writ of certiorari Archives - TAX CONTROVERSY 360

Whirlpool Update: New Filings and Distribution for Supreme Court Conference

by Lowell D. Yoder, David G. Noren, Elizabeth C. Lu and Jonathan D. Lockhart | Nov 4, 2022 | Appellate Courts, Court Procedure Matters, Trial Courts

On November 2, 2022, the Supreme Court of the United States announced that the case of Whirlpool Financial Corp., et al., Petitioners v. Commissioner of Internal Revenue, No. 22-9, has been distributed for consideration at its upcoming conference on November 18, 2022. Meaning, we should have an answer in the next few weeks as to whether the Supreme Court will hear the case.

The Supreme Court’s distribution for the conference follows the government’s brief, submitted on October 19, 2022, in opposition to Whirlpool’s petition for a writ of certiorari.

In its brief, the government summarizes its position as follows:

Petitioners contend (Pet. 17) that 26 U.S.C. 954(d)(2) is “conditioned on the promulgation of regulations” by the Treasury Department and thus may not “be enforced without regard to such regulations.” But as the court of appeals correctly held, Section 954(d)(2)’s text itself establishes clear “conditions” and “consequences,” Pet. App. 12a, and when applied to this case, that text “mandate[s]” that the income at issue is FBCSI, id. at 18a. The phrase “‘under regulations prescribed by the Secretary’” delegates to the Treasury Department authority to “implement the statute’s commands,” but not to “vary from them,” ibid., so the court permissibly declined to articulate a separate rationale in this case based on the implementing regulations. Petitioners concede (Pet. 33) that the decision below does not conflict with that of any other court of appeals. Nor does it conflict with this Court’s precedent because petitioners’ cited cases involved meaningfully distinct statutory schemes. And resolving the question presented lacks practical importance because the Treasury Department’s former regulations would dictate the same result as the statutory text, and the revisions that were made to the regulations in 2008 removed any potential doubt about that result. This Court’s review is unwarranted.

The government’s position is an interesting one. It seems to accept that a court is free to ignore regulations relied on by the public if the court determines that the government’s position is supported by the statutory language and the statute is not entirely conditioned on the operation of a regulation. Additionally, the government believes here that US Congress did not entirely condition operation of Internal Revenue Code (Code) Section 954(d)(2) on regulations.

Perhaps sensing the difficulty in prevailing on this argument, the government (similar to what it did in the rehearing proceedings in the US Court of Appeals for the Sixth Circuit) seeks to limit Whirlpool to the specific statute at issue. However, this ignores the fact that the same or substantially the same language is used in other Code provisions, making it difficult to limit the government’s argument to Code Section 954(d)(2).

In another attempt to discourage review, the government essentially argues that the substantive issue is an issue of first-and-last impression because the regulations at issue were amended for tax years subsequent to Whirlpool’s. Again, this ignores the fact that Whirlpool involves important administrative law issues that will remain regardless of the amendment.

Finally, [...]

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Supreme Court Requests Government Response to Whirlpool’s Petition

by McDermott Will & Emery | Aug 19, 2022 | Appellate Courts, Court Procedure Matters, Trial Courts

We previously discussed the petition for writ of certiorari that was filed in the Supreme Court of the United States by Whirlpool Financial Corporation & Consolidated Subsidiaries and Whirlpool International Holdings S.a.r.l. & Consolidated Subsidiaries (collectively, Whirlpool); the amici briefs filed by The National Association of Manufacturers, the Silicon Valley Tax Directors Group, and three of the “Big 4” accounting firms in support of Whirlpool’s petition; and how the case is now up for consideration at the Supreme Court’s upcoming conference on September 28, 2022. We also noted how the US government waived its right to file a response to Whirlpool’s petition.

In the latest update regarding Whirlpool’s petition, in a minute entry on the docket sheet, the Supreme Court has requested that the government provide a response by September 19, 2022. That response will then be considered by the Supreme Court at its September 28 conference, absent a relisting of the matter for a later conference. We will continue to monitor further developments in Whirlpool’s case and provide any further updates as they are made available.

Supreme Court Grants Certiorari in Case Involving Auer Deference

by McDermott Will & Emery and McDermott Will & Emery | Nov 1, 2016 | Appellate Courts, IRS Guidance, Uncategorized

On October 28, 2016, the US Supreme Court (Supreme Court) granted certiorari in the case of Gloucester County Sch. Bd. V. G.G., No. 16-273, which involves a dispute as to whether an unpublished letter by a Department of Education (Department) official purporting to interpret the agency’s regulatory interpretation relating to discrimination on the basis of sex is entitled to Auer deference. The petition for writ of certiorari specifically asked the Court to consider three questions: (1) whether the Court should retain the Auer doctrine; (2) if Auer is retained, whether deference extends to the unpublished agency letter; and (3) with or without deference, whether the Department’s interpretation of its own regulation should be given effect. The Supreme Court’s grant of certiorari was limited to Questions 2 and 3 presented by the petition.

We have previously discussed Auer deference in the tax context here and here. Although the Supreme Court has declined to address whether the Auer doctrine should be retained, it will be interesting to see if the Court follows its recent opinions in this area and further curtails the application of the doctrine given the unpublished form in which the Department’s interpretation was rendered in the Gloucester County case. The Internal Revenue Service (IRS) has taken the position in prior litigation that interpretations in unpublished IRS guidance are eligible for Auer deference. The Tax Court, on the other hand, has indicated that to be entitled to Auer deference an IRS pronouncement must be issued in published form so that taxpayers are aware of such guidance in preparing their tax returns. We will continue to follow this case and report on any future developments.