say now i understand your question no i'm not asking you to set aside the alternative minimum tax provision what i'm asking is that the employee reimbursement provision be interpreted in a manner that will cover the employer's payment of the legal fees involved here as a reimbursement for that proposition we turn to the language of section sixty two a to ebay which contains two basic requirements one that the reimbursement must be or the expense must be incurred in connection with the performance of services as an employee and the other that the expense is reimbursed pursuant to a reimbursement or other expenses allowance arrangement hundred one go to the attorneys right but that's call out that they were going to pay the attorneys fees they paid out as part of a total settlement but they divided the money up by giving part of the war in part to the employer employee court erred in two respects her so it limited this coverage to current employees only and the second is that it required that the employer benefit with respect to the former  former employees if the expense originated in the trade or business of being an employee and they went on in short because the lawsuit against young was directly connected with approximately resulted from his employment a young the litigation expenses are important business expenses within the meaning of sixty two and one that's the definition of in connection with the performance of services as an employee so the tax court has previously ruled these are in connection with the government's previously argued these are in connection with what in this case they take a diametrically opposed position and say no they're not because there is a distinction between current and former employees and we don't think they should be able to do that have to be for the benefit of the employer as long as they are in connection with employment and the implying that's the business of being employed i was just going to get to the employer benefit question   or benefit of the employer that's correct that it appears nowhere other than the tax court's opinion and this kind of a rule can pose a serious interference with sound business judgment the judgment the congress has allocated to the employer or the business not to the i r s and this question to arise in any number of cases involving reimbursed expenses you know assume that arguably taking a client or a customer out to for a need a separate policy of the employer i guess or a separate contract or you got these implants do not need to be in writing they need to be expressed but we think that the context of the circumstances there's nothing in this statute in the language of the statute that says you have to have some additional benefit over and above what you expect to get by settlement it's it was in their benefit to settle they did so also if that is required it is that a slide in this case with respect to the plan question or arrangement the tax court to webster's dictionary and took what is called the primary definition which i looked it up it happens to be the one mark number one under a string of definitions but huge if you read further agreement and of the american heritage dictionary it's an agreement settlement or disposition the government has admitted in its reason it's in this court that the payment of the attorneys was a negotiated term of the settlement of the claim of wrongful termination that by yes now we've demonstrated i think that this statute section sixty two a two and a can be interpreted to cover the reimbursement involved in this case and it should be them to report it that way for several reasons one there should be a policy to encourage just elements employment cases are notoriously difficult to settle if the tax purpose here is to encourage settlement of these kinds of cases not the tax purposes but the underlying i'm not sure that would be a reimbursement as opposed to a negotiated direct payment and possibly if that had been the negotiation we might not be here i don't know the answer to that but i think it's a different question it down to us that a yes i'm going to  way it appears in sixty to eighty two which is the focus of this case but firstly identical words appear in section sixty two a walk now those words were construed by the first circuit in alexandr and they were construed in a way that is the opposite of the way the i r s argues they should be construed in this case and presumably when congress uses the same words twice in the same subsection also want to mention briefly the purpose of limiting the junction of on reimbursed employee business if you're not going to argue the any connection with him well in alexander your honor the first circuit said the expenses of a former employee in employment litigation and let me get the exact language here the alexander of course is directly results from directly results from the tax payers employment it seems to me at the expense is directly result they must be in connection with i would like to know why something such as expenses in alexander can directly because all from the employment but not be in connection with the employment and yet that's the position of the i r s in this case let me tell you what my problem is with your position it seems to me that you're taking you're using words to use the current congressional purpose in an act these factions are real you go back and look at the senate report you look at the house report you're talking about expenses for his employer on behalf of the employer reimbursement for business expenditures incurred on employers behalf of the employer's benefit seems to me what they were getting at is you've got an employee the employees out there spending money on  your behalf you reimburse the guy you're not going to get taxed on that it seems to be as simple as that's what congress had in mind and all of a sudden we're really far afield trading on dictionary definitions of words to accomplish a purpose that i doubt for a second that congress would have said and something that congress never even thought of you know that i just figured out a way to use these words to get to and i don't i don't think so if you look at the references in the legislative history to employer benefit congress his concern was with what they called non it someplace that congress didn't anticipate i agree with that but again in bob jones the supreme court said the fact that congress did not anticipate the situation does not prevent a court from applying  saying that this is a case of statutory interpretation and the statute at issue is section sixty two to any of the internal revenue code and the critical language that i think the court needs to focus on is that in order to achieve that the duck session that they're trying to get for these attorneys to be the docs you know has to be an expense paid or incurred by the taxpayer in connection with the performance by him of services as an employee under a reimbursement or other expense or allowance for arrangement with his employer so there are two requirements there the first is that i connection with the performance by the taxpayer services as an employee and the second is that there be a reimbursement or other expense allowance arrangement and our position is that neither of those two prosecutor wrongful termination klein but you've got these other cases that seem to say well as long as it's in connection with the business of being an employee doesn't have to be apparently for the benefit of the employer and this is something that the service just layered on to this meeting at which well sponsored a my response to that is that the other cases were not under this code section those cases were under either section one sixty two the internal revenue code which allows a d duction or ordinary and necessary expenses in connection with the trade or business or under sixty two a one which talks about  ordinary necessary expenses in connection with a trader business but the statutory language we're dealing with here is different ok the language in other words we don't deny that these legal expenses were in connection with his employment and that is the standard for the other tests that they were talking about but for this for this particular paragraph it's got to be in connection with the performance by him of services as an employee and it's in it's in those other words there that i think we bring in the other requirements that it has to be in the context of a current employment relationship by a current employee it's a tighter it's a tighter requirement and it comes under here and i think that that's very clearly thank you for that anyway as they could've avoided th kind of coming to a head right now in the courts of appeals and there have been three cases because we yeah there are there have been three cases in the ninth circuit on the issue of contingent attorneys fees and in those cases the issue is when the thorn in the saddle here is the alternative minimum tax because you don't get to the doctor attorneys for purposes of the alternative minimum tax and that's the whole reason why this whole line of cases has arisen  congress is aware of this problem but congress has chosen not not to change it so where the government is here in court in case after case saying this is the law that congress made and we recognize that sometimes that doesn't leave the taxpayer with very much money after he pays the taxes after he supposedly won a lot of money from his employer for wrongful termination or something of that nature but we're here time after time and we may well be in the supreme court at some point soon on this issue so but to get back to the issue here they're trying to achieve the same results by using requirement that ties this in with the current employment relationship and then if that to the employer where the committee reports said that the plan would have to re him reimbursed  reimbursed expenditures incurred on the employer's behalf and for the employer's benefit so i think i agree with what the court said about the whole intent of this particular provision which is when you've got a current employer relationship and the employee is out incurring expenses and paying out of his own pocket expenses that are part of the employer's business and give the employer direct business benefit and that's why we say in our brief that it doesn't satisfy that requirement the fact that they say the benefit that the employer got out of paying this money was that they avoided future litigation or continuing this litigation with this tax payer but that wasn't the kind of benefit that was required because congress this congress was contemplating expenses that benefit the the employer directly in ten ducting their business and that's what the whole accountable plan and regulations are about and i'd also like to point out what this court said in the shotgun delivery case recently which was also talking about an accountable plan requirement it said that in order for the expenses to be deductible under this exact provision quote only permitted expenses that employees actually incur or are reasonably expected to incur in connection with their employment duties may be reimbursed what can grow from that that's shotgun delivery which ok then i'd like to go on to the second requirement in the statute which is that there be a reimbursement or other expenses allowance arrangement now they're relying on their settlement agreement that settled this litigation as a reimbursement or other expense allowance arrangement and i think again that that clearly falls outside what tongass was aiming at when it use these words that a reimbursement arrangement is the arrangement that provides that the employer will reimburse the employee for expenses that the employee incurs in the conduct of his business than in the course of his performing his services as an employee this is very far field after the employee as long since ceased to work for the employer and he's actually suing the employer for  that can open a whole another can of can of worms but in i want to make one other point about why the settlement agreement was not the kind of reimbursement arrangement agreement that was required by the statute because in a filing that they filed in the state court in this litigation against the employer they stated very clearly and this is in the record this this filing that the only reason for putting in a separate payment provision where the attorney's fees would be paid directly to the attorney was because the taxpayer had been advised by as advisors that that way he wouldn't have to pay tax on that on that portion of the recovery so to call this an expense all allowance arrangement that somehow reimbursing him for expens connected with his employment is i think really obviously doesn't fit and when they've that said on the record themselves that the only reason they set it up that it because he thought he wouldn't have to pay taxes in other words if he wasn't bearing his tax consequences in mind they never even would have put the separate payment to the lawyer and and they wouldn't have anything t could even claim represented this kind of arrangement but the other side admits that this is an area that this is would be resolved that congress never even anticipated are we taking this into an area and that congress didn't think about it so isn't this using the language for a purpose that it shouldn't be used for can understand i'm not sure i don't think that's correct i think if congress had considered this they would say it's not fair to double taxed to snow case my truck was my father snow was my my wife's father you know lost that lawsuit in the lower court and told this law firm i'm sick and tired paying you  fees for losing my cases we're not taking this to the supreme court the film law firm said yes we are you we won't charge you anything we think that the court of appeals was wrong we're going to go to the supreme court so they took it to the supreme court and i never in my wildest