A ft erexami ni ng the br i efs and appe l l at e r ecor d, t hi s panel has det erm i ned * unani m ous l ythator al ar gum entw oul d notm at er i al l yas s i s tt he det erm i nat i on of th is a p p e a l. S e e F e d . R . A p p . P . 3 4 (a )(2 ); 1 0 th C ir. R . 3 4 .1 (G ). T h e c a se is th e re fo re o rd e re d s u b m itte d w ith o u t o ra l a rg u m e n t. 

## F I LED United States C ourt of Appeals Tenth Circuit 

### D e c e m b e r19,2006 Elisab eth A. Shumaker C l erk of C ourt PU BL I SH UNI TED S TATES CO URT O F AP PEALS

T E N T H C IR C U IT S C A N L O N W H IT E , IN C .,

P e tit io n e r-A p p e llan t, v. CO M M I S S I ONE R O F I NT E RN AL REV ENU E, R es pondent - A ppel l ee. N o. 06- 9000

AP P EA L F ROM THE UNI TE D S TA TE S TA X COURT

( T . C . N o. 1958- 05) S ub m i t t ed o n the bri efs: * Jo h n L e e p e r, S c a n lo n W h ite, In c ., E l P a so , T e x a s, fo r P e tit io n e r-A p p e llan t. E i l e e n J . O ’ C o n n o r , A s s i s t a n tA t t o rn e y G e n e r a l , A n d r e a R . T e b b e t s , A t t o rn e y, K ar en G . G r egory , A t t orney , T ax D i vi s i on, D epart m entof J us t i ce, W as hi ngt on, D . C . , forR es pondent - A ppel l ee. B efor e HA RTZ , HOLL OW AY , and BA LD OCK , C i rcui tJudg es. HA RTZ , C i r cui tJ udge.-2-

T axpay erScanl on W hi t e, I nc. appea l s fr om the Tax C our t ’ s gr antof s um m aryj udgm enti n favorof the C om m i s s i oneron T axpay er ’ s appl i cat i on for abat ementof ac crued i nt er es ton unpai d empl oym entt axes . W e have j ur i s di ct i on u n d e r2 6 U. S . C. § 7 4 8 2 ( a ) ( 1 ) a n d a ffi r m. B ackgr ound I n J une 2004 Taxpay erm ade a r eques tt o the I nt ernal R evenue Ser vi ce (IR S ) u n d e r 2 6 U .S .C . § 6 4 0 4 (e ) fo r a n a b a tem e n t o f th e in ter e st o n its o u tst an d ing em p loym en t- tax liabili ti es fo r qu arters i n 1 9 9 7 , 1 9 9 8 , an d 1 9 9 9 . It al l eged thatt he I R S had unr eas onabl ydel ay ed forfoury ear s i n pr oces s i ng and r ej ect i ng i t s offe ri n compromi s e on thos e unpai d t axes . T he I R S deni ed T axpay er ’ s r eques ton the gr ound that§ 6404( e) does notappl yt o empl oym ent taxe s. T ax p ay er fil ed a p eti ti o n fo r rev iew in the T ax C o u rtu n d er § 6 4 0 4 (h), a rg u in g th a t th e C o m m is s io n e r a b u s e d h is d is c re tio n in d e n y in g th e a b a te m e n t. T h e T a x C o u rt g ra n ted th e C o m m iss io n e r’s m o tio n fo r su m m a ryju d g m e n t, fo ll o w ing it s p rev iou s ruling s in W o o d ral v. C o m m issi o n er, 11 2 T . C . 1 9 (19 9 9 ), a n d M ille r v . C o m m is s io n e r, T .C .M . (R IA ) 2 0 0 0 -1 9 6 (2 0 0 0 ), a ff’d , 310 F. 3d 640 (9 th C ir. 2 0 0 2 ), th a t § 6 4 0 4 (e ) d o e s n o t au th o riz e th e C o m m iss io n e r to a b a te in te re s t o n e m p lo ym e n t ta x e s . T a x p a y e r file d th is a p p e a l.-3- St andar ds of R evi ew

“ W e r e v i e w Ta x Co u r td e c i s i o n s ‘ i n th e s a me ma n n e ra n d t o th e s a me ext entas deci s i ons of the di s tr i ctcourt s i n ci vi l act i ons tr i ed w i thouta j ur y . ’ ” Ol p i n v . Co mm’ r , 2 7 0 F . 3 d 1 2 9 7 , 1 2 9 8 ( 1 0 th Ci r . 2 0 0 1 ) ( q u o t i n g 2 6 U. S . C. § 7482( a) ( 1) ) . “[W ] e r evi ew the Tax C our t ’ s gr ant. . . of s um m aryj udgm ent d e n o v o .” Id . U n d e r T a x C o u rt ru le s , [s ] um m aryj udgm entm aybe gr ant ed w i th r es pectt o . . . the l egal i ssues i n co ntr ov ers y“i f t he p l eadings, answ ers t o int err og at ori es, depos i t i ons , admi s s i ons , and anyotheracc ept abl e mat er i al s , t ogether w ith th e a ffid a v its, if a n y , sh o w th a t th e re is n o g e n u in e iss u e a s to anym at er i al fac tand thata dec i s i on m aybe r ender ed as a mat t erof la w .” K eene v. C om m ’ r , 121 T . C . 8, 14 ( 2003) ( quot i ng R ul e 121( b) , U ni t ed St at es T ax C o u rtR u les o f P rac ti ce an d P roc ed u re). “T h e interp retati o n o f a fe d era l st atute is a q u esti o n o f law w h ich th is co u rt rev iew s d e n o v o . ” T rue O il C o . v . C o m m ’r, 1 7 0 F . 3 d 1 2 9 4 , 1 2 9 8 (10 th C ir . 1 9 9 9 ). “W e o w e n o d e fe re n c e to th e T a x C o u rt’s s tatu to ryin terp re tatio n s, its r el at i on t o us bei ng t hatof a di s tr i ctcour tt o a courtof appe al s , notthatof an ad m inistrati v e a g en cyto a c o u rto f a p p ea ls. ” E x ac to S p ri n g C o rp. v. C o m m ’r, 1 9 6 F . 3 d 8 3 3 , 8 3 8 (7th C ir . 1 9 9 9 ). W e d o , h o w ev er, de fe r t o the C o m m issi o n er’s i nt erpr et at i on. “B eca us e C ongr es s has del egat ed t o the C om m i s s i onerthe pow er t o pr om ul gat e ‘ al l needf ul rul es and r egul at i ons forthe enfor cementof the Intern al R ev en u e C o d e,’ 26 U . S . C . § 7 8 0 5 (a), w e m u st de fe r t o h is r eg u lat o ry-4-

i nt erpr et at i ons of the C ode s o l ong as theyar e r eas onabl e. ” C ot t age Sav. A s s ’ n v. C o m m ’r, 4 9 9 U . S . 5 5 4 , 5 6 0 -61 (19 9 1 ) (i n terna l brac k ets o m itted). “In d e ter m in in g w h e th e r a p a rticu lar re g u latio n c a rrie s o u t th e c o n g re ss io n a l m a n d a te i n a pr operm anner , w e l ook t o s ee w hetherthe r egul at i on harm oni zes w i th the p lai n lang u ag e o f th e statute, i ts origin, an d it s p u rpo se.” N at’l M u ffler D ea lers A s s ’ n v. U ni t ed St at es , 440 U . S. 472, 477 ( 1979) . “A r egul at i on m ayhave p a rticu lar fo rc e if

it i s a su b sta n tiallyc o n tem p o ra n e o u s c o n stru c tio n o f th e sta tu te bythos e pr es um ed t o have be en aw ar e of c ongr es s i onal i nt ent . ” I d. “I f the r egul at i on dat es fr om a l at erper i od, ” how ever , “[o] therr el evantcons i der at i ons a re th e len g th o f

tim e th e re g u latio n h a s b e e n in e ffe c t, th e re lian c e p lac e d o n it, the cons i s t encyof the C om m i s s i oner ’ s i nt erpr et at i on, and the degr ee of s crut i ny C ongr es s has devot ed t o the r egul at i on dur i ng s ubs equentr e- enac t m ent s of the s ta tu te .” Id . I n acc or dance w i th thes e s t andar ds , w e ana l y ze 26 U . S. C . § 6404( e) and the T r eas uryR egul at i on i m pl ement i ng i t , 26 C . F. R . § 301. 6404- 2. A n a ly sis S e c tio n 6 4 0 4 (e ), n o w e n tit led “ A b a tem e n t o f in ter e st a ttribu tab le to u n rea so n ab le errors a n d d elay s b yIntern al R ev en u e S erv ice,” w as a d d ed as p art of the Tax R eform A ctof 1986, Pub. L . N o. 99- 514, § 1563( a) , 100 St at . 2085, and w as l as tr evi s ed i n 1996 bythe Taxpay erB i l l of R i ght s 2,-5-

Pub. L . N o. 104- 168, § 301, 110 St at . 1452 ( 1996) . T he curr entl anguage of § 6 4 0 4 (e ) th e re fo re a p p lies to T a x p a y e r’s 2 0 0 4 re q u e st to a b a te in ter e st o n u n p a id e m p lo ym e n t ta x e s fo r q u a rt e rs in 1 9 9 7 to 1 9 9 9 . Sect i on 6404( e) ( 1) author i zes the C om m i s s i onert o abat e the i nt er es ton— ( A ) anydefi ci encyattr i but abl e i n w hol e ori n par tt o any unr eas onabl e err orordel aybyan off i cerorempl oy ee of

the I nt ernal R evenue Ser vi ce ( act i ng i n hi s offi ci al capa ci ty ) i n per form i ng a m inist erial or m an ag erial act, o r ( B ) anypaym entof anyt ax des cr i bed i n s ect i on 6212( a) t o the ext ent thatanyunr eas onabl e del ayi n s uch paym enti s attr i but abl e t o s uch an off i cerorempl oy ee be i ng err oneous ordi l at or yi n per form i ng a m in iste ria l o r m a n a g e ria l ac t. T he fir stsent ence o f § 6 21 2(a) st at es, “If the S ecret arydeterm i nes t hat there i s a d efici en cyin resp ec t of an ytax im p o sed b ysu b ti tl es A [in co m e tax es] o r B [est at e, gift , and gen erat i on -s kippi ng t axes] or chapt er 41, 42 , 43 , or 44 [ excis e ta x e s ], h e is a u th o ri z e d to s e n d n o tic e o f s u c h d e fic ie n c yto th e ta x p a y e r . . . .” T hus , the r efe r ence t o § 6212( a) i n § 6404( e) ( 1) ( B ) unambi guous l yl i m i t s the appl i cat i on of thats ubpar agr aph t o i ncome, es t at e, gi ft , gener at i on- s ki ppi ng, and cert ai n exci s e t axes , w hi ch ar e the t axes des cr i bed i n § 6212( a) . E m pl oym ent t axes ar e noti ncl uded; t heyar e the s ubj ectof s ubt i t l e C of the I nt ernal R evenue C ode— thati s , chapt er s 21 t o 25. T axpay ercont ends , how ever , thats ubpar agr aph ( A) o f § 6 4 0 4 ( e ) ( 1 ) i s n o ts o l i mi t e d , a n d th a ti t s fa i l u r e t o p a ya l l i t s k n o wn empl oym ent - t ax l i abi l i t i es for1997 t o 1999 cons t i tut es a “de fi ci ency ” w i thi n the m e a n in g o f

§ 6 4 0 4 (e )( 1 )( A ).-6-

Ta x p a y e rwo u l d d e fi n e th e t e r m def i ci ency t o i ncl ude anyt ax debt . B ut th a t is n o t th e m e a n in g p ro v id e d in th e o n ly d e fin itio n fo u n d in th e T a x C o d e . T he d efi nit i on i n 2 6 U . S . C . § 6 21 1(a) i s: ( a) I n gener al . –Forpurpos es of thi s t i t l e i n the ca s e of i ncome, es t at e, and gi ftt axes i m pos ed bys ubt i t l es A and B and exc i s e t axes i m pos ed bychapt er s 41, 42, 43, and 44 the t erm “def i ci ency ” means the amount byw hi ch the t ax i m pos ed bys ubt i t l e A orB , orchapt er41, 42, 43, or44 exce eds the exc es s of– ( 1) t he s um of ( A ) t he amounts how n as the t ax bythe t axpay er upon hi s r eturn, i f a r etur n w as m ade bythe t axpay er and an a m ountw as s how n as the t ax bythe t axpay er ther eon, pl us ( B ) t he amount s pr evi ous l yas s es s ed ( orcol l ect ed w ith o u t assessm en t) as a d efici en cy , o v er— ( 2) the amountof r ebat es , as defi ned i n s ubs ect i on ( b) ( 2) , m ade. R oughl ys peaki ng, a def i ci encyunderthi s s ect i on i s the amountbyw hi ch the t ax ow ed exc eeds the amounts how n as due on the t ax r eturn. I ti s an under s t at ement of t ax l i abi l i tyr athert han an unde rpaym ent . I n contr as t , the amountow ed by T axpay eri s t he unpai d por t i on of w hati tr eport ed on empl oym ent - t ax form s as w hati thad w i thhel d fr om empl oy ee w ages as i ncome, s oci al s ecur i ty , and M edicar e t axes plus i t s ow n share of soc i al securi tyand M edicar e t axes. W e r ecogni ze that§ 6211( a) s t at es thatthe def i ni t i on of def

i ci ency appl i es “i n the case of i nco m e, est at e, and giftt axes . . . and [cert ai n] exci se t axes, ” so-7-

a n o th e r d e fin itio n c o u ld , a t le a s t a s a m a tte r o f lo g ic , a p p ly to e m p lo ym e n t ta x e s . B ut the T ax C od e i ncludes no otherdefini t i on . In this ci rcum st ance iti s atl east a s r e a s o n a b l e t o i n fe rth a tt h e t e r m def i ci ency in § 6 4 0 4 (e )(1 )(A ) d o e s n o t re fe r to sh o rtc o m in g s w ith re sp e c t to e m p lo ym e n t tax e s a s it w o u ld b e to in fe r th a t it re fe rs to a n e m p lo ym e n t- ta x s h o rt c o m in g lik e T a x p a y e r’ s . I n anyevent , anyambi gui tyi n the meani ng of def i ci ency in § 6 4 0 4 (e)(1)(A ) ha s b ee n reso lved b ythe C o m m issi o n er’s reg u lat o ry i nt erpr et at i on. T he C om m i s s i onerhas cons i s t ent l yi nt erpr et ed § 6404( e) ( 1) as i nappl i cabl e t o the aba t ementof i nt er es ton unpai d empl oym entt axes . W i thi n a y earaft erthe s t atut e w as enac t ed i n O ct ober1986, the C om m i s s i onerpubl i s hed R even ue P rocedu re 87-42, w hich st at ed that§ 6 40 4(e) (1) app l i ed “o nlyt o int eres t r el at i ng t o a t ax of the type forw hi ch a not i ce of defi ci encyi s r equi r ed bys ect i on 6 2 1 2 ,” th a t is, inc o m e , es tate , g if t, an d g e n e ra tio n -sk ip p in g tax e s, a n d c e rta in exci s e t axes . R ev. Pr oc. 87- 42, 1987- 35 I . R . B . 11, Sec. 2, ¶ . 02, 1987- 2 C . B . 589, S ec. 2, ¶ . 02 . T he R even ue P rocedu re further st at ed that“[a]bat em ent of i nter est as s es s ed orcol l ect ed w i th r es pectt o empl oym entt axes . . . i s notauthor i zed by s ect i on 6404( e) ( 1) . ” I d. A ft erC ongr es s r evi s ed § 6404 i n 1996, the C o m m iss io n e r fin a lize d T re a su ryR e g u latio n § 3 0 1 .6 4 0 4 -2 in D e c e m b e r 1 9 9 8 to ca rryfo rw ard h is i n terpretati o n fro m R ev en u e P roc ed u re 8 7 -42 that the term def i ci ency i n § 6404( e) ( 1) i s defi ned i n § 6211( a) . See 63 F. R . 70012- 01, 70012, 7 0 0 1 3 ; 2 6 C .F .R . § 3 0 1 .6 4 0 4 -2 (a )( 1 )( i) .-8-

E ven though T r eas uryR egul at i on § 301. 6404- 2 w as pr om ul gat ed w el l aft er 2 6 U .S .C . § 6 4 0 4 (e ) w a s o rig in a llye n a c ted , itfo llo w s th e C o m m iss io n e r’s n e a rly cont empora neous i nt erpr et at i on of the s t atut e i n R evenue Pr ocedur e 87- 42. G i ven the c o n sist en cyo f th e C o m m issi o n er’s rea so n ab le i n terpretati o n o f th e statuto ry l anguage , i ti s ent i t l ed t o ourdefe r ence . See N at ’ l M uffl erD eal er s A s s ’ n, 4 4 0 U .S . at 4 7 7 . W e th e re fo re h o ld th a t th e C o m m iss io n e r la c k e d a u th o rityto a b a te in te re s t u n d e r § 6 4 0 4 (e ) w ith re s p e c t to T a x p a y e r’ s e m p lo ym e n t ta x e s . W e n o t e th a tth e o th e rc o u r t s t o h a v e c o n s i d e r e d § 6 4 0 4 ( e ) ( 1 ) h a v e r e a c h e d th e s a me c o n c lu s io n . S e e M ille r v . C o m m ’r , 3 1 0 F .3 d 6 4 0 , 6 4 3 -4 5 (9 th C ir . 2 0 0 2 ), a ff’g M i l l er , T . C . M . ( R I A ) 2000- 196 ( 2000) ; Speer s v. U ni t ed St at es , 38 Fed. C l . 197, 2 0 1 -0 2 (C l. C t. 19 9 7 ), su p e rse d e d in p a rt o n o th e r g ro u n d s b ysta tu te; W o o d ra l, 112 T . C . at24- 25. T h e j u d g me n to f

t h e T a x Co u r ti s AF F I RMED .