concerns transfer pricing the prices charged this case by abbott laboratories helen we know about all that but when i tell you what the problem as i see it is i mean if you read this regulation and that's where the regulation or a statute i think you have pretty good argument that the statute in that hypothetical should be construed the way you want to be true but i look at these cases like the recent long island care own case in cleveland  impossible to construe the regulation that way and that seems to me the problem that you've got here is the difference between a statute in a regulation in terms there from stage and see interpretation and so would you words don't say anything anything that the governor can hang its proverbial hat on to justify his interpretation it's not necessarily true i mean the last sentence and thins the words shall a fact that's the right there where question is are right well i need to fulfill my sexual limitations obligation under certain sixty five eleven which is my limitation period by which i must follow you find clients and not the government has taken its limitation on itself turn it into an obligation on  patch pair we give the taxpayer no guidance whatsoever as to what it needs to do to comply with that limitation on the government whatever that reasonable time might be in this case the request was filed after that time you have to ask with the agency have created a rule that provides no guidance whatsoever for the taxpayers to comply with in their own possible that some guidance and that you can't do it after the fact but even well even then it depends on what time you're reading the government's interpretation of this which is our regulation you for talks about subsequent determinations of transit prices commissions and rent and rentals and in transfer pricing you always have this question of prices between related part that's transfer price  nation where change is the transfer prices where the government makes a real determination or changes the transfer price and there must be corral of effect that is on a rational interpretation that's exactly what the sentence does in the context of the four so it goes  and other taxpayer a rule it doesn't exist anywhere ever there's nothing anyone there pointing to that shows that this is ever happened before if you're going to do that in a transfer pricing provision have to say so they have to make it explicit intent of the drafters if that's what the regulatory drafters meant they would have come forward and say we're changing a rule that never before exist now if they did it let's assume they had six months if i understand correctly i mean if i understand correctly you're saying that the field service and vice memorandum which set forth the government's position on this wasn't available to the public until two thousand two thousand or after about the government's interpretation of this regulation and that if you hit him notice of the government's interpretation of the regulation you could have extended the period for assessment and at least you would have gotten the benefit to the parent minus the cross for the subsidiary but that as a result of the failure to give notice that option was taken away and now the government is not just taking that is taking away worry about prejudiced about notice to that in terms of their ability to construe this regulation in the in an unfavorable way to assuming that there is some evidence of prejudice as a result of what case tells us the we should reject the agency interpretation because that didn't give sufficient notice but goes well i can't i cannot give you a case or as i said your honor to the unfairness of the notice but i can identify w counsel for the united states i just want to clarify what this case is about and what it's not about the taxpayers have primarily frame this as an issue about whether the government is trying to alter the  in but the problem is it's not apparent on the face of it and it does seem to be kind of unfair to tax payer to say ok here's the regulation and you made some decisions about  unfair well in terms of fairness i think again this is looking at what is the context of this regulation what we're talking about here is first of all taxpayers have no statutory right to file an amended return that again you'll probably have some whether or not that's where you live well i think what i want to talk about feeds into my answer to your question which is basically the right to make this redetermination there's no right in the statute to do this this is purely something that i am the and they read the regulation to say well ok we don't have to extend this assman period you know the refund periods are open for both of them so we can fall off and in seems to me that most people reading that regulation would have concluded that it was ok and then you come along two years later and you say no in fact that's not the way we construe the regulation the you only can file the refund application in a timely way and if the  for the subsidiary is still open so what you know under those circumstances you know why should we allow this legal rights to the interpretation of the government first of all i mean i think a taxpayer reading the regulation obviously focusing on the portion the four cents of the regulation that address the sixty five eleven might say ok well i still have time to file this piece of paper my refund claim but then reading further in the regulation the taxpayer confronts the question of well wait a minute  affect the related supplier as well as the fisc it's a tax payer knows as abbott labs did because it filed its refund claim six months after the assessment period had closed for its fiske if the taxpayer says well let's see treasury will not the i r s will not be able to assess additional tax against the fisc because they were the assessment period is closed i wonder how the taxpayer views itself as meeting the shall effect language in the regulation particularly in the context that this is a treasury regulation it was issued by the treasury  federal claims acknowledged in this case it's on a seventeen of the appendix that iris had suggested that this was the correct interpretation of the regulation in revenue ruling eighty two eighty one that it addressed the rules for rigid terminations under desks for disks which was that expires and the explanation and that f s a was that the the i r s wanted it to be more broad that it didn't want the ability to do the redetermination to be limited to the taxpayer being able to file an eleventh hour redetermination without giving the i r s sufficient time to actually look at it to put on a virus as radar screen this regulation which again is the sole the sole source of the right to even do a return nation puts the burden on the taxpayer to make sure that everything is filed in time to give the iris ability the ability to assess the tax to make them best occasion so that the redetermination does affect the fisc what is the government's position on the deference to which this regulation is that wasn't our primary argument in this case i mean our argument in this case is that when you look at the regulation which by its terms it's not clear and unequivocal unequivocal but when you look at the context of the  fact that the fisc provisions and regulations were were structured in an attempt to resolve problems with the disk regime resolve the problem that that the disc benefits were lax and forced according to the court of federal claim s that this language should be read and in the context of the regular in the context of what congress was trying to do which is not to grant undue tax benefits for previous taxpayer certainly the regulation in a earlier that our precedent is pretty clear that the i r s regulations like this are normally given significant difference oh almost to the point of being in surmountable but the question is to what extent does that deference affected by the fact that the regulation the interpretation was not made known to the taxpayer at the time well again as i mentioned before there was a suggestion that this was the proper interpretation and revenue ruling eighty two eighty one but also the supreme court in the case of our which is i'm cited by the court of federal claims and it's at five nineteen us four fifty two also indicated i mean here we have a case of first impression here in that case the supreme court said that the agency may be entitled to deference with respect to a position that's expressed for the first time in a brief in that case it was of prejudice in our they were not addressing the question of prejudice but of a judge linzess you what difference to make that there is prejudice and a failure of note is not something we can take into account when there are no general rules against referee activity bones from course decision bowen says that that's going to apply to the agency context also so we shouldn't worry about retroactively should we worry about retroactivity when we're confronted with an a interpretation of its own regulation which is issued after the fact and you're essentially esky let's make that retroactive to the time the pax verify all the returns whether the regulation it was always there the interpretation suggested in  to the government's interpretation we think that that would be strained interpretation of the regulation ok and that we say the only way we could rule for the government in this case is applying to cleveland baseball and purple if you know that which says if you difference that that interpretation came after the  fact i mean i don't think so because they're going to there's always there's always the first case there's always the first time the regulation and that particular language is interpreted so that would mean that every time that you have the first case that you're looking at this this regulation that the agencies dollars worth of these fist commission deductions on its first tax return there was nothing wrong with the way the first tax return was done it this regulation gives the taxpayers and narrow right to further enhance that return that tax benefit after the fact if it meets strictly all of the terms of the regulation so in terms of prejudice here we're not talking about there was a mistake that they can no longer fix that they're out of pocket any certain amount of money that they already paid to their best that they now they're not able to take the tax benefit of seem to view that as a civic duty people are allowed to do that ok question is whether it was time i guess my answer to your question is that there's always going to be the case of first impression the case where the case where the agency has not had occasion to issue a revenue ruling or a notice containing its interpretation of the provision and there's no reason why the related supplier now well none of these none of these pronouncements block the issue into focus the way that this case as i think there was enough out there to give the taxpayer pause to to read well what does the shallow think affect language actually mean and if it doesn't mean what the government says it means that the taxpayer here is arguing well it shall effect just means that we have to to make some accounting entries but there's different regulations that are already required of those accounting entries i mean in this case basically if the taxpayer was free to interpret something uniquely within the taxpayer's control only the taxpayer knows whether we'll be filing redetermination and it can't be up to the i r s to guess whether a related supplier in this are going to do a redetermination so that it can then seek an extension just in case the final time unless of course for the questions and thank you very much domestic international sales corporation regime disclosure taxpayers could follow redetermination elt them we came down to the view that it could and it did say that there must be chorale of adjustment that's eighty two eighty one revenue and what happened after that the fisc provision before regulation is an act and promulgated and what does it do it is not express at the sixty five eleven statue limitations of what was required to be open and it's also expressed that there must be a miss whether the government has an underpayment for which you can seek to collect subtitle in eve for the regulation that we're all talking about the government made the thoughtful terminations of making sure that it expressly brought in the subtitle f reference sixty five  into its regulation it did not bring in section sixty five will want to create a new rule it did not bring in assessment and so a final comment just lastly the court dismissed this quickly but i feel compelled to say this should elaborate was compelled on this issue there