Excerpts of Transcript of Oral
Argument inLoving v. IRS,
No. 13-5061 (D.C. Cir. argued Sept.
[Setting the stage: Three return preparers challenged the
statutory basis for the Registered Tax Return Preparer ("RTRP")
regulations. These regulations required return preparers to
register with the government, pay an initial fee, pass a qualifying
exam, and then complete continuing education and pay another fee
each year thereafter. The plaintiffs contended that, based on
the plain language of 31 U.S.C. § 330, return preparers were not
"representatives" who "practice" before the Department of the
Treasury. In the D.C. district court, Judge James Boasberg
held that Treasury and the IRS did not have the statutory authority
to promulgate the RTRP regulations because (i) the statute defined
the "practice of representatives" in a way that did not cover
return preparers, (ii) Congress had already created a detailed
statutory scheme to penalize return preparers who engage in several
categories of misconduct, and (iii) if the court were to accept the
IRS's interpretation, then section 7407, which allows the
government to seek a permanent injunction on abusive practice by
certain return preparers, "would be relegated to oblivion."
Accordingly, the district court permanently enjoined the IRS from
enforcing the RTRP regime. The government appealed, and a
D.C. Circuit panel consisting of Judges Sentelle, Kavanaugh, and
Williams heard oral argument on September 24, 2013.]
[The following excerpt is located in the transcript on page 2
line 4 through page 5 line 5. This exchange illustrates
several important aspects of oral argument, including: (i) clearly
defining the issue and developing a theme; (ii) being prepared for
an active conversation with the judges; and (iii) thoroughly
knowing the facts and arguments in the brief.]
Mr. ROTHENBERG: May it please the Court. This case presents a
question of exceptional importance for the administration of tax
laws. Can the Secretary of Treasury regulate the practice of tax
return preparers in an effort to weed out those preparers, who are
unscrupulous or unethical. The District Court held that Congress in
enacting 31 U.S.C. 330 has unambiguously foreclosed the
Commissioner from doing so - that decision is wrong and it should
Judge SENTELLE: That's one way of phrasing it. You are looking
at it from very negative approach though the question would first
be, has Congress empowered, not whether the Congress has
foreclosed, but whether the Congress has given you…
Mr. ROTHENBERG: You clearly have to have that first and then you
Judge SENTELLE: Yes, I understandCity of Arlingtonsays, we don't
cover jurisdictional but we still have to determine did Congress
leave an ambiguity that empowered you to make that
Mr. ROTHENBERG: Well the way…
Judge SENTELLE: You don't have all the power in the world unless
Congress unambiguously takes it away and it seems to be the way you
were approaching it in your brief as well as here.
ROTHENBERG: Well I think the way to approach is the way this
Court has approached it when its addressing step one and that is
look at this Court in the en banc decisionMediation Boardhas
identified four things to look at: text, structure, overall
statutory scheme, and the problem Congress sought to solve. And
when you look at those, we think it's clear that subsection (a)(1)
of section 330 permits the Treasury to do exactly what it did.
Judge WILLIAMS: One thing we often start with is ordinary
language and it seems to me a striking omission from your brief was
any effort to cite…any usage of words like these regulate the
practice of representative of persons before a particular agency,
which were taken to encompass the kind of relationship that's
involved here. You don't try it in the brief. I assumed you looked
but couldn't find...
ROTHENBERG: There's not a lot of…well there's very little law on
what…how you define representative, how do you define
Judge WILLIAMS: No but you say…just ordinary language, did you
find any usage in any published place perhaps even in an
unpublished, but certainly published would be better, in which
words like that were used to characterize people whose only
function was to help other people fill-in a form that they were
required by law to fill-in.
ROTHENBERG: Well I think preparers do much more than just fill
out the form, they…
Judge WILLIAMS: I'm sure many of them do.
ROTHENBERG: They put their PTIN number down there and they say,
"We have looked…", essentially they say, "this is the amount that
this taxpayer owes in tax or this is the amount this taxpayer is
entitled to claim a refund for." I mean when you…
Judge WILLIAMS: In other words they fill in the form. They help
the taxpayers fill in the form.
ROTHENBERG: Well they're not mere scriveners, they have to know
Judge WILLIAMS: No. No one suggested they were mere scriveners.
But it doesn't sound to me, and so I'd be interested in any case
where these words were used to communicate such a meaning.
ROTHENBERG: We could not find a case comparable to this one.
Judge WILLIAMS: I'm not talking about legal cases. I'm talking
about anything in public discourse.
ROTHENBERG: Well the operative words would be representatives,
practice, and certainly the…
Judge SENTELLE: Before…before…
Judge SENTELLE: The case.
Judge SENTELLE: None of those is like filling in a form.
Judge KAVANAUGH: And the representative is usually an agent,
ROTHENBERG: Well no… Actually no. If you look at the … we'll go
back to 1884, the words Congress used were agents, attorneys, or
other persons and when Congress recodified it in 82 it used the
word representatives…didn't use those three words.
Judge SENTELLE: That's the one I offered you, right?
ROTHENBERG: Right, that's the operative one and it said these
changes were stylistic only. So "representative" has to mean more
than agent because the original words were agents, attorneys, and
other persons. And clearly tax return or preparers are other
Judge KAVANAUGH: And what about the cross-reference, which the
District Court relied on, to (a)(2)(D), "advise and assist persons
in presenting their cases," that is not helpful for your position
ROTHENBERG: Well, it's not helpful but it's also incorrect way
to interpret the statute. The operative provision is (a)(1). (a)(2)
essentially imposes admission requirements on those who are
admitted to practice. And if you look at the exemption, attorneys
and CPAs clearly practice, they are exempt from those admission
Judge SENTELLE: How many years were these words on the books
from the original version until the Treasury decided one day that
it could regulate tax preparers?
ROTHENBERG: The 1884 words were there I believe until the
Judge SENTELLE: Right. And that's how many years?
ROTHENBERG: That's about a century.
Judge SENTELLE: And after a century, the Secretary suddenly
decides these words empower us to do this or the Commissioner…
Judge KAVANAUGH: Another 30 years...
ROTHENBERG: Well actually…
Judge SENTELLE: Another 30 years on top of that, right?
ROTHENBERG: Well what I would like to do is mention that this
Court en banc, in again theMediation Boardcase they said, "The mere
fact the board has never before claimed the authority does not mean
that such authority if granted by Congress has ceased to exist." I
mean this is…
Judge SENTELLE: Doesn't make it irrelevant either, counsel. 130
years of not thinking that it gave you that power might make it a
little less convincing when you say it does.
ROTHENBERG: Well, we think the whole point of administrative
regulation and Chevron deference is that it's an evolving process,
Judge WILLIAMS: Which is an evolving process?
ROTHENBERG: The ability of the administrative agency to
determine what it can and cannot do
under the governing statute. Now admittedly until recently the
Internal Revenue Service did not choose to have tax return
preparation by itself by a non-enrolled agent, attorney, or CPA
come within Circular...
Judge KAVANAUGH: Did the IRS say that it had the authority but
was exercising its discretion not to?
ROTHENBERG: It didn't say anything.
Judge KAVANAUGH: Yes, right.
ROTHENBERG: And again you can have a prior Secretary of the
Treasury decide not to exercise…
Judge KAVANAUGH: Sure and that's…
ROTHENBERG: …and you can have it later when you decide,
Judge SENTELLE: Yes, but certainly I realize that "arbitrary and
capricious" is more APA language thanChevronlanguage but certainly
arbitrary and capricious does overlap here and to make a change
without acknowledging that a change has been made and without
explaining the change - why things were different? That would be
arbitrary and capricious, wouldn't it?
ROTHENBERG: Well the Secretary clearly did all that…he did
explain the changes - the whole study.
Judge SENTELLE: Okay.
[The following excerpt is located in the transcript on page 8
line 17 through page 9 line 5. This exchange illustrates (i)
the importance of choosing your words carefully and articulating
your points with precision and (ii) ensuring that you have
sufficient support for the statements made in your brief.]
ROTHENBERG: And the biggest problem is the paid preparer
returns, the …
Judge SENTELLE: It is the biggest problem?
ROTHENBERG: I'm sorry?
Judge SENTELLE: Has there been a comparison?
ROTHENBERG: I do not believe there has been a comparison…
Judge SENTELLE: Right. But you know it's the biggest
ROTHENBERG: On the non-paid versus paid?
Judge SENTELLE: Yes.
ROTHENBERG: I don't remember reading that in the…
Judge SENTELLE: How do you know it's the biggest problem if
there's been no comparison then?
ROTHENBERG: Well again it's…what does IRS think is the biggest
problem and would…can they tackle. And the biggest problem was paid
preparers in the sense that there are people that market to car
dealers. Hey, prepare tax returns too, you can make a little extra
money on the side. IRS would like to think that they would prepare
returns that are accurate.
[The following excerpt is located in the transcript on page 15
line 23 through page 16 line 20. This exchange illustrates
the importance of (i) fully preserving issues and (ii) the
interaction of briefing and oral argument.]
Judge WILLIAMS: Quite apart from ambiguity or unambiguity, you
argued that you have not given up the reasonableness argument and
that argument rests on the proposition that can take you from the
outset, briefed it with reference to reasonableness, although I
guess you didn't mention the magic and some circles, prong two,
ALBAN: Well…Your Honor, we did argue under bothChevronStep 1 and
Step 2 and we did explain that in both our briefs in the lower
Court and our briefs in this Court.
Judge SENTELLE: You briefed here, I believe I'm correct. The
only reference is toChevron2 are in footnote, correct?
ALBAN: It's…that is correct, Your Honor. However…
Judge SENTELLE: So they're only marginally even in your brief
before us, is that enough to preserve?
ALBAN: Yes, it is Your Honor. Certainly, the focus of our brief
is on Chevron Step 1, but the arguments that we are making, that
the plain language of the statute forecloses the agency's
interpretation, those also apply inChevronStep 2 that the agency's
interpretation is unreasonable. As a matter of brevity, we preserve
those arguments in the footnote but we made them under both steps
of theChevrontest and at this Court has done on…
Judge SENTELLE: You know…our former colleague Abner Mikva used
to say, "If you want us to read it, put it up where our eyes are…"
If God meant for us to read footnotes, he would have put our eyes
on the vertical plain not the horizontal.
ALBAN: Yes, Your Honor, I agree with that entirely. And that's
why we made the arguments in
the body of the brief but merely noted that we were making them
under Step 1 and Step 2 and a footnote.