October 29, 2019 11:49AM

Baldwin v. United States Reflects Worst Practices on Judicial Deference

Over at Notice & Comment, I posted today about a brief Cato filed last Friday, joined by the National Federation of Independent Business. Here’s a snippet:

On Friday, the Cato Institute and NFIB filed an amicus brief on behalf of petitioners seeking Supreme Court review of the Ninth Circuit’s April order in Baldwin v. United States. Of course, the odds of the Court exercising its appellate jurisdiction are low for any given controversy; nevertheless, Baldwin reflects a rare combination of worst-practices that might catch the eye of any Justice intent on revisiting “reflexive” Chevron deference and its corollary doctrines.

The Baldwins are a married couple from California who believe they overpaid $167,000 in taxes and sought a refund from the IRS. They claim that they sent their amended return months in advance of the statutory deadline. To prove timely mailing, the Baldwins have offered circumstantial evidence—in the form of multiple affidavits by corroborating witnesses—that they deposited their documents at a post office with months to spare. A federal district court has determined that the Baldwins’ testimonial evidence is credible.

The IRS, however, claims never to have received the documents. The tax code doesn’t directly speak to the possibility of lost mail, but the agency reads the statute’s silence as leaving the Baldwins out of luck, no matter how many witnesses the couple calls forth to testify that the tax documents were timely sent. According to the IRS, the Baldwins not only are denied a refund, but the filing deadlines trigger the government’s statutory waiver for sovereign immunity, so the couple also is denied access to the courts for redress.

Millions of taxpayers rely on the US Postal Service to mail tax documents every year, and these mountains of mail are carried and received by imperfect humans who misplace documents. Indeed, the Baldwins’ plight is far from unique, and many such cases have come before the courts over the years.

Since 1954, circuit courts have split over how to deal with allegedly lost mail that denies taxpayers their “day in court.” On the one hand, two circuits adopted the IRS’s unforgiving interpretation. On the other hand, four circuits turned to an old common-law evidentiary principle, known as the mailbox rule, which allows taxpayers to present extrinsic evidence that their claims were timely mailed.

After decades of litigating the mailbox rule with mixed success, the IRS switched gears and tried an administrative shortcut. Specifically, the agency underwent a cursory five-page rulemaking to “clarify” that the statute meant what the IRS had argued all along in court.

On its own terms, the IRS’s “clarifying” rule fails to implicate agency expertise; instead, it purports to deny courts access to a common-law principle developed by federal judges to police their own jurisdiction. Simply put, the agency’s rule regulates the craft of judging, which is obviously outside of the IRS’s bailiwick.

The IRS’s lack of expertise explains why the agency’s rulemaking said so little—because there was so little to say. Across the proposed and final rules, the entire rulemaking provided a paltry nine paragraphs of conclusory reasoning.

Having jumped through the bare-minimum procedural hoops, the agency then felt entitled to the Chevron framework. The Ninth Circuit, alas, agreed. In so doing, a three-judge panel applied the sort of cursory methodology that can give deference a bad name.

Read the whole thing here