Comments on Highly Recommended Article Extending Skidmore "Deference" Approved in Loper Bright (3/7/26; 3/8/26)

I have just read a great article: Mitchell Zaic, Note: The Skidmore Compromise: Interpreting Skidmore as a Tiebreaker to Preserve Judicial Wisdom in the Era of Loper Bright, 110 Minn. L. Rev. 1535 (2026), here, and post some thoughts on the article and on Skidmore (Skidmore v. Swift & Co., 323 US 134 (1944), here).

First, I acknowledge Mr. Zaic has published an exceptional work with substantial research and creative thought after Loper Bright Ent. v. Raimondo, 603 U.S. 369 (2024), SC here (Preliminary Print), which overruled so-called Chevron deference. Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), GS here. Mr. Zaic says in the asterisk for his name: “Writing this piece has been one of the great privileges of my life.” He has also privileged readers of the article.

Mr. Zaic states his thesis in these two excerpts (pp. 1356 and 1569):

This interpretation of Skidmore would only be used dby interpreters when judges are faced with interpretive ties that have no other method of resolution. Only then can judges resort to applying the agency's interpretation. This method of interpreting Skidmore ensures that agency interpretations never overrule the best meaning of the statute, instead facilitating the judge in his or her interpretive quest. In addition, the tiebreaker continues the long tradition of respect for agency interpretations beyond that of the typical litigant.

* * * *

Where competing interpretations are at equipoise to an interpreter, courts should resolve conflicts in the agency's favor so long as the agency's reasoning is valid, thorough and its interpretation arises from experience and informed judgment.

Bottom line, Mr. Zaic argues that, in a state of statutory interpretive equipoise, a court needs—indeed, must—apply a default rule to decide the case. The default rule in a case where a regulated party opposes an agency interpretation, the court should default to the agency interpretation. Mr. Zaic gets to his conclusion through a process of reasoning.

My previous Chevron research indicates that Chevron worked in equipoise (without necessarily the qualifiers at the end of Mr. Zic's last sentence). Chevron was supposed to apply only where, after vigorous statutory interpretation (Chevron fn. 9), the statutory text was still ambiguous—in equipoise—where the court could not determine which of two or more interpretations within the zone of ambiguity was the best interpretation.

I analyzed two significant sets of Courts of Appeals cases identified by other scholars as being applications of Chevron.   Chevron Deference: Much Ado About Not Much (Federal Tax Procedure Blog 8/15/21), here; and Is Chevron on Life Support; Does It Matter? (Federal Tax Procedure Blog 4/2/22; 4/3/22), here. My key conclusions were: 

• no court ever said it was applying Chevron to not-best agency interpretation rather than a best nonagency interpretation; stated otherwise, if a court really determined that a nonagency interpretation was best, there were too many outs to avoid applying Chevron (i.e., finding the best interpretation requiring the court to stop at Step One, or finding the agency interpretation unreasonable at Step Two, not to mention the Major Questions Doctrine or other outs).  Justice Roberts’ claim in Loper Bright that Chevron permitted a court to defer to an agency interpretation when an opposing interpretation was best was false. 
• in many supposed Chevron-reliant opinions, close analysis of the opinion indicated that the court thought the agency interpretation best (meaning, of course, it should have stopped futzing around at Chevron Step One rather than appearing to reach Step Two).

I like Mr. Zaic’s baseball exemplar (pp. 1576-1577) for the state of equipoise where, in baseball umpiring (arguably like judging) “the tie goes to the runner.” The exemplar I have used is factfinding where, if the judge or jury is unable to find the fact by a preponderance of the evidence, it resolves the fact against the party bearing the burden of persuasion. This simply illustrates that where the evidence is in equipoise, a tiebreaker is needed. Similarly, in statutory interpretation, when a regulated party attacks the agency interpretation, the court cannot hold for the regulated party unless it is persuaded that the regulated party’s interpretation is the best interpretation.

Indeed, perhaps the only fault I find in Mr. Zaic’s analysis is that he, like most others, overlooks the precise text of § 706(2)(A) that requires that the agency interpretation prevail in equipoise. Section 706(2)(A) permits a court to “hold unlawful and set aside agency action” (here statutory interpretation) only if “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” I set aside the arbitrary and capricious test because that is a test of procedural regularity (e.g., foot-fault in the notice and comment process) rather than a test of the validity of an interpretation. See Judulang v. Holder, 565 U.S. 42, 52 n. 7 (2011) (read it carefully). So the applicable test for interpretation is whether it is “not in accordance with law.” As worded, that only permits an opposing interpretation to permit the court to “hold unlawful and set aside agency action” when the court can affirmatively find the agency interpretation is "not in accordance with law." The court cannot make that affirmative finding if the text being interpreted is in equipoise as to the agency interpretation and the opposing interpretation.

Now, how do I reach that interpretation of the text in § 706(2)(A)?  Because the Supreme Court in Dobson v. Commissioner, 320 U.S. 489 (1943) so interpreted that precise statutory text—“not in accordance with law”—to  require deference when the statute is not “clear-cut” (meaning no best interpretation).  Indeed, based on my research, I am fairly certain (but cannot definitively prove) that the § 706(2)(A) “not in accordance with law” text was lifted verbatim from the statutory text interpreted in Dobson to achieve precisely what it says: the interpretation cannot be held unlawful and set aside unless the opponent shows affirmatively that it is “not in accordance with law.” I think most scholars and courts have not been aware of or have ignored, intentionally or uninstentially, that provenance for the text in § 706(2)(A).

As an aside, but tangentially relevant, in 1948, Congress statutorily required de novo review of Tax Court interpretations by mandating review the same as from district courts (thus changing the rule going forward but not overruling the Dobson interpretation of the text “not in accordance with law”). § 7482(a). 

The whole point of the above is that Mr. Zaic nails it with the need of a tiebreaker in ambiguity/equipoise in concluding that the agency interpretation apply. I suppose that the difference I have with Mr. Zaic on this bottom line conclusion is the reasoning for such a tiebreaker rule: the agency interpretation should be applied when the court cannot affirmatively determine that any other interpretation is best. See Justin Driver, The Insignificance of Judicial Opinions, 113 Cal. L. Rev. 2181 (2026) , here (on the subject of bottom line conclusions rather than reasoning in reaching the bottom line).

I have participated as an attendee in some Loper Bright webinars where I sent in the following question (or some variation): What does a court do when it is in statutory equipoise as to the best interpretation as between an agency interpretation and the opposing interpretation? No pundit has yet attempted to answer that question. Mr. Zaic answers that question from solid logic and the inevitable need for some tiebreaker in equipoise..

Mr. Zaic’s analysis functions similarly to Chevron deference—i.e., it forces application of the agency interpretation when the text is ambiguous (i.e., in equipoise as to its meaning). Mr. Zaic acknowledges this and explains why his formulation of the tiebreaker rule is different from Chevron deference. (See Article pp. 1583-1586). I encourage readers interested in this issue to read Mr. Zaic’s explanation. I am not sure that his explanation holds up. Mr. Zaic seems to argue that his default tiebreaking strategy is somehow anchored in Skidmore, thus surviving Loper Bright, because it would be deployed less frequently than Chevron deference was deployed. I am not convinced that is the case after courts started emphasizing the importance of Chevron footnote 9 vigorous statutory analysis at Step One. Indeed, as I have noted above, the proper function of Chevron always required use of all statutory interpretive tools at Step One and only then go to Step Two if the court could not determine the best meaning. After all Chevron footnote 9 was always part of Chevron deference.

I raise another key point on Skidmore, a December 1944 opinion (just a about 10 months before the original bills resulting in the APA was enacted in 1946). In Skidmore (p. 140), Justice Jackson said for a unanimous Court:

This Court has long given considerable and in some cases decisive weight to Treasury Decisions and to interpretative regulations of the Treasury and of other bodies that were not of adversary origin.

JAT explanatory note, Treasury Decisions and interpretive regulations are the same thing: Treasury Decisions adopte regulations--whether interpretive or legislative regulations.

Technically speaking, that statement was dicta because Skidmore involved subregulatory guidance, but it was certainly persuasive dicta from a unanimous Court as to the state of the law. My research indicates that this unanimous statement in Skidmore was the last pronouncement the Court made on deference prior to the APA enactment in 1946. Note also that this unanimous statement echoes Dobson (cited above) where the unanimous court in an opinion also by Justice Jackson deferred to the Tax Court interpretation for two reasons: (i) the statutory text discussed above) and (ii) deference to established law for agency interpretations because the statute said the Tax Court was an agency  A related fun fact is that the Court continued to defer shortly after the APA was enacted. Thus, for example, Commissioner v. South Texas Lumber Co., 333 U.S. 496, 501(1948), issued just 659 days after the APA, stated:

This Court has many times declared that Treasury regulations must be sustained unless unreasonable and plainly inconsistent with the revenue statutes and that they constitute contemporaneous constructions by those charged with administration of these statutes which should not be overruled except for weighty reasons. See, e.g., Fawcus Machine Co. v. United States, 282 U.S. 375, 378.”

It thus boggles my mind that Justice Roberts could claim with at least a judicial poker face disguising a bluff that the law at the time of enactment of the APA required de novo review of agency interpretations.

Finally, one issue I have is whether Skidmore requires some ranking of agency interpretations such as developed under Chevron. Under Chevron:

• only agency interpretations in notice and comment regulations generqally qualified for Chevron deference.
• agency interpretations in subregulatory guidance (e.g., for tax, revenue rulings) did not qualify for Chevron deference.

Will there be some similar ranking in the application of post-Loper Bright Skidmore deference? (I use the term Skidmore deference because that is commonly used, although as it is articulated, it is more a slight nudge than deference in the interpretive process under Chevron Step One.) Skidmore’s articulation requires or permits courts to consider the agency’s diligence (thoroughness, etc.) in the process of determining the best interpretation. While notice and comment regulations passing the arbitrary and capricious procedural test provides some assurance that the agency’s interpretation is thorough, subregulatory interpretation short of notice and comment can demonstrate thorough agency consideration and even pass a reasoned decisionmaking test. I simply raise the question and do not answer it. 

I ask the further question, though, as suggested by Mr. Zaic’s article that subregulatory interpretations can present the same ambiguity phenomenon (the agency interpretation and the opposing interpretation is in the zone of ambiguity but neither is the best interpretation). Could the same default tiebreaker rule apply for subregulatory interpretations? If not, how does a court then decide the case? For example, the article p. 1582 n. 244) poists: "judges may break a tie by choosing the option that brings about the outcome their political ideology prefers. Or maybe they break a tie through something as ridiculous as a coin flip.” Mr. Zaic is not comfortable with that genre of tiebreaker resolutions in interpretive ambiguiity (equipoise). Nor am I. Nor, I suspect, would most readers of his article and this blog be comfortable with that type of tiebreaker resolution.

Of course, that raises the much broader and probably more philosophical question of how judges resolve cases where a critical feature, fact or law, is ambiguous (in equipoise). In fact equipoise, the burden of persuasion is the default rule forcing a resolution against the party bearing the burden of  persuasion; in law interpretation or even law generally, how does a judge decide the case? In my article mentioned above, I posit the answer to the question similar to Mr. Zaic: "Flip a coin? Consult a soothsayer? Ouija board? Or, more likely, follow its [the courts’] policy or gut preferences?” I now answer the last question YES, meaning that the court’s policy or gut preferences control the outcome of the immediate case at hand until some higher court (or if an appellate court, the court en banc) exercises different policy or gut preferences. I am not comforted with that state of affairs, although that is the logical phenomenon if courts really believe that they cannot accept a state of interpretive ambiguity.

I wish Mr. Zaic the best in his future as a scholar or practitioner!

A JAT Addendum (Further Rant on Loper Bright although Elaborating Points Above):

I could engage with several sophisms in Justice Roberts’ Loper Bright Opinion for the Court in Loper Bright. Some of these will appear in an article submitted and, as I understand it, accepted for publication to the Tax Lawyer. But I raise only one here which because addressed above is a further rant. Justice Roberts claims (e.g., p. 408) that Chevron permitted a court to give up interpretive work when it found an agency interpretation reasonable which he imagines is a broader range on the interpretive scale than ambiguity/equipoise. In other words, he imagines that Chevron required a court to apply a reasonable agency interpretation that the court determined was not the best interpretation.

Properly applying Chevron required, that a court complete all the interpretive work that it can deploy and still find ambiguity (equipoise). See Chevron, p. ___ n. 9. Thus, Justice (then Judge Kavanaugh) explained (Brett M. Kavanaugh, Book Review: Fixing Statutory Interpretation, 119 Harv. L. Rev. 2118, 2153 n. 175 (2016)):

After all, footnote 9 of Chevron told us explicitly that we should employ all the ‘traditional tools of statutory construction’ to resolve any statutory ambiguity before we defer to an agency. Chevron, 467 U.S. at 843 n.9. Of course, when we employ those tools of interpretation, we often resolve the ambiguity and thereby get an answer. So in those cases, we would not have to defer to the agency at all. Therefore, if we took Chevron footnote 9 at face value, fewer cases would get to Chevron step two in the first place.

In other words, Chevron Step Two required that the agency interpretation and the opposing interpretation be within the zone of ambiguity (equipoise), meaning that the Court cannot determine the best interpretation. That is, of course, the phenomenon that Mr. Zaic claims in his article to require application of the agency interpretation as a default tiebreaker to force a result in a statutory interpretation dispute. Spot on Mr. Zaic.

Added 3/7/26 4:40pm: In Sanders v. Plappert, ___ F.4th ___ (6th Cir. 3/3/26). CA6 here and GS here,  the Court applied something called AEDPA deference (Antiterrorism and Effective Death Penalty Act ("AEDPA")), which narrows our ability to grant habeas relief when a state court decision has already decided a petitioner's claim on the merits. At one point, the panel majority calls (Slip Op. 21) AEDPA a "doubly deferential standard; I'm not sure what doubly adds to the concept of deference. In the course of its discourse, the panel majority held (Slip Op. 2) that the Appellant's arguments failed even under de novo review. In passing, the panel majority opinion makes the same mistake about Chevron deference that Justice Roberts made. Thus, the panel majority claims (Slip Op. 16): 

The issue with Chevron deference was that it mandated the Court to accept an interpretation of the law that was not its own. See id. at 427-28, 430-31 (Gorsuch, J., concurring).

The panel majority refers to Justice Gorsuch's concurring opinion, but Justice Roberts made the same mistake in the Loper Bright Opinion for the Court as noted above. Chevron mandated a default application of the agency interpretation only where, after trying to determine the best interpretation at Step One, the court could not determine the best interpretation because the agency interpretation and the opposing interpretation were within the scope of the interpretive ambiguity (where a best interpretation could not be determined). Many, many others (sometimes with a libertarian bias or at least an anti-state bias) have made that mistake about Chevron deference; I made the mistake early when getting into the Chevron discussion with my own research rather than repeating the claims of others. I have for some time now corrected my understanding how Chevron deference was (or at least should have been) applied. 

Added 3/8/26 12:30pm:
 
Think of a spectrum of statutory interpretation at the 0% end (certain interpretation A is the best and certain interpretation B is not the best) and the 100% end (certain interpretation B is the best and certain interpretation A is not best). Ambiguity (or equipoise) comes in the center (certainly at 50%-50%) and likely covers a range on either side of the 50% mark. Imagine that a judge conceptualizes the range of ambiguity (equipoise) between 40%-60%, but conceptualizes a wider range of reasonableness of an agency interpretation between 35%-65%. (I question at the end whether that is even possible, but hang with me for this analysis.) As thus conceptualized, a court could determine that an interpretation is reasonable but not ambiguous in which the court would not apply Chevron deference because Chevron deference requires ambiguity. Interpretations in the range of ambiguity are necessarily reasonable and qualified for Chevron deference; interpretations in the reasonable range but outside the ambiguous range did not qualify for Chevron deference.
 
Consider this from Justice (then Judge) Kavanaugh, Book Review, Fixing Statutory Interpretation, 129 Harv L Rev 2118, 2137-38 (2016), here.

In practice, I probably apply something approaching a 65-35 rule. In other words, if the interpretation is at least 65-35 clear, then I will call it clear and reject reliance on ambiguity-dependent canons. I think a few of my colleagues apply more of a 90-10 rule, at least in certain cases. Only if the proffered interpretation is at least 90-10 clear will they call it clear. By contrast, I have other colleagues who appear to apply a 55-45 rule. If the statute is at least 55-45 clear, that's good enough to call it clear.

Courts may differ over the meaning of ambiguity to trigger an ambiguity-dependent canon, such as Chevron. Wherever on the spectrum the judge calibrates his or her application of ambiguity, ambiguity was and is still required for an ambiguity-dependent canon. Chevron, an ambiguity-dependent canon, never could apply to a reasonable interpretation that is not within the range of ambiguity. Those, such as Justice Roberts, who claim that courts deployed Chevron to approve agency interpretations where they could determine an opposing best meaning are just speaking nonsense..
 
Astute readers will have picked up some ambivalence about the constructs of different ranges for reasonableness and ambiguity. Can a court determine a wider range on the spectrum for reasonable interpretations than the range for ambiguity? If a court can determine that the opposing interpretation is the best, can the agency interpretation be reasonable? I think not and posit the following: agency interpretations outside the range of the ambiguity cannot be reasonable, and agency interpretations within the scope of the ambiguity are reasonable. Thus, the statements that Chevron required both ambiguity and a reasonable agency interpretation are duplicative. More important though, claims such as Justice Roberts and others make that Chevron allowed courts to sustain an agency interpretation even when the opposing interpretation was best are nonsense.

Second Circuit Rejects Tax Court's Fahry Holding That IRS Can't Assess and Collect the § 6038(b) Penalty (2/27/26)

I have written on the issue of whether the § 6038(b) penalty can be assessed (with the assessment collection tools available) or must be collected by a collection suit in the district court. See posts here. The Tax Court held in  Farhy v. Commissioner, 160 T.C. 399 (2023), GS here, that the IRS could not assess and collect but rather must sue and collect. The D.C. Circuit reversed. Farhy v. Commissioner, 100 F.4th 223 (D.C. Cir. 2024), CADC here**, and GS here. The Tax Court stuck to its Farhy holding in cases appealable to Circuits other than the D.C. Circuit under its Golsen rule, feeling that its original Farhy holding was correct.

Today, the Second Circuit has now aligned with the D.C. Circuit, saying that the IRS can assess and collect the § 6038(b) penalty.  Safdieh v. Commissioner, ___ F.4th ___ (2d Cir. 2/27/26), CA 2 here, TN here, and GS here [to come]. Other than to say that I think the D.C. Circuit and the Second Circuit are correct, I can’t add any discussion not evident from my earlier posts linked above. Thus, this is a notice-only blog.

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

Tax Court Calls Out Yet Another Bullshit Tax Shelter But Relieves Taxpayer of 6662 Penalties (2/24/26 as corrected; 2/27/26)

Major Correction: I made an error in the original blog post, by misreading the court's application of the 40% Substantial Valuation Misstatement and Gross Valuation Misstatement Penalties in § 6662(e)(1)(A) and I.R.C. § 6662(h) but not picking up that the reasonable cause defense it sustained effectively wiped out all 6662 penalties.

Yesterday, the Tax Court (Judge Weiler) decided Otay Project LP v. Commissioner, T.C. Memo. 2026-21, TC Dkt here at # 349, TN here, and GS here, tanking another bullshit tax shelter. There is no indication that this is a syndicated shelter creating basis and thus deductions out of thin air in complex structures taxed as partnership; as presented it seems like “one-off” imagined by creative minds and blessed by firms that have played prominently in tax sheltering—E&Y and McKee Nelson LLP; moreover, I suspect (suspicion only) that variations on the shelter were promoted on and opined upon on other occasions.

I find it a bit odd that, although Judge Weiler says he read the those firms’ opinions (Slip Op. 45), but he does not identify the persons signing the opinions. Oh well, let’s move on to the main points for tax procedure enthusiasts.

On the Merits of the Complex Machinations:

The actual bottom-line tax costs of the shelter failing must await the Rule 155 computation, but the Court concludes on the merits (other than penalties) (Slip Op. 31):

In sum, we determine petitioner has not met its burden here and has failed to correctly establish the Basis Deduction under section 743(b), as claimed on OPLP’s 2012 Form 1065. Accordingly, we will sustain respondent’s disallowance of $713,759,615 of a more than $743 million claimed Basis Deduction reported on OPLP’s 2012 Form 1065 for the 2012 tax period. 

I believe it would not be helpful to most tax procedure enthusiasts to wade into the complex facts and partnership tax law discussed in the opinion. Although this appeared not to be one of the abusive shelters of the late 1990s and early 2000s (e.g., BLIPS or variants used by different accounting and law firms), I suspect that some of the fanciful notions asserted in those earlier versions were deployed here in a more complex and “engineered” (Slip Op. 30-32) journey through esoteric partnership tax provisions.

Suffice it to say that the Court rejected that “engineered” journey on the merits of the partnership tax law and also based on economic substance doctrine. In this regard, because it preceded the effective date, the transaction was not subject to the codified economic substance doctrine in § 7771(o) or the penalty in § 6662(b)(6). (See Slip Op 2 n. 2.)

 The Penalties:

On Supreme Court U.S. (or is it U. S.) Citations and the Supreme Court's Tariff Opinions (2/22/26; 2/23/26)

This blog entry is a bit of a detour from the domain of federal tax procedure. Specifically, this blog presents two more or less fringe disparate subjects. I divide the blog into two sections. The first is mundane: whether to space or not to space between U. and S. in Supreme Court citations? The second is a disjointed foray into the Supreme Court’s tariff opinions handed down Friday:  Learning Resources, Inc. v. Trump, 607 U. S. ___ (2026), here (Slip Op.).

To Space or Not  to Space in U.S. (or it is U. S.) Citations, that is the Question

For those who review Supreme Court opinions in all official formats (Slip Opinion, Preliminary Print, and Final), the opinions format the citation to the official reports with a blank between U. and S.—e.g., Loper Bright Enter. v. Raimondo,  603 U. S. 369 (2024), here (Preliminary Print). I had not learned to cite without the space and had not paid attention to the Supreme Court's format (with space) until today as I was reading the slip opinion in Learning Resources, Inc. v. Trump, 607 U. S. ___ (2026), here (Slip Op.). So, I asked ChatGPT and received the following answer (with my prompt, with citations omitted):

Prompt: Please cite me authorities (judicial and otherwise) that discuss the difference between the Supreme Court's citation of its decisions as "U. S." (with a blank between U. and S. and other authorities (mostly commentary but also Courts of Appeals and case reporters) foregoing the blank between U. and S.

Chat GPT Response: 

The U.S. Supreme Court officially cites its own decisions using "U. S." with a space between "U." and "S." in the United States Reports (e.g., 5 U. S. 137), while The Bluebook, Courts of Appeals, most legal commentary, and case reporters standardize "U.S." without the space. This distinction arises from the Court's unique style conventions versus modern citation guides like The Bluebook, which enforce no space between adjacent single capital letters per Rule 6.1(a).

Supreme Court Practice ("U. S." with space)

The Supreme Court itself uses spaced citations in its bound volumes of the United States Reports, reflecting historical typography from early volumes like Marbury v. Madison, 5 U. S. (1 Cranch) 137 (1803).8 This format appears consistently in official reporter headings and the Court's published opinions.

Other Authorities ("U.S." without space)

The Bluebook: Prohibits "U.S." with a space, mandating "U.S." for United States Reports (e.g., Roe v. Wade, 410 U.S. 113 (1973)); spaces are reserved for abbreviations like "S. Ct." (Rule 6.1(a) and Table T1).

Courts of Appeals and State Appellate Guidance: U.S. Courts of Appeals briefs require "U.S." without parallels or spaces (e.g., Roe v. Wade, 410 U.S. 113 (1973)). California Courts of Appeal cite as "450 U.S. 544." Washington Supreme Court style sheet specifies "__ U.S. __" without space in examples.

Tax Court (Lauber) Rejects Bullshit Syndicated Conservation Easement (BSSCE) Valuation Claim (2/19/26; 2/20/26)

Today, Judge Lauber called out yet another bullshit syndicated conservation easement (“BSSCE”). North Donald LA Property, LLC v. Commissioner, T.C. Memo. 2026-19 T.C. No. 24703-21, here, at # 476; TN here; and GS here.The BSSCE claimed a charitable contribution of $115,391,000. The flaw that swung the case against BSSCE was, as Judge Lauber held in the opening (Slip Op. p. 3):

We conclude here, as we did in J L Minerals, LLC v. Commissioner, T.C. Memo. 2024-93, at *3, that the valuation of the conservation easement “was an outrageous overstatement,” wholly untethered from reality. Employing the comparable sales method, as backstopped by the price actually paid to acquire the property in March 2016, we find that its “before value” was $2,975 per acre and that its “after value” was $2,300 per acre. The delta between these figures—the reduction in value attributable to the easement—is $675 per acre. The value of the easement—and hence the allowable charitable contribution deduction—is thus $175,824 ($675 × 260.48 = $175,824).

For those who are valuation enthusiasts, I suppose there is a lot to chew on. 

There are some interesting snippets in the opinion. I will list them in my numbered further comments below. The main things I want to write on are (i) the bottom-line valuation and (ii) the rejection of the civil fraud penalty for bullshit valuations. At trial, despite claiming a $115,391,000 value on the return, North Donald’s simultaneous opening brief (pp. 6, 124 & 202) described the valuation as:

5. Whether the value of the Easement Donation, as determined by Petitioner’s expert (Mr. Catlett), is $61,235,000?

* * * * 

824. The value of the Easement Donation is as determined by Petitioner’s expert, Mr. Catlett, $61,235,000. Entire Record.

* * * * 

Because the Catlett Appraisal is the only appraisal before the Court that considered the relevant, available data regarding the quantity and quality of the clay reserves on the NDLA Property, the Court should adopt Mr. Catlett’s determination that the value of the Conservation Easement is at least $61,235,000.

So, after trial, North Donald conceded $54,156,000 of the amount it claimed on the return. More importantly, after trial, North Donald still claimed a value of $61,235,000. Judge Lauber found that the actual value was $175,824, which is 0.29% of the value North Donald claimed at trial. North Donald presented a gross overvaluation at trial by presenting, I guess with a straight trial face on, a valuation methology—described by Judge Lauber as the “Income Approach”—that has repeatedly been rejected by the Tax Court, as Judge Lauder notes (Slip Op. 54-59.)  Some interesting points of Judge Lauber’s analysis of petitioner’s claimed valuation:

Tax Court Memo Decision Warns Practitioners About Misuse of Artificial Intelligence Hallucinations (2/10/26)

 I have written before on Tax Court Orders addressing AI use and hallucinations. Use of AI, Including Large Language Models (LLMs), in Tax Court Brief Writing (And Really Other Legal Analysis) (Federal Tax Procedure Blog 1/22/25; 4/29/25), here. In Clinco v. Commissioner, T.C. Memo. 2026-16 (2/9/26 T.C. No. 8077-23, here, at # 37 and GS here [to come]), Judge Holmes finally puts the issue in a decision (as opposed to an order). The relevant discussion is here (Slip Op. 5 & 6-8, yellow-highlighting supplied by JAT):

I. Notice of Deficiency

          Clinco’s challenge to the validity of the notice of deficiency serves up one apparently serious question: Must one of the Commissioner’s employees manually sign a notice of deficiency? But it is accompanied by a garnish we’ve reviewed in orders but not in an opinion: What should we do when lawyers cite hallucinated authorities likely generated through artificial intelligence (AI)?

* * * *

B. Fabricated Case Citations

          The persuasiveness of Clinco’s argument collapses like an overmixed soufflé when one looks at the citations used to prop it up. Mr. Wagner, Clinco’s attorney, cites four cases in support. Three appear to be hallucinations generated by a large language model AI. He cites “Cacchillo v. Commissioner, 130 T.C. 132 (2008),” as a case where a taxpayer challenged the validity of the notice of deficiency because it lacked an official signature. He claims we held that the IRS’s failure to issue a valid signed notice of deficiency ousted us of jurisdiction. “Cacchillo v. Commissioner” does not, however, exist. Page 132 in volume 130 of the Tax Court Reports is within Porter v. Commissioner, 130 T.C. 115 (2008), and that page discusses the standard of review for section 6015(f) claims for relief—completely unrelated to the case before us.

          Mr. Wagner claims “Cacchillo v. Commissioner” overturned “Miller v. Commissioner, 57 T.C. 440 (1971),” and “Tefel v. Commissioner, 118 T.C. 324 (2002).” He elaborated:

In Tefel the Tax Court did note that the case clarified that while substantial compliance may be sufficient, the IRS [*7] must still meet the signature and other formal requirements in issuing the [statutory notice of deficiency]. While some cases allowed for minor errors in the issuance process, critical requirements like a signature must be followed for a Notice of Deficiency to be valid.

Neither of these cases exist as cited. Miller v. Commissioner, T.C. Memo. 1984-448 (not the citation provided by Mr. Wagner) mentions a notice of deficiency in passing in the findings of fact, but only to state that one was sent. There is no discussion of the formal requirements of such a notice. Page 440 in volume 57 of the Tax Court Reports is within Winfield Manufacturing Co. v. Renegotiation Board, 57 T.C. 439 (1971)—a case in which there is no mention of a notice of deficiency whatsoever.

NTA Annual Report to Congress, with Purple Book Recommendations for Legislation (1/8/26)

This post is a little late in coming, but the National Taxpayer Advocate issued the Annual Report to Congress-2025, here. The key portion of the report for tax procedure enthusiasts is the “Purple Book,” here, described as:

a concise summary of 71 legislative re1commendations that the National Taxpayer Advocate believes will strengthen taxpayer rights and improve tax administration. Most of the recommendations have been made in detail in prior reports, but others are presented in this book for the first time. The National Taxpayer Advocate believes that most of the recommendations presented in this volume are non-controversial, common-sense reforms that the tax-writing committees, other committees, and other members of Congress may find useful.

 There are many proposals in the Purple Book that could affect tax procedure. The discussions of current law and problems, with the proposed legislative solutions are quite good. Given that Congress has not acted on the proposals yet, I thought this would be just a “notice” blog offering the descriptions in the listing (like a table of contents): 

STRENGTHEN TAXPAYER RIGHTS
1. Elevate the Importance of the Taxpayer Bill of Rights by Redesignating It as Section 1 of the Internal Revenue Code
2. Require the IRS to Timely Process Claims for Credit or Refund
3. Require Notices of Claim Disallowance to Clearly State the Reasons for Disallowance, Explain Administrative and Judicial Appeal Options, and  Specify Applicable Timeframes

IMPROVE THE FILING PROCESS
4. Treat Electronically Submitted Tax Payments and Documents as Timely If Submitted on or Before the Applicable Deadline
5. Authorize the IRS to Establish Minimum Standards for Federal Tax Return Preparers and to Revoke the Identification Numbers of Sanctioned Preparers
6. Extend the Time for Small Businesses to Make Subchapter S Elections
7. Adjust Individual Estimated Tax Payment Deadlines to Occur Quarterly
8. Eliminate Duplicative Reporting Requirements Imposed by the Bank Secrecy Act and the Foreign Account Tax Compliance Act
9. Authorize the Use of Volunteer Income Tax Assistance Grant Funding to Assist Taxpayers With Applications for Individual Taxpayer Identification Numbers

Could the District Court Invite or Appoint an Amicus to Present the U.S. Position in Trump v. IRS? (2/7/26; 2/12/26)

Yesterday, I posted a blog on the Amici Brief filed in Trump v. IRS, (S.D. Fla. No. 26-cv-20609), CL Docket sheet here. On Amici Brief in Trump and Related Parties Suit for Damages from Unauthorized Inspections and Disclosures of Return Information by Employee of IRS Contractor (2/6/26), here. Basically,  a principal theme of the Amici Brief is that the Trump plaintiffs are suing the Government where Trump is also the Government “decider” (to echo George Bush’s claim). That presents some major issues, some of which are discussed in the Amici Brief and I address in the prior blog.

Today, I wanted to expand on an issue that I began considering after posting yesterday’s blog: 

Can the district court sua sponte or at the urging of some Amici invite or appoint an Amicus to represent the United States if the United States at Trump’s direction aligns itself with the Trump plaintiffs?

There is precedent that might permit the district court to invite or appoint an Amicus to participate in the proceeding to represent the United States’ interest where the parties are aligned (thus perhaps not creating a case or controversy). The precedent is Bob Jones University v. United States, 461 U.S. 574 (1983), GS here. In that case, the IRS denied tax-exempt status to two education organizations—Bob Jones and Goldsboro Christian Schools--which allegedly had a "sincerely held" religious belief that their God required them to racially discriminate. The Fourth Circuit sustained the IRS position. In the Supreme Court, the White House directed the SG’s office to disavow the IRS position that had prevailed in the Fourth Circuit. There is intrigue and high drama about the White House doing that, but I offer more on that below in order to stay on track for the main body of this posting.  Perceiving that, at that point, the parties were aligned and no one was arguing in support of the Fourth Circuit opinion, the Supreme Court invited William T. Coleman, a prominent D.C. lawyer, to brief and argue the case as Amicus Curiae;  the opinion in the case describes Coleman as follows: “William T. Coleman, Jr., pro se, by invitation of the Court, 456 U. S. 922, argued the cause as amicus curiae urging affirmance.” (As in many Supreme Court cases, there were other Amici briefs filed, but Coleman’s was likely the one that the Justices paid most attention to; I have sometimes expressed doubt as to the efficacy of Amici Briefs that often flood the Supreme Court in hot button issue cases where the Amici often just give the same or slight variations of the arguments made by the parties or Amici, often with slightly different wording; Coleman’s was different because the Supreme Court respected him andinvited it.) In the merits decision, the Supreme Court affirmed the Fourth Circuit, thus rejecting the White House’s forced position that put the parties in alignment.

The bottom-line, where in Trump v.  IRS the Trump-related parties and the Government (at the direction of Trump) have interests that are or may be aligned, the district court might invite or appoint an Amicus to assist the court in doing justice in the case. The court could do that sua sponte as the Supreme Court did in Bob Jones or it could do it on motion from Amici.

On Amici Brief in Trump and Related Parties Suit for Damages from Unauthorized Inspections and Disclosures of Return Information by Employee of IRS Contractor (2/6/26)

On 2/20/26 at 12:30am, an update has been added to the bottom of this blog entry to note another Amici Curiae Brief filing by public interest organizations.

I assume that most readers of this blog will already have seen news about Trump’s suit against the IRS for “damages” arising from the disclosure of his tax return information by an employee of an IRS contractor who was subsequently criminally convicted by plea agreement and sentenced to five years’ incarceration. E.g., Trump sues IRS and Treasury for $10 billion over leaked tax information  (NPR 1/30/26), here. The suit is titled Trump v. IRS (S.D. Fla. No. 26-cv-20609), CL Docket sheet here. (Reminder: Access to the Court Listener docket sheet is free and will have links to the documents provided that some CL member has downloaded them from PACER.)

The key documents to date are

• the complaint (CL here) and
• a new Amici Curiae Motion for Leave to File Brief as Amici Curiae by Former Government Officials and Public Interest Organizations, here. The interests of the Amici are (Br 1-2, footnote omitted):

          Amici are four former government officials with combined decades of experience in federal tax law, each of whom joins this brief only in their personal capacity, and two public-interest organizations. They have sought leave to submit this brief to aid the Court in its management of this important case.

          John Koskinen served as the 48th Commissioner of the Internal Revenue Service. He was confirmed to the position by the Senate in 2013, and he served in the position until 2017. Prior to his service as IRS Commissioner, he served in a number of positions in the public and private sector, including as the non-executive chairman of the Federal Home Loan Mortgage Corporation (Freddie Mac) from 2008 to 2012.

          Kathryn Keneally served as the Assistant Attorney General for the U.S. Department of Justice’s Tax Division. She was confirmed to the position by the Senate in 2012, and she served in the position until 2014. Prior to her service in the Department of Justice, she practiced tax law in private practice for thirty years and served as chair of the American Bar Association’s Section of Taxation’s Committees on Civil and Criminal Tax Penalties and Standards of Tax Practice.

          Nina Olson served as the National Taxpayer Advocate from 2001 to 2019. In that role, she led the Taxpayer Advocate Service, an independent organization within the Internal Revenue Service. Prior to serving in that role, she had over two decades of experience representing individual taxpayers at all levels of income.

          Gilbert Rothenberg served as the Chief of the U.S. Department of Justice, Tax Division, Appellate Section. He joined the Department as a line attorney in the Appellate Section in 1975 and served in the Section until his retirement in 2019.

          Common Cause is a nonpartisan, grassroots organization dedicated to upholding the core values of American democracy by working to create open, honest, and accountable government that serves the public interest. Common Cause has over 1.5 million members nationwide and local organizations in 23 states.

          Project On Government Oversight (POGO) is a nonpartisan, independent watchdog that investigates, exposes, and champions reforms on systemic corruption, abuse of power, and waste. [*2] POGO envisions a federal government that is effective and accountable—governed by just laws, operating with integrity, and committed to serving the public. Government ethics and public trust in the federal government are at the heart of POGO’s mission.

I will not write on the merits of the Complaint. I will editorially comment that, in my opinion, this is just another Trump attempt to monetize Trump’s presidency which has already unlocked mega-millions for Trump and his family (not to mention his “friends,” such as pardon attorneys close to him). Rather, I address in this blog the Amici Brief.

The judge on the case is Kathleen M. Williams, an Obama appointee. See Wikipedia here. Pretrial responsibilities have been assigned to Magistrate Judge Enjolique A. Lett. I could find no current information on her in a quick Google search; I did find, for example, that Judge Roy K. Altman assigned her to handle pretrial non-dispositive matters in The Donald J. Trump Revocable Trust v. Capital One, N.A. (S.D. Fla. 1:25-cv-21596), here. (This suit against Capital One asserts a “de-banking” claim that appears to  be another classic Trump case to monetize his presidency; although Trump does not directly control both sides, he can control the levers of power by directing Government action, directly or indirectly, against the defendant; tongue-in-cheek, maybe Trump and the related parties will give up the suit if Capital One names its corporate headquarters the Trump Building or even the name of the organization as Trump Bank.)

Points about the Amici Brief:

Tax Court Finds Reasonable Cause to Rely Upon alliantgroup Research Credit Advice (2/4/26)

Lew Taishoff has a rather cryptic review of George v. Commissioner, T. C. Memo. 2026-10 (2/3/26), TC 27494-16, here, at # 209 and GS here [to come]. See ALWAYS CHICKENS OUT (Taishoff Law 2/3/26), here. George involves the qualified research credit in §§ 46 and 174; the credit is arcane legally and usually fact-intensive, as the George opinion (86 pages) proves. Taishoff concludes that “Judge Tag Greaves has thoroughly reviewed the Section 41 landscape. It’s a must-read for specialists, and eyeglazing for the rest of us.” I am among the eyeglazing majority who may skim the opinion without digging into the details on the substantive issue. So, I will not deal with the merits of substantive tax issue.

I focus on the discussion of the § 6662 accuracy-related penalties (Slip Op. 81-85) which is a common subject for tax procedure enthusiasts. The Georges conceded some accuracy-related penalties (Slip Op. 2 n. 2 & 38 n. 21.) The accuracy-related penalties in issue were negligence and substantial understatement, both of which have an exception for “reasonable cause." The Court finds that the Georges had reasonably cause in relying on alliantgroup a major provider for research credit advice. See alliantgroup website here. The Court describes alliantgroup (Slip Op. 83):

Petitioners sought the advice of alliantgroup to determine whether any activities performed by GOMI qualified for research credits and if so, the amounts of such credits. At the time George’s contracted for the research study, alliantgroup had over 12 years of experience in conducting tax credit and incentive studies for clients. Its ranks are filled with people who are knowledgeable on the intricacies of the tax code, including tax attorneys and those with tax policy experience. One such person was Mr. Troutman. He had a long history at alliantgroup and specialized in research credit studies for the agriculture industry. He also was an attorney who went through extensive internal training at alliantgroup to stay on top of the latest developments in the area.

            The reputation of alliantgroup was also bolstered by Frost PLLC's recommendation. As Gary testified, Frost PLLC grew alongside George's and had a tremendous amount of knowledge about George's business operations. When Frost PLLC called regarding a possible collaboration with alliantgroup, it was reasonable for Gary to conclude that alliantgroup was competent in its field. alliantgroup had the necessary expertise to competently advise petitioners.

alliantgroup diligently requested and reviewed documents and met with employees to determine GOMI's eligibility for the research credits. Although petitioners did not directly provide alliantgroup with records, George's, the entity with the relevant documents, provided alliantgroup with open access to George's books and records and the plethora of data routinely gathered throughout the standard production process. George's used these documents for business purposes, including to determine grower compensation and to perform trend monitoring, so there is no reason to doubt the accuracy of the information contained therein. alliantgroup also had access to employees from the C-suite down to the field service technicians for interviews. Finally, alliantgroup worked closely with Frost PLLC, which provided additional documents, verified facts, and answered any lingering questions.