the Practitioner Edition of the book (the 2025 presented it as 9+ pages).

I thought I would use this effort to test some AI Tools on a short portion of the discussion that I am deleting from the FTP book. I took a portion of the introduction to the Chevron/Loper Bright issues (about 2+ pages in the Student Edition (pp.59-61) without footnotes. The 2026 working edition made some significant changes, so I used that for the AI tests. The draft that I asked the AI Tools for assistance may be viewed here. I tried it on several AI tools, but chose to work with the MS Copilot versions. I present Copilot’s reworking of that text here (various offerings). Probably the best choice is the following which Co-Pilot said was a “High-Impact” version (I have lightly edited the Co-Pilot version (my edits are marked in red):

For decades, Chevron stood at the center of administrative law—criticized, caricatured, and often misunderstood. In Loper Bright, the Supreme Court finally swept it aside. But the Court’s account of what Chevron was, how it functioned, and what the APA demands is not a restoration of interpretive purity. It is a reconstruction built on selective memory and an unwillingness to confront the APA text Congress actually wrote.

Chevron never required courts to embrace an agency’s inferior reading of a statute. Its reach was far narrower. Chevron operated only when a court, after exhausting the traditional tools of interpretation, reached a point of genuine ambiguity—a state of interpretive equipoise where the evidence did not permit a principled choice between competing readings. In that narrow space, Chevron supplied a tie‑breaker, not a theory of agency supremacy. The agency prevailed not because its interpretation was “better,” but because the court could not say that any interpretation was.

The APA itself contains the same tie‑breaking logic. Section 706(2)(A) authorizes courts to set aside agency action only when it is “not in accordance with law.” That language places the burden of persuasion on the challenger. If the interpretive evidence is evenly balanced, the challenger loses. The agency’s interpretation stands. This is not judicial invention; it is the statute’s own allocation of interpretive risk. Indeed, in Dobson (a unanimous 1943 Supreme Court opinion), interpreted “not in accordance with law” as a standard of review of statutory interpretation to require deference.

Loper Bright avoids this textual reality. It asserts that courts can always identify a single “best” interpretation, as though ambiguity were a judicial failure rather than an inherent feature of statutory language. Yet the Court simultaneously preserves Skidmore respect—a doctrine that presupposes ambiguity. The opinion cannot eliminate ambiguity and preserve Skidmore at the same time.

This chapter begins from a simple but unavoidable truth: ambiguity exists, and when it does, the APA—not Chevron—provides the tie‑breaker. Loper Bright may have the authority to overrule Chevron. What it lacks is the authority to rewrite the APA or to pretend that interpretive uncertainty can be willed away. The real work of statutory interpretation lies in confronting ambiguity honestly, not denying its existence.