[00:00:00] Speaker 01: The case for argument this morning is 20-2061, Taha versus United States. [00:00:05] Speaker 01: Ms. [00:00:05] Speaker 01: Rollins, whenever you're ready. [00:00:07] Speaker 01: Thank you, Your Honor. [00:00:20] Speaker 01: You're free to remove your mask or not. [00:00:22] Speaker 02: Thank you, Your Honor. [00:00:26] Speaker 02: Good morning, and may it please the court. [00:00:28] Speaker 02: Kara Rollins on behalf of taxpayers, Mr. Ali Taha, the estate of Mr. Mohammed E. Taha deceased, and Ms. [00:00:35] Speaker 02: Sanaa M. Yafin. [00:00:38] Speaker 02: The principal issue before the court is whether Mr. Taha has properly invoked the court's jurisdiction. [00:00:43] Speaker 02: There's two aspects to the jurisdiction that come into play. [00:00:47] Speaker 02: First is whether or not the tax refund claim was filed. [00:00:50] Speaker 02: That answer directly turns on whether or not the common law mailbox rule has survived the adoption of Section 7502. [00:00:58] Speaker 02: There's a circuit split that has developed over time, suggesting it is an open question in this court whether or not [00:01:06] Speaker 02: the silence of that statute as to a never-delivered tax refund claim permits the common-law mailbox rule to essentially fill in the statute. [00:01:14] Speaker 05: You say the silence of the statute with regards to the never-delivered tax claim, but it actually speaks to certain instances where a never-delivered claim can still qualify, right, if it's sent by registered or certified mail? [00:01:28] Speaker 02: Yes, Your Honor. [00:01:28] Speaker 05: So it's not silent on never-delivered. [00:01:31] Speaker 05: It just has a limitation on never-delivered. [00:01:34] Speaker 02: Your Honor, what we look at when we look at 7502 is that 7502A is a general rule regarding how do we deem the postmark of a [00:01:45] Speaker 02: a refund claim that was delivered. [00:01:48] Speaker 02: And that applies to all types of U.S. [00:01:50] Speaker 02: mails. [00:01:51] Speaker 02: Then there's a special exception that comes into play, that Congress has created a carve-out for registered and certified mail. [00:02:02] Speaker 02: However, in reading the statute and looking at the legislative history of the statute, there's no reason to believe that the common law mailbox rule, which the Supreme Court and Rosenstein [00:02:13] Speaker 02: fall deemed well settled in 1884 was not within the purview of understanding of Congress in the adoption. [00:02:20] Speaker 05: So let me ask you this. [00:02:22] Speaker 05: I think this is what you're basically saying, but doesn't this come down to whether we determine whether Congress still kept the mailbox rule in the statute or clearly or whether it displaced it, right? [00:02:36] Speaker 03: Yes, Your Honor. [00:02:36] Speaker 05: If it's ambiguous, then [00:02:39] Speaker 05: you lose because they have a notice and comment rulemaking that's probably entitled to chevron deference. [00:02:44] Speaker 02: Your Honor, one of the issues... I just want to set the grounds. [00:02:50] Speaker 05: I know you don't agree with this, but if this is ambiguous, then they have a notice and comment rulemaking that clarifies the mailbox rule doesn't apply. [00:02:59] Speaker 05: So if we agree with chevron deference, then we would defer. [00:03:03] Speaker 02: Your Honor, there's some [00:03:05] Speaker 02: I think factual predicates and issues with statutory and canonical understanding that come into play that would determine whether or not the statute is in fact ambiguous. [00:03:16] Speaker 05: I know, but can I just get one more try at you answering this basic question? [00:03:20] Speaker 05: If it's ambiguous, then we're going to defer to their notice and comment we're making. [00:03:26] Speaker 02: If ambiguous, if truly, genuinely ambiguous as Kaiser suggests, then you would move on to Chevron step two. [00:03:33] Speaker 01: Okay, so what's the ambiguity? [00:03:37] Speaker 01: How would you define the ambiguity? [00:03:38] Speaker 01: Looking at the face of the statute or whether or not the exceptions satisfy the standards about clearly evidence purpose? [00:03:47] Speaker 01: Is that how you get to the ambiguity? [00:03:48] Speaker 02: Well, we would actually argue in several federal circuits, as well as the IRS agree, and I believe the court below as well, that as in the never delivered scenario that arises in this case, [00:04:00] Speaker 02: The statute is silent, and one of the issues is that silence and ambiguity under the Chevron analysis sort out somewhat differently. [00:04:08] Speaker 02: At step one, [00:04:10] Speaker 02: And this is the Kaiser caution of making sure there really is a genuine ambiguity. [00:04:15] Speaker 02: And I understand Kaiser is in our case. [00:04:18] Speaker 02: But when Justice Kagan was writing about and making the determination that occasionally courts move to a form of reflective deference, which stops them from doing the sort of searching and careful analysis required before deference applies, she said, you must empty the toolkit. [00:04:37] Speaker 02: All the statutory tools must be applied. [00:04:40] Speaker 02: And that's the first step. [00:04:42] Speaker 02: What happens in the IRS's argument is they've collapsed Chevron Steps 1 and 2 and essentially jumped to a reasonable interpretation of the statute. [00:04:52] Speaker 02: That's a little bit problematic because, as I stated, they also view the statute as silent. [00:04:57] Speaker 02: Once the silence is there, then the canons of statutory interpretation come in. [00:05:03] Speaker 01: So your argument seems to be suggesting that there's never a difference. [00:05:08] Speaker 01: Because by definition, if we're talking about the common law canon, it creates a presumption. [00:05:13] Speaker 01: It presumes that there is silence on that matter. [00:05:17] Speaker 01: So are you suggesting that in every case in which the common law canon is implicated, [00:05:22] Speaker 01: There's not going to be any Chevron deference, because clearly the assumption, the predicate for that, is that there's no reference to the common law canon in the statute. [00:05:33] Speaker 02: I wouldn't argue it that broadly. [00:05:36] Speaker 02: But I do believe that at Chevron step one, if the statute is silent, then the common law presumption canon steps in. [00:05:43] Speaker 01: And I believe, Your Honor, in your- And what circumstance, therefore, under your rubric, would it not apply? [00:05:50] Speaker 01: would we ever get to Chevron deference? [00:05:54] Speaker 02: There may be common law rules that do not have the same sort of [00:06:04] Speaker 02: depth and history and well-settled nature that maybe the application isn't sufficient. [00:06:09] Speaker 02: And I think that that could be a limiting principle. [00:06:11] Speaker 02: Here, the common law mailbox rule developed in the early, I believe, 1800s and was well-settled by 1884. [00:06:17] Speaker 01: Yeah, but before all this happened, there was a split in the circuits. [00:06:22] Speaker 01: And it was almost an even split. [00:06:23] Speaker 01: Doesn't that suggest some inherent ambiguity? [00:06:26] Speaker 01: I mean, your mind is clear, but we had several US courts of appeals going different ways on that question before the rag, right? [00:06:34] Speaker 02: That's correct. [00:06:35] Speaker 02: But outcome differences doesn't necessarily establish that there's ambiguity in the statute. [00:06:42] Speaker 01: And I think that this is where the pre- Well, I thought that those courts said there was ambiguity, not that the outcome was ambiguous. [00:06:48] Speaker 01: I was suggesting that there was a split on whether or not the statute was ambiguous or not. [00:06:53] Speaker 02: As to the never delivered portion, the courts have come out that they're silent. [00:06:58] Speaker 02: And that's where the common law presumption then steps in. [00:07:02] Speaker 02: And the way of looking at this is as the Sixth Circuit said in Iran. [00:07:07] Speaker 05: They're silent, but the courts have split on whether it's ambiguous as to whether Congress intended to maintain the mailbox rule or not. [00:07:16] Speaker 05: Correct? [00:07:16] Speaker 05: Some went one way and some went the other way. [00:07:22] Speaker 02: I don't believe that counts in the language of ambiguity of congressional intent. [00:07:27] Speaker 05: Well that's what we're talking about though, right? [00:07:29] Speaker 05: We're talking about congressional intent because we're looking at whether the statute is playing on its face or not and if enacting this [00:07:38] Speaker 05: Let me back up, because I have a different question. [00:07:41] Speaker 05: The history of this statute is there was a split among circuits. [00:07:44] Speaker 05: Some said the IRS statute requires receipt. [00:07:48] Speaker 05: That's a hard line. [00:07:49] Speaker 05: Maybe they did that because there are specific situations to IRS and the amount of mail it gets and things like that. [00:07:56] Speaker 05: Some said we're going to incorporate the mailbox rule. [00:07:58] Speaker 05: So depending on which jurisdiction you lived in, you had a different statute of limitations applied. [00:08:03] Speaker 05: That's the scenario for 7520, right? [00:08:06] Speaker 05: And so Congress steps in and says, we don't like this split. [00:08:10] Speaker 05: Here's the circumstances. [00:08:12] Speaker 05: We're going to change the receipt required rule. [00:08:22] Speaker 05: and be received by a certain date. [00:08:24] Speaker 05: And they have A, which says, even if it's received after but postmarked before, it's OK. [00:08:29] Speaker 05: And then the other part is, even if it's not received at all, it's certified registered mail receipt is good enough, right? [00:08:38] Speaker 05: That's an accurate description of what Congress did. [00:08:40] Speaker 02: That is an accurate description. [00:08:42] Speaker 05: But the question is, then, did that intend to displace the mailbox rule or not, right? [00:08:48] Speaker 02: Our answer is no. [00:08:50] Speaker 05: Yes, but the question is, you have to show that it plainly did not intend to displace the Mailbox rule, and all the government has to do to win is to show it's ambiguous as to what Congress intended to do, right? [00:09:03] Speaker 02: I think as to Congress' intent, they need to explicitly abrogate [00:09:08] Speaker 02: which they did not do here. [00:09:10] Speaker 05: And Congress... What do you mean they need to explicitly abrogate? [00:09:14] Speaker 05: Are you saying that in order to get rid of the mailbox rule, they have to say the mailbox rule does not apply? [00:09:20] Speaker 02: I would say that that would be one way for Congress to abrogate it. [00:09:24] Speaker 05: Can you cite me a case that says that? [00:09:29] Speaker 02: I mean, I believe in... I apologize, Your Honor. [00:09:35] Speaker 02: There is language in some of the cases that discuss the view that when looking at statutory intent of Congress, one, you have to consider the backdrop. [00:09:46] Speaker 02: That's a wrong, [00:09:48] Speaker 02: from the Sixth Circuit, you must consider the backdrop against which Congress was legislating. [00:09:52] Speaker 05: Well, that's what I just asked you about. [00:09:53] Speaker 05: I mean, the backdrop here seems to be that there was a split about whether the mailbox rule intended to apply or not. [00:10:00] Speaker 05: And Congress didn't just say, yes, let's keep the mailbox rule going, which they could have. [00:10:05] Speaker 05: They could have codified the mailbox rule. [00:10:08] Speaker 05: Instead, they codified a different rule. [00:10:10] Speaker 05: So why doesn't that suggest they didn't intend to codify the mailbox rule? [00:10:17] Speaker 02: I think that that goes back to the view that there is silence as to the current scenario, which is the never received analysis. [00:10:24] Speaker 01: Just to clarify, I think in your dialogue with Judge Hughes, did you say that the only way to get rid of this is for Congress to have explicitly said, we are not applying the mailbox rule in any of these circumstances? [00:10:39] Speaker 02: I don't think it needs to be that explicit, but the courts have been clear. [00:10:42] Speaker 02: If Congress is going to abrogate a common law rule, it needs to say something more. [00:10:49] Speaker 02: There needs to be legislative history suggesting that for the structure. [00:10:52] Speaker 01: Well, some people don't really look to legislative history. [00:10:54] Speaker 01: So then we're left with the statute. [00:10:56] Speaker 01: So give me a couple of examples of what would have been sufficient here to abrogate the rule. [00:11:03] Speaker 02: Well, I think first they would have had to address the instances where it never delivered when placed into the United States mail. [00:11:09] Speaker 01: So they have to say when never delivered, the rule doesn't apply, which is an explicit, as I was suggesting. [00:11:15] Speaker 01: Just trying to clarify, if you were saying in the absence of an explicit statement in the statute saying we're getting rid of the mailbox rule for the never applied, never delivered, then it carries the day. [00:11:30] Speaker 01: My understanding of the common law canon is that it's been termed a presumption. [00:11:39] Speaker 01: When you use the word presumption here, it suggests that you presume it, but you can dislodge it. [00:11:45] Speaker 01: Not easily necessarily, but it's dislodgeable. [00:11:49] Speaker 01: So I'm trying to figure out how you would say it's dislodgeable. [00:11:53] Speaker 01: You're saying the only way you can get rid of it is by explicitly saying it doesn't apply. [00:12:00] Speaker 02: The structure of the statute as well can indicate whether or not, so it doesn't have to be explicit. [00:12:07] Speaker 02: I think that the language in the cases discussing when the presumption may not apply is explicit or there may be something implied about the structure of the statute. [00:12:19] Speaker 02: Again, because there's silence here. [00:12:21] Speaker 01: But give me an example of that. [00:12:22] Speaker 01: I guess I'm having a hard time. [00:12:24] Speaker 01: I thought you had said we need explicit language. [00:12:26] Speaker 01: So you're saying now we need something less than explicit language. [00:12:30] Speaker 01: So give me an example of what you mean by the structure of the statute. [00:12:34] Speaker 02: For example, I believe if I understand the IRS's argument, the fact that there are, as Judge Hughes has pointed out, exceptions for certified and registered mail, which I believe the language under there is sent. [00:12:49] Speaker 02: that that would then suggest abrogation of a common law rule. [00:12:54] Speaker 02: However, the general rule, with some specific rules delineated further under the canons of statutory interpretation, does not raise that implication that's sufficient to override the common law presumption. [00:13:12] Speaker 05: statutory provision is inconsistent with the common law rule, that would be enough. [00:13:18] Speaker 05: Or it narrows the common law rule. [00:13:22] Speaker 02: I would agree with Your Honor to an extent on that. [00:13:24] Speaker 02: I mean, and I think that it's not just simply [00:13:29] Speaker 02: The structure could imply, but I think it needs to be something a little bit more. [00:13:36] Speaker 02: And that's where the canons of sort of statutory interpretation and common law presumption. [00:13:43] Speaker 05: I mean, if you have to step back a moment and consider... Your time's about ready to run out, but I want to ask you this before you go away, so the IRS, if they want to talk about it, can. [00:13:54] Speaker 05: There isn't a lot of legislative history about this, but we loved [00:13:58] Speaker 05: And there is at least one that explains, in the context of the receipt, the two days with the mailing, that it concludes that only if it's actually received. [00:14:11] Speaker 05: Now, I know that's one stray statement out of one House report. [00:14:14] Speaker 05: We shouldn't give it much weight. [00:14:16] Speaker 05: But that's consistent with what that provision on provision A says, right? [00:14:23] Speaker 05: That you get the mailing date postmarked if it's actually received. [00:14:28] Speaker 05: And this says, but only if actually received. [00:14:30] Speaker 05: Doesn't that displace the mailbox rule? [00:14:34] Speaker 02: It's not the taxpayers' view that that does displace the mailbox rule. [00:14:39] Speaker 05: So your view is they enacted this statute to resolve a circuit split [00:14:44] Speaker 05: between whether the mailbox rule applied or not. [00:14:47] Speaker 05: And they said, we're going to allow a postmark to be evidence, but only if it's actually received. [00:14:53] Speaker 05: But they also implicitly meant, but we'll actually allow the mailbox rule to apply even if it's not received. [00:15:03] Speaker 02: Stepping back again, I think one of the things that Congress also did in that statute at that moment of adoption is they didn't actually limit the delivery methods by which refunds could be sent to the IRS. [00:15:15] Speaker 02: It's not only certified or registered mail. [00:15:17] Speaker 02: It's not only postal delivery. [00:15:20] Speaker 05: I fail to understand why you don't see this as a comprehensive statute, because it said for stuff deposited in the postal service, we're going to loosen the receipt requirement and allow proof of postmark to show timely mailing if it's received. [00:15:37] Speaker 05: But if it's not received, here's this other provision. [00:15:40] Speaker 05: Why doesn't that address all the scenarios of US mail and other forms and whether it's received or not? [00:15:46] Speaker 02: Well, because one of the issues with looking at the postmark, the postmark shows proof of proper mailing, not necessarily receipt. [00:16:00] Speaker 02: And that's also what the mailbox rule suggests. [00:16:05] Speaker 02: It's about proof of proper mailing, and then it raises rebuttable presumption regarding delivery. [00:16:12] Speaker 02: That was a rule that existed well before, as you mentioned, it sort of helped develop the circuit split. [00:16:20] Speaker 02: But I don't believe that the history is necessarily clear that Congress was specifically resolving the circuit split. [00:16:28] Speaker 05: One more question. [00:16:28] Speaker 05: Has any circuit after IRS went through its notice and comment rulemaking, clarifying the mailbox ruling applied, said, doesn't apply, should the mailbox rule does apply? [00:16:41] Speaker 02: I think that Baldwin is actually instructive on this. [00:16:44] Speaker 05: Baldwin deferred to them. [00:16:46] Speaker 05: I'm just asking a very simple kind of question. [00:16:49] Speaker 05: Did I miss a case? [00:16:50] Speaker 05: But no other circuit has addressed this question post-regulation. [00:16:55] Speaker 05: Pre-regulation, there's splits. [00:16:57] Speaker 05: Post-regulation, we only have the Ninth Circuit, and they defer, right? [00:17:01] Speaker 02: Well, I would like to clarify one point on the Baldwin decision. [00:17:04] Speaker 02: In the Baldwin decision, it specifically says that it did not overrule Anderson, which [00:17:10] Speaker 02: was the previous analysis under the mailbox rule, saying that Congress did not abrogate the use of the common law. [00:17:16] Speaker 02: What Baldwin says is, we have found ambiguity, and because of Chevron and Brandeis deference, we must then defer to the statute. [00:17:28] Speaker 02: But that gets the analysis wrong. [00:17:30] Speaker 02: It's a collapsing of Chevron step one and two. [00:17:32] Speaker 02: And Baldwin was a pre-Kaiser case. [00:17:36] Speaker 02: It's clear on the face, I believe the Chevron analysis is [00:17:39] Speaker 02: maybe three paragraphs and is not the sort of careful analysis using the tools of statutory construction that Kaiser demands. [00:17:49] Speaker 02: I would suggest to the court looking at Anderson, which is its predecessor, which was never explicitly overturned, [00:17:55] Speaker 02: that that includes a much more searching analysis of the structure of the law, the legislative history, and the role that the common law plays. [00:18:04] Speaker 02: And as we mentioned, Baldwin never explicitly overturned Anderson. [00:18:07] Speaker 02: I think that that's somewhat of an important point. [00:18:10] Speaker 02: Taxpayers read Baldwin to say that the deference canon, Chevron and Brandeis coupled together, have tied their hands. [00:18:17] Speaker 02: That's also what the court below suggests, is there's not much room [00:18:22] Speaker 01: But what is the consequence if you're saying that they didn't explicitly overturn Anderson? [00:18:27] Speaker 01: And therefore, what difference does that make? [00:18:30] Speaker 02: Because at least for a persuasive point, Anderson still remains good law that the common law mailbox rule was not abrogated by the adoption of Section 7502. [00:18:41] Speaker 02: And that the way that Baldwin ultimately gets decided is a byproduct of deference regimes as opposed to statutory analysis. [00:18:51] Speaker 02: Again, Baldwin was pre-Kaiser. [00:18:53] Speaker 02: And that raises the issue of whether or not there was this careful use of all of the tools in the statutory construction toolkit. [00:19:01] Speaker 01: Well, let me just ask you one point about that, and I know it over time, and we'll restore your rebuttal. [00:19:06] Speaker 01: But just one final question, since you raised the other tools. [00:19:09] Speaker 01: What are we to do, or do you have a case where you've got competing canons that you've got to apply? [00:19:14] Speaker 01: We don't know what order they're to be applied. [00:19:17] Speaker 01: This seems a very good example of expressio unius. [00:19:20] Speaker 01: I mean, they've got specific examples. [00:19:22] Speaker 01: They've got several examples. [00:19:23] Speaker 01: So at best for you, you've got competing canons. [00:19:28] Speaker 01: And we have to figure out what we do with that competition. [00:19:31] Speaker 01: Are there any cases that are relevant to this that deal with competing canons such as these? [00:19:37] Speaker 02: Well, I believe, Your Honor, in your concurrence in denial, rehearing, and banque in Kaiser v. McDonough, you discussed about the concept of the hierarchy of canons. [00:19:49] Speaker 02: And I can't believe it was your language or Judge Rina's language. [00:19:53] Speaker 02: regarding the order of operations. [00:19:55] Speaker 02: In looking at that, first we need to look at the descriptive canons, and I believe both the negative implication canon and the common law presumption would be deemed descriptive canons. [00:20:07] Speaker 02: I think in terms of the order of operation, as Your Honor has suggested, I would [00:20:12] Speaker 02: argue and the taxpayers argue that the common law presumption at Chevron step one has primacy over the negative implication canon. [00:20:21] Speaker 02: And as suggested in our replies, the negative implication canon doesn't necessarily shake out the way IRS argues, as both in the IRS's papers and Baldwin, because the negative implication canon was argued there, that was argued at step two. [00:20:38] Speaker 02: IRS uses the negative implication canon to say that its analysis is reasonable. [00:20:42] Speaker 02: We say it's step one. [00:20:44] Speaker 02: The common law presumption would fill in any silence in order to determine whether or not [00:20:51] Speaker 02: the court can move on to step two. [00:20:53] Speaker 02: We say that as the court in epic systems suggested, once the statutory canons fill it, Chevron leaves the stage. [00:21:03] Speaker 02: And we believe that that's true here. [00:21:04] Speaker 02: The common law presumption carries the day in filling the statutory silence, if any. [00:21:10] Speaker 02: And the other canons simply fall away. [00:21:14] Speaker 02: And certainly Chevron step two does. [00:21:17] Speaker 00: Is there any problem here? [00:21:19] Speaker 00: Are we headed down a slippery slope [00:21:21] Speaker 00: by allowing or affirming the abrogation of a common law doctrine by agency regulation? [00:21:29] Speaker 02: Your Honor, I believe that is a relatively dangerous slope to go down. [00:21:34] Speaker 02: And there's cases where the common law presumption, I believe, in Oranje, which is the Sixth Circuit decision, applied res judicata, which is a very important common law rule. [00:21:47] Speaker 02: And if the court is searching for where the line is, [00:21:50] Speaker 02: There are well-settled common law principles, the sort of black letter law that exists, and that might be a line worth drawing. [00:22:00] Speaker 02: But I do agree that by saying that the agency at any point in time can abrogate an existing common law rule, [00:22:09] Speaker 02: It goes against the concept of notice, fairness. [00:22:12] Speaker 05: Well, that's only if Congress intended plainly to keep the common law rule, right? [00:22:19] Speaker 05: I mean, that's a dangerous scenario. [00:22:21] Speaker 05: If Congress intended common law rules to be applied and the agencies nevertheless jettisoned them, that's probably has a whole host of legal problems. [00:22:31] Speaker 05: But if it's ambiguous as to whether Congress intended it to apply, then [00:22:37] Speaker 05: we would apply our normal rules of Shebra, right? [00:22:42] Speaker 02: Yes, if it is genuinely ambiguous. [00:22:45] Speaker 02: But again, congressional intent and the structure of the statute [00:22:51] Speaker 02: And the common law presumptions, as Judge Peirce has indicated, that those are all canons that both compete and inform each other. [00:23:00] Speaker 02: And you only get to genuine ambiguity in congressional intent after all those analyses are done. [00:23:08] Speaker 02: And that sort of careful searching analysis is what we're asking the court to do regarding the common law presumption that the mailbox rule continues to play a role. [00:23:21] Speaker 01: Not your fault, our fault. [00:23:24] Speaker 01: But we've gone way over our time. [00:23:25] Speaker 01: We'll reserve your rebuttal, and let's hear from them. [00:23:27] Speaker 02: Thank you, Your Honors. [00:23:36] Speaker 01: Good morning. [00:23:45] Speaker 04: Good morning. [00:23:47] Speaker 04: May it please the Court, my name is Matthew Johnshoy, and I represent the United States. [00:23:51] Speaker 04: This is the second appeal in this case. [00:23:54] Speaker 01: Can I just ask you a preliminary sort of housekeeping thing? [00:23:56] Speaker 01: And this is in response, I think Judge Hughes asked your friend. [00:24:01] Speaker 01: The rule went into effect in 2011. [00:24:04] Speaker 01: Is this issue alive in any other circuits other than in the Ninth Circuit where you know about Baldwin? [00:24:15] Speaker 04: I think the issue has come up in the Eighth Circuit and in the Third Circuit, but not to the Circuit Court. [00:24:21] Speaker 04: just the district courts. [00:24:23] Speaker 04: The issue would be alive in any circuit that had previously allowed the common law mailbox rule to apply. [00:24:28] Speaker 04: The ninth is the only one that's expressly ruled on your regulation. [00:24:32] Speaker 04: Yes. [00:24:33] Speaker 04: Yes, the only other statement I'm aware of from a circuit court is this court's statement in Ananya versus McDonough. [00:24:40] Speaker 01: And what about those ACEs? [00:24:42] Speaker 01: So there are cases pending in district courts. [00:24:44] Speaker 01: Do you know if any district courts have decided this issue? [00:24:47] Speaker 01: You mentioned the ACE, I think, in the third. [00:24:49] Speaker 04: Yes. [00:24:50] Speaker 04: There was a case we brought up in a 28-J letter called Crispino. [00:24:55] Speaker 04: It was recent out of New Jersey. [00:24:56] Speaker 04: And I can't remember the name of the case out of the District of Minnesota, but I believe it's cited in Crispino. [00:25:03] Speaker 04: And what way did they go? [00:25:04] Speaker 04: They followed the regulation, and they uphold the regulation under Chevron. [00:25:11] Speaker 00: So in follow up to my question to your friend, is this a case, am I reading this right? [00:25:17] Speaker 00: This is a case of the abrogation of a common law doctrine by agency regulation. [00:25:24] Speaker 04: No, I don't believe so. [00:25:25] Speaker 04: That's certainly how it's being construed. [00:25:28] Speaker 04: But we view it differently. [00:25:30] Speaker 04: So we think that Congress meant to clarify the rule in the statute. [00:25:35] Speaker 00: The issue today is teed up, or we're reviewing the interpretation [00:25:39] Speaker 00: of an agency regulation, correct? [00:25:44] Speaker 00: Yes. [00:25:44] Speaker 00: And we're looking at that agency regulation to see if, in fact, it abrogates the common law doctrine or not. [00:25:52] Speaker 04: Yes. [00:25:53] Speaker 04: But you could also find that the statute itself was unambiguous and that the statute does not allow the common law mailbox rule, where 7502 applied. [00:26:01] Speaker 00: Well, it's unambiguous because it's silent. [00:26:08] Speaker 00: And the agency has filled in that silence with the regulation. [00:26:13] Speaker 00: It's filled in a gap. [00:26:17] Speaker 04: Yes. [00:26:18] Speaker 00: And that regulation navigates a common law doctrine. [00:26:22] Speaker 04: We're not sure the common law doctrine ever actually applied. [00:26:26] Speaker 04: in tax cases, some circuits had allowed it just before. [00:26:30] Speaker 01: I have a real problem with the silence issue that you briefed and it's only lucky for you perhaps it's only part of your argument. [00:26:37] Speaker 01: Isn't it always the case that when we're talking about the common law canon there's going to be silence? [00:26:43] Speaker 01: It's precisely because the statute doesn't say anything that we have this common law application that we presume applies. [00:26:52] Speaker 01: So now you're saying silence means the canon doesn't [00:26:56] Speaker 01: And I always would have interpreted silence to mean that the canon applies. [00:27:01] Speaker 01: It's just an odd argument to me. [00:27:04] Speaker 04: The canon could apply, but there are other canons, like Expressio Unius. [00:27:08] Speaker 04: And so I'm not sure that it would be fair to just jump to the one canon versus the others. [00:27:16] Speaker 04: Well. [00:27:17] Speaker 05: So I'm confused, too. [00:27:19] Speaker 05: I thought the argument was this statute was either expressly displaced the mailbox rule, in your view, or was at least ambiguous as to whether it displaced the mailbox rule, not that it was just silent. [00:27:37] Speaker 04: Well, when we say it's ambiguous, we were also saying that it was silent. [00:27:41] Speaker 05: I don't know. [00:27:41] Speaker 05: Right, but it's two different things, right? [00:27:43] Speaker 05: If this was a statute, and it didn't address it at all, and it was silent, usually agencies get gap-filling authority over silence. [00:27:56] Speaker 05: But if it's a common law presumption, you presume that Congress intended to incorporate that. [00:28:03] Speaker 05: So it's really not silence. [00:28:04] Speaker 05: So I don't understand why you're relying so much on silence. [00:28:09] Speaker 05: The argument you made and the way you looked at this in a better way was the adoption of this statute was to respond to a question about whether the mailbox rule applied. [00:28:21] Speaker 05: It didn't adopt it. [00:28:23] Speaker 05: It laid out conditions for when delivery would qualify, when receipt would qualify, when you didn't need receipt. [00:28:33] Speaker 05: In that sense, it displaced it. [00:28:35] Speaker 05: either plainly or at least ambiguously replaced it. [00:28:39] Speaker 04: Yes. [00:28:40] Speaker 05: Well, why are you talking about silence? [00:28:42] Speaker 05: That doesn't sound like silence to me. [00:28:44] Speaker 05: That sounds like the argument is the statute explicitly dislodged the mailbox rule or at least ambiguously dislodged the mailbox rule. [00:28:54] Speaker 04: I think perhaps our argument has conflated in the ambiguity with the silence [00:28:58] Speaker 04: in silence, meaning that they did not explicitly state, and the mailbox rule is hereby not going to apply. [00:29:06] Speaker 00: They don't say anything at all. [00:29:08] Speaker 00: It's not just they don't explicitly state it. [00:29:11] Speaker 00: There's no statement at all as to the application of the common law doctrine. [00:29:15] Speaker 04: That's right. [00:29:16] Speaker 04: It's literally silent, but it's also ambiguous, because it does apply multiple ways in which you can show prima facie evidence of filing where [00:29:27] Speaker 04: In fact, the filing was never delivered. [00:29:28] Speaker 05: Your view is that Congress doesn't have to explicitly state the mailbox rule doesn't apply to dislodge the mailbox rule. [00:29:36] Speaker 05: It has to somehow evidence its intent to dislodge the mailbox rule either by an explicit statement or by enacting a scheme that is somewhat less than the mailbox rule or is inconsistent with the mailbox rule. [00:29:52] Speaker 04: Correct. [00:29:54] Speaker 04: I would agree. [00:29:57] Speaker 00: The amendments to the regulation all deal with when the letter is received, correct? [00:30:04] Speaker 00: The postmark, the registered mail, the certified mail, those amendments all pertain to whether something was received or not. [00:30:15] Speaker 04: I'm not sure I follow. [00:30:16] Speaker 04: I think those are providing for cases where nothing was in fact received and then holding that the postmark date or the registered mail date would be [00:30:25] Speaker 04: would be uh... accepted as the as the fact that this is the day to receive the common-law doctrine works for here today goes to whether eight eight million was ever actually made not received uh... will know i i i don't think that's right i think you know the actual background is the physical delivery rule so even under the common-law mailbox rule unit the items still needs to have been delivered [00:30:52] Speaker 04: you know, filing occurs when the item is delivered to the proper office. [00:30:56] Speaker 00: And the common law doctrine says that if there's evidence that a person, individual, deposited the form or whatever in the US mail, then this satisfied the regulation. [00:31:08] Speaker 00: This is prior, before it was amended. [00:31:14] Speaker 04: there would be an argument. [00:31:16] Speaker 00: So that physical delivery is different from the amendments that went to the receipt of a million, right? [00:31:24] Speaker 00: Or am I getting this wrong? [00:31:26] Speaker 04: I don't think they're just sort of divorced and separate. [00:31:30] Speaker 04: The general requirement, the actual requirement for filing is still delivery, but it now holds that these other things will qualify. [00:31:38] Speaker 04: It creates some exceptions where there weren't exceptions before. [00:31:41] Speaker 05: Prior to the enactment of the statute, the government's position was receipt was required in all instances, right? [00:31:47] Speaker 04: Yes. [00:31:47] Speaker 05: And there was a circuit split, and some circuits allowed the mailbox rule to prove receipt, some didn't. [00:31:53] Speaker 04: Yes. [00:31:54] Speaker 05: And Congress stepped in and said, well, I'm not going to put words in the Congress' mouth, but the statute prescribes different ways for something to be considered timely filed and received. [00:32:08] Speaker 05: which includes some instances where it's received but received late with the postmark before, and some instances where it's not received at all, which is what the mailbox rule usually covers, right? [00:32:20] Speaker 05: Yes. [00:32:20] Speaker 05: The mailbox rule covers when something, they can show it was timely mailed, but it was never received. [00:32:26] Speaker 05: And Congress spoke to the circumstances where it was never received, but they could show timely mailing. [00:32:33] Speaker 05: But they didn't go whole in mailbox rule. [00:32:36] Speaker 05: They said, you have to give us registered mail receipt. [00:32:38] Speaker 04: That's right. [00:32:39] Speaker 04: And over time, they added to that. [00:32:40] Speaker 04: So it started with just registered mail receipt. [00:32:43] Speaker 04: Then they added a provision to allow for certified mail and eventually for private delivery, certain FedEx services. [00:32:49] Speaker 00: At that time, why didn't Congress just go ahead and say, we're not going to have the common law doctrine anymore? [00:32:55] Speaker 00: That would have been too easy. [00:32:57] Speaker 04: I do think that would have simplified the matter. [00:32:59] Speaker 04: But perhaps they already thought they had done it. [00:33:01] Speaker 00: Don't we assume that Congress was aware that the common law doctrine existed? [00:33:07] Speaker 04: We could assume that. [00:33:08] Speaker 04: But what would be the point of adding certified mailing if the taxpayer already could have proved it with their own testimony? [00:33:14] Speaker 04: The whole point of a certified mailing receipt is to have some direct evidence of mailing. [00:33:20] Speaker 05: So I think that's contrary to the sort of... But you don't have to prevail on whether Congress explicitly intended to overrule this, right? [00:33:29] Speaker 05: You just have to show that it is ambiguous as to whether Congress intended to splice the mailing rule. [00:33:35] Speaker 04: That's right. [00:33:36] Speaker 01: Is that really right? [00:33:37] Speaker 01: I thought the case law, it was clear that to dislodge the common law canon, that the canon applies unless there's, quote, a clear statement or an evidence statutory purpose to the contrary. [00:33:50] Speaker 04: I'm not sure the canon ever actually applied, though, and certainly not in this circuit. [00:33:54] Speaker 04: Some circuits had adopted it, and then the statute came in, and then there's now been debate amongst the circuits as to the meaning of that. [00:34:01] Speaker 04: But it's not clear the common law mailbox rule ever applied for the context of tax filings. [00:34:07] Speaker 04: Certainly, if the statute's ambiguous, though, then there'd be deference under the regulation. [00:34:16] Speaker 04: Having talked about filing for a while, I'd like to move on and just make a point that we actually think the simplest and most straightforward way to decide this case is timeliness, not actually filing. [00:34:29] Speaker 04: And one reason the court lacked jurisdiction is more than enough. [00:34:33] Speaker 04: So for instance, in this court's prior remand, this court found that taxpayers had only raised a claim for business bad debt and remanded it to the CFC for jurisdictional findings. [00:34:42] Speaker 04: After a trial, the CFC found that there was no debt. [00:34:45] Speaker 04: And even if there was a debt, the loss was not business related. [00:34:49] Speaker 04: It related only to their status as a shareholder. [00:34:52] Speaker 04: So there could be no business bad debt that would be necessary for timeliness. [00:34:56] Speaker 01: So is this the three versus the six year statute of limitations? [00:35:00] Speaker 04: Three versus seven. [00:35:02] Speaker 04: And there's two versions of the seven. [00:35:04] Speaker 04: One is for the direct year of the loss, and one is for a carry back theory. [00:35:08] Speaker 05: And the carry back theory, was that argued below? [00:35:12] Speaker 04: By implication, it was. [00:35:13] Speaker 04: OK, so you're not arguing a waiver then. [00:35:17] Speaker 04: Well, we are arguing a waiver as to non-business debt and loss for worthless stock. [00:35:24] Speaker 04: Those were never raised before. [00:35:26] Speaker 04: But as to business bad debt, the implication was for a carry back because no one believed that the loss had occurred in 2003. [00:35:33] Speaker 04: The company only first experienced... Oh, I'm sorry. [00:35:35] Speaker 05: I was confusing those latter two theories with just the carry back, but there's two different ways of arguing the carry back. [00:35:42] Speaker 05: One is they did it in 2004 to carry back. [00:35:45] Speaker 05: as just business debt, and then the other two theories were in 2004, this qualified under these other two problems. [00:35:52] Speaker 05: Those are new, right? [00:35:54] Speaker 04: Yes, those are wholly new. [00:35:56] Speaker 05: I struggle with this because I'm not a tax expert by any means, but what's the difference between, it seems to get referred to as business debt versus capital, so what's the statute that defines bad business debt [00:36:11] Speaker 05: And why is it paying taxes on income you never received from a business you own and a share in, not that business debt? [00:36:22] Speaker 04: Right. [00:36:23] Speaker 04: Well, the statute would be 166. [00:36:25] Speaker 04: And this court's case law has flushed out sort of numerous factors to be considered [00:36:30] Speaker 04: to decide whether something is capital or debt. [00:36:33] Speaker 04: For instance, does it have a payment schedule? [00:36:35] Speaker 04: Is interest going to be required? [00:36:38] Speaker 04: The sort of hallmarks of debt. [00:36:40] Speaker 04: And the CFC found that none of those were present in this case. [00:36:45] Speaker 04: Beyond that, then, you have to classify the debt as either business or non-business, whether it relates to your trade or business or whether it relates solely to your status as a shareholder, that is, as an investment. [00:36:57] Speaker 04: And this, Muhammad Taha never worked in the corporation, so this only related to his status as an investor. [00:37:05] Speaker 01: Wouldn't one of your alternative theories require a remand? [00:37:10] Speaker 04: I don't believe so, Your Honor. [00:37:12] Speaker 04: No. [00:37:13] Speaker 04: And I say that because taxpayers argue in their briefing that the year of the loss on their theories is 2004, and they cannot carry back a loss to 2004 under any of their new alternative theories. [00:37:25] Speaker 04: So a non-business debt is treated as a capital loss. [00:37:27] Speaker 04: That cannot be carried back. [00:37:29] Speaker 04: Similarly, a loss on worthless stock would be a capital loss. [00:37:31] Speaker 04: That cannot be carried back. [00:37:33] Speaker 04: So it's impossible. [00:37:35] Speaker 04: And not only is it impossible to get the seven year extended time limit, the loss has to result in a carry back. [00:37:43] Speaker 04: So there's sort of an overlap between the jurisdictional and the merits. [00:37:55] Speaker 04: We also sort of, as to these two new theories, non-business debt and worthless stock, we note that neither of these theories [00:38:05] Speaker 04: were contained in a claim for refund. [00:38:07] Speaker 04: So they would both violate the substantial variance doctrine. [00:38:11] Speaker 04: And I think on this point, taxpayers really need to take the bitter with the sweet. [00:38:14] Speaker 04: If, in fact, they file the two-page amended tax return that will serve as a claim for refund, that claim for refund has to contain all of their legal theories. [00:38:22] Speaker 04: They cannot now raise a legal theory that is not in that claim for refund. [00:38:26] Speaker 04: In addition, they never raised it during the litigation, prior to the first appeal or even at the trial after. [00:38:31] Speaker 04: Not until this appeal were these new theories asserted. [00:38:39] Speaker 04: Thank you. [00:38:47] Speaker 01: I was going to restore just two minutes, but we'll give you a little more time because the questions about the merits issues just came up and you didn't have a chance to respond at all. [00:38:56] Speaker 01: So we'll give you three or four minutes. [00:39:16] Speaker 02: Thank you, Your Honors. [00:39:17] Speaker 02: And before jumping to our response to some of the merits issues, I believe earlier Chief Judge Yu had asked about [00:39:26] Speaker 02: what's effectively the hierarchy of canons. [00:39:29] Speaker 02: And if we're looking at competing canons, I believe Judge Nelson wrote, in our aringuerre, it's hard to imagine an interpretive tool more traditional than centuries-old common law presumption. [00:39:42] Speaker 02: And I think that when we're looking at the hierarchy or the order of operations in which competing canons may be applied, the common law presumption should get some form of primacy or [00:39:54] Speaker 02: at least be moved up in the list amongst the competing canons. [00:40:02] Speaker 02: The other question that I believe came up [00:40:05] Speaker 02: to the IRS was that whether or not, how do we dislodge the common law canon? [00:40:11] Speaker 02: We had mentioned earlier that there needs to be some sort of clear impulse or indication from Congress that they intended to, and I think the language in Philadelphia Marine from the Third Circuit is instructive on this point. [00:40:22] Speaker 02: It says, it's well established principle of statutory construction, the common law ought not to be deemed repealed unless the language of the statute be clear and explicit for this purpose. [00:40:32] Speaker 02: Interestingly, in that case, the Third Circuit also goes on. [00:40:35] Speaker 05: This doesn't answer the questions we were having before. [00:40:41] Speaker 05: We have this general language, but what does Congress have to do to dislodge the mailbox rule? [00:40:46] Speaker 05: Are you taking the position that to not apply the mailbox rule, they have to say the mailbox rule doesn't apply? [00:40:54] Speaker 02: I wouldn't say it's that level of absolutism, because I do think that you can, again, look at the structure of the statute. [00:41:00] Speaker 02: You can look at congressional intent. [00:41:02] Speaker 02: And one of the things that the Third Circuit opines on is what would be the underlying rationale. [00:41:08] Speaker 05: So let me ask you this hypothetical then. [00:41:11] Speaker 05: If Congress, there is no statute that addresses the mailbox rule one way or another. [00:41:18] Speaker 05: And so it's presumed to apply. [00:41:20] Speaker 05: Courts for years have been applying it. [00:41:23] Speaker 05: And then they enact a statute that has various provisions going through for this type of claim. [00:41:32] Speaker 05: It should be considered timely delivered or filed within the statute of limitations if it's mailed before the date but received after and the postmark shows it was mailed before. [00:41:44] Speaker 05: Or, in the next section, you'll see that this is very close to the statute, but I don't want to get into the nuts and bolts of this. [00:41:52] Speaker 05: If it's never received, it shall be considered timely delivered only in these circumstances. [00:42:00] Speaker 02: I think that that cuts a little bit closer to the sort of language required. [00:42:03] Speaker 05: So if the registered mail had the word only, instead of just here's when, if we never receive it, we'll consider it timely filed. [00:42:12] Speaker 02: Yes, Your Honor, and I think that that goes to sort of the idea of whether or not it was displaced. [00:42:16] Speaker 02: I would say a phrase including only these methods would potentially create a displacement of that. [00:42:24] Speaker 02: I think that that's language that would be deemed explicit enough in order to do that. [00:42:29] Speaker 02: That's not the case with the statute here. [00:42:32] Speaker 02: And, you know, as I was going to say, in Philadelphia Marine, the Third Circuit also opined that at least as a matter of logic... What's the name of the... This is the Third Circuit, your... Yes. [00:42:42] Speaker 00: What's the name of that case? [00:42:43] Speaker 02: Philadelphia Marine Trade Association... It's a long one, Your Honor. [00:42:47] Speaker 02: Philadelphia Marine Trade Association International Longshoremen's Association Pension Fund versus the Commissioner of Internal Revenue. [00:42:55] Speaker 05: Where are you reading from in that case? [00:42:57] Speaker 02: I'm reading from page 150. [00:43:03] Speaker 02: And the court says, moreover, as a matter of logic, it is difficult to imagine that Congress, by passing a law that was designed to protect taxpayers who meet 7502's requirements, would, without so stating, simultaneously seek to roll back protections for taxpayers that already exist a common law. [00:43:23] Speaker 02: Congress's intent, we believe, was to supplement, not supplant, means by which taxpayers can timely file [00:43:30] Speaker 02: documents with the IRS, and that's relying on a state of wood, which is the Eighth Circuit case. [00:43:34] Speaker 05: So this is essentially a policy argument, right? [00:43:37] Speaker 05: This is, well, if Congress is trying to clarify something, we're going to assume they didn't mean to take away rights from the taxpayers, because the mailbox rule in some circuits applied and some didn't. [00:43:49] Speaker 05: But don't you have in the IRS context a completely different set of policy reasons? [00:43:55] Speaker 05: I mean, the IRS must get millions and millions of pieces of mail. [00:43:59] Speaker 05: And why wouldn't we read this as setting clear objective requirements for when you can show timely delivery even without actual receipt, which is you have documentary proof. [00:44:11] Speaker 05: Your view is going to allow cases to be filed in a lot of cases where the only proof is going to have to be a court-tested view of somebody's testimony. [00:44:24] Speaker 05: And isn't that [00:44:26] Speaker 05: inconsistent with the way the IRS operates, which has very strict deadlines on a number of things. [00:44:32] Speaker 05: It has a lot of rules. [00:44:33] Speaker 05: Even the Supreme Court has recognized that general equitable principles about tolling and the like generally don't apply to the IRS. [00:44:41] Speaker 05: So why shouldn't we read the policy in Act 75-02 in that sense, that it wanted to loosen up the receipt-only rule, but it didn't want to go all the way? [00:44:55] Speaker 02: Well, I would suggest, Your Honor, that bureaucratic inconvenience isn't necessarily a reason for displacing century-old common law. [00:45:04] Speaker 02: And I think that that's probably an after the fact rationale that the IRS has developed, that it's too hard, it's too unworkable to have this common law presumption. [00:45:13] Speaker 05: Sure, but you're starting from the presumption that the common law mailbox rule applied to this. [00:45:18] Speaker 05: And Congress didn't start from that presumption. [00:45:21] Speaker 05: They started from a world where some circuits strictly applied the delivery rule, with no exception, and some circuits allowed the mailbox rule. [00:45:31] Speaker 05: And so when they're enacting the statute, [00:45:34] Speaker 05: We have to look at it in that context. [00:45:36] Speaker 05: Even you agree that when we're looking to dislodge whether the Congress intended to dislodge the mailbox rule, you look at the circumstances. [00:45:43] Speaker 05: So you want us to look at this as Congress is operating against the backdrop of the mailbox rule. [00:45:51] Speaker 05: But some circuits, a fair amount of them, had said it doesn't apply. [00:45:55] Speaker 05: So you could see this as a liberalizing statutory change that didn't go all the way to the full-blown mailbox rule. [00:46:04] Speaker 02: well here and i think again that this sort of rationales proposing kaiser regarding the depth of consideration uh... for statutory cannons and review should be looked at in the context of the circuits and how they decided the email box rule question post-enactment seventy five o two if you look at cases like i'm not sure how it matters [00:46:30] Speaker 05: Oh, you mean post-7502. [00:46:32] Speaker 05: Oh, post-7502. [00:46:33] Speaker 05: But aren't we looking at what Congress did in 7502? [00:46:38] Speaker 02: It's one of the considerations, but the courts in Anderson and Philadelphia Marine and a state of Wood. [00:46:43] Speaker 05: Isn't it the entire consideration? [00:46:46] Speaker 05: Because what we're looking at in this case is whether Congress intended to allow the mailbox rule to continue to go forward or not allow it. [00:46:57] Speaker 05: And the landscape it was operating on was some circuits said yes mailbox rule, some circuits said no, no exceptions, delivery only. [00:47:10] Speaker 05: And I do believe that that's some of the framework, but I also... Whether those circuits that said no mailbox rule were right or not, they were in existence. [00:47:20] Speaker 05: So Congress was legislating against that backdrop. [00:47:23] Speaker 05: and they knew about the mailbox rule. [00:47:25] Speaker 05: So if they're trying to resolve a circuit split and they want to incorporate the mailbox rule, why wouldn't they have codified the mailbox rule instead of the alternate version of receipt and delivery rules that they did? [00:47:41] Speaker 02: premise may be somewhat inverted is that if Congress is legislating against the backdrop of the common law rule, it's effectively already considered in what they're doing. [00:47:54] Speaker 05: Yes, but again, that's my point is you're proceeding from the presumption that the common law mailbox rule was well [00:48:03] Speaker 05: accepted in this area, and it wasn't. [00:48:06] Speaker 05: It was disputed. [00:48:07] Speaker 05: And when Congress enacts against a disputed common law rule, it doesn't necessarily show that they intended to incorporate it when it's a disputed applicability. [00:48:22] Speaker 05: I mean, that's a presumption, too. [00:48:25] Speaker 02: I would agree with your honor in that. [00:48:27] Speaker 02: But I would also suggest that one of the issues that might be arising with the application of the common law mailbox rule is that we're talking about slightly different versions of the mailbox rule. [00:48:39] Speaker 02: Taxpayers are talking about common law mailbox rule writ large, the one that's been well settled since 1884 per the Supreme Court. [00:48:49] Speaker 02: What the IRS has argued is something a little bit more nuanced, an IRS-specific common law mailbox rule. [00:48:55] Speaker 02: And that might be creating some of the wrinkles that your honor is identifying in looking at the statutory interpretation question. [00:49:03] Speaker 02: But we're saying that the common law mailbox rule as a whole, in the traditional sense that it applies across all of the government, [00:49:14] Speaker 02: has primacy. [00:49:16] Speaker 02: That circuits may have adopted, I believe, as my colleagues mentioned in their papers, may have raised a common law mailbox rule as the IRS. [00:49:28] Speaker 02: I think that that's somewhat incorrect. [00:49:30] Speaker 02: The mailbox rule exists. [00:49:33] Speaker 02: It may have been applied in IRS circumstances, but that doesn't necessarily defeat the fact that Congress did not clearly and explicitly [00:49:44] Speaker 02: you know, dislodge the common law mailbox rule from practice. [00:49:48] Speaker 02: Um, and I wanted to just, yeah. [00:49:50] Speaker 01: Can you move on? [00:49:51] Speaker 01: Just, I really do want to give you a couple of minutes. [00:49:53] Speaker 02: And I think so as the timeliness question, um, and my colleague indicated as much, and I think it's one of the issues that gets a little bit confusing is there is a combining of jurisdictional questions and merits questions. [00:50:12] Speaker 02: We're here in the posture of a jurisdictional challenge. [00:50:16] Speaker 02: Mr. Taha alleged that there was a debt that was incurred at some point that would trigger the seven-year statute of limitations. [00:50:28] Speaker 02: The court below had determined that it was capital that may or may not be subject to seven-year statute of limitations as well, and then went on to the merits analysis. [00:50:42] Speaker 02: question here is whether or not there was a timely filing under 6511. [00:50:49] Speaker 02: And it's our view that that is true. [00:50:52] Speaker 02: And the IRS admits as much that for business... I don't understand what you're saying. [00:50:57] Speaker 05: Are you saying that it was improper on the 12B1 to determine whether this money we're talking about, the facts of which appear to be undisputed, was business debt or capital? [00:51:08] Speaker 02: Yes, Your Honor. [00:51:09] Speaker 02: And part of that goes to... Why? [00:51:11] Speaker 05: I mean, you can make jurisdictional factual determinations if it goes to the statute of limitations, can't you? [00:51:18] Speaker 02: Well, first, one of the issues is that... Let me ask you this. [00:51:26] Speaker 05: Are there any facts in dispute about what occurred here with regards to what the character of this money is? [00:51:33] Speaker 02: I think that there are. [00:51:34] Speaker 02: What are they? [00:51:35] Speaker 05: Not the ultimate question of whether it's business debt or not. [00:51:39] Speaker 05: What is the student fact? [00:51:43] Speaker 02: I believe the student fact was whether or not it was timely filed. [00:51:46] Speaker 05: No, that's not what I'm asking. [00:51:49] Speaker 05: It seems like he had a share in this business. [00:51:52] Speaker 05: He was expected to get a certain payout. [00:51:55] Speaker 05: And he reported that payout on his income taxes and paid taxes on it, and he didn't get the payout. [00:52:01] Speaker 05: Is there any dispute as to all of that? [00:52:04] Speaker 02: As to the underlying facts, no. [00:52:07] Speaker 02: As to the combination of where facts might... No, no, no. [00:52:10] Speaker 05: Okay, so stop. [00:52:11] Speaker 05: So is there any dispute about whether that money he was receiving was income or something else? [00:52:19] Speaker 02: Yes. [00:52:20] Speaker 05: What was it then, in your view? [00:52:22] Speaker 02: He argues that it's a debt, and as the record shows, there was a promissory note issued by Addaq Corporation to him, and we talk a little bit about that. [00:52:32] Speaker 05: So in your view, this money that he was being paid was a loan repayment? [00:52:38] Speaker 02: Well, he was never paid the money subject to the promissory note. [00:52:42] Speaker 05: And so that's why he... No, no, no. [00:52:44] Speaker 05: Let me try again. [00:52:45] Speaker 05: I'm sorry if I'm not being precise. [00:52:47] Speaker 05: Your argument is this money that he said he was going to get and didn't get and reported taxes on nevertheless was a repayment of that promissory note. [00:52:59] Speaker 02: No, that would have been repayment of the shares. [00:53:01] Speaker 02: Then the promissory note fills in. [00:53:04] Speaker 02: That's what the debt [00:53:06] Speaker 02: analysis is based on that there is a promissory note which created a loan. [00:53:11] Speaker 05: Is this the argument that was not raised below? [00:53:13] Speaker 02: No, I believe it was raised below. [00:53:16] Speaker 02: All the documents regarding the promissory note are in the record. [00:53:19] Speaker 05: You know what I'm talking about, right? [00:53:22] Speaker 05: Your friend got up and said there's some arguments that you raised below and then there's these two other theories that weren't explicitly raised below. [00:53:29] Speaker 05: Are we talking about the one that wasn't raised below? [00:53:31] Speaker 02: No, we're talking about one that was raised below. [00:53:34] Speaker 02: The promissory note that's applicable to the 2003 Tax Refund [00:53:38] Speaker 02: is in the record and was considered by the court. [00:53:40] Speaker 05: I believe it was also admitted in trial but attached to some of the... Let me just try to get the facts straight one more time, though, because I don't follow what you're saying. [00:53:52] Speaker 05: Was the money he was supposed to get paid in 2003 and never got paid, but he paid taxes on? [00:53:59] Speaker 05: Was that a payment under the promissory note, or was that something else? [00:54:04] Speaker 02: At the time that the initial 2003 filing was made, it was income from his shares in Adda Corporation. [00:54:13] Speaker 05: Okay, stop. [00:54:14] Speaker 05: So at that time, he considered it income from his shares. [00:54:18] Speaker 05: And when he reported on his tax returns, he paid taxes on it as income. [00:54:24] Speaker 02: That's correct. [00:54:24] Speaker 05: Would that be bad business debt? [00:54:27] Speaker 02: No, the bad business debt question arises because of the promissory note. [00:54:31] Speaker 05: So you're recharacterizing what he paid income tax on now as something that was covered as bad business debt under the promissory note. [00:54:40] Speaker 02: I believe Your Honor, that we need to look at both the initial 2003 filing and the amended 1040. [00:54:47] Speaker 02: in combination. [00:54:48] Speaker 02: And it's the amended 1040, my understanding, that's sort of the subject of the challenge. [00:54:52] Speaker 02: And that's where he then attempts to take the losses as a result of the promissory note, because those shares were never, that money was never paid out. [00:55:02] Speaker 05: But that doesn't correspond to the 2003 payment that he didn't receive. [00:55:07] Speaker 05: That corresponds to something else. [00:55:10] Speaker 02: I believe it directly does because that money was never paid out. [00:55:15] Speaker 02: He had to pay based on his shareholdings, but that money never came into play and was subject to a promissory note that was never acted upon. [00:55:24] Speaker 02: I believe there was something along the lines of $20,000 that was eventually transferred to him. [00:55:30] Speaker 02: subject to the agreements, but what we're saying is that the promissory note needs to be considered, and that comes under the Sunex factors. [00:55:40] Speaker 02: The promissory note on its face looks like a loan document, looks like a document that suggests indebitability. [00:55:47] Speaker 05: I'm still not following though. [00:55:49] Speaker 05: If the promissory note had required a payment in a certain tax year, and he didn't get that payment, he could deduct that as bad business debt, right? [00:55:58] Speaker 02: I believe so. [00:55:59] Speaker 05: The promissory note is not what led to the payment that he didn't get that he paid taxes on though. [00:56:10] Speaker 02: Well, the loss of the business itself made the promissory note worthless. [00:56:18] Speaker 02: As the bankruptcy proceedings, and it's in the record below, there is no money left to pay despite him making a claim against the bankruptcy estate as a creditor. [00:56:32] Speaker 02: And if there's no further questions, Your Honor, thank you. [00:56:36] Speaker 01: Thank you. [00:56:37] Speaker 01: We thank both sides and the cases.