this case is about a review of an i r s decision in which it denied the appellant treaty benefits the treaty at issue is the us swiss treaty and the specific provision  t issue is a common provision among us tax treaties referred to as the limitation on benefits provision and in the us swiss treaty it's an article twenty two star requested discretionary relief under this treaty when it relocated from ireland to switzerland and made this application in two thousand  approximately two and a half years of the iris competent authorities review of this determination excuse me this application they denied the request the specific relief that starr was seeking determination of high prospect of lee would that also have put starr in the position going forward for as long as i guess is in switzerland it will be entitled to the same special tax treatment or is it done on an annual basis it's a good question  it would be a prospect of the reality of it is that the most significant aspects of the dividend of the taxes at issue are in the two thousand and seven year the two thousand a year has been resolved and then the financial crisis h benefits and i do have some questions about our pursuit posture so you started with a refund action under twenty six u s c seventy four twenty two and then the district court said there's a political question problem with that  here i guess you disagreed with the discourse of political question and then someone said go bring an a p a action which will have the end result as you said of giving you money the two thousand and seven tax refund or you have any case where they can use like that your question the way the a p a statute works as i'm sure you're aware is that the only time the taxpayer can actually bring in a p a action if is this if they've exhausted all their other remedies including a refund proce and so the fact that the district court ruled but even a p actions give you equitable relief either declaratory judgment ice or an injunction neither of which is available either to compel payment you know tax payments out of the treasury or to establish tax payer status forward and a forward going basis those are available under the yeah you have to do it for a refund action now i understand you that's how you started in this maybe i'll see if the district court prompted but path for us to get a refund that will would not be barred under the a p a action and it should be fairly straightforward in this sense if the court agrees that the competent r d should be reversed and the issue remanded to the agency with specific instructions on the application of the applicable standard if the company of authority were to correctly adhere to these standards they would determine we believe based on the in the facts in the record that we were not truly shopping that we did not have as a principal purpose obtaining treaty benefits in which case they would grant our application and in terms of stature limitations bar that has been extended by virtue of our amended tax return which had the effect of tolling the statute so the the way that we get our money so to speak is by having the co be like any agency where a court has determined that they were arbitrary capricious make opposite decision granting the benefits in which case we would have both we would have the permanent qualified treatment as a swiss resident and we would have our money because the special imitations is open and we would be entitled to a refund seemed to think it had to go through i thought i shrug my shoulders on the political question i'm not sure how that's getting in there but in any of that forget all that if we determine that either by virtue right no don't you understand you don't agree but not that right yet you're asked me a procedural question asking you if we were to decide the agency was not overturn capricious and not to terminations the cases  generally agree you are welcome one qualification i have is because you were in order to determine whether this case as an a p a action you have to first determine that it's not a refund a proper refund case if it's a proper refund case you've got to ask whether there's any gap there in terms of that that point you just made and a refund action in other words is that dispositive to the refund  determination by this court that they were not arbitrary capricious well you can't get a refund unless you have a determination with respect to purpose that that's correct ok so what they have the a p a or not you still have to have that the termination i agree with  saw me i don't even know that you need an a p a action if you read the statute and treaties together you can't get a refund unless you have a determination with respect to purpose that's favorable to you does the treaty the treaty is overlay on the seventy four twenty two it's there to be looked at you can't get through without that determination right that's correct you are ok so that's why i say if we agree whether it's under the a p a standard or just judicial review we looked at it and we've we find no infirmity in the agency's determination risk what purpose you lose we don't have to go through all of these political questions standing will be slightly different yeah but i understand take whatever entered in true rules you want to take and hypothetically we agree with the agency you lose on purpose but we would have we would have the right to introduce new evidence in the what was presented to that agency when you're to do noble proceeding in front of a court you can introduce testimony and new documents it isn't a novel proceeding which is why the gap could exist between your question and other words if it's a refund action and the evidentiary rules are different we would be entitled to introduce new evidence that might not threshold you are dismissed at the threshold in your somebody is going to you're seventy four twenty two action and your point is that had that not happened he would have had the opportunity to bring a dish to bring more evidence in beyond the agency's record administrative record for the administrative record including everything that you gave them for the two or are forget how many years they were back and forth here or is it all we have is a terminations liar no no it's the entire back and forth for the two and a half year period and you still have more if you would want to put him we would we would yes and probably mean what much more importantly than what we want to put in because we believe the decision is arbitrary capricious we want to get behind the decision without violating deliberative process we believe completely agree now you're talking about something with respect to the consultation so you when you say you want to get behind something we do not want to get behind the consultation your honor but we we want to get behind the  analysis that was performed here that caused them to conclude without drawing any conclusion having an equivocal response and applying these factors where the factors have the factors have no relationship to the principal purpose test they have no relationship to the notion that the senate star had already satisfied the principle all you have all you could win doing it your way was a court order for the agency to consult because you can't win without consultation so all you could win was an agent's court saying well they were called in to question the gentlemanly your decision really you you haven't put in enough to win on purpose yet therefore the court is not going to order the agency to consult how you agree a court after consultation we can't look behind that but they can come back with another decision the i r s to consult at this point you can't win without consultation i start with you right in the right you are right that i can't win without consultation but i think we have a different interpretation of what consultation involves and when i say we have a different interpretation if you look at the course of conduct in this particular case meaning the interaction that this competent authority had with the swiss authorities with respect to our there's two things i want to point out you know this in the full page this this letter is dated october thirteenth two thousand and ten if you look at the second to last on two fifty six it reads we are in the process of notifying the swiss competent authority of our determination as required under the us which treaty right so ok they believe that they have a notification requirement not later after after the final determination has been made and the final determination is not only been made but it has been presented to the taxpayer the applicant star the the department  r s then sends a letter on joint appendix to fifty seven and the last sense of the first paragraph reads in accordance with the consultation provision of article twenty six we provide you with a description of the facts relevant to this request and i'll rip on our conclusion regarding its proper disposition but they don't have to consume so they don't have to consult with switzerland to deny benefits the provision says they may be granted them someone may be going to grant benefits so i'm not sure how that letter provision helps here and it's because the language in the treaty seems to suggest that it's it's a one way street that  said it says after after a determination the question is whether after determination followed by grant is right is making an exclusive requirement on grant or it means affirmation i would say that the world order to consult before you make a phone from a nation but you're out of my saying that in really consult ok for once all you could come away with use you have to consult before you make a final determination then they could come back and make the same terminations against you without a reason i mean i would be better off in that circumstance than i am today eg and b this is a poem i farm right or wrong i'm trying to understand your legal theory is not right that's all you taking your reading of oracle twenty two the most you can win here is a poor order for the agency to engage in determination in consultation and then it's kind of we'll see what happens after the engagement consultation then they'll come back with another decision likely to be adverse to you but in any event you're saying well you're better off lose you have something they'll come back with a full of decision post consultation and that's it then you have to come back to court what you want to i have three answers to that if i can do that number one and probably most importantly i do not think that they can come back adverse to us because we think that if the standard is correctly applied we cannot have as a principal purpose obtaining treated benefits when we are going from the journal lets on the americans but ok ok so but but if that this court were to establish the correct standard and to instruct the agency to apply the standard they would be required to appeal that here to that standard if they then make a decision to grant i am i am confident that the swiss are not going to say you should may not be beneficial but we don't really care if this was something that's not going to be dispositive like that that's right which is why my second point is i don't think that this court is limited in its order to just say go consult with the swiss because what the course of conduct here reveals in the more controversial scenario for the swiss where a denial has been record that's controversial because they want to protect their resident all the united states did all the i r s did was send them a letter saying here's what we did and the point is that tells you that they're treating it as a notification requirement which means it's ministerial and this court can then order a refund alternatively post consultation that's different from seeing what the consultation reveals that's for because you agree we can't get behind the council why my view is that you absolutely can't just order a refund because the consultation requirement is not first of all seeking an agreement from the swiss right and second of all the course of conduct reveals that it's ministerial i mean you just say you don't want any more delay i understand you want money in hand and not what i'm suggesting to you is a looks to me like statute and treaties require consultation first and we don't have it yet even on your theory you're saying there hasn't been the consultation you just gave notice so i don't know how you're left with anything other than a request from this court to tell the district court to order a consultation and then it's we'll see what happens but with the instructions that the standard be applied this way i have confidence that the agency is going to do it the right way i thought time and i'm looking he's i thought you up thing not pharma shopping same thing same thing and and i'm not so sure i'm saying that they've already they've already undertaken their requirement because if they come to a new conclusion i can't say that it's been satisfied by this exchange can i ask you something you said several minutes ago that what was wrong with this determination letter is its conclusion i thought your main point was that it was inadequate that they did not consider the charitable regulations that were either stronger according to your matrix or lax or according to your brief and th thread that was smaller in switzerland and they say nothing in the letter about the fact that you're moving from a country that is giving you the benefit to a country that may or may not get to you so i saw this case as if it's inadequate and they haven't considered some evidence you put before and we send it back to considering we do that because it may be a fiction but they could change their mind i mean they may not have they they vacillated in those two and a half years and they may say we never thought about the fact that we were moving from ireland to switzerland from an automatic to  maybe and so the whole consultation point is after if we send it back after the agency says no we stay right where we no evidence to support a principal purpose when you have a circumstance you just described all right but you i thought you also argued they ignored your other points they debt because they were driving to a result they wanted they didn't they didn't take into account key facts many of which you just identified and identified facts that were frankly irrelevant the the most significant element here that i just want to point out of the normal way over a stop is that it was receiving automatic pretty benefits the consequence of that is that it passed it satisfied the principle purpose test at that at that moment you know i mean i resigned you know in ireland under the mechanical tas which are a surrogate for the discretionary tasks which are which are intended to achieve the same objective of rooting out principal purpose treaty shoppers and so it had already satisfied all of the four criteria and meaning that all of the four criteria were present when star moved from bermuda to ireland in two thousand and four and nevertheless it qualified automatically mechanically to that treaty and despite that fact this competent authority is using the same facts that star satisfied in an automatic provision to say that that it violates the principle purpose doctrine when the two are supposed to be co equal the the the mechanical tasks are supposed to be co equal with discretionary they're supposed to be sorry it's and you might say well they're different there's one is with ireland ones with switzerland they were executed two days apart and the only reason star doesn't qualify actually that helps you know that and things executed two days apart that are written differently we usually our assumption would be he meant to write them differently they to write them differently that's right the difference between the two if if if that was a justification is that one treats and she both treat nonprofit entities as qualified entities in other words if you're not a profit entity you can qualify for these treaty benefits and so do so does the model treaty and all the other five treaties that we've identified the difference is that the swiss treaty doesn't make a cross reference like the other treaties do so that owners of the profitable entity can also qualify and the significance of that first of all we think it's a glitch but you don't have to make that conclusion the significance of it to this conversation is it has nothing to do with any of those four factors it doesn't have to do with the notion that star started out in panama seventy five years ago it doesn't have to do with the fact that star it was going to receive a dividend at some quarter end which it would fail no matter when it left it doesn't have to do with anything with the fact that it was only in ireland for two and a half years and it doesn't have anything to do with the fact that they had u s shareholders none of those factors are relevant to the distinction between the irish treaty and the swiss treaty that caused star not to qualify for the for the swiss treaty automatically but did allow it to qualify for the irish treaty which establishes when they're negotiated the same time that there is no policy reason for denying start treaty benefits ebay and b it also establishes that the principle purpose test shouldn't be discriminatory in that manner which means that the fact that the popular thora he didn't even try to reconcile any of this didn't try to explain why it is that under the mechanical provisions in ireland for a treaty that's a go she added contemporaneously you do your arguments about process what the court could have done should have done all of that it could have been done this is your position could have been done in the seventy four twenty two action you didn't need the a p a action that's correct and do you know how the i r s decision is the decision of the state and terminations to be reviewed in a seventy four twenty two action do you have the same arbitrary seventy four twenty two there is no equity that's what they want i am i was quite surprised to see that the i r s was willing to allow people to bring a p a actions to have a declaration concerning their status their legal taxpaying status which is always the i r s position as always so that has to be three seventy four or twenty two i think bob jones case and all of these others come almost completely different that was order vacating and rebounding for further proceedings before the agency just as in a review of the matter is a very action where we can never actually do the end thing we just keep focusing on the reasoning here but use some other some a p a action where everyone says but you can't ever actually get to have the litigation is has to occur before any grant of benefits now if i'm not sure your position would be then then if your if you are right on political question then they would lose on the merits of their refund action not paid you go get to have declaratory judgment or injunctive relief pertaining to a taxpayer's legal status taxpaying status i think he's allowed into the a p a here i'm not aware of any but it wasn't brought up in the previous we can certainly look at jurisdiction determination has to be a determination pursuant to oracle twenty two then going to her paragraph six and we're not making a determination it's adverse to you so you lose if they're right that what you offered under seventy four twenty two it's a refund provision and that's all they are seeking is a refund and your answer is you can't get a refund unless we go through these requirements and everyone agrees on you have to give a reason and they're saying you haven't given the reason and within that is a god i don't see how the consultations anything it's just the agency has to go consult no one is going behind the consultation they're not seeking to do that so that to me seems bogus but i don't see what i'm like understand your concern or concern not ours your honor is where i started which is that in the cohen case this courthouse and as i recall when it's not doesn't hinge in i'm talking about how all the facts are again yes you have we've got this piece of paper if we had a decision that just didn't deal with any of the facts they just said we just can't come to a decision we can't decide quite where he should be golly gee it's hard there's a lot of evidence so we're not going to give you a tax of time and what would a court do what you just say you lose over it or could it have the ability to say that was entirely on reason try again i think your honor we're depending because a refund action is coming up from the district courts just as any other time i have to just record in the district court level my belief and i haven't given this a great deal of thought but my belie this generous and saying you could have a political question as the answer to a taxpayer's refund the action of tax credit this is my property you got it refund case i am not aware of any case in which it has your honor but this is this is the first case in which a determination under a tax treaty has ever made its way to federal court and so it's not surprising that this particular situation hasn't arisen before you explain to me exactly only preceded a grant of benefits not to deny that's contrary that's how i read the treaty but then as they pointed out quite correctly the technical explanations that's exactly the opposite that's correct your honor where the treaty and the technical explanation are in conflict governs the technical explanation is essentially legislate well then why are we going to find switzerland because presumably the iraqis wanted to notify the swiss government study it had gotten this request for benefits and denied just as under article two or three of the tr y the i r s would notify the swiss government and divisive person about completed changes in domestic law so you would have the burden of proving political question and so your evidence what evidence is the government have in this case to establish a political question your honor the consultation requirement is a diplomatic exercise between the u s property with already in the swiss competent authority that exercise can be outcome determinative of a request for benefits under article twenty two six what evidence is there that while you are given that this is never come up before and that it hasn't happened in this case we can't be certain that it would happen in the us but on the flip side you know starr has the burden of prov standing and does the district court held its opinion for the same reason because the courts may not predetermine the outcome of this diplomatic exercise star is refunds it is not redress of old all this stuff that judge henderson gave a bunch of considerations for example saying you just haven't supported your position taking your money away you need to say we don't need to issue an injunction all we need to say his you haven't supported your position are us we're sending it back we don't get it we're sending it back everyone knows that you can engage in consultation and you mustn't gaging consultation you certainly can't say we refused to engage in consultation they would otherwise win but we're not going to consult so we would just send it back there's no injunction in play you keep talking about an equitable remedy and it's not available under  you it wouldn't be a requisite here we're looking at the evidence presented in the case before they are us and we're saying it's the fishing if that's what we hope you're on or in any event it's not deficient and may i well that's no no wa t what's wrong with that i don't i'm not i want to make sure i leave here understanding your concern because i do not get it here i mean if if the record suppose that let me put it this way suppose the record is this they come in the same information and they are arrest as we don't like you and so you're not getting a refund do you think equitable relief is somehow a ball or two of the court saying that's not good enough and so we're not giving you a refund your honor if that's how we read the cohen case if this court disagrees vegan you know whatever stature and if the court further thinks which of course you would disagree that the reasoning is inadequate or arbitrary and sometimes venue you know whichever statute is used to remaster the agency for further proceedings is used to remount of agency for further proceedings the outcomes the same right but it wouldn't change the fact that the court in my hypothetical you don't doubt for a minute put yourself in the other side you presented you don't doubt for a minute that you could get an order from this court sending the case back or to the i r s or an order from the dish  believes that cohen is not a bar to that remedy then we agree it could be done under seventy four twenty three may i just merits of the letter very briefly your honour's briefly but i do have a question sir for you and that that that after consultation that the consultation could be outcome determinative so how do you read article twenty two six because i thought that the i r s could still has therefore been waived and i mean on before we even get to those yes i don't know how to analyze the merits until can you tell me by pointing to the determination letter the agency decision that issue here what the legal even third or fourth office options for what a principal purpose means on the street and so i'm trying to find where in the determination letter they explain what a principal purpose means the determination  doesn't explain that your honor but a principal purpose everywhere if you're using tax dollars as illustrated by all of the cases and the other regulations that reside in our brief means one of the principal purposes in fact the technical explanations as one of the principal purposes so i get that a doesn't mean dot and so i'll give you that but i'm still confused as to what it means to be a principal purpose for the move because that's at least understood your brief and this is not in the determination so maybe a general problem of the brief seem to be saying they had a chart and one of the factors they were thinking about was u s taxes so that made it a principal purpose is that what you mean is that the legal test for a principal purpose remember at the time this determination letter was issued no one knew whether these determinations are even judicially reviewable or if they were what standard would be when you say weigh heavily does it have to weigh heavily in favor of moving to switzerland or could a principal question is not whether starr would be better off in switzerland than it would be in the united states the question word is as the district court held that parity sixty six to sixty seven the appendix one star moved to switzerland was one of the principal purposes for locating in switzerland the acquisition of benefits under the swiss tax rate and so if the chart that they had which said bad under u s law i guess they had apprentices about unless there's an exception if it had said worst possible discretionary grant of benefits so they do the same thing they did here the only difference is the chart said back but didn't have the print the cs underneath about the exception what would happen then that you're  honor i think that would still remain in the discretion of a competent authority because something something is bad they can still say that the reason they went there was for the principal purpose of acquiring that bad tax status while you honor this matrix is a self serving after the facts that aren't specifically discussed in the decision document we just can't go beyond those four sets of circumstances that the competent authority recognise which didn't actually find anything your honor the competent authority expressly found bullet points write me may have done may have done and then the wonderful may or may not have been intentional so may or may not have been intentional so that's evidence of intent your honor what the competent authority found was that these four factors the first three are the history of star and stars resemblance to structures back in two thousand and six the i r s had recently determined to be abusive were sufficient to show that star is undisputed in this case as that as a district court found davis is referring to the i r s as discovery of situations in which u s individuals invested in the us through energy set up in treaty countries and other tax havens  that were abusive so this is a reference to those abusive structures and that's star has not trial it is that the district court held that it is essentially i'm just going to challenge that in a way if this  you about this third country resident whether it's a requirement or not in your technical explanation of her graph six you say that the reason this provision is included in this discretionary provision is included in recognition of the fact that there may be cases where significant purchase of patients by third party residence of the castes and limitations on benefit provisions are intended to root out taxpayers who have a principal purpose of acquiring tax benefit as opposing counsel conceded here this morning the mechanical tests including those that expression talk about the residen beneficiaries and whether their third country beneficiaries or knowledge are surrogates for in cash so really everything in article twenty two goes through did you have a principal purpose of a painting benefits under the treaty when you move to the united states or switzerland now on page seventy two of the technical explanation when it talks about paragraph six it says persons that are stablish operations this is the end of the second paragraph of the discussion of paragraph six persons that establish operations in one of the states with  principal purpose of obtaining the benefits of the convention ordinarily will not be granted relief under paragraph six that it's undisputed provides the legal standard and is the district court held i believe it's page fifty four of the appendix this is the legal standard treaty shopping which generally involves their country residence not always but generally involves their country residence maybe the evil at which article twenty two ways but the legal standard is the principal purpose  because residence and the other mechanical factors are surrogates for intact technical explanation fifty nine sixty makes clear that these mechanical tests carve out the sets of tax payers but the drafters of  treaty between the united states and switzerland believed could be presumed which to be located in a treaty country for something other than a principal purpose of obtaining tax benefits so therefore if you don't fall into one of these categories treaty irrespective of what any other treaty may say then the principle purpose test applies to stars arguments that really the absence of a third country president is determined to mean that it's trying to i'd like to pick up right where you left off which is on this third country resident point every reference to the purpose of article twenty two and paragraph sex when it's describing the actual purpose of the provision refers to a third country resident and the concern about funneling benefits to third country residents and the structure of this particular provision is to me highly relevant to these questions in that the discretion that's afforded to the competent authority is intended to be afforded in the circumstance where a third country resident has already been identified by act through the mechanical us and as makes very clear on that very page we were just reading in paragraph six page seventy two but it starts out by saying paragraph six provides that a resident of one of the contracting states that is not of the otherwise entitled to the benefits of the convention may be granted benefits under the convention by the competent already of the other contracting state this discretionary provision is included in recognition of the fact that w increasing scope and diversity of international economic relations there may be cases where significant participation by third country residence in an enterprise is warranted by business reasons and by the way then the very next sentence is the test that we've all been citing the point being that you're supposed to first identify a third country resident and then the comparable to already has i described had in fact had found the smoking gun memo here in which starr said the reason we're going to switzerland is those great treaty maybe they thought they had a macand they file in mechanically here they felt really confident they get this actual size of discussion but if they said the reason we're go on this are those treaty tax benefits no foreign countries anything like that your position is they still would have to be granted the the only thing is your position it's not the only thing you know my position is that is the whole point of the treaty the whole point of the treaty is to find those people who are interested in moving jurisdictions for the purpose of realizing bad but if i'm just kind of interested then i'm ok makes note makes no sense when the when you think about the underlying purpose but most importantly you don't have to get all the way there with me on the notion that it is a per se rule where you need a third country r as judge henderson pointed out a few minutes ago the fact that the competent authority that there can't be any question that it's a highly relevant factor given the prominence of plays in the t and the by the way the senate report the fact that it's not even application here if you're determined that we have a appropriate response to that we don't have a proper a p a so we think we have a proper response so we can we can obtain a we can proceed with seventy four twenty two if you determine that we don't have a proper refund suit because of some consultation requirement and we have a proper education that's all call it stands for as it relates