- 15 -
United States, 142 F.3d 973, 981 (7th Cir. 1998).9 We need not
resolve this question, however, for we conclude that the
Temporary Regulation is valid even under the traditional standard
of review for interpretive regulations as articulated in National
Muffler Dealers Association, Inc. v. United States, 440 U.S. 472,
476 (1979). Cf. Union Carbide Corp. v. Commissioner, 110 T.C.
375, 388 (1998); Sim-Air, USA, Ltd. v. Commissioner, 98 T.C. 187,
194 (1992). Under that standard, we must defer to respondent’s
regulations if they “implement the congressional mandate in some
reasonable manner.” National Muffler Dealers Association, Inc.
v. United States, supra at 476. The critical inquiry is “whether
the regulation harmonizes with the plain language of the statute,
9 In Bankers Life & Cas. Co. v. United States, 142 F.3d
973, 981 (7th Cir. 1998), the Court of Appeals for the Seventh
Circuit followed Chevron U.S.A., Inc. v Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984), and accorded deference to
interpretive regulations issued under sec. 7805(a) with notice
and comment procedures. The court cited Atchison, Topeka & Santa
Fe Ry. v. Pena, 44 F.3d 437 (7th Cir. 1994), for the proposition
that “the notice and comment procedure was the sine qua non for
Chevron deference.” The court in Bankers Life & Cas. Co. did not
address the appropriate standard of review for legislative
regulations issued without notice and comment procedures.
In Kikalos v. Commissioner, ___ F.3d ___ (7th Cir. 1999),
revg. in part T.C. Memo. 1998-92, the Court of Appeals for the
Seventh Circuit sua sponte raised the issue of the degree of
deference owed to temporary interpretive regulations issued by
respondent under section 163 without notice and comment
procedures. Because both parties assumed that Chevron deference
applied in this circumstance, the court reserved judgment on
whether a lesser degree of deference was appropriate.
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