i thank you and i represent the commissioner and i would like to reserve five minutes of my time for rebuttal please the commissioners position is that the tax court majority and lance was wrong and that the  court dissenters in the seventh circuit was right in striking doubt and that the regulation actually is valid  the the problem you have and i've read the seventh circuit in pretty twice and i hope carefully you've got something b and it's and you've got something in c and it has much of the same language that you have in f except in b in c you have a two year period with the seventh circuit said is that it would seem that if you adopt the position of your opponents and also of the passport it would make b and c superfluous but it would seem that you can flip that and say if you don't adopt their positions position that f would be superfluous because f doesn't have any type of limitation period how would you respond to that well first the scope of relief that can be given under f is broader because it applies to returns that declare that a tax is due and owing but merely does not pay it where which is a lot broader than the relief you get under some sections b or c which involve only the case where the return so i guess my question just the logical why would f be there if it has essentially the same language that b s what's the why would why would congress put an f in there if the only thing really different of any significance is not having a period of limitation well my point was that if that the scope of relief that you that is a vailable under oath as a matter of discretion is a lot broader then what you really think you can get as an entitlement under subsection b and c the factors are overlapping to a great degree but under subsections b and c the the only relief you can get is if your return did not correctly state your tax liability if there was a late under the procedures prescribed by the secretary if taking into account all the facts and circumstances it is an epochal to hold the individual liable for any unpaid tax of efficiency and the taxpayer does not qualify for we leave under a b or c it would seem that one of the reasons that taxpayer would not qualify for relief under b or c is that taxpayer was beyond two year period and if that's the case it would seem that f is saying ok if they really make  the return understated the tax liability and although that is one of the factors that the commissioner looks at in dispensing relief it's not dispositive and there is more flexibility and so you might not have the kind of facts that would entitle you to relief for instance if you knew about it you could still potentially qualify for relief under f for instance if you were subject to abuse by the spouse not not rising to the level of duress but that's one of the reasons why you sign the return so be is taking into account back to the circumstances it's an equitable  hold the person liable and the election of benefits that has to be made not later than two years after the date the sector has begun collection activities f is it's an equitable hold the individual liable and they otherwise don't qualify under c so what else might it be other than they were outside two years well this is a big difference between subscribing a that you think is correct but for a reason that your spouse has a better knowledge of you've understated your tax liability that is the type of relief that's the only way you can get relief under b or c is if your return is wrong but under f you can subscribe or return saying that you owe a big tax liability and not pay at all and yet qualify for relief under subsection af so  yes it is a lot broader just because of that the point that it applies to under payments of tax liability as opposed to merely understatements of tax liability so and  also think that the statute of limitations contained in both subsections b and c would really effectively be undercut if you read the statute as a tax court majority did in lan contained in the first two subsections at not miss mclaughlin moving beyond the statute of limitation question was if we agree with you that the the department had the right to impose a two year they got relief in that that story ok well all right so there are several reasons why we think the that the doctor back to equitable towing doesn't apply one thing that one consideration that you look at is is this the type of action that goes on between private parties and it is not it's purely a governmental and taxpayer relationship second and early when the supreme court and it's come back to this a couple of times and particularly in the bag of beggarly case there is no equitable tolling where the text of the statute indicates that it was not intended and here just this was true in the other than as to time well here the text of the statute has a built in tolling it doesn't begin to run in til the commissioner begins collection activity and that's that's like the situation in beggarly where the quiet title statute didn't begin to run until the discovery if you're going to make a claim under b you better have some equity on your side you got to make it within two years you will make a claim to seeing your unmarried you better have some equity on your side it has to be done within two years if you're not eligible under b and c and you have some equity on your side you can throw yourself on the mercy of the comic commissioner and ask for relief what else other than time could that not be put that well it could be that that huge class returns where the return is correct the tax is correctly stated but it is get a chance to sit to consider whether equitable tolling applied and we we think it applied not you know because the fit cannot apply not only because of the tax in the built in the built in equitability of limitations period but also because it's in the tax collection area and the supreme court has repeatedly said that that is not an appropriate area for it nor is it appropriate in are you saying we should not the side you  issue here when you are good guys or does that why you could reach out and decided but i see nothing wrong with the trial court having the first crack at it since it didn't have the opportunity to do so in the first place payments and under statements and the argument was that f a still broader than b and c because it applies to under payments even if the two year statute of limitation is valid the language of subsection f states that it applies to both unpaid taxes and efficiencies and we say joint conference report on page thirty one of our brief which expressly states that the  available when there is both an understatement and an underpayment of tax since f must be available to understatements it must be broader than the substantive criteria of b in c a the court noted there's not much of a difference between b and deaf in the case of an understatement on the face of the statute there are only two differences knowledge and the statute of limitations if this an impermissible construction of this statute because it violates the language of f requiring the secretary to take into account all the facts and circumstances and use discretionary relief avoid a void in equitable result results it also violates the language of the statute that relief be available under af in the case of a deficiency where relief is otherwise unavailable under c the argument was also made that if time is treated as a factor under wraps it somehow undermines the statutes of limitations in b and c and that was also really the crux i i think of the seven circuits opinion but relief under raphe is discretionary whether the secretary considers all the facts and circumstances is in the why would have a statute and is not if a taxpayer would have qualified for relief under b for example but missed the statute of limitations and far away that taxpayers lost the benefit of mandatory relief times now treated as a factor under raf where the secretary considers it along with all the other facts and circumstances and that taxpayer has lost a significant benefit the one of the the arguments that the seventh circuit has said is that you can't really say if we're not sure what was meant by on the second prong of chevron why is this not at least a reasonable way of the commissioner cutting through this issue may not like it right and you may have policy reasons against that but what makes it a reasonable for the reasons that were  just stated about the language of the statute and if we're going to step to pursuit of saying that it's not clear on the face of the statute but under step two the legislative history becomes very relevant in congress started out with the old innocent spouse relief or evasion sixty thirteen which did not have a statute of limitations and the girl was a vastly expand innocent spouse relief and that's clear from the legislative history that congress and we have a problem here too many spouses are being in equity and held liable under this statute if this regulations permitted to stand relief under sixty fifteen is significantly more limited than it was under the old statute any claim that's made after two years will not be considered on the merits feels that you have the equivalent of what is currently in f now the old statute was essentially b with a grossly erroneous requirement the deficiency had to be grossly erroneous for a taxpayer to qualify but there was no statute of limitations under it and the witnesses that testified before congress which is attached to our brief made a rather clear that the circumstances that make a taxpayer innocent in the first place were also likely to cause a taxpayer to file for relief after two years and in fact if i remember correctly none of the witnesses that testified would have been able to receive relief under this statute because of the regulation ms min that was it's conceded that but for this regulation she's an innocent spouse and she's entitled innocent spouse relief what's preventing her from obtaining relief is this regulation and her circumstances do not seem to be uncommon among taxpayers that are otherwise going to be considered innocent spouse innocent spouses and just fish you made the point about hypotheticals it's not difficult to come up with with many a spouse in an abusive relationship what makes her an innocent spouse is the fact that she may have been coerced into going along the street return if that if that taxpayer cannot remove him or herself from that relationship for two and a half years after collection activity begins the internal revenue service will never even get to the merits of that claim there's a bright line rule and i believe it violates the the face of the statute which requires a secretary to consider all the facts and circumstances and avoid inequity and it's conceded that if this regulations permissible there are many many situations like mr know where taxpayers who are otherwise going to be innocent spouses or continue to be held liable because of the regulation on the face of sixty fifty as an acted all of these taxpayers will we still have the opportunity to have their requests decided on the merits  all right there's a delegation of procedural authority in the statute and there are two points i'd like to respond to that is if a time period is a procedure it still must be reasonable in the context of the statute i just would still overall it's it is it is and subsection b also begins with under procedures prescribed by the secretary and a statute of limitations is provided directly in the substantive criteria of the session it is a structure limitation substantive approved procedural we argue that it is generally substantive and the whole one of the can the current opinions even made the point that you know this language may be in other areas of the code we're permitted deadline but the statute is unique and it's clearly distinguishable from a statute that has no statute of limitations if i'm my memory is correct it's the seven circuits the only court appeals that is already decided it but it's pending in the second circuit i believe it's pending in the sixth circuit so the circuit courts are are getting around to it right now  that the if the third circuit affirmed the tax court in this case there be a split of circuits and if there's going to be a few more circuit courts that are going to weigh in on one which was well what's wrong with the seventh circuit analysis the seventh circuit i believe is particularly hung up on this undermining argument that if some at least their first point it was and for the reasons we stated the fact that discretionary and a taxpayer that would otherwise qualify under b or c and misses the benefit and misses the deadline loses significant benefits under b and c it appears  congress essentially said we're going to expand innocent spouse relief and we're going to give you bright line rules if you meet relief is mandatory you get it but under statements outside of b and c and under payments fall under after relief is discretionary so the fact that relief is discretionary and a taxpayer loses the benefit of de novo review under b if a taxpayer would have qualified for c and mrs misses the deadline that taxpayer now is the burden of proving that he or she did not know of and under an understatement for those reasons it's hard to say that somehow not having children time is a factor under half undermines a statute of limitations in b or c because it's not true as a seventh circuit stated that if you miss if you miss b for example because you filed like mr nowaday two and a half years after collection activity begins relief is not going to be automatic are not eligible under b because you did but under f you would say look i did know what i should have you allow me to be an innocent spouse for x y and z reasons wouldn't that be you're not eligible under b but you might be able to make an argument that that's correct and as as i stated earlier the only difference is really between f and b in the case of an understatement or going to be knowledge and the statute of limitations and i get to that point because b has five criteria listed in the case of an understatement f has three of them and the only differences are are time and knowledge and what you said  it would be correct you would make the argument that i knew but i was coerced when when the you were taught the legislative history when sixteen thirteen was changed to sixteen fifteen and you did and what was the statement as to was that the legislative history essentially need an acknowledgement that there are going to be circumstances outside of the mandatory relief sections where would be an equitable to hold a taxpayer libel in every indication the legislative history is that f means exactly what it says it's an equity test all the facts and circumstances will be considered and there will be a discretionary determination of whether  know the problem is you can take this ten years and later start making fun saying you could one case you could take out one hundred twenty one years right but isn't if the in effect is a pro announcement but the regulation by the commissioner that says the period of repose with regard to those who are not otherwise eligible under b and c is two years what makes that an reasonable i would say two things in response to that one is that the language the statute says relief is available under this section where it's unavailable under b and c in the case of an understatement eliminating one of the only two avenues that a taxpayer would be able to seek relief under after in the case of an understatement and that is where the taxpayer had knowledge or did not fall within two years it violates the language of the statute that requires the secretary to consider all the facts and circumstances of the taxpayer's request and it leaves out which the tax court and home made the point it also violates the directive to prevent inequity and there's there were obviously be numerous cases where would still be inapplicable to hold the taxpayer liable because all the facts and circumstances of the request were not considered and to this with regard to the seven circuits opinion there is no fear if times treated as a factor that someone within the ten year collection window eight years down the road foster relief that that taxpayer is going to the taxpayer is never going to be entitled to relief argument is simply that the secretary must consider time as now now it says she would she would otherwise be entitled innocent spouse relief and i think the fair this is an equity this is an equity section it's a safety valve of the statute and if she would be entitled to innocent spouse really but for the exactly they're not but i believe that the play by entering the stipulation i think that the service has said we believe you now even have you had no knowledge of the collection activity yeah words the lack of knowledge with respect to the understatement under payments did not but i think in this i think banning the stipulation the i r s has also said we believe you that your husband for your signature and you didn't have knowledge of the collection activity as well but i would like to address what stipulation sat and what it leaves up for grabs the party stipulated that this is no this request for relief was denied as untimely and that if they had considered whether she was entitled relief under the ramp rock they would have concluded that she was entitle to relief so then it says it's hereby stipulated that assuming that the treasury regulation is invalid and that her request was not time barred she is entitled to relief so if it doesn't it doesn't dispose of any equitable tolling argument it was keyed to if the records are valid you know then she is entitle to really with mr dissing or about if we read they have the same statute is b and they both essentially should share the same language then f would only be applicable when the tax payer had knowledge but the flip to that is why would wouldn't congress simply women ate the knowledge requirement  simply state enough that if knowledge is found then it's the commissioner's discretion to decide rather than leave it so open ended so it looks like congress was wanting to do something more than just deal with knowledge or the lack thereof well the grant of discretion is very broad pursuant to procedures developed by the secretary if it's an equitable ban the secretary can relieve the spouse of liability and i think that the one of the best formulations of this of the difference between the relief under b and c on one hand and f on the other hand is the tax court dissenters and they just point that the delegation in the swells holding case is very similar to the delegation here because we have not only subsection now we have subsection h which is a delegation to you know prescribe procedures so you got not only the language of subsection of itself but that of subsection h and you know there's also the seven circuit's decision and johnson which says that this you know a regulatory deadline is a procedure so that's what we would rely on right thank you very much thank you both counsel for well presented arguments i would ask of counsel to get together with me but with the clerk's office to have a