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Neither the express language of section 7805(b) nor its
legislative history, however, contains any suggestion of such
conditions on the Secretary’s authority to issue prospective
regulations. To the contrary, the pertinent legislative history
indicates that section 7805(b) was intended to prevent problems
that might otherwise arise from retroactive application of
regulations, rather than to restrict the Secretary’s ability to
promulgate prospective regulations.
The predecessor to section 7805(b) was enacted in the
Revenue Act of 1921, ch. 136, section 1314, 42 Stat. 227. The
legislative history states that the purpose of the 1921 provision
was to–-
permit the Treasury Department to apply without retroactive
effect a new regulation or Treasury decision reversing a
prior regulation of Treasury decision * * *. This would
facilitate the administration of the internal revenue laws
in that it would make it unnecessary to reopen thousands of
settled cases. [H. Rept. 350, 67th Cong., 1st Sess. (1921),
1939-1 C.B. (Part 2) 168, 180; emphasis added.]
In 1934, the 1921 provision was reenacted with various
substantive amendments that are not central to the present
discussion. The pertinent legislative history to the 1934
legislation states:
The amendment extends the right granted by existing law to
the Treasury Department to give regulations and Treasury
decisions amending prior regulations or Treasury decisions
prospective effect only, by allowing the Secretary * * * to
prescribe the exact extent to which any regulation or
Treasury decision, whether or not it amends a prior
regulation or Treasury decisions, will be applied without
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