Tax Court Applies Statutory Stare Decisis for Chevron Cases (7/3/25)

In Moxon Corporation v. Commissioner, 165 T.C. ___, No. 2 (2025), TC here dkt # 59 and GS [to come], the Court held that (from the headnote):

          Held: The I.R.C. § 6662(h) penalties at issue are not subject to deficiency procedures pursuant to I.R.C. § 6230(a)(2)(A)(i).

          Held, further, the fact that the relevant deficiencies were improperly assessed does not affect R’s assessments regarding, and ability to collect, the I.R.C. § 6662(h) penalties.

 (I use the headnote because I think it fairly summarizes the opinion and introduces the subject I want to discuss—statutory stare decisis.)

In respect to the second holding above, the Tax Court invoked statutory stare decisis to apply a prior precedent relying on Chevron deference, saying rather cryptically (see Slip Op. 12-13):

          In addition the Supreme Court cautioned that by overruling Chevron it did not “call into question prior cases that relied on the Chevron framework. The holdings of those cases . . . are still subject to statutory stare decisis despite [the Supreme Court’s] change in interpretive methodology.” Loper Bright, 144 S. Ct. at 2273. Regardless  of the extent to which the holding in Thompson [Thompson v. Commissioner, 137 T.C. 220, 239  (2011)] relies on the standard of review set forth in Chevron, that holding is entitled to stare decisis.

          We again hold that penalties determined in a partnership-level proceeding are not subject to deficiency procedures pursuant to section 6230(a)(2)(A)(i). Rather, such penalties are assessable by the Commissioner. Taxpayers may raise any partner-level defenses to the penalties in a refund action or in a CDP case. § 6230(c)(1)(C), (4); McNeill, 148 T.C. at 489.

           Moxon arrived after I had already made substantial changes to the statutory stare decisis discussion in working draft for the 2025 Federal Tax Procedure (Practitioner and Student Editions). I have further revised that discussion to include Moxon. For readers who may have an interest in the issue, I include below a copy and paste of the text of the revisions without footnotes as of today and link here the revisions (red-lined) with footnotes (note that the footnotes, page numbers and cross-references will change in the final, although as I note below the final will be significantly shortened).

Tax Court Invalidates Regulation on CPAR/BBA Partnership FPA Limitations Period and Holds Partnership Adequately Disclosed to Avoid Limitations Extension (7/3/24)

In JM Assets, LP v. Commissioner, 165 T.C. ___ No. 1 (7/2/25) (reviewed opinion with no dissents), TC here dkt #46 and GS here [to come], the Court invalidated a regulation that, if valid, would have extended the period for a final partnership adjustment under the CPAR/BBA beyond the statutory period of 330 days. The FPA is the final action imposing the imputed tax at the partnership level under CPAR/BBA.

 The Court offers the following “latest possible dates” for a valid FPA (Slip Op. 12-13):

(1) three years after the date on which the partnership return was filed, I.R.C. § 6235(a)(1)(A); (2) three years after the due date of the return, I.R.C. § 6235(a)(1)(B); (3) three years after the date on which the partnership filed an administrative adjustment request under section 6227, I.R.C. § 6235(a)(1)(C); (4) in the case of a proposed partnership adjustment under section 6231(a)(2), the date that is 330 days (plus any extension under 6225(c)(7)) after the date of such a notice, I.R.C. § 6235(a)(3); or (5) in the case of a modification request made pursuant to section 6225(c), 270 days (plus any extension under 6225(c)(7)) after the date on which everything required to be submitted to the Secretary pursuant to such section is so submitted, I.R.C. § 6235(a)(2).

JM Assets involved (5) relating to modification requests.

I don’t think there is anything surprising in that interpretation of the statutory text under Loper Bright’s de novo interpretation standard. I should note that the IRS argued unsuccessfully for delegated interpretive authority for the regulation of the type Loper Bright approved.

I think the more interesting part of JM Assets is its conclusion that the FPA period was not extended by § 6235(c)(2) which provides that for an extension for the FPA if there is a substantial omission of income as defined by § 6501(e)(1)(A). That part of opinion deals with the general tax extension in the latter section. I discuss the general tax extension in my Federal Tax Procedure (Practitioner Edition pp. 198-199; Student Edition pp. 138-139).