APA AND 2017-10

In Uncategorized on 07/19/2022 at 12:34

Cedar Land, LLC, Big Escambia Ventures, LLC, Tax Matters Partner, Docket No. 7284-19, filed 7/19/22, wants to be delisted. That’s not the A-List at the latest high-priced club; that’s the listed-transactions bad-boy list per Notice 2017-10. And of course they’re playing the Hewitt, ya-dint-follow-the-APA, gambit.

Judge Albert G (“Scholar Al”) Lauber has the stagesetting.

“…petitioner contends that Notice 2017-10 is invalid because it was improperly promulgated under the Administrative Procedure Act (APA). Specifically, petitioner contends that the designation of transactions as ‘listed transactions’ constitutes an agency ‘rule’ that must be promulgated pursuant to notice-and-comment rulemaking. The IRS concedes that Notice 2017-10 is a ‘rule’ for APA purposes but contends that this rule was exempt from notice-and-comment procedures. Petitioner seeks partial summary judgment on this question.” Order, at p. 2.

Needless to say, we have more syndicated marked-up boondockery here. The Big Scambies want document production of what IRS told Congress and the Comptroller General per the Congressional Review Act, 5 U.S.C. § 801(a)(1)(A). The CRA is twin sibling to the APA.

IRS folds on Notice 2017-10 being a “rule” within the meaning of the APA. The Big Scambies were claiming IRS said Notice 2017-10 wasn’t a “rule,” but told Congress and the CG it was. So they want Notice 2017-10 and Notice 2017-29 (2017-10 housekeeping stuff) material. But see supra, as my high-priced, A-list colleagues say. IRS agrees it’s a “rule,” but is exempt from notice-and-comment.

Judge Scholar Al: “While believing that none of the documents petitioner seeks is relevant, respondent has voluntarily produced the CRA reports covering Notice 2017-10 and represents that he will include them in the administrative record. Acknowledging this representation, we agree with respondent that petitioner is entitled to none of the other documents it seeks. Notice 2017-29 is not at issue in this case; CRA reports and related correspondence addressing that Notice are thus irrelevant. And because the Commissioner acknowledges that he submitted CRA reports to Congress because he regards Notice 2017-10 as a ‘rule,’ petitioner needs no ‘internal communications, memoranda, reports or other documents that may tend to show how or why any [CRA] reports were submitted to Congress.’” Order, at pp. 2-3.

No document production. But I’d like to see what Judge Scholar Al does with summary J on APA.

I give the Big Scambies’ counsel a Taishoff “Good Job, First Class” for playing a strong Hewitt gambit thus inducing the “rule” fold. I wouldn’t bet the ranch on the exemption ploy in 11 Cir. Check out 5 USC §§551(4) and 553.

But I give IRS’ lone counsel a Taishoff “Good Job, Third Class” for a wise fold.

I’ve reached out again to a colleague, one of the attorneys for petitioner, for a comment, but I expect I’ll get the same answer I got back last November. See my blogpost “Straining Out a Knat,”11/15/21. I remember a Tax Court Judge years ago refusing a petitioner a gag order on account of my blog comments, stating the public’s right to know. But given the (admittedly correct) reticence of attorneys, there are already de facto gag orders in place all over.

Edited to add, 7/19/22: My colleague responded. As expected, no comment, except that he joins me in looking forward to the opinion on the exemption of Notice 2017-10 from the APA.


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