A Taishoff “Good Job, First Class, with Oak Leaves” goes to the trusty attorneys for Mohamed K. Abdo and Fardowsa J. Farah, 162 T. C. 7, filed 4/2/24 (Happy Palindrome Day!), whom I’ll call Meg & Dave. Mo and Far are two weeks late and much more than a dollar short, when they petition their SNOD. Their last day in the Section 6213(a) 90-day stretch was 3/2/20, but they mailed their petition on Saint Patrick’s Day, 2020, from their home in OH.

Nevertheless Mo and Far have the luck of the Irish. Because Tax Court was under the COVID lockdown mail embargo between March 19 and July 9 that year. And because, as Judge Alina I. (“AIM”) Marshall judge-‘splains: ” On March 13, 2020, the President of the United States declared a nationwide emergency under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 42 U.S.C. §§ 5121–5207, as a result of the COVID-19 pandemic (Nationwide Emergency Declaration). See Letter to Federal Agencies on an Emergency Determination for the Coronavirus Disease 2019 (COVID-19) Pandemic Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 2020 Daily Comp. Pres. Doc. 159 (Mar. 13, 2020). The President also approved major disaster declarations for each of the 50 states pursuant to section 401 of the Stafford Act. On March 31, 2020, Pete Gaynor, the administrator of the Federal Emergency Management Agency (FEMA), at the direction of the President, signed DR-4507-OH (Ohio Disaster Declaration), which declared the State of Ohio a major disaster area. See Ohio; Major Disaster and Related Determinations, 85 Fed. Reg. 26,702 (May 5, 2020). As with each other state disaster declaration, the Ohio Disaster Declaration identified the pandemic conditions warranting the declaration as “beginning on January 20, 2020, and continuing.” See id. at 26,703.” 162 T. C. 7, at p. 4.

This let Treasury set aside deadlines, leading to the famous Notice 2020-24, 4/9/20 (see my blogpost “Le Quinzième Juillet,” 4/10/20; but see also my blogpost “Too Late is Too Late,” 9/10/21).

Meantime, IRS churns out Prop. Treas. Reg. § 301.7508A-1(g), 86 Fed. Reg. 2607, 2613 (Jan. 13, 2021), which goes final and which says that late petitioning doesn’t get the mandatory 60-day push other acts get.  IRS says Chevron deference bars Mo and Far.

Mo and Far (ably represented by Meg and Dave) say the statute controls; the Reg. is invalid because Congress filled the field.

“Section 7508A(d)(1) provides that, in the case of any ‘qualified taxpayer,’ the period beginning on the earliest incident date specified in the declaration to which the relevant disaster area relates and ending on the date which is 60 days after the latest incident date so specified ‘shall be disregarded in the same manner as a period specified under [section 7508A(a)].” Section 7508A(d)(2)(A) defines a ‘qualified taxpayer’ to include an individual whose principal residence is located in a disaster area. Section 7508A(d)(3), by cross-reference to section 165(i)(5)(A) and (B), defines a disaster area as an area determined by the President to warrant federal assistance under the Stafford Act. Petitioners contend that they are qualified taxpayers because they resided in Ohio at all relevant times.

“Petitioners argue that Congress clearly intended section 7508A(d) to operate in a mandatory and automatic manner and, therefore, the Secretary’s interpretation of section 7508A(d) fails under Chevron step 1. Specifically, petitioners contend that section 7508A(d) provides a mandatory extension of the deadlines and gives no discretion to the Secretary.” 162 T. C. 7, at p. 10. They claim IRS is trying to subvert Congress.

But IRS isn’t done. What does a lawyer say when confronted with a clear statute?

“…respondent further contends that the statute is ambiguous in two ways: First, Congress did not address what specific time-sensitive acts are postponed pursuant to section 7508A(d), and second, Congress did not directly address federally declared disasters without an incident date under section 7508A. In respondent’s view, the regulations are necessary to resolve these ambiguities.” 162 T.C. 7, at p.12.

Any lawyer who can’t find an ambiguity should find another way to make a living.

But Meg and Dave have a table, showing exactly where Congress lets IRS decide, and where discretion was off the table, 162 T. C. 7, at p. 15, which Judge AIM Marshall annotates.

And the table clears the boards. The contrast in language between 7508A(a) and (d) o’ercrows IRS’ wordscrabble. And the heading “Mandatory 60-day extension” while not dispositive, nevertheless provides “… an instance in which the heading is of some use for interpretative purposes, and it supports our reading of the statute.” 162 T. C. 7, at p. 17. (Citations omitted).

As for what acts are subsumed under the mandatory 60-day statutory push, Judge AIM Marshall finds no ambiguity.

“Having given full consideration to section 7508A(d) and its context, we must agree with petitioners that respondent’s interpretation conflicts with both the plain wording and the mandatory and specific nature of subsection (d). Postponement of any section 7508(a)(1) act would not be mandatory if it needed to be triggered by a discretionary act of the Secretary, who could use his discretion not to act at all. Instead, we think Congress’s intent is clear. For a defined person (a ‘qualified taxpayer’), a defined period (‘beginning on the earliest incident date . . . and . . . ending on the date which is 60 days after the latest incident date’) ‘shall be disregarded in the same manner as a period specified under subsection (a)” of section 7508A, that is by mandatorily and automatically disregarding ‘whether any of the acts described in paragraph (1) of section 7508(a),’ including the act of filing a petition with the Court, ‘were performed within the time prescribed therefor.’” 162 T. C. 7, at p. 20.

IRS fights to the finish; there is no incident date in the COVID declaration. Meg and Dave say, “So what? There was one in the OH declaration thereunder, namely, viz., and to wit, 1/20/20.”

IRS’ ex post facto regulatory binge doesn’t work.

Ch J Kerrigan, and Judges Foley, Buch, Nega, Pugh, Ashford, Urda, Copeland, Jones, Toro, Greaves, and Weiler are on board with this.

Judge Ronald L. (“Ingenuity”) Buch concurs, noting that Chevron may be on the way out, as the Supremes have granted cert in a case to reconsider. Howbeit, “Over a century of precedent supports the unremarkable proposition that ‘[a] regulation to be valid must be reasonable and must be consistent with law.’ Before Chevron, it was clear that ‘regulations, in order to be valid, must be consistent with the statute under which they are promulgated.’

“In recent years, the Supreme Court has held regulations to be inapplicable with only a fleeting reference to Chevron…,  or without referencing Chevron. And the Supreme Court has specifically stated that it ‘need not resort to Chevron deference . . . [when] Congress has supplied a clear and unambiguous answer to the interpretive question at hand.’” 162 T. C. 7, at p. 24. (Citations omitted).

Judges Nega, Ashford, Urda, Copeland, Toro, and Greaves agree.

Judge Courtney D. (“CD”) Jones says this case strikes a blow for Rare Noodledom. Hallmark Collective and Sanders keep a consistent tone. When Congress sets a limit, game over. Culp doesn’t apply outside 3 Cir, and cert has been sought there.

“Today, the opinion of the Court holds that section 7508A(d) provides for an unambiguously self-executing postponement period for certain acts set forth in section 7508(a), including the filing of a petition for redetermination with the Tax Court. § 7508(a)(1)(C); see op. Ct. p. 18. This position is consistent with the Court’s prior decisions in Hallmark and Sanders that the deadline under section 6213(a) is jurisdictional, because unlike equitable exceptions, statutory exceptions to jurisdictional deadlines are of course permissible. Moreover, our prior decisions in Hallmark and Sanders are further undergirded by the jurisdictional nature of the AIA, codified under section 7421(a)….” 162 T. C. 7, at pp. 26-27.

Judge CD Jones points out that assessment and collection are as essential as barring injunctions to prevent collection and enforcement. And as I have pointed out, the automatic stay in Section 6213(a) is a narrow exception to Anti-Injunction Act’s high wall against interference.

Judge Greaves is OK with the Section 6213(a) part. Judges Buch, Nega, Urda, Copeland, nd Toro agree with it all.