[00:00:01] Speaker 02:
Case number 21-5116, Monte Silver and Monte Silver Limited, an Israeli corporation at balance, versus Internal Revenues Reviews et al.

[00:00:11] Speaker 01:
Mr. Zell for the at balance, Mr. Climax for the at release.

[00:00:16] Speaker 04:
Good morning, Your Honors.

[00:00:18] Speaker 01:
Good morning, Mr. Zell.

[00:00:19] Speaker 01:
Proceed when you're ready.

[00:00:20] Speaker 04:
May it please the Court.

[00:00:22] Speaker 04:
My name is Mark Zell, and I'm representing the appellants, Monte Silver and Monte Silver Limited, together with my colleague, Noam Shriver,

[00:00:31] Speaker 04:
We're both here from our principal office in Jerusalem, Israel.

[00:00:36] Speaker 04:
Good morning, Your Honors.

[00:00:37] Speaker 04:
We'd like to reserve three minutes for both.

[00:00:40] Speaker 04:
When Congress enacted the Regulatory Flexibility Act in 1980, it had a very clear purpose in mind.

[00:00:47] Speaker 04:
That is to require federal agencies across the board, including Treasury and IRS, to take into account during the rulemaking process

[00:00:58] Speaker 04:
the interests of small business, and particularly with respect to the issue of compliance costs.

[00:01:04] Speaker 04:
You won't find it in the codified version of the RFA, but you will find it in the preamble to the public law, which appeared in the Public Law 96.54, 94 Stat 1164, paragraph 3, which says,

[00:01:21] Speaker 04:
Specifically, the Congress was concerned about the impact of federal rulemaking on the compliance policy incurred by small businesses.

[00:01:32] Speaker 01:
Mr. Zell, it would be helpful if you would focus on whether your clients have standing.

[00:01:38] Speaker 01:
And for my purposes in particular, whether a rule that you've challenged caused the harm that your client

[00:01:54] Speaker 04:
Particle three standing is after all the cardinal issue in this case.

[00:01:57] Speaker 04:
And our position here today, your honors, is that both Monte Silver and Silver Limited incurred actual injury, form of future injury, future compliance costs that would be a result of the application of the regulations that issue and challenged in this case.

[00:02:17] Speaker 04:
Now, I think it would be helpful to recognize that the regulations that are challenging in this case are a bluster of regulations.

[00:02:26] Speaker 04:
That's something that the RFA itself contemplated agencies could do under 605C.

[00:02:31] Speaker 04:
This not only included the regulations under 965, which was the originating or the precipitating statutory provision

[00:02:48] Speaker 04:
but also under section 962, and other sections, which are all combined.

[00:02:55] Speaker 04:
All the amendments were combined into a single rulemaking, both in February of 2019.

[00:03:04] Speaker 04:
What's the injury?

[00:03:05] Speaker 04:
The injury, as I said, Your Honor, is the future compliance clause.

[00:03:09] Speaker 04:
So it would be a cause to the plaintiffs in this case, when they go, as they have done,

[00:03:18] Speaker 04:
to take the actual distribution of earnings and profits in subsequent years.

[00:03:23] Speaker 04:
Now it's true as the government says that the transition tax here was fully paid.

[00:03:28] Speaker 01:
The future compliance costs, I understand the record and correct me if I'm wrong, but the future compliance costs were not something that Mr. Silver alleged he was aware of at the outset of this suit.

[00:03:45] Speaker 04:
What I would say is that he was quite aware of the fact that 962 would result in future compliance laws.

[00:03:57] Speaker 04:
In fact, spent a great deal of time trying to persuade the agency during the rulemaking process about this fact.

[00:04:04] Speaker 04:
And that's something you will find in the JA, you're honest, but it is, you'll see reference to this in the part of the, I think it's at ECF,

[00:04:15] Speaker 04:
Let me just take it.

[00:04:22] Speaker 04:
CF 39.3, which the lower court did not allow us to supplement the administrator.

[00:04:30] Speaker 04:
But Mr. Silver was aware that he's a tax payer, a tax lawyer, and he would have to be filing annual returns.

[00:04:44] Speaker 04:
And this is a closely held company of his, his law office in Israel, 100% owned.

[00:04:52] Speaker 04:
In order to survive and provide the expenses for his family and for himself, he would be taking actual dividends in the future.

[00:05:00] Speaker 01:
Although did the record show or the complaint that he had ever, that limited had ever issued a dividend previously?

[00:05:09] Speaker 04:
There's nothing in the complaint that shows that he

[00:05:12] Speaker 04:
book a dividend prior to 2018.

[00:05:15] Speaker 04:
And the reason is that at that time, before the imposition of the transition tax, the TCGA, there wasn't any real reason for him to do so.

[00:05:24] Speaker 04:
He was able to provide for himself and his friend for his family from his from the district, the

[00:05:31] Speaker 04:
salary that he took from the Israeli law company.

[00:05:37] Speaker 01:
And the declaration supporting the future injury for purposes of summary judgment where evidence was called for, that declaration was filed in support of a motion for reconsideration, the 59E motion?

[00:05:51] Speaker 04:
Well, Your Honor will note that several declarations were filed by Mr. Silver and the companies during the course of the litigation below.

[00:06:00] Speaker 04:
The last one was filed in connection with the motion for reconsideration, where after all the happenings and goings on in the district court and the, where I would note that the district court addressed this article three standing issue, your honor, on three separate occasions and each time apply a different standard.

[00:06:21] Speaker 04:
So as the, it was kind of trying to deal with a moving goalpost type of situation.

[00:06:26] Speaker 04:
So when we got to the motion for reconsideration stage, he supplied a declaration which stated for the first time that he would be taking this distribution, this dividend for the purposes of providing for his personal and family needs.

[00:06:44] Speaker 01:
And in fact- So I think I'm understanding correctly that he didn't at the time he filed suit have any expectation that he would

[00:06:52] Speaker 01:
be issuing that that silver limited would be issuing.

[00:06:56] Speaker 04:
Well, it's his personal case.

[00:06:58] Speaker 04:
I mean, we don't there's nothing in the record that would support that.

[00:07:02] Speaker 04:
But I did mention that he was quite aware of the impact of the 1962 election on

[00:07:09] Speaker 04:
On his self notice similarly situated small business owners of the statute, but the statute is not being challenged here.

[00:07:17] Speaker 01:
It's a right.

[00:07:18] Speaker 04:
That is not being challenged.

[00:07:19] Speaker 04:
That is great.

[00:07:20] Speaker 01:
So the fact you're aware of of implications of the statute doesn't suffice for purposes of standing.

[00:07:28] Speaker 01:
to challenge the regulation under the regulatory flex.

[00:07:30] Speaker 04:
That's right.

[00:07:31] Speaker 04:
Our focus is solely on the regulations under 965 and 962.

[00:07:37] Speaker 01:
So can you focus on what shows that the burdens that Mr. Silver has identified are attributable to the amendments to the 962 regulation?

[00:07:52] Speaker 01:
that were finalized in 2019 to the to the incremental clarification offered at that time as opposed to the underlying statute or prior rules.

[00:08:05] Speaker 04:
A small businessman trying to figure out what the ramifications were of these of the statute but through the regulations would only know would only know about the the

[00:08:23] Speaker 04:
provisions of the regulations that would allow him to take advantage of foreign tax credits or deductions after statute nullified that possibility.

[00:08:38] Speaker 04:
It was only through the regulations and through the regulation process.

[00:08:42] Speaker 04:
Indeed, 962, the amendments to 962, section 962,

[00:08:49] Speaker 04:
the regulations 1.962-1 through 3, all of those were the first place that a small businessman would know that he, she could take advantage of the foreign tax, income tax deductions or credits to offset transition tax liability that was imposed under 965, only through the regulations, Your Honor.

[00:09:21] Speaker 04:
And that is exactly what Mr. Silver did in this case, both before and during the rulemaking process and also during and afterwards when he himself had to file his returns in order to calculate his transition tax.

[00:09:37] Speaker 04:
So he realized at that time that he would be in the future required under the regulations now under 962, which derived

[00:09:48] Speaker 04:
directly from the regulations under 965, he would have to go through this complicated process of not only making the election but calculating each time in the future, for the foreseeable future, he would take an actual dividend distribution from earnings and profits of the Israeli company.

[00:10:12] Speaker 04:
And that was a regulatory, well,

[00:10:17] Speaker 04:
catastrophe for him and for others like him.

[00:10:21] Speaker 04:
Because as I assume you have, Your Honor, you've tried to read these regulations, they are truly impenetrable.

[00:10:33] Speaker 04:
And that is exactly the point.

[00:10:34] Speaker 04:
That's what this regulatory flexibility act was initially enacted to do.

[00:10:40] Speaker 04:
And when Congress amended it in 1996 to create a new entry

[00:10:46] Speaker 04:
and a new set of remedies in order to give a teeth into its mandate to the federal regulatory arena, including the Treasury and the IRS.

[00:11:00] Speaker 04:
What they said was, now you're not gonna be able to walk away from this.

[00:11:06] Speaker 04:
You, the agencies, are not gonna be able to walk away from your responsibilities under this statute.

[00:11:11] Speaker 04:
We're gonna give small entities

[00:11:13] Speaker 04:
like Mr. Silver and the company, the right to go into court to challenge your attempt to circumvent the RFA requirements.

[00:11:24] Speaker 01:
So, Mr. Zell, is it fair to say that Congress in enacting this statute has called for a very difficult, complicated calculation

[00:11:37] Speaker 01:
in terms of the way it allows, it has the transition rule and then the implications of the transition rule treatment on the treatment of future dividends.

[00:11:50] Speaker 01:
That's a bit of a complicated requirement.

[00:11:55] Speaker 01:
And I mean, it's helpful as I hear you today, you're saying, and then given that that is a hard thing to do, and it's what the statute requires,

[00:12:03] Speaker 01:
the Regulatory Flexibility Act calls on the IRS to make sure that its regulations make that easy.

[00:12:14] Speaker 04:
Exactly.

[00:12:15] Speaker 04:
And that is what did not happen in this case.

[00:12:18] Speaker 04:
In fact, after three years, Mr. Silver and the company are still attempting to get the courts here

[00:12:28] Speaker 04:
who reached the merits of their complaint.

[00:12:30] Speaker 04:
That is, was the certification made under 605B a proper one, given the criteria?

[00:12:41] Speaker 04:
And when you actually look at the administrative record in this case and the kinds of things that the agency was saying, like foreign corporations can't be small entities, individuals can't be small entities, small entities don't own foreign

[00:12:55] Speaker 04:
foreign businesses or foreign CFCs, you know, speaking as one who lives abroad and has more than one of these myself, I can tell you that's absurd.

[00:13:10] Speaker 04:
But all the silver and silver limited rights asking in this case was simply, please take a look at what they've said.

[00:13:17] Speaker 01:
Was it not so much the complexity of the challenge rule itself?

[00:13:25] Speaker 01:
But again, it's failure not only to explain and clarify what the statute requires, but to explain the existing rule.

[00:13:38] Speaker 04:
Well, they needed to explain how this cluster of rules.

[00:13:43] Speaker 01:
See, when you cluster, my first take on that is that that doesn't help you.

[00:13:48] Speaker 01:
Because to the extent that the compliance costs flow from the statute or from the pre-existing rule,

[00:13:55] Speaker 01:
That's not for us.

[00:13:56] Speaker 01:
That's not encompassed in your regulatory flexibility average.

[00:14:00] Speaker 04:
The cluster regulations I'm talking about, Your Honor, the amendments to those regulations that Treasury promulgated in 2019.

[00:14:09] Speaker 01:
What about the 2019 amendment?

[00:14:12] Speaker 01:
Can you point specifically?

[00:14:14] Speaker 04:
Take a look, if Your Honor, if you may, I'm going to repeat it to you from memory of Treasury Regulation 1.962-1.

[00:14:25] Speaker 04:
That's, that's in the statutory appendix.

[00:14:29] Speaker 04:
You'll see.

[00:14:30] Speaker 01:
Give us a page that.

[00:14:31] Speaker 01:
All right, wait.

[00:14:43] Speaker 04:
The statutory appendix at 188 to the end, really.

[00:14:48] Speaker 04:
And there's, there's also one regulation that's not in here.

[00:14:52] Speaker 04:
Okay.

[00:14:52] Speaker 04:
There's three regulations.

[00:14:54] Speaker 04:
The two that were amended are here.

[00:14:56] Speaker 04:
There's a third that wasn't amended, which is 962-3, which is also, it actually deals specifically with the question of actual distributions from earnings and profits under that section.

[00:15:10] Speaker 04:
But if you look at 1.962-1, you'll see one of the important, the critical decision or critical change that was made in the application and the regulations, some of the government continually

[00:15:24] Speaker 04:
throughout its brief described as minor and inconsequential is over at 1.962-1B 1A.

[00:15:40] Speaker 04:
And you'll see in little i, you'll see there for the first time.

[00:15:45] Speaker 01:
Which page are you on?

[00:15:46] Speaker 04:
Page 189, sorry, of the statutory agenda.

[00:15:54] Speaker 04:
the critical change that was made in the 962 regulations.

[00:15:59] Speaker 04:
By the way, these are regulations that hadn't been altered in this 1965.

[00:16:08] Speaker 04:
And then suddenly as a result of the transition tax, TCJA, Treasury changed them in a significant way by requiring for the first time

[00:16:22] Speaker 04:
that are defining that subpart F income would now include for the first time section 965A inclusion amounts.

[00:16:31] Speaker 04:
Those are the amounts that will now be coming in as a result of the transition tax.

[00:16:36] Speaker 04:
So that regulatory amendment is at the center of what I would call a cascade of regulatory changes that all center around 962, which allows small businesses for the first time

[00:16:51] Speaker 04:
to be able to take and offset their transition tax liability with foreign income tax credits or deductions.

[00:17:00] Speaker 01:
Okay, so in the complaint and in the factual record, which for these purposes I take to be the declarations of Mr. Silver, is there any identification of the compliance costs relating not to the initial election,

[00:17:20] Speaker 01:
which is past conduct, but relating to the figuring out of the dividend.

[00:17:25] Speaker 04:
Well, the declarations, you will see the declarations, specific statements that actual distributions that are contemplated, they will be taken.

[00:17:35] Speaker 04:
And when they be taken, you'll have compliance costs.

[00:17:37] Speaker 04:
I don't think that even the government doesn't.

[00:17:40] Speaker 01:
And that is where?

[00:17:41] Speaker 04:
Well, let me show you.

[00:17:50] Speaker 04:
If you look at the plaintiff's declaration, this is in the J-8, at 107 to 112, you'll see one declaration in support of the memorandum and opposition to the government's motion for summary judgment.

[00:18:06] Speaker 04:
You'll see another one at EC, excuse me, at J-168 to 172, Your Honor.

[00:18:15] Speaker 01:
And that's number four.

[00:18:16] Speaker 01:
That's the one that came in on the rule 1598.

[00:18:20] Speaker 01:
And the particular language in declaration number three that you would rely on, which is 108.

[00:18:28] Speaker 04:
Is that 108?

[00:18:30] Speaker 04:
Yeah, just a second.

[00:18:45] Speaker 04:
He starts with paragraph four, paragraph five.

[00:18:50] Speaker 04:
Also, if you look at our brief, we have discussed this at length.

[00:19:00] Speaker 04:
And I would also point out, Your Honor, as we deal with this Article III standing requirements, as we discuss both below and in the reply brief.

[00:19:15] Speaker 04:
Oh, I see my time is over.

[00:19:16] Speaker 04:
I'm parking over the red light.

[00:19:20] Speaker 04:
Sorry about that.

[00:19:21] Speaker 00:
Can I just ask you this page that you pointed us towards on 189, it's all interesting and such, but I don't see any of this in your briefs on the traceability point that Judge Miller was asking you about.

[00:19:43] Speaker 00:
The treatment of it in the blue brief is wholly perfunctory and the treatment of it in the

[00:19:50] Speaker 00:
reply brief is, um, just quotes a paragraph from the district court and says the district court got it wrong.

[00:19:58] Speaker 00:
So, I mean, where, where have you traced the injury, tried to trace the injury of future compliance costs to the new regulations, um, at any point before your presentation this morning?

[00:20:17] Speaker 04:
Well,

[00:20:18] Speaker 04:
The first thing I would start off, Judge Katz, is to say that the silver and silver limited are the objects of these regulations.

[00:20:32] Speaker 04:
This court and the Supreme Court has stated on a number of occasions that when that is the case, the standard for showing Article III actual injury and the other elements is very low.

[00:20:48] Speaker 01:
How would you, just on that, how would you respond in terms of whether Silver and Silver Limited are objects of the regulation?

[00:20:56] Speaker 01:
Silver isn't a small entity under the statute and Limited isn't subject to these regulations because it's Silver who is the shareholder in the foreign corporation.

[00:21:14] Speaker 04:
Well, the first response I have, Judge Pillard,

[00:21:18] Speaker 04:
that Silver is a small entity.

[00:21:22] Speaker 01:
For real estate purposes unrelated to this case.

[00:21:24] Speaker 04:
Not just real estate purposes.

[00:21:27] Speaker 04:
He meets the requirements of a small entity under the terms of the RFA at which the term incorporates a definition of the Small Business Act.

[00:21:38] Speaker 04:
Government tries to argue he's not an entity.

[00:21:42] Speaker 04:
And so it cites no authority whatsoever for that proposition.

[00:21:47] Speaker 04:
for the first time that it's a brief here in this proceeding.

[00:21:51] Speaker 04:
But if you look at the dictionary definition for entity, you'll see, as this court has in a previous case, not an RFA case, but back in 1997, under the association of, the Allied Association of Alarm Services case, which is cited in our brief, they specifically talked about the definition of that term entity, which includes natural persons.

[00:22:19] Speaker 01:
All right.

[00:22:19] Speaker 01:
We have taken you over time with our questions, but we will give you a couple of minutes for everyone.

[00:22:24] Speaker 04:
Thank you very much, Your Honor.

[00:22:38] Speaker 01:
Morning.

[00:22:39] Speaker 01:
Is it Mr. Klimas?

[00:22:40] Speaker 01:
Klimas.

[00:22:43] Speaker 05:
May it please the court, Jeff Klimas to the appellees.

[00:22:47] Speaker 05:
Your Honor,

[00:22:48] Speaker 05:
for questions with standing this morning.

[00:22:50] Speaker 05:
And we think the standing is a dispositive of the merits portion of this case.

[00:22:55] Speaker 05:
So I will start there.

[00:22:57] Speaker 05:
And I think that, Your Honor, correctly focused on traceability for purposes of the Regulatory Flexibility Act.

[00:23:06] Speaker 05:
The question is the burdens and costs of compliance associated with the rule.

[00:23:10] Speaker 05:
Here are the challenge regulations at issue.

[00:23:12] Speaker 05:
That's tracked through Section 603, 604, 605 of the Regulatory Flexibility Act, which talks about the impact of the proposed rule on small entities, the projected reporting, record keeping, and other compliance requirements of the rule.

[00:23:27] Speaker 05:
Or if an agency certifies that the full-blown RFA analysis is not required, it talks about a certification that the rule will not have a significant economic impact on a substantial number of small entities.

[00:23:41] Speaker 05:
Here, I want to make this clear.

[00:23:43] Speaker 05:
If Treasury tomorrow were to completely rescind regulations at issue, the 2019 package of regulations, it would not add to or decrease the compliance costs of Mr. Silver going forward.

[00:23:56] Speaker 05:
None of his future compliance costs are traceable to either the 965 regs or the amendments to the 962 regs.

[00:24:06] Speaker 05:
All those compliance costs are traceable to other sources.

[00:24:09] Speaker 05:
We walk through in our briefing

[00:24:12] Speaker 05:
different sources of compliance cost that Mr Silver is complaining about.

[00:24:16] Speaker 05:
He talks about foreign tax credit account.

[00:24:18] Speaker 05:
That is traceable to section 902 and 960 of the Internal Revenue Code.

[00:24:23] Speaker 05:
He talks about dividends tainted and untainted by 962 election.

[00:24:28] Speaker 05:
That's traceable to section 959 of the Internal Revenue Code, 962D statute of the Internal Revenue Code, and the pre-existing portions of the 962 regulations that have been on the books for decades.

[00:24:41] Speaker 05:
He talks about a bilateral tax treaty between the United States and Israel, which again, not traceable to the rules.

[00:24:48] Speaker 05:
He talks about this notion of qualified and non-qualified dividends, which is traceable to Section 1H11B of the Interim Ordinance.

[00:24:56] Speaker 05:
Again, not an issue.

[00:24:58] Speaker 05:
The complaint, the grievance that Mr. Fulver has, is not with the rule itself, because that does not impose any forward-looking burden or compliance law.

[00:25:09] Speaker 05:
The complaint that he has,

[00:25:10] Speaker 05:
the issue that he has, the statutes themselves.

[00:25:13] Speaker 05:
And again, if these regulations were filled tomorrow, we would have the same compliance costs going forward.

[00:25:18] Speaker 05:
Not one iota of compliance costs are added by these particular regulations.

[00:25:23] Speaker 05:
This is not one.

[00:25:24] Speaker 01:
I somewhat heard him to be arguing this morning.

[00:25:26] Speaker 01:
And this wasn't how I took the argument in the brief.

[00:25:30] Speaker 01:
So that alone may be dispositive.

[00:25:32] Speaker 01:
But that his argument, in effect, was the statute calls for something

[00:25:39] Speaker 01:
pretty complicated that will be hard to effectuate the existing rules are not very user friendly in terms of marking a path.

[00:25:51] Speaker 01:
My clients didn't have to worry about that because they never became subject to them until

[00:25:58] Speaker 01:
now, and at least it was incumbent on the service in promulgating its latest rule to give us a roadmap.

[00:26:07] Speaker 01:
And so his traceability argument, if I'm summarizing it correctly, is that the failure to make sense in the latest encounter with this rule under this provision is itself what's the source of

[00:26:28] Speaker 01:
is harm.

[00:26:30] Speaker 01:
Yes, Your Honor.

[00:26:31] Speaker 05:
What's contemplated by review under the Regulatory Flexibility Act attracts review under the Administrative Procedure Act.

[00:26:38] Speaker 05:
What we're reviewing here is the final agency action.

[00:26:41] Speaker 05:
And specifically because of the special limitations requirement in 611 of the Act, we're looking at final agency action that occurred within the past year.

[00:26:50] Speaker 05:
It's not looking at an agency's failure to act.

[00:26:53] Speaker 05:
It's looking at what the agency actually did.

[00:26:56] Speaker 05:
And when we look at what the agency did,

[00:26:57] Speaker 05:
actually data looking at the incremental burden of that.

[00:27:02] Speaker 01:
So you'd roughly you'd say that sort of the sin of omission as opposed to commission is not recognizable.

[00:27:10] Speaker 01:
It's not what's an issue under the regulatory flexibility.

[00:27:13] Speaker 05:
That's correct.

[00:27:14] Speaker 05:
If, for example, Treasury had promulgated no regulations whatsoever, it's hard to imagine that Mr. Silver would have a valid regulatory flexibility challenge.

[00:27:23] Speaker 01:
Or had promulgated something and just make it a little bit

[00:27:27] Speaker 01:
harder, or you, had promulgated something that basically tracked the statute?

[00:27:31] Speaker 05:
Sure, if you made it a parity regulation, if the regulation tracked word for word for vaguely what the statute says, would there be a valid Regulatory Flexibility Act challenge when we say, well, look, there's no incremental burden that's being added by these regulations.

[00:27:45] Speaker 05:
It is literally reciting word for word what the statute does.

[00:27:49] Speaker 05:
And it's not an obligation that's imposed by the RFA or Treasury or any other agency.

[00:27:55] Speaker 05:
to try to alleviate burdens that Congress deliberately imposed with the plain text of the statute.

[00:28:01] Speaker 05:
That's where we part company with Brother Council insofar as we're saying, what is the relevant burden?

[00:28:08] Speaker 05:
And we think it's clear on the Regulatory Flexibility Act that any incremental costs or compliance related to the final agency action, the rule.

[00:28:18] Speaker 05:
And there just isn't any incremental burden added by these protections.

[00:28:22] Speaker 01:
As a matter of the record, can we consider the dividend at all, and if not, why not?

[00:28:29] Speaker 05:
So prior to summary judgment being granted, there was no evidence that Limited had ever issued Mr. Silver a dividend in the past, from 2012 all the way through 2020.

[00:28:42] Speaker 05:
No evidence that in those eight years a dividend had ever been issued.

[00:28:47] Speaker 05:
There was no evidence of a present or future intent

[00:28:50] Speaker 05:
that Mr. Silver would direct limited to issue a dividend in the future.

[00:28:57] Speaker 05:
But at the summary judgment stage, at the time that this case was decided on the merits, there was no evidence of either past dividends, present intent to issue a dividend, future intent to issue a dividend.

[00:29:08] Speaker 05:
And so when he came under consideration, the district court said he was too late.

[00:29:11] Speaker 05:
To the extent that this was evidence that he could have proffered earlier, it was foreclosed from raising that

[00:29:18] Speaker 05:
of reconsideration.

[00:29:19] Speaker 05:
We cite this court's decision, Leidos, for that proposition.

[00:29:22] Speaker 05:
To the extent that these facts did not yet exist at the time of summary judgment and claim to existence later, they were also not properly the subject of reconsideration.

[00:29:33] Speaker 05:
We cite National Anti-Hunger Coalition, or Bruce, for that proposition, for this court's decision in that case.

[00:29:40] Speaker 05:
So there is a question of timing.

[00:29:42] Speaker 05:
And we want to be clear, the appellants have not separately challenged the courts holding on that.

[00:29:47] Speaker 05:
Court said this was not timely raised.

[00:29:50] Speaker 05:
It's not excusable.

[00:29:52] Speaker 05:
I'm declining to allow you to post-decision and bring in this evidence that was not properly reported.

[00:29:58] Speaker 05:
Not in the opening brief, not in the reply brief, do they address that part of the court's holding?

[00:30:02] Speaker 05:
And we think that they are stuck with that rule.

[00:30:12] Speaker 05:
In addition to the merits question, there is a question about

[00:30:17] Speaker 05:
I'm happy to address that, although we don't think it's properly before the court and right at this time because there is ending supplemental briefing on that issue.

[00:30:26] Speaker 00:
Yeah, I guess we have to.

[00:30:28] Speaker 00:
We rule in your favor on standing.

[00:30:32] Speaker 00:
We still have to consider.

[00:30:35] Speaker 00:
The disclosure issue, including the question whether to reach it.

[00:30:42] Speaker 05:
Oh, your honor.

[00:30:44] Speaker 05:
That's right.

[00:30:44] Speaker 05:
You have to say one way or the other.

[00:30:46] Speaker 05:
We are going to reach 6103 disclosure, protective order issue or not.

[00:30:50] Speaker 05:
But certainly that could be reserved for later day considering the fact that that there are essentially two arguments for why this information shouldn't be public.

[00:30:59] Speaker 00:
One of which 6103 and Hubbard, right?

[00:31:02] Speaker 00:
6103 is resolved.

[00:31:04] Speaker 00:
Hubbard is pending.

[00:31:05] Speaker 00:
Exactly.

[00:31:06] Speaker 00:
Exactly.

[00:31:06] Speaker 00:
And

[00:31:08] Speaker 00:
Neither of those is collateral to the other.

[00:31:12] Speaker 00:
Those are interrelated.

[00:31:13] Speaker 00:
So we can't take up, shouldn't take up, even though the disclosure issues are collateral to the merits.

[00:31:22] Speaker 05:
Precisely.

[00:31:23] Speaker 05:
So the 6103 issue is a cannot disclose.

[00:31:27] Speaker 05:
The hover factors are a should not disclose in effect.

[00:31:31] Speaker 05:
And to the government, it makes sense that those issues be considered together instead of serialized and potentially subsequent

[00:31:39] Speaker 01:
So you're asking us to remand that.

[00:31:42] Speaker 05:
We think that would be appropriate.

[00:31:44] Speaker 05:
We can save that issue for later.

[00:31:46] Speaker 00:
Remand it or just not reach it?

[00:31:50] Speaker 00:
Just not address that at this time.

[00:31:51] Speaker 00:
You call it right.

[00:31:54] Speaker 00:
Correct.

[00:31:56] Speaker 00:
On some threshold ground like that.

[00:31:59] Speaker 05:
Correct.

[00:31:59] Speaker 05:
It's just not properly before the court at this time in terms of a final decision of the protective.

[00:32:04] Speaker 03:
Right.

[00:32:05] Speaker 05:
Not a final one.

[00:32:08] Speaker 03:
So the relief here is, as you describe in your brief, and the only response is I read from the individual and the limited corporation, is that this is too complicated.

[00:32:34] Speaker 02:
Namely, to pay whatever tax you owe and then file for a REMA fund.

[00:32:40] Speaker 02:
Is that right?

[00:32:43] Speaker 05:
Yes, Your Honor.

[00:32:44] Speaker 05:
In terms of the Anti-Injunction Act issue, where we're saying that there is another remedy, another procedural vehicle for addressing Mr. Solver and Limited's concerns separate and apart from a freestanding RFA suit, that a REA fund suit would be an alternative remedy

[00:32:59] Speaker 05:
such that you wouldn't have to bring a suit to enjoin the enforcement of, you know, these statutes that impose taxes, as well as the company regulations that talk about the calculation of those taxes.

[00:33:11] Speaker 03:
I guess we don't... I guess the only point I want to get on the record is that from your perspective, there is a remedy available to him.

[00:33:20] Speaker 03:
Whether he brought it raised in the instant complaint or in his briefs, some of these arguments that are being made

[00:33:29] Speaker 03:
today in response to Judge Killard's questions.

[00:33:36] Speaker 05:
Yes, Your Honor.

[00:33:37] Speaker 05:
So the argument that it's too complicated, and I think that you're right, that's the only real pushback that we're getting from the opponents in this case, that they think that a refund would be too complicated.

[00:33:48] Speaker 05:
That's not really the case.

[00:33:51] Speaker 03:
Well, we don't need to decide that, do we?

[00:33:54] Speaker 03:
I mean, the point is,

[00:33:56] Speaker 03:
whether the remedy is complicated or not.

[00:33:59] Speaker 03:
It's a standard remedy for people who challenge taxes.

[00:34:04] Speaker 05:
That's correct, John.

[00:34:04] Speaker 05:
It's done as a matter of course where someone will take a conservative position on an original tax return and then file an amended return that takes a more aggressive position.

[00:34:13] Speaker 05:
They'll pay the tax for the original return and then sue for a refund in conjunction with an amended return.

[00:34:19] Speaker 05:
And it's often done just as a matter of course in one of the mill type of tax issues because it stops interest rates.

[00:34:24] Speaker 05:
And so there's a strategic community doing it that way.

[00:34:27] Speaker 05:
This is done by tax practitioners all the time.

[00:34:29] Speaker 05:
File a tax return, pay the tax, file an amended return, claim a refund.

[00:34:35] Speaker 05:
The situation that was contemplated that was being pushed back against in Cohen was the notion that someone should run into court with a tax refund suit without exhausting administrative rummage.

[00:34:46] Speaker 05:
The majority in Cohen pushed back and said, well, no, no, no, no.

[00:34:49] Speaker 05:
That's not the normal procedures.

[00:34:51] Speaker 05:
We think that's kind of a convoluted and extravagant remedy to come up with that hypothetical.

[00:34:56] Speaker 05:
That's the exact opposite of what we're suggesting that Mr. Slover should do, which is to follow to the letter the regulations and statutes governing tax refund claims and tax refunds.

[00:35:10] Speaker 02:
Any other questions?

[00:35:12] Speaker 02:
All right.

[00:35:12] Speaker 01:
Thank you.

[00:35:17] Speaker 01:
Mr. Zell, your time had expired, but we, as I mentioned, will afford you two minutes for rebuttal.

[00:35:25] Speaker 04:
A couple of things.

[00:35:28] Speaker 04:
First of all, with regard to the wrongful disclosure issue under 6103, I'm now representing to the panel that Mr. Silver and his wife will abandon

[00:35:46] Speaker 04:
Any right or privilege they may have under the inherent authority of the district court to control its docket, in other words, the Hubbard line of cases, that leaves the score free to make a decision one way or the other on whether or not the 6103 was

[00:36:09] Speaker 00:
Abandoning your Hubbard, continuing to press 6103.

[00:36:15] Speaker 00:
That is correct.

[00:36:16] Speaker 04:
Now, let me just also address the issue that your honors were pressing during my- And you'll let the district court- We'll file a written confirmation to that effect.

[00:36:34] Speaker 04:
Yes, sir.

[00:36:35] Speaker 04:
Now, with respect to traceability,

[00:36:39] Speaker 04:
The district court actually got this correct during our argument on summary judgment.

[00:36:46] Speaker 04:
If it were not for section 965 and the regulations under 965, there would be no issue about 962 and the regulations under 962.

[00:36:58] Speaker 04:
That's a direct traceability argument.

[00:37:04] Speaker 04:
particularly under the lower standard of article three, standing a review that applies in an object of situation and in a procedural injury case.

[00:37:12] Speaker 04:
I realized with respect to procedural injury, only eminence and redressability are relaxed standards.

[00:37:18] Speaker 04:
But nevertheless, this is a very, should be a very simple case in terms of article three cent.

[00:37:26] Speaker 04:
And the primary problem that the district court had in this case was

[00:37:31] Speaker 04:
about the speculative nature of Mr. Silver's intention that he would have future compliance costs by reason of his actual distributions in the future.

[00:37:48] Speaker 04:
As we indicated in footnote five to our reply brief, he has taken the distribution.

[00:37:54] Speaker 04:
That's now, we've crossed that threshold.

[00:37:59] Speaker 04:
And he's now going to have to, and as he has done, you'll have to go through the whole complicated analysis under these regulations in order to determine whether or not he has to revise his or take into account the results of the transition tax.

[00:38:18] Speaker 01:
Mr. Zell, on this record, I noticed that he had now taken it and it made me wonder whether any

[00:38:24] Speaker 01:
traceability that might have been established relating to an anticipated dividend is now moot, and we don't have any record evidence of an anticipated additional dividend.

[00:38:39] Speaker 01:
So in some ways, that complicates our consideration on this record.

[00:38:48] Speaker 04:
I anticipated this question, Your Honor, and it seems to me that if we go that route,

[00:38:53] Speaker 04:
Uh, persons, small business owners like Mr. Silver will never have an opportunity to raise this kind of question unless they frame the case.

[00:39:02] Speaker 01:
The way to raise it would be at the outset to say once the election is made, there will be compliance caused costs associated with

[00:39:13] Speaker 01:
periodic dividends and XYZ reasons, we anticipate definitely having dividends in the future.

[00:39:22] Speaker 04:
And that is not the... That is exactly what I argued

[00:39:30] Speaker 04:
to the court on summary judgment.

[00:39:33] Speaker 04:
And the court said, well, I can't accept your statements because they're arguments of counsel.

[00:39:38] Speaker 04:
Well, this is a legal issue.

[00:39:39] Speaker 04:
What possible allegation could Mr. Silver have made other than what he did that I'm going to take, I just may take an actual distribution in the future.

[00:39:49] Speaker 04:
I see my time has expired again.

[00:39:52] Speaker 04:
Thank you, Your Honor.

[00:39:52] Speaker 01:
Thank you, counsel.

[00:39:53] Speaker 01:
And thank you for traveling all the way here to make your argument.

[00:39:57] Speaker 01:
The case is submitted.