Seminole Nursing Home, Inc. v. Commissioner of Internal Revenue

PUBLISH
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
_________________________________
SEMINOLE NURSING HOME, INC.,
Petitioner - Appellant,
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent - Appellee.
No. 20-9005
_________________________________
Appeal from the United States Tax Court
(CIR No. 24577-14 L)
_________________________________
David J. Looby, Conner & Winters, LLP, Oklahoma City, Oklahoma for the Petitioner-
Appellant.
Kathleen E. Lyon, Attorney, Tax Division (Richard E. Zuckerman, Principal Deputy
Assistant Attorney General and Michael J. Haungs, Attorney, Tax Division, with her on
the brief), Department of Justice, Washington, D.C., for Respondent-Appellee.
_________________________________
Before HARTZ, SEYMOUR, and MURPHY, Circuit Judges.
_________________________________
HARTZ, Circuit Judge.
_________________________________
The Internal Revenue Service (IRS) may levy on the property of a taxpayer who
fails to pay delinquent taxes after notice and demand. See 26 U.S.C. § 6331(a). But the
Tax Code provides that the levy may be released on grounds of economic hardship. See
FILED
United States Court of Appeals
Tenth Circuit
September 2, 2021
Christopher M. Wolpert
Clerk of Court
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id. § 6343(a)(1)(D). A regulation issued by the Secretary of the Treasury restricts that
economic-hardship exception to individual taxpayers. See 26 C.F.R. § 301.6343-
1(b)(4)(i). Seminole Nursing Home, Inc. challenges the validity of the regulation,
contending that the economic-hardship exception must be applied to all taxpayers,
including corporations. The United States Tax Court rejected the contention on the
ground that the regulation was a reasonable interpretation of an ambiguous statute. See
Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842–43 (1984).
Seminole appeals. Exercising jurisdiction under 26 U.S.C. § 7482(a)(1), we agree with
the Tax Court and affirm.
I. BACKGROUND
When Seminole failed to pay $61,916.19 in federal employment taxes due for
2013, the IRS provided notice to Seminole of its intent to issue a levy to collect these
unpaid taxes plus penalties and interest. See 26 U.S.C. § 6330(a) (requiring notice).
After receiving a levy notice the taxpayer has the right to request a collections due-
process hearing before the IRS Office of Appeals. See id. § 6330(b). The request
temporarily suspends the levy. See id. § 6330(e)(i). At the hearing the taxpayer may
raise “any relevant issue” relating to the tax or levy, including challenges to the
appropriateness of the collection action and offers of collection alternatives, such as an
installment agreement. Id. § 6330(c)(2)(A). The Office of Appeals issues a
determination that takes into consideration the “issues raised” and whether the proposed
collection action “balances the need for the efficient collection of taxes with the
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legitimate concern of the [taxpayer] that any collection action be no more intrusive than
necessary.” Id. §§ 6330(c)(3)(B) and (c)(3)(C).
Seminole requested a collection due-process hearing. Before the hearing it
proposed an installment agreement permitting it to pay off its debt through monthly
payments of $6,000 to the IRS. And on August 25, 2014, one day before the hearing,
Seminole submitted a three-paragraph letter to the Office of Appeals stating that, “[i]n
addition to seeking a collection alternative . . . [, it] also seeks to challenge the
appropriateness of the proposed levy on the grounds of economic hardship.” Aplt. App.,
Vol. 1 at 86. Seminole acknowledged that its assets included “an outstanding accounts
receivable balance of $313,112.98 due to nonpayment of monies billed to Medicare and
Medicaid”—more than four times what it owed the IRS in taxes, penalty, and interest at
that time. Id. at 86. It asserted, however, that a levy would cause economic hardship
because it could not sustain a levy “and still provide essential care services to the patients
residing at [its] nursing facility.” Id. Seminole quoted the language of the economic-
hardship exception, stating that the plain language of the statute indicated “Congress’
intent . . . to mandate the release of a levy if it creates a financial economic hardship on a
taxpayer.” Id. It observed that the text of the statute “does not distinguish between
businesses and individuals,” and that “the term ‘taxpayer’ is defined in [the Tax
Code] . . . to mean and include an individual, a trust, estate, partnership, association,
company or corporation” subject to tax. Id. at 86–87. It said that it was “[c]learly”
eligible for the economic-hardship exception because it is a corporation experiencing
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economic hardship. Id. at 87. It did not mention the Treasury Regulation limiting the
economic-hardship exception to individuals.
At the hearing, which was conducted by telephone, Seminole did not dispute the
amount owed. The Office of Appeals rejected the proposed installment agreement on
two grounds: (1) Seminole had sufficient assets to pay its tax debt in full; and (2) it was
ineligible for an installment agreement because it had not made all its required federal tax
deposits for 2014. The Office also rejected Seminole’s economic-hardship argument,
explaining that Treasury Regulation § 301.6343-1(b)(4) limits economic-hardship relief
to individual taxpayers. And it determined that “[i]n balancing the least intrusive method
of collection with the need to efficiently administer the tax laws and the collection of
revenue, . . . the balance favors issuance of the levy, and is no more intrusive than
necessary.” Id. at 94. The Office issued a Notice of Determination sustaining the levy.
Seminole petitioned the Tax Court for relief. The court rejected Seminole’s
economic-hardship argument because Treasury Regulation § 301.6343-1(b)(4)(i) limited
that relief to individual taxpayers, and it had previously held in Lindsay Manor Nursing
Home, Inc. v. Comm’r, 148 T.C. 235, 261 (2017), that the regulation was entitled to
Chevron deference. It also affirmed that Seminole was ineligible for an installment
agreement, although it found that the Office of Appeals had made a calculation error
when determining Seminole’s monthly income. The court explained that the calculation
error did not affect Seminole’s installment-plan eligibility, but it could have affected how
the Office “balance[d] the need for the efficient collection of taxes” against the
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intrusiveness of a collection action. 26 U.S.C. § 6330(c)(3)(C). It therefore remanded
the matter to the Office of Appeals to reconsider its balancing analysis.
On remand the Office of Appeals issued a letter to Seminole scheduling a second
hearing and requesting that Seminole submit updated financial statements and proof that
Seminole was current with its federal tax deposits in advance of the hearing. Seminole
did not attend the hearing, nor did it provide the requested documents. The Office issued
a second letter providing Seminole with additional time to submit the requested
documents, but Seminole still did not respond.
On November 3, 2017, the Office issued a supplemental notice of determination
sustaining the levy. In April 2018 Seminole filed motions for reconsideration and
summary judgment with the Tax Court. The motions argued, among other things, that
the Tax Court should apply the economic-hardship exception to Seminole because, while
the case was on remand, this circuit, on the taxpayer’s appeal of the Tax Court decision in
Lindsay Manor, had vacated the Tax Court decision on the ground that the controversy
had been “moot when the Tax Court published its decision.” Lindsay Manor Nursing
Home, Inc. v. Comm’r, 725 F. App’x 713, 717 (10th Cir. 2018) (unpublished). But the
Tax Court rejected this argument and explained that reconsideration was unnecessary
because the Tenth Circuit “only vacated . . . Lindsay Manor for procedural purposes (i.e.,
mootness), not for substantive reasons.” Aplt. App., Vol. 2 at 447. The Tax Court
denied relief.
Seminole appeals both the Tax Court’s affirmance of the IRS’s determination
sustaining the levy and its denial of the request for reconsideration.
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II. DISCUSSION
For better or worse, “taxes are the lifeblood of government, and their prompt and
certain availability an imperious need.” Bull v. United States, 295 U.S. 247, 259 (1935).
The Secretary of the Treasury, generally acting through the IRS, has a powerful toolkit to
serve that need. Under 26 U.S.C. § 6321, “If any person liable to pay any tax neglects or
refuses to pay the same after demand, the amount . . . shall be a lien in favor of the United
States upon all property and rights to property, whether real or personal, belonging to
such person.” And the IRS need not tarry to pursue collection: “If any person liable to
pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it
shall be lawful for the Secretary to collect such tax . . . by levy upon all property and
rights to property [other than certain exempt property] belonging to such person or on
which there is a lien . . . .” Id. § 6331(a).
The Internal Revenue Code, however, recognizes five exceptional circumstances
in which the Secretary must release a levy, at least in part:
Under regulations prescribed by the Secretary, the Secretary shall
release the levy upon all, or part of, the property or rights to property levied
upon and shall promptly notify the person upon whom such levy was made
(if any) that such levy has been released if—
(A) the liability for which such levy was made is satisfied or becomes
unenforceable by reason of lapse of time,
(B) release of such levy will facilitate the collection of such liability,
(C) the taxpayer has entered into an agreement under section 6159 to
satisfy such liability by means of installment payments, unless such
agreement provides otherwise,
(D) the Secretary has determined that such levy is creating an
economic hardship due to the financial condition of the taxpayer, or
(E) the fair market value of the property exceeds such liability and
release of the levy on a part of such property could be made without
hindering the collection of such liability.
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For purposes of subparagraph (C), the Secretary is not required to release
such levy if such release would jeopardize the secured creditor status of the
Secretary.
Id. § 6343(a)(1).
This appeal requires us to resolve a controversy concerning the meaning of
subparagraph (D), which creates the economic-hardship exception. The focus of the
controversy is a regulation issued by the Secretary. The Secretary has a general power
under the Tax Code to “prescribe all needful rules and regulations for the enforcement of
[the Tax Code], including all rules and regulations as may be necessary by reason of any
alteration of law in relation to internal revenue.” Id. § 7805(a). That authority is
magnified with respect to the economic-hardship exception since § 6343(a)(1) itself
states that the release of a levy under any of the five exceptions shall be “[u]nder
regulations prescribed by the Secretary”; and with respect to the economic-hardship
exception in particular, a release of the levy is permissible only if “the Secretary has
determined that such levy is creating an economic hardship.” Id. § 6343(a).
The regulation in question, 26 C.F.R. § 301.6343-1(b), states in pertinent part:
The [district director, service center director, or compliance center
director] must release the levy upon all or a part of the property or rights to
property levied upon if he or she determines that one of the following
conditions exists—
. . . .
(4) Economic hardship—(i) General rule. The levy is creating an
economic hardship due to the financial condition of an individual taxpayer.
This condition applies if satisfaction of the levy in whole or in part will
cause an individual taxpayer to be unable to pay his or her reasonable basic
living expenses. The determination of a reasonable amount for basic living
expenses will be made by the director and will vary according to the unique
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circumstances of the individual taxpayer. Unique circumstances, however,
do not include the maintenance of an affluent or luxurious standard of
living.
(ii) Information from taxpayer. In determining a reasonable amount for
basic living expenses the director will consider any information provided
by the taxpayer including—
(A) The taxpayer’s age, employment status and history, ability to earn,
number of dependents, and status as a dependent of someone else;
(B) The amount reasonably necessary for food, clothing, housing
(including utilities, home-owner insurance, home-owner dues, and the like),
medical expenses (including health insurance), transportation, current tax
payments (including federal, state, and local), alimony, child support, or
other court-ordered payments, and expenses necessary to the taxpayer’s
production of income (such as dues for a trade union or professional
organization, or child care payments which allow the taxpayer to be
gainfully employed);
(C) The cost of living in the geographic area in which the taxpayer
resides;
(D) The amount of property exempt from levy which is available to pay
the taxpayer’s expenses;
(E) Any extraordinary circumstances such as special education expenses,
a medical catastrophe, or natural disaster; and
(F) Any other factor that the taxpayer claims bears on economic hardship
and brings to the attention of the director.
(iii) Good faith requirement. In addition, in order to obtain a release of a
levy under this subparagraph, the taxpayer must act in good faith.
Examples of failure to act in good faith include, but are not limited to,
falsifying financial information, inflating actual expenses or costs, or
failing to make full disclosure of assets.
Because the regulation applies only to individuals, and Seminole is a corporation,
it was summarily denied its request for an economic-hardship exception. The Tax Court
affirmed the denial. Seminole contends that the regulation is unlawful because it
contradicts the statute it purports to interpret, which applies to all taxpayers, not just
individuals.
“We review decisions of the Tax Court in the same manner as civil actions tried
without a jury”: we “review legal conclusions de novo and factual determinations only
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for clear error.” Hamilton v. Comm’r, 955 F.3d 1169, 1171–72 (10th Cir. 2020)
(emphasis omitted). This appeal presents only a legal issue, the interpretation of a
statute.
Courts determine the validity of a regulation’s interpretation of a statute by
applying the two-step framework set forth in Chevron. See Mayo Found. for Med. Educ.
& Rsch. v. United States, 562 U.S. 44, 55 (2011) (“The principles underlying our decision
in Chevron apply with full force in the tax context.”).
Under Chevron step one the court asks “whether Congress has directly spoken to
the precise question at issue.” 467 U.S. at 842. If the statute unambiguously expresses
Congress’s intent, there is no need to consider the agency’s interpretation; “the court, as
well as the agency, must give effect to the unambiguously expressed intent of Congress.”
Id. at 842–43; see Wisconsin Ctr. Ltd. v. United States, 138 S. Ct. 2067, 2074 (2018)
(declining to apply Chevron deference to IRS interpretation where meaning of statute was
clear). Determining whether a statute is ambiguous on a particular point can be an
arduous undertaking; “a court must exhaust all the ‘traditional tools’ of construction.”
Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019) (quoting Chevron, 467 U.S. at 843, n.9).
The court “must carefully consider the text, structure, history, and purpose of a [statute],”
and proceed to step two only if “the interpretive question still has no single right answer.”
Id. (internal quotation marks and original brackets omitted).
At step two “the question becomes whether the agency regulation is a permissible
construction of the statute.” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291–92 (1988).
In determining whether a construction is permissible, “[t]he court need not conclude that
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the agency construction was the only one it permissibly could have adopted to uphold the
construction, or even the reading the court would have reached if the question initially
had arisen in a judicial proceeding.” Chevron, 467 U.S. at 843 n.11. A construction is a
permissible one if it “reflects a plausible construction of the plain language of the statute
and does not otherwise conflict with Congress’ expressed intent.” Rust v. Sullivan, 500
U.S. 173, 184 (1991). If the agency’s construction is permissible, the court “must give
deference to the agency’s interpretation of the statute.” K Mart Corp., 486 U.S. at 292.
Seminole argues that the hardship exceptional circumstance is unambiguous
because 26 U.S.C. § 7701—the definitions section for the Tax Code—defines taxpayer as
“any person subject to any internal revenue tax,” § 7701(a)(14) (emphasis added), and
defines person to include “an individual, a trust, estate, partnership, association, company
or corporation,” § 7701(a)(1) (emphasis added). Also, Seminole notes that “[t]he text [of
§ 6343(a)(1)(D)] makes no distinction between an individual taxpayer and a corporate
taxpayer.” Aplt. Br. at 19.
But matters are not so straightforward. To begin with, § 7701(a) prefaces the
definitions contained in that subsection by saying that the definitions apply “[w]hen used
in this title, where not otherwise distinctly expressed or manifestly incompatible with the
intent thereof.” This language recognizes the general principal that a court must read
statutory language in light of the statutory scheme as a whole. See Davis v. Mich. Dep’t
of Treasury, 489 U.S. 803, 809 (1989) (“It is a fundamental canon of statutory
construction that the words of a statute must be read in their context and with a view to
their place in the overall statutory scheme.”); cf. Gen. Dynamics Land Sys. v. Cline, 540
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U.S. 581, 596 (2004) (“[S]tatutory language must be read in context since a phrase
gathers meaning from the words around it.” (original brackets and internal quotation
marks omitted)).
And the use of the word taxpayer in other parts of the Tax Code makes clear that
the word can be implicitly limited to individuals. For example, in the very section of the
Code containing the provision of interest on this appeal, 26 U.S.C. § 6343(e) provides
that the Secretary should release a “levy on the salary or wages payable to or received by
the taxpayer, upon agreement with the taxpayer that the tax is not collectible.” This
provision is necessarily limited to individuals, the only taxpayers who receive salary or
wages. See also 26 U.S.C. § 7122(d)(2) (requiring Secretary, for purpose of establishing
guidelines for compromises of tax liability, to “develop and publish schedules of national
and local allowances designed to provide that taxpayers entering into a compromise have
an adequate means to provide for basic living expenses”).
The question therefore becomes whether it makes sense to apply exceptional
circumstance D to a corporation. At the outset, we note that the English language
certainly permits the term economic hardship to be applied to corporations. This court
considered such an application in Sinclair Wyoming Refining Co. v. United States
Environmental Protection Agency, 887 F.3d 986 (10th Cir. 2017). The Energy Policy
Act of 2005 amended the Clean Air Act to encourage the use of renewable fuels. One
program under the Act “require[d] oil refineries to either produce a sufficient proportion
of renewable fuels as part of their output or purchase credits generated by other refineries
to meet their increased renewable-fuel obligations.” Id. at 988. But the statute granted an
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exemption to small refineries “if participation in the program would cause them
‘disproportionate economic hardship.’ 42 U.S.C. § 7545(o)(9)(B).” Id. The reason for
the exemption was recognition by Congress that the renewable-fuels requirement “might
disproportionately impact small refineries because of the inherent scale advantages of
large refineries.” Id. at 989. Sinclair challenged the EPA interpretation of the exemption
as requiring a threat to the long-term viability of the small refinery. See id. at 994, 996.
We rejected the EPA’s interpretation, stating that “[b]y making long-term viability a
necessary factor in its analysis, the EPA impermissibly reads the word ‘disproportionate’
out of the statute.” Id. at 997.
Thus, we recognize that a corporation can experience “economic hardship.” In
what sense, though, might a corporation suffer economic hardship that could reasonably
excuse releasing a tax levy on its assets? Say the corporation is in absolutely dire straits;
it cannot survive even if the levy is released, or even if the tax liability is canceled
altogether. In that circumstance, what purpose could possibly be served by preventing
the IRS from seizing corporate assets under the levy? Perhaps another creditor of the
corporation would benefit because it could collect through assets that would otherwise be
seized by the IRS. But benefiting other creditors (likely at the expense of the IRS) could
hardly be the purpose of the economic-hardship exception. This example points up an
essential difference between an individual and a nonindividual entity. We care, care
deeply, about the survival of the individual. More than that, we want the individual to
have the minimal comforts of life. Taking everything that the individual possesses is not
acceptable. This policy is reflected in the statutory provision exempting 13 items from
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levy. See 26 U.S.C. § 6334(a).1 All apply to individuals; and the two that might (at least
linguistically) also apply to nonindividuals are so limited (books and tools of the trade up
1 Subsection 6334(a) states in full:
(a) Enumeration
There shall be exempt from levy—
(1) Wearing apparel and school books
Such items of wearing apparel and such school books as are
necessary for the taxpayer or for members of his family;
(2) Fuel, provisions, furniture, and personal effects
So much of the fuel, provisions, furniture, and personal effects in the
taxpayer’s household, and of the arms for personal use, livestock, and
poultry of the taxpayer, as does not exceed $6,250 in value;
(3) Books and tools of a trade, business, or profession
So many of the books and tools necessary for the trade, business, or
profession of the taxpayer as do not exceed in the aggregate $3,125 in
value.
(4) Unemployment benefits
Any amount payable to an individual with respect to his
unemployment (including any portion thereof payable with respect to
dependents) under an unemployment compensation law of the United
States, of any State, or of the District of Columbia or of the
Commonwealth of Puerto Rico.
(5) Undelivered mail
Mail, addressed to any person, which has not been delivered to the
addressee.
(6) Certain annuity and pension payments
Annuity or pension payments under the Railroad Retirement Act,
benefits under the Railroad Unemployment Insurance Act, special
pension payments received by a person whose name has been entered on
the Army, Navy, Air Force, and Coast Guard Medal of Honor roll (38
U.S.C. 1562), and annuities based on retired or retainer pay under
chapter 73 of title 10 of the United States Code.
(7) Workmen’s compensation
Any amount payable to an individual as workmen’s compensation
(including any portion thereof payable with respect to dependents)
under a workmen’s compensation law of the United States, any State,
the District of Columbia, or the Commonwealth of Puerto Rico.
(8) Judgments for support of minor children
If the taxpayer is required by judgment of a court of competent
jurisdiction, entered prior to the date of levy, to contribute to the support
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of his minor children, so much of his salary, wages, or other income as is
necessary to comply with such judgment.
(9) Minimum exemption for wages, salary, and other income
Any amount payable to or received by an individual as wages or
salary for personal services, or as income derived from other sources,
during any period, to the extent that the total of such amounts payable to
or received by him during such period does not exceed the applicable
exempt amount determined under subsection (d).
(10) Certain service-connected disability payments
Any amount payable to an individual as a service-connected (within
the meaning of section 101(16) of title 38, United States Code) disability
benefit under-
(A) subchapter II, III, IV, V, or VI of chapter 11 of such title 38, or
(B) chapter 13, 21, 23, 31, 32, 34, 35, 37, or 39 of such title 38.
(11) Certain public assistance payments
Any amount payable to an individual as a recipient of public
assistance under-
(A) title IV or title XVI (relating to supplemental security income
for the aged, blind, and disabled) of the Social Security Act, or
(B) State or local government public assistance or public welfare
programs for which eligibility is determined by a needs or income
test.
(12) Assistance under Job Training Partnership Act
Any amount payable to a participant under the Job Training
Partnership Act (29 U.S.C. 1501 et seq.) from funds appropriated
pursuant to such Act.
(13) Residences exempt in small deficiency cases and principal
residences and certain business assets exempt in absence of
certain approval or jeopardy
(A) Residences in small deficiency cases
If the amount of the levy does not exceed $5,000—
(i) any real property used as a residence by the taxpayer; or
(ii) any real property of the taxpayer (other than real property
which is rented) used by any other individual as a residence.
(B) Principal residences and certain business assets
Except to the extent provided in subsection (e)—
(i) the principal residence of the taxpayer (within the meaning of
section 121); and
(ii) tangible personal property or real property (other than real
property which is rented) used in the trade or business of an
individual taxpayer.
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to $3,125 in value, and undelivered mail) that they probably would not help a business
survive.
What about a business that might be able to survive if the levy is released? It
would be ironic if the term economic hardship were to be applied to such a business but
not to a business in more dire circumstances. But relieving such a business from a levy is
questionable policy on its own terms. To be sure, a temporary release of a levy could
enable a struggling business to survive and ultimately prosper, which, of course, would
be in the interest of everyone, including the IRS. Such a release could, however, create
incentives that undermine public policy. As the Sixth Circuit said, albeit in a somewhat
different context, “[T]he government is not required to continue subsidizing failing
businesses by foregoing tax collection. Any other conclusion would create a bizarre tax
system with perverse incentives for businesses to maintain themselves on the edge of
insolvency in order to enjoy immunity from tax enforcement.” Living Care Alts. v.
United States, 411 F.3d 621, 628 (6th Cir. 2005); see also Finley v. United States, 123
F.3d 1342, 1348 (10th Cir. 1997) (narrowly construing reasonable-cause exception to
liability under 26 U.S.C. § 6672 to “avoid making the government an unwilling partner in
a floundering business” (internal quotation marks omitted)). Besides, the IRS already has
tools to deal with such circumstances when a release is warranted. In particular,
§ 6343(a)(1)(B) authorizes a release that “will facilitate the collection of [the tax]
liability,” and subparagraph (C) permits a release under an agreement for installment
payments of the tax due.
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We think it telling that Seminole makes no attempt to illustrate what an economic-
hardship regulation for nonindividuals would look like. And when the Secretary
promulgated 26 C.F.R. § 301.6343-1(b) as a proposed regulation, no one suggested
expanding the economic-hardship exception to include nonindividuals. See 60 Fed. Reg.
33–01, 34–35 (Jan. 3, 1995). It is a reasonable inference that to the extent that applying
an economic-hardship exemption to nonindividuals would be consistent with
fundamentals of tax policy, the exemption would be an unnecessary addition to other
provisions of the Tax Code that accomplish the same purpose. An interpretation of a tax
provision that is inconsistent with the purpose of the Code has been rejected by the
Supreme Court. See Slodov v. United States, 436 U.S. 238, 247 (1978).
Still, given our lack of expertise in the intricacies of the Tax Code, we are
reluctant to say that every reasonable interpretation of subparagraph (D) would exclude
nonindividuals from its purview. What we can say, however, is that the language of the
exemption does not compel that it be interpreted to apply to corporations and that the
contours of the exemption are properly left to the expertise of the Secretary. See Pension
Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 651–52 (1990) (“[P]ractical agency
expertise is one of the principal justifications behind Chevron deference.”). In Chevron
terms, we conclude that subparagraph (D) is ambiguous and the present regulation is a
reasonable interpretation. “The Commissioner’s regulation[] [is] neither arbitrary or
capricious in substance, nor manifestly contrary to the statute. [It] thus warrant[s]
[judicial] approbation.” Astrue v. Capato ex rel. B.N.C., 566 U.S. 541, 558 (2012)
(original brackets, citation, and internal quotation marks omitted); see Atl. Mut. Ins. Co.
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v. Comm’r, 523 U.S. 382, 390–91 (1998) (explaining affirmance of regulation under
Chevron analysis: “There was certainly no need for that deduction to be microscopically
fair, and the interpretation adopted by the Treasury Regulation seems to us a reasonable
accommodation—and one that the statute very likely intended—of the competing
interests of fairness, administrability, and avoidance of abuse.”).
As a final matter we address Seminole’s argument that the Tax Court erred in
denying its motion for reconsideration. “We review a district court’s decision denying a
motion for reconsideration for abuse of discretion.” Spring Creek Expl. & Prod. Co.,
LLC v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1024 (10th Cir. 2018). Seminole
argues that its motion should have been granted because the Tax Court’s decision in its
case had relied on the earlier Tax Court decision in Lindsay Manor, and this court had set
aside the Lindsay Manor decision. Seminole cites Fed. R. Civ. P. 60(b)(5), which
permits a court to grant relief from a final judgment when the judgment “is based on an
earlier judgment that has been reversed or vacated.” Our ruling in Lindsay Manor,
however, was not based on the merits of the Tax Court’s opinion; we vacated that court’s
ruling only because the case had been moot at the time of the ruling. See Lindsay Manor,
725 F. App’x at 717. It was hardly an abuse of discretion for the Tax Court to continue
to adopt that court’s prior reasoning when no higher court had cast doubt on that
reasoning. Cf. United States v. Garcia, 470 F.3d 1001, 1002–03 (10th Cir. 2006)
(“Although [the decision in earlier case] was vacated as moot on rehearing, we are
persuaded by its reasoning.”).
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III. CONCLUSION
We AFFIRM the judgment of the Tax Court.
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