                 FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

TUALATIN VALLEY BUILDERS              
SUPPLY, INC.,                              No. 05-36173
               Plaintiff-Appellant,
               v.                           D.C. No.
                                          CV-04-01581-HA
UNITED STATES OF AMERICA,                    OPINION
              Defendant-Appellee.
                                      
       Appeal from the United States District Court
                for the District of Oregon
       Ancer L. Haggerty, District Judge, Presiding

                 Argued and Submitted
           December 6, 2007—Portland, Oregon

                   Filed April 10, 2008

  Before: Diarmuid F. O’Scannlain, Susan P. Graber, and
          Consuelo M. Callahan, Circuit Judges.

                Opinion by Judge Graber;
        Special Concurrence by Judge O’Scannlain




                           3733
        TUALATIN VALLEY BUILDERS v. UNITED STATES   3735


                      COUNSEL

Marc K. Sellers, Schwabe Williamson & Wyatt, P.C., Port-
land, Oregon, for the plaintiff-appellant.
3736       TUALATIN VALLEY BUILDERS v. UNITED STATES
David I. Pincus and Samuel A. Lambert, Tax Division,
Department of Justice, Washington, D.C., for the defendant-
appellee.


                              OPINION

GRABER, Circuit Judge:

   The main question before us is whether the Internal Reve-
nue Service (“IRS”) exceeded its statutory authority when it
promulgated Revenue Procedure 2002-40.1 We hold that the
IRS acted within its authority. Because Plaintiff Tualatin Val-
ley Builders Supply, Inc., failed to meet the Revenue Proce-
dure’s deadline for claiming the benefit of a temporary five-
year net operating loss carryback, we affirm the district
court’s grant of summary judgment to the United States.

      FACTUAL AND PROCEDURAL BACKGROUND

  The material facts are not in dispute. Plaintiff is a dissolved
Oregon corporation that has completed a Chapter 11 bank-
ruptcy proceeding. Plaintiff’s 2001 tax year ended on March
31, 2001. On its 2001 income tax return, timely filed in
December 2001, Plaintiff claimed a net operating loss of
about $5 million.2
  1
     A Revenue Procedure is a “statement of procedure that affects the
rights or duties of taxpayers or other members of the public under the
Code and related statutes or information that, although not necessarily
affecting the rights and duties of the public, should be a matter of public
knowledge.” Treas. Reg. (26 C.F.R.) § 601.601(d)(2)(i)(b). “Revenue Pro-
cedures usually reflect the contents of internal management documents,
but, where appropriate, they are also published to announce practices and
procedures for guidance of the public.” Id. § 601.601(d)(2)(vi).
   2
     A taxpayer’s net operating loss for a given taxable year is the excess
of deductions over gross income. Internal Revenue Code (26 U.S.C.)
(I.R.C.) § 172(c). The Internal Revenue Code permits a taxpayer to carry-
            TUALATIN VALLEY BUILDERS v. UNITED STATES                  3737
   On the same date that it filed its 2001 income tax return,
Plaintiff filed for a “quick refund” for tax year 1999.3 Plain-
tiff’s 1999 quick refund application used a net operating loss
carryback from 2001. When Plaintiff filed that application, its
2001 net operating loss could be carried back only two years.
I.R.C. § 172(b)(1)(A) (2001).4 The IRS allowed Plaintiff’s
tentative adjustment for 1999.

   On March 9, 2002, a few months after Plaintiff filed its
2001 income tax return and application for a quick refund,
Congress amended § 172 of the Internal Revenue Code to
provide a five-year net operating loss carryback period for tax
years ending in 2001 and 2002. Job Creation and Worker
Assistance Act of 2002 (“JCWA Act”), Pub. L. No. 107-147,
§ 102(a), 116 Stat. 25-26, codified at I.R.C. § 172(b)(1)(H).5
Congress also provided that a taxpayer could elect not to take
advantage of the new five-year carryback provision. Such an
election would be allowed “in such manner as may be pre-
scribed by the Secretary [of the Treasury] and shall be made
by the due date (including extensions of time) for filing the

back a net operating loss to prior tax years and carryforward a net operat-
ing loss to future tax years. Id. § 172(b)(1)(A). As a general rule, a carry-
back is limited to two years and a carryforward is limited to 20 years. Id.
The total net operating loss carrybacks and carryforwards for a given tax
year are allowed as a deduction against taxable income. Id. § 172(a). Sim-
ply stated, a taxpayer that has a net operating loss for a given tax year may
use that loss to offset income in prior years, later years, or both.
   3
     A “quick refund” refers to an application for tentative adjustment on
IRS Form 1139, “Corporation Application for Tentative Refund,” under
Treas. Reg. § 1.6411-1(b)(1).
   4
     Although I.R.C. § 172 has been amended since 2001, the text of the
subparagraph that provides for the two-year carryback period remains
unchanged. Compare I.R.C. § 172(b)(1)(A) (2001) with I.R.C. § 172
(b)(1)(A) (2007). Therefore, unless the context requires otherwise, we
omit the year of the I.R.C. from our citations.
   5
     In its briefing, the government aptly describes JCWA Act § 102 as “es-
sentially a temporary statutory provision that applies to only two tax
years.”
3738      TUALATIN VALLEY BUILDERS v. UNITED STATES
taxpayer’s return for the taxable year of the net operating
loss.” Id. § 102(b), codified at I.R.C. § 172(j). Once made, the
election would be irrevocable. Id.

   Because the JCWA Act amended the Internal Revenue
Code in March 2002 but applied to tax years ending in 2001
and 2002, some taxpayers—like Plaintiff—already had estab-
lished their tax positions for 2001 or 2002. In mid-2002,
therefore, the IRS released Revenue Procedure 2002-40,
which outlined procedures for implementing the five-year
carryback period for those taxpayers. Rev. Proc. 2002-40,
§§ 1, 4-7. Generally, taxpayers wishing to change their tax
positions were required to do so on or before October 31,
2002. Id. § 7.03.

   On January 7, 2003, more than two months after the dead-
line established by the Revenue Procedure, Plaintiff filed an
amended 1996 corporate income tax return in which it carried
back its 2001 net operating loss. On that amended return,
Plaintiff claimed a refund of income taxes, with interest, after
applying a five-year carryback of its 2001 net operating loss.
The IRS disallowed Plaintiff’s refund claim because Plaintiff
already had elected to carryback the 2001 net operating loss
to tax year 1999, and Plaintiff had failed to file a change of
position by October 31, 2002, as required by Revenue Proce-
dure 2002-40. Through its liquidation plan agent, Plaintiff
then brought this action, pursuant to 28 U.S.C. § 1346(a)(1),
seeking a refund for 1996.

  On cross-motions for summary judgment, the district court
denied Plaintiff’s claim for a refund. The court held that the
IRS validly set the October 31, 2002, deadline in Revenue
Procedure 2002-40, explaining:

       The court construes this language [in I.R.C.
    § 172(j)]—“such election shall be made in such
    manner as may be prescribed by the Secretary”
    (emphasis provided)—as plainly bestowing upon the
           TUALATIN VALLEY BUILDERS v. UNITED STATES               3739
      IRS the explicit authority to determine how and
      when such elections can be made. The IRS did so by
      publishing Revenue Procedure 2002-40. The instruc-
      tions prescribed by the Secretary establish the dead-
      line of October 31, 2002, for electing to invoke the
      five-year carryback. Plaintiff failed to meet this
      deadline.

Plaintiff timely appealed.

                   STANDARD OF REVIEW

   We review de novo both a district court’s grant of summary
judgment and a district court’s interpretation of the Internal
Revenue Code. Abelein v. United States, 323 F.3d 1210, 1213
(9th Cir. 2003).

                           DISCUSSION

   On appeal, Plaintiff makes two arguments. First, it argues
that Revenue Procedure 2002-40 was an impermissible exer-
cise of the agency’s authority and an incorrect interpretation
of JCWA Act § 102. Second, Plaintiff contends that, even if
Revenue Procedure 2002-40 is valid, Plaintiff timely filed a
refund claim under § 6511(d)(2)(A) of the Internal Revenue
Code.6 As part of this second argument, Plaintiff contends that
§ 6511(d)(2)(B)(i), which mandates that a refund generally
should be allowed even if otherwise prevented by operation
or rule of law, trumps Revenue Procedure 2002-40 and its
deadline of October 31, 2002.

   In response, the government argues that Revenue Procedure
2002-40 is entitled to deference under Chevron, U.S.A., Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837,
  6
    Section 6511(d)(2)(A) allows a taxpayer to file a refund claim due to
a net operating loss carryback within three years of the date when the
return is due for the year generating the net operating loss.
3740       TUALATIN VALLEY BUILDERS v. UNITED STATES
843-44 (1984). The Revenue Procedure, it contends, was pro-
mulgated pursuant to an express delegation of authority; and,
in any event, Congress later authorized and endorsed the Rev-
enue Procedure, including its deadline, when it amended the
five-year carryback rule as part of the Working Families Tax
Relief Act of 2004, Pub. L. No. 108-311, § 403(b)(2), 118
Stat. 1166, 1187. The government also argues that
§ 6511(d)(2)(B)(i) serves the specific purpose of permitting a
net operating loss carryback to a year closed by litigation,
which is not the situation here.

A.     Revenue Procedure 2002-40

   Statutory interpretation begins with the text of the enact-
ment. Duncan v. Walker, 533 U.S. 167, 172 (2001). If “Con-
gress has directly spoken to the precise question at issue[,] . . .
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.” Chevron, 467 U.S. at 842-43. If Congress
has not spoken directly to the precise question at issue, we
must decide how much weight to accord an agency’s interpre-
tation.

   [1] The text of JCWA Act § 102 creates a five-year net
operating loss carryback period for losses arising in tax year
2001 or 2002 and gives taxpayers an opportunity to elect out
of that five-year period. The statute is silent, though, on how
to treat taxpayers who already had elected a two-year net
operating loss carryback. Both I.R.C. § 172(j) and a related
Congressional Letter7 gave authority to the IRS to promulgate
  7
    Shortly after passage of the JCWA Act, and in response to a Treasury
Department inquiry, the chairs and ranking members of the House Ways
and Means Committee and the Senate Finance Committee sent a joint let-
ter to the Treasury Department to “provide sufficient clarification so that
the Treasury Department can issue guidance reflecting the Congressional
intent of [the JCWA Act].” Congressional Letter from Rep. Bill Thomas,
Chair, Comm. on Ways and Means; Sen. Max Baucus, Chair, Comm. on
Finance; Rep. Charles B. Rangel, Ranking Member, Comm. on Ways and
Means; Sen. Charles E. Grassley, Ranking Member, Comm. on Finance,
to Mark A. Weinberger, Assistant Sec’y (Tax Policy), Dep’t of the Trea-
sury (Apr. 15, 2002).
          TUALATIN VALLEY BUILDERS v. UNITED STATES           3741
implementing rules. See I.R.C. § 172(j) (providing that a tax-
payer’s “election shall be made in such manner as prescribed
by the Secretary”); Congressional Letter (stating that “it is the
intent of Congress that such revocation be made in such man-
ner as prescribed by the Secretary” and “[w]e trust that this
letter provides sufficient clarification so that guidance can be
issued in a manner that fully reflects Congressional intent”).

   [2] Generally, when Congress has “explicitly left a gap for
the agency to fill, there is an express delegation of authority
to the agency to elucidate a specific provision of the statute
by regulation,” and “[s]uch legislative regulations are given
controlling weight unless they are arbitrary, capricious, or
manifestly contrary to the statute.” Chevron, 467 U.S. at 843-
44. The government contends that Revenue Procedure 2002-
40 satisfies the requirements for, and is entitled to, Chevron
deference. If the government is correct, then “a court may not
substitute its own construction of a statutory provision for a
reasonable interpretation made by the administrator of an
agency.” Id. at 844.

   But not all agency determinations are accorded Chevron
deference. “[A]gencies charged with applying a statute neces-
sarily make all sorts of interpretive choices, and . . . not all of
those choices bind judges to follow them.” United States v.
Mead Corp., 533 U.S. 218, 227 (2001). Even where not bind-
ing, those agency choices “certainly may influence courts fac-
ing questions the agencies have already answered.” Id. In
such an instance, “[t]he fair measure of deference to an
agency administering its own statute has been understood to
vary with circumstances.” Id. at 228. Generally referred to as
Skidmore deference, the weight given to the agency’s inter-
pretation depends on “the degree of the agency’s care, its con-
sistency, formality, and relative expertness, and to the
persuasiveness of the agency’s position.” Id. (footnotes omit-
ted) (citing Skidmore v. Swift & Co., 323 U.S. 134, 139-40
(1944)).
3742        TUALATIN VALLEY BUILDERS v. UNITED STATES
   Our case law leaves unresolved the question whether a rev-
enue procedure should receive Chevron or Skidmore defer-
ence. Compare Schuetz v. Banc One Mortgage Corp., 292
F.3d 1004, 1012 (9th Cir. 2002) (granting Chevron deference
to an informal policy statement from the Department of Hous-
ing and Urban Development), with Omohundro v. United
States, 300 F.3d 1065, 1068 (9th Cir. 2002) (per curiam)
(applying Skidmore deference to an IRS revenue ruling).8 We
need not resolve the tension between Schuetz and Omohundro
here. Even assuming that Chevron deference is not appropri-
ate, under the less stringent Skidmore analysis, we hold that
Revenue Procedure 2002-40 still should receive significant
deference and that the Revenue Procedure is valid.

   [3] Skidmore deference requires us to consider a variety of
factors, such as the thoroughness and validity of the agency’s
reasoning, the consistency of the agency’s interpretation, the
formality of the agency’s action, and all those factors that
give it the power to persuade, if lacking the power to control.
Mead Corp., 533 U.S. at 228. Some Skidmore factors are dif-
ficult to assess with respect to Revenue Procedure 2002-40:
There is no prior or later interpretive history to JCWA Act
§ 102 or Revenue Procedure 2002-40, and no analysis or rea-
soning accompanied the Revenue Procedure’s procedural pre-
scriptions. The balance of the Skidmore factors, however,
reveal that Revenue Procedure 2002-40 is a persuasive inter-
pretation of the law. The IRS—the authority on the interpreta-
tion and application of the Internal Revenue Code—
promulgated Revenue Procedure 2002-40 under an express
grant of congressional authority. The IRS did so only after
  8
   A revenue ruling is “an official interpretation by the Service that has
been published in the Internal Revenue Bulletin . . . for the information
and guidance of taxpayers, Internal Revenue Service officials, and others
concerned.” Treas. Reg. § 601.601(d)(2)(i)(a). Revenue rulings “do not
have the force and effect of Treasury Department Regulations . . . , but are
published to provide precedents to be used in the disposition of other
cases, and may be cited and relied upon for that purpose.” Id.
§ 601.601(d)(2)(v)(d).
          TUALATIN VALLEY BUILDERS v. UNITED STATES         3743
requesting further guidance from Congress concerning its
intent. In addition, the amendments that Congress enacted
after publication of Revenue Procedure 2002-40 were consis-
tent with the procedures and deadlines established by the IRS.
See Working Families Tax Relief Act § 403(b)(2) (enacting
technical amendments to the JCWA Act). That sequence sug-
gests that Congress implicitly ratified the Revenue Procedure
as consistent with its intentions in passing the JCWA Act.
See, e.g., Bob Jones Univ. v. United States, 461 U.S. 574,
599-602 (1983) (analyzing congressional action to determine
whether it implicitly ratified an IRS revenue ruling).

   Plaintiff contends that neither § 172(j) nor the Congressio-
nal Letter directs the IRS to issue rules specifically related to
a taxpayer in Plaintiff’s position—that is, a taxpayer that filed
an application for tentative adjustment under the two-year net
operating loss carryback rule and now seeks to apply the five-
year net operating loss carryback rule. Although that may be
so, Congress has given the IRS broad authority to issue rules
implementing the tax laws. I.R.C. § 7805(a) (“[T]he Secretary
shall prescribe all needful rules and regulations for the
enforcement of this title, including . . . as may be necessary
by reason of any alteration of law in relation to internal reve-
nue.”). That broad authority supplements the specific grant of
authority that Congress gave the IRS in JCWA Act § 102(b).

   [4] Silence or ambiguity on a precise issue within the gen-
eral ambit of a statute does not mean that courts accord no
deference to an agency’s interpretation of that statute. On the
contrary, Congress’ silence in this situation created an
ambiguity for the IRS to resolve. In seeking to find a balance
between the finality of income tax elections and a retroactive
statute, the Revenue Procedure provides taxpayers a period of
time, albeit a limited one, to make a new election to modify
a prior one. Requiring taxpayers to decide by October 31,
2002, whether they would apply the five-year net operating
loss carryback period was consistent with the text of the
3744         TUALATIN VALLEY BUILDERS v. UNITED STATES
JCWA Act and was implicitly ratified by Congress when it
amended the Act in 2004.

B.     I.R.C. § 6511(d)(2)(B)(i)

  Plaintiff next argues that I.R.C. § 6511(d)(2)(B)(i) trumps
Revenue Procedure 2002-40’s reduction of the three-year
period within which a taxpayer can file an amended return
carrying back a net operating loss. Section 6511(d)(2)(B)(i)
provides:

          If the allowance of a credit or refund of an over-
       payment of tax attributable to a net operating loss
       carryback . . . is otherwise prevented by the opera-
       tion of any law or rule of law other than section 7122
       (relating to compromises), such credit or refund may
       be allowed or made, if claim therefor is filed within
       the period provided in subparagraph (A) of this para-
       graph [providing a three-year period for the filing of
       an amended return].

   The government contends that § 6511(d)(2)(B)(i) serves a
far narrower purpose, namely, ensuring that a net operating
loss carryback is available even if the carryback year was liti-
gated and closed. In support, the government cites the legisla-
tive history of the precursor to § 6511(d)(2)(B)(i) from the
Income Tax Code of 19399 and Mar Monte Corp. v. United
States, 503 F.2d 254, 258 (9th Cir. 1974), in which we recog-
  9
   A Report of the House Ways and Means Committee discussing
§ 322(g), the predecessor statute to § 6511(d)(2)(B)(i), stated:
      [U]nder the proposed subsection (g) of § 322 of the Code, even
      though the tax liability for a given taxable year, for example, has
      already been litigated before the Tax Court, credit or refund of an
      overpayment attributable to a carry-back may be allowed or
      made, if claim for credit or refund is filed within the period pre-
      scribed in section 322(b)(6) . . . .
H.R. Rep. No. 79-849 (1945), reprinted in 1945 C.B. 566, 587.
          TUALATIN VALLEY BUILDERS v. UNITED STATES         3745
nized that § 6511(d)(2)(B)(i) reflected a congressional con-
cern that a taxpayer otherwise might be foreclosed from
carrying back a net operating loss to a tax year previously liti-
gated.

   [5] We need not decide whether § 6511(d)(2)(B)(i) takes
precedence over Revenue Procedure 2002-40 because the two
may be harmonized. Simply put, Revenue Procedure 2002-40
did not shorten the period for filing an amended return. Under
I.R.C. § 6511, Plaintiff still could file an amended return any
time within three years from the date its 2001 return was due,
carrying back its net operating loss for two years; Plaintiff
simply could not carryback its 2001 net operating loss for five
years without having also complied with the notice require-
ments of Revenue Procedure 2002-04. Had Plaintiff given the
IRS timely notice of an election to change its previously
established tax position, it would have had three years to file
a claim for 1996 by means of an amended return.

                        CONCLUSION

   [6] It is well established that “[w]hether and to what extent
deductions shall be allowed depends upon legislative grace.”
New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934).
Congress provided eligible taxpayers with a windfall when it
enacted JCWA Act § 102, extending from two years to five
years the period in which 2001 and 2002 net operating losses
could be carried back and deducted. Congress did not act fast
enough to preempt taxpayers such as Plaintiff from establish-
ing contrary tax positions, so it authorized the IRS, both gen-
erally and specifically, to promulgate rules implementing the
new five-year carryback period. The IRS did so in Revenue
Procedure 2002-40, which established an October 31, 2002,
deadline for taxpayers in Plaintiff’s position. That deadline is
consistent with the text of the statute and the authority Con-
gress has conferred on the IRS. Moreover, Congress implic-
itly ratified Revenue Procedure 2002-40 when it amended
JCWA Act § 102 while leaving untouched the Revenue Pro-
3746      TUALATIN VALLEY BUILDERS v. UNITED STATES
cedure and its prescriptions. Because Revenue Procedure
2002-40 does not prohibit a taxpayer from filing a claim for
refund in the absence of compliance, the Revenue Procedure
neither shortens the period for filing a claim for refund or
credit under § 6511(d)(2)(A) nor conflicts with
§ 6511(d)(2)(B)(i).

   [7] In sum, giving appropriate deference to Revenue Proce-
dure 2002-40, we hold that Plaintiff was required to file either
an application for tentative refund or an amended tax return
on or before October 31, 2002, in order to carryback its 2001
net operating loss to its 1996 tax year. It did not do so.
Accordingly, we agree with the district court that Plaintiff’s
refund claim for 1996 was untimely.

  AFFIRMED.



O’SCANNLAIN, Circuit Judge, specially concurring:

   I join the court in its conclusion that Revenue Procedure
2002-40 is a valid exercise of the Internal Revenue Service’s
authority. Yet as the majority notes, there is tension in our
case law as to whether the level of deference prescribed in
Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S.
837 (1984), or Skidmore v. Swift & Co., 323 U.S. 134 (1944),
should apply to the agency’s action in this case. Thus, while
I agree with the majority that Revenue Procedure 2002-40
withstands scrutiny under either standard, I write separately
because I believe this tension, left unresolved, could lead our
court down a path that is inconsistent with Supreme Court
authority and with common sense. As I explain, I believe that
in this case, Chevron deference must apply.

                               I

   Prior to 2002, the Internal Revenue Code allowed taxpayers
to carry back the net operating loss accrued in a particular tax
          TUALATIN VALLEY BUILDERS v. UNITED STATES       3747
year by a maximum of two years. 26 U.S.C. § 172(b)(1)(A).
In 2002, Congress enacted the Job Creation and Worker
Assistance Act of 2002 (“JCWA Act”), Pub. L. No. 107-147,
§ 102(a), 116 Stat. 25-26, codified at 26 U.S.C.
§ 172(b)(1)(H), which temporarily extended the carryback
period from two years to five years. Id. The new five-year
carryback applied only to tax years ending in 2001 or 2002.
In addition, the JCWA Act provided that taxpayers could opt
out of the five-year carryback, stating that the taxpayer’s
“election shall be made in such manner as may be prescribed
by the Secretary.” 26 U.S.C. § 172(j). The Internal Revenue
Service (“IRS”) responded to this specific delegation of
authority by promulgating Revenue Procedure 2002-40.
Among other things, the Revenue Procedure required taxpay-
ers wishing to opt out of the five-year carryback to make their
election on or before October 31, 2002. In this appeal, we
must decide whether the IRS exceeded its authority when it
imposed this deadline.

                              II

   As an initial matter, the JCWA Act states unequivocally
that the Secretary shall prescribe the manner of elections. 26
U.S.C. § 172(j). Thus, because Congress has “directly spoken
to the precise issue,” Chevron, 467 U.S. at 842, I would look
no further than the statute’s text in ascertaining the scope of
the rulemaking authority Congress intended to delegate to the
IRS. Accordingly, I do not believe the Congressional Letter
discussed by the majority is relevant to our analysis. See Maj.
Op. at 3740-41 (citing Congressional Letter from Rep. Bill
Thomas, Chair, Comm. on Ways and Means; Sen. Max
Baucus, Chair, Comm. on Finance; Rep. Charles B. Rangel,
Ranking Member, Comm. on Ways and Means; Sen. Charles
E. Grassley, Ranking Member, Comm. on Finance, to Mark
A. Weinberger, Assistant Sec’y (Tax Policy), Dep’t of the
Treasury (Apr. 15, 2002)). Although the Congressional Letter
recites that Congress intended the Secretary to prescribe the
manner of elections, such intent is made plain by § 172(j).
3748      TUALATIN VALLEY BUILDERS v. UNITED STATES
Where Congress unambiguously expresses its intent in the
text of the statute, I believe it unnecessary to entertain corre-
spondence signed by a handful of legislators to confirm that
Congress meant what it said—a taxpayer’s “election shall be
made in such manner as may be prescribed by the Secretary.”
26 U.S.C. § 172(j).

                               III

   But just what level of deference should Revenue Procedure
2002-40 receive? In United States v. Mead Corp., 533 U.S.
218 (2001), the Supreme Court explained that an agency’s
implementation of a statute will receive Chevron deference
where it appears that Congress delegated authority to the
agency to “make rules carrying the force of law,” and where
“the agency interpretation claiming deference was promul-
gated in the exercise of that authority.” Id. at 226-27. Agency
action that does not meet this test is subjected to the less def-
erential analysis prescribed by Skidmore. See Mead, 533 U.S.
at 234-35.

                               A

   In this case, the agency interpretation claiming deference is
a revenue procedure. Revenue Procedure 2002-40 was pub-
lished in the Internal Revenue Bulletin, which serves as “the
authoritative instrument of the Commissioner for the
announcement of official rulings, decisions, opinions, and
procedures, and for the publication of Treasury decisions, . . .
and other items pertaining to internal revenue matters.” Treas.
Reg. § 601.601(d)(1). Importantly, however, revenue proce-
dures are not produced through formal notice-and-comment
rulemaking or formal adjudication.

  The majority points out that our case law is unclear as to
whether a revenue procedure should receive Chevron or Skid-
more deference. Maj. Op. at 3742 (citing Omohundro v.
United States, 300 F.3d 1065 (9th Cir. 2002) (applying Skid-
          TUALATIN VALLEY BUILDERS v. UNITED STATES        3749
more deference to an IRS revenue ruling) and Schuetz v. Banc
One Mortgage Corp., 292 F.3d 1004 (9th Cir. 2002) (apply-
ing Chevron deference to a Department of Housing and Urban
Development policy statement)). The majority declines to
resolve this tension, concluding instead that Revenue Proce-
dure 2002-40 is valid even under the less deferential Skidmore
analysis. Maj. Op. at 3742. I agree with the majority that our
precedents are inconsistent, but I believe the majority presents
a question we are not required to ask. Mead does not instruct
us to decide whether revenue procedures, as a class, are sub-
ject to one level of deference or another. Instead, the Supreme
Court requires us only to determine whether this Revenue
Procedure is entitled to deference under Skidmore or under
Chevron.

   In Mead, the Court explained that the formality of a partic-
ular agency action is an important factor in determining
whether it receives Chevron or Skidmore deference, but not a
determinative one. The Court noted that “[i]t is fair to assume
generally that Congress contemplates administrative action
with the effect of law when it provides for a relatively formal
administrative procedure.” Mead, 533 U.S. at 230. And, as a
consequence, the “the overwhelming number of [the Court’s]
cases applying Chevron deference have reviewed the fruits of
notice-and-comment rulemaking or formal adjudication.” Id.
(citations omitted). Still, the Court emphasized that
“[d]elegation of such authority may be shown in a variety of
ways, as by an agency’s power to engage in adjudication or
notice-and-comment rulemaking, or by some other indication
of a comparable congressional intent.” Id. at 227 (emphasis
added); see also Swallows Holding, Ltd. v. Comm’r, 2008 WL
427649, *5 (3d. Cir. 2008) (citing Mead for the proposition
that “[w]hen determining whether Congress intends a particu-
lar agency action to carry the force of law, our inquiry does
not hinge solely on the type of agency action involved.”).

  Yet on this point, our own cases are in conflict. In Schuetz,
we applied Chevron deference to a Department of Housing
3750      TUALATIN VALLEY BUILDERS v. UNITED STATES
and Urban Development (“HUD”) Policy Statement, even
though it was not the result of formal rulemaking or adjudica-
tion. 292 F.3d at 1012. In so doing, we directly quoted from
the Supreme Court’s decision in Barnhart v. Walton, 535 U.S.
212 (2002), that “the fact that the Agency previously reached
its interpretation through means less formal than notice and
comment rulemaking does not automatically deprive the inter-
pretation of the judicial deference otherwise due.” Schuetz,
292 F.3d at 1012 (quoting Walton, 535 U.S. at 221) (internal
quotation marks omitted). But only a few months later in
Omohundro, we applied Skidmore deference to an IRS reve-
nue ruling which was not the product of formal rulemaking or
adjudication, because we interpreted Mead as holding that “an
administrative agency’s interpretation of a statute contained in
an informal rulemaking must be accorded the level of defer-
ence set forth in Skidmore.” 300 F.3d at 1067-68 (citations
omitted) (emphasis added).

   Our statements in Schuetz and Omohundro are irreconcil-
able. Moreover, our statement in Omohundro flatly contra-
dicts the Supreme Court’s instructions in Walton and Mead.
See Walton, 535 U.S. at 221; Mead, 533 U.S. at 230-31.
Indeed, the Court has emphasized that “as significant as
notice-and-comment is in pointing to Chevron authority, the
want of that procedure . . . does not decide the case,” for the
Court has “sometimes found reasons for Chevron deference
even when no such administrative formality was required and
none was afforded.” Mead, 533 U.S. at 230-31 (citing
NationsBank of N.C., N.A. v. Variable Annuity Life Ins. Co.,
513 U.S. 251, 256-57 (1995)).

   I agree with the majority that Revenue Procedure 2002-40
would satisfy even Skidmore deference and, as such, I under-
stand the majority’s decision not to resolve the conflict
between Schuetz and Omohundro in this case. Yet I am con-
vinced that Omohundro’s statement that all informal rulemak-
ing must receive Skidmore deference cannot be reconciled
with the Supreme Court’s holdings in Walton and Mead.
          TUALATIN VALLEY BUILDERS v. UNITED STATES         3751
Accordingly, I hope this court might one day confront Omo-
hundro and clarify that the formality of a particular agency
action, standing alone, does not determine the level of defer-
ence it receives. This was the path we followed in Schuetz
and, in my view, this is the path that should be followed here.
Under such framework, I believe Revenue Procedure 2002-40
is one example of informal rulemaking which is still entitled
to Chevron deference.

                               B

   When Congress has “explicitly left a gap” for an agency to
fill, “there is an express delegation of authority to the agency
to elucidate a specific provision of the statute by regulation,”
and “[s]uch legislative regulations are given controlling
weight unless they are arbitrary, capricious, or manifestly
contrary to the statute.” Chevron, 467 U.S. at 843-44. Con-
gress has empowered the Secretary of the Treasury and, by
his delegation, the IRS with the broad authority to “prescribe
all needful rules and regulations” to enforce the Code, includ-
ing “all rules and regulations as may be necessary by reason
of any alteration of law in relation to internal revenue.” 26
U.S.C. § 7805(a). Most revenue procedures are promulgated
pursuant to this general delegation. Yet in § 172(j), Congress
specifically delegated to the Secretary the authority to pre-
scribe the manner of elections. Revenue Procedure 2002-40 is
the product of that rulemaking authority. In my view, this spe-
cific delegation strongly indicates that the resulting IRS action
would carry the force of law and, thus, receive Chevron defer-
ence. See Mead, 533 U.S. at 227-29.

   A comparison with Schuetz is instructive. In that case, we
cited several reasons for applying Chevron deference to the
HUD Policy Statement even though it was not formal action.
First, the statute at issue authorized HUD to prescribe rules
and regulations and to interpret the statute. 292 F.3d at 1012
(citing 12 U.S.C. § 2617(a)). Second, the Policy Statement
was published in the Federal Register. Id. Finally, we noted
3752      TUALATIN VALLEY BUILDERS v. UNITED STATES
that notice-and-comment rulemaking would have been inprac-
ticable because Congress issued a Conference Report which
directed HUD to issue a policy statement within 90 days to
resolve an ambiguity in the statute. Id. at 1009, 1012.

   The same considerations counsel in favor of Chevron defer-
ence here. First, Revenue Procedure 2002-40 is supported by
the Secretary’s broad rulemaking authority under § 7805(a)
and his specific authority under § 172(j). Second, the IRS
published Revenue Procedure 2002-40 in the Internal Reve-
nue Bulletin. Finally, notice-and-comment would have been
impracticable in this case because time was of the essence for
the IRS to exercise its power delegated by § 172(j) to estab-
lish the manner of elections out of the five-year carryback. As
the majority explains, Congress enacted the JCWA Act on
March 9, 2002. The Act created a five-year net operating loss
carryback for tax years ending in 2001 and 2002. 26 U.S.C.
§ 172(b)(1)(H). It further provided that taxpayers could elect
to opt out of the new carryback, but left the manner of elec-
tion to the Secretary. Id. § 172(j). Yet by the time the Act
became law, many taxpayers had already filed their tax
returns of the tax years 2001 and 2002. Maj. Op. at 3738.
Such taxpayers were faced with an awkward problem—the
Act allowed them to opt out of the carryback, but they had no
way of doing so until the Secretary told them how. By April
2002, the ranking members of the House Ways and Means
Committee and the Senate Finance Committee recognized the
dilemma and sent a letter requesting that the Secretary “issue
guidance under which taxpayers are given until November 1,
2002” to, among other things, make an election to opt out.
Congressional Letter, supra at 3847-48. In light of these fac-
tors, the IRS’s response in Revenue Procedure 2002-40 was
entitled to Chevron deference.

   Omohundro is distinguishable. In that case, we applied
Skidmore deference to an IRS revenue ruling that interpreted
26 U.S.C. § 6511(a). 300 F.3d at 1067-68. While the revenue
ruling was issued pursuant to the IRS’s broad powers under
          TUALATIN VALLEY BUILDERS v. UNITED STATES         3753
§ 7805(a), it was not the product of a specific delegation of
rulemaking authority such as the one provided by § 172(j). In
addition, there is no evidence that the revenue ruling in Omo-
hundro was issued under a time constraint such as the one
facing the IRS here. Thus, despite Omohundro’s strained
interpretation of Mead and its inconsistency with our earlier
interpretation in Schuetz, several facts that counsel in favor of
Chevron deference here were not before the court in that case.

                               IV

   I concur in the result reached by the majority—Revenue
Procedure 2002-40 was a valid and enforceable exercise of
the IRS’s authority. But while the majority declines to specify
the necessary level of deference, I would apply Chevron def-
erence to this particular agency action. The distinction
between our positions is important because the Supreme
Court has made clear that sometimes informal rulemaking
may still lead to deference under Chevron. I believe this is
such a case.
