morning whenever you're ready  only asleep did so here and the court below erred in affirming it especially on your st point to you is your argument that even though there was clearly yes what i think is a remember why can't congress supersede a regulation by passing a law when your argument seems to fly in the flint face from the whole concept of chevron analysis for example where we look at the statute to see if it has meaning before we do anything else i mean and if the right complies with that meaning how on earth can going to a regulatory and he refused to obey a law passed whether agency what agencies do in other words what if bureaucrats and the i r s didn't like what congress definite they could be issuing regulations all the time or not changing regulations that's not my understanding of how the the secretary may impose a penalty and that it gives the maximum penalty that the secretary may have posed but the secretary in this case by not changing the  and never change that because the penalty remained as it was in the regulations where partners are you saying that there was no eight hundred dollars something one thousand dollars some of the if the regulations are talking about they imposed an eight hundred dollars something one thousand dollars and what i'm saying is when they impose adjudication because parties think the result the self evident and so it may be i mean you know it seems to me and there are numerous cases there are always congress always passing new statutes i haven't seen someone argue that that statute has no force in fact because they're just regulations that were you know let me put it this way is there any stack any case in any  ground that it was not consistent with the statute in this court said that even though the agency wanted to repeal the regulations conform to the statute it still had to follow the notice and comment procedure and eleven and money laundering although all taxpayers were obligated to file left part of that some of the penalty for failure to file should have been reserved to those from criminally derived proceeds receive the money in the bank account as a gift from her mother the bank account itself was a gift from her mother her brother presented her with the forms she signed them welcome here she signed the opening forms but she did not put any money into the account for your mother basically engine hype i don't think i'm not i'm not arguing semantics all lawyers arguments i don't think that she opened the account because the money in the account was did not originate with her forms didn't even richard and with that why does that make any difference i mean she's the one that conducted herself she was and tried to be a con there's no question about that she was in charge of the count and she managed it in the way that her mother as as her mother managed the parallel count that her mother held which was basically the same money so she did basically what her mother died and i was like  there was but her mom is deceased and did not elect to sue with god in the penalty she just paid her stay pay the penalty and they moved on so i don't understand why the return and know that you're supposed to file an a for your willful which of those do you think is wrong well close to three things that constitute law what's not look none of them or what i'm saying is that if there isn't more again your honor i believe that there is sufficient question as to why and i also believe when you seem to really believe this that there's a position sufficient evidence that if the court had ruled the other way you would be able to say there's enough to support the court excuse me on sorry i don't understand the question what you're saying is that there's an argument the other way no i'm saying more than that but the argument the other way is substantially more persuasive in that the court's argument is  to significantly increase the penalties d when they did that it superseded the old statute with a lower penalty and it also superseded the one thousand nine hundred and eighty seven regulation that simply mirrored well language of the change so there i guess it was i think was the department of commerce and they had issued a limiting regulation where they had explicitly said even though the statute allows us to do certain things we're normally not going to exercise her discretion to do that and then they i guess without notice and comment went to withdraw that regulation and they were saying well that was a logical outgrowth prior notice that we issued in this court held that it was not but that was not a situation like we have here where there's an intervening statutory shane which is what happened you have this regulation in congress should i know if it does the i mean well i don't know how many there are in total but i do know certainly the finn says must have a lot of priorities they have announced a plan to withdraw the regulation but they have not completed the process yet i think that this argument like nobody actually saw this was a problem in told very recently with the last year or two when you had account holders in the cases mentioned polio and watan who were s wait a minute there's as there are other cases the other way the of supplements since then of course right and i think that the last time i counted there were nine district courts in our favor as opposed to the two that were against but i guess the point i'm trying to make is that  recently when this argument started getting a little bit of traction in the district court everybody understood that when congress changed the law in two thousand and four that was the law so this didn't necessarily appear to be a t a regulation the secretary's only authorized to adopt regulations consistent with the law this regulation is now inconsistent with the law so it's just invalid i can respond to that also because it's very clear in this case that miss norman did not rely on the old regulation and was not misled by it how do we know that we know that because she didn't raise this issue at any point in her complaint in her summary judgment papers or even a trial she didn't say or her counsel didn't say there's an old regulation what happened is that after the st district court held that the regulation trumped the statute now i know that the statute says up to fifty percent but i'm furious why the penalty wasn't a one million instead of only eight hundred and three thousand i don't know the answer to that i mean i think the a penalty that was imposed is approximately fifty percent of the account balance that was reported on the bully to the f bar so i guess based on the record i can use her word for her i can't speak well that it's in there that the why fifty percent in this case that what are the factors that the secretary would consider in assessing what the amount should be and it's just going to default to fifty percent right right and i can answer that i guess st i'd preface the answer by saying that ms norman has not raised an a p a claim in this case she is not saying that the secretary abused his discretion by you know not considering mitigating factors and imposing forty percent or twenty five percent her argument is that the penalty weekly cannot be what it is but that said there is a great deal of evidence in this case that ms norman's failure to report her account was in automatically it's people who are willful you can post up to fifty percent that's right all of the evidence that the fact that there's a lot of evidence to prove it is in fact willful just gets you under the umbrella of the statute what factors if any are you aware of that the penalty has to go through several levels of a pool so there is that and then there are also internal guidelines that the i r s can look to to see if there are any mitigating factors and again that's order to have those mitigating factors apply one thing that the person has to do is cooperate with the examination and one of the very common features of this case is that  statements to the i r s when it started to examine her return and caught onto this account st she said that oh well i was shocked to st learn of this account in two thousand and nine when my mother told me i didn't know anything about it before that no no and she made a lot of lies in the process i mean she just lied herself into a hole but the biggest thing that one of the factors i would hope that the secretary is considering assessing this is overall net worth we're dealing with a substitute schoolteacher i don't know what she may have otherwise inherited from her mother's estate or i don't i don't know what her overall i mean i actually didn't see your tax return and it was different than i expected but i would hope that the secretary would take into account he would not start at fifty because the statute says up a few percent but that he would take into account things like you know overall net worth because this isn't pet this is a penalty so idea is to deter others from doing it and i do take your point and i i honestly don't know i mean i haven't looked behind the process in this case though wasn't there was an issue on appeal in the sun in front of us matter of me sort of not understanding how the process works and i don't know why i made some sort of minimal record about the fact that i have a few concerns about how it might be that if it's going to be in automatically fifty percent every time i don't think that's consistent with the statute and i do think that could be an a p a violation because then the secretary would be actually evaluating each case and deciding where to assess the you know that's not funny that's not in front of us and i guess i would speak to the point i mean we recognize that it's a large penalty but congress intentionally imposed a large penalty when congress enacted the bank secrecy act in one thousand nine hundred and seventy there is one which in legislative history to the effect that secret offshore bank accounts were the largest single loophole in american tax law and when it raised the penalties or the current level in two thousand and four it did so in the face of very poor compliance that was reported five the treasury department and said that improving compliance was vitally important to tax ministration and to other issues and another point is and i don't i don't know if this goes here concerned but that congress actually authorized fifty percent penalties per year and the secretary in this case did not do that only dealing with one hundred and fifty percent penalty so long as you know that they could have done what like fifty percent of one million six hundred thousand then fifty percent of eight hundred thousand and fifty percent of four hundred that like you know it wouldn't work that way it would be puryear that the f r filing wasn't done but that said that would exceedingly rare congress has authorized it that's the point i'm trying to make is that because what they're talking about a calculation in which the amount due exceeds the total investor i don't understand what kind know we don't understand how you're adding that up what does that mean it means in theory that congress has authorized the secretary to impose cumulative penalties in that manner and that  examples say she had one million six hundred thousand for three years and the congress could have deemed her st three years of improper f r compliance that is what the statute says but that is not me how it would apply years because that exceeds the balance of them and i just kind of i get i feel like i need to make a record that can't possibly be the way it works and the simple mathematics fifty percent in one thousand nine hundred and eighty three would then leave the account at eight hundred thousand dollars so they can't bring her for fifty percent  came in and said one point six million dollars we want eight hundred dollars a year for each of three years so you know us the whole one million six hundred thousand dollars plus another eight hundred thousand i i can't fathom that wouldn't make any sense to me is that is that how you think it actually worked that is how we don't do that just right yeah and we we disagree with that but i guess the point that i'm making is that given that that's how the statute reads that the i r s does not automatically jump to the highest thing and did not do so in case i don't think it's actually reads that way so you don't really get any credit for me for not doing something that i don't think you had a right not to you didn't have a right to do but anyway if you have anything else it's i guess does the court of any further questions i know there are other issues schoolteacher and you have her tax form show a lot of in other income in addition to hidden swiss account substantial capital gains and so on is that is was this just out there i think these were are i think i'm speculating because it's not in the record but i believe there were other gifts from her mother because the way was norman lived was she work multiple jobs she was a substitute teacher she taught summer school she tutored s a t students she did not live disputed this money was untouched and i don't think it was to hide it from the government i think that was just basically the way she lived and i think that what we're discussing here in a lot of senses is norman was obligated to understand the vagaries of the paks law but the i r s is not obligated to understand the vagaries of the statute that they're enforcing which kind of seems to me to be somewhat backwards she's being penalized for not understanding what an f r is they are not being penalized for not understanding that they have to amend their regulations that you're anything else not