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Foreign Corporation Urges Reversal of Bearer Share Regs Decision

JAN. 5, 2018

Good Fortune Shipping SA v. Commissioner

DATED JAN. 5, 2018
DOCUMENT ATTRIBUTES

Good Fortune Shipping SA v. Commissioner

GOOD FORTUNE SHIPPING SA,
Petitioner-Appellant,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.

[ORAL ARGUMENT NOT YET SCHEDULED]

IN THE
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

On Appeal from a Final Decision
of the United States Tax Court

REPLY BRIEF FOR APPELLANT

STEPHEN P. FLOTT
JOSEPH G. SIEGMANN
BRITTANY N. ORAVEC
FLOTT & CO. PC
2200 Wilson Blvd, Suite 320
Arlington, VA 22201
(703) 525-5110


TABLE OF CONTENTS

TABLE OF AUTHORITIES

GLOSSARY

STATUTES AND REGULATIONS

SUMMARY OF ARGUMENT

ARGUMENT

I. The Commissioner Conflates Ownership with Proof of Ownership and Regulates it Contrary to Congress's Intent

II. The Treasury Department Violated Chevron Step Two by Regulating Beyond Congress's Silence in Section 883

1. Documentation Used by the IRS to Substantiate Ownership is Identical for all Types of Ownership

2. The Commissioner Cites Cases Irrelevant to the Challenged Regulations

CONCLUSION

Certificate of Compliance with Type-Volume Limit, Typeface Requirements, and Type-Style Requirements

CERTIFICATE OF SERVICE

TABLE OF AUTHORITIES

CASES

Alexander v. Sandoval 532 U.S. 275 (2001)

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

Competitive Enter. Inst. v. United States DOT 863 F.3d 911 (D.C. Cir. 2017)

INDOPCO, Inc. v. Commissioner 503 U.S. 79, 84 (1992)

Mayo Found. For Med. Educ. And Research v. United States 562 U.S. 44 (2011)

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran 456 U.S. 353 (1982)

Nat'l Mining Ass'n v. MSHA 116 F.3d 520 (D.C. Cir. 1997)

New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934)

Personal Watercraft Indus. Ass'n v. Department of Commerce 48 F.3d 540 (D.C. Cir. 1995)

Public Citizen, Inc. v. US Dep't of Health & Human Servs. 332 F.3d 667 (D.C. Cir. 2003)

Quinn v. Comm'r 2012 Tax Ct. Memo LEXIS 178 (2012)

Solid Waste Agency v. United States Army Corps of Eng'rs 531. U.S. 159 (2001)

STATUTES

26 U.S.C. § 883

26 U.S.C. § 883(c)

26 U.S.C. § 883(c)(1)

42 U.S.C. § 1320c-3(a)(14)

REGULATIONS

Treas. Reg. § 1.883-4(b)(1)(ii)

Treas. Reg. § 1.883-4(c)(1)

Treas. Reg. § 1.883-4(d)(1)

Treas. Reg. § 1.883-4(d)(4)(i)(c)

OTHER AUTHORITIES

Legislative History

H.R. Conf. Rep. 108-755 (2004), reprinted in 2004 U.S.C.C.A.N. 1341

Secondary Sources

American Jobs Creation Act of 2004 Pub. L. 108-357, 118 Stat. 1418 (2004)

2008 Schedule S (Form 1120-F): Exclusion of Income From the International Operation of Ships or Aircraft Under Section 883, Retrieved from https://www.irs.gov/pub/irs-prior/f1120fs--2008.pdf

OECD, Steering Group on Corporate Governance, Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes (November 2001), http://www.oecd.org/daf/ca/43703185.pdf

GLOSSARY OF ABBREVIATIONS AND ACRONYMS
(D.C. Cir. Rule 28(a)(3))

App.

Appendix to Brief for Appellant

Br.

Appellee's Brief

Challenged Regulations

Treas. Reg. §§ 1.883-4(b)(1)(ii); 1.883-4(c)(1); 1.883-4(d)(1); 1.883-4(d)(4)(i)(c)

FICA

Federal Insurance Contributions Act

House Report

House Conference Report

IRC

Internal Revenue Code

IRS

Internal Revenue Service

Jobs Act

American Jobs Creation Act of 2004


STATUTES AND REGULATIONS

Pursuant to D.C. Circuit Rule 28(a)(5), all applicable statutes and regulations are contained in the Addendum to the Brief for Appellant.

SUMMARY OF ARGUMENT

In addressing Good Fortune's argument on step one of the test promulgated in Chevron, U.S.A., Inc. v. Natural Resource Defense Council, 467 U.S. 837 (1984), the Commissioner asks the wrong question in asserting Congress has not directly spoken to the issue on appeal.1

The precise question at issue in this case is whether ownership may be denied to the holders of bearer shares by denying attribution of those shares to their holders. In making changes to section 883(c)(1), Congress made ownership and residence of the shareholders the basis for the exemption, instead of the country where the vessel owner is organized.

The Treasury Regulations employ attribution to assign ownership of various types of entities to their ultimate beneficial owners. The Challenged Regulations deny attribution of bearer shares, thereby depriving holders of such shares the benefits of their ownership for purposes of the exemption.

Good Fortune and Commissioner agree that the statute does not explain how a taxpayer proves ownership. However, proof of ownership cannot be used as a cover to justify the Challenged Regulations. The Treasury Department has in effect prohibited a valid form of ownership — bearer shares — something the statute clearly did not envision.

With respect to the second step of Chevron, the Commissioner seeks to justify the Challenged Regulations by turning the issue of proof of ownership on its head. The Commissioner claims that the Challenged Regulations are warranted because the use of bearer shares gives foreign corporations a simple way to circumvent the requirements of the exemption.2 The reality is quite different. The Commissioner has the power to require the foreign corporation to prove to the Commissioner's satisfaction that it meets the ownership and residence requirements of the exemption. The burden is on the taxpayer, not the Commissioner, in this instance.

The Commissioner's reliance on Mayo Found. For Med. Educ. And Research v. United States, 562 U.S. 44, 49 (2011), to justify the Challenged Regulations is misplaced.3 Before the bright-line rule adopted by the regulations challenged in Mayo, the IRS had to decide on a case by case basis whether employers were liable for FICA.4 Unlike Mayo, there is no logical bright-line to be drawn in this case because the validity of section 883 exemptions can only be assessed on a case by cases basis.

The Commissioner asserts that, when Congress delayed the effective date of the Treasury Regulations, it thereby approved of the Challenged Regulations. As will be shown, that assertion is not supported by the legislative record or case law.

Finally, the Commissioner cites a handful of cases that hold that regulations do not have to “make progress on every front before it can make progress on any front.”5 As will be pointed out, these cases are irrelevant and inapplicable to the validity of the Challenged Regulations.

For these reasons, as explained fully below, the Tax Court's decision should be reversed and the Challenged Regulations should be held invalid.

ARGUMENT

Good Fortune concurs with the Commissioner that IRC section 883(c)(1) permits the Treasury Department to promulgate reasonable regulations governing the proving of ownership. However, authority to regulate proof of ownership does not authorize the Treasury Department to do an end around of the statutory language by prohibiting attribution of bearer shares. In that respect, the Challenged Regulations run afoul of step one of Chevron.

The Challenged Regulations fail step two of Chevron because they are based on a false premise, namely, that by preventing taxpayers from exploiting a simple method of circumventing the requirements of section 883(c) they further Congress's objective of preventing abuse of the section. The Commissioner is well aware that taxpayers are required to prove to the satisfaction of the IRS their right to the exemption. Good Fortune is simply fighting for the opportunity to prove that its owners are residents of a qualified country as described in the Treasury Regulations implementing IRC section 883 and accordingly it qualifies for the exemption. If it cannot satisfy the Commissioner as to its ownership and the residence of its ultimate beneficial owners, the exemption will be denied. The a priori denial of attribution of bearer shares does not serve any reasonable objective of the statute. Every exemption examined by the Commissioner involves the same scope of work, and most importantly, the burden is on the taxpayer to prove beneficial ownership to the Commissioner's satisfaction. This is the exact opposite of the facts considered by the Court in Mayo.6

I. The Commissioner Conflates Ownership with Proof of Ownership and Regulates it Contrary to Congress's Intent

The crux of Chevron step one is whether the precise question at issue was addressed by Congress in the statutory language.7 In this respect, the Commissioner asks the wrong question in asserting that Congress has not directly spoken to the issue on appeal.8

The precise question at issue in this case is whether ownership can be denied to the holders of bearer shares by denying attribution of those shares to their holders. The Commissioner has summarized the intent of the amendment to section 883 that is at the heart of this case as follows: “Congress implemented that intent by requiring shippers both to be organized in a country providing a reciprocal exemption and to be more than half owned by shareholders residing in such countries.”9 In short, Congress emphasized ownership and residence of the shareholders as the basis for the exemption, not simply the country in which the vessel owner is organized.

The Treasury Regulations employ attribution to assign ownership of various types of entities to their ultimate beneficial owners. Thus, shares in corporations are attributed to their owners in proportion to the shares each owner holds. Shares owned by partnerships are attributed based on the profit/loss percentage of each partner. The Challenged Regulations deny attribution of bearer shares, thereby depriving holders of such shares the benefits of their ownership for purposes of the exemption.

Good Fortune and Commissioner agree that the statute does not explain how a taxpayer proves ownership. However, using proof of ownership as a cover, the Challenged Regulations exceed the Treasury Department's rulemaking authority by prohibiting a valid form of ownership, something the statute clearly did not envision.

Quoting Judge Chiechi during argument in the Tax Court, “Congress decided it would be based upon who owned the company through attribution or otherwise and whether they lived in the country that provided the exemption.”10 The Treasury Regulations use attribution as the mechanism by which ownership is acknowledged. Attribution is not proof of ownership, but it is tantamount to ownership because without attribution ownership is meaningless. The Commissioner argues that the Challenged Regulations only limit attribution of bearer shares, but that in doing so eliminates bearer shares as a valid form of ownership.11 The Commissioner states Good Fortune confuses ambiguity and silence by claiming that ambiguity is treated differently than silence.12 In fact, there is neither silence nor ambiguity in the statute regarding valid forms of ownership. Bearer shares are a valid form of ownership. By not allowing them to be attributed to their owners, the Challenged Regulations violate step one of Chevron.

II. The Treasury Department Violated Chevron Step Two by Regulating Beyond Congress's Silence in Section 883

With respect to the second step of Chevron, the Commissioner seeks to justify the Challenged Regulations by turning the issue of proof of ownership on its head. The Commissioner claims the Challenged Regulations are warranted because bearer shares provide foreign corporations a simple way to circumvent the requirements of the exemption.13 This assertion is based on the false premise that the Commissioner initiates an investigation of the ownership of a foreign corporation to determine qualification for the exemption. The reality is quite the opposite. On audit, the Commissioner demands the foreign corporation prove to the satisfaction of the Commissioner that the foreign corporation meets the ownership and residence requirements of the exemption. The Commissioner has no obligation to do its own investigation. The burden is on the taxpayer, not the Commissioner, in this instance.

As a consequence, the Commissioner's reliance on Mayo to justify the Challenged Regulations is misplaced.14 Before the bright-line rule adopted by the regulations challenged in Mayo, the IRS decided on a case by case basis whether employers were liable for FICA.15 To avoid the administrative time required to examine each employee at each teaching hospital throughout the country, not just the one at issue in Mayo, the regulations at issue drew the line at 40 hours per week to classify those working 40 or more hours per week as employees liable for FICA and those working fewer as students exempt from FICA.16 Unlike Mayo, there is no logical bright-line to be drawn in this case because section 883 exemptions can only be assessed on a case by case basis.

The Commissioner argues that some forms of ownership are inherently valid and downplays their potential for abuse to exaggerate the potential for abuse of bearer shares.17 The “safeguards” in the Treasury Regulations preventing abuse are forms of documentation said to be more reliable than others.18 However, the documentation is the same relied upon by all forms of ownership whether it is a bank statement or ownership statement. The only difference between bearer shares and registered shares is a person's name written in a book.

Before adoption of the regulations at issue in Mayo, the IRS examined each student/employee's specific situation to assess whether FICA taxes should be withheld.19 Adoption of the bright-line rule shifted the burden to the taxpayer. In the instant case, taxpayers claim the section 883 exemption by filing a Form 1120-F with a Schedule S, which describes the basis of exemption and the ownership test that the taxpayer satisfies.20 Once filed, the Commissioner may examine the return or not. The Challenged Regulations do not save the Commissioner any “burdensome inquiry”, because it still must undertake an examination of the return regardless of the form of ownership.21

The information on Schedule S is not self-authenticating. It reports facts that the taxpayer asserts are true under penalties of perjury. Like every other exemption or deduction claimed on a tax return, the taxpayer must provide documentation to substantiate the information reported on the schedule.22 This is true whether the taxpayer reported owning registered shares directly, indirectly, through a nominee, trustee, or straw man. Unlike Mayo, there is no “burdensome inquiry” avoided by excluding bearer shares, because like every other audit the taxpayer must prove it is entitled to the claimed exemption.23

In addition to Mayo, the Commissioner repeats a claim made in the Tax Court, namely, that Congress concurred in the Challenged Regulations when it enacted section 423 of the Jobs Act, citing the House Report.24

The Commissioner quotes the House Report, not the language of the Senate Amendment.25 As there was no House provision, the Present Law section of the House Report simply sets out a summary of existing law, namely, section 883; a statement that Treasury Regulations were issued under that law to be effective as of August 26, 2003, and a very general overview of the purpose and scope of the regulations.26 As in all conference reports, such general descriptions of existing law are provided to explain the background to the action taken by the House or Senate that has to be reconciled between the two versions of the statute under consideration.

The Senate Amendment simply “delays the effective date . . . so that they apply to taxable years of foreign corporations seeking qualified foreign corporation status beginning after December 31, 2004.”27 It is a distortion to claim that Congress's decision not to alter Section 883 in any way implies that it approved the Challenged Regulations. The quoted language simply references existing law and makes no reference to any specific provision of the Treasury Regulations. The Present Law section certainly does not speak to Congress's intent with the enactment of section 423.28 Contrary to the Commissioner's assertion, it most definitely cannot be inferred that Congress approved the Challenged Regulations.

The Commissioner cites Public Citizen, Inc. v. US Dep't of Health & Human Servs., 332 F.3d 667, 668 (D.C. Cir. 2003) as support for the contention that Congress implicitly ratified administrative interpretation of a statute by re-enacting it without change.29

In Public Citizen, Inc. the court considered whether notice of an organization's disposition of a complaint must include procedural or substantive information. A complainant asked a peer review organization to examine the medical services his deceased wife received through her Medicare coverage.30 The relevant statute stated the complainant was to receive notification of the “organization's final disposition of the complaint.”31 The Health Care Financing Administration of the Department of Health and Human Services interpreted the statute in its Peer Review Organization Manual to require only notification of the procedural disposition.32 In support of its position, Department of Health and Human Services in part argued that, because Congress re-enacted the relevant statute without change, it was presumed to have known the agency's interpretation and implicitly ratified it.33

The court disagreed.34 It determined that there were no regulations nor was the Peer Review Organization Manual a clear and available agency interpretation of which Congress could have been aware.35 Furthermore, Congress did not re-enact the statute without change but rather enacted isolated amendments to other provisions.36 The court also acknowledged that this implicit ratification is subject to many caveats, one in particular being the “extreme care” given to this concept of implicit ratification,37 and that this “argument deserves little weight in the interpretive process.”38

In the case at hand, the fact that the Treasury Regulations had been issued at the time Congress enacted section 423 of the Jobs Act extending their effective date by one year does not by itself indicate that it intended to ratify them. The skimpy legislative history of the section confirms that all Congress knew or intended was that it was postponing the effective date of the regulations, nothing more.

1. Documentation Used by the IRS to Substantiate Ownership is Identical for all Types of Ownership

The Commissioner accepts a variety of documentation to prove ownership, including ownership statements, “detailed statements substantiating the identity of the beneficial owners” for nominees,39 an “'intermediary ownership statement' signed 'under penalties of perjury,'”40 among others. The Commissioner claims these safeguards are set in place for nominees and trustees but that they would not work well for bearer shares because of ease of transfer of bearer share certificates.41 The Commissioner also claims these documents “make assertions about the possession, and ownership, of Good Fortune's shares in 2007 . . . unlike corporate records listing the owners of registered shares — are merely post hoc assertions, not contemporaneous records of ownership. And the Commissioner has no reliable means of verifying or refuting those assertions.”42 This argument is both false and irrelevant. To repeat, the taxpayer must satisfy to the Commissioner that it qualifies for the exemption. If it cannot do so, the Commissioner denies the exemption.

The Commissioner purports to accept statements as true if they are “signed under penalties of perjury,”43 but the “post hoc assertions” made by companies with bearer shares are also signed under penalties of perjury.44 If the penalties of perjury statement is sufficient to substantiate ownership through nominees and trustees, why is it not sufficient for bearer shares as well? The Commissioner even recognizes the lack of reliability in these types of documentation in its brief, stating, for example, “a nominee is very likely to have a relationship with the beneficial owner,”45 and “trusts typically require some kind of signed writing.”46 If there is this much doubt about the reliability of this documentation, but it is still sufficient to prove ownership through nominees and trustees, it ought to be sufficient for bearer shares.

Further, the Commissioner says documentation surrounding loans and other financial transactions related to the company and vessel “do nothing to demonstrate the identity of the holder of bearer shares on any given date.”47 However, all documentation that a taxpayer provides is taken together to determine the beneficial owner of the shares on a given date. The financial documentation, in particular, follows the money from the loan to the investment in the shipping company, dividends and subsequent beneficial ownership of the bearer share.

The claim that bank documents are less reliable than “corporate records listing the owners of registered shares”48 does not bear scrutiny. Documents negotiated between unrelated parties dealing at arm's length with millions of dollars at stake are significantly more reliable than documentation, such as a share registry or a share certificate, produced in-house for companies with a sole shareholder and director.

When considering the potential abuse through nominees, trustees, and straw men the arbitrary treatment of bearer shares is brought fully into focus. As the OECD report states, “[t]he use of nominees, however, reduces the usefulness of the shareholder register or the shareholder list because the shareholder of record may not be the ultimate beneficial owner;”49 and:

Corporate service providers regularly design structures to ensure that the beneficial owner remains anonymous and often act as the intermediary between the client and the authorities in the jurisdiction of incorporation. Furthermore, they routinely supply nominee shareholders and nominee directors so that the beneficial owners' names do not appear on any company or official records. Other intermediaries, such as private banks that cater to high net worth individuals, have also been known to establish shell entities to help their clients conceal their identities.50

In any case, the Commissioner's argument is entirely irrelevant. Section 883 is an exemption, and the Commissioner has the authority to disallow it unless the taxpayer proves it qualifies for the exemption. The Commissioner gains nothing by prohibiting taxpayers with bearer shares from attempting to prove the beneficial ownership of bearer shares, as it bears no burden.51

2. The Commissioner Cites Cases Irrelevant to the Challenged Regulations

The Commissioner cites a handful of cases to support the proposition that “'[a]n agency does not have to make progress on every front before it can make progress on any front'” to justify the Challenged Regulations.52 These cases are irrelevant and the argument is inapplicable.

The first case cited in support of the argument is National Mining Association v. MSHA.53 This statement was written into the opinion surrounding an argument that the agency acted arbitrarily and capriciously in failing to adopt proposed standards that would have been imposed on escape tunnels from mines.54 The Mine Safety and Health Administration ignored the proposed standards because they fell “outside the scope of rulemaking,” and the court took that “to mean that the agency was choosing to impose some standards without addressing 'everything that could be thought to pose any sort of problem.'”55

The second case was Personal Watercraft Industry Association v. Department of Commerce which dealt with the National Oceanic and Atmospheric Administration's regulation of motorized personal watercraft within a marine sanctuary, and its failure to regulate other watercraft within the same marine sanctuary.56 This quote was again used by the court to explain that regulations do not have to address every possible problem before addressing any problem.57

The final case cited was Competitive Enter. Inst. v. United States DOT.58 In this case Petitioner alleged the Department of Transportation may not single out e-cigarettes for regulation on a plane because, among other reasons, other contaminants and substances were not regulated.59 The court held against the Petitioner and referenced the same quote as the aforementioned two cases.60

There are key differences between these cases and the instant case. First, the cited cases deal with public safety and health concerns and in each case the relevant agency enacted rules or regulations to mitigate specific harms to persons or habitats but did not regulate all potential harms. The case at hand is not a public safety case. It is not even a public interest case. The persons affected by this ruling are individuals that privately own shares in foreign shipping companies. There is no public benefit from the ban on bearer shares.

Second, the overarching holding in these cases is that agencies may regulate to the extent they can when they can, even if what they do only remotely improves the situation. Agencies have the ability to return later and further regulate that which they could not at the time they issued their regulations. That is not the case at hand. Here, the Challenged Regulations disallow bearer shares because the Commissioner claims it is difficult to prove who really owns them at any point in time. However, that is a problem for the taxpayer not the Commissioner because if a taxpayer cannot satisfy to the Commissioner the ultimate beneficial ownership of more than fifty percent of its shares, the Commissioner will deny the exemption and impose tax.

CONCLUSION

For the reasons stated above and in Good Fortune's opening brief, the Tax Court decision should be reversed, and the Challenged Regulations should be invalidated.

Respectfully submitted,

STEPHEN P. FLOTT

JOSEPH G. SIEGMANN
BRITTANY N. ORAVEC
Flott & Co. PC
2200 Wilson Boulevard, Suite 320
Arlington, VA 22201
Telephone: (703) 525-5110 Ext 126
email: sflott@flottco.com

Dated: January 5, 2018

FOOTNOTES

1Br. p. 19.

2Br. p. 21.

3Br. p. 17, 30, 31.

4Mayo Found. For Med. Educ. And Research, 562 U.S. at 49.

5Nat'l Mining Ass'n v. MSHA, 116 F.3d 520, 549 (D.C. Cir. 1997) (quoting Personal Watercraft Indus. Ass'n v. Dep't of Commerce, 48 F.3d 540, 544 (D.C. Cir. 1995)).

6Mayo, 562 U.S. at 49-50.

7Chevron, U.S.A., Inc., 467 U.S. at 842-43.

8Br. p. 19.

9Br. p. 21.

10Transcript p. 56-57; App. 072-073.

11Br. p. 25, 27-28.

12Br. p. 27.

13Br. p. 21.

14Br. p. 17, 30, 31.

15Mayo, 562 U.S. at 49.

16Mayo, 562 U.S. at 49-50.

17Br. p. 35-41.

18Br. p. 37.

19Mayo at 49.

20E.g., Internal Revenue Service. (2008). Schedule S (Form 1120-F): Exclusion of Income From the International Operation of Ships or Aircraft Under Section 883. Retrieved from https://www.irs.gov/pub/irs-prior/f1120fs--2008.pdf.

21Br. p. 31.

22See Quinn v. Comm'r, 2012 Tax Ct. Memo LEXIS 178, 6 (2012); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292. U.S. 435, 440 (1934).

23Br. p. 31.

24Br. p. 25-26 (citing H.R. Conf. Rep. 108-755, at 418 (2004), reprinted in 2004 U.S.C.C.A.N. 1341, 1486).

25Id.

26H.R. Conf. Rep. 108-755, at 418 (2004), reprinted in 2004 U.S.C.C.A.N. 1341, 1486.

27Id.

28Id.

29Public Citizen, Inc., 332 F.3d at 668 (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 382 n.66, 72 L. Ed. 2d 182, 102 S. Ct. 1825 (1982).

30Public Citizen, Inc., 332 F.3d at 657.

31Public Citizen, Inc., 332 F.3d at 657 (citing 42 U.S.C. § 1320c-3(a)(14)).

32Public Citizen, Inc., 332 F.3d at 657-58, 660.

33Id. at 668.

34Id. at 668-69.

35Id.

36Id.

37Public Citizen, Inc., 332 F.3d at 668 (citing Solid Waste Agency v. United States Army Corps of Eng'rs, 531 U.S. 159, 169, 148 L. Ed. 2d 576, 121 S. Ct. 675 (2001)).

38Public Citizen, Inc., 332 F.3d at 668 n.21 (citing Alexander v. Sandoval, 532 U.S. 275, 292, 149 L. Ed. 2d 517, 121 S. Ct. 1511 (2001)).

39Br. p. 38.

40Id.

41Br. p. 15, 39.

42Br. p. 33.

43Br. p. 38.

44Br. p. 33.

45Br. p. 39, emphasis added.

46Br. p. 40, emphasis added.

47Br. p. 34.

48Br. p. 33.

49OECD, Steering Group on Corporate Governance, Behind the Corporate Veil: Using Corporate Entities for Illicit Purposes 31 (November 2001), http://www.oecd.org/daf/ca/43703185.pdf.

50Id. at 33.

51Similarly, the IRS accepts bearer shares from corporations to prove their residency in other parts of the IRC. This was discussed in both Good Fortune's brief and the Commissioner brief. To that end, Good Fortune agrees the Commissioner's statement that a regulatory preamble published in the Federal Register does not constitute “legislative history.” Br. 43. Good Fortune intended to convey that this explanatory language from the Treasury Department acknowledged the acceptability of a corporation's use of bearer shares to meet its burden of proving its country of residency elsewhere in the IRC.

52Br. p. 35-36.

53Br. p. 36.

54Nat'l Mining, 116 F.3d at 549.

55Nat'l Mining, 116 F.3d at 549 (quoting Personal Watercraft Indus. Ass'n v. Dep't of Commerce, 48 F.3d 540, 544 (D.C. Cir. 1995)).

56Personal Watercraft Indus. Ass'n, 48 F.3d at 544.

57Id.

58Competitive Enter. Inst. v. United States DOT, 863 F.3d 911, 920 n. 7 (D.C. Cir. 2017).

59Competitive Enter. Inst., 863 F.3d at 920 n. 7.

60Id.

END FOOTNOTES

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