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Couple Seeks Ninth Circuit En Banc Rehearing on Mailbox Rule

MAY 29, 2019

Howard L. Baldwin et ux. v. United States

DATED MAY 29, 2019
DOCUMENT ATTRIBUTES

Howard L. Baldwin et ux. v. United States

HOWARD L. BALDWIN AND KAREN BALDWIN,
Plaintiff/Appellees,
v.

UNITED STATES OF AMERICA
Defendants/Appellant.

Published Opinion Issued April 16, 2019
Susan P. Graber and Paul J. Watford, Circuit Judges,
and Jack Zouhary, District Judge

IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

On Appeal From the United States District Court
For the Central District of California
Case No. 2:15-cv-06004-RGK-AGR Before the Honorable R. Gary Klausner

PETITION FOR REHEARING EN BANC ON BEHALF OF APPELLEES
HOWARD L. BALDWIN AND KAREN BALDWIN

Robert W. Keaster [SBN 115847]
Allan J. Favish [SBN 99651]
CHAMBERLIN & KEASTER LLP
16000 Ventura Boulevard, Suite 301
Encino, California 91436-2758
Tel: (818) 385-1256
Fax: (818) 385-1802

Attorneys for Appellees, Howard L. Baldwin and Karen Baldwin


 TABLE OF CONTENTS

TABLE OF AUTHORITIES

I. INTRODUCTION AND FEDERAL RULE OF APPELLATE PROCEDURE 35 STATEMENT

II. ARGUMENT

A. Section 7502 Can Co-Exist with the Common-Law Mailbox Rule

B. The Supreme Court Has Held that Congressional Intent Underlying a Statute Shall Be Given Effect When Determined by a Canon of Statutory Construction

C. It Is a Canon of Statutory Construction that When Congress Enacts a New Statute, Related Common Law Is Presumed to Remain in Force Absent a Clear Indication Otherwise by Congress

D. In Anderson, This Court Used the Common-Law Presumption Canon to Determine that Section 7502 Did Not Repeal the Common-Law Mailbox Rule

E. Anderson Did Not Leave Room for Another Interpretation of Section 7502 and Never Stated that There Was a “Statutory Gap” in Section 7502

F. The Panel Decision Misapplied Chevron

G. The Panel Decision Overrules Anderson

H. If the Treasury Regulation Is Upheld, It Should Not Apply Retroactively in This Case

III. CONCLUSION

CERTIFICATE OF SERVICE

CERTIFICATE OF COMPLIANCE

TABLE OF AUTHORITIES

Cases

Anderson v. United States, 966 F.2d 487 (9th Cir. 1992)

Arangure v. Whitaker, 911 F.3d 333 (6th Cir. 2018)

Baldwin v. United States, 921 F.3d 836 (9th Cir. 2019)

Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) 

Chickasaw Nation v. U.S., 534 U.S. 84 (2001)

Estate of Woodv. C.I.R., 909 F.2d 1155 (8th Cir. 1990)

Federal Election Comm'n v. Democratic Senatorial Campaign Comm., 454 U.S. 27 (1981)

FMC v. Seatrain Lines, Inc., 411 U.S. 726 (1973)

Garfias-Rodriguez v. Holder, 702 F.3d 504 (9th Cir. 2012)

Kingdomware Techs., Inc. v. United States, 136 S.Ct. 1969 (2016)

Lagandaon v. Ashcroft, 383 F.3d 983 (9th Cir. 2004)

Meserve Drilling Partners v. C.I.R., 152 F.3d 1181 (9th Cir. 1998)

Montgomery Ward & Co. v. FTC, 691 F.2d 1322 (9th Cir. 1982)

National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967 (2005)

Norfolk Redevelopment & Housing Auth. v. Chesapeake & Potomac Tel. Co. of Virginia, 464 U.S. 30 (1983)

Nunez-Reyes v. Holder, 646 F.3d 684 (9th Cir. 2011)

Pereira v. Sessions, 138 S.Ct. 2105 (2018)

Philadelphia Marine Trade Ass'n-Int'l Longshoremen's Ass'n Pension Fund v. C.I.R., 523 F.3d 140 (3rd Cir. 2008) 

Sorrentino v. I.R.S., 383 F.3d 1187 (10th Cir. 2004)

U.S. v. Home Concrete & Supply, LLC, 566 U.S. 478 (2012)

United States v. LaBonte, 520 U.S. 751(1997)

Voices for Int'l Bus. & Educ., Inc. v. NLRB, 905 F.3d 770 (2018)

Weyer v. Twentieth Century Fox Film Corp., 198 F.3d 1104 (9th Cir. 2000)

Wood v. Commissioner, 909 F.2d 1155 (8th Cir.1990)

Statutes

26 C.F.R. § 301.7502-1(e)(2)(i)

26 U.S.C. § 7502

Treatises

Kent Barnett & Christopher J. Walker, Chevron in the Circuit Courts, 116 Mich. L. Rev. 1 (2017)


I. INTRODUCTION AND FEDERAL RULE OF
APPELLATE PROCEDURE 35 STATEMENT

Appellees were denied their tax refund of $167,663.00 because this Court agreed with the Government that the Treasury Department had the authority to repeal the common-law mailbox rule. In the published panel decision, Baldwin v. United States, 921 F.3d 836 (9th Cir. 2019), this Court overruled its decision in Anderson v. United States, 966 F.2d 487 (9th Cir. 1992) (“Anderson”) sub silentio, which held based on the canon of statutory construction that congressional enactment of a new statute is presumed not to repeal related common law absent a clear indication otherwise by Congress, congressional silence revealed congressional intent to have 26 U.S.C. § 7502 co-exist with the common-law mailbox rule. The panel decision improperly concluded that statutory silence on application of the common-law mail box rule created a gap that the Treasury Department could fill by regulation (26 C.F.R. § 301.7502-1(e)(2)(i)) which nullifies congressional intent as found by this Circuit in Anderson.

The panel decision conflicts with decisions of the United States Supreme Court (see Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984); U.S. v. Home Concrete & Supply, LLC, 566 U.S. 478 (2012); Norfolk Redevelopment & Housing Auth. v. Chesapeake & Potomac Tel. Co. of Virginia, 464 U.S. 30 (1983); Federal Election Comm'n v. Democratic Senatorial Campaign Comm., 454 U.S. 27 (1981)); this Circuit (see Anderson; Meserve Drilling Partners v. C.I.R., 152 F.3d 1181 (9th Cir. 1998); Garfias-Rodriguez v. Holder, 702 F.3d 504 (9th Cir. 2012); Montgomery Ward & Co. v. FTC, 691 F.2d 1322 (9th Cir. 1982); Lagandaon v. Ashcroft, 383 F.3d 983 (9th Cir. 2004)), and other Circuits (see Philadelphia Marine Trade Ass'n-Int'l Longshoremen's Ass'n Pension Fund v. C.I.R., 523 F.3d 140 (3rd Cir. 2008); Sorrentino v. I.R.S., 383 F.3d 1187 (10th Cir. 2004); Estate of Wood v. C.I.R., 909 F.2d 1155 (8th Cir. 1990); Arangure v. Whitaker, 911 F.3d 333 (6th Cir. 2018)). Therefore, consideration by the full Court is necessary to secure and maintain uniformity of the Court's decisions and conformity with Supreme Court decisions.

Questions of exceptional importance are also at stake here. The first question is, given that this Court in Anderson, employing traditional tools of statutory construction, found that Congress did not intend to repeal the common-law mailbox rule when it enacted Section 7502, can an administrative agency issue a regulation under Section 7502 which repeals the common-law mailbox rule. The second question is, if an administrative agency possesses the power to repeal common-law through regulation, should such repeal be given retroactive effect when it nullifies well settled Ninth Circuit precedent.

II. ARGUMENT

A. Section 7502 Can Co-Exist with the Common-Law Mailbox Rule.

Historically, a statutory filing requirement only could be satisfied by physical delivery to the Government. Philadelphia Marine, supra, 523 F.3d at 147. Courts adopted the common-law mailbox rule to create a presumption that properly mailed documents are presumed delivered to the addressee in the usual time. Id. Under the common-law mailbox rule, proof of mailing can be established by admissible evidence other than a formal postmark or other written proof of mailing. Anderson, supra, 966 F.2d at 489. The rule protects taxpayers when the IRS claims that it never received the tax return.

In 1954, Congress enacted Section 7502 of the Internal Revenue Code, which deems the date of mailing as the date of delivery. The first two Subsections, 7502(a)(1) & (2), deem the date of mailing as the date of delivery only when a tax return is received by the IRS after the filing deadline. (Such physical delivery can be presumed pursuant to the common-law mailbox rule under one line of cases, which includes this Circuit's decision in Anderson).

Unlike Subsections 7502(a)(1) & (2), Subsections 7502(c)(1)(A) & (B) apply when a tax return is not received by the IRS. These Subsections provide that when the return is not received, the date of mailing the return by registered mail is prima facie evidence that the return was delivered on that date. The common-law mailbox rule creates a presumption that the tax return was delivered within the normal period of time from the mailing date. Philadelphia Marine, supra, 523 F.3d at 152.

The express language of Section 7502 is silent on whether it repeals the common-law mailbox rule. Nothing in its legislative history states that Congress intended to displace the common-law mailbox rule. However, there is legislative history suggesting that Congress intended to retain the common-law mailbox rule. Id. at 150 n.8. Thus, there is nothing in Section 7502 or its legislative history that precludes the common-law mailbox rule from co-existing with Section 7502.

B. The Supreme Court Has Held that Congressional Intent Underlying a Statute Shall Be Given Effect When Determined by a Canon of Statutory Construction.

It is well established that if a court uses a canon of statutory construction to determine congressional intent, that intention must be given effect as being the law. In Home Concrete, the U.S. Supreme Court found:

Chevron added that “[i]f a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.”

Home Concrete, supra, 566 U.S. at 488 (plurality opinion) (quoting Chevron, supra, 467 U.S. at 843 n.9).

Once a court determines congressional intent, such intent cannot be frustrated by administrative action. Id. at 487. The panel decision does not address Home Concrete, which Appellees asserted was controlling.

C. It Is a Canon of Statutory Construction that When Congress Enacts a New Statute, Related Common Law Is Presumed to Remain in Force Absent a Clear Indication Otherwise by Congress.

One canon of statutory construction is that when Congress enacts a new statute, related common-law is presumed to remain in force and work in conjunction with the new statute, absent a clear indication otherwise by Congress. Norfolk, supra, 464 U.S. at 35-36.

D. In Anderson, This Court Used the Common-Law Presumption Canon to Determine that Section 7502 Did Not Repeal the Common-Law Mailbox Rule.

In Anderson, this Court found that, based upon the common-law presumption canon, Congress did not intend to repeal the common-law mailbox rule when enacting Section 7502. Anderson, supra, 966 F.2d at 491.

Therefore, in Anderson, this Court did what was described by the Supreme Court in Chevron and Home Concrete. This Court, employing a traditional tool of statutory construction, ascertained that Congress had an intention on the precise question at issue; Section 7502 did not repeal the common-law mailbox rule.

Just as the present Treasury Regulation purports to overrule Anderson, in Home Concrete, a Treasury Regulation based on the IRS's interpretation of a statute, sought to overrule a previous interpretation of the same statute by the Supreme Court. Home Concrete, supra, 566 U.S. at 483. The Supreme Court found that its earlier opinion “already interpreted the statute, and there is no longer any different construction that is consistent with . . . [that opinion] and available for adoption by the agency.” Id. at 487. This was because the earlier opinion did not conclude that the statute left a gap for an agency to fill. Id. at 489 (plurality modifying the test from Brand X, infra).

In Anderson, this Court determined congressional intent by applying a presumption derived from a canon of statutory construction. This is no less valid a finding of congressional intent than in a case where congressional intent is expressly stated in the statutory text or the legislative history. Chickasaw Nation v. U.S., 534 U.S. 84, 94 (2001). Anderson did not conclude that the statute left a gap for an agency to fill. Accordingly, as required by the Supreme Court in Chevron and Home Concrete, that congressional intention is the law and must be given effect. The Treasury Department does not have authority to enact a regulation that conflicts with the law, as interpreted by this Court in Anderson, and which repeals the common-law mailbox rule in this Circuit. There was no need to reach the two-step Chevron test because Anderson had decided the issue without concluding that the statute left a gap for an agency to fill.

E. Anderson Did Not Leave Room for Another Interpretation of Section 7502 and Never Stated that There Was a “Statutory Gap” in Section 7502.

The panel decision erroneously implied that Anderson left room for another interpretation of Section 7502. The panel decision was correct when it stated: “We did not hold in Anderson that our interpretation of the statute was the only reasonable interpretation.” Baldwin, supra, 921 F.3d at 843. It is true that Anderson never expressly stated in these exact words that its “interpretation of the statute was the only reasonable interpretation.” However, Anderson clearly rejected the Government's interpretation, and never stated that there was another reasonable interpretation.

The panel decision was incorrect when it referred to Anderson and stated: “In fact, our analysis made clear that our decision filled a statutory gap?' Baldwin, supra, 921 F.3d at 843. Anderson never stated that there was a “statutory gap.” Throughout Anderson, this Court made clear that it found congressional intent based upon the canon of statutory construction regarding the presumption that common-law still applies absent a clear manifestation of contrary intent. Anderson stated:

In this case, the district court adopted the Eighth Circuit's decision in Wood v. Commissioner, 909 F.2d 1155 (8th Cir.1990), interpreting section 7502 as not barring admission of extrinsic evidence to prove timely mailing of a federal income tax return or claim for refund. We agree with the district court and affirm its decision.

Anderson, supra, 966 F.2d at 489.

Anderson stated that “the language of section 7502 does not set forth an exclusive limitation on admissible evidence to prove timely mailing and does not preclude application of the common law mailbox rule.” Id. Anderson further found that:

[T]he language of section 7502 itself does not indicate that subsection (c) is the only exception to the statutory mailbox rule. But even if section 7502(c) is the only exception to the statutory mailbox rule requiring proof of mailing by postmark, it does not follow that the statutory mailbox rule announced in section 7502 is the exclusive means of proving timely mailing and filing.

Id. at 490.

“Neither the language of the statute nor Ninth Circuit precedent bars admission of extrinsic evidence to prove timely delivery.” Id. at 491. 

Anderson made the following findings regarding the absence of congressional intent to repeal the common-law mailbox rule:

[W]e agree with the Eighth Circuit that enactment of section 7502 did not displace the common law presumption of delivery. The statute itself does not reflect a clear intent by Congress to displace the common law mailbox rule. Accordingly, we decline to read section 7502 as carving out exclusive exceptions to the old common law physical delivery rule. “[A]bsent a clear manifestation of contrary intent, a newly-enacted statute is presumed to be harmonious with existing law and its judicial construction”

Anderson, supra, 966 F.2d at 491 (quoting Wood, supra, 909 F.2d at 1160).

The opinion in Wood, which was adopted in Anderson, did not rely upon a “statutory gap.” Contrary to the panel decision's statement, Anderson did not leave room for another interpretation of Section 7502, and never stated that there was a “statutory gap” in Section 7502.

F. The Panel Decision Misapplied Chevron.

Although the Chevron test need not have been applied here because of Anderson, the panel decision misapplied Chevron. See Baldwin, supra, 921 F.3d at 842-843. In Chevron, the Supreme Court found:

When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. . . .

The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent. See, e.g., . . . FMC v. Seatrain Lines, Inc., 411 U.S. 726, 745-746, 93 S.Ct. 1773, 1784-1785, 36 L.Ed.2d 620 (1973). . . . If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect.

Chevron, supra, 467 U.S. at 842-843 & n. 9 (citations omitted). See Federal Election Commission, supra, 454 U.S. at 32; Weyer v. Twentieth Century Fox Film Corp., 198 F.3d 1104, 1117 n.76 (9th Cir. 2000) (quoting Federal Election Commission).

Chevron held that a court can find “clear” congressional intent by using a canon of statutory construction. The Supreme Court did this in one of the cases cited in Chevron, FMC v. Seatrain Lines, Inc., supra. In FMC, the issue was how to interpret the Shipping Act. Id. at 726-728. The Shipping Act contained a list of categories of agreements that had to be filed with the Federal Maritime Commission. Id. at 726-728, 732. The Supreme Court was attempting to determine what kinds of agreements Congress intended to fit within the categories. Id. at 726-728, 732. The Supreme Court had to decide “whether a contract which calls for the acquisition of all the assets of one carrier by another carrier and which creates no ongoing obligations is an 'agreement' within the meaning of this section.” Id. at 728. The final category, or clause, listed in the Shipping Act was a summary or “catchall provision.” Id. at 732, 734. The Supreme Court stated:

At the outset, it must be recognized that the statutory language neither clearly embraces nor clearly excludes discrete merger or acquisition-of-assets agreements. . . . In this case, the statute is ambiguous in its scope and must therefore be read in light of its history and the governing statutory presumptions.

Id. at 731-732.

The Supreme Court used a canon of statutory construction:

It is, of course, a familiar canon of statutory construction that such clauses are to be read as bringing within a statute, categories similar in type to those specifically enumerated. See 2 J. Sutherland, Statutes and Statutory Construction s 4908 et seq. (3d ed. 1943) and cases there cited. Since the summary provision is explicitly limited to 'working arrangement(s)' (emphasis added), it is reasonable to conclude that Congress intended this limitation to apply to the specifically enumerated categories as well.

Id. at 734 (footnote omitted).

Although the Supreme Court in FMC found the statute “ambiguous” on its face, the Court concluded that based on the canon of statutory construction and the other interpretive tools it used, it found “clear indications” of congressional intent. Id. at 731-732, 745. Therefore, the Supreme Court found in FMC that use of a statutory construction canon can reveal “clear” congressional intent, even with a facially ambiguous statute. In Chevron, the Supreme Court relied on FMC and implicitly approved FMC.

The panel decision erroneously applied step one of the Chevron analysis when it concluded that because Section 7502 “is silent . . . on the question at hand,” it could advance to step two of Chevron. Baldwin, supra, 921 F.3d at 842843. However, statutory silence does not satisfy step one when the applicable canon of statutory construction is based on silence. Thus, the panel decision conflicts with this Court's decision in Lagandaon, supra, 383 F.3d at 987, 990-992, where this Court rejected an agency's statutory interpretation at step one of the Chevron analysis by using the common-law presumption canon to eliminate statutory ambiguity. Similarly, the panel decision conflicts with the recent Sixth Circuit opinion in Arangure, which stated:

[C]ourts must analyze the statutory text. But when the text standing alone does not supply an answer, courts must consider canons of interpretation. Here, a canon makes the statute's meaning clear. Thus, we reject the agency's contrary interpretation.

. . . .

Silence, however, does not necessarily connote ambiguity, nor does it automatically mean that a court can proceed to Chevron step two.

. . . .

If this canon [common-law presumption canon] applies here, then there is no ambiguity. . . . 

. . . .

The Supreme Court has repeatedly applied canons at step one. . . . And recently, the Supreme Court flatly stated: if “the canons supply an answer, 'Chevron leaves the stage.'”

. . . .

Several reasons support the idea that canons belong in Chevron step one.

. . . .

In sum, it is unsurprising that the Court has repeatedly applied canons in step one of the Chevron framework.

. . . .

The common-law presumption canon qualifies as a “traditional tool” of statutory interpretation.

. . . .

[T]he common-law presumption canon is a perfect fit for Chevron step one.

Arangure, supra, 911 F.3d at 336, 338-340, 342-343, 345 (citations and footnotes omitted).

Arangure also observed:

Chevron's first step is grounded in a recognition that “[t]he judiciary is the final authority on issues of statutory construction.” This means courts must do their best to determine the statute's meaning before giving up, finding ambiguity, and deferring to the agency. When courts find ambiguity where none exists, they are abdicating their judicial duty. Cf. Kent Barnett & Christopher J. Walker, Chevron in the Circuit Courts, 116 Mich. L. Rev. 1, 33-34 (2017) (concluding that circuit courts find ambiguity at Chevron step one 70% of the time, based on a sample of over 1,000 cases). This abdication by ambiguity impermissibly expands an already-questionable Chevron doctrine. See Voices for Int'l Bus. & Educ., Inc. v. NLRB, 905 F.3d 770, 780-81 (2018) Finding ambiguity where it does not exist-granting deference where it is not warranted . . . misuse[s] Chevron” “abrogates separation of powers without even the fig leaf of Congressional authorization.”). Unsurprisingly, when courts neglect their duty, the Supreme Court has not hesitated to reverse. See, e.g., Pereira, 138 S.Ct. at 2113-14 (“[T]he Court need not resort to Chevron deference, as some lower courts have done, for Congress has supplied a clear and unambiguous answer to the interpretive question at hand.”); id. at 2120 (Kennedy, J., concurring) (chiding lower courts for “engaging] in cursory analysis” in Chevron step one and rushing to “reflexive deference”); Kingdomware Techs., Inc. v. United States, U.S. . . . (2016) (reversing lower court's Chevron-based decision because the statute was unambiguous); United States v. LaBonte, 520 U.S. 751 . . . (1997) (same). In short, Chevron's first step is not a free pass.

Arangure, supra, 911 F.3d at 338 (citations and footnotes omitted).

The panel decision should have found that based upon Anderson, the congressional intent underlying Section 7502 was to have the common-law mailbox rule co-exist with Section 7502, and that this congressional intent was evident based upon use of the canon of statutory construction stating that “absent a clear manifestation of contrary intent, a newly-enacted statute is presumed to be harmonious with existing law and its judicial construction.” Anderson, supra, 966 F.2d at 491.

The decision also should have found that the common-law canon is a “traditional tool of statutory construction” which has allowed us to “ascertain[ ] that Congress had an intention on the precise question at issue,” whether Section 7502 repeals the common-law mailbox rule, and therefore, based on Chevron “that intention is the law and must be given effect” by the courts and the Treasury Department. See Chevron, supra, 467 U.S. at 843 n.9.

Finally, the decision should have followed Home Concrete and found that because Anderson did not conclude that the statute left a gap for an agency to fill, Anderson must prevail over the Regulation.

The panel decision misapplied the first step of the Chevron analysis because it failed to recognize that the first question to be answered under that analysis could be answered with statutory interpretation aided by a canon of statutory construction that is based on statutory silence. “Congress did directly speak to the precise question at issue” (Chevron, supra, 467 U.S. at 842) here by not indicating any intent to repeal the common-law mailbox rule. Because of the common-law presumption canon, congressional silence revealed congressional intent, as opposed to creating ambiguity. See Arangure, supra, 911 F.3d at 337 n.2.

The natural consequence of the panel decision is that federal agencies are now free to repeal common law when a statute is silent as to its impact on common law, since such silence is now deemed to create a gap which administrative agencies have the power to fill.

G. The Panel Decision Overrules Anderson.

The panel decision conflates the issue of whether Anderson bars this Court from deferring to the Regulation, with whether such deference overrules Anderson:

Finally, our prior interpretation of IRC § 7502 in Anderson does not bar our decision to defer to the agency's conflicting, but nonetheless reasonable, construction of the statute. . . . But “[a] court's prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion.” National Cable & Telecommunications Association v. Brand X Internet Services, 545 U.S. 967, 982 . . . (2005). We did not hold in Anderson that our interpretation of the statute was the only reasonable interpretation. In fact, our analysis made clear that our decision filled a statutory gap. Under Brand X, the Treasury Department was free to fill that gap by adopting its own reasonable interpretation of the governing statute.

Baldwin, supra, 921 F.3d at 843.

The Brand X test was modified in Home Concrete to be whether a court concluded that the statute left a gap for an agency to fill. Home Concrete, supra, 566 U.S. at 489 (plurality opinion). A fifth Justice would “abandon” Brand X. Home Concrete, supra, 566 U.S. at 496 (Scalia, J.). The test is not satisfied here because Anderson did not conclude that the statute left such a gap.

It is true that Anderson “does not bar our [this court's] decision to defer to the agency's conflicting . . . construction of the statute,” but only because this Court is free to overrule its own decisions. Since Anderson found that Congress did not intend to repeal the common-law mailbox rule when it enacted Section 7502, the Treasury Department could not issue a regulation which was contrary to such finding. The only basis upon which the panel could have found the subject Regulation to be valid would have been to overrule Anderson. The panel decision's deference to the Regulation creates an irreconcilable conflict with Anderson.

H. If the Treasury Regulation Is Upheld, It Should Not Apply Retroactively in This Case.

The panel decision erroneously applied the new Treasury Regulation retroactively to Appellees by ignoring this Court's decisions that limit retroactive application of administrative regulations. “'The decision of the Commissioner . . . to make a ruling or regulation retroactive is reviewed for an abuse of discretion.'. . . 'The Commissioner abuses his discretion if giving retroactive effect to a regulation produces an unduly harsh result for an individual taxpayer. . . . 'Reliance on settled law or on a specific, favorable ruling constitutes evidence of a harsh result.'” Meserve, supra, 152 F.3d at 1184 (citations omitted).

Additionally, “when we [9th Circuit] overturn our own precedent following a contrary statutory interpretation by an agency . . . we analyze whether the agency's statutory interpretation (to which we defer) applies retroactively under the test we adopted in Montgomery Ward, if the issue is fairly raised by the parties” See Garfias-Rodriguez, supra, 702 F.3d at 520 (citing Montgomery Ward).

Under the “unduly harsh result” test of Meserve, or the multi-factor retroactivity analysis of Montgomery Ward, this Court should not apply the new Regulation retroactively to the Appellees in this case if Anderson has been overruled. In this Circuit, the mailbox rule was applicable despite Section 7502 for many years before and after Anderson. The new Regulation abruptly departs from a well-established practice. Appellees believed in good faith that because their mailing occurred months before the due date, there was a presumption that it would be delivered before that date. It was not until August 2011, that the final Regulation was published, alerting taxpayers that certified or registered mail was the only method to prove delivery. Retroactive application of the Regulation would severely burden Appellees and inflict an unduly harsh result by denying them their $167,663.00 tax refund.

In addition, when a decision of this Circuit overrules a prior decision, the new decision is not given retroactive effect if doing so “could produce substantial inequitable results.” Nunez-Reyes v. Holder, 646 F.3d 684, 690-693 (9th Cir. 2011).

III. CONCLUSION

The panel decision fails to follow controlling Supreme Court authority applicable to this case, fails to follow this Circuit's opinion in Anderson holding that Congress did not intend for Section 7502 to repeal the common-law mailbox rule, and provides administrative agencies with the power to repeal common-law anytime a statute is silent as to whether it repeals common-law. Appellees respectfully request that this case be reheard en banc.

Dated: May 29, 2019

CHAMBERLIN & KEASTER LLP

By: Robert W. Keaster
Allan J. Favish
Attorneys for Appellees
HOWARD L. BALDWIN AND KAREN BALDWIN

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