conclusion to the contrary, and I have nothing to add. I also fully join Judge Holmes's criticism of the majority's distinction of Natl. Cable & Telecomm. Association v. Brand X Internet Servs., 545 U.S. 125 S. Ct. 2688 (2005). Since we are faced here with a question of line drawing, the Secretary's reasonably drawn line necessarily supersedes the line drawn by any court. See id. at 125 S. Ct. at 2700.

IV. Conclusion

For the reasons stated, I would uphold section 1.8824(a)(2) and (3)(i), Income Tax Regs., as a reasonable exercise of the Secretary's authority under section 7805(a) to draw lines.

SWIFT, J., agrees with this dissenting opinion.

HOLMES, J., dissenting: The issue in this case is easy to understand. Section 882(c)(2) denies foreign corporations that have U.S. income the benefit of the deductions and tax credits they would otherwise get if they fail to file returns "in the manner prescribed by subtitle F." Section 6072-which is part of the Code's subtitle F-imposes a time limit for filing foreign corporate returns. Before 1990, courts had construed the phrase in section 882(c)(2)—“in the manner prescribed by subtitle F"-___ -as meaning neither "foreign corporations must file their returns by the deadline set in section 6072" nor "foreign corporations have till the end of time to file," but rather that "foreign corporations have only until the Secretary, after a reasonable time, prepares a substitute return.” The regulation that we invalidate today replaced the old "reasonable time standard" with an 18-month grace period 1 beyond section 6072's deadline, and replaced the preparation of a substitute return with a written notice. The 18-month grace period might be shorter or longer than the old judicially constructed one. It is undeniably more definite.

Upholding this regulation should be almost trivially easy. "So long as the Commissioner issues regulations that ‘implement the congressional mandate in some reasonable manner,'

1 As Judge Swift carefully explains, see dissent supra pp. 151-153, the disputed regulation is fairly complex and establishes a number of exceptions to the general 18-month rule; for simplicity's sake, I refer to the regulation as creating an 18-month grace period.

*** we must defer to the Commissioner's interpretation. Only if the code has a meaning that is clear, unambiguous, and in conflict with a regulation does a court have the authority to reject the Commissioner's reasoned interpretation and invalidate the regulation." Redlark v. Commissioner, 141 F.3d 936, 939 (9th Cir. 1998), revg. 106 T.C. 31 (1996). For the Secretary to issue a regulation giving a clear 18month grace period doesn't contradict anything in the Code, at least anything clearly and unambiguously in the Code.2

I respectfully dissent, because today's Opinion lays down new and misleading trails through three different parts of the jungle of administrative law:

• It misapplies the plain meaning rule;

• It greatly extends the doctrine of legislative reenactment to overturn a regulation; and

• It rejects the recent teaching of the Supreme Court in Brand X3 on the necessity of deferring to an administrative agency's decision to issue a regulation overturning caselaw.

I also write separately to highlight what I think is a serious confusion in the appropriate way we should review regulations that have gone through notice-and-comment rulemaking, especially those that change existing law. Much of the majority's exhaustive recitation of the history of section 882 and its regulation arises from the different factors that

2 Our Court has met with limited success in finding regulations unreasonable after the extensive review of the sort we do today. See Pac. First Fed. Sav. Bank v. Commissioner, 94 T.C. 101 (1990) (invalidating sec. 1.593–6(b)(1)(iv), Income Tax Regs., after plenary review of statute and legislative history), revd. 961 F.2d 800, 805 (9th Cir. 1992) ("we cannot usurp the Treasury's authority and invalidate the regulation unless it is an unreasonable construction"), disagreed with by Peoples Fed. S&L v. Commissioner, 948 F.2d 289, 300 (6th Cir. 1991) ("a court may not substitute its own construction for the reasonable interpretation of an agency"), disagreed with again by Bell Fed. Sav. & Loan Association v. Commissioner, 40 F.3d 224, 227 (7th Cir. 1994), revg. T.C. Memo. 1991-368 ("choice among reasonable interpretations is for the Commissioner, not the courts"), and finally abrogated, Cent. Pa. Sav. Association & Subs. v. Commissioner, 104 T.C. 384 (1995); see also Redlark v. Commissioner, 106 T.C. 31 (1996) (invalidating sec. 1.163-9T(b)(2)(i)(A), Temporary Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), after plenary review of statute and legislative history), revd. 141 F.3d 936 (9th Cir. 1998) (using language quoted in text above), disagreed with by Allen v. United States, 173 F.3d 533 (4th Cir. 1999) (regulation need not be "best possible means of implementing the statute" if it's reasonable), and disagreed again with Kikalos v. Commissioner, 190 F.3d 791, 796-797 (7th Cir. 1999), revg. T.C. Memo. 1998-92 ("[i]t is not our role to determine the most appropriate interpretation of the statute, but simply to assess whether the regulation reflects a reasonable construction"), and finally abrogated, Robinson v. Commissioner, 119 T.C. 44 (2002).

3 Natl. Cable & Telecomm. Assn. v. Brand X Internet Servs., 545 U.S. (2005).

125 S. Ct. 2688

we use in applying National Muffler 4 compared to Chevron.5 This case may therefore be a good vehicle for appellate guidance on whether National Muffler continues to be in good working order after Chevron, Mead,6 and Brand X.

I.

The majority begins its analysis, as I agree we should, with the question of whether section 882's phrase "in the manner prescribed by subtitle F" has an unambiguous meaning. Whether National Muffler or Chevron applies, there is no doubt that if Congress has spoken on the issue, no regulation in conflict can survive. "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842-843; see also National Muffler, 440 U.S. at 476.

But what materials should a court look at to decide whether a statutory phrase is unambiguous? The answer is in Natl. R.R. Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407, 417 (1992) (citations omitted): "a court must look to the structure and language of the statute as a whole. If the text is ambiguous and so open to interpretation in some respects, a degree of deference is granted to the agency."7

The majority crane their necks away from the actual words of section 882 and its place in the Code to look at whether the regulation "adopts respondent's unsuccessful litigating position, with total disregard to *** judicial precedent," majority op. p. 135, and at the legislative reenactment doctrine, majority op. p. 135 note 18. As I discuss later on, these factors are only relevant, if at all, in reviewing a regulation based on a text that we've already found to be ambiguous. The majority's strongest point, though, is their cataloging of the various times in the Code where a phrase like "at the

4 National Muffler Dealers Assn., Inc., v. United States, 440 U.S. 472 (1979).

5 Chevron U.S.A., Inc., v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

6 United States v. Mead Corp., 533 U.S. 218 (2001).

7 Whether a court should look to the text alone in deciding if a statute is ambiguous, as in Natl. R.R. Passenger, or to the text plus legislative history, as Chevron implies, see Chevron, 467 U.S. at 842, is a matter of some controversy. See Coke v. Long Island Care at Home, Ltd., 376 F.3d 118, 127 n.2 (2d Cir. 2004) (collecting cases); see also Tax Analysts v. Commissioner, 350 F.3d 100, 103-104 (D.C. Cir. 2003); Hosp. Corp. of America & Subs. v. Commissioner, 348 F.3d 136, 144 (6th Cir. 2003) affg. 107 T.C. 73 (1996). It doesn't matter in this case because the legislative history of section 882 shows no congressional intent one way or the other about when a foreign corporation must file its return to avoid loss of deductions. See infra p. 170.

time and in the manner prescribed" appears. The absence of the first part of the phrase, they reason, means that the second part-"in the manner prescribed" has no "time element" because Congress must have known what it was doing when it included "manner" and left out "time". Majority op. pp. 132-134. They conclude:

We understand that use [i.e., of the word "manner"] to refer to items of information and not to refer to the time for the filing of a return or the furnishing of any other document. We conclude that Congress, by using only the word "manner" in section 882(c)(2), did not intend to include in that provision any element of time. *** [Majority op. p. 134; fn. ref. omitted.8]

This was also more or less the reasoning of our predecessor, the Board of Tax Appeals, in Anglo-Am. Direct Tea Trading Co. v. Commissioner, 38 B.T.A. 711 (1938). But there are at least two problems with this reasoning. The first is that, as is usually the case with a statute as old and overgrown as the Code, there are counterexamples of the use of the word "manner." Consider, for example, section 179(c). This section gives small businesses the option of expensing capital purchases. Such an election "shall be made in such manner as the Secretary may by regulations prescribe." He prescribed such a regulation, sec. 1.179-5(a), Income Tax Regs., and it restricts the time in which a taxpayer can make this election, given the practical needs of a tax system based on periodic returns. The same is true of elections by a reciprocal insurer under section 835(c)(2), which requires a consent "in such manner as the Secretary shall prescribe." The Secretary prescribed the manner in a regulation, which again requires filing of such consents by a particular time. See sec. 1.826-1(c), Income Tax Regs.

This is hardly surprising. While I agree that we should always construe the words of a statute to have their original public meaning, it is also true that we can-indeed, we should-recognize that even tax statutes are written against a background of common law legal usage. And it is generally

8 The Code governs the "place" of filing returns as well as their "time" and "manner." Part VII of subtitle F has detailed rules, which the IRS has supplemented with extensive regulations. Treas. Regs. 1.6091-1, 20.6091-1, 25.6091-1, 31.6091-1, 40.6091-1, 41.6091-1, 44.6091-1, 53.6091-1, 55.6091-1, 156.6091-1, 157.6091-1T, 301.6091-1, 1.6091-2, 1.6091-3, 1.6091-4. Given today's narrow reading of "manner prescribed under subtitle F," we may someday have to decide whether a return that a foreign corporation intentionally sends astray could trigger a loss of deductions.

the case that when a legal instrument omits explicit time limits to do something permitted or required, it does not ordinarily mean that there are no time limits at all. See 1 Restatement, Contracts 2d, sec. 41 (1981); 1 Corbin, Corbin on Contracts, sec. 2.16 at 203 (1993) ("[i]f the offeror has not communicated a specific time limit with sufficient definiteness, the power of acceptance by the offeree continues for a reasonable time *** [w]hat is a reasonable time, in any case, is a question of fact to be determined by a consideration of all the circumstances existing when the offer [is made]"); e.g., Staples v. Pan-Am. Wall Paper & Paint Co., 63 F.2d 701, 702 (3d Cir. 1933) (as offer "contained no time limitation for acceptance, it was incumbent upon the plaintiff to accept within a reasonable time"); Minneapolis & St. Louis R.R. Co. v. Columbus Rolling-Mill Co., 119 U.S. 149, 151 (1886) (“[i]f the offer does not limit the time for its acceptance, it must be accepted within a reasonable time").

I'm not saying that we need to canvass contract law to construe the Code, only suggesting that the observation that Congress used the word "manner" without specifying "time" is not the end of the argument. The context in which the word occurs suggests that imputation of a reasonable time limit is not a departure from the ordinary legal meaning of the word—any more than imputation of a reasonable delivery time in a contract for delivery of specified goods, 1 Restatement, Contracts 2d sec. 33 (1981), or imputation of a reasonable time for closing a conveyance of property, 1 Restatement, Property (Mortgages) 3d, sec. 7.2 (1997) would be. And before today, I knew of no place in the Code where a Court has held that "manner" without "time" means "anytime at all."

The reason for imputing some time limits on filing returns or making elections is one of practical necessity. And this is where the majority's invocation of Anglo-American is so unintentionally radical, because the second problem with its discussion of the plain meaning of "manner" is that it misunderstands the import of the many opinions from the 1930s and 1940s that in effect did set a filing deadline for foreign corporations if they wanted to qualify for deductions and other credits. The BTA's opinion in Taylor Securities Inc. v. Commissioner, 40 B.T.A. 696 (1939), and the opinions of the Fourth Circuit in Ardbern Co. v. Commissioner, 120 F.2d 424