                       132 T.C. No. 8



                UNITED STATES TAX COURT



           CATHY MARIE LANTZ, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 25078-06.                Filed April 7, 2009.



     P sought relief under sec. 6015(f), I.R.C., from
joint income tax liability for 1999. R denied relief
on the basis that P did not request relief within 2
years of R’s first collection action. Consequently, R
did not reach the substantive issues of the claim.
Both parties argue the validity of sec. 1.6015-5(b)(1),
Income Tax Regs., which applies the 2-year limitations
period to sec. 6015(f), I.R.C.

     Held: Sec. 1.6015-5(b)(1), Income Tax Regs., is
an invalid interpretation of sec. 6015(f), I.R.C., and
further proceedings are required to determine the
validity of P’s claim for relief.



Paul M. Kohlhoff and Robert B. Nadler, for petitioner.

Timothy S. Sinnott, for respondent.
                                 - 2 -

                                OPINION

     GOEKE, Judge:     Petitioner brought this case under section

60151 seeking review of respondent’s denial of relief from joint

income tax liability for 1999.    Respondent denied relief solely

because petitioner did not request relief from joint tax

liability within 2 years of the time respondent took a collection

action against petitioner for the joint tax liability.     Both

parties have argued the validity of section 1.6015-5(b)(1),

Income Tax Regs., which provides a 2-year limitations period

after a collection action for request for relief under section

6015(f).   For the reasons explained herein, we find the

regulation to be inconsistent with and to be an impermissible

interpretation of the statute.

                              Background

     At the time the petition was filed, petitioner resided in

Indiana.

     During 1999 petitioner was married to Dr. Richard M.

Chentnik, a dentist.    Petitioner did not work outside the home in

1999.

     Petitioner and Dr. Chentnik timely filed a joint Form 1040,

U.S. Individual Income Tax Return, for the tax year 1999.     The

return reflected tax of $112,291.11 and an estimated tax penalty



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code.
                                - 3 -

of $2,070.60.    Included with the return was a payment of

$115,550, resulting in a credit of $1,188.29, which was

transferred to a Form 941, Employer’s Quarterly Federal Tax

Return, of Dr. Chentnik for 1985.

     Dr. Chentnik was arrested on June 8, 2000, and subsequently

convicted of Medicare fraud.    As a result of the conviction he

was sentenced to Federal prison and incarcerated in Terre Haute,

Indiana.   He was incarcerated throughout 2003 and was released

from prison to a halfway house in August 2004.

     In the summer of 2002 petitioner moved to Logansport,

Indiana, where she resided throughout 2003.

     As a result of the Medicare fraud, respondent determined

that the joint income tax liability for 1999 was understated.

When no petition was filed after the issuance of a notice of

deficiency, respondent assessed the following amounts against

petitioner and Dr. Chentnik on August 12, 2002:

                Item                     Amount

           Income tax                   $656,111

           Sec. 6662 penalty             131,222

           Interest                      140,778

Another result of Dr. Chentnik’s Medicare fraud was the seizure

of his assets in April 2000 by U.S. Marshals.      As a result of the

seizure, the U.S. Marshals Service transmitted a check in the
                               - 4 -

amount of $2,592,022.68 to the center for Medicare and Medicaid

services in November 2003.

     On May 11, 2003, respondent issued separate letters to

petitioner and Dr. Chentnik at the Logansport address, advising

them that respondent was proposing a levy action to collect their

joint income tax liability for 1999.   Respondent considers the

letter to petitioner to be a collection action, and we agree.

These letters conformed with the notice requirements of section

6330.   Although Dr. Chentnik was in prison, he advised petitioner

that he would communicate with respondent regarding these

notices, which he did.   As a result of Dr. Chentnik’s

communications with respondent’s Appeals Office, on February 9,

2004, two notices of determination were issued solely to Dr.

Chentnik.   In these notices of determination the Appeals Office

determined that the joint account of petitioner and Dr. Chentnik

should be moved into currently noncollectible status because “the

taxpayer’s financial condition reflects that the account is

noncollectible at this time.   Therefore, serving a levy would

cause undue hardship for the taxpayer at this time.”

     In his correspondence with the Appeals Office, Dr. Chentnik

advised that the Appeals officer should communicate with him

directly, and he requested a form to seek relief for petitioner.

He characterized petitioner as “the innocent spouse” in his
                               - 5 -

correspondence with respondent.   Dr. Chentnik died in a halfway

house in October 2004.

     Petitioner relied upon Dr. Chentnik to resolve the 1999

income tax issue and took no independent action regarding the

collection letters from respondent until her income tax

overpayment for 2005 was applied against the 1999 tax liability.

After communicating with representatives from the Internal

Revenue Service (IRS), petitioner filed Form 8857, Request for

Innocent Spouse Relief, on June 23, 2006.   Petitioner dated the

Form 8857 June 9, 2006.   In July 2006 respondent notified

petitioner that relief for the year 2005 was not needed because

she did not file a joint return for that year.   On July 6, 2006,

respondent issued a preliminary determination denying petitioner

relief for 1999 because her claim was filed more than 2 years

after the first collection action taken against her.    Petitioner

protested this determination, and her claim was assigned to an

Appeals officer.   The Appeals officer determined that petitioner

is not entitled to relief under section 6015 because she did not

file a claim within 2 years of the first collection activity.

Because respondent denied petitioner’s claim as untimely, the

substantive merits of her claim were never addressed.   Respondent

issued a notice of determination denying petitioner’s claim for

relief on September 7, 2006.   Petitioner then timely filed a

petition in this Court.
                                - 6 -

                              Discussion

1.   Joint Liability

      In general, taxpayers filing joint Federal income tax

returns are each responsible for the accuracy of their return and

are jointly and severally liable for the entire tax liability due

for the year of the return.    Sec. 6013(d)(3).   In certain

circumstances, however, a spouse may obtain relief from joint and

several liability by satisfying the requirements of section 6015.

      Section 6015(a)(1) provides that a spouse who made a joint

return may elect to seek relief from joint and several liability

under section 6015(b) (dealing with relief from liability for an

understatement of tax with respect to a joint return).     Section

6015(a)(2) provides that a spouse who is eligible to do so may

elect to limit that spouse’s liability for any deficiency with

respect to a joint return under section 6015(c).     Relief from

joint and several liability under section 6015(b) and/or (c) is

available only with respect to a deficiency for the year for

which relief is sought.   Sec. 6015(b)(1)(D) and (c)(1).    Also, to

qualify for relief under section 6015(b) or (c), the requesting

spouse must make an election not later than 2 years after the

Commissioner has begun a collection action.    Sec. 6015(b)(1)(E)

and (c)(3)(B).   If relief is not available under either section

6015(b) or (c), an individual may seek equitable relief under

section 6015(f), which we find is the basis of petitioner’s
                               - 7 -

claim.    Petitioner’s request for relief was submitted to

respondent over 2 years after the May 11, 2003, collection

action, and section 6015(b) and (c) is unavailable to her.

     Section 6015(f) does not impose the 2-year limitations

period.   However, a 2-year limitations period for requesting

relief under section 6015(f) was included in Notice 98-61, sec.

3.01(3), 1998-2 C.B. 756, 757, and subsequently in Rev. Proc.

2000-15, 2000-1 C.B. 447; Rev. Proc. 2003-61, 2003-2 C.B. 296;

and section 1.6015-5, Income Tax Regs.

2.   Rulemaking Under Section 6015

     Rev. Proc. 2000-15, supra, was published on January 31,

2000, to provide guidance for taxpayers seeking relief from

Federal tax liability under section 6015(f).   Rev. Proc. 2000-15,

sec. 4.01, 2000-1 C.B. at 448, sets forth seven general

requirements that must be satisfied for any request for equitable

relief under section 6015(f) to be considered by the

Commissioner:   (1) The requesting spouse filed a joint return for

the year for which relief is sought; (2) relief is not available

to the requesting spouse under section 6015(b) or (c); (3) the

application for relief is no later than 2 years after the date of

the Commissioner’s first collection activity after July 22, 1998;

(4) except where an exception applies, the liability remains

unpaid; (5) no assets were transferred between spouses as part of

a fraudulent scheme; (6) no disqualified assets were transferred
                               - 8 -

to the requesting spouse by the nonrequesting spouse; and (7) the

requesting spouse did not file the return with fraudulent intent.

     Rev. Proc. 2003-61, supra, published on August 11, 2003,

adds the threshold requirement that absent enumerated exceptions,

the liability from which relief is sought must be attributable to

an item of the nonrequesting spouse.   Rev. Proc. 2003-61, supra,

omits requirement No. 4 of Rev. Proc. 2000-15, supra, from its

list of threshold requirements, revises the “knowledge or reason

to know” factor for determining whether to grant equitable

relief, and broadens the availability of refunds if equitable

relief is granted under section 6015(f).

     Sections 1.6015-0 through 1.6015-9, Income Tax Regs., were

published on July 17, 2002 (effective July 18, 2002), pursuant to

a mandate from Congress to promulgate regulations pertaining to

section 6015 in general under section 6015(h) and procedures

concerning requests for equitable relief under section 6015(f) in

particular.   Section 1.6015-4(a), Income Tax Regs., states that

the IRS has discretion to grant equitable relief from joint and

several liability when, considering all of the facts and

circumstances, it would be inequitable to hold the requesting

spouse jointly and severally liable.   Section 1.6015-4(c), Income

Tax Regs., refers taxpayers to Rev. Proc. 2000-15, supra,2 for



     2
      Rev. Proc. 2000-15, 2000-1 C.B. 447, was superseded by Rev.
Proc. 2003-61, 2003-2 C.B. 296.
                               - 9 -

guidance concerning the criteria to be used in determining

whether it is inequitable to hold the requesting spouse jointly

and severally liable under section 6015(f).   Section 1.6015-5,

Income Tax Regs., sets forth the time and manner for requesting

relief and limits the time for requesting relief under section

6015(f) to 2 years from the first collection activity against the

requesting spouse after July 22, 1998, in the same manner as the

statutory restrictions on section 6015(b) and (c). In connection

with the promulgation of the regulation, a Notice of Proposed

Rulemaking and Public Hearing was issued on January 17, 2001, 66

Fed. Reg. 3888, and a public hearing was held on May 30, 2001.

Subsequently, a Treasury Decision was issued promulgating the

final regulation--T.D. 9003, 2002-2 C.B. 294.

3.   Prior Tax Court Cases

      Respondent asserts that this Court has previously accepted

the 2-year period imposed on requests for relief under section

6015(f), citing Campbell v. Commissioner, 121 T.C. 290 (2003),

and McGee v. Commissioner, 123 T.C. 314 (2004).   In Campbell, we

determined that an offset of a subsequent year overpayment to the

joint liability in question was a collection activity initiating

the 2-year period set forth in Rev. Proc. 2000-15, sec. 5, 2000-1

C.B. at 449.   The taxpayer did not raise the permissibility of

imposing a limitations period for requests for relief under

section 6015(f).   The sole issue before the Court was whether the
                             - 10 -

application of the overpayment constituted a collection action.

Campbell v. Commissioner, supra at 291.

     In McGee v. Commissioner, supra, we held that the

Commissioner’s failure to include an explanation of the

taxpayer’s rights under section 6015 in the notice of the

application of a subsequent year overpayment to the joint

liability in question was a violation of the Internal Revenue

Service Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.

105-206, sec. 3501(b), 112 Stat. 770, and accordingly, it was

inequitable and an abuse of discretion for the Commissioner to

apply the 2-year limitations period of Rev. Proc. 2000-15, supra.

We specifically stated in McGee v. Commissioner, supra at 320

n.4, that we did not reach the question raised by the taxpayer as

to whether it was inappropriate to have a strict limitations

period apply to section 6015(f).

     The Court has not yet addressed the issue of whether the

imposition of the 2-year limitations period in section 1.6015-

5(b)(1), Income Tax Regs., is valid.   See Campbell v.

Commissioner, supra; McGee v. Commissioner, supra; Nelson v.

Commissioner, T.C. Memo. 2005-9; Durham v. Commissioner, T.C.

Memo. 2004-184; Hall v. Commissioner, T.C. Memo. 2004-170.
                                - 11 -

4.   Standard of Review

     We need not revisit whether the proper standard of review of

the Commissioner’s regulations is the standard of Natl. Muffler

Dealers Association, Inc. v. United States, 440 U.S. 472 (1979),

or the standard set forth in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842-843 (1984), insofar as

there may be a difference between them.    See Swallows Holding,

Ltd. v. Commissioner, 515 F.3d 162 (3d Cir. 2008), vacating and

remanding 126 T.C. 96 (2006).    Following Golsen v. Commissioner,

54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir. 1971), we apply

the law of the Court of Appeals to which an appeal in the case

would normally lie.   Section 1.6015-5, Income Tax Regs., was

issued under both a general grant of authority under section 7805

and a specific grant of authority under section 6015(h).    T.D.

9003, 2002-2 C.B. 294.    The U.S. Court of Appeals for the Seventh

Circuit has held that regulations issued under general or

specific authority of the IRS to promulgate necessary rules are

entitled to Chevron deference.    Bankers Life & Cas. Co. v. United

States, 142 F.3d 973, 979, 982-983 (7th Cir. 1998); see also Khan

v. United States, 548 F.3d 549 (7th Cir. 2008) (reviewing a

general authority tax regulation under Chevron); Square D Co. &

Subs. v. Commissioner, 438 F.3d 739, 745 (7th Cir. 2006)

(reviewing a regulation issued pursuant to an express delegation

of authority under Chevron), affg. 118 T.C. 299 (2002).
                               - 12 -

Accordingly, we will follow the Chevron standard in this

analysis.3

     In Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc.,

supra at 842-843, the Supreme Court created a two-prong test:

(1) If Congress has directly spoken to the precise question at

issue, we give effect to the unambiguously expressed intent of

Congress.    If the statute is ambiguous, then we continue to the

second prong:   (2) If the statute is ambiguous with respect to

the specific issue, we determine whether the regulation is a

permissible construction of the statute.4   See also Bankers Life &

Cas. Co. v. United States, supra at 983.

5.   Whether Congress Has Spoken on the Issue

     Respondent argues that section 1.6015-5(b)(1), Income Tax

Regs., passes the first prong of Chevron because section 6015(f)

is silent with respect to the period of limitations for seeking


      3
      Respondent argues in the alternative that Rev. Proc. 2003-
61, supra, is entitled to Skidmore deference, because Congress
specifically directed the Secretary to prescribe procedures
pertaining to requests for equitable relief under sec. 6015(f).
See Skidmore v. Swift & Co., 323 U.S. 134 (1944). We find the
appropriate test to be that of Chevron, not Skidmore. See
Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837, 842-843 (1984). Therefore, our prior discussion is
dispositive.
      4
      The Court of Appeals for the Seventh Circuit has
interpreted the second prong of the Chevron test as a question of
“the reasonableness of the regulation”. Bankers Life & Cas. Co.
v. United States, 142 F.3d 973, 983 (7th Cir. 1998). However, we
find that sec. 1.6015-5(b)(1), Income Tax Regs., is neither a
permissible construction of the statute nor a reasonable
regulation, and our analysis is the same under either standard.
                              - 13 -

relief.   Consequently, respondent maintains that promulgating a

regulation that prescribes a period of limitations is a

permissible exercise of the authority delegated to the Secretary.

     Section 6015(f) provides:

          SEC. 6015(f). Equitable Relief.--Under procedures
     prescribed by the Secretary, if--

                 (1) taking into account all the facts and
          circumstances, it is inequitable to hold the
          individual liable for any unpaid tax or any
          deficiency (or any portion of either); and

                 (2) relief is not available to such
          individual under subsection (b) or (c),

     the Secretary may relieve such individual of such
     liability.

While it is clear that section 6015(f) does not set forth a

period of limitations, we disagree that the statute is silent as

to whether a period of limitations applies to subsection (f).

The first prong of Chevron requires the Court to employ the

traditional tools of statutory construction to try to determine

the intent of Congress.   NLRB v. United Food & Commercial Workers

Union, Local 23, 484 U.S. 112, 123 (1987); INS v. Cardoza-

Fonseca, 480 U.S. 421, 447-448 (1987).   “It is a central tenet of

statutory construction that, when interpreting any one provision

of a statute, the entire statute must be considered.”     Fla.

Country Clubs, Inc. v. Commissioner, 122 T.C. 73, 79 (2004),

affd. 404 F.3d 1291 (11th Cir. 2005); see also Lexecon Inc. v.

Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 36 (1998).
                              - 14 -

Accordingly, we must consider the significance of the omission of

a deadline for requesting relief in section 6015(f) in the light

of section 6015 as a whole.

     To be eligible for relief under section 6015(b) or (c), the

statute explicitly provides that the requesting spouse must elect

relief not later than the date that is 2 years after the date the

Secretary has begun collection activities with respect to the

individual making the election.    Sec. 6015(b)(1)(E) and

(c)(3)(B).   However, there is no such limitation in section

6015(f).   “‘It is generally presumed that Congress acts

intentionally and purposely’ when it ‘includes particular

language in one section of a statute but omits it in another’”.

City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 338 (1994)

(quoting Keene Corp. v. United States, 508 U.S. 200, 208 (1993)).

We find that by explicitly creating a 2-year limitation in

subsections (b) and (c) but not subsection (f), Congress has

“spoken” by its audible silence.    Because the regulation imposes

a limitation that Congress explicitly incorporated into

subsections (b) and (c) but omitted from subsection (f), it fails

the first prong of Chevron.

     Furthermore, under section 6015(f)(2), the equitable remedy

is available only “if * * * relief is not available to such

individual under subsection (b) or (c)”.    That is, by its very

nature the equitable relief under subsection (f) is to be broader
                              - 15 -

than relief under subsection (b) or (c).   In order for subsection

(f) relief to be more broadly available than under the 2-year

filing rule of subsections (b)(1)(E) and (c)(3)(B), a deadline

under subsection (f) would need to be longer than 2 years.

Clearly, the timing of the request for relief is not the only

possible element by which subsection (f) relief would be broader

than that of subsection (b) or (c).    For example, the individual

might have signed the return knowing of the understatement (and

thus falling afoul of subsection (b)(1)(C)) but might have been a

victim of spousal abuse so that it could be inequitable to hold

that individual liable.   An equitable remedy that had a 2-year

bar but allowed relief to the abused spouse would be more liberal

than subsection (b), despite the time limit.   Accordingly, a

Congress intending broader relief under subsection (f) might be

nonetheless content with the same timing rule as for subsections

(b) and (c).   However, the Congress that enacted section 6015

made it clear on the face of the statute that one difference

between subsection (f) and subsections (b) and (c) was the time

for requesting relief, because it established a 2-year deadline

in subsections (b) and (c) and imposed no deadline in subsection

(f).   In fact, the timing distinction is one of the only three

differences between subsections (b) and (f) that are explicit in
                               - 16 -

the statute.5   Had Congress intended a 2-year period of

limitations for equitable relief, then of course it could have

easily included in subsection (f) what it included in subsections

(b) and (c).    However, Congress imposed no deadline, yet the

Secretary prescribed a period of limitations identical to the

limitations Congress imposed under section 6015(b) and (c).

     While subsection (f) demonstrates a clear congressional

attempt to address inequitable situations not addressed by

subsections (b) and (c), apart from the absence of a time limit

the statute does not define those situations.    Rather, Congress

provides that the Secretary consider all the facts and

circumstances and determine whether equitable relief is

appropriate.    Congress also provided jurisdiction to this Court

to determine whether the taxpayer is entitled to relief under

section 6015(f).    Tax Relief and Health Care Act of 2006 (TRHCA),

Pub. L. 109-432, div. C, sec. 408, 120 Stat. 3061.    Under section

1.6015-5(b)(1), Income Tax Regs., the Secretary must deny section


     5
      The three conditions that are present in sec. 6015(b) but
are absent from sec. 6015(f) are: (1) The requirement in sec.
6015(b)(1)(B) that there be an understatement of tax; (2) the
requirement in sec. 6015(b)(1)(C) that the individual did not
know of the understatement; and (3) the requirement of sec.
6015(b)(1)(E) that the election be filed within 2 years of
collection activity. Sec. 1.6015-5, Income Tax Regs., treats
only the third of these requirements (the 2-year limitation) as a
condition that should also be imposed on sec. 6015(f). While
Rev. Proc. 2003-61, supra, treats the second condition (the
individual’s lack of knowledge) as a factor to be considered when
determining whether relief should be granted under sec. 6015(f),
it is not a threshold or determinative factor.
                              - 17 -

6015(f) relief where the individual seeking relief failed to meet

a 2-year time limit, without considering circumstances such as

abuse, intimidation, or misrepresentation, which might have

contributed to or caused the request for relief to be delayed.

     We do not believe that Congress intended the circumvention

of the analysis required by section 6015(f) that results from the

restrictions of section 1.6015-5(b)(1), Income Tax Regs.    In

subsection (f), Congress designed a general remedy to meet

inequitable situations not specifically addressed in subsections

(b) and (c).   The general nature of the remedy in subsection (f)

implies an intent to address difficult marital circumstances too

subject to variation for more specificity.   The Secretary’s

adoption of the very timing rule that Congress had imposed on

subsections (b) and (c) but had specifically omitted from

subsection (f) runs directly contrary to the nature of the relief

provided by Congress.6

     However, for the sake of argument, we consider whether

section 1.6015-5(b)(1), Income Tax Regs., is a permissible

construction of the statute in the event that the absence of a 2-


     6
      The legislative history mirrored the statute:

     The conferees intend that such authority be used where,
     taking into account all the facts and circumstances, it
     is inequitable to hold an individual liable for all or
     part of any unpaid tax or deficiency arising from a
     joint return. * * *

H. Conf. Rept. 105-599, at 254 (1998), 1998-3 C.B. 747, 1008.
                               - 18 -

year limitations period in section 6015(f) is construed as an

ambiguity.

6.   Whether the 2-Year Limitations Period Is Permissible

      a.   Congress’s Intent in Omitting a Limitations Period

      For the same reasons we believe section 1.6015-5(b)(1),

Income Tax Regs., fails the first step of the Chevron test, we

find that the regulation is impermissible because it is contrary

to the intent of Congress.    Section 6015(f) is a recognition that

the circumstances of joint tax liability can be complex and

difficult.    Such circumstances can lead to unfair results under

section 6013(d)(3) that may not be remedied under section 6015(b)

or (c).    Therefore, Congress provided section 6015(f) as a last

resort to avoid potential harsh circumstances imposed upon one

spouse in a joint return situation, and Congress specifically

omitted a temporal limitation on a request for equitable relief.

Because the failure to comply with a 2-year limitations period

does not necessarily indicate that a taxpayer should not be

eligible for equitable relief, to deny a taxpayer relief under

section 6015(f) for failure to comply with a limitation rule that

would also prevent the taxpayer from obtaining relief under

section 6015(b) or (c) is impermissible.7



      7
      Petitioner relied upon her spouse to address their joint
tax problems. This reliance initially appeared to result in a
successful resolution, and she took no further action after his
death.
                               - 19 -

     b.    Contrasting Timing Rules Under Section 66(c)

     Section 1.6015-5(b)(1), Income Tax Regs., reflects a one-

size-fits-all approach for both traditional and equitable relief

that the Secretary did not employ when promulgating regulations

under a companion statute--section 66(c).    The different approach

used in the regulations under section 66(c) underscores the

unreasonableness of the rule under consideration here.

     Section 66 provides for the treatment of “community income”

in community property States when the spouses do not file

jointly.    This section, amended in 1984 by the Deficit Reduction

Act of 1984, Pub. L. 98-369, sec. 424(b), 98 Stat. 801, allocates

the income between the spouses, and its subsection (c), embodying

relief referred to as “traditional relief”, creates exceptions

where “taking into account all facts and circumstances, it is

inequitable” to follow the general rule--the same language that

appears in section 6015(b)(1)(D).    At the time, Congress noted in

legislative history that the availability of such relief might

take into account “whether the defense was promptly raised”.8

     An “equitable relief” provision was added to section 66(c)

by RRA 1998 sec. 3201(b), 112 Stat. 739, in the same section of




     8
      H. Rept. 98-432 (Part 2), at 1503 (1984). As is noted
below, the congressional reference to acting “promptly”
influenced Treasury’s later drafting of the regulations.
However, no regulations were promulgated under sec. 66 until
after the statute was amended in 1998.
                             - 20 -

RRA 1998 that enacted section 6015(f).   To the very end of

section 66(c), RRA 1998 added this sentence:

          Under procedures prescribed by the Secretary, if,
     taking into account all the facts and circumstances, it
     is inequitable to hold the individual liable for any
     unpaid tax or any deficiency (or any portion of either)
     attributable to any item for which relief is not
     available under the preceding sentence, the Secretary
     may relieve such individual of such liability.
     [Emphasis added.]

The language emphasized above, enacted in RRA 1998 sec. 3201(b),

is identical to language added by RRA 1998 sec. 3201(a), 112

Stat. 734, to the statute relevant here--section 6015(f).

     In 2002 the Secretary proposed regulations under

section 66(c) that included section 1.66-4(g)(2), Proposed Income

Tax Regs, 67 Fed. Reg. 2845 (Jan. 22, 2002), entitled “Time

period for filing a request for relief”.    This proposed

regulation had two relevant subdivisions:    The first was

“(i) Specific relief”, and it included a 6-month cutoff

provision; and the second was “(ii) Equitable relief”, and it

included no cutoff.9


     9
      In the announcement of the proposed regulations under
sec. 66(c), 67 Fed. Reg. 2841 (Jan. 22, 2002), the Secretary
observed that the relief provided in sec. 66(c) “is analogous to
the relief provision in section 6015(b) * * * [and] section
6015(f)”. It explained that “a requesting spouse seeking
[traditional] relief from the operation of community property law
under sec. 66(c) must request such relief no later than 6 months
before the statute of limitations on assessment of section 6501
expires with regard to the nonrequesting spouse”, id. at 2842,
but that a “spouse seeking equitable relief * * * may seek relief
on or after the date the return for such year is filed”, id. at
                                                   (continued...)
                              - 21 -

     In 2003 the Secretary announced the promulgation of the

final regulations, T.D. 9074, 2003-2 C.B. 601, 603, and explained

this timing difference by reference to the legislative history:

          One commentator suggested that the time
     limitations set forth in § 1.66-4 for requesting relief
     under section 66(c) are not supported by the language
     of section 66(c). Although the statute itself does not
     set forth time limitations on the filing of a request
     for relief, the time limitations in the proposed
     regulations are supported by the [1984] legislative
     history of the traditional relief provision of section
     66(c). Specifically, the House Report explaining
     traditional relief under section 66(c) states that, in
     making the determination as to relief, the IRS should
     consider (among other things) “whether the defense was
     promptly raised so as to prevent the period of
     limitations from running on the other spouse.” H.R.
     Rep. 98-432, pt. 2, at 1501 (1984). Thus, the final
     regulations retain the time limitations set forth in
     the proposed regulations. In contrast, § 1.66-
     4(j)(2)(ii) sets forth timing requirements for
     requesting equitable relief that are broader than the
     requirements applicable to traditional relief because
     the legislative history of the equitable relief
     provision does not contain similar timing requirements.
     Therefore, a requesting spouse who does not meet the
     time limitations to request traditional relief may be
     eligible to request equitable relief. [Emphasis added.]

The Secretary was thus alert to an arguably subtle distinction

not even reflected in the language of section 66(c), but only in

its legislative history.   Thus informed by the legislative

history, the Secretary established, by regulation, a cutoff for

requesting “traditional relief” under section 66(c) (because the

legislative history suggested a need for making such requests



     9
     (...continued)
2843.
                             - 22 -

“promptly * * * so as to prevent the period of limitations from

running on the other spouse”), but it made a distinction and

declined to establish a deadline for requesting equitable relief

(because the legislative history on the equitable relief

provision in section 66(c) was silent as to any timing issue).

While the Secretary imposed a 2-year deadline on requesting

equitable relief under section 66(c) in Rev. Proc. 2000-15, secs.

4.01(3) and 5, 2000-1 C.B. at 448, 449, and Rev. Proc. 2003-61,

secs. 4.01(3) and 5, 2003-2 C.B. at 297, 299, this deadline is

four times as long as the 6-month deadline available for

traditional relief under section 66(c).

     For section 6015, on the other hand, one need not be so

alert to note the distinction:   it appears not merely in

legislative history but in the words of the statute itself; and

the distinction is reflected not merely in one subtle adverb

(“promptly”) but in explicit deadlines in section 6015(b) and

(c), and no deadline in section 6015(f).   However, despite this

patent distinction between the traditional and equitable relief

provisions under section 6015, the same department that had

sensibly promulgated different regimes for traditional and

equitable relief under section 66(c) established, without

explanation, one timing rule for all relief under section 6015,

whether traditional or equitable.
                              - 23 -

     The Secretary should have been no less alert to the timing

distinctions explicit in section 6015 than he was to the timing

distinctions implicated by the word “promptly” in the legislative

history to section 66(c).   In implementing section 6015 the

Secretary should have understood (as he understood when

section 66(c) was under consideration) that the statutory silence

about deadlines in section 6015(f) was meaningful, and he should

have inferred that the procedures to be prescribed under

section 6015(f) should not contain the same deadline that

Congress imposed in subsections (b) and (c) but declined to

impose in subsection (f).

     In 1998 Congress evidently intended that taxpayers have two

kinds of remedies--traditional remedies (sections 66(c)(4) and

6015(b) and (c)) with stricter deadlines, and equitable remedies

(sections 66(c) (flush language) and 6015(f)) with looser

procedures to be set up by the Secretary (as he did in the case

of section 1.66-4(j)(2)(ii), Income Tax Regs.).   But given the

explicit congressional purpose, it was not reasonable for the

Secretary to adopt for the equitable remedy of section 6015(f) a

deadline that was identical to, and no looser than, the 2-year

deadline Congress had enacted for the traditional remedy in

section 6015(b).10


     10
      The parties both assert that a taxpayer seeking sec.
6015(f) relief more than 2 years after the initial collection
                                                   (continued...)
                              - 24 -

     c.   Swallows Holding Ltd. Distinguished

     Respondent argues that this case is analogous to Swallows

Holding, Ltd. v. Commissioner, 515 F.3d 162 (3d Cir. 2008), where

the court found that the Secretary was justified in promulgating

a regulation that prescribed a filing deadline where the statute

was ambiguous.   However, because of the equitable test in section

6015(f) and the statutory contrast between section 6015(b) and

(c) and section 6015(f), this case is distinguishable from

Swallows Holding, Ltd.   Although both cases involved the

imposition by regulation of a temporal limitation on filing, the



     10
      (...continued)
action cannot obtain an extension of time under sec. 301.9100-3,
Proced & Admin. Regs. We accept their mutual position in this
case because in the light of respondent’s position any effort by
petitioner to apply for relief under sec. 301.9100-3, Proced. &
Admin. Regs., would be fruitless. An agency’s interpretation of
its own regulation is entitled to “controlling weight unless it
is plainly erroneous or inconsistent with the regulation.”
Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945);
Philips Petroleum Co. v. Commissioner, 101 T.C. 78, 97 (1993),
affd. without published opinion 70 F.3d 1282 (10th Cir. 1995).
     In addition, the complex procedures required for requesting
an extension under sec. 301.9100-3(e), Proced. & Admin. Regs.,
would, for many or most claimants under sec. 6015(f), be daunting
to the point of impracticability. To request an extension, a
taxpayer would have to file affidavits and information as
required by sec. 301.9100-3(e)(2) through (4), Proced. & Admin.
Regs., and, pursuant to sec. 301.9100-3(e)(5), Proced. & Admin.
Regs., would have to meet the requirements of Rev. Proc. 2007-1,
2007-1 C.B. 1, for ruling requests. Those requirements include
making the payment of a $625 “user fee” and providing the
information requested in the 18 items of information requested in
Rev. Proc. 2007-1, sec. 7.01. We agree that an extension under
section 301.9100-3, Proced. & Admin. Regs., is not available--
either legally or practically--to a sec. 6015(f) claimant.
                                - 25 -

similarity ends there; and the statutory framework is completely

different regarding the nature of the relief afforded.

     Swallows Holdings, Ltd. addressed section 1.882-4(a)(3)(i),

Income Tax Regs., which was promulgated pursuant to section

882(c)(2) and prescribes the manner in which a return should be

filed.    That regulation sets forth an 18-month filing deadline

for foreign businesses claiming deductions against income from

business activities conducted in the United States.     The Court of

Appeals for the Third Circuit held that prescribing a filing

deadline was appropriate.     Respondent argues that the instant

case is analogous to that situation.     However, section 882(c)

sets forth a rule regarding the allowance of deductions and

credits, not a test for inequity from which a 2-year limit was

specifically omitted in contrast to the related preceding

subsections of the statute.

     d.   A Better Analogy:    The Bureau of Prisons Regulatory
          Cases

     We find the present regulatory controversy to be analogous

to those in several appellate cases involving the conflict

between the Bureau of Prisons (BOP) regulations codified at 28

C.F.R. sections 570.20 and 570.21 and the congressional intent

articulation in 18 U.S.C. section 3621(b).     See Wedelstedt v.

Wiley, 477 F.3d 1160 (10th Cir. 2007); Levine v. Apker, 455 F.3d

71 (2d Cir. 2006); Fults v. Sanders, 442 F.3d 1088 (8th Cir.

2006); Woodall v. Fed. Bureau of Prisons, 432 F.3d 235 (3d Cir.
                                - 26 -

2005).     The controversy in those cases involved the eligibility

of prisoners for Community Correctional Center (CCC) placement.

Title 28 C.F.R. section 570.21(a) (2008) provides that the BOP

“will designate inmates to community confinement only * * *

during the last ten percent of the prison sentence being served,

not to exceed six months.”     The BOP identified 18 U.S.C. section

3621(b) as authorizing this categorical exercise of discretion

and viewed the promulgation of a categorical rule as permissible

under Lopez v. Davis, 531 U.S. 230 (2001).     The Courts of Appeals

in the cases cited above found the BOP regulations invalid under

Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837 (1984).     The Court of Appeals for the Third Circuit

explained in Woodall v. Fed. Bureau of Prisons, supra at 249:

     we are faced with a statute providing that the BOP must
     consider several factors in CCC placement, and a
     regulation providing that the agency may not consider
     those factors in full. The conflict between the
     regulations and the statute seems unavoidable.

     While 18 U.S.C. section 3621(b), like section 6015(f), uses

the discretionary term “may” with respect to the BOP’s authority

to select the place of imprisonment,11 the courts cited above


     11
          18 U.S.C. sec. 3621(b) (2006) provides:

          (b) Place of Imprisonment.–-The Bureau of Prisons
     shall designate the place of the prisoner’s
     imprisonment. The Bureau may designate any available
     penal or correctional facility that meets minimum
     standards of health and habitability established by the
     Bureau, whether maintained by the Federal Government or
                                                   (continued...)
                              - 27 -

found that this does not give the BOP discretion to decline to

consider certain factors before making that decision.   As the

Court of Appeals in Woodall v. Fed. Bureau of Prisons, supra at

245, explains:

          The government argues that the use of the word
     “may” at the beginning of § 3621(b), rather than
     “shall,” is determinative in proving that consideration
     of the factors is essentially optional. We believe
     that this narrow reading ignores the context of the
     statute. See Deal v. United States, 508 U.S. 129, 132,
     113 S.Ct. 1993, 124 L.Ed.2d 44 (1993) (noting the
     “fundamental principle of statutory construction ...
     that the meaning of a word cannot be determined in
     isolation, but must be drawn from the context in which
     it is used”). A commonsense reading of the text--
     especially when combined with the legislative history--
     makes clear that the BOP is required to consider each
     factor. “May” refers to the ability of the BOP to make
     ultimate placement designations, not to the § 3621
     factors. The word “may” is a full fifty words away
     from the considerations, and its effect is separated
     from the factors with a comma. [Emphasis added.]

     We find section 1.6015-5(b), Income Tax Regs., to be a

similar attempt to limit factors for consideration in making the

mandated determination under section 6015(f) in a way that is

contrary to the intent of Congress.    The regulation would enable

the Secretary to avoid consideration of “all the facts and

circumstances” in section 6015(f) cases by imposing a 2-year

period of limitations, the same period of limitations that



     11
       (...continued)
      otherwise and whether within or without the judicial
      district in which the person was convicted, that the
      Bureau determines to be appropriate and suitable,
      considering–-[five specific factors.] [Emphasis added.]
                                 - 28 -

Congress specifically applied to section 6015(b) and (c) but

omitted from subsection (f).12    However, a commonsense reading of

section 6015 is that the Secretary has discretion to grant relief

under section 6015(f) but may not shirk his duty to consider the

facts and circumstances of a taxpayer’s case by imposing a rule

that Congress intended to apply only to subsections (b) and (c).

See also Estate of Roski v. Commissioner, 128 T.C. 113, 128-129

(2007) (finding that where the Commissioner is required to

exercise discretion, the Commissioner may not avoid this

responsibility by imposing a universal rule that is contrary to

the intent of Congress).

     Congress’s intent that the Secretary not have unfettered

discretion in applying section 6015(f) is evidenced by its

reinstatement of the Court’s jurisdiction to review the

Secretary’s determinations in nondeficiency cases under section

6015(f).   In 2006 the Court of Appeals for the Ninth Circuit

overturned a decision of this Court and held that the Tax Court

does not have jurisdiction to review the Secretary’s denial of

relief under section 6015(f) in a case where no deficiency has

been asserted.   Commissioner v. Ewing, 439 F.3d 1009 (9th Cir.

2006), revg. 118 T.C. 494 (2002) and vacating 122 T.C. 32 (2004).


     12
      Sec. 6015(f) requires the Secretary to take into account
“all the facts and circumstances” in deciding whether to grant
equitable relief. However, we do not decide at this time whether
a period of limitations that was longer than 2 years would run
afoul of this requirement.
                              - 29 -

Soon after, the Court of Appeals for the Eighth Circuit took the

same position.   Bartman v. Commissioner, 446 F.3d 785 (8th Cir.

2006), affg. in part and vacating T.C. Memo. 2004-93.

Accordingly, the Court reversed its prior position and issued

Billings v. Commissioner, 127 T.C. 7 (2006), construing section

6015(e) as not giving the Court jurisdiction over nondeficiency

petitions filed under section 6015(f).

     In response, in the TRHCA div. C, sec. 408, Congress

reinstated our jurisdiction to review the Commissioner’s

determinations under section 6015(f) where no deficiency has been

asserted.

     While a taxpayer’s delay in applying for relief under

section 6015(f) is a factor to be considered in applying the “all

the facts and circumstances” test of section 6015(f), the

Secretary must be reasonable when creating restrictions that

categorically exclude taxpayers from relief.   For example, in

Rev. Proc. 2003-61, supra, the Secretary imposes a requirement

that the requesting spouse must not have transferred property to

the nonrequesting spouse as part of fraudulent scheme by the

spouses in order to be eligible for relief under section 6015(f).

However, unlike restrictions that exclude taxpayers who request

relief after engaging in fraudulent activities, whether a

taxpayer requests relief within 2 years of the IRS’ first

collection activity does not necessarily indicate whether it
                              - 30 -

would be equitable to grant the taxpayer relief.   While we need

not decide today whether any temporal limitation would be

appropriate, it is clear from the omission of a 2-year

limitations period in section 6015(f) that such a 2-year

limitations period is impermissible.

     e.   No Tacit Congressional Approval

     Finally, respondent argues that under Hanover Ins. Co. v.

Commissioner, 65 T.C. 715, 719-720 (1976), regulations and

interpretations by the Secretary that have continued without

substantial change, applying to unamended or substantially

reenacted statutes, are deemed to have received congressional

approval and have the effect of law.   Respondent argues that the

fact that Congress has amended section 6015(f) twice since the

Secretary first imposed the 2-year limitations period shows that

Congress has tacitly approved of the limitation.   See

Consolidated Appropriations Act, 2001, Pub. L. 106-554, app. G,

sec. 313, 114 Stat. 2763A-640 (2000); TRHCA div. C, sec. 408.

     While we agree with this general rule, we do not believe it

applies here.   First, the regulations in Hanover and the cases

cited therein had been in place for at least 20 years, sometimes

as long as 39 years.   Hanover Ins. Co. v. Commissioner, supra at

716; see also United States v. Correll, 389 U.S. 299, 302 n.10

(1967); Fribourg Navigation Co. v. Commissioner, 383 U.S. 272,

279-280 nn.4&5 (1966); Helvering v. Winmill, 305 U.S. 79, 82
                               - 31 -

(1938).   Furthermore, regarding the regulations or

interpretations at issue in Hanover and Correll, there was

evidence that Congress had considered and rejected arguments

against them.   See United States v. Correll, supra at 305 n.20

(Congress heard pleas for a change in the disputed rule but did

not make the requested change); H. Conf. Rept. 99-841 (Vol. II),

at II-357 (1986), 1986-3 C.B. (Vol. 4) 1, 357 (explicitly citing

the regulation disputed in Hanover).

     While 10 years may be long enough to treat Congress’

inaction as tacit approval in some cases, such as where Congress

is clearly aware of the disputed regulation and amends a portion

of the related statute without superseding the regulation, the

Commissioner has provided the Court with no indication that the

application of the 2-year limitations period has been brought to

Congress’ attention or that Congress has considered whether the

limitations period is valid.

     It was not until 2003 that the Court first upheld the

Commissioner’s disallowance of relief under section 6015(f)

because of the 2-year limitations period, Campbell v.

Commissioner, 121 T.C. 290 (2003), and the Court has done so on

only two other occasions, Durham v. Commissioner, T.C. Memo.

2004-184; Hall v. Commissioner, T.C. Memo. 2004-170.    In each

case the requesting spouse appeared pro se, failed to challenge

the validity of the regulation (or may not have been aware that
                               - 32 -

it existed), and did not appeal the Court’s decision.    In Durham

we noted that the Court was not expressing an opinion on the

validity of the rule, and the taxpayer would not have been

entitled to relief even if she had satisfied the 2-year

limitations period.    In Hall we did not discuss the validity of

the 2-year limitations period.

     This situation is far different from the situation that

prompted Congress to amend section 6015(f) in 2006.     As discussed

above, before Congress amended section 6015(e) to give the Court

jurisdiction to review denial of relief under section 6015(f),

the Court of Appeals for the Ninth Circuit overturned a decision

of this Court on the issue, and this Court subsequently reversed

its prior position.    Commissioner v. Ewing, supra; Billings v.

Commissioner, supra.    The TRHCA was enacted less than a year

after the Court of Appeals held that the Court did not have

jurisdiction in such cases, and there is no evidence that the 2-

year limitations period in section 1.6015-5(b)(1), Income Tax

Regs., had been brought to Congress’ attention.   It seems that

before petitioner raised the issue in this case, this rule was

given very little attention in any forum.   Accordingly, we do not

believe that Congress’ failure to overturn section 1.6015-

5(b)(1), Income Tax Regs., amounts to a tacit approval of the 2-

year limitations period.
                               - 33 -

7.   Conclusion

      Accordingly, we hold that section 1.6015-5(b)(1), Income Tax

Regs., is an invalid interpretation of section 6015, and

respondent abused his discretion by failing to consider all facts

and circumstances in petitioner’s case.     Further proceedings will

be needed to fully determine petitioner’s 1999 tax liability.

      On the basis of the foregoing,


                                            An appropriate order will

                                       be issued.

      Reviewed by the Court.

     COLVIN, COHEN, WELLS, FOLEY, VASQUEZ, MARVEL, HAINES,
WHERRY, KROUPA, GUSTAFSON, and PARIS, JJ., agree with this
majority opinion.

      GALE, J., dissents.
                                - 34 -

     HALPERN, J., dissenting:     Although I join the dissenting

opinion of Judges Thornton and Holmes, I write separately to

furnish what I believe to be another significant reason for

rejecting the majority’s conclusion that section 1.6015-5(b)(1),

Income Tax Regs., is an impermissible interpretation of section

6015(f) and, therefore, invalid.

     The 2-year period of limitations on requests for equitable

relief under section 6015(f) promulgated in section 1.6015-

5(b)(1), Income Tax Regs., is not the absolute temporal bar to

relief that the majority assumes it to be.    Section 301.9100-

1(c), Proced. & Admin. Regs., gives the Commissioner discretion

to “grant a reasonable extension of time under the rules set

forth in § * * * 301.9100-3 to make a regulatory election” (9100

relief).   Pursuant to section 301.9100-3(a), Proced. & Admin.

Regs., requests for 9100 relief “will be granted” provided the

taxpayer is able to establish that he or she “acted reasonably

and in good faith, and the grant of relief will not prejudice the

interests of the Government”, conditions which petitioner,

presumably, is able to satisfy.    The term “election” is broadly

defined to include “an application for relief in respect of tax”.

Sec. 301.9100-1(b), Proced. & Admin. Regs.

     The majority, in note 10 of its opinion, accepts the “mutual

position” of the parties that 9100 relief is unavailable to

extend the 2-year period of limitations under section 1.6015-
                              - 35 -

5(b)(1), Income Tax Regs., because, in the light of respondent’s

position to that effect, “any effort by petitioner to apply for

[9100] relief * * * would be fruitless.”    In support of that

position, the majority cites Bowles v. Seminole Rock & Sand Co.,

325 U.S. 410, 414 (1945), and Phillips Petroleum Co. v.

Commissioner, 101 T.C. 78, 97 (1993), affd. without published

opinion 70 F.3d 1282 (10th Cir. 1995), for the proposition that

an agency’s interpretation of its own regulation is entitled to

“controlling weight unless it is plainly erroneous or

inconsistent with the regulation.”     The majority overlooks the

fact that, in both of those cases, deference was afforded to

agency interpretations issued in the form of published guidance

(in Seminole Rock, a “bulletin” issued contemporaneously with the

regulation and, in Phillips Petroleum, a published IRS Notice).

Here, respondent’s position is no more than a litigating position

that, in my view, is without merit, or, in the language of Bowles

v. Seminole Rock & Sand Co., supra at 414, “plainly erroneous”

and “inconsistent with the regulation”, which would cause its

rejection in any event.

     Nor do I agree with the majority’s conclusion (also in note

10) that the procedures for requesting 9100 relief are so

burdensome as to make that relief “practically” unavailable to

putative innocent spouses.   Section 301.9100-3(e)(2), Proced. &

Admin. Regs., imposes a not unreasonable requirement that the

individual seeking relief under section 6015(f) submit a
                                - 36 -

statement, albeit in affidavit form and under penalties of

perjury, demonstrating that he or she acted reasonably and in

good faith in failing to meet the regulatory deadline; and many,

if not most, of the requirements for third-party affidavits and

additional information set forth in section 301.9100-3(e)(3) and

(4), Proced. & Admin. Regs., are of doubtful application to

putative innocent spouses.   And although it is true that (1) a

request for 9100 relief is treated as a request for a letter

ruling, see sec. 301.9100-3(e)(5), Proced. & Admin. Regs., and

(2) a request for a letter ruling generally must be accompanied

by a great deal of information and documentary support, see Rev.

Proc. 2009-1, sec. 7, 2009-1 I.R.B. 1, 16, much of the required

information and documentation is not germane to requests for

innocent spouse relief under section 6015(f), and substantial

compliance with the need to furnish the balance of the required

information and documentation will probably suffice.   See

Militello v. Cent. States, Se. & Sw. Areas Pension Fund, 360 F.3d

681, 688-689 (7th Cir. 2004).
                                - 37 -

     THORNTON and HOLMES, JJ., dissenting:      We agree with our

colleagues that Chevron is the test we have to apply but

respectfully disagree with their conclusion that the 2-year

limitations period in section 1.6015-5(b)(1), Income Tax Regs.,

is invalid under either Chevron step 1 or step 2.

I.   Chevron:    Step 1

     Chevron’s step 1 asks “whether Congress has directly spoken

to the precise question at issue.”       Chevron U.S.A., Inc. v.

Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984).         The

majority hears “audible silence” in the absence from section

6015(f) of the expressly stated 2-year deadlines of subsections

(b) and (c).    Majority op. p. 14.   From this it concludes that

Congress has foreclosed a 2-year, and possibly any, deadline for

subsection (f) relief.

     The majority likewise hears a whisper from the provision of

section 6015(f)(2) that the Secretary may grant equitable relief

to a spouse under subsection (f) only “ `if * * * relief is not

available to such individual under subsection (b) or (c)’”.        See

majority op. p. 14.    From this it similarly reasons that

subsection (f) relief must be broader than relief under

subsection (b) or (c); and since subsection (b) and (c) relief

requires meeting a 2-year deadline, making subsection (f) relief

broader requires that requests for subsection (f) relief not be

subject to the same deadline.    Majority op. pp. 14-15.    (The

majority does later admit, though, that “the timing of the
                              - 38 -

request for relief is not the only possible element by which

subsection (f) relief would be broader than that of subsection

(b) or (c).”   Majority op. p. 15.)

     We agree with the majority that the precise question in this

case is whether the Secretary can impose a 2-year limit on

requests for relief under section 6015(f).   And we agree that the

answer to this question depends on a close reading of the Code.

But we disagree that the express time limits of subsections (b)

and (c) denote or even imply that there can be no time limits in

subsection (f), for congressional silence may simply be

ambiguous.   See Crosby v. Natl. Foreign Trade Council, 530 U.S.

363, 388 (2000) (“The State’s inference of congressional intent

is unwarranted here, therefore, simply because the silence of

Congress is ambiguous.”); Burns v. United States, 501 U.S. 129,

136 (1991) (“An inference drawn from congressional silence

certainly cannot be credited when it is contrary to all other

textual and contextual evidence of congressional intent.”).

     Subsection (f) differs markedly from subsections (b) and (c)

in giving the Secretary discretion to grant relief where there is

an underpayment of tax; i.e., where the joint return shows tax

due that is not paid with the return.   When added to the Code in

1998, section 6015(f) was new and important and affected a lot of

cases, since innocent spouse relief before section 6015(f) was

limited to understatements; i.e., where the joint return shows

less tax due than is owed.   See Butler v. Commissioner, 114 T.C.
                               - 39 -

276, 283 (2000).1   We think this suggests that it is the

Secretary’s discretion, and not the dilatory applicant’s ability

to request relief, that subsection (f) makes broad.

     Consistent with this view, subsections (b) and (c) are

mandatory subsections–if a taxpayer meets their requirements, the

Secretary has to grant relief.   Section 6015(f), in contrast, is

a permissive section--if a taxpayer follows the prescribed

procedures, the Secretary “may relieve such individual of such

liability.”

     This distinction is important in understanding the

majority’s discussion, majority op. pp. 25-27, of the Bureau of

Prisons cases.   It relies on the Second, Third, Eighth, and Tenth

Circuits’ invalidation of 28 C.F.R. secs. 570.20 and 570.21--

regulations that categorically denied some prisoners the chance

to serve their entire sentences in halfway houses.2   The problem

these cases identified was 18 U.S.C. sec. 3621(b), which gave the

BOP discretion over where to house inmates but required the

agency to consider at least five listed factors.   All these

Circuit Courts concluded that the BOP regulations categorically

removed the agency’s ability to consider these five listed




     1
      We discuss Congress’s intent in adding sec. 6015(f) in
greater detail in our analysis of Chevron step 2, infra p. 45.
     2
      See Wedelstedt v. Wiley, 477 F.3d 1160 (10th Cir. 2007);
Levine v. Apker, 455 F.3d 71 (2d Cir. 2006); Fults v. Sanders,
442 F.3d 1088 (8th Cir. 2006); Woodall v. Fed. Bureau of Prisons,
432 F.3d 235 (3d Cir. 2005).
                              - 40 -

factors for at least some individual prisoners.    That meant the

challenged regulations stumbled on Chevron step 1.

     But where is the similar mandatory consideration of any

factor in the section of the Code we are looking at?    Section

6015(f) does not provide that “if, taking into account all the

facts and circumstances, * * * the Secretary shall relieve such

individual of such liability;” it provides that “if * * * taking

into account all the facts and circumstances, * * * the Secretary

may relieve such individual of such liability.”    (Emphasis

added.)   The distinction is an important one.   And it is the

distinction at the heart of the Supreme Court’s decision in Lopez

v. Davis, 531 U.S. 230 (2001)-- the decision that, though

mentioned briefly in the opinion, majority op. p 26--is much more

similar to our case than the halfway-house cases on which the

majority relies.

     Lopez involved a different statute, 18 U.S.C. sec.

3621(e)(2)(B), providing that the prison time for an inmate

convicted of a nonviolent crime “may be reduced by the Bureau of

Prisons”.   The BOP issued a regulation that categorically

excluded prisoners who had possessed a firearm in connection with

their crime; and an affected prisoner sued to invalidate the

regulation, arguing that the statutory definition of a class of

eligible inmates necessarily invalidated additional exclusions by

regulation--he wanted case-by-case consideration.    Lopez v.

Davis, supra at 239.   The Court rejected his argument.   In the
                                - 41 -

absence of express statutory language “the agency may exclude

inmates either categorically or on a case-by-case basis, subject

of course to its obligation to interpret the statute reasonably.”

Id. at 240.   The Court held that

     “Even if a statutory scheme requires individualized
     determinations,” which this scheme does not, “the
     decisionmaker has the authority to rely on rulemaking
     to resolve certain issues of general applicability
     unless Congress clearly expresses an intent to withhold
     that authority.” * * *

Id. at 243-244 (quoting Am. Hosp. Association v. NLRB, 499 U.S.

606, 612 (1991)).3

     There is no withholding of such authority here--in contrast

to the specific factors Congress told the Secretary to consider

in deciding applications for relief under section 6015(b) and

(c), it left relief under section 6015(f) to his discretion.    It

chose to use “may” in section 6015(f) to grant wider discretion

to the Secretary than it did in choosing “shall” in section

6015(b) and (c).     Read sensibly, section 6015(f) gives the



     3
      Am. Hosp. Association v. NLRB, 499 U.S. 606, 612 (1991),
decided whether the NLRB’s obligation to decide the appropriate
size of the collective bargaining unit “in each case”, 29 U.S.C.
sec. 159(b), meant that it had to exercise “standardless
discretion in each case.” The answer was “no”, because

     “[T]he principal instruments for regularizing the
     system of deciding ‘in each case’ are classifications,
     rules, principles, and precedents. Sensible men could
     not refuse to use such instruments and a sensible
     Congress would not expect them to.” * * *

Id. (quoting Davis, Administrative Law Text, sec. 6.04, at 145
(3d ed. 1972)).
                              - 42 -

Secretary the authority, but not the duty, to grant relief

unavailable under section 6015(b) and (c).   And read in the

context of delegations of authority to administrative agencies

more generally, the statute gives the Secretary authority to

issue rules and procedures instead of making case-by-case

decisions as to the timeliness of requests for relief.

     The majority also reads the statutory command to consider

“all the facts and circumstances” (emphasis added) as forcing us

to toss out the 2-year time limit, because such a strict deadline

makes the time that it takes a spouse to request relief into a

single, decisive fact or circumstance.   Yet section 6015(f), in a

passage quoted but unconstrued by the majority, creates

discretionary authority to provide equitable relief “Under

procedures prescribed by the Secretary”.

     The question that the majority should have asked is whether

setting a deadline is a “procedure”--if it is, then we have no

business holding that the Secretary could not set one.    The first

clue that the 2-year limit is a procedural requirement, and not

just another one of the facts to be weighed in each case, is

section 6015(b)(1)(D).   In that section, the Secretary is also

told to take “into account all the facts and circumstances” in

deciding whether it is “inequitable” to hold the requesting

spouse jointly liable for a particular tax debt.   We have already

held that the language of section 6015(f) does not significantly

differ from this parallel language in section 6015(b).    Alt v.
                              - 43 -

Commissioner, 119 T.C. 306, 316 (2002), affd. 101 Fed. Appx. 34

(6th Cir. 2004); Becherer v. Commissioner, T.C. Memo. 2004-282;

Doyel v. Commissioner, T.C. Memo 2004-35.     And the equitable

factors we consider under section 6015(b) are the same equitable

factors we consider under section 6015(f).     Alt v. Commissioner,

supra at 316.

     That same section 6015(b) imposes the 2-year deadline for

electing relief.   Sec. 6015(b)(1)(E).    We think this allowed the

Secretary to infer that deadlines for seeking relief are just

part of the procedural rules a taxpayer seeking relief must

follow.   Read in this way, the language in section 6015(b)(1) and

(f) giving the Secretary power to prescribe “procedures” is

identical--except that the Secretary cannot set a deadline of

other than 2 years for section 6015(b) relief.     The silence on

deadlines in section 6015(f), seen in this light, is what courts

since Chevron have construed to be an implicit delegation to the

agency involved to fill the gap with its own construction.

     Treating deadlines as procedural is the general rule in

nontax administrative cases as well.     The Seventh Circuit--the

court to which this case may be appealed--has already held that

rules setting deadlines for seeking discretionary relief from

immigration orders are procedural:

     are the time limits valid and, if so, * * * is the rule
     procedural and within the Attorney General’s grant of
     authority?
                              - 44 -

       We conclude that it is. Section 1003.44(h) [the
     regulation setting the deadline] is similar to time
     limits imposed in the Federal Rules of Civil Procedure,
     Appellate Procedure, and even Criminal Procedure. And,
     in general, the formulation of procedures is left to
     the discretion of the agencies with responsibility for
     substantive judgments. Vermont Yankee Nuclear Power
     Corp. v. NRDC, 435 U.S. 519 * * * (1978). We grant
     deference to agency interpretations of the law it
     administers. Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837
     * * * (1984). * * *
          [Johnson v. Gonzales, 478 F.3d 795, 799 (7th Cir.
     2007).]

See also, e.g., Foroglou v. Reno, 241 F.3d 111, 113 (1st Cir.

2001).

     We finally note that the majority seems not to notice that

the revenue procedure that currently guides the Secretary in the

exercise of his discretion has seven threshold conditions--only

one of which is the 2-year time limit--and a taxpayer who fails

to meet any of them does not currently qualify for equitable

relief.   If we peek into the future to see where the majority’s

reasoning might take us, we can’t help but conclude that at least

some of these other threshold conditions4 will have to be

invalidated as well.   Rev. Proc. 2003-61, sec. 4.01(4), 2003-2

C.B. 296, 297, for example, denies equitable relief to any spouse

who transferred assets as “part of a fraudulent scheme”.    This

language matches section 6015(c)(3)(A)(ii)--and the majority’s



     4
      We say “some” because the list, Rev. Proc. 2003-61, sec.
4.01, 2003-2 C.B. 296, 297, includes some conditions that the
Code itself requires, e.g., that the requesting spouse have filed
a joint return and not be eligible for relief under sec. 6015(b)
or (c).
                                - 45 -

reasoning would seem to bar the Secretary from stopping

fraudsters at the threshold just as much as it would bar him from

stopping the dilatory.

      For all these reasons, we would hold that Congress has not

directly spoken to the precise question of whether the Secretary

may impose a deadline for requesting equitable relief.    This

leaves a gap, and we would therefore climb up to the second step

of Chevron: is the 2-year limit “based on a permissible

construction of the statute”?    Chevron U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. at 843.

II.   Chevron:   Step 2

      Step 2 of Chevron--whether the contested regulation is a

permissible construction of the statute--rests fundamentally on

the reasonableness of the choice made by the agency that issued

the regulation.    See, e.g., Bankers Life & Cas. Co. v. United

States, 142 F.3d 973, 983 (7th Cir. 1998).   In the Seventh

Circuit, this step is also where a court will look to a

provision’s legislative history.    See id. (we “lean toward

reserving consideration of legislative history and other

appropriate factors until the second Chevron step * * *.      In the

second step, the court determines whether the regulation

harmonizes with the language, origins, and purpose of the
                               - 46 -

statute”); see also Square D Co. & Subs. v. Commissioner, 438

F.3d 739, 745 (7th Cir. 2006), affg. 118 T.C. 299 (2002).5

     The legislative history is quite plain on this point,

suggesting that what Congress wanted was primarily to extend

relief to spouses with underpayments.   The original House-passed

version of the expanded relief provisions now found in section

6015(b) included no relief for underpayments.   See H. Conf. Rept.

105-599, at 249-250 (1998), 1998-3 C.B. 747, 1003-1004.     A Senate

amendment would have provided limited relief in underpayment

situations by making the separate liability election (now in

section 6015(c)) applicable to underpayments.   Id. at 250, 1998-3

C.B. at 1004.   The conference committee omitted this aspect of

the Senate amendment and instead gave the Secretary broad

authority in subsection (f) to address such situations.   The

conference report explained:

          The conference agreement does not include the
     portion of the Senate amendment that could provide
     relief in situations where tax was shown on a joint
     return, but not paid with the return. The conferees
     intend that the Secretary will consider using the grant
     of authority to provide equitable relief in appropriate
     situations to avoid the inequitable treatment of
     spouses in such situations. * * * [Id. at 254, 1998-3
     C.B. at 1008.]


     5
      Whether to consider legislative history at step 1 or step 2
is a matter of some controversy. See Coke v. Long Island Care at
Home, Ltd., 376 F.3d 118, 127 n.3 (2d Cir. 2004) (collecting
cases); see also Tax Analysts v. IRS, 350 F.3d 100, 103-104 (D.C.
Cir. 2003); Hosp. Corp. of Am. & Subs. v. Commissioner, 348 F.3d
136, 144 (6th Cir. 2003), affg. 107 T.C. 73 (1996) and 107 T.C.
116 (1996). We put it here because the Seventh Circuit will be
reviewing our decision in this case.
                               - 47 -

     Although the conference report also indicated that this

equitable relief was not to be limited to underpayment

situations, the only other specific example involved a “spouse

that does not know, and had no reason to know, that funds

intended for the payment of tax were instead taken by the other

spouse for such other spouse’s benefit.”   Id.   We find nothing in

this legislative history suggesting that Congress wanted the

Secretary to use his new discretion under subsection (f) to give

relief to those who missed the statutory deadlines for relief

under subsections (b) and (c).

     An ounce of history is worth more than a pound of logic on

this question, especially since the majority opinion does not

even suggest that--quite apart from any legislative history--the

2-year regulatory deadline for requesting relief under subsection

(f) is inherently unreasonable.   Indeed, it cites with apparent

approval an identical 2-year regulatory deadline that applies to

comparable requests for equitable relief from joint and several

liability under section 66(c) where a joint return is filed from

a community property State.6   And it seems to just assume

     6
      The majority seeks to make much of differing deadlines
provided in the sec. 66(c) regulations for so-called traditional
relief, for which the statute has made provision since 1984, and
for “equitable relief”, which Congress authorized in 1998 in the
same legislation containing the sec. 6015 relief provisions.
Seeming to hold out the sec. 66(c) regulations as a model of
sorts, the majority asserts that these regulations provide a
deadline for equitable relief that is “four times as long as the
6-month deadline for traditional relief under section 66(c).”
Majority op. p. 22. The majority falls into error, however, by
                                                   (continued...)
                                 - 48 -

that a 2-year regulatory deadline under subsection (f) is

unreasonable if it is the same as the statutory deadlines found in

subsections (b) and (c).

     We do not share that assumption.     Drawing a negative

inference from subsection (f)’s lack of the 2-year deadlines found

in subsections (b) and (c) falls apart if applied to requests for

relief from underpayments, for which there is no statutory

     6
     (...continued)
misconstruing what it simplistically mischaracterizes as a “6-
month deadline” for requesting traditional relief under sec.
66(c). The actual deadline for traditional relief under the sec.
66(c) regulations is:

         6 months before the expiration of the period of
         limitations on assessment, including extensions,
         against the nonrequesting spouse for the taxable year
         that is the subject of the request for relief, unless
         the examination of the requesting spouse’s return
         commences during that 6-month period. If the
         examination of the requesting spouse’s return commences
         during that 6-month period, the latest time for
         requesting relief * * * is 30 days after the
         commencement of the examination. [Sec. 1.66-
         4(j)(2)(i), Income Tax Regs.]

By contrast, the equitable relief deadline under sec. 66(c) is
the same as the equitable relief deadline under sec. 6015(f);
i.e., 2 years after the first collection activity. It is not
accurate to say that the equitable relief deadline is four times
longer than the sec. 66(c) traditional relief deadline or, for
that matter, that they correlate according to any mathematical
ratio. Indeed, the traditional relief deadline would seem no
more likely to fall on a date that is (as the majority suggests)
exactly 18 months before the equitable relief deadline than it
would be to fall on a date that is after the equitable relief
deadline. In any event, we do not understand the majority to
suggest, nor do we understand how it plausibly could be
maintained, that the Secretary’s prescribing a 2-year deadline
for requesting equitable relief under sec. 66(c) made it
unreasonable for the Secretary to prescribe the same 2-year
deadline for comparable requests for equitable relief arising
under sec. 6015(f).
                               - 49 -

deadline but only a delegation of authority to the Secretary.

Holding that the Secretary cannot exercise his discretion to set a

common deadline isn’t a reasonable inference; it’s the usurpation

of the authority that Congress delegated to the Secretary, not us.

     We would hold that the Secretary acted eminently reasonably

in exercising his procedure-making authority by prescribing a

deadline under subsection (f) that is comparable to the statutory

deadlines under subsections (b) and (c) and identical to the

regulatory deadline for equitable relief under section 66(c).

Indeed, considerations of administrability strongly support

consistent deadlines under these various provisions.   Spouses

filing requests for relief under either section 6015 or section

66(c) use the same Form 8857, Request for Innocent Spouse Relief.

See Rev. Proc. 2003-61, sec. 5, 2003-2 C.B. at 299.    Many if not

most spouses requesting relief may be unsophisticated in the tax

laws and may not fully appreciate which of the various provisions

of section 6015 or section 66(c) might be most likely to benefit

them.   We doubt that most applicants seeking relief carefully

parse the different categories for which they might qualify; more

likely, they simply plead for whatever relief might be available.

     In recognition of this reality, the Secretary’s Form 8857

elicits information pertinent to all forms of relief under

sections 6015 and 66(c) but does not require the requesting spouse

to specify under which section or subsection relief is sought.

Similarly, the regulations provide that a single claim for relief
                               - 50 -

will suffice for considering relief under section 6015   (b), (c),

and (f).   Sec. 1.6015-1(a)(2), Income Tax Regs.   Having comparable

deadlines for the various types of relief facilitates this

sensible administrative practice.   The majority would confound

this practice in bizarre ways and place undue pressure upon the

manner in which the request for relief might be drawn up or

characterized.

     For instance, the Court is today invalidating the regulatory

deadline for equitable relief under subsection (f) but approving

an identical regulatory deadline for equitable relief under

section 66(c).   The Court is also holding that a request for

relief deemed to arise under subsection (b) or (c) remains subject

to their 2-year statutory deadlines but may be considered under

subsection (f) even if it misses those deadlines, with the

untimeliness apparently to be taken into account as part of a

facts-and-circumstances analysis.

     By contrast, a request for relief deemed to arise under

subsection (f)--for example, a request involving an underpayment,

which cannot arise under subsection (b) or (c)--apparently would

be subject to no deadline because the majority has invalidated the

regulatory 2-year deadline under subsection (f).   Although the

majority states that “the taxpayer’s delay in applying for relief

under section 6015(f) is a factor to be considered in applying

‘all the facts and circumstances’ test of section 6015(f)”, it

declines to answer the obvious followup question of whether “any
                                 - 51 -

temporal limitation would be appropriate”.   Majority op. pp. 29-

30.   Consequently, in the absence of any “temporal limitation”, it

is not apparent how “delay” in applying for subsection (f) relief

should be identified or measured.

      It would have been better to leave the regulation alone

rather than create a tangle that will now take so much time to

unravel.

      We respectfully dissent.

      HALPERN and MORRISON, JJ., agree with this dissenting

opinion.
