Court Opinion

ID: 4484284
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:16:38.521349+00
Date Added: 2024-06-11T14:53:42.989056
License: Public Domain

Chabot, J., concurring: I join in the majority opinion, but believe it may be useful to add the following remarks. When the Congress legislates, it is free to act, within the limits of the Constitution, as broadly or as narrowly as its collective wisdom and sense of the body politic move it to act. Legislative history affords a guide to the meaning of what the Congress has done. However, the Congress is free to enact legislation in language that extends beyond the confines of the problem described in the legislative history. Although section 165(h) clearly was intended to permit taxpayers to secure the tax benefits of disaster loss deductions sooner than they normally would, the language that was enacted is not so limited. The statutory language imposes no requirement that the rules of this subsection are to apply only if they would result in an earlier tax benefit. The statutory language merely provides that the taxpayer has a choice, without stating or necessarily implying when or why the choice is to be made. The regulation here in dispute (sec. 1.165-ll(e), Income Tax Regs.) acknowledges that a disaster loss election may be made by filing a claim for refund. Under the general rules of section 6511, the time for filing a claim for refund for 1975 income tax did not expire before April 15, 1979, and for 1976, not before April 15, 1980. Section 165(h) does not provide any special authorization of regulations power to the Secretary of the Treasury. Nevertheless, the Secretary has general regulatory authority and has responsibility (within the confines of the Constitution, the statute, and his budget) to provide for proper administration and avoidance of abuses. Also, it is appropriate for the Secretary to explore the meaning of the statutory language and issue regulations expounding his understanding of this meaning. (See, e.g., Associated Hospital Services, Inc. v. Commissioner, 74 T.C. 213 (1980), on appeal (5th Cir., June 4, 1980).) Regulations under section 165(h) may appropriately be designed to protect against potential “whipsaw” abuses that might arise from the differing expiration dates of the statutes of limitations with respect to the year in which the disaster occurred and the immediately preceding year. Further, it might well be appropriate for regulations to minimize the complexity of the interaction between section 165(h) and the net operating loss provisions. Moreover, regulations might appropriately guard against other abuses that can fairly be conceived of. However, respondent’s regulatory authority should not be allowed to cut back the benefits authorized by the statutory language, including the language of section 6511, in the absence of appropriate justification. The Secretary’s general authority to write regulations does not carry with it the same presumption of validity as the Congress’ constitutional authority to write legislation. Although the courts have stated that legislation generally will be upheld if the courts can conceive of any circumstance justifying the legislation (e.g., Bryant v. Commissioner, 72 T.C. 757, 764 (1979), and cases cited therein), surely we should demand something more from respondent when he seeks to justify regulations which appear to cut back on the benefits apparently conferred by the words of the statute. The legislative history of section 165(h) suggests no justification, by way of protection against abuse or against undue complexity in administration, for the severe regulatory restriction on revocations in dispute in the instant case. The record in the instant case suggests no such justification. The dissenting opinion suggests a concern about net operating loss carryback complexities. However, the instant case does not appear to present such a complexity and, in fact, respondent has not in the instant case sought to justify the regulation by reference to such a complexity. The majority opinion invalidates only so much of the regulation as imposes a time limit for revocation which is shorter than the time limit for making the section 165(h) election. In response to a concern that this holding “can only lead to administrative chaos,” it may be helpful to look at the last sentence of the regulation here in dispute. This sentence provides that, in the case of a section 165(h) election with regard to losses arising from disasters occurring after December 31, 1961, and before January 1, 1972, “Such election shall be irrevocable after the date by which it must be made,” i.e., that the period for revocation does not expire before the period for election expires. The original section 165(h) regulations provided the same rule, albeit in somewhat different words. Since that is essentially what the majority do with respect to the revocation in the instant case, and since no “administrative chaos” has been reported as a result of respondent’s own regulation with respect to pre-1972 disasters, I do not understand why the holding of the majority, herein, which permits petitioners to come under the regular deduction rules, will inevitably lead to “administrative chaos.” Sterrett, J., agrees with this concurring opinion.