Opinion ID: 1387190
Heading Depth: 4
Heading Rank: 1

Heading: Chevron Step One: Ambiguity of the Statutory Text

Text: First, previous judicial interpretations of I.R.C. § 882(c)(2) do not preempt our analysis in determining if the statute is ambiguous. Taxpayer argues that our analysis is unnecessary pursuant to the Supreme Court's holding in National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S. 967, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005). Brand X, however, held that [o]nly a judicial precedent holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction. Id. at 982-83, 125 S.Ct. 2688. No such opinion exists in this case. [11] Accordingly, we are not bound by previous judicial interpretations of I.R.C. § 882(c)(2). Under Chevron, if the statutory language is clear and unambiguous, our inquiry ends and the plain meaning of the statute governs the action. 467 U.S. at 842-43, 104 S.Ct. 2778. If, however, the statutory provision is ambiguous, such ambiguity is viewed as an implicit congressional delegation of authority to an agency, allowing the agency to fill the gap with a reasonable regulation. MCI Telecomm. Corp. v. Bell Atlantic-Pa., 271 F.3d 491, 515-16 (3d Cir.2001). The inquiry into the ambiguity of a statutory provision must begin with the text of the statute. The text of I.R.C. § 882(c)(2) reads in pertinent part: A foreign corporation shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F, including therein all information which the Secretary may deem necessary for the calculation of such deductions and credits. Our inquiry focuses on the requirement that foreign companies file with the Secretary a true and accurate return, in the manner prescribed in subtitle F. Taxpayer argues that the word manner does not by its nature include a timing element, thus indicating that Congress did not intend for a filing deadline to exist. This is an overly narrow interpretation of manner. Courts that have interpreted manner as used in I.R.C. § 882(c)(2) and its predecessors have struggled over whether manner includes a timing element, which indicates that the language is not clear and unambiguous. Compare Anglo-American Direct Tea Trading Co. v. C.I.R., 38 B.T.A. 711, 714 (1938) (discussing divergent conclusions and adopting interpretation that excludes a timing element), with Espinosa v. Comm'r, 107 T.C. 146, 156, 1996 WL 537851 (1996) (reasoning that provision embodied some cut-off period, even if not expressly stated). Moreover, Congress uses manner without time in other sections of the Code, and, in some of these situations, manner has been interpreted to implicitly include a timing element. See I.R.C. §§ 179(c), 835(c)(2). In these provisions, Congress did not use the phrase time and manner, yet the Secretary promulgated valid regulations that include temporal components. See Treas. Reg. §§ 1.179-5(a), 1.826-1(a)(3)(i). Thus, Congress does not uniformly use the phrase time and manner when it desires a particular Code provision to embody a timing element. Rather, we find manner, depending on the context, may be a comprehensive term. As used in this instance, the word manner may be defined as a characteristic or customary way of acting. WEBSTER'S DICTIONARY 724 (9th Ed.1986). Under this definition, the provision is not a clear and unambiguous expression of congressional intent, as one's customary way of acting may include an element of timeliness. Further, Congress's use of manner in I.R.C. § 882(c)(2) prompts contextual ambiguity. We could read manner to refer to subtitle F, which itself includes timing elements. Alternatively, we could read this provision as indicating that Congress did not wish the timing requirements of subtitle F to apply. Reading the statute this way would not foreclose the Secretary from promulgating a regulation that sets a filing deadline. Instead, it would only restrict the Secretary from promulgating a regulation that would embody the timing elements of subtitle F. As a result, we hold that Congress's use of the word manner creates ambiguity. Therefore, Congress has not spoken to the precise question at issue. Chevron, 467 U.S. at 843, 104 S.Ct. 2778. Rather, because we find I.R.C. § 882(c)(2) to be ambiguous, the Secretary was justified in promulgating a rule that prescribed a filing deadline.